x
|
Annual
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
|
¨
|
Transition
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
|
California
|
94-2848099
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
Number)
|
1778
McCarthy Blvd Milpitas, California
|
95035
|
(Address
of principal executive offices)
|
(Zip
code)
|
Title
of each class
|
Name
of each exchange on which registered
|
|
Common
Stock, no par value
|
The
NASDAQ Stock Market LLC
|
Page
No
|
||
PART
I
|
||
Item 1.
|
Business
|
5
|
Item 1A.
|
Risk
Factors
|
12
|
Item 1B.
|
Unresolved
Staff Comments
|
23
|
Item 2.
|
Properties
|
23
|
Item 3.
|
Legal
Proceedings
|
23
|
Item 4.
|
Submission
of Matters to a Vote of Security Holders
|
24
|
PART
II
|
||
Item 5.
|
Market
for the Registrant’s Common Equity and Related Shareholder
Matters
|
25
|
Item 6.
|
Selected
Consolidated Financial Data
|
25
|
Item 7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
26
|
Item 7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
38
|
Item 8.
|
Financial
Statements and Supplementary Data
|
40
|
Item 9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
65
|
Item 9A.
|
Controls
and Procedures
|
65
|
Item 9B.
|
Other
Matters
|
68
|
PART
III
|
||
Item 10.
|
Directors
and Executive Officers of the Registrant
|
68
|
Item 11.
|
Executive
Compensation
|
69
|
Item 12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Shareholder Matters
|
69
|
Item 13.
|
Certain
Relationships and Related Transactions
|
69
|
Item 14.
|
Principal
Accounting Fees and Services
|
69
|
PART
IV
|
||
Item 15.
|
Exhibits
and Financial Statement Schedules
|
70
|
Signatures
|
72
|
ITEM 1.
|
BUSINESS
|
Product
Series
|
Key
Performance Features
|
Target
Applications
|
||
SMP8630
High
definition, fully integrated, secure digital media processor SoC—our
leading product for IPTV and Blu-ray player markets
|
• High-definition
multi-stream video decoding of MPEG-4.10 (H.264), VC-1 (SMPTE 421M), WMV9,
MPEG-4.2 and MPEG-2
• Secure
media processing with a wide variety of Digital Rights Management (DRM)
and Conditional Access (CA)
• Programmable
audio decoding with support for all audio formats
• High
performance 2D graphics acceleration with alpha blending and
scaling
• Display
output control including de-interlacing, HDMI and NTSC/PAL
• Integrated
high performance CPU and system connectivity interfaces (Ethernet, USB,
IDE, IR, IIC)
|
• IPTV
• Blu-ray
players/recorders
• HDTV
|
||
EM8620L
High
definition digital media processor SoC—our mid-range product for
multi-format applications
|
• High-definition
decoding of MPEG-4.10 (H.264), SMPTE 421M (VC-1), WMV9, MPEG-4.2 and
MPEG-2
• Selected
DRM decryption support
• Programmable
audio decoding with support for all formats
• 2D
graphics acceleration with alpha-blending and scaling
• Display
output control including de-interlacing and NTSC/PAL
• Integrated
CPU, Ethernet, and IDE
|
• Digital
media adapters
• IPTV
• HDTV
|
||
Windeo®
UWB
dual chip solution—for high bandwidth cable replacement applications,
currently in customer sampling phase
|
• Based
on the WiMedia® Alliance Multi-band OFDM (MBOA) PHY v1.1 and MAC v1.0
Specifications and is comprised of two devices: Windeo® RF IC (B7CW101)
and Windeo® Baseband IC (B7CW201)
• Enables
adding high-speed wireless access to the next generation of consumer
electronics products
|
• IPTV
• Blu-ray
players/recorders
• HDTV
• Digital
media adapters
• PCs
and peripherals
|
||
VXP9450
10-bit
dual channel
Image
Processor
|
• High
quality motion and speed
adaptive
deinterlacing
• Advanced
film mode detection and
compensation
• Frame
rate conversion with full
support
for genlock and frame-lock
operation
•
Adaptive 3D noise reduction
• Mosquito
noise reduction and block
artifact
reduction
• Adaptive
detail enhancement
• Adaptive
contrast enhancement
|
• Projection
and high-end HDTVs
• AV
receivers
|
Name
|
Age
|
Position
|
||
Thinh
Q. Tran
|
54
|
Chairman
of the Board, President and Chief Executive Officer
|
||
Thomas
E. Gay III
|
59
|
Chief
Financial Officer and Secretary
|
||
Silvio
Perich
|
60
|
Senior
Vice President of Worldwide Sales
|
||
Kit
Tsui
|
58
|
Vice
President of Planning and Administration
|
||
Jacques
Martinella
|
52
|
Vice
President of Engineering
|
||
Kenneth
Lowe
|
52
|
Vice
President of Strategic Marketing
|
ITEM 1A.
|
RISK
FACTORS
|
ITEM 1B.
|
UNRESOLVED
STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
ITEM 3.
|
LEGAL
PROCEEDINGS
|
ITEM 4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
ITEM 5.
|
MARKET
FOR THE REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
|
Fiscal 2008
|
Fiscal 2007
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
First
fiscal quarter
|
$ | 32.57 | $ | 23.12 | $ | 16.88 | $ | 12.83 | ||||||||
Second
fiscal quarter
|
34.00 | 24.15 | 14.85 | 7.99 | ||||||||||||
Third
fiscal quarter
|
60.65 | 29.30 | 19.88 | 8.52 | ||||||||||||
Fourth
fiscal quarter
|
73.00 | 35.00 | 29.12 | 18.60 |
ITEM 6.
|
SELECTED
CONSOLIDATED FINANCIAL DATA
|
Fiscal
Years Ended
|
||||||||||||||||||||
(In
thousands, except per share data)
|
February
2,
|
February
3,
|
January
28,
|
January
29,
|
January
31,
|
|||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Consolidated
Statements of Operations Data:
|
(Unaudited)
|
|||||||||||||||||||
Net
revenue
|
$ | 221,206 | $ | 91,218 | $ | 33,320 | $ | 31,398 | $ | 30,559 | ||||||||||
Income
(loss) from operations
|
57,301 | 5,857 | (4,569 | ) | (356 | ) | (841 | ) | ||||||||||||
Net
income (loss)
|
70,209 | 6,244 | (1,561 | ) | (125 | ) | (663 | ) | ||||||||||||
Basic
net income (loss) per share
|
$ | 2.73 | $ | 0.28 | $ | (0.07 | ) | $ | (0.01 | ) | $ | (0.03 | ) | |||||||
Diluted
net income (loss) per share
|
2.46 | 0.24 | (0.07 | ) | (0.01 | ) | (0.03 | ) | ||||||||||||
(In
thousands)
|
February
2,
|
February
3,
|
January
28,
|
January
29,
|
January
31,
|
|||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Consolidated
Balance Sheets Data:
|
(Unaudited)
|
(Unaudited)
|
||||||||||||||||||
Working
capital
|
$ | 263,178 | $ | 38,784 | $ | 27,826 | $ | 22,303 | $ | 22,516 | ||||||||||
Total
assets
|
379,466 | 76,084 | 40,357 | 35,553 | 30,703 | |||||||||||||||
Total
shareholders' equity
|
345,592 | 52,972 | 30,677 | 27,781 | 25,167 |
Fiscal
Years Ended
|
||||||||||||||||||||
February
2,
|
February
3,
|
January
28,
|
January
29,
|
January
31,
|
||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Supplemental
Data on Share-based Compensation
|
(Unaudited)
|
|||||||||||||||||||
Expense:
|
||||||||||||||||||||
Cost
of revenue
|
$ | 559 | $ | 380 | $ | 84 | $ | 101 | $ | 169 | ||||||||||
Research
and development
|
3,577 | 2,815 | 650 | 595 | 594 | |||||||||||||||
Selling
and marketing
|
1,005 | 825 | 353 | 344 | 416 | |||||||||||||||
General
and administrative
|
2,068 | 1,246 | 495 | 436 | 450 | |||||||||||||||
$ | 7,209 | $ | 5,266 | $ | 1,582 | $ | 1,476 | $ | 1,629 |
Years
Ended
|
||||||||||||||||||||||||
February
2,
|
% of
|
February
3,
|
% of
|
January
28,
|
% of
|
|||||||||||||||||||
2008
|
Net
Revenue
|
2007
|
Net
Revenue
|
2006
|
Net
Revenue
|
|||||||||||||||||||
Net
revenue
|
$ | 221,206 | 100 | % | $ | 91,218 | 100 | % | $ | 33,320 | 100 | % | ||||||||||||
Cost
of revenue
|
108,408 | (49 | )% | 46,783 | (51 | )% | 11,925 | (36 | )% | |||||||||||||||
Gross
profit
|
112,798 | 51 | % | 44,435 | 49 | % | 21,395 | 64 | % | |||||||||||||||
Operating
expenses:
|
||||||||||||||||||||||||
Research
and development
|
31,384 | (14 | )% | 22,515 | (25 | )% | 15,040 | (45 | )% | |||||||||||||||
Sales
and marketing
|
10,226 | (5 | )% | 7,841 | (9 | )% | 6,056 | (18 | )% | |||||||||||||||
General
and administrative
|
13,887 | (6 | )% | 8,222 | (9 | )% | 4,868 | (15 | )% | |||||||||||||||
Total
operating expenses
|
55,497 | (25 | )% | 38,578 | (42 | )% | 25,964 | (78 | )% | |||||||||||||||
Income
(loss) from operations
|
57,301 | 26 | % | 5,857 | 6 | % | (4,569 | ) | (14 | )% | ||||||||||||||
Gain
on sales of long-term investments
|
— | — | — | — | 2,549 | 8 | % | |||||||||||||||||
Interest
income and other income, net
|
5,782 | 3 | % | 815 | 1 | % | 529 | 2 | % | |||||||||||||||
Income
(loss) before income taxes
|
63,083 | 29 | % | 6,672 | 7 | % | (1,491 | ) | (4 | )% | ||||||||||||||
(Benefit)
provision for income taxes
|
(7,126 | ) | 3 | % | 428 | — | 70 | — | ||||||||||||||||
Net
income (loss)
|
$ | 70,209 | 32 | % | $ | 6,244 | 7 | % | $ | (1,561 | ) | (5 | )% |
Years
Ended
|
||||||||||||||||||||
February
2,
|
%
|
February
3,
|
%
|
January
28,
|
||||||||||||||||
2008
|
change
|
2007
|
change
|
2006
|
||||||||||||||||
Net
revenue
|
$ | 221,206 |
143%
|
$ | 91,218 |
174%
|
$ | 33,320 |
Years
Ended
|
||||||||||||||||||||||||
February
2,
|
%
of
|
February
3,
|
%
of
|
January
28,
|
%
of
|
|||||||||||||||||||
2008
|
Net
Revenue
|
2007
|
Net
Revenue
|
2006
|
Net
Revenue
|
|||||||||||||||||||
IPTV
|
$ | 164,143 | 74% | $ | 61,501 | 67% | $ | 19,170 | 58% | |||||||||||||||
High
definition DVD and other media players
|
49,127 | 22% | 24,698 | 27% | 11,227 | 34% | ||||||||||||||||||
HDTV
|
3,633 | 2% | 1,657 | 2% | 797 | 2% | ||||||||||||||||||
Other
|
4,303 | 2% | 3,362 | 4% | 2,126 | 6% | ||||||||||||||||||
Net
revenue
|
$ | 221,206 | 100% | $ | 91,218 | 100% | $ | 33,320 | 100% |
Years
Ended
|
||||||||||||||||||||||||
February
2,
|
%
of
|
February
3,
|
%
of
|
January
28,
|
%
of
|
|||||||||||||||||||
2008
|
Net
Revenue
|
2007
|
Net
Revenue
|
2006
|
Net
Revenue
|
|||||||||||||||||||
SoCs
|
$ | 216,703 | 98% | $ | 86,984 | 95% | $ | 28,198 | 85% | |||||||||||||||
Other
|
4,503 | 2% | 4,234 | 5% | 5,122 | 15% | ||||||||||||||||||
Net
revenue
|
$ | 221,206 | 100% | $ | 91,218 | 100% | $ | 33,320 | 100% |
Years
Ended
|
||||||||||||||||||||||||
February
2,
|
%
of
|
February
3,
|
%
of
|
January
28,
|
%
of
|
|||||||||||||||||||
2008
|
Net
Revenue
|
2007
|
Net
Revenue
|
2006
|
Net
Revenue
|
|||||||||||||||||||
Asia
|
$ | 153,146 | 69% | $ | 48,386 | 53% | $ | 27,293 | 82% | |||||||||||||||
Europe
|
56,782 | 26% | 33,109 | 36% | 2,081 | 6% | ||||||||||||||||||
North
America
|
11,173 | 5% | 9,607 | 11% | 3,944 | 12% | ||||||||||||||||||
Other
regions
|
105 | —% | * | 116 | —% | * | 2 | —% | * | |||||||||||||||
Net
revenue
|
$ | 221,206 | 100% | $ | 91,218 | 100% | $ | 33,320 | 100% |
Years
Ended
|
||||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Singapore
|
24% | * | —% | * | —% | * | ||||||
Korea
|
19% | 17% | 26% | |||||||||
Japan
|
12% | —% | * | —% | * | |||||||
China
|
—% | * | 11% | 21% | ||||||||
Taiwan
|
—% | * | —% | * | 14% |
Years
Ended
|
||||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||
Customer
|
2008
|
2007
|
2006
|
|||||||||
MTC
Singapore
|
23% | —% | * | —% | * | |||||||
Uniquest
|
19% | 17% | 26% | |||||||||
Macnica,
Inc.
|
12% | —% | * | —% | * | |||||||
Freebox
SA
|
—% | * | 20% | —% | * |
Years
Ended
|
||||||||||||||||||||
February
2,
|
%
|
February
3,
|
%
|
January
28,
|
||||||||||||||||
2008
|
change
|
2007
|
change
|
2006
|
||||||||||||||||
Gross
profit
|
$ | 112,798 | 154% | $ | 44,435 | 108% | $ | 21,395 | ||||||||||||
Gross
margin
|
51% | 49% | 64% |
Years
Ended
|
||||||||||||||||||||
February
2,
|
%
|
February
3,
|
%
|
January
28,
|
||||||||||||||||
2008
|
change
|
2007
|
change
|
2006
|
||||||||||||||||
Research
and development expenses
|
$ | 31,384 |
39%
|
$ | 22,515 |
50%
|
$ | 15,040 | ||||||||||||
Sales
and marketing expenses
|
10,226 |
30%
|
7,841 |
29%
|
6,056 | |||||||||||||||
General
and administrative expenses
|
13,887 |
69%
|
8,222 |
69%
|
4,868 | |||||||||||||||
Total
operating expenses
|
$ | 55,497 |
44%
|
$ | 38,578 |
49%
|
$ | 25,964 |
Years
Ended
|
||||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||
2008
(1)
|
2007
(1)
|
2006
|
||||||||||
Cost
of revenue
|
$ | 559 | $ | 380 | $ | 84 | ||||||
Research
and development expenses
|
3,577 | 2,815 | 650 | |||||||||
Sales
and marketing expenses
|
1,005 | 825 | 353 | |||||||||
General
and administrative expenses
|
2,068 | 1,246 | 495 | |||||||||
Total
share-based compensation
|
$ | 7,209 | $ | 5,266 | $ | 1,582 |
(1)
|
The
amounts included in fiscal 2007 and 2008 reflect the adoption of SFAS
123(R). In accordance with the modified prospective transition
method, our consolidated statements of operations for fiscal 2006 has not
been restated to reflect, and does not include, the impact of SFAS
123(R).
|
Years
Ended
|
||||||||||||||||||||
February
2,
|
%
|
February
3,
|
%
|
January
28,
|
||||||||||||||||
2008
|
change
|
2007
|
change
|
2006
|
||||||||||||||||
Interest
and other income, net
|
$ | 5,782 |
609%
|
$ | 815 |
54%
|
$ | 529 |
February
2,
|
February
3,
|
|||||||
2008
|
2007
|
|||||||
Cash
and cash equivalents
|
$ | 174.1 | $ | 24.4 | ||||
Short-term
marketable securities
|
44.4 | 8.8 | ||||||
$ | 218.5 | $ | 33.2 |
Years
Ended
|
||||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Net
cash flow provided by (used in):
|
||||||||||||
Operating
activities
|
$ | 40.2 | $ | 8.5 | $ | 1.2 | ||||||
Investing
activities
|
(100.1 | ) | (2.0 | ) | 2.2 | |||||||
Financing
activities
|
209.4 | 1.0 | 3.3 | |||||||||
Effect
of foreign rate changes on cash and cash equivalents
|
0.2 | 0.1 | (0.1 | ) | ||||||||
Net
increase in cash and cash equivalents
|
$ | 149.7 | $ | 7.6 | $ | 6.6 |
Payments
Due by Period
|
||||||||||||||||
1
year
|
1
- 3
|
3
- 5
|
||||||||||||||
Contractual
Obligations
|
or
less
|
years
|
years
|
Total
|
||||||||||||
Operating
leases
|
$ | 935 | $ | 1,882 | $ | 1,590 | $ | 4,407 | ||||||||
Non-cancelable
purchase orders
|
19,559 | — | — | 19,559 | ||||||||||||
$ | 20,494 | $ | 1,882 | $ | 1,590 | $ | 23,966 |
ITEM 7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
Page
|
|
Report
of Independent Registered Public Accounting Firm
|
41
|
Consolidated
Balance Sheets
|
42
|
Consolidated
Statements of Operations
|
43
|
Consolidated
Statements of Shareholders’ Equity and Comprehensive Income
(Loss)
|
44
|
Consolidated
Statements of Cash Flows
|
45
|
Notes
to Consolidated Financial Statements
|
46
|
February
2,
|
February
3,
|
|||||||
2008
|
2007
|
|||||||
Assets
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 174,089 | $ | 24,413 | ||||
Short-term
marketable securities
|
44,401 | 8,791 | ||||||
Accounts
receivable (net of allowances of $252 in 2008 and $601 in
2007)
|
40,205 | 11,231 | ||||||
Inventories
|
26,283 | 16,003 | ||||||
Deferred
tax assets
|
5,155 | — | ||||||
Prepaid
expenses and other current assets
|
5,547 | 1,095 | ||||||
Total
current assets
|
295,680 | 61,533 | ||||||
Long-term
marketable securities
|
57,242 | — | ||||||
Software,
equipment and leasehold improvements, net
|
8,783 | 3,364 | ||||||
Long-term
investments
|
263 | 263 | ||||||
Goodwill
|
5,020 | 5,020 | ||||||
Intangible
assets, net
|
4,303 | 5,527 | ||||||
Deferred
tax assets, net of current portion
|
7,513 | — | ||||||
Other
non-current assets
|
662 | 377 | ||||||
Total
assets
|
$ | 379,466 | $ | 76,084 | ||||
Liabilities
and Shareholders' Equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 18,484 | $ | 13,723 | ||||
Accrued
liabilities
|
14,018 | 8,800 | ||||||
Current
portion of bank term loan
|
— | 226 | ||||||
Total
current liabilities
|
32,502 | 22,749 | ||||||
Long-term
portion of bank term loan
|
— | 15 | ||||||
Other
long-term liabilities
|
1,372 | 348 | ||||||
Total
liabilities
|
33,874 | 23,112 | ||||||
Commitments
and contingencies (Note 9)
|
||||||||
Shareholders'
equity:
|
||||||||
Preferred
stock - no par value, 2,000,000 shares authorized; no shares
issued or outstanding
|
— | — | ||||||
Common
stock and additional paid-in capital; no par value; 100,000,000 shares
authorized;
|
||||||||
30,031,060
and 22,903,930 shares issued and outstanding at February 2, 2008
and
|
||||||||
February
3, 2007, respectively
|
341,194 | 119,301 | ||||||
Shareholder
notes receivable
|
— | (58 | ) | |||||
Accumulated
other comprehensive income
|
811 | 351 | ||||||
Retained
earnings (accumulated deficit)
|
3,587 | (66,622 | ) | |||||
Total
shareholders' equity
|
345,592 | 52,972 | ||||||
Total
liabilities and shareholders' equity
|
$ | 379,466 | $ | 76,084 |
Years
Ended
|
||||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Net
revenue
|
$ | 221,206 | $ | 91,218 | $ | 33,320 | ||||||
Cost
of revenue
|
108,408 | 46,783 | 11,925 | |||||||||
Gross
profit
|
112,798 | 44,435 | 21,395 | |||||||||
Operating
expenses:
|
||||||||||||
Research
and development
|
31,384 | 22,515 | 15,040 | |||||||||
Sales
and marketing
|
10,226 | 7,841 | 6,056 | |||||||||
General
and administrative
|
13,887 | 8,222 | 4,868 | |||||||||
Total
operating expenses
|
55,497 | 38,578 | 25,964 | |||||||||
Income
(loss) from operations
|
57,301 | 5,857 | (4,569 | ) | ||||||||
Gains
on sales of long-term investments
|
— | — | 2,549 | |||||||||
Interest
and other income, net
|
5,782 | 815 | 529 | |||||||||
Income
(loss) before income taxes
|
63,083 | 6,672 | (1,491 | ) | ||||||||
(Benefit)
provision for income taxes
|
(7,126 | ) | 428 | 70 | ||||||||
Net
income (loss)
|
$ | 70,209 | $ | 6,244 | $ | (1,561 | ) | |||||
Net
income (loss) per share:
|
||||||||||||
Basic
|
$ | 2.73 | $ | 0.28 | $ | (0.07 | ) | |||||
Diluted
|
$ | 2.46 | $ | 0.24 | $ | (0.07 | ) | |||||
Shares
used in computing net income (loss) per share:
|
||||||||||||
Basic
|
25,683 | 22,683 | 21,412 | |||||||||
Diluted
|
28,550 | 25,670 | 21,412 |
Accumulated
Other
|
||||||||||||||||||||||||||||||||||||
Common
Stock
|
Comprehensive
Income
|
Retained
|
Total
|
|||||||||||||||||||||||||||||||||
Shareholder
|
Unrealized
|
Accumulated
|
Earnings
|
Total
|
Comprehensive
|
|||||||||||||||||||||||||||||||
Deferred
|
Notes
|
Gain/
|
Translation
|
(Accumulated
|
Shareholders'
|
Income
|
||||||||||||||||||||||||||||||
Shares
|
Amount
|
Compensation
|
Receivable
|
(Loss)
|
Adjustment
|
Deficit)
|
Equity
|
(Loss)
|
||||||||||||||||||||||||||||
Balance,
January 29, 2005
|
21,038,962 | $ | 103,560 | $ | (4,698 | ) | $ | (29 | ) | $ | (24 | ) | $ | 276 | $ | (71,305 | ) | $ | 27,780 | — | ||||||||||||||||
Net
loss
|
— | — | — | — | — | — | (1,561 | ) | (1,561 | ) | (1,561 | ) | ||||||||||||||||||||||||
Unrealized
gains on marketable securities
|
— | — | — | — | 5 | — | — | 5 | 5 | |||||||||||||||||||||||||||
Currency
translation adjustment
|
— | — | — | — | — | (53 | ) | — | (53 | ) | (53 | ) | ||||||||||||||||||||||||
Total
comprehensive loss
|
(1,609 | ) | ||||||||||||||||||||||||||||||||||
Deferred
share-based compensation
|
— | 1,187 | (1,187 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||||
Amortization
of deferred share-
based
compensation
|
— | — | 1,582 | — | — | — | — | 1,582 | — | |||||||||||||||||||||||||||
Note
receivable issued for
common
stock
|
— | 29 | — | (29 | ) | — | — | — | — | — | ||||||||||||||||||||||||||
Common
stock issued
under
share plans
|
906,912 | 2,924 | — | — | — | — | — | 2,924 | — | |||||||||||||||||||||||||||
Balance,
January 28, 2006
|
21,945,874 | 107,700 | (4,303 | ) | (58 | ) | (19 | ) | 223 | (72,866 | ) | 30,677 | — | |||||||||||||||||||||||
Net
income
|
— | — | — | — | — | — | 6,244 | 6,244 | 6,244 | |||||||||||||||||||||||||||
Unrealized
gains on marketable securities
|
— | — | — | — | 35 | — | — | 35 | 35 | |||||||||||||||||||||||||||
Currency
translation adjustment
|
— | — | — | — | — | 112 | — | 112 | 112 | |||||||||||||||||||||||||||
Total
comprehensive income
|
6,391 | |||||||||||||||||||||||||||||||||||
Reversal
of APB 25 deferred share-
based
compensation upon the
adoption
of FAS 123R
|
— | (4,303 | ) | 4,303 | — | — | — | — | — | — | ||||||||||||||||||||||||||
Share-based
compensation expense
recognized
in accordance with
FAS
123R
|
— | 6,059 | — | — | — | — | — | 6,059 | — | |||||||||||||||||||||||||||
Issuance
of common stock for
Blue7
acquisition
|
583,870 | 8,189 | — | — | — | — | — | 8,189 | — | |||||||||||||||||||||||||||
Non-employee
share-based
compensation
|
— | 317 | — | — | — | — | — | 317 | — | |||||||||||||||||||||||||||
Excess
tax benefit from
stock
options
|
— | 123 | — | — | — | — | — | 123 | — | |||||||||||||||||||||||||||
Common
stock issued under
share
plans
|
374,186 | 1,216 | — | — | — | — | — | 1,216 | — | |||||||||||||||||||||||||||
Balance, February 3, 2007
|
22,903,930 | 119,301 | — | (58 | ) | 16 | 335 | (66,622 | ) | 52,972 | — | |||||||||||||||||||||||||
Net
income
|
— | — | — | — | — | — | 70,209 | 70,209 | 70,209 | |||||||||||||||||||||||||||
Unrealized
gains on marketable securities
|
— | — | — | — | 254 | — | — | 254 | 254 | |||||||||||||||||||||||||||
Currency
translation adjustment
|
— | — | — | — | — | 206 | — | 206 | 206 | |||||||||||||||||||||||||||
Total
comprehensive income
|
70,669 | |||||||||||||||||||||||||||||||||||
Shareholder
receivable written off
|
— | — | — | 29 | — | — | — | 29 | — | |||||||||||||||||||||||||||
Repayment of
shareholder
note
receivable
|
— | — | — | 29 | — | — | — | 29 | — | |||||||||||||||||||||||||||
Share-based
compensation expense
recognized
in accordance with FAS 123R
|
— | 6,777 | — | — | — | — | — | 6,777 | — | |||||||||||||||||||||||||||
Non-employee
share-based
compensation
|
— | 432 | — | — | — | — | — | 432 | — | |||||||||||||||||||||||||||
Excess
tax benefit from stock
options
|
— | 5,266 | — | — | — | — | — | 5,266 | — | |||||||||||||||||||||||||||
Common
stock issued under
share
plans
|
2,527,130 | 10,524 | — | — | — | — | — | 10,524 | — | |||||||||||||||||||||||||||
Common
stock issued in follow-on
offering,
net of offering costs
|
4,600,000 | 198,894 | — | — | — | — | — | 198,894 | — | |||||||||||||||||||||||||||
Balance, February 2, 2008
|
30,031,060 | $ | 341,194 | $ | — | $ | — | $ | 270 | $ | 541 | $ | 3,587 | $ | 345,592 | — |
Years
Ended
|
||||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income (loss)
|
$ | 70,209 | $ | 6,244 | $ | (1,561 | ) | |||||
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
|
||||||||||||
Depreciation
and amortization
|
3,375 | 2,352 | 938 | |||||||||
Share-based
compensation expense
|
7,209 | 5,266 | 1,582 | |||||||||
Provision
to record excess and obsolete inventory
|
669 | 1,224 | 29 | |||||||||
Provision
for sales returns, discounts and doubtful accounts
|
619 | 30 | 31 | |||||||||
Deferred
income taxes
|
(12,668 | ) | — | — | ||||||||
Shareholder
note receivable written off
|
29 | — | — | |||||||||
Loss
on disposal of equipment and leasehold improvements
|
12 | 10 | 43 | |||||||||
Gains
on sales of long-term investments
|
(31 | ) | — | (2,580 | ) | |||||||
Investment
impairment charges
|
— | 19 | 31 | |||||||||
Tax
benefit from employee stock option plan
|
5,264 | 123 | — | |||||||||
Excess
tax benefit from share-based compensation
|
(179 | ) | — | — | ||||||||
Accretion
of contributed leasehold improvements
|
(130 | ) | (81 | ) | (81 | ) | ||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Accounts
receivable
|
(29,593 | ) | (6,310 | ) | 1,435 | |||||||
Inventories
|
(10,949 | ) | (13,397 | ) | (184 | ) | ||||||
Prepaid
expenses and other current assets
|
(4,194 | ) | 45 | (58 | ) | |||||||
Other
non-current assets
|
(284 | ) | — | — | ||||||||
Accounts
payable
|
4,762 | 9,517 | (73 | ) | ||||||||
Accrued
liabilities and other
|
5,626 | 3,450 | 1,619 | |||||||||
Other
long-term liabilities
|
489 | — | — | |||||||||
Net
cash provided by operating activities
|
40,235 | 8,492 | 1,171 | |||||||||
Cash
flows from investing activities:
|
||||||||||||
Purchases
of marketable securities
|
(194,254 | ) | (22,234 | ) | (42,216 | ) | ||||||
Sales
and maturities of marketable securities
|
101,656 | 23,003 | 41,225 | |||||||||
Purchases
of software, equipment and leasehold improvements
|
(7,582 | ) | (3,014 | ) | (699 | ) | ||||||
Recovery
of long-term investment loss
|
31 | — | — | |||||||||
Net
proceeds from long-term investment
|
— | — | 4,580 | |||||||||
Issuance
of short-term promissory notes
|
— | — | (900 | ) | ||||||||
Cash
received in business acquisitions, net of cash paid
|
— | 147 | — | |||||||||
Other
|
— | 67 | 164 | |||||||||
Net
cash (used in) provided by investing activities
|
(100,149 | ) | (2,031 | ) | 2,154 | |||||||
Cash
flows from financing activities:
|
||||||||||||
Bank
borrowings
|
— | — | 600 | |||||||||
Repayment
of bank borrowings
|
(242 | ) | (203 | ) | (156 | ) | ||||||
Repayment
of shareholder note receivable
|
29 | — | — | |||||||||
Excess
tax benefit from share-based compensation
|
179 | — | — | |||||||||
Net
proceeds from exercise of employee stock options and stock purchase
rights
|
10,524 | 1,216 | 2,924 | |||||||||
Proceeds
from issuance of common stock, net of offering costs
|
198,894 | — | — | |||||||||
Costs
related to registration of private offering of common
stock
|
— | — | (63 | ) | ||||||||
Net
cash provided by financing activities
|
209,384 | 1,013 | 3,305 | |||||||||
Effect
of foreign exchange rate changes on cash and cash
equivalents
|
206 | 112 | (53 | ) | ||||||||
Increase
in cash and cash equivalents
|
149,676 | 7,586 | 6,577 | |||||||||
Cash
and cash equivalents at beginning of year
|
24,413 | 16,827 | 10,250 | |||||||||
Cash
and cash equivalents at end of year
|
$ | 174,089 | $ | 24,413 | $ | 16,827 | ||||||
Supplemental
disclosure of cash flow information:
|
||||||||||||
Cash
paid for interest
|
$ | 10 | $ | 30 | $ | 45 | ||||||
Cash
paid for income taxes
|
$ | 388 | $ | 171 | $ | 9 | ||||||
Issuance
of common stock and assumption of stock options related to business
acquisition
|
$ | — | $ | 11,414 | $ | — |
1.
|
Organization
and Summary of Significant Accounting
Policies
|
Years
Ended
|
||||||||
February
2, 2008
|
February
3, 2007
|
|||||||
Share-based
compensation by type of award:
|
||||||||
Stock
options
|
$ | 6,359 | $ | 4,842 | ||||
Employee
stock purchase plan
|
419 | 107 | ||||||
Total
share-based compensation
|
6,778 | 4,949 | ||||||
Tax
effect on share-based compensation
|
(1,598 | ) | (317 | ) | ||||
Net
effect on net income
|
$ | 5,180 | $ | 4,632 | ||||
Effect
on net income per share:
|
||||||||
Basic
|
$ | 0.20 | $ | 0.20 | ||||
Diluted
|
$ | 0.18 | $ | 0.18 |
Year
Ended
|
||||
January
28,
|
||||
2006
|
||||
Net
loss
|
$ | (1,561 | ) | |
Add:
share-based employee compensation expense included in reported net
income,
net of tax
|
1,582 | |||
Deduct:
share-based employee compensation expense determined under fair
value
based method, net of tax
|
(3,461 | ) | ||
Pro
forma net loss
|
$ | (3,440 | ) | |
Basic
and diluted net loss per share:
|
||||
As
reported
|
$ | (0.07 | ) | |
Pro
forma
|
$ | (0.16 | ) |
2.
|
Cash
,
cash equivalents and marketable
securities
|
February
2, 2008
|
February
3, 2007
|
|||||||||||||||||||||||
Fair
|
Fair
|
|||||||||||||||||||||||
Adjusted
|
Unrealized
|
market
|
Adjusted
|
Unrealized
|
market
|
|||||||||||||||||||
cost
|
gain
|
value
|
cost
|
gain
|
value
|
|||||||||||||||||||
Money
market funds
|
$ | 165,719 | $ | — | $ | 165,719 | $ | 13,552 | $ | — | $ | 13,552 | ||||||||||||
Corporate
commercial paper
|
33,354 | 35 | 33,389 | 1,734 | — | 1,734 | ||||||||||||||||||
Corporate
bonds
|
17,177 | 180 | 17,357 | 724 | — | 724 | ||||||||||||||||||
US
agency discount notes
|
4,926 | 25 | 4,951 | — | — | — | ||||||||||||||||||
US
agency non-callable
|
7,000 | 30 | 7,030 | 2,000 | (1 | ) | 1,999 | |||||||||||||||||
Auction
rate securities
|
43,900 | — | 43,900 | 5,175 | — | 5,175 | ||||||||||||||||||
Total
cash equivalents and marketable securities
|
$ | 272,076 | $ | 270 | $ | 272,346 | $ | 23,185 | $ | (1 | ) | $ | 23,184 | |||||||||||
Cash
on hand held in the United States
|
2,257 | 8,985 | ||||||||||||||||||||||
Cash
on hand held overseas
|
1,129 | 1,035 | ||||||||||||||||||||||
3,386 | 10,020 | |||||||||||||||||||||||
Total
cash, cash equivalents and marketable securities
|
$ | 275,732 | $ | 33,204 | ||||||||||||||||||||
Reported
as:
|
||||||||||||||||||||||||
Cash
and cash equivalents
|
$ | 174,089 | $ | 24,413 | ||||||||||||||||||||
Short-term
marketable securities
|
44,401 | 8,791 | ||||||||||||||||||||||
Long-term
marketable securities
|
57,242 | — | ||||||||||||||||||||||
$ | 275,732 | $ | 33,204 |
February
2, 2008
|
February
3, 2007
|
|||||||||||||||
Estimated
|
Estimated
|
|||||||||||||||
Amortized
|
market
|
Amortized
|
market
|
|||||||||||||
(In
thousands)
|
cost
|
value
|
cost
|
value
|
||||||||||||
Due
in 1 year or less
|
$ | 214,959 | $ | 215,104 | $ | 23,185 | $ | 23,184 | ||||||||
Due
in greater than 1 year
|
57,117 | 57,242 | — | — | ||||||||||||
Total
|
$ | 272,076 | $ | 272,346 | $ | 23,185 | $ | 23,184 |
3.
|
Inventories
|
February
2,
|
February
3,
|
|||||||
2008
|
2007
|
|||||||
Raw
materials
|
$ | 12,838 | $ | 7,696 | ||||
Work-in-process
|
2,735 | 1,680 | ||||||
Finished
goods
|
10,710 | 6,627 | ||||||
Total
|
$ | 26,283 | $ | 16,003 |
4.
|
Software,
equipment and leasehold
improvements
|
February
2,
|
February
3,
|
|||||||
2008
|
2007
|
|||||||
Software
|
$ | 5,688 | $ | 3,138 | ||||
Computers
and test equipment
|
4,899 | 2,794 | ||||||
Furniture
and fixtures
|
1,981 | 591 | ||||||
Leasehold
improvements
|
1,036 | 761 | ||||||
Other
|
632 | 145 | ||||||
Total
|
$ | 14,236 | $ | 7,429 | ||||
Accumulated
depreciation and amortization
|
(5,453 | ) | (4,065 | ) | ||||
Total
|
$ | 8,783 | $ | 3,364 |
5.
|
Acquisition
|
Value
of Sigma stock issued
|
$ | 8,190 | ||
Fair
value of vested stock options assumed
|
1,091 | |||
Retirement
of note receivables
|
400 | |||
Retirement
of interest receivable
|
25 | |||
Investment
in Blue7 prior to the acquisition
|
1,000 | |||
Note
receivable converted to Blue7 preferred shares prior to the
acquisition
|
500 | |||
Cash
acquired from Blue7 acquisition
|
(147 | ) | ||
Direct
costs
|
804 | |||
Total
purchase price
|
$ | 11,863 |
Expected
term (in years)
|
5.13
years
|
Volatility
|
74%
|
Risk
free interest rate
|
4.59%
|
Amount
|
Estimated
Useful
Life
|
||||
Net
tangible assets
|
$ | 104 | |||
Identifiable
intangible assets:
|
|||||
Licensing
agreements
|
39 |
6
to 15 months
|
|||
Developed
technology
|
5,300 |
7
years
|
|||
Noncompete
agreements
|
1,400 |
3
years
|
|||
Goodwill
|
5,020 | ||||
Total
purchase price
|
$ | 11,863 |
Fiscal
Year Ended
|
||||
January
28, 2006
|
||||
Reported
net revenue
|
$ | 33,320 | ||
Reported
net loss
|
$ | (1,561 | ) | |
Reported
net loss per share - basic and diluted
|
$ | (0.07 | ) | |
Pro
forma net revenue
|
$ | 33,553 | ||
Pro
forma net loss
|
$ | (3,770 | ) | |
Pro
forma net loss per share - basic and diluted
|
$ | (0.17 | ) |
6.
|
Goodwill
and Intangible assets
|
Accumulated
|
||||||||||||
Cost
|
Amortization
|
Net
|
||||||||||
Developed
technology
|
$ | 5,300 | $ | (1,483 | ) | $ | 3,817 | |||||
Noncompete
agreements
|
1,400 | (914 | ) | 486 | ||||||||
Total
acquired intangible assets
|
$ | 6,700 | $ | (2,397 | ) | $ | 4,303 |
Accumulated
|
||||||||||||
Cost
|
Amortization
|
Net
|
||||||||||
Developed
technology
|
$ | 5,300 | $ | (726 | ) | $ | 4,574 | |||||
Noncompete
agreements
|
1,400 | (447 | ) | 953 | ||||||||
Total
acquired intangible assets
|
$ | 6,700 | $ | (1,173 | ) | $ | 5,527 |
Developed
|
Noncompete
|
|||||||||||
Fiscal
year
|
Technology
|
Agreements
|
Total
|
|||||||||
2009
|
$ | 757 | $ | 467 | $ | 1,224 | ||||||
2010
|
757 | 19 | 776 | |||||||||
2011
|
757 | — | 757 | |||||||||
2012
|
757 | — | 757 | |||||||||
2013
|
757 | — | 757 | |||||||||
Thereafter
|
32 | — | 32 | |||||||||
$ | 3,817 | $ | 486 | $ | 4,303 |
7.
|
Accrued
liabilities
|
February
2,
|
February
3,
|
|||||||
2008
|
2007
|
|||||||
Accrued
payroll taxes
|
$ | 2,823 | $ | 4,562 | ||||
Accrued
software design tool fees
|
2,509 | — | ||||||
Accrued
attorney's fee
|
2,250 | — | ||||||
Accrued
salaries and benefits
|
2,039 | 889 | ||||||
Accrued
warranty
|
1,564 | 556 | ||||||
Accrued
royalties
|
690 | 410 | ||||||
Deferred
revenues
|
215 | 755 | ||||||
Accrued
commissions
|
184 | 277 | ||||||
Customer
deposits
|
214 | 85 | ||||||
Income
taxes payable
|
— | 465 | ||||||
Other
accrued liabilities
|
1,530 | 801 | ||||||
Total
|
$ | 14,018 | $ | 8,800 |
8.
|
Product
warranty
|
Balance
|
Balance
|
|||||||||||||||
Beginning
|
End
of
|
|||||||||||||||
Fiscal
years
|
of
Period
|
Additions
|
Deductions
|
Period
|
||||||||||||
2008
|
$ | 556 | $ | 1,828 | $ | (820 | ) | $ | 1,564 | |||||||
2007
|
289 | 599 | (332 | ) | 556 | |||||||||||
2006
|
191 | 187 | (89 | ) | 289 |
9.
|
Commitments
and Contingencies
|
Operating
|
||||
Fiscal
years
|
Lease
|
|||
2009
|
$ | 935 | ||
2010
|
946 | |||
2011
|
936 | |||
2012
|
973 | |||
2013
|
617 | |||
Total
minimum lease payments
|
$ | 4,407 |
10.
|
Debt
|
11.
|
Net
income (loss) per share
|
Years
Ended
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Numerator:
|
||||||||||||
Net
income (loss), as reported
|
$ | 70,209 | $ | 6,244 | $ | (1,561 | ) | |||||
Denominator:
|
||||||||||||
Weighted
average common shares outstanding - basic
|
25,683 | 22,683 | 21,412 | |||||||||
Effect
of dilutive securities:
|
||||||||||||
Escrowed
shares related to Blue7 acquisition
|
— | 94 | — | |||||||||
Stock
options
|
2,867 | 2,893 | — | |||||||||
Shares
used in computation - diluted
|
28,550 | 25,670 | 21,412 | |||||||||
Net
income (loss) per share:
|
||||||||||||
Basic
|
$ | 2.73 | $ | 0.28 | $ | (0.07 | ) | |||||
Diluted
|
$ | 2.46 | $ | 0.24 | $ | (0.07 | ) |
Years
Ended
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Stock
options excluded because exercise price in excess of average stock
price
|
362 | 489 | 2 | |||||||||
Dilutive
shares not included in loss years
|
— | — | 2,621 | |||||||||
Total
potential dilutive securities
|
362 | 489 | 2,623 |
12.
|
Stock
option plans
|
Weighted
Average
|
Aggregate
|
|||||||||||||||
Number
of
|
Weighted
Average
|
Remaining
|
Intrinsic
|
|||||||||||||
Shares
|
Exercise
Price
|
Contractual
Term
|
Value
|
|||||||||||||
Outstanding
|
Per
Share
|
(Years)
|
(in
thousands)
|
|||||||||||||
Balance,
January 29, 2005 (2,853,801 exercisable at a
weighted-average
price of $2.79)
|
4,835,339 | $ | 3.33 | |||||||||||||
Granted
(weighted-average fair value of $6.22)
|
967,900 | 10.36 | ||||||||||||||
Cancelled
|
(92,679 | ) | 5.89 | |||||||||||||
Exercised
|
(825,343 | ) | 2.89 | |||||||||||||
Balance,
January 28, 2006 (2,745,101 exercisable at a
weighted-average
price of $2.99)
|
4,885,217 | 4.75 | ||||||||||||||
Granted
(weighted-average fair value of $9.58)
|
1,092,837 | 10.51 | ||||||||||||||
Cancelled
|
(173,783 | ) | 8.14 | |||||||||||||
Exercised
|
(337,909 | ) | 2.74 | |||||||||||||
Balance,
February 3, 2007 (3,243,508 exercisable at a
weighted-average
price of $3.53)
|
5,466,362 | $ | 5.92 | 5.93 | $ | 108,137 | ||||||||||
Granted
(weighted-average fair value of $29.23)
|
1,204,900 | 45.44 | ||||||||||||||
Cancelled
|
(249,177 | ) | 20.47 | |||||||||||||
Exercised
|
(2,480,266 | ) | 3.82 | |||||||||||||
Balance,
February 2, 2008
|
3,941,819 | $ | 16.78 | 7.34 | $ | 125,256 | ||||||||||
Ending
Vested & Expected to Vest
|
3,735,685 | $ | 16.33 | 7.26 | $ | 120,394 | ||||||||||
Ending
Exercisable
|
1,551,905 | $ | 6.37 | 5.42 | $ | 65,473 |
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||||||||||||
Range of Exercise Prices
|
Number of Shares Outstanding
at
February 2, 2008
|
Weighted Average Remaining Life
(Years)
|
Weighted
Average
Exercise Price Per
Share
|
Number of Shares Exercisable at February 2,
2008
|
Weighted Average Exercise Price Per
Share
|
|||||||||||||||||||||
$ | 0.95 | $ | 3.22 | 453,617 | 4.13 | $ | 2.04 | 405,480 | $ | 1.92 | ||||||||||||||||
$ | 3.30 | $ | 5.43 | 456,949 | 4.77 | $ | 4.17 | 357,795 | $ | 3.84 | ||||||||||||||||
$ | 5.60 | $ | 7.89 | 540,279 | 6.03 | $ | 7.34 | 353,691 | $ | 7.22 | ||||||||||||||||
$ | 7.99 | $ | 9.89 | 269,527 | 7.58 | $ | 9.76 | 75,823 | $ | 9.65 | ||||||||||||||||
$ | 11.06 | $ | 11.06 | 568,015 | 8.56 | $ | 11.06 | 139,523 | $ | 11.06 | ||||||||||||||||
$ | 11.40 | $ | 13.88 | 426,410 | 7.42 | $ | 11.69 | 174,279 | $ | 11.66 | ||||||||||||||||
$ | 15.91 | $ | 27.83 | 208,122 | 8.54 | $ | 20.08 | 42,814 | $ | 18.47 | ||||||||||||||||
$ | 28.63 | $ | 28.63 | 135,000 | 9.03 | $ | 28.63 | — | $ | — | ||||||||||||||||
$ | 31.57 | $ | 31.57 | 216,500 | 9.50 | $ | 31.57 | 2,500 | $ | 31.57 | ||||||||||||||||
$ | 45.83 | $ | 45.83 | 667,400 | 9.76 | $ | 45.83 | — | $ | — | ||||||||||||||||
$ | 0.95 | $ | 45.83 | 3,941,819 | 7.34 | $ | 16.78 | 1,551,905 | $ | 6.37 |
Years
Ended
|
|||||||||
February
2,
|
February
3,
|
January
28,
|
|||||||
Stock
Options
|
2008
|
2007
|
2006
|
||||||
Expected
volatility
|
68.39%
|
69.98%
|
58.96%
|
||||||
Risk-free
interest rate
|
3.79%
|
4.77%
|
4.31%
|
||||||
Expected
term (in years)
|
6.04
|
5.90
|
4.54
|
||||||
Dividend
yield
|
None
|
None
|
None
|
||||||
Employee
Stock Purchase Plan
|
|||||||||
Expected
volatility
|
60.10%
|
54.55%
|
62.10%
|
||||||
Risk-free
interest rate
|
4.44%
|
4.66%
|
3.10%
|
||||||
Expected
term (in years)
|
0.50
|
0.50
|
0.50
|
||||||
Dividend
yield
|
None
|
None
|
None
|
Years
Ended
|
||||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
United
States
|
$ | 61,953 | $ | 6,135 | $ | (1,962 | ) | |||||
International
|
1,130 | 537 | 471 | |||||||||
Total
|
$ | 63,083 | $ | 6,672 | $ | (1,491 | ) |
Years
Ended
|
||||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Current
|
||||||||||||
Federal
|
$ | 5,410 | $ | 314 | $ | — | ||||||
State
|
34 | 64 | 6 | |||||||||
Foreign
|
58 | 50 | 64 | |||||||||
Total
current
|
$ | 5,502 | $ | 428 | $ | 70 | ||||||
Deferred
|
||||||||||||
Federal
|
(9,195 | ) | — | — | ||||||||
State
|
(3,427 | ) | — | — | ||||||||
Foreign
|
(6 | ) | — | — | ||||||||
Total
deferred
|
(12,628 | ) | — | — | ||||||||
Total
provision
|
$ | (7,126 | ) | $ | 428 | $ | 70 |
Years
Ended
|
||||||||
February
2,
|
February
3,
|
|||||||
2008
|
2007
|
|||||||
Deferred
tax assets:
|
||||||||
Net
operating losses and credits carry forwards
|
$ | 943 | $ | 16,077 | ||||
Allowance,
reserve and other
|
4,864 | 5,385 | ||||||
Depreciation
|
515 | 284 | ||||||
Tax
credits
|
4,914 | 10,727 | ||||||
Share-based
compensation
|
3,053 | 3,388 | ||||||
Total
gross deferred tax assets
|
14,289 | 35,861 | ||||||
Valuation
allowance
|
- | (33,653 | ) | |||||
Total
net deferred tax assets
|
14,289 | 2,208 | ||||||
Deferred
tax liabilities:
|
||||||||
Acquired
intangibles
|
(1,621 | ) | (2,208 | ) | ||||
Total
net deferred tax assets
|
$ | 12,668 | $ | - |
Expiration
|
|||||
Amount
|
Years
|
||||
Net
operating losses, federal
|
$ | 60,657 |
Thru
2028
|
||
Net
operating losses, state
|
12,341 |
Thru
2018
|
|||
Tax
credits, federal
|
2,427 |
Thru
2028
|
|||
Tax
credits, state
|
2,486 |
Indefinite
|
Years
Ended
|
||||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Computed
at 35%
|
$ | 22,091 | $ | 2,336 | $ | (444 | ) | |||||
State
taxes net of federal benefit
|
(3,405 | ) | 42 | 4 | ||||||||
Difference
between statutory rate and foreign effective tax rate
|
(287 | ) | (109 | ) | (101 | ) | ||||||
Expenses
not deductible for tax purposes
|
673 | 235 | 615 | |||||||||
Share
based compensation expense
|
637 | 554 | — | |||||||||
Change
in valuation allowance, federal effect only
|
(25,031 | ) | (1,505 | ) | 685 | |||||||
Tax
credit
|
(1,804 | ) | (1,125 | ) | (689 | ) | ||||||
Total
|
$ | (7,126 | ) | $ | 428 | $ | 70 |
Balance
at February 4, 2007
|
$ | 2,353 | ||
Additions
based on tax positions related to the current year
|
1,393 | |||
Additions
for tax positions of prior years
|
892 | |||
Reductions
for tax positions of prior year
|
(409 | ) | ||
Balance
at January 31, 2008
|
$ | 4,229 |
14.
|
Significant
customers
|
15.
|
Related
party transactions
|
16.
|
Segment
and geographical information
|
Years
Ended
|
||||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
SoCs
|
$ | 216,703 | $ | 86,984 | $ | 28,198 | ||||||
Other
|
4,503 | 4,234 | 5,122 | |||||||||
Net
revenue
|
$ | 221,206 | $ | 91,218 | $ | 33,320 |
Years
Ended
|
||||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
IPTV
|
$ | 164,143 | $ | 61,501 | $ | 19,170 | ||||||
High
definition DVD and other media players
|
49,127 | 24,698 | 11,227 | |||||||||
HDTV
|
3,633 | 1,657 | 797 | |||||||||
Other
|
4,303 | 3,362 | 2,126 | |||||||||
Net
revenue
|
$ | 221,206 | $ | 91,218 | $ | 33,320 |
Years
Ended
|
||||||||||||||||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||||||||||||||
2008
|
2007
|
2006
|
||||||||||||||||||||||
Asia
|
$ | 153,146 | 69% | $ | 48,386 | 53% | $ | 27,293 | 82% | |||||||||||||||
Europe
|
56,782 | 26% | 33,109 | 36% | 2,081 | 6% | ||||||||||||||||||
North
America
|
11,173 | 5% | 9,607 | 11% | 3,944 | 12% | ||||||||||||||||||
Other
regions
|
105 | —% | * | 116 | —% | * | 2 | —% | * | |||||||||||||||
Net
revenue
|
$ | 221,206 | $ | 91,218 | $ | 33,320 |
Years
Ended
|
||||||||||||
February
2,
|
February
3,
|
January
28,
|
||||||||||
2008
|
2007
|
2006
|
||||||||||
Singapore
|
$ | 52,529 | $ | 7,403 | $ | 256 | ||||||
Korea
|
42,941 | 15,616 | 8,548 | |||||||||
France
|
31,448 | 26,836 | 268 | |||||||||
Japan
|
26,754 | 7,286 | 2,859 | |||||||||
Other
European countries
|
25,331 | 6,273 | 1,813 | |||||||||
China
|
16,597 | 9,767 | 7,125 | |||||||||
United
States
|
11,163 | 9,498 | 3,816 | |||||||||
Taiwan
|
10,863 | 4,368 | 4,823 | |||||||||
Hong
Kong
|
3,413 | 3,675 | 3,206 | |||||||||
Rest
of the world
|
167 | 496 | 606 | |||||||||
Net
revenue
|
$ | 221,206 | $ | 91,218 | $ | 33,320 |
February
2,
|
February
3,
|
January
28,
|
||||||||||
Long-lived
assets:
|
2008
|
2007
|
2006
|
|||||||||
United
States
|
$ | 18,015 | $ | 13,762 | $ | 1,318 | ||||||
France
|
88 | 140 | 152 | |||||||||
Hong
Kong
|
3 | 9 | 4 | |||||||||
Total
long-lived assets
|
$ | 18,106 | $ | 13,911 | $ | 1,474 |
17.
|
Quarterly
financial information (unaudited)
|
Quarters
Ended
|
||||||||||||||||||||||||||||||||
February
2,
|
November
3,
|
August
4,
|
May
5,
|
February
3,
|
October
28,
|
July
29,
|
April
29,
|
|||||||||||||||||||||||||
2008
|
2007
|
2007
|
2007
|
2007
|
2006
|
2006
|
2006
|
|||||||||||||||||||||||||
Net
revenues
|
$ | 76,398 | $ | 66,244 | $ | 42,548 | $ | 36,016 | $ | 31,228 | $ | 25,055 | $ | 20,136 | $ | 14,799 | ||||||||||||||||
Gross
profit
|
37,453 | 35,227 | 22,308 | 17,810 | 16,005 | 12,038 | 8,962 | 7,430 | ||||||||||||||||||||||||
Income
(loss) from operations
|
20,852 | 22,413 | 8,796 | 5,240 | 4,623 | 2,697 | 68 | (1,530 | ) | |||||||||||||||||||||||
Net
income (loss)
|
35,302 | 20,950 | 8,588 | 5,369 | 4,643 | 2,742 | 216 | (1,356 | ) | |||||||||||||||||||||||
Net
income (loss) per share:
|
||||||||||||||||||||||||||||||||
Basic
|
$ | 1.19 | $ | 0.80 | $ | 0.36 | $ | 0.23 | $ | 0.20 | $ | 0.12 | $ | 0.01 | $ | (0.06 | ) | |||||||||||||||
Diluted
|
$ | 1.12 | $ | 0.72 | $ | 0.32 | $ | 0.20 | $ | 0.18 | $ | 0.11 | $ | 0.01 | $ | (0.06 | ) |
18.
|
Subsequent
events
|
ITEM 9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
ITEM 9A.
|
CONTROLS
AND PROCEDURES
|
ITEM 10.
|
DIRECTORS
AND EXECUTIVE OFFICERS OF THE
REGISTRANT
|
ITEM 11.
|
EXECUTIVE
COMPENSATION
|
ITEM 12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
SHAREHOLDER MATTERS
|
ITEM 13.
|
CERTAIN
RELATIONSHIPS AND RELATED
TRANSACTIONS
|
ITEM 14.
|
PRINCIPAL
ACCOUNTING FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
|
Fina
n
cial
Statements
|
Page
|
|
Report
of Independent Registered Public Accounting Firm
|
41
|
|
Consolidated
Balance Sheets
|
42
|
|
Consolidated
Statements of Operations
|
43
|
|
Consolidated
Statements of Shareholders’ Equity and Comprehensive Income
(Loss)
|
44
|
|
Consolidated
Statements of Cash Flows
|
45
|
|
Notes
to Consolidated Financial Statements
|
46
|
Schedule
II—Valuation and Qualifying Accounts and Reserves
|
72
|
SIGMA
DESIGNS, INC.
|
|||
|
By:
|
/s/ Thinh Q. Tran | |
Thinh
Q. Tran
|
|||
Chairman
of the Board,
|
|||
President
and Chief Executive Officer
|
Signature
|
Title
|
Date
|
||
/s/ Thinh
Q. Tran
Thinh
Q. Tran
|
Chairman
of the Board, President, and Chief Executive Officer (Principal Executive
Officer)
|
April
2, 2008
|
||
/s/
Thomas E. Gay III
Thomas
E. Gay III
|
Chief
Financial Officer and Secretary (Principal Financial and Accounting
Officer)
|
April
2, 2008
|
||
/s/
William J. Almon
William
J. Almon
|
Director
|
April
2, 2008
|
||
/s/
Julien Nguyen
Julien
Nguyen
|
Director
|
April
2, 2008
|
||
/s/
Lung C. Tsai
Lung
C. Tsai
|
Director
|
April
2, 2008
|
Additions:
|
||||||||||||||||
Balance
at
|
Charged
to
|
Balance
at
|
||||||||||||||
Beginning
of
|
Costs
and
|
End
of
|
||||||||||||||
Classification
|
Year
|
Expenses
|
Deductions:
|
Year
|
||||||||||||
Allowance
for returns, doubtful accounts and discounts:
|
(in
thousands)
|
|||||||||||||||
Fiscal
year
|
||||||||||||||||
2008
|
$ | 601 | $ | 619 | $ | 968 | $ | 252 | ||||||||
2007
|
1,491 | 30 | 920 | 601 | ||||||||||||
2006
|
1,460 | 31 | — | 1,491 |
Exhibit
Number
|
Description
|
Filed
Herewith or Incorporated Herein by Reference
to
|
3.1
|
Second
Restated Articles of Incorporation.
|
Incorporated
by reference to exhibit filed with the Registration Statement on Form S-1
(No. 33-17789) filed October 8, 1987, Amendment No. 1 thereto filed June
9, 1988 and Amendment No. 2 thereto filed June 14, 1988, which
Registration Statement became effective June 14, 1988.
|
||
3.2
|
Certificate
of Amendment to the Second Restated Articles of Incorporation dated June
22, 2001.
|
Incorporated
by reference to exhibit filed with the Registration Statement on Form S-8
(No. 333-64234) filed on June 29, 2001.
|
||
3.3
|
Bylaws
of the Company, as amended.
|
Incorporated
by reference to exhibit filed with the Annual Report on Form 10-K for the
fiscal year ended February 1, 2003.
|
||
3.4
|
Certificate
of Determination of Preferences of Series A Preferred Stock dated
June 13, 1997.
|
Incorporated
by reference to exhibit 3.3 filed with the Registrant’s Form S-1 filed on
September 14, 2007.
|
||
3.5
|
Certificate
of Determination of Preferences of Series B Preferred Stock dated
January 30, 1998.
|
Incorporated
by reference to exhibit 3.4 filed with the Registrant’s Form S-1 filed on
September 14, 2007.
|
||
3.6
|
Certificate
of Determination of Preferences of Series C Preferred Stock dated
January 20, 1999.
|
Incorporated
by reference to exhibit 3.5 filed with the Registrant’s Form S-1 filed on
September 14, 2007.
|
||
3.6
|
Certificate
of Determination of Rights, Preferences and Privileges of Series D
Participating Preferred Stock dated June 4, 2004.
|
Incorporated
by reference to exhibit 3.6 filed with the Registrant’s Form S-1 filed on
September 14, 2007.
|
||
|
||||
3.7
|
Certificate
of Amendment to the Second Restated Articles of Incorporation dated
January 28, 2008
|
Filed
herewith.
|
||
4.1
|
Preferred
Stock Rights Agreement, dated as of June 7, 2004, between the Company and
Mellon Investor Services LLC, as Rights Agent, including the Certificate
of Designation, the form of Rights Certificate and the Summary of Rights
attached thereto as Exhibit A, B and C, respectively.
|
Incorporated
by reference to exhibit filed with the Current Report on Form 8-K filed on
June 7, 2004.
|
||
10.1*
|
1986
Employee Stock Purchase Plan, as amended, and form of Subscription
Agreement.
|
Incorporated
by reference to exhibit filed with the Registration Statement on Form S-8
(No. 333-61549) filed on August 14, 1998.
|
||
10.2*
|
Amended
and Restated 1994 Stock Plan and form of Stock Option
Agreement.
|
Incorporated
by reference to exhibit filed with the Registration Statement on Form S-8
(No. 333-86875) filed on September 10, 1999.
|
||
10.3*
|
1994
Director Stock Option Plan and form of Director Option
Agreement.
|
Incorporated
by reference to exhibit filed with the Registration Statement on Form S-3
(No. 33-74308) filed on January 28, 1994, Amendment No. 1 thereto filed
February 24, 1994, Amendment No. 2 thereto filed March 3, 1994, Amendment
No. 3 thereto filed March 4, 1994 and Amendment No. 4 thereto filed March
8, 1994.
|
||
10.4*
|
2001
Employee Stock Option Plan.
|
Incorporated
by reference to exhibit filed with the Registration Statement on Form S-8
(333-64234) filed on June 29, 2001.
|
10.5*
|
2001
Employee Stock Purchase Plan and Form of Subscription
Agreement.
|
Incorporated
by reference to exhibit filed with the Registration Statement on Form S-8
(333-64234) filed on June 29, 2001.
|
||
10.6
|
2001
Loan and Security Agreement with Silicon Valley Bank, as
amended.
|
Incorporated
by reference to exhibit filed the Annual Report on Form 10-K for the
fiscal year ended February 2, 2002.
|
||
10.7
|
Lease
between the Company and EOP-Industrial Portfolio, L.L.C.
|
Incorporated
by reference to exhibit filed with the Annual Report on Form 10-K for the
fiscal year ended February 1, 2003.
|
||
10.8
|
Amendment
to Company’s 2001 Loan and Security Agreement with Silicon Valley
Bank.
|
Incorporated
by reference to exhibit filed with the Annual Report on Form 10-K for the
fiscal year ended January 31, 2004.
|
||
10.9
|
Amended
and Restated Schedule to Loan and Security Agreement with Silicon Valley
Bank
|
Incorporated
by reference to exhibit filed with Annual Report on Form 10-K for the
fiscal year ended January 31, 2004.
|
||
10.10
|
Purchase
of Series B Preferred Stock in Envivio from Sigma Designs,
Inc.
|
Incorporated
by reference to exhibit filed with the Annual Report on Form 10-K for the
fiscal year ended January 29, 2005.
|
||
10.11
|
Agreement
and Plan of Merger dated December 13, 2005 by and among the Company, Blue7
Communications and the other parties named therein.
|
Incorporated
by reference to exhibit filed with the Current Report on Form 8-K filed on
December 16, 2005.
|
||
10.12
|
Amendment
No. 1 to Agreement and Plan of Merger dated January 9, 2006 by and among
the Company, Blue7 Communications and the other parties named
therein.
|
Incorporated
by reference to exhibit 2.1 filed with the Current Report on Form 8-K
filed on January 12, 2006.
|
||
10.13
|
Industrial
Lease by and between AMB Property, L.P. and the Company dated February 22,
2007
|
Incorporated
by reference to exhibit filed with the Annual Report on Form 10-K for
the fiscal year ended February 3, 2007.
|
||
10.14*
|
2003
Director Stock Option Plan.
|
Incorporated
by reference to exhibit filed with the Form S-8 filed on
July 11, 2003.
|
||
10.15*
|
Offer
Letter, dated as of May 16, 2007, between the Registrant and Thomas
E. Gay III.
|
Incorporated
by reference to exhibit filed with the Quarterly Report on Form 10-Q
filed on June 14, 2007.
|
||
10.16
|
Loan
and Security Agreement, dated as of August 12, 2005, by and between
the Registrant and United Commercial Bank.
|
Incorporated
by reference to exhibit filed with the Quarterly Report on Form 10-Q
filed on September 8, 2005.
|
||
21.1
|
Subsidiaries
of the Registrant.
|
Filed
herewith
|
||
23.1
|
Consent
of Independent Registered Public Accounting Firm (Armanino McKenna
LLP)
|
Filed
herewith as page E-5
|
||
24.1
|
Power
of Attorney (contained in the signature page to this Annual Report on Form
10-K).
|
Filed
herewith as page 47
|
Exhibit
Number
|
Description
|
Filed
Herewith or Incorporated Herein by Reference
to
|
31.1
|
Certification
of the President and Chief Executive Officer pursuant to Securities
Exchange Act Rules 13a-14(a) and 15d-14(a).
|
Filed
herewith as page E-7
|
||
|
||||
31.2
|
Certification
of the Chief Financial Officer and Secretary pursuant to Securities
Exchange Act Rules 13a-14(a) and 15d-14(a).
|
Filed
herewith as page E-9
|
||
32.1
|
Certificate
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
Filed
herewith as page E-11
|
||
32.2
|
Certificate
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
Filed
herewith as page E-12
|
*
|
Indicates
management contract or compensatory plan or
arrangement.
|
/s/
Thinh Q. Tran
|
|
Thinh
Q. Tran
President
and Chief Executive Officer
|
|
/s/
Thomas E. Gay III
|
|
Thomas
E. Gay III
Secretary
and Chief Financial Officer
|
NAME
|
JURISDICTION
|
Foreign Corporations
and
Entities
|
|
Sigma
Designs (Asia), Ltd.
|
Hong
Kong
|
Societe
Realmagic France
|
France
|
Sigma
Designs Singapore PTE, LTD
|
Singapore
|
Sigma
International Limited
|
Cayman
Islands
|
Sigma
Designs Technologies Canada, Inc.
|
Canada
|
1.
|
I
have reviewed this annual report on Form 10-K of Sigma Designs,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
/s/ Thinh
Q. Tran
|
Thinh
Q. Tran
|
Chairman
of the Board, President and
|
Chief
Executive Officer
|
1.
|
I
have reviewed this annual report on Form 10-K of Sigma Designs,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
/s/ Thomas
E. Gay III
|
Thomas
E. Gay III
|
Chief
Financial Officer and Secretary
|
By:
|
/s/ Thinh
Q. Tran
|
Thinh
Q. Tran
|
|
Chairman
of the Board, President and
Chief
Executive Officer
|
By:
|
/s/ Thomas
E. Gay III
|
Thomas
E. Gay III
|
|
Chief
Financial Officer and Secretary
|