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Silicon Laboratories, Inc.
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Sigma Designs, Inc. Reports Fourth Quarter and Fiscal Year 2018 Financial Results

2018-04-20 09:00 ET - News Release

FREMONT, Calif., April 20, 2018 (GLOBE NEWSWIRE) -- Sigma Designs, Inc.® (NASDAQ:SIGM), a developer of technology for use in the mobile Internet of Things (IoT) market, today reported financial results for its fourth quarter and fiscal year 2018, which ended February 3, 2018.  Due to the previously announced asset sale to Silicon Labs (NASDAQ:SLAB) the Company will not hold an earnings conference call. 

Fourth Quarter Fiscal 2018 Financial Results

Net revenue for the fourth quarter of fiscal 2018 was $26.5 million. This compares with net revenue of $33.9 million reported in the previous quarter, and net revenue of $42.7 million in the same period in fiscal 2017. 

GAAP gross margin in the fourth quarter of fiscal 2018 was 42.1%.  This compares with GAAP gross margin of 50.5% in the previous quarter, and GAAP gross margin of 50.1% for the same period in fiscal 2017. 

Non-GAAP gross margin in the fourth quarter of fiscal 2018 was 38.0%.  This compares with non-GAAP gross margin of 54.7% in the previous quarter, and non-GAAP gross margin of 50.6% for the same period in fiscal 2017.

GAAP operating expenses in the fourth quarter of fiscal 2018 were $80.0 million, which includes impairment charges of $40.8 million and restructuring charges of $6.8 million. This compares with GAAP operating expenses of $36.0 million in the previous quarter, and GAAP operating expenses of $28.6 million for the same period in fiscal 2017.

Non-GAAP operating expenses in the fourth quarter of fiscal 2018 were $28.3 million. This compares with non-GAAP operating expenses of $27.8 million in the previous quarter, and non-GAAP operating expenses of $26.0 million for the same period in fiscal 2017. 

GAAP net loss in the fourth quarter of fiscal 2018 was ($73.4) million, or ($1.88) per share.  This compares with a GAAP net loss of ($19.1) million, or ($0.49) per share, in the previous quarter, and a GAAP net loss of ($8.7) million, or ($0.23) per share, for the same period in fiscal 2017. 

Non-GAAP net loss in the fourth quarter of fiscal 2018 was ($21.6) million, or ($0.55) per share.  This compares with a non-GAAP net loss of ($9.6) million, or ($0.25) per share, in the previous quarter, and a non-GAAP net loss of ($5.9) million, or ($0.16) per diluted share, for the same period in fiscal 2017. 

Cash and cash equivalents at the end of the fourth quarter of fiscal 2018 were $40.6 million.

Fiscal Year 2018 Financial Results

Net revenue in fiscal 2018 was $139.5 million, compared with $220.5 million in the previous fiscal year, prior to Assets held for sale adjustments of ($73.6 million) in fiscal 2018 and ($86.1 million) in fiscal 2017.   The Assets held for sale adjustments consist of the financial results of Sigma’s Z-Wave business and Media Connectivity business, each of which were deemed to be held for sale as of February 3, 2018.

GAAP gross margin from continuing operations in fiscal 2018 was 47.1%, compared with 48.1% in fiscal 2017, prior to Assets held for sale adjustments.   

Non-GAAP gross margin from continuing operations in fiscal 2018 was 37.4%, compared with 41.5% in fiscal 2017, which is after adjusting for Assets held for sale. 

GAAP operating expenses from continuing operations in fiscal 2018 were $179.0 million, compared with $117.3 million in fiscal 2017, prior to Assets held for sale adjustments of $37.2 million in fiscal 2018 and $34.7 million in fiscal 2017. 

Included in the fiscal 2018 results were impairment charges of $50.4 million and restructuring charges of $9.3 million.

Non-GAAP operating expenses from continuing operations in fiscal 2018 were $73.1 million, compared with $74.9 million in fiscal 2017, which is after adjusting for Assets held for sale.

GAAP net loss from continuing operations in fiscal 2018 was ($120.0) million, or net loss of ($3.12) per basic share, which is the same result after adjusting for Assets held for sale. This compares with a GAAP net loss of ($18.3) million, or a net loss of ($0.49) per diluted share, in fiscal 2017, which is the same result after adjusting for Assets held for sale. 

Non-GAAP net loss in fiscal 2018 was ($51.3) million, or net loss of ($1.31) per share, after adjusting for Assets held for sale.  This compares with a non-GAAP net loss of ($9.5) million, or a net loss of ($0.66) per share, in fiscal 2017, after adjusting for Assets held for sale.

The reconciliation between the GAAP and non-GAAP financial results for all referenced periods is provided in a table immediately following the GAAP financial tables below.

Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principles (“GAAP”), Sigma also reports non-GAAP financial measures, as Sigma believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Non-GAAP financial measures are not a substitute for financial information prepared in accordance with GAAP.  Therefore, non-GAAP financial measures should not be considered in isolation, but should be considered together with the most directly comparable GAAP financial measures and the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financials measures.  The Company presents non-GAAP financial measures to provide investors with an additional tool to evaluate its operating results in a manner that focuses on what management believes to be its core, ongoing business operations. Furthermore, non-GAAP financial measures used by the Company may not be the same non-GAAP financial measures as those utilized by other companies; specifically, non-GAAP financial measures used by the Company may be calculated differently than other companies. Investors should, therefore, exercise caution when comparing non-GAAP financial measures used by Sigma to similarly titled non-GAAP financial measures of other companies.

Sigma’s non-GAAP financial measures exclude amortization of acquired intangibles, stock-based compensation, one-time legal and other professional fee expenses, net gain on the sale of and impairment of privately-held investments, impairment of purchased IP, mask sets used in production and one-time restructuring charges.  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.  In the GAAP to non-GAAP reconciliation at the end of this press release, we have disclosed the impact of these income tax adjustments in our calculation of our non-GAAP financial results.

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 Sigma’s operating results in the same manner as the research analysts that follow Sigma’s progress, all of whom present non-GAAP projections in their published reports. 

Sigma uses non-GAAP measures to evaluate and assess its performance and operating results on a consistent basis, and to measure and compare its performance with the financial projections published by analysts as well as its direct competitors in the industry, many of whom report financial results on a non-GAAP basis.  The economic substance behind its decision to use non-GAAP measures is that such measures approximate its controllable operating performance more closely than the most directly comparable GAAP financial results.  For example, Sigma’s management has no control over certain variables that have a major influence in the determination of stock-based compensation. These variables include the volatility of its stock price and changing interest rates.  Sigma believes that all of these excluded expenses in its non-GAAP financial measures may 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. Sigma believes that the inclusion of these non-GAAP financial measures provides consistency and comparability with past reports and provides a better understanding of the overall performance of the business and its ability to perform in subsequent periods.

Sigma Designs is a registered trademark of Sigma Designs, Inc. in the United States and other countries.

About Sigma Designs, Inc.

Sigma Designs, Inc.® (NASDAQ:SIGM) is developing technology for use in the mobile Internet of Things (IoT) market. For more information about Sigma Designs, please visit www.sigmadesigns.com.

Note to editors: Sigma Designs is a trademark of Sigma Designs, Inc. All other product names noted herein may be trademarks of their respective holders.

Investor Relations Contacts:                                                                                     
Jim Fanucchi
Darrow Associates, Inc.
(408) 404-5400
IR@sigmadesigns.com

Elias Nader, Interim President and Chief Executive Officer, and Chief Financial Officer
Sigma Designs, Inc.
(510) 897-0077
IR@sigmadesigns.com

 

 
 
SIGMA DESIGNS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
PRO FORMA
 
 February 3, 2018 January 28, 2017
 Consolidated
Balance
Sheets
Held
for Sale
Other
Adjustments
As Reported Consolidated
Balance
Sheets
Held
for Sale
Other
Adjustments
As Reported
          
ASSETS          
Current assets          
Cash and cash equivalents$40,628 $(2,000)$-$38,628  $66,425 $(2,000)$-$64,425 
Short-term marketable securities -  -  - -   4,781  -  - 4,781 
Restricted cash 335  (335) - -   303  (303) - - 
Accounts receivable, net 17,120  (7,405) - 9,715   35,860  (15,874) - 19,986 
Inventory 14,064  (11,026) - 3,038   18,147  (8,684) - 9,463 
Prepaid expenses and other current assets 7,898  (1,127) - 6,771   8,017  (1,139) - 6,878 
Current assets held for sale -  -  21,893 21,893   -  -  28,000 28,000 
Total current assets  80,045  (21,893) 21,893 80,045   133,533  (28,000) 28,000 133,533 
          
Software, equipment and leasehold improvements, net 6,178  (1,839) - 4,339   18,523  (7,265) - 11,258 
Intangible assets, net 4,630  (2,079) - 2,551   30,744  (2,439) - 28,305 
Goodwill -  -  - -   10,594  -  - 10,594 
Deferred tax assets 770  (777) 7 -   625  (658) 33 - 
Long-term investments -  -  - -   2,000  -  - 2,000 
Non-current assets held for sale -  -  4,703 4,703   -  -  10,370 10,370 
Other non-current assets 4,467  (8) - 4,459   5,755  (8) - 5,747 
Total assets $96,090 $(26,596)$26,603$96,097  $201,774 $(38,370)$38,403$201,807 
          
LIABILITIES AND SHAREHOLDERS' EQUITY          
Current liabilities         
Accounts payable$15,864 $(6,531)$-$9,333  $14,230 $(5,918)$-$8,312 
Accrued compensation and related benefits 6,512  (2,464) - 4,048   8,127  (2,609) - 5,518 
Accrued liabilities 14,679  (4,812) - 9,867   13,607  (4,762) - 8,845 
Current liabilities held for sale -  -  13,807 13,807   -  -  13,289 13,289 
Total current liabilities  37,055  (13,807) 13,807 37,055   35,964  (13,289) 13,289 35,964 
          
Income taxes payable 15,708  (4,128) - 11,580   15,752  (1,635) - 14,117 
Deferred tax liabilities 38  -  7 45   287  -  33 320 
Long-term liabilities held for sale -  -  4,144 4,144   -  -  1,642 1,642 
Other long-term liabilities 3,169  (16) - 3,153   6,225  (7)  6,218 
Total liabilities  55,970  (17,951) 17,958 55,977   58,228  (14,931) 14,964 58,261 
          
Commitments and contingencies         
          
Shareholders' equity          
Common stock and additional paid-in capital 522,985  -  - 522,985   513,168  (56,373) - 456,795 
Treasury stock (88,336) (56,687) - (145,023)  (88,336) -  - (88,336)
Accumulated other comprehensive loss 18  -  - 18   (2,178) -  - (2,178)
Accumulated deficit (394,547) 48,042  8,645 (337,860)  (279,108) 32,934  23,439 (222,735)
Total shareholders' equity  40,120  (8,645) 8,645 40,120   143,546  (23,439) 23,439 143,546 
          
Total liabilities and shareholders' equity $96,090 $(26,596)$26,603$96,097  $201,774 $(38,370)$38,403$201,807 
          

 

 
SIGMA DESIGNS, INC.
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
PRO FORMA
(In thousands, except per share data)
 
 February 3, 2018 January 28, 2017
 Consolidated
Statements of
Operations
Held
for Sale
Other
Adjustments
As Reported Consolidated
Statements of
Operations
Held
for Sale
Other
Adjustments
As Reported
          
Net revenue$139,471 $(73,566)$- $65,905  $220,544 $(86,137)$- $134,407 
Cost of revenue 73,735  (32,289) -  41,446   114,565  (35,629)  78,936 
Gross profit 65,736  (41,277) -  24,459   105,979  (50,508) -  55,471 
Gross margin percent 47.1% 56.1%  37.1%  48.1% 58.6%  41.3%
          
Operating expenses:         
Research and development 72,309  (19,653) -  52,656   73,993  (16,716)  57,277 
Sales and marketing 23,806  (14,720)  9,086   23,300  (15,727)  7,573 
General and administrative 23,097  (2,710)  20,387   18,860  (2,292)  16,568 
Restructuring charges 9,327  -   9,327      - 
Impairment of IP, mask sets and design tools 50,431  (80)  50,351   1,148    1,148 
Total operating expenses 178,970  (37,163) -  141,807   117,301  (34,735) -  82,566 
Loss from operations (113,234) (4,114)  (117,348)  (11,322) (15,773)  (27,095)
Impairment of privately-held investments, net of gain on sale      (885)   (885)
Interest and other income, net (1,929) (541)  (2,470)  539  (256)  283 
Loss before income taxes (115,163) (4,655)  (119,818)  (11,668) (16,029)  (27,697)
Provision for income taxes 4,878  (5,592)  (714)  6,647  (897)  5,750 
Net (loss) income from continuing operations  (120,041) 937  -  (119,104)  (18,315) (15,132) -  (33,447)
Income from operations held for sale   4,655  4,655     16,029  16,029 
Provision for income taxes   5,592  5,592     897  897 
(Loss) income on operations held for sale -  -  (937) (937)  -  -  15,132  15,132 
Net (loss) income$(120,041)$937 $(937)$(120,041) $(18,315)$(15,132)$15,132 $(18,315)
          
Net loss per share:         
Basic$(3.12)  $(3.12) $(0.49)  $(0.49)
Diluted$(3.12)  $(3.12) $(0.49)  $(0.49)
Shares used in computing net loss per share:         
Basic 38,527    38,527   37,429    37,429 
Diluted 38,527    38,527   37,429    37,429 
          
Other comprehensive (loss) income:          
Change in currency translation adjustments, net of tax$(2,191)$(129)$129 $(2,191) $(336)$63 $(63)$(336)
Change in unrealized gains (losses) on marketable securities, net of tax (5)   (5)  33    33 
Other comprehensive income (loss) (2,196) (129) 129  (2,196)  (303) 63  (63) (303)
Comprehensive (loss) income $(122,237)$808 $(808)$(122,237) $(18,618)$(15,069)$15,069 $(18,618)
          

 

 
SIGMA DESIGNS, INC.
RECONCILIATION OF PRO FORMA NET LOSS TO NON-PRO FORMA NET LOSS AS REPORTED
(Unaudited)
(In thousands, except per share data)
    
 Twelve months ended
 February 3, 2018 January 28, 2017
    
Pro Forma Net Revenue$65,905  $134,407 
    
Non-Pro Forma Net Revenue$65,905  $134,407 
    
Pro Forma Cost of Revenue$41,446  $78,936 
Items reconciling Pro Forma Cost of Revenue to Non-Pro Forma:   
Stock based compensation expense (204)  (274)
Amortization of acquired intangibles -   - 
Impairment of IP, mask sets and design tools -   - 
Restructuring charges, net -   - 
Pro Forma to Non-Pro Forma adjustments (204)  (274)
Non-Pro Forma Cost of Revenue$41,242  $78,662 
    
Pro Forma Gross Profit$24,459  $55,471 
Pro Forma Gross Margin % 37.1%  41.3%
Non-Pro Forma Gross Profit$24,663  $55,745 
Non-Pro Forma Gross Margin % 37.4%  41.5%
    
Pro Forma Operating Expenses$141,807  $82,566 
Items reconciling Pro Forma Operating Expenses to Non-Pro Forma:   
Stock based compensation expense (3,966)  (4,942)
Amortization of acquired intangibles (1,603)  (1,603)
Impairment of IP, mask sets and design tools (50,431)  (1,148)
Legal and other professional expenses (3,332)  - 
Restructuring charges (9,327)  - 
Pro Forma to Non-Pro Forma adjustments (68,659)  (7,693)
Non-Pro Forma Operating Expenses$73,148  $74,873 
    
Pro Forma Other Income (Expense) and Tax$(1,756) $(6,352)
    
Items reconciling Pro Forma Other Income (Expense) and Tax to Non-Pro Forma:   
(Gain on sale) impairment of privately held instruments, net (110)  885 
Pro Forma to Non-Pro Forma adjustments (110)  885 
    
Non-Pro Forma Other Income (Expense) and Tax (1,866)  (5,467)
    
Non-Pro Forma loss from continuing operations (50,351)  (24,595)
Income (loss) from operations held for sale 4,655   16,029 
Provision for income taxes 5,592   897 
Income (loss) on operations held for sale (937)  15,132 
    
Non-Pro Forma Net loss$(51,288) $(9,463)
    
Non-Pro Forma Net loss per share:   
Basic$(1.31) $(0.66)
Diluted$(1.31) $(0.66)
Shares used in computing Non-Pro Forma net loss per share:   
Basic 38,527   37,429 
Diluted 38,527   37,429 
  

 

 
SIGMA DESIGNS, INC.
QUARTERLY FINANCIAL INFORMATION
UNAUDITED, PRESENTED WITHOUT EFFECT TO ASSETS HELD FOR SALE
         
 Fiscal Quarters Ended
 February 3,
2018
October 28,
2017
July 29,
2017
April 29,
2017
January 28,
2017
October 29,
2016
July 30,
2016
April 30,
2016
         
Net revenue$26,537 $33,862 $39,508 $39,564 $42,724 $62,729$61,316 $53,775 
Gross profit 11,176  17,116  18,820  18,624  21,401  30,995 29,582  24,001 
(Loss) income from operations (70,019) (18,884) (10,954) (13,377) (7,163) 2,169 (313) (6,015)
Net (loss) income (73,421) (19,084) (12,677) (14,859) (8,716) 221 (1,722) (8,098)
Basic net (loss) income per share$(1.91)$(0.49)$(0.33)$(0.39)$(0.23)$0.01$(0.05)$(0.22)
Diluted net (loss) income per share$(1.91)$(0.49)$(0.33)$(0.39)$(0.23)$0.01$(0.05)$(0.22)
         
         
This table, differing from financial statement presentation herein, presents condensed financial information without effect to the reclassifications resulting from discontinued operations.

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