SOURCE: Sigma Designs

Sigma Designs

December 10, 2014 16:25 ET

Sigma Designs, Inc. Reports Third Quarter 2015 Financial Results

MILPITAS, CA--(Marketwired - Dec 10, 2014) - Sigma Designs®, Inc. (NASDAQ: SIGM), a leader in intelligent media platforms, today reported financial results and business highlights for its third quarter of fiscal year 2015 ended November 1, 2014.

Financial Results

Net revenues for the third quarter of fiscal 2015 were $53.8 million, up $11.0 million, or 25.7%, from $42.8 million reported in the previous quarter and down $0.6 million, or 1.1%, from $54.4 million reported for the same period last year. 

GAAP net loss for the third quarter of fiscal 2015 was $0.6 million, or $0.02 per share. This compares to GAAP net loss of $7.6 million, or $0.22 per share, for the previous quarter and GAAP net loss of $3.0 million, or $0.09 per share, for the same period last year. 

Non-GAAP net income for the third quarter of fiscal 2015 was $1.5 million, or $0.04 per diluted share. This compares to a non-GAAP net loss of $2.0 million, or $0.06 per diluted share, for the previous quarter and non-GAAP net income of $3.3 million, or $0.10 per diluted share, during the same period last year. 

The reconciliation between GAAP and non-GAAP net income (loss) for all referenced periods is provided in a table immediately following the GAAP financial tables below.

Management Comment

"We are pleased to report a 25.7% sequential growth in revenue along with pro forma profitability of $1.5 million, or $0.04 per share," said Thinh Tran, President and CEO of Sigma Designs. He continued, "We achieved this growth through a combination of increased customer volumes for our new DTV chipsets, additional growth in our home control products, the continued strength of our home networking products, and increases in set-top box deployments. We are committed to sustaining this momentum by securing increased customer deployments to continue to drive the top line while maintaining our focus on profitability."

Recent Highlights

  • We have successfully ramped volume shipments of our UXL DTV SoC as well as our latest smart TV products, the SX6 SoC and FRCX frame-rate conversion processor, which allow our customers to launch new 4K TVs with improved video quality along with BOM cost reductions.
  • We have begun volume shipments of our SMP8756, a new member of our software-compatible series of set-top box chipsets that feature an ARM CPU, HEVC decoding, and 3D graphics, all supported by robust software stacks under Linux and Android operating systems.
  • We have announced that Orange France launched their new Homelive smart home solution, based on Z-Wave technology, and made it available in Orange stores and online. 
  • We have announced that leading European powerline communications provider Devolo AG has launched its new modular, plug-and-play line of home control products based on Z-Wave technology.

Investor Conference Call

The conference call relating to Sigma's third quarter fiscal year 2015 financial results will take place following this announcement at 5:00 PM ET today, December 10, 2014. Investors will have the opportunity to listen live to the conference call via the Internet through www.sigmadesigns.com/IR 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 prior to the commencement of the call to register, 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. 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, facility exit legal expenses, settlement expenses, net impairment of privately-held investments, restructuring charges, impairment of purchased IP, mask sets, design tools used in production and other assets and the gain on the sale of an R&D development project to a third party that Sigma recognized in accordance with GAAP. The tax amounts included in Sigma's non-GAAP results approximate its operating cash tax expense, similar to the liability reported on Sigma's tax returns. In the GAAP to non-GAAP reconciliation at the end of this press release, we have disclosed the impact of these income tax adjustments in our calculation of our non-GAAP financial results. Sigma believes that its non-GAAP measures provide 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 investors 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 may 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 may not reflect the full economic impact of Sigma's activities. Sigma's non-GAAP net income (loss) 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 our commitment to sustaining momentum by securing increased customer deployments to continue to drive our top line while maintaining our focus on profitability. 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 third fiscal quarter of fiscal 2015 are different than the results set forth in this press release, our ability to recognize revenue from design wins, 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 markets in general, the ramp in demand from our set-top box, television and telecommunication customers, our ability to deploy and achieve market acceptance for our 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 our SEC reports, including our report on Form 10-Q as filed with the SEC on September 10, 2014. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake 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 intelligent 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.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(GAAP)
(In thousands)
    November 1,   February 1,
    2014   2014
Assets            
             
Current Assets:            
  Cash and cash equivalents   $ 81,296   $ 64,326
  Short-term marketable securities     8,752     7,791
  Restricted cash     1,500     1,775
  Accounts receivable, net     25,966     27,647
  Inventory     20,109     20,403
  Deferred tax assets     7,206     4,144
  Prepaid expenses and other current assets     6,064     8,069
    Total current assets     150,893     134,155
             
Long-term marketable securities     4,265     15,505
Software, equipment and leasehold improvements, net     22,318     27,089
Intangible assets, net     24,743     29,780
Deferred tax assets, net of current portion     313     439
Long-term investments and notes receivable, net of current portion     3,267     3,873
Other non-current assets     4,740     4,934
             
    Total assets   $ 210,539   $ 215,775
             
Liabilities and Shareholders' Equity            
             
Current Liabilities:            
  Accounts payable   $ 21,691   $ 16,184
  Accrued compensation and related benefits     7,424     6,288
  Accrued liabilities     22,751     19,813
    Total current liabilities     51,866     42,285
               
  Other long-term liabilities     13,314     15,099
    Total liabilities     65,180     57,384
             
Shareholders' equity     145,359     158,391
             
      Total liabilities and shareholders' equity   $ 210,539   $ 215,775
             
             
   
SIGMA DESIGNS, INC  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
    (GAAP)              
    (In thousands, except per share data)              
                               
    Three months ended     Nine months ended  
    November 1, 2014     August 2, 2014     November 2, 2013     November 1, 2014     November 2, 2013  
                                 
Net revenue   $ 53,784     $ 42,810     $ 54,394     $ 133,467     $ 160,696  
Cost of revenue     27,272       20,921       23,311       64,841       74,601  
Gross profit     26,512       21,889       31,083       68,626       86,095  
Gross margin percent     49.3 %     51.1 %     57.1 %     51.4 %     53.6 %
                                         
Operating expenses:                                        
  Research and development     16,603       16,452       17,555       50,158       56,528  
  Sales and marketing     5,559       5,475       5,608       16,484       16,817  
  General and administrative     4,808       4,555       5,212       14,394       14,911  
  Restructuring charges     (18 )     46       1,104       1,002       1,994  
  Write down of goodwill, intangible assets                                        
  and acquired-in-process R&D     -       -       -       -       -  
  Impairment of IP, mask sets and design tools     856       1,156       150       2,122       338  
    Total operating expenses     27,808       27,684       29,629       84,160       90,588  
                                         
Loss from operations     (1,296 )     (5,795 )     1,454       (15,534 )     (4,493 )
Gain on sale of development project     -       -       -       -       1,079  
Interest and other income, net     188       372       (254 )     508       558  
                                         
Loss before income taxes     (1,108 )     (5,423 )     1,200       (15,026 )     (2,856 )
Provision for income taxes     (551 )     2,197       4,178       3,065       9,446  
                                         
Net loss   $ (557 )   $ (7,620 )   $ (2,978 )   $ (18,091 )   $ (12,302 )
                                         
Net loss per share:                                        
  Basic   $ (0.02 )   $ (0.22 )   $ (0.09 )   $ (0.52 )   $ (0.36 )
  Diluted   $ (0.02 )   $ (0.22 )   $ (0.09 )   $ (0.52 )   $ (0.36 )
Shares used in computing net loss per share:                                        
  Basic     34,790       34,622       34,518       34,578       34,129  
  Diluted     34,790       34,622       34,518       34,578       34,129  
                                           
                                           
   
SIGMA DESIGNS, INC.  
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME (LOSS)  
(Unaudited)  
(In thousands, except per share data)  
                               
    Three months ended     Nine months ended  
    November 1,     August 2,     November 2,     November 1,     November 2,  
2014     2014     2013     2014     2013  
GAAP net loss   $ (557 )   $ (7,620 )   $ (2,978 )   $ (18,091 )   $ (12,302 )
                                         
Items reconciling GAAP net loss to non-GAAP net income (loss):                                        
                                         
  Stock-based compensation expenses     1,703       1,386       1,668       4,577       5,387  
                                           
  Amortization of acquired intangibles     1,407       1,408       1,782       4,256       5,380  
                                           
  Restructuring and impairment charges     838       1,202       1,665       3,175       2,776  
                                           
  Mark-up on inventory acquired in business combinations sold during the period                                        
  sold during the period     -       -               -       436  
                                           
  Realized gain on sale of development project     -       -       -       -       (1,079 )
                                           
  Facility exit legal expenses     133       33       8       356       296  
                                           
  Settlement expenses     -       -       100       107       100  
                                           
  Impairment on sale of privately held investments     (3 )     601       163       598       163  
                                           
  Income tax adjustments     (2,055 )     952       901       (521 )     4,466  
                                         
Total GAAP to Non-GAAP adjustments     2,023       5,582       6,287       12,548       17,925  
                                         
Non-GAAP net income (loss)   $ 1,466     $ (2,038 )   $ 3,309     $ (5,543 )   $ 5,623  
                                         
Diluted net income (loss) per share   $ 0.04     $ (0.06 )   $ 0.10     $ (0.16 )   $ 0.16  
                                         
Shares used in calculating diluted net income (loss) per share:     34,878       34,622       34,564       34,578       34,176  
                                         
                                         

Contact Information

  • Investor Relations Contact:
    Elias Nader
    Chief Financial Officer & Corporate Secretary
    Sigma Designs, Inc.
    1778 McCarthy Blvd.
    Milpitas, CA 95035
    Tel: (408) 957-9847
    IR@sigmadesigns.com