Form 8-K SIGMA DESIGNS INC For: Dec 07

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

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FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

December 7, 2017

Date of Report (date of earliest event reported)

 

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Sigma Designs, Inc.

(Exact name of Registrant as specified in its charter)

 

California		001-32207		94-2848099
(State or other jurisdiction of  incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification Number)

47467 Fremont Blvd.

Fremont, California 94538

(Address of principal executive offices)

(510) 897-0200

(Registrant’s telephone number, including area code)

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company      ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

 

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Item 2.02. Results of Operations and Financial Condition

 

The information contained in this Item 2.02 and in the accompanying exhibit shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”), except as shall be expressly set forth by specific reference in such filing.

 

On December 7, 2017, Sigma Designs, Inc. issued a press release announcing its results for the third fiscal quarter ended October 28, 2017. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

Item 9.01. Financial Statements and Exhibits

 

The information contained in this Item 9.01 and in the accompanying exhibit shall not be deemed filed for purposes of Section 18 of the Exchange Act or incorporated by reference in any filing under the Exchange Act or the Securities Act, except as shall be expressly set forth by specific reference in such filing.

 

(d)

Exhibits.

 

 

Exhibit		Description
99.1		Press Release issued by Sigma Designs, Inc. dated December 7, 2017.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: December 7, 2017		SIGMA DESIGNS, INC.
	By:	/s/ Thinh Q. Tran
		Thinh Q. Tran President and Chief Executive Officer (Principal Executive Officer)

 

Exhibit 99.1

 

SIGMA DESIGNS, INC. REPORTS THIRD QUARTER

FISCAL YEAR 2018 FINANCIAL RESULTS

 

 

Fremont, CA – December 7, 2017 — Sigma Designs, Inc.^® (NASDAQ: SIGM), a leading provider of intelligent system-on-chip (SoC) solutions for Connected Smart TV platforms and smart home Internet of Things (IoT), today reported financial results for its third quarter of fiscal year 2018, which ended October 28, 2017.

 

Third Quarter Fiscal 2018 Financial Results

 

Net revenue for the third quarter of fiscal 2018 was $33.9 million. This compares with net revenue of $39.5 million reported in the previous quarter, and net revenue of $62.7 million in the same period in fiscal 2017. 

 

GAAP gross margin in the third quarter of fiscal 2018 was 50.5%. This compares with GAAP gross margin of 47.6% in the previous quarter, and GAAP gross margin of 49.4% for the same period in fiscal 2017.

 

Non-GAAP gross margin in the third quarter of fiscal 2018 was 54.7%. This compares with non-GAAP gross margin of 48.1% in the previous quarter, and non-GAAP gross margin of 51.0% for the same period in fiscal 2017.

 

GAAP operating expenses in the third quarter of fiscal 2018 were $36.0 million, which includes an impairment charge of $5.5 million. This compares with GAAP operating expenses of $29.8 million in the previous quarter, and GAAP operating expenses of $28.8 million for the same period in fiscal 2017.

 

Non-GAAP operating expenses in the third quarter of fiscal 2018 were $27.8 million. This compares with non-GAAP operating expenses of $26.1 million in the previous quarter, and non-GAAP operating expenses of $26.7 million for the same period in fiscal 2017.

 

GAAP operating loss in the third quarter of fiscal 2018 was ($18.9) million. This compares with a GAAP operating loss of ($11.0) million in the previous quarter, and GAAP operating income of $2.2 million for the same period in fiscal 2017.

 

Non-GAAP operating loss in the third quarter of fiscal 2018 was ($9.3) million. This compares with a non-GAAP operating loss of ($7.1) million in the previous quarter, and non-GAAP operating income of $5.3 million for the same period in fiscal 2017.

 

 

GAAP net loss in the third quarter of fiscal 2018 was ($19.1) million, or ($0.49) per share. This compares with a GAAP net loss of ($12.7) million, or ($0.33) per share, in the previous quarter, and GAAP net income of $0.2 million, or $0.01 per share, for the same period in fiscal 2017.

 

Non-GAAP net loss in the third quarter of fiscal 2018 was ($9.6) million, or ($0.25) per share. This compares with a non-GAAP net loss of ($8.8) million, or ($0.23) per share, in the previous quarter, and non-GAAP net income of $3.3 million, or $0.09 per diluted share, for the same period in fiscal 2017.

 

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 intends to calculate the various non-GAAP financial measures in future periods consistent with how they were calculated for the periods presented within this press release.

 

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 and Z-Wave are registered trademark of Sigma Designs, Inc. in the United States and other countries.

 

About Sigma Designs, Inc.

Sigma Designs, Inc.^® (NASDAQ: SIGM) is a world leader in enabling smart home convergence. The company designs and builds the essential semiconductor technologies that serve as the foundation for the world’s leading Connected Smart TV platforms and Internet of Things (IoT) for smart home devices. For more information about Sigma Designs, please visit: www.sigmadesigns.com.

 

Investor Relations Contacts:                                                            

Jim Fanucchi

Darrow Associates, Inc.

(408) 404-5400

[email protected]

 

Elias Nader, CFO, SVP and Corporate Secretary

Sigma Designs, Inc.

(510) 897-0077

[email protected]

 

 

SIGMA DESIGNS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(GAAP)

(In thousands)

 

		October 28,				January 28,
		2017				2017
Assets
Current Assets:
Cash and cash equivalents		$	69,219			$	66,425
Short-term marketable securities			-				4,781
Restricted cash			325				303
Accounts receivable, net			19,628				35,860
Inventory			13,679				18,147
Prepaid expenses and other current assets			7,869				8,017
Total current assets			110,720				133,533
Software, equipment and leasehold improvements, net			18,135				18,523
Intangible assets, net			21,957				30,744
Goodwill			10,594				10,594
Deferred tax assets			741				625
Long-term investments			910				2,000
Other non-current assets			4,138				5,755
Total assets		$	167,195			$	201,774
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable		$	14,478			$	14,230
Accrued compensation and related benefits			10,020				8,127
Accrued liabilities			16,147				13,607
Total current liabilities			40,645				35,964
Other long-term liabilities			18,655				22,264
Total liabilities			59,300				58,228
Shareholders’ equity			107,895				143,546
Total liabilities and shareholders' equity		$	167,195			$	201,774

 

 

SIGMA DESIGNS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(GAAP)

(In thousands, except per share data)

 

		Three months ended												Nine months ended
		October 28, 2017				July 29, 2017				October 29, 2016				October 28, 2017				October 29, 2016
Net revenue		$	33,862			$	39,508			$	62,729			$	112,934			$	177,820
Cost of revenue			16,746				20,688				31,734				58,374				93,242
Gross profit			17,116				18,820				30,995				54,560				84,578
Gross margin percent			50.5	%			47.6	%			49.4	%			48.3	%			47.6	%
Operating expenses:
Research and development			17,218				17,993				18,264				53,380				56,255
Sales and marketing			7,012				5,113				5,984				17,498				17,646
General and administrative			5,744				4,945				4,578				15,899				14,536
Restructuring charges			563				1,723				-				2,529				-
Impairment of IP, mask sets and design tools			5,463				-				-				8,469				300
Total operating expenses			36,000				29,774				28,826				97,775				88,737
(Loss) income from operations			(18,884	)			(10,954	)			2,169				(43,215	)			(4,159	)
Interest and other income (expense), net			147				(758	)			179				(1,076	)			(157	)
(Loss) income before income taxes			(18,737	)			(11,712	)			2,348				(44,291	)			(4,316	)
Provision for income taxes			347				965				2,127				2,329				5,283
Net (loss) income		$	(19,084	)		$	(12,677	)		$	221			$	(46,620	)		$	(9,599	)
Net (loss) income per share:
Basic		$	(0.49	)		$	(0.33	)		$	0.01			$	(1.22	)		$	(0.26	)
Diluted		$	(0.49	)		$	(0.33	)		$	0.01			$	(1.22	)		$	(0.26	)
Shares used in computing net loss per share:
Basic			38,632				38,289				37,666				38,359				37,241
Diluted			38,632				38,289				38,001				38,359				37,241

 

 

SIGMA DESIGNS, INC.

RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET (LOSS) INCOME

(Unaudited)

(In thousands, except per share data)

 

		Three months ended												Nine months ended
		October 28,				July 29,				October 29,				October 28,				October 29,
		2017				2017				2016				2017				2016
GAAP Net Revenue		$	33,862			$	39,508			$	62,729			$	112,934			$	177,820
Non-GAAP Net Revenue		$	33,862			$	39,508			$	62,729			$	112,934			$	177,820
GAAP Cost of Revenue		$	16,746			$	20,688			$	31,734			$	58,374			$	93,242
Items reconciling GAAP Cost of Revenue to Non-GAAP:
Stock based compensation expense			(56	)			(54	)			(61	)			(167	)			(239	)
Amortization of acquired intangibles			(145	)			(145	)			(938	)			(435	)			(2,827	)
Impairment of IP, mask sets and design tools			(1,200	)			-				-				(1,200	)			-
GAAP to Non-GAAP adjustments			(1,401	)			(199	)			(999	)			(1,802	)			(3,066	)
Non-GAAP Cost of Revenue		$	15,345			$	20,489			$	30,735			$	56,572			$	90,176
GAAP Gross Profit		$	17,116			$	18,820			$	30,995			$	54,560			$	84,578
GAAP Gross Margin %			50.5	%			47.6	%			49.4	%			48.3	%			47.6	%
Non-GAAP Gross Profit		$	18,517			$	19,019			$	31,994			$	56,362			$	87,644
Non-GAAP Gross Margin %			54.7	%			48.1	%			51.0	%			49.9	%			49.3	%
GAAP Operating Expenses		$	36,000			$	29,774			$	28,826			$	97,775			$	88,737
Items reconciling GAAP Operating Expenses to Non-GAAP:
Stock based compensation expense			(1,188	)			(1,180	)			(1,432	)			(3,840	)			(4,897	)
Amortization of acquired intangibles			(430	)			(431	)			(692	)			(1,292	)			(2,087	)
Impairment of IP, mask sets and design tools			(5,463	)			-				-				(8,469	)			(300	)
Legal and other professional expenses			(559	)			(305	)			-				(1,003	)			(11	)
Restructuring charges			(563	)			(1,723	)			-				(2,529	)			-
GAAP to Non-GAAP adjustments			(8,203	)			(3,639	)			(2,124	)			(17,133	)			(7,295	)
Non-GAAP Operating Expenses		$	27,797			$	26,135			$	26,702			$	80,642			$	81,442
GAAP Other Income (Expense) and Tax		$	(200	)		$	(1,723	)		$	(1,948	)		$	(3,405	)		$	(5,440	)
Items reconciling GAAP Other Income (Expense) and Tax to Non-GAAP:
(Gain on sale) impairment of privately held instruments, net			(110	)			-				1				(110	)			885
GAAP to Non-GAAP adjustments			(110	)			-				1				(110	)			885
Non-GAAP Other Income (Expense) and Tax		$	(310	)		$	(1,723	)		$	(1,947	)		$	(3,515	)		$	(4,555	)
Non-GAAP Net (loss) income		$	(9,590	)		$	(8,839	)		$	3,345			$	(27,795	)		$	1,647
Non-GAAP Net (loss) income per share:
Basic		$	(0.25	)		$	(0.23	)		$	0.09			$	(0.72	)		$	0.04
Diluted		$	(0.25	)		$	(0.23	)		$	0.09			$	(0.72	)		$	0.04
Shares used in computing Non-GAAP net (loss) income per share:
Basic			38,632				38,289				37,666				38,359				37,241
Diluted			38,632				38,289				38,001				38,359				37,626

 

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