Sigma Designs, Inc. (referred to collectively in these unaudited condensed consolidated financial statements as “Sigma,” “we,” “our”, “the Company” and “us”) is a provider of intelligent platforms for use in a variety of home entertainment and home control appliances. We sell our products into primary target markets which are the Connected Smart TV Platforms and Internet of Things (“IoT”) Devices markets. Our integrated system-on-chip (“SoC”) solutions serve as the foundation for some of the world’s leading consumer products, including televisions, media connectivity, smart home, and mobile IoT products

. A majority of our primary products are semiconductors that are targeted toward end-product manufacturers, Original Equipment Manufacturers (“OEMs”), and Original Design Manufacturers (“ODMs”). We derive a portion of our revenue from licensing and other activities, including licensing of our software development kits, and engineering support services for hardware and software.

 

The unaudited condensed consolidated financial statements include the accounts of Sigma Designs, Inc. and its wholly-owned subsidiaries.  All significant intercompany balances and transactions have been eliminated upon consolidation.

We operate and report quarterly financial results that consist of weeks and end on the last Saturday of the period. The quarter of fiscal and fiscal ended on days) and days), respectively.

 

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”).  They do include all disclosures required by US GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended included in our fiscal Annual Report on Form -K, as filed with the SEC on referred to as our fiscal Annual Report.

 

The condensed consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in our opinion, are necessary to present fairly our consolidated financial position at and the consolidated results of our operations for the months ended and and the consolidated cash flows for the months ended and The results of operations for the months ended are necessarily indicative of the results to be expected for future quarters or the full year.

There have been significant changes in our critical accounting policies during the months ended as compared to the critical accounting policies described in our Annual Report on Form -K for the year ended For a complete summary of our significant accounting policies, refer to Note "Organization and Summary of Significant Accounting Policies”, in Part II, Item of our fiscal Annual Report.

 

 

 

 

In the FASB issued ASU - Simplifying the Measurement of Inventory. Under this ASU, the measurement principle for inventory changed from the lower of cost or market value to the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

We adopted this ASU in the quarter of fiscal with material impact on our condensed consolidated financial statements.

 

Recent accounting pronouncements expected to impact our operations that are yet effective are summarized as follows:

In the FASB issued ASU - Statement of Cash Flows (Topic ): Restricted Cash (“ASU -). The update provides guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows. We will be required to adopt ASU - until the commencement of our quarter of fiscal but early adoption is permitted.

The adoption of this ASU is expected to have a material impact on our consolidated financial statements.

 

In the FASB issued ASU - Income Taxes (Topic ): Intra-Entity Transfers of Assets Other Than Inventory (“ASU -), which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU - is effective for us beginning in the quarter of fiscal and early adoption is permitted. We are currently evaluating the impact that this ASU will have on our consolidated financial statements.

In the FASB issued ASU - Leases (Topic ) (“ASU -), which requires lessees to recognize all leases, including operating leases, on the balance sheet as a lease asset or lease liability, unless the lease is a short-term lease. ASU - also requires additional disclosures regarding leasing arrangements. ASU -

is effective for us beginning in the quarter of fiscal and early adoption is permitted. We are currently evaluating the impact, and expect the ASU will have a material impact on our consolidated financial statements, primarily to the consolidated balance sheets and related disclosures

.

 

In the FASB issued ASU - Revenue from Contracts with Customers (Topic ) (“ASU -), which amends the existing accounting standards for revenue recognition. ASU - is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products or services are transferred to customers. ASU - is effective for us beginning in the quarter of fiscal and early adoption is permitted. 

 

Subsequently, the FASB has issued the following standards related to ASU - ASU  - Revenue from Contracts with Customers (Topic ): Principal versus Agent Considerations (“ASU -); ASU - Revenue from Contracts with Customers (Topic ): Identifying Performance Obligations and Licensing (“ASU -); ASU - Revenue from Contracts with Customers (Topic ): Narrow-Scope Improvements and Practical Expedients (“ASU -) and ASU - Technical Corrections and Improvements to Topic Revenue from Contracts with Customers (“ASU -). We must adopt ASU - ASU - ASU - and ASU - with ASU - (collectively, the “new revenue standards”). We currently expect to adopt Topic as of using the modified retrospective transition method applied to those contracts that were completed as of that date. Upon adoption, we will recognize the cumulative effect of adopting this guidance as an adjustment to our opening balance of retained earnings. Prior periods will be retrospectively adjusted. We expect the adoption of Topic will have a material impact to our consolidated financial statements.