Sigma Designs, Inc. Reports Fourth Quarter and Fiscal Year 2016 Financial Results

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 confidence that the underlying strength and design wins of our Smart TV products will drive our revenue growth in fiscal 2017, our confidence that we will see another year of revenue growth and profitability driven by our strong and differentiated products serving both established and new customers and the anticipated benefits and features of our recently announced products. The forward-looking statements contained in this press release involve risks and uncertainties. Actual results may vary materially from expectations discussed in such forward-looking statements 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 fourth quarter and fiscal year 2016 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 Smart TVs, Internet of Things Devices, Set-top-Box and Media Connectivity, the ramp in demand from our Set-Top-Box, television and telecommunication customers, our ability to deploy and achieve market acceptance for our products, unanticipated costs and risks related to the integration of Bretelon and further development of Bretelon technology 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 filings with the Securities and Exchange Commission. In particular, see Sigma's recent quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available at www.sec.gov. 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) designs and builds the essential semiconductor technologies that serve as the foundation for the world's leading Connected Smart TV platforms and the IoT Devices. For more information about Sigma Designs, please visit www.sigmadesigns.com.

Sigma Designs, Secure Media Processor, and the Sigma Designs logo are either registered trademarks or trademarks of Sigma Designs, Inc. and its subsidiaries in the United States and other countries. All other trademarks mentioned herein are believed to be trademarks of their respective owners.

                                                                            
                                                                            
                             SIGMA DESIGNS, INC.                            
               UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS              
                                   (GAAP)                                   
                               (In thousands)                               
                                                                            
                                                  January 30,   January 31, 
                                                      2016          2015    
                                                 ------------- -------------
Assets                                                                      
                                                                            
Current Assets:                                                             
  Cash and cash equivalents                      $      63,790 $      83,502
  Short-term marketable securities                       4,805         6,347
  Restricted cash                                          900           400
  Accounts receivable, net                              30,362        26,415
  Inventory                                                                                      26,709                20,445
    Deferred  tax  assets                                                                                0                  3,319
    Prepaid  expenses  and  other  current  assets                          14,085                  8,805
                                                                                                  -------------  -------------
        Total  current  assets                                                              140,651              149,233
                                                                                                                                                        
Long-term  marketable  securities                                                    3,527                  4,249
Software,  equipment  and  leasehold  improvements,                                                          
  net                                                                                                        14,086                21,594
Goodwill                                                                                                11,068                          -
Intangible  assets,  net                                                                    37,050                24,642
Deferred  tax  assets,  net  of  current  portion                                911                      687
Long-term  investments,  net  of  current  portion                        2,884                  3,267
Other  non-current  assets                                                                  6,492                  1,661
                                                                                                  -------------  -------------
                                                                                                                                                        
        Total  assets                                                                  $          216,669  $          205,333
                                                                                                  =============  =============
                                                                                                                                                        
Liabilities  and  Shareholders'  Equity                                                                                
                                                                                                                                                        
Current  Liabilities:                                                                                                                
    Accounts  payable                                                              $            26,181  $            21,207
    Accrued  compensation  and  related  benefits                            7,360                  6,806
    Accrued  liabilities                                                                      14,632                22,894
                                                                                                  -------------  -------------
        Total  current  liabilities                                                      48,173                50,907
                                                                                                                                                        
    Other  long-term  liabilities                                                      15,691                11,136
                                                                                                  -------------  -------------
        Total  liabilities                                                                      63,864                62,043
                                                                                                                                                        
Shareholders'  equity                                                                      152,805              143,290
                                                                                                  -------------  -------------
                                                                                                                                                        
        Total  liabilities  and  shareholders'  equity      $          216,669  $          205,333
                                                                                                  =============  =============
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                        SIGMA  DESIGNS,  INC.                                                          
                  UNAUDITED  CONDENSED  CONSOLIDATED  STATEMENTS  OF  OPERATIONS                    
                                                                      (GAAP)                                                                      
                                      (In  thousands,  except  per  share  data)                                        
                                                                                                                                                        
                                                          Three  months  ended                  Twelve  months  ended  
                                            -------------------------------    --------------------  
                                              January        October        January        January        January    
                                              30,  2016      31,  2015      31,  2015      30,  2016      31,  2015  
                                            ---------    ---------    ---------    ---------    ---------  
                                                                                                                                                        
Net  revenue                      $    51,450    $    61,581    $    54,846    $  227,250    $  188,313  
Cost  of  revenue                    26,949          30,794          28,126        114,090          92,967  
                                            ---------    ---------    ---------    ---------    ---------  
Gross  profit                          24,501          30,787          26,720        113,160          95,346  
Gross  margin  percent              47.6%            50.0%            48.7%            49.8%            50.6%
                                                                                                                                                        
Operating  expenses:                                                                                                                  
    Research  and                                                                                                                            
      development                      19,030          17,339          17,324          68,784          67,482  
    Sales  and  marketing          5,937            5,875            5,806          22,877          22,290  
    General  and                                                                                                                              
      administrative                  4,771            5,314            5,247          20,862          19,641  
    Restructuring  costs                  -                    -                  (3)                  9                999  
    Impairment  of  IP,                                                                                                                  
      mask  sets  and                                                                                                                        
      design  tools                              -                795                689            1,783            2,811  
                                            ---------    ---------    ---------    ---------    ---------  
        Total  operating                                                                                                                  
          expenses                        29,738          29,323          29,063        114,315        113,223  
                                                                                                                                                        
Income  (loss)  from                                                                                                                    
  operations                            (5,237)          1,464          (2,343)        (1,155)      (17,877)
Gain  on  sale  of                                                                                                                          
  development  project                    -            7,551                    -            7,551                    -  
Interest  and  other                                                                                                                    
  income,  net                                132                  37                661                953            1,169  
                                            ---------    ---------    ---------    ---------    ---------  
                                                                                                                                                        
Income  (loss)  before                                                                                                                
  income  taxes                        (5,105)          9,052          (1,682)          7,349        (16,708)
Provision  for  income                                                                                                                
  taxes                                        1,086            2,617            1,928            7,191            4,993  
                                            ---------    ---------    ---------    ---------    ---------  
                                                                                                                                                        
Net  income  (loss)          $    (6,191)  $      6,435    $    (3,610)  $          158    $  (21,701)
                                            =========    =========    =========    =========    =========  
                                                                                                                                                        
Net  income  (loss)  per                                                                                                              
  share:                                                                                                                                          
    Basic                              $      (0.17)  $        0.18    $      (0.10)  $        0.00    $      (0.63)
    Diluted                          $      (0.17)  $        0.17    $      (0.10)  $        0.00    $      (0.63)
Shares  used  in                                                                                                                            
  computing  net  income                                                                                                              
  (loss)  per  share:                                                                                                                    
    Basic                                    36,568          36,046          35,036          35,890          34,693  
    Diluted                                36,568          36,785          35,036          36,669          34,693  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                        SIGMA  DESIGNS,  INC.                                                          
      RECONCILIATION  OF  GAAP  NET  INCOME  (LOSS)  TO  NON-GAAP  NET  INCOME  (LOSS)      
                                                                (Unaudited)                                                                  
                                      (In  thousands,  except  per  share  data)                                        
                                                                                                                                                        
                                                          Three  months  ended                  Twelve  months  ended  
                                            -------------------------------    --------------------  
                                              January        October        January        January        January    
                                              30,  2016      31,  2015      31,  2015      30,  2016      31,  2015  
                                            ---------    ---------    ---------    ---------    ---------  
                                                                                                                                                        
GAAP  Net  Revenue            $    51,450    $    61,581    $    54,846    $  227,250    $  188,313  
Items  reconciling                                                                                                                      
  GAAP  Revenue  to  Non-                                                                                                              
  GAAP:                                                                                                                                            
    Reversal  of  rebate                    -                    -                    -          (1,027)                  -  
                                            ---------    ---------    ---------    ---------    ---------  
    GAAP  to  Non-GAAP                                                                                                                    
      adjustments                                -                    -                    -          (1,027)                  -  
    Non-GAAP  Net                                                                                                                            
      Revenue                        $    51,450    $    61,581    $    54,846    $  226,223    $  188,313  
                                                                                                                                                        
GAAP  Cost  of  Revenue    $    26,949    $    30,794    $    28,126    $  114,090    $    92,967  
Items  reconciling                                                                                                                      
  GAAP  Cost  of  Revenue                                                                                                              
  to  Non-GAAP:                                                                                                                              
    Stock  based                                                                                                                              
      compensation                                                                                                                          
      expense                                    (69)              (78)              (39)            (227)            (189)
    Amortization  of                                                                                                                      
      acquired                                                                                                                                  
      intangibles                          (965)            (965)        (1,062)        (3,960)        (4,281)
    Restructuring  costs                  -                    -                (15)                  -                (66)
                                            ---------    ---------    ---------    ---------    ---------  
    GAAP  to  Non-GAAP                                                                                                                    
      adjustments                      (1,034)        (1,043)        (1,116)        (4,187)        (4,536)
    Non-GAAP  Cost  of                                                                                                                    
      Revenue                        $    25,915    $    29,751    $    27,010    $  109,903    $    88,431  
                                                                                                                                                        
    GAAP  Gross  Profit      $    24,501    $    30,787    $    26,720    $  113,160    $    95,346  
    GAAP  Gross  Margin  %            47.6%            50.0%            48.7%            49.8%            50.6%
    Non-GAAP  Gross                                                                                                                        
      Profit                          $    25,535    $    31,830    $    27,836    $  116,320    $    99,882  
    Non-GAAP  Gross                                                                                                                        
      Margin  %                                49.6%            51.7%            50.8%            51.4%            53.0%
                                                                                                                                                        
GAAP  Operating                                                                                                                            
  Expenses                          $    29,738    $    29,323    $    29,063    $  114,315    $  113,223  
Items  reconciling                                                                                                                      
  GAAP  Operating                                                                                                                          
  Expense  to  Non-GAAP:                                                                                                              
    Stock  based                                                                                                                              
      compensation                                                                                                                          
      expense                              (1,610)        (1,814)        (1,662)        (6,333)        (6,089)
    Amortization  of                                                                                                                      
      acquired                                                                                                                                  
      intangibles                          (648)            (318)            (346)        (1,627)        (1,383)
    Impairment  of  IP,                                                                                                                  
      mask  sets  and                                                                                                                        
      design  tools                              -              (795)            (689)        (1,783)        (2,811)
    Settlement  expenses                  -                    -                    -                    -              (107)
    One  time  legal  fee                                                                                                                
      expenses                                  (85)            (357)            (258)        (1,687)            (614)
    Restructuring  costs                  -                    -                    3                  (9)            (999)
                                            ---------    ---------    ---------    ---------    ---------  
    GAAP  to  Non-GAAP                                                                                                                    
      adjustments                      (2,343)        (3,284)        (2,952)      (11,439)      (12,003)
    Non-GAAP  Operating                                                                                                                
      Expenses                      $    27,395    $    26,039    $    26,111    $  102,876    $  101,220  
                                                                                                                                                        
GAAP  Other  Income                                                                                                                      
  (Expense)  and  Tax        $        (954)  $      4,971    $    (1,267)  $      1,313    $    (3,824)
Items  reconciling                                                                                                                      
  GAAP  Other  Income                                                                                                                    
  (Expense)  and  Tax  to                                                                                                              
  Non-GAAP:                                                                                                                                    
    Impairment  (gain  on                                                                                                              
      sale)  of  privately                                                                                                              
      held  instruments,                                                                                                                
      net                                            251                    -                    4              (141)              602  
    Gain  on  sale  of                                                                                                                      
      development                                                                                                                            
      project                                        -          (7,551)                  -          (7,551)                  -  
    Income  tax                                                                                                                                
      adjustments                        3,463            1,494            1,016            6,159                495  
                                            ---------    ---------    ---------    ---------    ---------  
    GAAP  to  Non-GAAP                                                                                                                    
      adjustments                        3,714          (6,057)          1,020          (1,533)          1,097  
    Non-GAAP  Other                                                                                                                        
      Income  (Expense)                                                                                                                  
      and  Tax                        $      2,760    $    (1,086)  $        (247)  $        (220)  $    (2,727)
                                                                                                                                                        
Non-GAAP  Net  Income                                                                                                                  
  (Loss)                              $          900    $      4,705    $      1,478    $    13,224    $    (4,065)
                                            =========    =========    =========    =========    =========  
                                                                                                                                                        
Non-GAAP  Net  Income                                                                                                                  
  (Loss)  per  share:                                                                                                                    
    Basic                              $        0.02    $        0.13    $        0.04    $        0.37    $      (0.12)
    Diluted                          $        0.02    $        0.13    $        0.04    $        0.36    $      (0.12)
Shares  used  in                                                                                                                            
  computing  Non-GAAP                                                                                                                  
  net  income  (loss)                                                                                                                    
  per  share:                                                                                                                                  
    Basic                                    36,568          36,046          35,036          35,890          34,693  
    Diluted                                36,995          36,785          35,036          36,669          34,693  
                                                                                                                                                        
 




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