MILPITAS, Calif., Aug. 26, 2009 (GLOBE NEWSWIRE) -- Sigma Designs(r), 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 second fiscal quarter ended August 1, 2009.
Net revenue for the second quarter was $51.3 million, relatively unchanged from $51.2 million reported in the previous quarter and down $6.9 million, or 12%, from $58.2 million reported for the same period last year.
GAAP net income for the second quarter was $4.8 million, or $0.18 per diluted share. This compares to GAAP net income of $2.7 million, or $0.10 per diluted share, for the previous quarter and $9.6 million, or $0.35 per diluted share, in the same period last year.
At the end of Sigma's second quarter, cash, cash equivalents and marketable securities totaled $228.8 million, or $8.55 per share outstanding, an increase of $36.6 million, or $1.31 per share for the first half of this fiscal year. This increase was primarily due to reductions in inventory and accounts receivable and $17.0 million, or $0.62 per share, generated by other operating activities.
Non-GAAP net income for the second quarter was $7.8 million, or $0.28 per diluted share. This compares to non-GAAP net income of $8.3 million, or $0.30 per diluted share for the previous quarter and non-GAAP net income of $12.7 million, or $0.47 per diluted share during the same period one year ago. Non-GAAP adjustments for the second quarter consisted of $796,000 in amortization expense for acquired intangibles related to the Zensys, VXP and Blue7 acquisitions and $2.2 million in non-cash share-based compensation expenses. The reconciliation between GAAP and non-GAAP net income for all referenced periods is provided in a table immediately following the GAAP financial tables below.
Management Comment
"We are pleased to report that our revenue for the second quarter was in line with our expectations as we began the quarter. We feel that our primary markets have shown continued stability in the face of a difficult economy and we are continuing to place heavy efforts on bolstering sales as well as expanding the breadth of our market opportunities. The IPTV market has remained relatively flat during this year and we remain confident that it will start to demonstrate growth by the end of the year. We are also pursuing design activity in the cable industry and helping to drive the transition to Tru2way IP cable solutions, deployments of which could substantially increase our addressable market. We are continuing to pursue consumer opportunities on multiple fronts, including Blu-ray players, digital media adapters and home entertainment connectivity devices. Finally, we have begun to pursue strategic relationships in the set-top box market with our Z-wave brand of wireless home control solutions," stated Thinh Tran, chairman and chief executive officer, Sigma Designs.
Second Quarter and More Recent Highlights
* Announced that the company has begun sampling its new SMP8642
media processor SoC, designed for mainstream Blu-ray players.
The SMP8642, coupled with Sigma's proven Blu-ray Profile 2.0
software suite, provides a high performance interactive
experience and a cost effective architecture for competing in
today's player market.
* Announced the availability of the company's new SMP8652 media
processor SoC. The SMP8652 is designed to provide the optimal
price/performance configuration for thin client applications,
which include IPTV set-top boxes (STBs), digital media adapters
(DMAs), and hybrid cable/IP thin clients.
* Announced several strategic partnerships with original design
manufacturers (ODM) Alpha Networks Inc., GigaFast and Gemtek. As
a result of these partnerships, each ODM will offer a reliable
coax to Ethernet bridge solution at a lower cost for consumer
electronics manufacturers that are looking to make home network
installation easy to achieve and affordable to their customers.
* Announced a partnership with 4Home, Inc., a leading provider of
home control services, to expand the range of additional services
in the home through Sigma's set-top box reference designs. As a
result of this partnership, Sigma will be able to offer set-top
box suppliers an integrated home control solution, based on
4Home's innovative software platform and the complete Z-Wave
ecosystem of RF-based home control devices.
* Announced a cooperative relationship with Entropic Communications,
Inc., a leading provider of home connectivity silicon and
software solutions, to develop high definition, MoCA compliant
Cable TV and IPTV set-top box reference designs powered by
Entropic's EN2510 and Sigma Designs' SMP8654.
* Was named by FORTUNE magazine as the second fastest growing
company in their 2009 "100 Fastest Growing Companies" list, an
annual ranking based on three-year records of revenue growth,
profit growth and total shareholder return.
* Was selected by Standard & Poor's to join the S&P SmallCap 600
index which will become effective as of today's market close.
Investor Conference Call
The conference call relating to Sigma's second quarter fiscal 2010 results will take place following this announcement at 5:00 PM ET today, August 26, 2009. 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 15 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, stock-based compensation calculated under APB No. 25 and SFAS No. 123R 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 and, with respect to the first half of fiscal 2009, in-process development costs acquired during the first quarter of fiscal 2009. 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 share-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, projected growth in the IPTV market, the transition to Tru2way IP cable solutions, potential opportunities in the set-top box market and the potential impact of new products and technology. Actual results may vary materially due to a number of factors including, but not limited to, the risk that, upon completion of further closing and audit procedures, that the financial results for the second quarter 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, high definition DVD and HDTV markets in general, the ramp in demand from our set-top box and telecommunication customers, our ability to deploy and achieve market acceptance for Sigma products in these markets, the ability of our 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 our SEC reports, including our quarterly report on Form 10-Q as filed June 11, 2009. 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 provider of highly integrated SoC solutions that are used to deliver multimedia entertainment throughout the home. Sigma's SoC solutions include media processors and wireless communication devices which combine semiconductors and software as critical components of high-growth consumer applications including IPTV-based set-top boxes, Blu-ray players, HDTVs, entertainment connectivity devices and RF-based home control devices. Headquartered in Milpitas, Calif., Sigma Designs also has design centers or sales offices in Canada, China, Denmark, France, Japan, Korea (third party), Singapore and Taiwan. For more information, please visit Sigma Designs' web site at www.sigmadesigns.com.
The Sigma Designs, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6524
SIGMA DESIGNS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(GAAP)
(In thousands)
August 1, Jan. 31,
2009 2009
--------- ---------
Assets
Current Assets:
Cash and cash equivalents $128,048 $ 90,845
Short-term marketable securities 64,169 28,862
Accounts receivable, net 25,161 30,719
Inventories 21,870 36,058
Deferred tax assets 1,417 1,417
Prepaid expenses and other current assets 8,565 5,909
--------- ---------
Total current assets 249,230 193,810
Long-term marketable securities 36,631 72,523
Software, equipment and leasehold
improvements, net 20,157 21,124
Goodwill 9,913 9,928
Intangible assets, net 15,957 17,520
Deferred tax assets, net of current portion 9,364 12,824
Long-term investments 3,525 3,000
Other non-current assets 271 218
--------- ---------
Total assets $345,048 $330,947
========= =========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 8,907 $ 5,655
Accrued liabilities and other 10,828 12,826
--------- ---------
Total current liabilities 19,735 18,481
Other long-term liabilities 6,476 7,216
--------- ---------
Total liabilities 26,211 25,697
Shareholders' Equity:
Total shareholders' equity 318,837 305,250
--------- ---------
Total liabilities and shareholders' equity $345,048 $330,947
========= =========
SIGMA DESIGNS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(GAAP)
(In thousands, except per share data)
Three months ended Six months ended
---------------------------- ------------------
Aug. 1, May 2, Aug. 2, Aug. 1, Aug. 2,
2009 2009 2008 2009 2008
-------- -------- -------- -------- --------
Net revenue $ 51,283 $ 51,243 $ 58,212 $102,526 $115,094
Cost of revenue 28,033 26,856 28,691 54,889 57,553
-------- -------- -------- -------- --------
Gross profit 23,250 24,387 29,521 47,637 57,541
Gross margin percent 45.3% 47.6% 50.7% 46.5% 50.0%
Operating expenses:
Research and
development 11,717 11,517 10,377 23,234 21,233
Sales and marketing 3,482 3,211 2,783 6,693 5,424
General and
administrative 3,622 3,131 3,634 6,753 10,102
Acquired in-process
R&D -- -- -- -- 1,571
-------- -------- -------- -------- --------
Total operating
expenses 18,821 17,859 16,794 36,680 38,330
Income from
operations 4,429 6,528 12,727 10,957 19,211
Interest and other
income, net 268 778 1,064 1,046 3,232
-------- -------- -------- -------- --------
Income before
income taxes 4,697 7,306 13,791 12,003 22,443
Provision for
(benefit from)
income taxes (103) 4,563 4,200 4,460 6,270
-------- -------- -------- -------- --------
Net income $ 4,800 $ 2,743 $ 9,591 $ 7,543 $ 16,173
======== ======== ======== ======== ========
Net income per share:
Basic $ 0.18 $ 0.10 $ 0.36 $ 0.28 $ 0.59
Diluted $ 0.18 $ 0.10 $ 0.35 $ 0.28 $ 0.57
Shares used in
computing net income
per share:
Basic 26,671 26,592 26,488 26,631 27,392
Diluted 27,396 27,196 27,347 27,295 28,415
SIGMA DESIGNS, INC.
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(Unaudited)
(In thousands, except per share data)
Three months ended Six months ended
---------------------------- ------------------
Aug. 1, May 2, Aug. 2, Aug. 1, Aug. 2,
2009 2009 2008 2009 2008
-------- -------- -------- -------- --------
GAAP net income $ 4,800 $ 2,743 $ 9,591 $ 7,543 $ 16,173
Items reconciling
GAAP net income to
non-GAAP net income:
Included in cost of
revenue:
Amortization of
acquired
developed
technology (712) (724) (570) (1,436) (1,111)
Share-based
compensation (80) (85) (92) (165) (175)
-------- -------- -------- -------- --------
Total related to
cost of revenue (792) (809) (662) (1,601) (1,286)
Included in
operating expenses:
Research and
development:
Amortization of
acquired
noncompete
agreements -- (19) (117) (19) (233)
Share-based
compensation (1,197) (1,258) (1,241) (2,455) (2,652)
Sales and
marketing:
Share-based
compensation (419) (299) (382) (718) (740)
Amortization of
acquired
intangibles (84) (89) (53) (173) (103)
General and
administrative:
Share-based
compensation (487) 484 (689) (3) (3,591)
Acquired
in-process
development costs -- -- -- -- (1,571)
-------- -------- -------- -------- --------
Total related to
operating
expenses (2,187) (1,181) (2,482) (3,368) (8,890)
-------- -------- -------- -------- --------
Write-off of tax
valuation allowance -- (3,540) -- (3,540) --
-------- -------- -------- -------- --------
Net effect of
non-GAAP
adjustments (2,979) (5,530) (3,144) (8,509) (10,176)
-------- -------- -------- -------- --------
Non-GAAP net income $ 7,779 $ 8,273 $ 12,735 $ 16,052 $ 26,349
======== ======== ======== ======== ========
Non-GAAP net income
per diluted share $ 0.28 $ 0.30 $ 0.47 $ 0.59 $ 0.93