SOURCE: Sigma Designs, Inc.
March 02, 2011 16:01 ET
Sigma Designs, Inc. Reports Fourth Quarter and Fiscal 2011 Results
MILPITAS, CA--(Marketwire - March 2, 2011) - Sigma Designs®, Inc. (NASDAQ: SIGM)
("Sigma"), a leading provider of highly integrated system-on-chip, or SoC,
solutions used to deliver multimedia entertainment throughout the home,
today reported financial results and business highlights for its fourth
quarter and fiscal year ended January 29, 2011.
Net revenue for the fourth quarter of fiscal 2011 was $70.6 million, down
$7.2 million, or 9%, from $77.8 million reported in the previous quarter
and up $2.5 million, or 4%, from $68.1 million reported for the same period
last year. Net revenue for fiscal 2011 was $286.9 million, up $80.8
million or 39%, from $206.1 million reported for the previous year.
GAAP net income for the fourth quarter of fiscal 2011 was $2.5 million, or
$0.08 per diluted share. This compares to GAAP net income of $5.1 million,
or $0.16 per diluted share, for the previous quarter and a net loss of $2.8
million, or ($0.09) per diluted share, in the same period last year. GAAP
net income for fiscal 2011 was $9.1 million, or $0.29 per diluted share,
compared to $2.5 million, or $0.09 per diluted share, for the previous
year.
At the end of fiscal 2011, cash, cash equivalents and marketable securities
totaled $179 million, or $5.66 per share outstanding, an increase of $31
million, or $0.87 per share outstanding compared to the beginning of the
fiscal year. This increase was primarily generated by income from Sigma's
operating activities.
Non-GAAP net income for the fourth quarter of fiscal 2011 was $10.1
million, or $0.32 per diluted share. This compares to non-GAAP net income
of $13.0 million, or $0.41 per diluted share, for the previous quarter and
non-GAAP net income of $11.3 million, or $0.37 per diluted share during the
same period one year ago. Non-GAAP adjustments for the fourth quarter
consisted of $4.6 million in amortization expense for acquired intangibles
related to acquisitions and $3.1 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.
Non-GAAP net income for fiscal 2011 was $40.6 million, or $1.28 per diluted
share, compared to $30.6 million, or $1.08 per diluted share, for the
previous year.
Management Comment
"We reported over $70 million in revenue for the fourth quarter, matching
the guidance provided at last quarter's earnings call. This 9% fourth
quarter decrease in revenue was the result of moderate declines in three of
our market segments, namely IPTV, Connected Home Technologies and VXP video
processors. In the larger context, we believe that this revenue decline is
more than offset by the strategic gains that were made this quarter. Our
key strategic gains include the launch of a new premium line of
differentiated media processors starting with the SMP8910, the extension of
our value line of media processors with the SMP8670 and the successful
demonstration of our new CG5110 which positions us as the technology leader
for G.hn all-wire connectivity solutions. Moving forward, we are
continuing to pursue major design wins in our current market segments with
special initiatives for penetrating the hybrid IP Cable set-top box market,
developing powerline accounts and the increased adoption of Z-Wave based
home control solutions," stated Thinh Tran, chairman and chief executive
officer, Sigma Designs.
Fourth Quarter Highlights
-- We announced the SMP8910, the first chip to integrate VXP studio
quality video processing and highly flexible 3D video processing into a
high-performance media processor forming the genesis of our premium
line of set-top box media processors.
-- We demonstrated Sigma's new SMP8670, which gives OEMs and ODMs a
compelling solution for connected media players with 40% more
performance 30% less power consumption, and lower overall BOM costs
compared to its predecessor.
-- We announced support for five exciting new TV development environments:
Adobe® AIR® for TV, the Espial Browser with support for Adobe
Flash® Player, a Hardware Accelerated Open GL ES 3D UI Framework,
Skype TV HD video conferencing, and XBMC (XBMC Media Center) for
delivering easy access to Internet-based video content and games.
-- We announced that our SMP8652 Secure Media Processor™ is being used
inside Verismo's Broadband TV set top box and overall we continue to
see high interest in our low cost thin client solutions.
-- We were the first to announce and demonstrate a working G.hn solution,
the CG5110 G.hn chipset. This solution delivers substantially higher
performance than every wired home entertainment networking solution on
the market today.
-- We announced that our HomePlug AV® with ClearPath™ technology has
won the TV Innovation Award in the category of "Home Networking," in
addition to two other recent awards.
Investor Conference Call
The conference call relating to Sigma's fourth quarter fiscal 2011 results
will take place following this announcement at 5:00 PM ET today, March 2,
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 and the mark-up from cost to fair
market value of sold inventory acquired from purchased companies and, with
respect to the third and fourth quarters of fiscal 2010,
acquisition-related expenses and, with respect to the first quarter of
fiscal 2010, the expense resulting from the write-off of the deferred tax
asset due to the change in California tax laws. 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.
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 regarding potential
opportunities emerging for Sigma's strategic initiatives, anticipated
features and benefits of Sigma's new products, and the potential impact of
special initiatives for penetrating the hybrid IP Cable set-top box
industry, developing powerline accounts and the increased adoption of
Z-Wave based home control solutions. 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, that the financial results
for the fourth quarter and fiscal 2011 are different than the results set
forth in this press release, general economic conditions, including
continuance of the current economic conditions specific to the
semiconductor industry, the rate of growth of the IPTV, connected home
technologies, connected media player and prosumer and industrial
audio/video markets in general, the ramp in demand from Sigma's set-top box
and telecommunication customers, Sigma's ability to deploy and achieve
market acceptance for Sigma products in these markets, the ability of
Sigma's SoCs to compete with other technologies or products in these
emerging markets, the risk that such products will not gain widespread
acceptance, or will be rendered obsolete, by product offerings of
competitors or by alternative technologies, the risk that anticipated
design wins will not materialize and that actual design wins will not
translate into launched product offerings, and other risks including delays
in the manufacturer's deployment of set-top boxes or consumer products.
Other risk factors are detailed from time to time in Sigma's SEC reports,
including Sigma's quarterly report on Form 10-Q as filed December 7, 2010.
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 is a leading fabless semiconductor provider of highly
integrated system-on-chip (SoC) solutions that are used to deliver
entertainment and control throughout the home. SoC solutions include media
processing, wired and wireless networking, video image processing and home
control along with system software to form the critical components of
consumer electronic products that include internet protocol TV (IPTV)
set-top boxes and gateways, Blu-ray players and media communication
devices. Headquartered in Milpitas, California, Sigma Designs has offices
in the United States, Europe, Hong Kong, Israel, Japan, Singapore and
Taiwan and sales representatives in Brazil, China, India, Korea and Russia.
For more information, please visit Sigma Designs' web site at
www.sigmadesigns.com.
SIGMA DESIGNS, INC.
PRELIMINARY UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(GAAP)
(In thousands)
January 29, January 30,
2011 2010
------------- -------------
Assets
Current Assets:
Cash and cash equivalents $ 72,732 $ 81,947
Short-term marketable securities 47,482 51,176
Restricted cash 1,616 1,500
Accounts receivable, net 31,348 36,127
Inventories 37,714 18,187
Deferred tax assets 4,670 2,235
Prepaid expenses and other current assets 7,493 8,925
------------- -------------
Total current assets 203,055 200,097
Long-term marketable securities 57,308 13,257
Software, equipment and leasehold improvements,
net 28,392 23,810
Goodwill 44,910 44,910
Intangible assets, net 107,628 125,568
Deferred tax assets, net of current portion 13,051 11,575
Long-term investments 4,300 4,000
Other non-current assets 595 680
------------- -------------
Total assets $ 459,239 $ 423,897
============= =============
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 15,650 $ 10,943
Accrued liabilities 24,209 23,164
------------- -------------
Total current liabilities 39,859 34,107
Other long-term liabilities 21,339 20,968
------------- -------------
Total liabilities 61,198 55,075
Shareholders' equity 398,041 368,822
------------- -------------
Total liabilities and shareholders'
equity $ 459,239 $ 423,897
============= =============
SIGMA DESIGNS, INC.
PRELIMINARY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(GAAP)
(In thousands, except per share data)
Three months ended Fiscal year ended
------------------------------- --------------------
January October January January January
29, 2011 30, 2010 30, 2010 29, 2011 30, 2010
--------- --------- --------- --------- ---------
Net revenue $ 70,605 $ 77,805 $ 68,093 $ 286,915 $ 206,083
Cost of revenue 35,708 39,192 40,096 146,271 114,381
--------- --------- --------- --------- ---------
Gross profit 34,897 38,613 27,997 140,644 91,702
Gross margin percent 49.4% 49.6% 41.1% 49.0% 44.5%
Operating expenses:
Research and
development 20,205 20,484 17,682 77,270 52,644
Sales and
marketing 8,689 8,357 7,436 31,712 17,617
General and
administrative 4,712 4,781 6,021 18,745 18,240
--------- --------- --------- --------- ---------
Total operating
expenses 33,606 33,622 31,139 127,727 88,501
Income (loss) from
operations 1,291 4,991 (3,142) 12,917 3,201
Interest and other
income (expense),
net 580 425 296 (3,020) 1,906
--------- --------- --------- --------- ---------
Income (loss) before
income taxes 1,871 5,416 (2,846) 9,897 5,107
Provision for
(benefit from)
income taxes (601) 351 (57) 750 2,652
--------- --------- --------- --------- ---------
Net income (loss) $ 2,472 $ 5,065 $ (2,789) $ 9,147 $ 2,455
========= ========= ========= ========= =========
Net income (loss)
per share:
Basic $ 0.08 $ 0.16 $ (0.09) $ 0.29 $ 0.09
Diluted $ 0.08 $ 0.16 $ (0.09) $ 0.29 $ 0.09
Shares used in
computing net
income (loss)
per share:
Basic 31,479 31,327 30,344 31,245 27,597
Diluted 32,099 31,646 30,344 31,732 28,235
SIGMA DESIGNS, INC.
RECONCILIATION OF PRELIMINARY GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME
(Unaudited)
(In thousands, except per share data)
Three months ended Fiscal year ended
------------------------------- -------------------
January October January January January
29, 2011 30, 2010 30, 2010 29, 2011 30, 2010
--------- --------- --------- --------- --------
GAAP net income
(loss) $ 2,472 $ 5,065 $ (2,789) $ 9,147 $ 2,455
Items reconciling
GAAP net income
(loss) to non-GAAP
net income:
Included in cost of
revenue:
Amortization of
acquired developed
technologies (2,587) (2,586) (2,462) (10,350) (4,610)
Mark-up on
purchased inventory
sold during the
period --- (52) (4,620) (538) (5,385)
Stock-based
compensation (129) (159) (105) (560) (359)
--------- --------- --------- --------- --------
Total related
to cost of
revenue (2,716) (2,797) (7,187) (11,448) (10,354)
Included in operating
expenses:
Research and
development:
Amortization of
acquired
intangibles (11) --- --- (11) (19)
Stock-based
compensation (1,557) (1,806) (1,700) (6,745) (5,333)
Sales and marketing:
Stock-based
compensation (569) (541) (759) (2,094) (1,861)
Amortization of
acquired
Intangibles (1,995) (1,996) (1,845) (7,981) (2,103)
General and
administrative:
Stock-based
compensation (796) (824) (677) (3,178) (1,240)
Acquisition
expenses --- --- (1,896) --- (3,651)
--------- --------- --------- --------- --------
Total related
to operating
expenses (4,928) (5,167) (6,877) (20,009) (14,207)
--------- --------- --------- --------- --------
Write-off of
deferred tax
asset --- --- --- --- (3,540)
--------- --------- --------- --------- --------
Net effect of
non-GAAP
adjustments (7,644) (7,964) (14,064) (31,457) (28,101)
--------- --------- --------- --------- --------
Non-GAAP net income $ 10,116 $ 13,029 $ 11,275 $ 40,604 $ 30,576
========= ========= ========= ========= ========
Non-GAAP net income
per diluted share $ 0.32 $ 0.41 $ 0.37 $ 1.28 $ 1.08