Sigma Designs, Inc. Reports Fourth Quarter and Fiscal Year 2013 Financial Results

Sigma Designs, Inc. Reports Fourth Quarter and Fiscal Year 2013 Financial 
Results 
Expects 11-15 Percent Sequential Revenue Growth and Return to
Profitability in Q1 FY14 
MILPITAS, CA -- (Marketwire) -- 03/13/13 --  Sigma Designs(R), Inc.
(NASDAQ: SIGM), a leader in connected media platforms, today reported
financial results and business highlights for its fourth fiscal
quarter and fiscal year ended February 2, 2013. 
Net revenue for fiscal year 2013 was $216.6 million, an increase of
$34.0 million, or 18.6%, from $182.6 million in the previous year.
Net revenue for the fourth quarter of fiscal 2013 was $44.2 million,
down $19.7 million, or 31.0%, from $63.9 million reported in the
previous quarter and up $8.6 million, or 24.0%, from $35.6 million
reported for the same period last year.  
GAAP net loss for the fourth quarter of fiscal 2013 was $35.5
million, or $1.05 per diluted share. This compares to GAAP net loss
of $39.5 million, or $1.18 per diluted share, for the previous
quarter and GAAP net loss of $18.8 million, or $0.58 per diluted
share, for the same period last year. 
Non-GAAP net loss for the fourth quarter of fiscal 2013 was $18.2
million, or $0.54 per diluted share. This compares to non-GAAP net
loss of $9.1 million, or $0.27 per diluted share, for the previous
quarter and non-GAAP net loss of $14.0 million, or $0.43 per diluted
share, during the same period last year. Non-GAAP adjustments for the
fourth quarter consisted of $2.1 million in amortization expense for
acquired intangibles related to acquisitions, $2.5 million in
non-cash stock-based compensation expenses, $0.2 million of inventory
mark-up, $2.4 million in restructuring expense and $10.2 million in
impairment of purchased intellectual property, design tools and mask
sets associated with our cost reduction program. The reconciliation
between GAAP and non-GAAP net loss for all referenced periods is
provided in a table immediately following the GAAP financial tables
below. 
Management Comment
 "Sigma remains focused on returning to
profitability in Q1 FY14 as well as achieving profitable revenue
growth throughout the coming fiscal year. By the end of Q4 FY13, the
Company had taken the actions required to achieve the $45 million
cost reduction plan for fiscal 2014. As a result of 
these cost
reductions and our expected revenue levels, we believe the Company
will experience profitability starting in the first quarter. We have
restructured our organization from the top to bottom, reducing our
headcount by 15.0%. This reduction was principally achieved in our
higher cost locations. We also have sharply reduced our usage of
external contract labor in R&D. We are converging on a single SoC
platform to deliver our next generation solutions for both set-top
box and digital TV markets, which should lead to significant cost
efficiencies. In the fourth quarter, we achieved $44.2 million in
revenue at a 44.0% non-GAAP gross margin. Without a $3.4 million
write-down of inventory, non-GAAP gross margin would have been 52.0%,
which represents a 3.0% increase above our guidance. 
Moving into the first quarter of fiscal 2014, based on better
visibility into our backlog, we believe revenue will rise
sequentially from Q4 levels to between $49-52 million. We expect to
see revenue increases in all of our business segments along with
improved non-GAAP gross margins to a range of 52-53% driven by higher
margin product mix and continued worldwide cost savings. In addition,
we expect our proforma operating expenses in Q1 to be between
$25.6-26.1 million which includes $2.7 million of depreciation and
amortization," said Thinh Tran, CEO of Sigma. 
Recent Highlights 


 
--  We announced with Opera Software that we will team up to optimize
    Opera's TV products for Sigma's optimized Smart TV processors. As a
    result, Sigma-based solutions will be able to access the Opera TV
    Browser and the Opera TV Store, a complete HTML5-based solution for
    Smart TVs, available for OEMs, developers and content providers to
    reach millions of app-hungry users.
--  We demonstrated the technology to create a 4K x 2K digital TV platform
    on a 55" inch screen at the CES 2013 show. This next generation Ultra
    HD display technology (UHDTV), based on the company's MEMC/FRC (Motion
    Estimation Motion Compensation based Frame Rate Conversion)
    technology, is four times the resolution of today's high-definition
    televisions.
--  We announced our new breakthrough CG5200 family of G.hn chipsets,
    which provides optimized functionality, performance and cost structure
    for a variety of market needs. This new family of G.hn parts also
    enables superior networked entertainment performance and throughput
    for seamless, high-quality distribution of Triple Play and IPTV over
    all three household wires: power line, coax and phone line.
--  We announced that Comtrend has selected Sigma's new G.hn CG5200 family
    of chipsets for its PowerGrid 9051s Powerline Ethernet Adapter. The
    technical superiority of the CG5200 gives Comtrend a competitive
    advantage for meeting the demands of video networking.
--  We announced the launch of our EasyTV Dongle reference design, an
    innovative, simple and affordable solution that enables users to
    access multimedia content on their mobile devices (cell phones,
    tablets or laptops) and share it on HDMI TV sets or projectors. EasyTV
    is based on Sigma's power efficient SMP8674 chip and Qualcomm
    Atheros's 802.11n technology.
--  We announced that Microsoft's Smooth Streaming client technology has
    been integrated into Sigma's state-of-the-art multimedia chipset
    solutions to deliver seamless High Definition 1080p media content.

  
Investor Conference Call
 The conference call relating to Sigma's
fourth quarter fiscal and year end 2013 financial results will take
place following this announcement at 5:00 PM ET today, March 13,
2013. Investors will have the opportunity to listen live to the
conference call via the Internet through www.sigmadesigns.com/IR or
www.earnings.com. Institutional investors can access the call via
Thomson StreetEvents at www.streetevents.com. To listen to the live
call, please go to the website at least 10 minutes early to register
and download and install any necessary audio software. For those who
cannot listen to the live broadcast, a replay will be available
shortly after the call via the internet through
www.sigmadesigns.com/IR or www.earnings.com. The audio replay will be
available for one week after the call. 
Use of Non-GAAP Financial Information 
In addition to reporting financial results in accordance with
generally accepted accounting principles, or GAAP, Sigma reports
non-GAAP net income (loss), which excludes amortization of acquired
intangibles, stock-based compensation, the mark-up on purchased
inventory sold during the period, acquisition-related expenses,
restructuring charges, impairment of pre-production purchased IP,
design tools and mask sets, a settlement payment, write-down of
acquisition-related goodwill and intangible assets, the reserve of
deferred income tax assets and the gain upon acquisition of the DTV
business that Sigma recognized in accordance with GAAP. Sigma
believes that its non-GAAP net income provides useful information to
management and investors regarding financial and business trends
relating to its financial condition and results of operations. Sigma
also believes the non-GAAP measures provide useful supplemental
information for inv
estors to evaluate its operating results in the
same manner as the research analysts that follow Sigma, all of whom
present non-GAAP projections in their published reports. As such, the
non-GAAP measures provided by Sigma facilitate a more direct
comparison of its performance with the financial projections
published by the analysts as well as its competitors, many of whom
report financial results on a non-GAAP basis. The economic substance
behind its decision to use such non-GAAP measures is that such
measures approximate its controllable operating performance more
closely than the most directly comparable GAAP financial measures.
For example, Sigma's management has no control over certain variables
that have a major influence in the determination of stock-based
compensation such as the volatility of its stock price and changing
interest rates. Sigma believes that all of these excluded expenses do
not accurately reflect the underlying performance of its continuing
operations for the period in which they are incurred, even though
some of these excluded items may be incurred and reflected in Sigma's
GAAP financial results in the foreseeable future. 
The material limitation associated with the use of the non-GAAP
financial measures is that the non-GAAP measures do not reflect the
full economic impact of Sigma's activities. Sigma's non-GAAP net
income is not prepared in accordance with GAAP, is not an alternative
to GAAP financial information, and may be calculated differently than
non-GAAP financial information disclosed by other companies.
Accordingly, investors are cautioned not to place undue reliance on
non-GAAP information.  
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 about becoming profitable in the first quarter
of fiscal 2014, achieving stable-to-growing revenue throughout the
coming fiscal year and anticipated revenue and gross margin in the
first quarter of fiscal 2014. 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 2013 are
different than the results set forth in this press release, including
any adjustments as a result of an unresolved claim of $1.8 million
related to Sigma's digital TV acquisition from Trident Microsystems,
general economic conditions, the ability to recognize the anticipated
savings from our restructuring efforts, the rate of growth of the
IPTV, connected home technologies, digital TV, connected media player
and prosumer and industrial audio/video 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 quarterly report on Form 10-Q as filed with the SEC on
December 6, 2012. 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. (NASDAQ: SIGM) is a
leader in connected media platforms. The company designs and builds
the essential semiconductor technologies that serve as the foundation
for the world's leading IPTV set-top boxes, connected televisions,
connected media players, residential gateways, home control systems
and more. For more information about Sigma Designs, please visit
www.sigmadesigns.com. 


 
                                                                            
                                                                            
                             SIGMA DESIGNS, INC.                            
         PRELIMINARY UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS        
                                   (GAAP)                                   
                               (In thousands)                               
                                                                            
                                                February 2,     January 28, 
                                                    2013            2012    
                                               -------------   -------------
Assets                                                                      
                                                                            
Current Assets:                                                             
Cash and cash equivalents                      $      51,218   $      44,283
  Short-term marketable securities                    17,455          42,134
  Restricted cash                                      1,770           1,769
  Accounts receivable, net                            21,648          21,180
  Inventories                                         24,928          22,037
  Deferred tax assets                                  5,868           4,832
  Prepaid expenses and other current assets           12,761           7,234
                                               -------------   -------------
    Total current assets                             135,648         143,469
                                                                            
Long-term marketable securities                       14,253          62,022
Software, equipment and leasehold                                           
 improvements, net                                    16,767          19,609
Intangible assets, net                                36,573          45,656
Deferred tax assets, net of current portion            2,681          16,595
Long-term investments                                  6,445           6,443
Other non-current assets                           
    7,308           3,430
                                               -------------   -------------
                                                                            
    Total assets                               $     219,675   $     297,224
                                               =============   =============
                                                                            
Liabilities and Shareholders' Equity                                        
                                                                            
Current Liabilities:                                                        
  Accounts payable                             $      10,229   $       8,438
  Accrued liabilities                                 28,791          24,081
                                               -------------   -------------
    Total current liabilities                         39,020          32,519
                                                                            
  Other long-term liabilities                         18,976          16,230
                                               -------------   -------------
    Total liabilities                                 57,996          48,749
                                                                            
Shareholders' equity                                 161,679         248,475
                                               -------------   -------------
                                                                            
    Total liabilities and shareholders' equity $     219,675   $     297,224
                                               =============   =============
                                                                            
                                                                            
                                                                            
                            SIGMA DESIGNS, INC.                        
     
        PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS         
                                   (GAAP)                                   
                   (In thousands, except per share data)                    
                                                                            
                             Three months ended          Fiscal year ended  
                      -------------------------------  -------------------- 
                       February   October    January    February   January  
                       2, 2013    27, 2012   28, 2012   2, 2013    28, 2012 
                      ---------  ---------  ---------  ---------  --------- 
Net revenue           $  44,199  $  63,905  $  35,566  $ 216,613  $ 182,617 
Cost of revenue          30,923     38,423     18,978    126,180    105,241 
                      ---------  ---------  ---------  ---------  --------- 
Gross profit             13,276     25,482     16,588     90,433     77,376 
Gross margin percent       30.0%      39.9%      46.6%      41.7%      42.4%
                                                                            
                                                                            
Operating expenses:                                                         
  Research and                                                              
   development           26,940     26,741     21,483    103,445     86,517 
  Sales and marketing     7,099     12,774      8,992     34,556     34,467 
  General and                                                               
   administrative         6,029      6,007      5,369     27,903     20,829 
  Gain on acquisition        27        ---        ---     (1,390)       --- 
  Restructuring                                                             
   charges                2,398        821        ---      3,219        --- 
  Impairment of                                                             
   purchased IP and                                                         
   design tools           5,942        ---        ---      5,942        --- 
  Write-down of                                                             
   goodwill,                                                                
   intangible assets                                                        
   and acquired in-                                                         
   process R&D              ---        ---        ---        ---    111,278 
                      ---------  ---------  ---------  ---------  --------- 
    Total operating                                                         
     expenses            48,435     46,343     35,844    173,675    253,091 
                                                                            
Loss from operations    (35,159)   (20,861)   (19,256)   (83,242)  (175,715)
Interest and other                                                          
 income (expense),                                                          
 net                        850        299        609      1,882      2,704 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
                                                                            
Loss before income                                                          
 taxes                  (34,309)   (20,562)   (18,647)   (81,360)  (173,011)
Provision for                                                               
 (benefit from)                                                             
 income taxes             1,227     18,889        191     20,747     (4,966)
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Net loss              $ (35,536) $ (39,451) $ (18,838) $(102,107) $(168,045)
                      =========  =========  =========  =========  ========= 
                                                                            
Net loss per share:                                                         
  Basic               $   (1.05) $   (1.18) $   (0.58) $   (3.08) $   (5.25)
  Diluted             $   (1.05) $   (1.18) $   (0.58) $   (3.08) $   (5.25)
                                                                            
Shares used in                                                              
 computing net loss                                                         
 per share:                                                                 
  Basic                  33,722     33,383     32,361     33,205     32,036 
  Diluted                33,722     33,383     32,361     33,205     32,036 
                                                                            
                                                                            
                                                                            
                                                                            
                            SIGMA DESIGNS, INC.                             
      PRELIMINARY RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET LOSS      
                                (Unaudited)                                 
                   (In thousands, except per share data)                    
                                                                            
                             Three months ended          Fiscal year ended  
                      -------------------------------  -------------------- 
                       February   October    January    February   January  
                       2, 2013    27, 2012   28, 2012   2, 2013    28, 2012 
                      ---------  ---------  ---------  ---------  --------- 
GAAP net loss         $ (35,536) $ (39,451) $ (18,838) $(102,107) $(168,045)
                                                                            
Items reconciling GAAP                                                      
 net loss to non-GAAP                                                       
 net loss:                                                                  
  Included in cost of                                                       
   revenue:                                                                 
      Stock-based                                                           
       compensation        (106)      (130)      (126)      (486)      (478)
      Amortization of                                                       
       acquired                                                             
       intangibles       (1,651)    (1,591)    (1,495)    (6,327)    (9,561)
Impairment of                                                               
 Purchased IP and mask                                                      
 sets used in                                                               
 production              (4,232)       ---        ---     (4,232)       --- 
      Restructuring                                                         
       charges              (14)       ---        ---        (14)       --- 
      Acquisition                                                           
       expenses             ---       (101)       ---       (101)       --- 
      Mark-up on                                                            
       inventory                                                            
       acquired in                                                          
       business                                                             
       combinations                                                         
       sold during the                                                      
       period              (162)    (1,078)       (76)    (3,769)      (147)
                      ---------  ---------  ---------  ---------  --------- 
Total related to cost                                                       
 of revenue              (6,165)    (2,900)    (1,697)   (14,929)   (10,186)
                                                                            
  Included in                                                               
   operating expenses:                                                      
    Research and                                                            
     development:                                                           
      Stock-based                                                           
       compensation      (1,394)    (1,375)    (1,517)    (5,740)    (6,277)
      Amortization of                                                       
       acquired                                                             
       intangibles          (41)       (34)       (45)      (141)      (143)
      Acquisition                                                           
     
  expenses             ---        ---        ---     (1,417)       --- 
    Sales and                                                               
     marketing:                                                             
      Stock-based                                                           
       compensation        (399)      (457)      (503)    (1,811)    (2,137)
      Amortization of                                                       
       acquired                                                             
       intangibles         (381)      (360)      (372)    (1,463)    (6,458)
      Settlement                                                            
       payment              ---     (5,700)       ---     (5,700)       --- 
      Acquisition                                                           
       expenses             ---        ---        ---       (257)       --- 
    General and                                                             
     administrative:                                                        
      Stock-based                                                           
       compensation        (617)      (539)      (746)    (2,557)    (3,133)
      Acquisition                                                           
       expenses             ---       (251)       ---     (2,501)       (89)
                                                                            
    Restructuring                                                           
     charges             (2,398)      (821)       ---     (3,219)       --- 
    Gain on                                                                 
     acquisition            (27)       ---        ---      1,390        --- 
Impairment of pre-                                                          
 production purchased                                                       
 IP and design tools     (5,942)       ---        ---     (5,942)       --- 
    Write-down of                                                           
     acquisition                                                            
     related goodwill                                                       
     and intangible                                                         
     assets                 ---        ---        ---        ---   (111,278)
                      ---------  ---------  ---------  ---------  --------- 
      Total related to                                                      
       operating                                                            
       expenses         (11,199)    (9,537)    (3,183)   (29,358)  (129,515)
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
    Deferred tax                                                            
     assets                 ---    (17,932)       ---    (17,932)       --- 
    Net effect of non-                                                      
     GAAP adjustments   (17,364)   (30,369)    (4,880)   (62,219)  (139,701)
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Non-GAAP net loss     $ (18,172) $  (9,082) $ (13,958) $ (39,888) $ (28,344)
                      =========  =========  =========  =========  ========= 
                                                                            
Non-GAAP net loss per                                                       
 diluted share        $   (0.54) $   (0.27) $   (0.43) $   (1.20) $   (0.88)

  
Investor Relations Contact: 
Elias Nader
interim CFO 
Sigma Designs, Inc.
Tel: (408) 957-9847
IR@sigmadesigns.com 
 
 
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