Sigma Designs reported financial results and business highlights for its first fiscal quarter ended April 30, 2011.
Sigma Designs trades on the NASDAQ under the symbol SIGM.
For more information visit: www.sigmadesigns.com
Edited press release follows:
Sigma Designs, Inc. Reports First Quarter Fiscal 2012 Results
MILPITAS, CA–(May 25, 2011) – Sigma Designs®, Inc. (NASDAQ: SIGM), the world’s leader in connected media platforms, today reported financial results and business highlights for its first fiscal quarter ended April 30, 2011.
Net revenue for the first quarter of fiscal 2012 was $60.6 million, down $10.0 million, or 14%, from $70.6 million reported in the previous quarter and down $4.6 million, or 7%, from $65.2 million reported for the same period last year.
GAAP net loss for the first quarter of fiscal 2012 was $5.7 million, or ($0.18) per share. This compares to GAAP net income of $2.5 million, or $0.08 per diluted share, for the previous quarter and GAAP net income of $1.1 million, or $0.04 per diluted share, in the same period last year.
Non-GAAP net income for the first quarter of fiscal 2012 was $2.3 million, or $0.07 per diluted share. This compares to non-GAAP net income of $10.1 million, or $0.32 per diluted share, for the previous quarter and non-GAAP net income of $9.2 million, or $0.29 per diluted share, during the same period one year ago. Non-GAAP adjustments for the first quarter consisted primarily of $4.7 million in amortization expense for acquired intangibles related to acquisitions and $3.2 million in non-cash stock-based compensation expenses. 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.
At the end of our first fiscal quarter of 2012, cash, cash equivalents, restricted cash and marketable securities totaled $169 million, or $5.31 per share outstanding, a decrease of $10 million, or $0.35 per share outstanding compared to the beginning of the fiscal year. This decrease was primarily due to the timing of shipments as well as increased payments for design tools and software during the quarter.
Management Comment
“While we were within the guidance provided during last quarter’s earnings call, we are disappointed with this quarter’s results,” said Thinh Tran, CEO of Sigma Designs. “Still, we are confident in our connected media platform strategy and remain confident of the mid- and long-term opportunities before us. Our new generations of media processors, the SMP8650 series and SMP8670 series are being well received by the marketplace and we are encouraged by the design-ins with both service providers and OEMs.”
Mr. Tran continued, “We continue to invest in executing our platform strategy and believe we are well positioned to capitalize on developments in the connected media market. Over the last year, we have doubled our sales force — resulting in much closer and productive relationships with top service providers globally. As a result of these efforts, we have much better visibility into design cycle windows and key market requirements. This has helped us develop our product roadmap and win important new designs which we expect to positively impact our revenues later this fiscal year. Moreover, we have improved our ability to bring new products to market quickly. While investments in new products have contributed to a cash decrease in the first quarter, these investments are a testament to the aggressiveness of our product development efforts. Finally, we continue to enter adjacent businesses such as video encoders, which complement our strong experience in video decoding and home connectivity. These new products will allow us to leverage our customer base of leading set-top box and consumer electronics OEMs by expanding our footprint with these valued customers as video calling becomes more common.”
Recent Highlights
— We entered into a joint venture with Vietnam Multimedia Corporation.
The joint venture, VSilicon, was formed to develop and market
high-performance set-top boxes for digital televisions, smart energy
products and home connectivity solutions to help accelerate growth in
the Vietnamese market.
— We announced that Mitsumi is now licensed as a second source for our
popular Z-Wave wireless RF technology. As a second source, Mitsumi
will independently produce and deliver the popular Z-Wave modules
with a goal of making it easier for large multinational companies and
government businesses that require a second source to adopt the
technology. In time, this is expected to lead to continued market
share growth and could result in adoption by additional standards
organizations.
— We introduced our recently acquired PL330, a new, low-power HD video
encoder processor aimed at capturing high-definition video for video
calling on set-top boxes, connected media players, VoIP devices,
video phones, video conferencing, TVs and video surveillance devices.
Quanta Computers has integrated this technology into four video
conferencing and encoding camera products.
— We announced that our SMP8652 secure media processor was awarded
TMCnet’s coveted Cable Spotlight Product of the Year Award. The award
recognizes companies and products for their most significant
accomplishments in the advancement of the cable technology industry.
Investor Conference Call
The conference call relating to Sigma’s first quarter fiscal 2012 results will take place following this announcement at 5:00 PM ET today, May 25, 2011. 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, which excludes amortization of acquired intangibles and developed technologies, stock-based compensation, acquisition expenses and the mark-up from cost to fair market value of sold inventory acquired from purchased companies. 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 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 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.
About Sigma Designs, Inc.
Sigma Designs, Inc. (NASDAQ: SIGM) is a world 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 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)
April 30, January 29,
2011 2011
---------- ----------
Assets
Current Assets:
Cash and cash equivalents $ 59,819 $ 72,732
Short-term marketable securities 54,990 47,482
Restricted cash 1,621 1,616
Accounts receivable, net 37,328 31,348
Inventories 38,433 37,714
Deferred tax assets 4,670 4,670
Prepaid expenses and other current assets 8,304 7,493
---------- ----------
Total current assets 205,165 203,055
Long-term marketable securities 52,499 57,308
Software, equipment and leasehold improvements, net 31,544 28,392
Goodwill 45,108 44,910
Intangible assets, net 106,940 107,628
Deferred tax assets, net of current portion 13,100 13,051
Long-term investments 4,300 4,300
Other non-current assets 580 595
---------- ----------
Total assets $ 459,236 $ 459,239
========== ==========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 14,328 $ 15,650
Accrued liabilities 25,234 24,209
---------- ----------
Total current liabilities 39,562 39,859
Other long-term liabilities 22,142 21,339
---------- ----------
Total liabilities 61,704 61,198
Shareholders' equity 397,532 398,041
---------- ----------
Total liabilities and shareholders' equity $ 459,236 $ 459,239
========== ==========
SIGMA DESIGNS, INC.
PRELIMINARY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(GAAP)
(In thousands, except per share data)
Three months ended
-------------------------------
April 30, January 29, May 1,
2011 2011 2010
--------- --------- ---------
Net revenue $ 60,632 $ 70,605 $ 65,179
Cost of revenue 30,840 35,708 33,028
--------- --------- ---------
Gross profit 29,792 34,897 32,151
Gross margin percent 49.1% 49.4% 49.3%
Operating expenses:
Research and development 21,596 20,205 18,758
Sales and marketing 8,501 8,689 7,322
General and administrative 5,435 4,712 4,935
--------- --------- ---------
Total operating expenses 35,532 33,606 31,015
Income (loss) from operations (5,740) 1,291 1,136
Interest and other income, net 819 580 724
--------- --------- ---------
Income (loss) before income taxes (4,921) 1,871 1,860
Provision for (benefit from) income taxes 749 (601) 746
--------- --------- ---------
Net income (loss) $ (5,670) $ 2,472 $ 1,114
========= ========= =========
Net income (loss) per share:
Basic $ (0.18) $ 0.08 $ 0.04
Diluted $ (0.18) $ 0.08 $ 0.04
Shares used in computing net income (loss)
per share:
Basic 31,731 31,479 30,995
Diluted 31,731 32,099 31,586
SIGMA DESIGNS, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME
(Unaudited)
(In thousands, except per share data)
Three months ended
-------------------------------
April 30, January 29, May 1,
2011 2011 2010
--------- --------- ---------
GAAP net income (loss) $ (5,670) $ 2,472 $ 1,114
Items reconciling GAAP net income (loss)
to non-GAAP net income:
Included in cost of revenue:
Amortization of acquired developed
technologies (2,663) (2,587) (2,590)
Mark-up on purchased inventory sold
during the period --- --- (390)
Stock-based compensation (100) (129) (131)
--------- --------- ---------
Total related to cost of revenue (2,763) (2,716) (3,111)
Included in operating expenses:
Research and development:
Amortization of acquired intangibles (35) (11) ---
Stock-based compensation (1,532) (1,557) (1,700)
Sales and marketing:
Amortization of acquired intangibles (2,020) (1,995) (1,995)
Stock-based compensation (594) (569) (452)
General and administrative:
Acquisition expenses (89) --- ---
Stock-based compensation (965) (796) (841)
--------- --------- ---------
Total related to operating expenses (5,235) (4,928) (4,988)
--------- --------- ---------
Net effect of non-GAAP adjustments (7,998) (7,644) (8,099)
Non-GAAP net income $ 2,328 $ 10,116 $ 9,213
========= ========= =========
Non-GAAP net income per diluted share $ 0.07 $ 0.32 $ 0.29
========= ========= =========