Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that our new products introduced in the past six months puts us in position to secure increasing customer deployments, which we expect to realize in the second half of our new fiscal year, and statements about our intentions to repurchase additional shares under our previously announced stock repurchase program. Actual results may vary materially due to a number of factors including, but not limited to, the risk that, upon completion of further closing procedures and audit, the financial results for the fourth quarter and full fiscal 2014 are different than the results set forth in this press release, including the issuance of a final decision in an ongoing arbitration matter which may be announced after the date of this press release and prior to the completion of our audit, general economic conditions, the ability to recognize the anticipated savings from our restructuring efforts, the rate of growth of the Set-Top Box, home networking, digital TV, and home control and energy management markets in general, the ramp in demand from Sigma's set-top box, television and telecommunication customers, Sigma's ability to deploy and achieve market acceptance for Sigma products, and the risk that such products will not gain widespread acceptance, or will be rendered obsolete, by product offerings of competitors or by alternative technologies, and other risks detailed from time to time in Sigma's SEC reports, including Sigma's report on Form 10-Q as filed with the SEC on December 12, 2013. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Sigma undertakes no obligation to publicly release or otherwise disclose the result of any revision to these forward-looking statements that may be made as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
About Sigma Designs, Inc.
Sigma Designs, Inc. (
SIGMA DESIGNS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(GAAP)
(In thousands)
February 1, February 2,
2014 2013
------------ ------------
Assets
Current Assets:
Cash and cash equivalents $ 64,326 $ 51,218
Short-term marketable securities 7,791 17,455
Restricted cash 1,775 1,769
Accounts receivable, net 27,647 21,648
Inventory 20,403 24,929
Deferred tax assets 4,144 5,868
Prepaid expenses and other current assets 8,069 13,578
------------ ------------
Total current assets 134,155 136,465
Long-term marketable securities 15,505 14,253
Software, equipment and leasehold improvements,
net 27,089 17,106
Intangible assets, net 29,780 36,573
Deferred tax assets, net of current portion 439 2,681
Long-term investments and notes receivable, net of
current portion 3,873 8,943
Other non-current assets 4,934 4,810
------------ ------------
Total assets $ 215,775 $ 220,831
============ ============
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 16,184 $ 11,046
Accrued compensation and related benefits 6,288 10,070
Accrued liabilities 19,813 18,721
------------ ------------
Total current liabilities 42,285 39,837
Other long-term liabilities 15,099 18,976
------------ ------------
Total liabilities 57,384 58,813
Shareholders' equity 158,391 162,018
------------ ------------
Total liabilities and shareholders' equity $ 215,775 $ 220,831
============ ============
SIGMA DESIGNS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(GAAP)
(In thousands, except per share data)
Three months ended Fiscal year ended
------------------------------- --------------------
February November February February February
1, 2014 2, 2013 2, 2013 1, 2014 2, 2013
--------- --------- --------- --------- ---------
Net revenue $ 38,497 $ 54,394 $ 44,199 $ 199,193 $ 216,613
Cost of revenue 16,451 23,311 30,331 91,052 125,588
--------- --------- --------- --------- ---------
Gross profit 22,046 31,083 13,868 108,141 91,025
Gross margin percent 57.3% 57.1% 31.4% 54.3% 42.0%
Operating expenses:
Research and
development 16,634 17,555 26,973 73,162 103,478
Sales and marketing 4,820 5,608 7,093 21,637 34,550
General and
administrative 4,729 5,212 6,025 19,640 27,899
Gain on acquisition - - 28 - (1,389)
Restructuring
charges 267 1,104 2,443 2,261 3,264
Impairment of IP,
mask sets and
design tools 675 150 6,569 1,013 6,569
--------- --------- --------- --------- ---------
Total operating
expenses 27,125 29,629 49,131 117,713 174,371
Income (loss) from
operations (5,079) 1,454 (35,263) (9,572) (83,346)
Gain on sale of
development project - - - 1,079 -
Interest and other
income (expense),
net (164) (254) 1,293 394 2,325
--------- --------- --------- --------- ---------
Income (loss) before
income taxes (5,243) 1,200 (33,970) (8,099) (81,021)
Provision (benefit)
for income taxes (6,496) 4,178 1,227 2,950 20,747
--------- --------- --------- --------- ---------
Net income (loss) $ 1,253 $ (2,978) $ (35,197) $ (11,049) $(101,768)
========= ========= ========= ========= =========
Net income (loss) per
share:
Basic $ 0.04 $ (0.09) $ (1.04) $ (0.32) $ (3.06)
Diluted $ 0.04 $ (0.09) $ (1.04) $ (0.32) $ (3.06)
Shares used in
computing net income
(loss) per share:
Basic 34,421 34,518 33,722 34,206 33,205
Diluted 34,502 34,518 33,722 34,206 33,205
SIGMA DESIGNS, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS)
(Unaudited)
(In thousands, except per share data)
Three months ended Fiscal year ended
------------------------------- --------------------
February November February February February
1, 2014 2, 2013 2, 2013 1, 2014 2, 2013
--------- --------- --------- --------- ---------
GAAP net income
(loss) $ 1,253 $ (2,978) $ (35,197) $ (11,049) $(101,768)
Items reconciling
GAAP net income
(loss) to non-GAAP
net income (loss):
Stock-based
compensation
expenses 1,427 1,668 2,516 6,814 10,595
Amortization of
acquired
intangibles 1,772 1,782 2,073 7,152 7,931
Impairment of
purchased IP, mask
sets, designs
tools and other
assets 675 562 11,173 1,425 11,173
Restructuring
charges, net 279 1,104 2,443 2,306 3,264
Mark-up on
inventory acquired
in business
combinations sold
during the period
- - 162 436 3,769
Realized gain on
sale of
development
project - - - (1,079) -
(Gain) loss on
acquisition - - 28 - (1,389)
Facility exit legal
expenses 91 8 - 387 -
Settlement expenses - 100 - 100 5,700
Impairment of
investments, net 270 163 - 433 -
Acquisition
expenses - - - - 4,276
Income tax
adjustments (10,292) 901 (1,227) (5,826) 16,194
--------- --------- --------- --------- ---------
Total GAAP to Non-
GAAP adjustments (5,778) 6,288 17,168 12,148 61,513
--------- --------- --------- --------- ---------
Non-GAAP net income
(loss) $ (4,525) $ 3,310 $ (18,029) $ 1,099 $ (40,255)
========= ========= ========= ========= =========
Diluted net income
(loss) per share $ (0.13) $ 0.10 $ (0.53) $ 0.03 $ (1.21)
========= ========= ========= ========= =========
Shares used in
calculating diluted
net income (loss)
per share: 34,421 34,564 33,722 34,294 33,205
========= ========= ========= ========= =========
Diluted net income
(loss) per share:
Diluted GAAP net
income (loss) per
share $ 0.04 $ (0.09) $ (1.04) $ (0.32) $ (3.06)
Diluted GAAP to non-
GAAP adjustments $ (0.17) $ 0.19 $ 0.51 $ 0.35 $ 1.85
--------- --------- --------- --------- ---------
Diluted Non-GAAP net
income (loss) per
share $ (0.13) $ 0.10 $ (0.53) $ 0.03 $ (1.21)
========= ========= ========= ========= =========
Reconciliation of
shares used in
calculating non-GAAP
net
income (loss) per
share:
Shares used in
calculating basic
net income (loss)
per share 34,421 34,518 33,722 34,206 33,205
Adjustment for
dilutive securities - 46 - 88 -
--------- --------- --------- --------- ---------
Non-GAAP shares used
in calculating
diluted net income
(loss)
per share 34,421 34,564 33,722 34,294 33,205
========= ========= ========= ========= =========
SIGMA DESIGNS, INC.
SECHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS
(Unaudited)
(In thousands, except per share data)
The following schedule reconciles selected line items from the
GAAP basic statements of operations to non-GAAP statements of
operations:
Three months ended Fiscal year ended
------------------------------- --------------------
February November February February February
1, 2014 3, 2013 2, 2013 1, 2014 2, 2013
--------- --------- --------- --------- ---------
GROSS PROFIT:
GAAP gross profit $ 22,046 $ 31,083 $ 13,868 $ 108,141 $ 91,025
Stock-based
compensation
expenses 53 64 106 267 487
Amortization of
acquired
intangibles 1,403 1,403 1,651 5,644 6,327
Acquisition
expenses - - - - 101
Restructuring
charges, net 12 - 14 45 14
Impairment of
purchased IP and
mask sets used in
production - 4,604 4,604
Mark-up on
inventory acquired
in business
combinations sold
during the period
during the period - 162 436 3,769
--------- --------- --------- --------- ---------
Non-GAAP gross profit $ 23,514 $ 32,550 $ 20,405 $ 114,533 $ 106,327
========= ========= ========= ========= =========
OPERATING EXPENSES:
GAAP operating
expenses $ 27,125 $ 29,629 $ 49,131 $ 117,713 $ 174,371
Stock-based
compensation
expenses (1,374) (1,604) (2,410) (6,547) (10,108)
Amortization of
acquired
intangibles (369) (379) (422) (1,508) (1,604)
Impairment of
purchased IP, mask
sets and designs
tools (675) (562) (6,569) (1,425) (6,569)
Restructuring
charges, net (267) (1,104) (2,443) (2,261) (3,264)
Gain on acquisition - - (28) - 1,389
Facility exit legal
expenses (91) (8) - (387) -
Settlement expenses - (100) - (100) (5,700)
Acquisition
expenses - - - - (4,175)
--------- --------- --------- --------- ---------
Non-GAAP operating
expenses $ 24,349 $ 25,872 $ 37,259 $ 105,485 $ 144,340
========= ========= ========= ========= =========
INCOME TAX EXPENSE:
GAAP income tax
expenses $ (6,496) $ 4,178 $ 1,227 $ 2,950 $ 20,747
Income tax
adjustments 10,292 (901) 1,227 5,826 (16,194)
--------- --------- --------- --------- ---------
Non-GAAP income tax
expenses $ 3,796 $ 3,277 $ 2,454 $ 8,776 $ 4,553
========= ========= ========= ========= =========
RESEARCH AND
DEVELOPMENT:
GAAP research and
development $ 16,634 $ 17,555 $ 26,973 $ 73,162 $ 103,478
Stock-based
compensation
expenses (660) (778) (1,394) (3,381) (5,740)
Amortization of
acquired
intangibles (22) (33) (41) (121) (141)
Acquisition
expenses - - - - (1,417)
--------- --------- --------- --------- ---------
Non-GAAP research and
development $ 15,952 $ 16,744 $ 25,538 $ 69,660 $ 96,180
========= ========= ========= ========= =========
SALES AND MARKETING:
GAAP sales and
marketing $ 4,820 $ 5,608 $ 7,093 $ 21,637 $ 34,550
Stock-based
compensation
expenses (246) (365) (399) (1,275) (1,811)
Amortization of
acquired
intangibles (347) (346) (381) (1,387) (1,463)
Settlement expenses - (100) - (100) (5,700)
Acquisition
expenses - - - - (257)
--------- --------- --------- --------- ---------
Non-GAAP sales and
marketing $ 4,227 $ 4,797 $ 6,313 $ 18,875 $ 25,319
========= ========= ========= ========= =========
GENERAL AND
ADMINISTRATIVE:
GAAP general and
administrative $ 4,729 $ 5,212 $ 6,025 $ 19,640 $ 27,899
Stock-based
compensation
expenses (468) (461) (617) (1,891) (2,557)
Impairment of other
assets - (412) - (412) -
Acquisition
expenses - - - - (2,501)
Facility exit legal
expenses (91) (8) - (387) -
--------- --------- --------- --------- ---------
Non-GAAP general and
administrative $ 4,170 $ 4,331 $ 5,408 $ 16,950 $ 22,841
========= ========= ========= ========= =========
