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, August 2, November 2, November 1, November 2,
2014 2014 2013 2014 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
Investor Relations Contact: Elias Nader Chief Financial Officer & Corporate Secretary Sigma Designs, Inc. 1778 McCarthy Blvd. Milpitas, CA 95035 Tel: (408) 957-9847 Email Contact