SigmaTel Reports First Quarter 2007 Results

  
    
  
  
    
      SigmaTel, Inc. (NASDAQ:SGTL) today announced results for the quarter 
      ended March 31, 2007.
    
    
      First Quarter Financial Review
    
    
      Revenues for the first quarter of 2007 were $22.0 million with a GAAP 
      net loss of $18.1 million or $0.51 per share. The non-GAAP adjusted net 
      loss for the first quarter of 2007 was $14.6 million or a net loss of 
      $0.41 per share. GAAP gross margins for the quarter were 35 percent and 
      non-GAAP gross margins were 37 percent. See the reconciling charges set 
      forth in the reconciliation of GAAP to non-GAAP results provided below.
    
    
      As of March 31, 2006, SigmaTel had cash, cash equivalents, restricted 
      cash and short-term investments of $81.2 million.
    
    
      Executive Summary
    
    
      “In January, we committed to evaluating the 
      business to improve our financial stability. We consolidated office 
      space, reduced staff and made additional expense controls. Executive 
      Staff roles were redefined and the organization focused their efforts on 
      major OEMs for the PMP, Printer, and TV Audio product lines,” 
      said Phil Pompa, CEO of SigmaTel.
    
    
      Tier one OEM design win announcements during the first quarter of 2007:
    
    
      
        TV Audio design win at Samsung
      
      
        Ink-jet AIO EasyShare™ printer design win at 
        Kodak
      
      
        STMP3600-based SanDisk player
      
    
    
      Second Quarter 2007 Guidance
    
    
      For the second quarter of 2007, the company anticipates revenue of $24 
      to $28 million with non-GAAP gross margins of approximately 38 percent, 
      plus or minus a couple of points. SigmaTel’s 
      gross margin percentage varies primarily with product mix, pricing, and 
      unit costs.
    
    
      GAAP diluted loss per share is expected to be $0.36 to $0.42 with 
      non-GAAP loss per share expected to be $0.30 to $0.36, based on 35.5 
      million diluted weighted average shares outstanding. Our effective tax 
      rate for the second quarter is expected to be approximately 10%.
    
    
      Significant operating expenditure reductions were initiated during the 
      first quarter and are expected to continue into the third quarter. Once 
      completed, these reductions are expected to result in a total decrease 
      of our quarterly operating expenses of $5.0 to $7.0 million.
    
    
      “The management team will continue evaluating 
      our businesses and managing our costs,” said 
      Mr. Pompa. “Our goal is to rapidly minimize 
      the cash burn, without jeopardizing future revenue.”
    
    
      Conference Call Today
    
    
      A conference call will be held today, May 3, 2007, at 3:30 p.m. Central 
      Standard Time (CDT) and will be simulcast over the Internet at www.streetevents.com 
      and www.sigmatel.com. A replay 
      will be available after the call until June 1, 2007, at the websites 
      listed above or by calling 888-203-1112 for domestic calls or 
      719-457-0820 for international and entering passcode number 2154838.
    
    
      For more information on SigmaTel, please visit www.sigmatel.com.
    
    
      About SigmaTel: SigmaTel is a fabless semiconductor company which 
      designs, develops, and markets mixed-signal ICs for the consumer 
      electronics market. The Company’s target 
      market segments include portable media players, printers and digital 
      televisions. SigmaTel provides complete, system-level solutions that 
      include highly integrated ICs, customizable firmware and software, 
      software development tools and reference designs. The Company's focus is 
      on enabling customers to rapidly introduce and offer electronic products 
      that are small, light-weight, power-efficient, reliable, and 
      cost-effective. SigmaTel is ISO 9001:2000 certified and is committed to 
      providing customers with high-performance, quality products along with 
      superior, worldwide customer service.
    
    
      Cautionary Language: This press release contains forward-looking 
      statements based on current SigmaTel expectations. The words "expect," 
      "will," "should," "would," "anticipate," "project," "outlook," 
      "believe," "intend," and similar phrases as they relate to SigmaTel or 
      future events are intended to identify such forward-looking statements. 
      These forward-looking statements reflect the current views and 
      assumptions of SigmaTel, but are subject to various risks and 
      uncertainties that could cause actual results to differ materially from 
      expectations. A number of important factors could cause actual results 
      to differ materially from those in the forward-looking statements, and 
      there will be events in the future that SigmaTel is not able to 
      accurately predict or control. These risks and uncertainties include, 
      but are not limited to: the ability of SigmaTel to effectively implement 
      changes which will increase operational efficiencies, reduce costs, and 
      ultimately improve SigmaTel’s financial 
      results and return SigmaTel to profitability; our ability to execute on 
      implementation of new products to support existing and new customer 
      relationships and achieve new design wins; our ability to cut costs, as 
      currently contemplated, without jeopardizing SigmaTel’s 
      ability to retain key employees and continue supporting customers and 
      new development efforts; and, market acceptance of our customers’ 
      end products which incorporate our products. For a more detailed 
      discussion of factors that could impact SigmaTel's financial results and 
      cause actual results to differ materially from those in the 
      forward-looking statements, please refer to recent SigmaTel filings with 
      the SEC, particularly the Form 10-K that was filed on March 16, 2007.
    
    
      SigmaTel provides a non-GAAP measure of gross profit, net income (loss) 
      and net income (loss) per share in its earnings release. The 
      presentation of gross profit, net income (loss) and net income (loss) 
      per share is intended to be a supplemental measure of performance and 
      excludes: (i) a non-cash charge related to amortization of intangible 
      assets from acquisitions; (ii) a non-cash charge related to stock-based 
      compensation; (iii) a charge related to the abandonment of leased 
      facilities; and (iv) a loss on the disposition of assets in conjunction 
      with the lease abandonment. SigmaTel believes that excluding these items 
      represents a better basis for the comparison of its current results to 
      past, present, and future operating results, and a better means to 
      highlight the results of core ongoing operations. The presentation of 
      this additional information is not meant to be considered in isolation 
      or as a substitute for results prepared in accordance with GAAP. The 
      non-GAAP financial measures included in the press release have been 
      reconciled to the corresponding GAAP financial measures as required 
      under the rules of the Securities and Exchange Commission regarding the 
      use of non-GAAP financial measures.
    
    
      SigmaTel is a registered trademark of SigmaTel, Inc. All other products 
      and brand names as they appear in this release are trademarks or 
      registered trademarks of their respective holders. All specifications 
      may be changed without notice.
    
    
      
        
          
            SIGMATEL, INC.
          
          
            RECONCILIATION of GAAP to NON-GAAP RESULTS
          
          
            (in thousands, except per share data)
          
          
            (unaudited)
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Three Months Ended

          
            March 31,
          
        
      
      
        
        
        
        
        
          2007
        
        
        
        
          2006
        
      
      
        
          Gross profit as reported
        
        
        
        
          $7,728 
        
        
        
        
          $14,730 
        
      
      
        
          Non-GAAP adjustments:
        
        
        
        
        
        
        
        
        
      
      
        
          Amortization of intangible assets from acquisitions
        
        
        
        
          456 
        
        
        
        
          783 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Adjusted gross profit
        
        
        
        
          $8,184 
        
        
        
        
          $15,513 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Adjusted gross profit percentage
        
        
        
        
          37.2%
        
        
        
        
          47.0%
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Three Months Ended

          
            March 31,
          
        
      
      
        
        
        
        
        
          2007
        
        
        
        
          2006
        
      
      
        
          Net loss as reported
        
        
        
        
          $(18,136)
        
        
        
        
          $(24,726)
        
      
      
        
          Non-GAAP adjustments (tax effected):
        
        
        
        
        
        
        
        
        
      
      
        
          Amortization of intangible assets from acquisitions
        
        
        
        
          505 
        
        
        
        
          840 
        
      
      
        
          Stock-based compensation
        
        
        
        
          1,866 
        
        
        
        
          2,057 
        
      
      
        
          Loss on asset disposition
        
        
        
        
          594 
        
        
        
        
          — 
        
      
      
        
          Lease abandonment charge
        
        
        
        
          619 
        
        
        
        
          — 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Adjusted net loss
        
        
        
        
          $(14,552)
        
        
        
        
          $(21,829)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Diluted weighted average shares outstanding
        
        
        
        
          35,533 
        
        
        
        
          35,787 
        
      
      
        
          Diluted net loss per share, non-GAAP
        
        
        
        
          $(0.41)
        
        
        
        
          $(0.61)
        
      
    
    
    
    
      
        
          
            SIGMATEL, INC.
          
          
            CONDENSED CONSOLIDATED BALANCE SHEETS
          
          
            (in thousands)
          
          
            (unaudited)
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          March 31, 2007
        
        
        
        
          December 31, 2006
        
      
      
        
          ASSETS
        
        
        
        
        
        
        
        
        
      
      
        
          Current assets:
        
        
        
        
        
        
        
        
        
      
      
        
          
            Cash and cash equivalents
          
        
        
        
        
          $35,114 
        
        
        
        
          $30,686 
        
      
      
        
          
            Restricted cash
          
        
        
        
        
          7,608 
        
        
        
        
          7,354 
        
      
      
        
          
            Short-term investments
          
        
        
        
        
          38,501 
        
        
        
        
          62,800 
        
      
      
        
          
            Accounts receivable, net
          
        
        
        
        
          12,730 
        
        
        
        
          12,556 
        
      
      
        
          
            Inventories, net
          
        
        
        
        
          17,349 
        
        
        
        
          20,794 
        
      
      
        
          
            Income tax receivable
          
        
        
        
        
          3,766 
        
        
        
        
          3,365 
        
      
      
        
          
            Prepaid expenses and other assets
          
        
        
        
        
          4,917 
        
        
        
        
          5,591 
        
      
      
        
          
            Total current assets
          
        
        
        
        
          119,985 
        
        
        
        
          143,146 
        
      
      
        
          
            Property, equipment and software, net
          
        
        
        
        
          12,205 
        
        
        
        
          13,301 
        
      
      
        
          
            Intangible assets, net
          
        
        
        
        
          14,978 
        
        
        
        
          15,370 
        
      
      
        
          Non-current income tax receivable
        
        
        
        
          1,871 
        
        
        
        
          – 
        
      
      
        
          
            Other assets
          
        
        
        
        
          1,065 
        
        
        
        
          1,574 
        
      
      
        
          
            Total assets
          
        
        
        
        
          $150,104 
        
        
        
        
          $173,391 
        
      
      
        
          LIABILITIES AND STOCKHOLDERS’ EQUITY
        
        
        
        
        
        
        
        
        
      
      
        
          Current liabilities:
        
        
        
        
        
        
        
        
        
      
      
        
          
            Accounts payable
          
        
        
        
        
          $11,910 
        
        
        
        
          $16,338 
        
      
      
        
          
            Accrued compensation
          
        
        
        
        
          5,470 
        
        
        
        
          8,712 
        
      
      
        
          
            Other accrued expenses
          
        
        
        
        
          6,532 
        
        
        
        
          8,056 
        
      
      
        
          
            Deferred revenue
          
        
        
        
        
          1,749 
        
        
        
        
          1,242 
        
      
      
        
          
            Current portion of long-term obligations
          
        
        
        
        
          644 
        
        
        
        
          229 
        
      
      
        
          
            Total current liabilities
          
        
        
        
        
          26,305 
        
        
        
        
          34,577 
        
      
      
        
          
            Non-current income taxes payable
          
        
        
        
        
          5,933 
        
        
        
        
          4,453 
        
      
      
        
          
            Other liabilities
          
        
        
        
        
          2,497 
        
        
        
        
          809 
        
      
      
        
          
            Total liabilities
          
        
        
        
        
          34,735 
        
        
        
        
          39,839 
        
      
      
        
          Stockholders' equity:
        
        
        
        
        
        
        
        
        
      
      
        
          Common stock, $0.0001 par value; 170,000 shares authorized; shares 
          issued and outstanding: 35,878 and 35,788 at March 31, 2007 and 
          35,603 and 35,513 at December 31, 2006, respectively
        
        
        
        
          4 
        
        
        
        
          4 
        
      
      
        
          Additional paid-in capital
        
        
        
        
          199,822 
        
        
        
        
          197,711 
        
      
      
        
          Notes receivable from stockholders
        
        
        
        
          – 
        
        
        
        
          (5)
        
      
      
        
          Treasury stock, 90 common shares at cost
        
        
        
        
          (741)
        
        
        
        
          (741)
        
      
      
        
          Accumulated deficit
        
        
        
        
          (84,033)
        
        
        
        
          (63,687)
        
      
      
        
          Accumulated other comprehensive income
        
        
        
        
          317 
        
        
        
        
          270 
        
      
      
        
          Total stockholders' equity
        
        
        
        
          115,369 
        
        
        
        
          133,552 
        
      
      
        
          Total liabilities and stockholders' equity
        
        
        
        
          $150,104 
        
        
        
        
          $173,391 
        
      
    
    
    
    
      
        
          
            SIGMATEL, INC.
          
          
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          
          
            (in thousands, except per share data)
          
          
            (unaudited)
          
        
      
      
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Three Months Ended

          
            March 31,
          
        
      
      
        
        
        
        
        
          2007
        
        
        
        
          2006
        
      
      
        
          Revenues, net
        
        
        
        
          $22,019 
        
        
        
        
          $33,021 
        
      
      
        
          Cost of goods sold
        
        
        
        
          14,291 
        
        
        
        
          18,291 
        
      
      
        
          Gross profit
        
        
        
        
          7,728 
        
        
        
        
          14,730 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Operating expenses:
        
        
        
        
        
        
        
        
        
      
      
        
          Research and development
        
        
        
        
          18,321 
        
        
        
        
          22,192 
        
      
      
        
          Selling, general and administrative
        
        
        
        
          9,838 
        
        
        
        
          13,993 
        
      
      
        
          Loss on asset disposition
        
        
        
        
          594 
        
        
        
        
          – 
        
      
      
        
          Total operating expenses
        
        
        
        
          28,753 
        
        
        
        
          36,185 
        
      
      
        
          Operating loss
        
        
        
        
          (21,025)
        
        
        
        
          (21,455)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Interest income, net
        
        
        
        
          999 
        
        
        
        
          783 
        
      
      
        
          Foreign exchange loss
        
        
        
        
          (74)
        
        
        
        
          (52)
        
      
      
        
          Total other income
        
        
        
        
          925 
        
        
        
        
          731 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Loss before income taxes
        
        
        
        
          (20,100)
        
        
        
        
          (20,724)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income tax (benefit) expense
        
        
        
        
          
            (1,964)
          
        
        
        
        
          4,002 
        
      
      
        
        
        
        
        
           
        
        
        
        
           
        
      
      
        
          Net loss
        
        
        
        
          $(18,136)
        
        
        
        
          $(24,726)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          BASIC NET LOSS PER SHARE
        
        
        
        
          $(0.51)
        
        
        
        
          $(0.69)
        
      
      
        
          DILUTED NET LOSS PER SHARE
        
        
        
        
          $(0.51)
        
        
        
        
          $(0.69)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          WEIGHTED AVERAGE SHARES USED TO COMPUTE:
        
        
        
        
        
        
        
        
        
      
      
        
          Basic net loss per share
        
        
        
        
          35,533 
        
        
        
        
          35,787 
        
      
      
        
          Diluted net loss per share
        
        
        
        
          35,533 
        
        
        
        
          35,787