Mail Stop 0306
April 18, 2005
VIA U.S. MAIL AND FAX (408) 830-9531
Mr. Robert G. Gargus
Chief Financial Officer
Silicon Image, Inc.
1060 East Arques Avenue
Sunnyvale, California 94085
Re: Silicon Image, Inc.
Form 10-K for the year ended December 31, 2004 & related
materials
Form 8-K filed January 25, 2005
Dear Mr. Gargus:
We have reviewed your filing and have the following
comments.
We have limited our review to matters related to the issues raised
in
our comments. Where indicated, we think you should revise your
document in response to these comments. If you disagree, we will
consider your explanation as to why our comment is inapplicable or
a
revision is unnecessary. Please be as detailed as necessary in
your
explanation. In some of our comments, we may ask you to provide
us
with supplemental information so we may better understand your
disclosure. After reviewing this information, we may or may not
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comment or on any other
aspects
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for the year ended December 31, 2004
Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations - Page 24
Annual Results of Operations - Page 35
1. We note you have included multiple non-GAAP financial measures
that exclude the effects of stock compensation expense. Item
10(e)(1)(ii)(B) of Regulation S-K prohibits the exclusion of items
identified as non-recurring, infrequent or unusual items. While
there
is no per se prohibition against removing a recurring item, you
must
meet the burden of demonstrating the usefulness of any measure
that
excludes recurring items. Revise your filing to remove the non-
GAAP
financial measures. Alternatively, provide details that
demonstrate
the usefulness of the non-GAAP financial measures and provide all
of
the disclosures required by Item 10(e)(1) of Regulation S-K for
each
non-GAAP financial measure presented. Refer to SEC Release 33-8176
and also Question 8 of the FAQ Regarding the Use of Non-GAAP
Financial Measures, dated June 13, 2003.
Item 9A. Controls and Procedures - Page 66
2. We note your disclosure that your "Chief Executive Officer and
Chief Financial Officer, and Chief Accounting Officer concluded
that
[your] disclosure controls and procedures as of the end of the
period
covered by this report were effective in ensuring that all
material
information required to be disclosed in the reports [you] file and
submit under the Securities and Exchange Act of 1934 has been made
known to them on a timely basis and that such in formation has
been
properly recorded, processed, summarized and reported, as
required."
The language that appears after the word "effective" appears
superfluous since the definition of disclosure controls and
procedures is included in Rule 13a-15(e) of the Exchange Act.
Revise
to state simply, if true, that your management determined your
disclosure controls and procedures were effective. Alternatively,
if
you wish to include the definition of disclosure controls and
procedures, please revise so that it matches the definition
included
in Rule 13a-15(e) of the Exchange Act.
Consolidated Financial Statements
Note 2 - Business Combinations - Page 84
3. We noted that you recorded a non-operating gain of
approximately
$4.6 million in the year ended December 31, 2003 related to a
settlement whereby you received 949,780 escrowed shares. Please
supplementally tell us and revise your filing to disclose the
following:
a) Discuss how you originally accounted for the shares that were
placed into escrow at the date of acquisition. Refer to paragraph
26
of SFAS 141.
b) Describe in detail the events and circumstances that led you to
make a claim against the escrow pools.
c) Describe how such events resulted in you recording a $4.6
million
gain in 2003. Address why you concluded that this amount should
not
have been recorded as a reduction to the original cost of the
acquired entity. Cite the accounting literature upon which you
based
your conclusion.
Exhibit 31 - Certifications of Chief Executive Officer and Chief
Financial Officer
4. We noted that the certifications filed as Exhibits 31.1 and
31.2
were not in the proper form. Further, we note you filed an amended
Form 10-K on April 1, 2005 that included the proper certifications
on
a standalone basis. In light of the fact that the certification
relates to the entire Form 10-K, the amendment you filed on April
1,
2005 should have included the entire filing, not just the
signature
pages. Refer to Question 17 of Sarbanes-Oxley Act of 2002
Frequently
Asked Questions document, which can be found on our website at
www.sec.gov. Accordingly, please file an amendment to your Form
10-K
that includes the entire filing together with the certifications
of
each of your current CEO and CFO in the form currently set forth
in
Item 601(b)(31) of Regulation S-K.
Form 8-K dated January 25, 2005
5. We do not believe that the presentation of a non-GAAP statement
of
operations is appropriate unless all disclosures required by Item
10(e)(1)(i) of Regulation S-K are included for each separate non-
GAAP
measure. Please delete this presentation from all future Forms 8-
K.
If you continue to present non-GAAP information, Item 2.02 of Form
8-
K requires that disclosures "furnished" include information that
complies with the disclosure requirements of Item 10(e)(1)(i) of
Regulation S-K. Accordingly, in addition to the reconciliation
for
each non-GAAP measure, you must also provide statements disclosing
the reasons why management believes presentation of each of the
individual non-GAAP measures provide useful information to
investors
regarding your financial condition and results of operations.
Those
disclosures should be specific and substantive to each individual
measure. Refer to SEC Release 33-8176 and also Question 8 of the
FAQ
Regarding the Use of Non-GAAP Financial Measures, dated June 13,
2003. Please confirm that you will revise your Forms 8-K in future
periods to provide all of the disclosures required by Item
10(e)(1)(i) for each non-GAAP measure presented. Provide us with
a
full sample of your proposed disclosure.
* * * * * * * *
As appropriate, please amend your 10-K for the year ending
December 31, 2004 and respond to these comments within 10 business
days or tell us when you will provide us with a response. You may
wish to provide us with marked copies of the amendment to expedite
our review. Please furnish a cover letter with your response that
keys your responses to our comments and provides any requested
supplemental information. Detailed cover letters greatly
facilitate
our review. Please file your cover letter on EDGAR. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require.
Since the company and its management are in possession of all
facts
relating to a company`s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that
* The company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* Staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* The company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Julie Sherman, Staff Accountant, at (202)
824-
5506, Kevin Vaughn at (202) 824-5387 or me at (202) 942-7903 if
you
have any questions regarding these comments.
Sincerely,
Michele Gohlke
Branch Chief
Mr. Robert G. Gargus
Silicon Image, Inc.
April 18, 2005
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