First Quarter FY2000 Shows Net Profit, 33% Increase in Sales ---------------------------------------------------------------------- MILPITAS, Calif.--(BUSINESS WIRE)--May 24, 1999--Sigma Designs, Inc. (NASDAQ:SIGM) today announced results for its first fiscal quarter ended April 30, 1999. Sales for the first quarter of fiscal 2000 were $13,783,000, up 33% from $10,394,000 reported for the same period in fiscal 1999 and up 5% from $13,078,000 for the fourth quarter of fiscal 1999. Sigma reported net income of $512,000 ($0.03 per share, diluted) in the first quarter of fiscal 2000, compared to a net loss of $56,000 ($0.00 per share, diluted) in the first quarter of fiscal 1999. Thinh Tran, Chairman and Chief Executive Officer, stated, "We are pleased to have achieved profitability for the quarter. In addition to improved fundamentals, as reflected in operating and net profits, the balance sheet strengthened during the quarter. We were cash flow positive from operations." "Our PC DVD business continued to grow, with 18% sequential growth. Our DVD product mix continued to shift from boards to silicon sales, with DVD silicon sales increasing 24% sequentially." "During the quarter, we launched three new products. We unveiled our breakthrough set-top box design at the 1999 National Association of Broadcasters (NAB) Convention in Las Vegas in April. In his NAB keynote address, Larry Ellison of Oracle (Nasdaq:ORCL) demonstrated how a set-top box supplied by Boca Research, Inc. (Nasdaq:BOCI) equipped with REALmagic decoder silicon can provide true video-on-demand over a switched network. This fully featured Internet appliance uses our silicon for streaming video and for DVD playback. In April, we announced that our EM8220 REALmagic DVD chip provides full DVD playback support for add-in cards based on the new Intel (Nasdaq:INTC) 752 graphics accelerator. Also in April, we launched REALmagic Digital Video Recorder (DVR), a low-cost encoder and decoder card for creating and playing MPEG-2 DVD titles. All of these products leverage our `REALmagic In It' branding campaign to demonstrate the added value we provide--a highly integrated silicon solution providing excellent video quality, a sophisticated GUI, and comprehensive driver support for all MPEG applications. This added value is derived from our six years of experience in implementing MPEG video on PCs," Mr. Tran concluded. Sigma Designs, headquartered in Milpitas, California, is an acknowledged leader in the fast-growing multimedia market. Sigma entered the multimedia field in 1993 with products based on the MPEG (Moving Picture Experts Group) standard for compressing and decompressing digital audio and video signals. Sigma is a driving force in advancement of the MPEG technology used in most multimedia PCs on the market today. Sigma Designs' products, marketed under the REALmagic trade name, are sold worldwide through a direct sales force and a network of manufacturers' representatives, VARs, and distributors. For more information, visit the Company's web site at http://www.sigmadesigns.com. This press release contains forward-looking statements regarding the networked video market and the PC-DVD market, as well as the features and potential growth prospects of certain MPEG and DVD products offered by the Company in these markets that involve risks and uncertainties. Actual results may vary due to a number of factors including, but not limited to, growth of the multimedia market in general and growth of Sigma products in this market, the ability of the Company's REALmagic DVD silicon and the Company's NetStream MPEG playback card to compete with other technologies in these emerging markets and the risk that such products will not gain widespread acceptance or be rendered obsolete by product offerings of competitors, or by alternative technologies. Following are highlights of the first quarter results: Sigma Designs, Inc. Quarter ended April 30, 1999 1998 Net sales $ 13,783,000 $ 10,394,000 Net income (loss) available to common shareholders 512,000 (56,000) Basic & diluted income (loss) per share: $ 0.03 ($0.00) Basic weighted average shares 15,509,000 11,680,000 Diluted weighted average shares 17,703,000 11,680,000 SIGMA DESIGNS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data. Unaudited) For the three months ended April 30, 1999 1998 Net sales $ 13,783 $ 10,394 Cost of goods sold 9,740 7,392 Gross profit 4,043 3,002 Other costs and expenses: Research and development 1,290 1,171 Sales and marketing 1,300 1,130 General and administrative 882 713 Total costs 3,472 3,014 Operating income (loss) 571 (12) Interest and other income (expense), net (8) (4) Income taxes (23) -- Net income (loss) before dividend on preferred stock 540 (16) Dividend on preferred stock (28) (40) Net income (loss) applicable to common shareholders $ 512 $ (56) Basic & diluted net income (loss) applicable to common shareholders per share $ 0.03 $ (0.00) Shares used in computation: Basic 15,509 11,680 Diluted 17,703 11,680 SIGMA DESIGNS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS April 30, January 31, 1999 1999(1) (Unaudited) (In thousands) Assets Current assets: Cash and marketable securities $ 19,846 $ 18,058 Accounts receivable 10,037 13,648 Inventories 11,071 10,418 Prepaid expenses 513 629 Total current assets 41,467 42,753 Property and equipment, net 1,527 1,311 Other assets 156 156 Total assets $ 43,150 $ 44,220 Liabilities and shareholders' equity Current liabilities: Bank line of credit $ 12,391 $ 13,716 Accounts payable 3,111 4,109 Accrued liabilities 1,919 1,350 Total current liabilities 17,421 19,175 Long-term debt 274 274 Shareholders' equity: Preferred stock 1,138 1,536 Common stock 65,263 64,699 Accumulated deficit & other (40,934) (41,452) Shareholder note receivable (12) (12) Total shareholders' equity 25,455 24,771 Total liabilities and shareholders' equity $ 43,150 $ 44,220 (1) Derived from audited balance sheet included in the Company's annual report on Form 10-K for the year ended January 31, 1999.  