Sigma also announced that its Board of Directors has authorized a share repurchase program of up to $20.0 million through December 31, 2014. Share repurchases may be made by the Company from time to time in privately negotiated transactions or in open market transactions.
Net revenues for the third quarter of fiscal 2014 were $54.4 million, up $0.6 million, or 1.2%, from $53.8 million reported in the previous quarter and down $9.5 million, or 14.9%, from $63.9 million reported for the same period last year.
GAAP net loss for the third quarter of fiscal 2014 was $3.0 million, or $0.09 per share. This compares to GAAP net loss of $4.8 million, or $0.14 per share, for the previous quarter and GAAP net loss of $39.5 million, or $1.18 per share, for the same period last year.
Non-GAAP net income for the third quarter of fiscal 2014 was $3.3 million, or $0.10 per diluted share. This compares to non-GAAP net income of $2.0 million, or $0.06 per diluted share, for the previous quarter and a non-GAAP net loss of $9.5 million, or $0.28 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 very pleased about our profitability on a non-GAAP basis for the third consecutive quarter. Our financial results were all positive, with an increase in revenues and gross margin, a decrease in operating expenses and positive pro-forma net income. We remain focused on our objective to maintain profitability," said Thinh Tran, President and CEO of Sigma Designs.
"Our Board's authorization of a share repurchase program reflects its confidence in the long-term strength of the company, as well as its commitment to returning value to shareholders," said Mr. Tran. "Our current cash balance combined with the early results of our ongoing restructuring efforts allows us to be confident in returning value to shareholders while continuing to invest in our business and our next generation of products."
The actual timing, number and value of shares repurchased under the program will be determined by Sigma's management and its Board of Directors at its discretion, and will depend on a number of factors, including the trading price of the stock, and general market and business conditions as well as applicable legal requirements. This program does not require Sigma to repurchase any shares under the authorization, and the program may be suspended, discontinued or modified at any time, for any reason and without notice.
Recent Highlights
- We launched our new ARM-based chipsets for the set-top box market at the IBC show in Amsterdam. These chipsets ushers in a new era of performance, combining a high performance ARM A9 CPU with an Imagination SGX GPU, along with our premium media processing technology.
- We announced a turn-key hybrid set-top box, based on a Sigma SoC and Ginga middleware, being developed by LATAM set-top box manufacturers for Argentina and other countries using ISDB-T.
- We announced that a major European supplier Novabase has selected our SMP8674 media processor SoC for their next generation of small footprint hybrid set-top boxes.
- We announced, along with the Z-Wave Alliance, the launch of a new certification program called Z-Wave Plus™, which is designed to help consumers easily identify products that offer the Next Gen Z-Wave platform features, such as over-the-air upgrading.
- We announced that Portugal Telecom successfully completed their field trial using G.hn to deliver HD services to multiple rooms in actual homes using Sigma's G.hn chipset.
- We announced an expansion of our conditional access portfolio with the addition of Verimatrix Advanced Security support for our set-top box SoC family.
Investor Conference Call
The conference call relating to Sigma's third quarter fiscal year 2014 financial results will take place following this announcement at 5:00 PM ET today, December 11, 2013. 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 (loss), which excludes amortization of acquired intangibles, stock-based compensation, the mark-up on purchased inventory sold during the period, acquisition-related expenses, 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, the gain on the sale of an R&D development project to a third party and the gain upon acquisition of the DTV business 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. While the Company has historically not presented its non-GAAP tax provision in this manner, it believes this approach will enhance the ability of investors to understand the Company's actual tax expense on its current operations and provide improved modeling accuracy for analysts and investors. The Company intends to report its non-GAAP tax provision in this manner in future periods. Prior periods included in this release have been updated to reflect this new methodology. 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 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 (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 statements about confidence in the long-term strength of the company and continuing to invest in our business and our next generation of products. 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 quarter of fiscal 2014 are different than the results set forth in this press release, 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 and energy management markets in general, the ramp in demand from Sigma's set-top box, television and telecommunication customers, Sigma's ability to deploy and achieve market acceptance for Sigma 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 Sigma's SEC reports, including Sigma's report on Form 10-Q as filed with the SEC on September 12, 2013. 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, Inc. (
SIGMA DESIGNS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(GAAP)
(In thousands)
November 2, February 2,
2013 2013
-------------- --------------
Assets
Current Assets:
Cash and cash equivalents $ 50,326 $ 51,218
Short-term marketable securities 11,412 17,455
Restricted cash 1,771 1,769
Accounts receivable, net 39,256 21,648
Inventory 19,176 24,929
Deferred tax assets 4,683 5,868
Prepaid expenses and other current assets 8,845 13,578
-------------- --------------
Total current assets 135,469 136,465
Long-term marketable securities 24,574 14,253
Software, equipment and leasehold
improvements, net 16,398 17,106
Intangible assets, net 31,696 36,573
Deferred tax assets, net of current portion 43 2,681
Long-term investments and notes receivable,
net of current portion 4,144 8,943
Other non-current assets 4,803 4,810
-------------- --------------
Total assets $ 217,127 $ 220,831
============== ==============
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 12,580 $ 11,046
Accrued compensation and related benefits 8,381 8,773
Accrued liabilities 19,749 20,018
-------------- --------------
Total current liabilities 40,710 39,837
Other long-term liabilities 20,210 18,976
-------------- --------------
Total liabilities 60,920 58,813
Shareholders' equity 156,207 162,018
-------------- --------------
Total liabilities and shareholders' equity $ 217,127 $ 220,831
============== ==============
SIGMA DESIGNS, INC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(GAAP)
(In thousands, except per share data)
Three months ended Nine months ended
---------------------------- ------------------
November August October November October
2, 2013 3, 2013 27, 2012 2, 2013 27, 2012
-------- -------- -------- -------- --------
Net revenue $ 54,394 $ 53,762 $ 63,905 $160,696 $172,414
Cost of revenue 23,311 25,696 38,423 74,601 95,257
-------- -------- -------- -------- --------
Gross profit 31,083 28,066 25,482 31,083 77,157
Gross margin percent 57.1% 52.2% 39.9% 19.3% 44.8%
Operating expenses:
Research and development 17,555 18,769 26,741 56,528 76,505
Sales and marketing 5,608 5,527 12,774 16,817 27,457
General and
administrative 5,212 4,937 6,007 14,911 21,874
Gain on acquisition - - - - (1,417)
Restructuring charges 1,104 680 821 1,994 821
Impairment of IP, mask
sets and design tools 150 - - 338 -
-------- -------- -------- -------- --------
Total operating
expenses 29,629 29,913 46,343 29,629 125,240
Income (loss) from
operations 1,454 (1,847) (20,861) 1,454 (48,083)
Gain on sale of
development project - - - 1,079 -
Interest and other income
(expense), net (254) 121 299 558 1,032
-------- -------- -------- -------- --------
Income (loss) before
income taxes 1,200 (1,726) (20,562) 3,091 (47,051)
Provision for income taxes 4,178 3,065 18,889 9,446 19,520
-------- -------- -------- -------- --------
Net loss $ (2,978) $ (4,791) $(39,451) $ (6,355) $(66,571)
======== ======== ======== ======== ========
Net loss per share:
Basic $ (0.09) $ (0.14) $ (1.18) $ (0.19) $ (2.02)
Diluted $ (0.09) $ (0.14) $ (1.18) $ (0.19) $ (2.02)
Shares used in computing
net loss per share:
Basic 34,518 34,259 33,383 34,129 33,032
Diluted 34,518 34,259 33,383 34,129 33,032
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 August October November October
3, 3, 27, 3, 27,
2013 2013 2012 2013 2012
-------- -------- -------- -------- --------
GAAP net loss $ (2,978) $ (4,791) $(39,451) $(12,302) $(66,571)
Items reconciling GAAP net
loss to non-GAAP net
income (loss):
Stock-based compensation
expenses 1,668 1,686 2,503 5,387 8,078
Amortization of acquired
intangibles 1,782 1,783 1,985 5,380 5,858
Impairment of purchased
IP, mask sets, designs
tools and other assets 561 - - 749 -
Restructuring charges,
net 1,104 680 821 2,027 821
Mark-up on inventory
acquired in business
combinations sold
during the period
during the period - 176 1,078 436 3,607
Realized gain on sale of
development project - - - (1,079) -
Gain on acquisition - - - - (1,417)
Facility exit legal
expenses 8 288 - 296 -
Settlement expenses 100 - 5,700 100 5,700
Impairment of
investments, net 163 - - 163 -
Acquisition expenses - - 352 - 4,276
Income tax adjustments 901 2,222 17,548 4,466 17,421
-------- -------- -------- -------- --------
Total GAAP to Non-GAAP
adjustments 6,287 6,835 29,987 17,925 44,344
-------- -------- -------- -------- --------
Non-GAAP net income (loss) $ 3,309 $ 2,044 $ (9,464) $ 5,623 $(22,227)
======== ======== ======== ======== ========
Diluted net income (loss)
per share $ 0.10 $ 0.06 $ (0.28) $ 0.16 $ (0.67)
======== ======== ======== ======== ========
Shares used in calculating
diluted net income (loss)
per share: 34,564 34,135 33,383 34,176 33,032
======== ======== ======== ======== ========
Diluted net income (loss)
per share:
Diluted GAAP net loss per
share $ (0.09) $ (0.14) $ (1.18) $ (0.36) $ (2.02)
Diluted GAAP to non-GAAP
adjustments $ 0.19 $ 0.20 $ 0.90 $ 0.52 $ 1.35
-------- -------- -------- -------- --------
Diluted Non-GAAP net
income (loss) per share $ 0.10 $ 0.06 $ (0.28) $ 0.16 $ (0.67)
======== ======== ======== ======== ========
Reconciliation of shares
used in calculating non-
GAAP net income (loss)
per share:
Shares used in calculating
basic net income (loss)
per share 34,518 34,259 33,383 34,129 33,032
Adjustment for dilutive
securities 46 (124) - 47 -
-------- -------- -------- -------- --------
Non-GAAP shares used in
calculating diluted net
income (loss) per share 34,564 34,135 33,383 34,176 33,032
======== ======== ======== ======== ========
SIGMA DESIGNS, INC.
SECHEDULE OF SELECTED GAAP TO NON-GAAP ADJUSTMENTS
(Unaudited)
(In thousands, except per share data)
The following schedule reconciles selected line items from the GAAP basic
statements of operations to non-GAAP statements of operations:
Three months ended Nine months ended
---------------------------- ------------------
November August October November October
3, 3, 27, 3, 27,
2013 2013 2012 2013 2012
-------- -------- -------- -------- --------
GROSS PROFIT:
GAAP gross profit $ 31,083 $ 28,066 $ 25,482 $ 86,095 $ 77,157
Stock-based compensation
expenses 64 67 131 214 380
Amortization of acquired
intangibles 1,403 1,403 1,591 4,241 4,676
Acquisition expenses - - 101 - 101
Restructuring charges,
net - - - 33 -
Mark-up on inventory
acquired in business
combinations sold
during the period
during the period - 176 1,078 436 3,607
-------- -------- -------- -------- --------
Non-GAAP gross profit $ 32,550 $ 29,712 $ 28,383 $ 91,019 $ 85,921
======== ======== ======== ======== ========
OPERATING EXPENSES:
GAAP operating expenses $ 29,629 $ 29,913 $ 46,343 $ 90,588 $125,240
Stock-based compensation
expenses (1,604) (1,619) (2,372) (5,173) (7,698)
Amortization of acquired
intangibles (379) (380) (394) (1,139) (1,182)
Impairment of purchased
IP, mask sets, designs
tools and other assets (561) - - (749) -
Restructuring charges,
net (1,104) (680) (821) (1,994) (821)
Gain on acquisition - - - - 1,417
Facility exit legal
expenses (8) (288) - (296) -
Settlement expenses (100) - (5,700) (100) (5,700)
Acquisition expenses - - (251) - (4,175)
-------- -------- -------- -------- --------
Non-GAAP operating
expenses $ 25,873 $ 26,946 $ 36,805 $ 81,137 $107,081
======== ======== ======== ======== ========
INCOME TAX EXPENSE:
GAAP income tax expenses $ 4,178 $ 3,065 $ 18,889 $ 9,446 $ 19,520
Income tax adjustments (901) (2,222) (17,548) (4,466) (17,421)
-------- -------- -------- -------- --------
Non-GAAP income tax
expenses $ 3,277 $ 843 $ 1,341 $ 4,980 $ 2,099
======== ======== ======== ======== ========
RESEARCH AND DEVELOPMENT:
GAAP research and
development $ 17,555 $ 18,769 $ 26,741 $ 56,528 $ 76,505
Stock-based compensation
expenses (778) (853) (1,375) (2,721) (4,346)
Amortization of acquired
intangibles (33) (33) (34) (99) (100)
Acquisition expenses - - - - (1,417)
-------- -------- -------- -------- --------
Non-GAAP research and
development $ 16,744 $ 17,883 $ 25,332 $ 53,708 $ 70,642
======== ======== ======== ======== ========
SALES AND MARKETING:
GAAP sales and marketing $ 5,608 $ 5,527 $ 12,774 $ 16,817 $ 27,457
Stock-based compensation
expenses (365) (315) (458) (1,029) (1,412)
Amortization of acquired
intangibles (346) (347) (360) (1,040) (1,082)
Settlement expenses (100) - (5,700) (100) (5,700)
Acquisition expenses - - - - (257)
-------- -------- -------- -------- --------
Non-GAAP sales and
marketing $ 4,797 $ 4,865 $ 6,256 $ 14,648 $ 19,006
======== ======== ======== ======== ========
GENERAL AND
ADMINISTRATIVE:
GAAP general and
administrative $ 5,212 $ 4,937 $ 6,007 $ 14,911 $ 21,874
Stock-based compensation
expenses (461) (451) (539) (1,423) (1,940)
Impairment of purchased
IP, mask sets, designs
tools and other assets (411) - - (411) -
Acquisition expenses - - (251) - (2,501)
Facility exit legal
expenses (8) (288) - (296) -
-------- -------- -------- -------- --------
Non-GAAP general and
administrative $ 4,332 $ 4,198 $ 5,217 $ 12,781 $ 17,433
======== ======== ======== ======== ========
Investor Relations Contact: Elias Nader Interim CFO Sigma Designs, Inc. Tel: (408) 957-9847 IR@sigmadesigns.com