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<p align="center"><font size="3"><strong>UNITED STATES</br>
SECURITIES AND EXCHANGE COMMISSION</br>
Washington, D.C. 20549</strong></font></p>

<br>
<HR WIDTH="25%">
<br>

<p align="center"><font size="5"><strong>FORM 10-K</strong></font></p>

<br>
<HR WIDTH="25%">

<p>(MARK ONE)
<p align="center"><font size="3"><strong>
[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934
</strong></font></p>
<p align="center"><font size="3" color="FF0000"><strong>
     For the fiscal year ended January 31, 2000
</strong></font></p>

<p align="center"><font size="3"><strong> OR </strong></font></p>

<p align="center"><font size="3"><strong>
[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
</strong></font></p>
<p align="center"><font size="3"><strong>
    FOR THE TRANSITION PERIOD FROM ___________ TO  _____________
</strong></font></p>
<p align="center"><font size="3"><strong>
                       <u>Commission file number 000-15116</u>
</strong></font></p>
<p align="center"><font size="6" color="#0000FF"><strong>
                             <u>Sigma Designs, Inc.</u>
</strong></font></br>
<font size="2">
               (Exact name of Registrant as Specified in its Charter)
</font></p>

<P> 
<TABLE COLS=2 WIDTH="100%" >
<TR>
<TD>
<font size="3"><strong>
<CENTER><u>California</u></CENTER>
</font></strong>
</TD>
<TD>
<font size="3"><strong>
<CENTER><u>94-2848099</u></CENTER>
</font></strong>
</TD>
</TR>
<TR>
<TD>
<font size="2">
<CENTER>  (State or Other Jurisdiction of Incorporation or Organization) </CENTER>
</font>
</TD>
<TD>
<font size="2">
<CENTER>(I.R.S. Employer Identification Number)</CENTER>
</font>
</TD>
</TR>
</TABLE>
<BR>



<p align="center"><font size="3"><strong>
                                        355 Fairview Way<br>
                   <u>Milpitas, California    95035
</strong></font></u><br>

<font size="2">
        (Address of Principal Executive Offices including Zip Code)
</font></p>

<p align="center"><font size="3"><strong><u>
                                       (408) 262-9003
</strong></font></u><br>

<font size="2">
                 (Registrant's Telephone Number, Including Area Code)
<br>
<br>
<br>
</font></p>

<p align="center"><font size="3">
          Securities registered pursuant to Section 12(b) of the Act: None
</font></p>


<p align="center"><font size="3">
          Securities registered pursuant to Section 12(g) of the Act:
</font></p>

<p align="center"><font size="3"><strong><u>
                     Common Stock
</strong></font></u><br>

<font size="2">
                                (Title of Class)

<br>
<br>
<br>
</font></p>

<p>          Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
[X]       No  [     ]


<p>         Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]

<p>        The aggregate market value of the voting stock held by non-affiliates of the
Registrant was approximately $110,004,723 as of April 12, 2000 based on the
closing price of the Common Stock as reported on The Nasdaq Stock Market for
that date. There were 16,296,996 of the Registrant's Common Stock issued and
outstanding on April 12, 2000.



<p align="center"><font size="3">
                      DOCUMENTS INCORPORATED BY REFERENCE
</font></p>
<p>     
Certain  sections of Sigma Designs, Inc.'s definitive Proxy Statement for the
2000 Annual Meeting of Shareholders to be held on June 9, 2000 are incorporated
by reference in Part III of this Form 10-K to the extent stated herein.


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<br>
<br>
</strong></p>
<p align="center"><strong>

                             Sigma Designs, Inc.<br>
                        2000 ANNUAL REPORT ON FORM 10-K<br>
                                TABLE OF CONTENTS
</strong></p>


<P ALIGN="LEFT"><TABLE BORDER=0 CELLSPACING=1 CELLPADDING=2 WIDTH=700>
  <TR vAlign=bottom>
<TD WIDTH="90%">
<font size="3"><strong>
                                     PART I
</font></strong>
</TD>

<TD WIDTH="10%">
<font size="3"><strong>
<u>Page No.</u>
</font></strong>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>

  <TR vAlign=top>
<TD>
<font size="3">
Item 1.   Business
</font>
</TD>

<TD>
<font size="3">
<CENTER><A HREF="#item1">**</A></CENTER>
</font>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>

  <TR vAlign=top>
<TD>
<font size="3">
Item 2.   Facilities
</font>
</TD>

<TD>
<font size="3">
<CENTER><A HREF="#item2">**</A></CENTER>
</font>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>

  <TR vAlign=top>
<TD>
<font size="3">
Item 3.   Legal Proceedings
</font>
</TD>

<TD>
<font size="3">
<CENTER><A HREF="#item3">**</A></CENTER>
</font>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>

  <TR vAlign=top>
<TD>
<font size="3">
Item 4.   Submission of Matters to a Vote of Security Holders
</font>
</TD>

<TD>
<font size="3">
<CENTER><A HREF="#item4">**</A></CENTER>
</font>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>

  <TR vAlign=bottom>
<TD WIDTH="90%">
<font size="3"><strong>
                                     PART II
</font></strong>
</TD>

<TD WIDTH="10%">
<font size="3"><strong>
  
</font></strong>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>

  <TR vAlign=top>
<TD>
<font size="3">
Item 5.   Market for the Registrant's Common Equity and Related Shareholder Matters
</font>
</TD>

<TD>
<font size="3">
<CENTER><A HREF="#item5">**</A></CENTER>
</font>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>

  <TR vAlign=top>
<TD>
<font size="3">
Item 6.   Selected Financial Data
</font>
</TD>

<TD>
<font size="3">
<CENTER><A HREF="#item6">**</A></CENTER>
</font>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>

  <TR vAlign=top>
<TD>
<font size="3">
Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations
</font>
</TD>

<TD>
<font size="3">
<CENTER><A HREF="#item7">**</A></CENTER>
</font>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>


  <TR vAlign=top>
<TD>
<font size="3">
Item 7A.      Quantitative and Qualitative Disclosures About Market Risks
</font>
</TD>

<TD>
<font size="3">
<CENTER><A HREF="#item7a">**</A></CENTER>
</font>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>



  <TR vAlign=top>
<TD>
<font size="3">
Item 8.   Consolidated Financial Statements and Supplementary Data
</font>
</TD>

<TD>
<font size="3">
<CENTER><A HREF="#item8">**</A></CENTER>
</font>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>


  <TR vAlign=top>
<TD>
<font size="3">
Item 9.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure
</font>
</TD>

<TD>
<font size="3">
<CENTER><A HREF="#item9">**</A></CENTER>
</font>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>


  <TR vAlign=bottom>
<TD WIDTH="90%">
<font size="3"><strong>
                                     PART III
</font></strong>
</TD>

<TD WIDTH="10%">
<font size="3"><strong>
  
</font></strong>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>

  <TR vAlign=top>
<TD>
<font size="3">
Item 10.  Directors and Executive Officers of the Company
</font>
</TD>

<TD>
<font size="3">
<CENTER><A HREF="#item10">**</A></CENTER>
</font>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>


  <TR vAlign=top>
<TD>
<font size="3">
Item 11.  Executive Compensation
</font>
</TD>

<TD>
<font size="3">
<CENTER><A HREF="#item11">**</A></CENTER>
</font>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>


  <TR vAlign=top>
<TD>
<font size="3">
Item 12.  Security Ownership of Certain Beneficial Owners and Management
</font>
</TD>

<TD>
<font size="3">
<CENTER><A HREF="#item12">**</A></CENTER>
</font>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>


  <TR vAlign=top>
<TD>
<font size="3">
Item 13.  Certain  Relationships and Related Transactions
</font>
</TD>

<TD>
<font size="3">
<CENTER><A HREF="#item13">**</A></CENTER>
</font>
</TD>
</TR>


<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>


  <TR vAlign=bottom>
<TD WIDTH="90%">
<font size="3"><strong>
                                     PART IV
</font></strong>
</TD>

<TD WIDTH="10%">
<font size="3"><strong>
  
</font></strong>
</TD>
</TR>

<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>

  <TR vAlign=top>
<TD>
<font size="3">
Item 14.  Exhibits, Consolidated Financial Statement Schedules and Reports on Form 8-K
</font>
</TD>

<TD>
<font size="3">
<CENTER><A HREF="#item14">**</A></CENTER>
</font>
</TD>
</TR>


<TR>
<TD>
  
</TD>
<TD>
  
</TD>
</TR>


  <TR vAlign=top>
<TD>
<font size="3">
Signatures
</font>
</TD>

<TD>
<font size="3">
<CENTER><A HREF="#sign">**</A></CENTER>
</font>
</TD>
</TR>
</TABLE>




<br>
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<HR WIDTH="85%">
<br>
<br>
<br>




<B><P ALIGN="CENTER">PART I</P>

<A NAME="item1"></A>
<P ALIGN="JUSTIFY">ITEM 1.	BUSINESS</P>
</B><P ALIGN="JUSTIFY">This Annual Report on Form 10-K contains forward-looking statements that
involve risks and uncertainties.  Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of certain factors, including those set forth under
"Certain Factors Affecting Business, Operating Results, and Financial Condition" and
elsewhere in this Annual Report on Form 10-K.  In this Annual Report on Form 10-K, the
"Company," "Sigma," "we," "us," and "our" refer to
Sigma Designs, Inc.</P>

<B><P ALIGN="JUSTIFY">Overview</P>
</B><P ALIGN="JUSTIFY">Sigma Designs provides digital video decoding solutions for applications in
full-screen full-motion video streaming and Digital Versatile Disk (DVD) playback.  We design,
manufacture (using subcontractors) and market digital video decoding products for use with personal
computers and other consumer information appliances.  The emergence of digital video technology in
the personal computer (PC) market has dramatically changed the way in which users interact with
computers.  Digital video integrates different elements, such as sound, video, and web browsing to
enhance the computing experience and deliver a heightened sense of realism.  Our REALmagic product
line incorporates Moving Picture Experts Group (MPEG) technology.</P>
<P ALIGN="JUSTIFY">Prior to MPEG's introduction, video on personal computers suffered from serious
drawbacks.  Motion pictures appeared jerky, and video was confined to small window sizes.  MPEG, a
defined International Standards Organization (ISO) standard for video compression, eliminated many
of those problems and revolutionized multimedia on the PC platform.  For the first time, MPEG users
could play back full-screen, full-motion video combined with stereo audio, even from a standard CD-
ROM.  A single CD-ROM using the MPEG-1 compression technique can store up to 74 minutes of full-
motion video and audio.</P>
<P ALIGN="JUSTIFY">With MPEG technology, producers can create (and users can enjoy) an interactive,
television-like experience on a desktop PC.  The result is a significant new visual impact, thereby
opening possibilities for a wide range of entertainment, education, training and business
presentation applications.  In April 1997, we announced our entry into the DVD market.  A key
element of the DVD specification is the use of MPEG-2 for digital video compression, a technology in
which Sigma has established expertise.  Sigma's REALmagic EM8400, EM8300, EM8220, and EM8800 silicon
chip solutions are extensions of our MPEG expertise and provide a highly integrated solution for PC-
DVD and consumer information appliance markets.</P>
<B><P ALIGN="JUSTIFY">Partnership with Industry Leaders for Streaming Video</P>
</B><P ALIGN="JUSTIFY">Sigma has built strategic partnerships to develop and market network
streaming video products with companies including Hughes Network Systems, IBM, Microsoft
Corporation, OptiVision, Oracle Corporation, Silicon Graphics, Inc., Starlight Networks (acquired by
Picturetel), Sun Microsystems, and FVC.COM. In the United States, Dell Computer Corporation and
Compaq Computer Corporation have purchased REALmagic NetStream cards for installation inside their
systems for streaming video.</P>
<B><P ALIGN="JUSTIFY">Partnership with Set-Top Box Suppliers</P>
</B><P ALIGN="JUSTIFY">With the introduction of Sigma's REALmagic EM8400 silicon, Sigma has
established relationships with key suppliers to the emerging consumer Internet information
appliance, or set-top box manufacturers and suppliers. These new set-top boxes support interactive
capabilities and an Internet connection viewable on your television set, thereby bringing the
Internet into the main television room in your home so that it can be more of a family experience.
The relationships we have established can be grouped in to three categories: graphical software,
operating system software, and hardware including set-top box designers, manufacturers, and
component suppliers. </P>
<P ALIGN="JUSTIFY">In the first category of graphical software, we have built relationships with
Liberate Technologies and its TV Navigator software, Microsoft TV, and Stellar One's Connect TV
system. In the second category of operating system software, we support Wind River's VX Works,
Microsoft's Windows CE and NT, and Linux.  In the third category of hardware, we have an exclusive
agreement with Inprimis Technologies, the new internet appliance design subsidiary of Boca Research.
We also have announced design wins with set-top box suppliers including Acer and its CT 500, Eagle
Wireless and its Webflyer Computer Plus, and CoCom and its Voyager 7 to provide video on demand and
DVD playback in set-top boxes. This hardware category includes working with CPU manufacturers
National Semiconductor, Intel, and AMD to make sure our silicon solution works with theirs. </P>
<B><P ALIGN="JUSTIFY">Support from Original Equipment Manufacturer ("OEM") for DVD
Playback</P>
</B><P ALIGN="JUSTIFY">By the end of our fiscal year 1998, the year we entered the DVD playback
market, we had one OEM packaging our PC upgrade card with its DVD-ROM drive to complete a PC-DVD
upgrade kit. Today several OEMs use our card or our silicon solution in their upgrade packages,
including Philips, Sony, Toshiba, Utobia, IBM and other companies. These PC-DVD upgrade packages
include our REALmagic Hollywood Plus playback card and DVD player software. </P>
<P ALIGN="JUSTIFY">Additionally, Sigma recently released a progressive DVD player reference design
that enables a low cost, high quality progressive DVD playback capability in a standalone consumer
player. We have promoted our reference design to Chinese, Taiwanese, and Japanese manufacturers of
consumer DVD players with the intent of providing our silicon solutions into new consumer DVD player
models that will provide progressive output for high definition monitors, projectors, and
televisions (HDTV). </P>
<B><P ALIGN="JUSTIFY">REALmagic Business Strategy</P>
</B><P ALIGN="JUSTIFY">Our objective is to provide leading digital video decoding solutions that
enable full-screen, full-motion, best quality video on desktop PCs, through internet set-top boxes,
and in consumer DVD players.  To accomplish this goal, we need to promote widespread acceptance of
REALmagic technology and solutions.  The key parts of this strategy include:</P>
<B><P ALIGN="JUSTIFY">Win More Set-Top Box Partnerships</P>
</B><P ALIGN="JUSTIFY">As previously noted, Sigma is actively working with several partners to
promote use of our silicon solutions for video on demand and DVD playback in set-top box
applications.  We will continue to nurture these relationships in order to associate with the volume
manufacturers of these set-top boxes and enable more opportunities for uses of our silicon
solutions. So far, these relationships have focused on set-top box designs that provide Internet
connections via conventional dial up or Digital Subscriber Line (DSL) technology. We will also seek
out new relationships with companies in the cable and satellite broadcast markets in order to deploy
our silicon solutions in their markets.  </P>
<B><P ALIGN="JUSTIFY">Further Penetrate the Industry Market for Streaming Video</P>
</B><P ALIGN="JUSTIFY">Sigma's systems integration sales team will continue to work with its network
of system integrators, national distributors, and special Value Added Resellers (VARs) to distribute
our high-end REALmagic NetStream card.  This includes specific application identification and
development in close concert with our distribution channel.  In Europe and Asia Pacific, we intend
to continue to expand our relationship with distributors as well as OEMs and VARs.  In addition, we
will seek to sell silicon solutions to add-on card manufacturers that provide their own streaming
video products.</P>
<B><P ALIGN="JUSTIFY">Introduce New Generations of REALmagic, Offer REALmagic products at
Competitive Prices and Continually Reduce Product Costs</P>
</B><P ALIGN="JUSTIFY">A significant aspect of our product strategy is to increase the sale of
REALmagic chipsets while continuing to develop newer versions and generations of REALmagic products,
including chipsets for PCs, set-top boxes, consumer DVD progressive players, and HDTV applications.
We seek to continue to offer consumers better-featured and low-priced products over time.</P>
<B><P ALIGN="JUSTIFY">REALmagic Products </P>
</B><P ALIGN="JUSTIFY">We currently offer a complete family of REALmagic products including:</P>

<UL>

<UL>
<I><P ALIGN="JUSTIFY"><LI>REALmagic EM8400</I>-In September 1999, we introduced a new chip that sets
the stage for Sigma's entry into consumer applications.  Our first MPEG-2 decoder to upconvert DVD
video to progressive HDTV formats, the EM8400 can be used for consumer home theater DVD players,
streaming video client applications, and Web DVD set-top boxes.  </LI></P>
<I><P ALIGN="JUSTIFY"><LI>REALmagic NetStream 2000</I>-In September 1999, we announced NetStream
2000, based on our EM8400 decoder silicon chip.  This product shipped in January 2000.  A product in
the NetStream family includes specialized hardware and software developed specifically for
delivering video to corporate desktops, multiple dwelling units, hospitality markets, kiosks and
retailtainment, and can be used for both video on demand and broadcast video playback.  NetStream
2000 is an MPEG-2 playback card offering full plug and play installation and compatibility with a
broad range of third-party applications, including video servers for video on demand, MPEG encoders
for stored or real-time playback, satellite delivery systems, streaming video playback systems and
scores of customizable interactive training titles.</LI></P>
<I><P ALIGN="JUSTIFY"><LI>REALmagic EM8300</I>-In March 1998, we announced the introduction of the
EM8300 REALmagic DVD/MPEG-2/MPEG-1 decoder Integrated Circuit ("IC").  Integrating
virtually all functions of a DVD decoder on one chip, the EM8300 is designed to provide a highly
integrated, cost effective vehicle for high-quality DVD.  The EM8300 feature set draws on our
industry experience in the DVD/MPEG-2 market with earlier designs such as the REALmagic Hollywood
decoder card.   </LI></P>
<I><P ALIGN="JUSTIFY"><LI>REALmagic Hollywood Plus</I>-In April 1997, we announced our entry into
the DVD market. The REALmagic Hollywood Plus MPEG-2 playback card turns a PC into a full-featured
DVD player that exploits many of the digital video and digital surround sound capabilities of the
DVD format and upcoming MPEG-2 interactive titles.  The REALmagic Hollywood Plus DVD/MPEG-2 playback
card displays flicker-free video at full-screen resolution, making video watching on a PC a new
experience.  Movies can be either displayed on the PC monitor or on a large-screen TV.  We even have
a remote control system that allows one to control the playback features of the DVD station software
included with the card, via an infra-red communication link.</LI></P>
<I><P ALIGN="JUSTIFY"><LI>REALmagic DVR (Digital Video Recorder)</I>-In April 1999, we announced
REALmagic DVR for creating DVD titles.  This product shipped in January 2000.  The REALmagic DVR is
a packaged solution for authoring DVD titles using your PC, a DVD-RAM drive, and DVD write-able
media.  The package includes editing software that helps you set the flow and sequence of the video
content, authoring software that lets you add titles and interactive capabilities, and our own DVD
station software for playback.  This product is a low cost, high quality solution for corporate
environments, educational applications, and the so-called prosumer who want to author their own
DVDs.</LI></P>
<I><P ALIGN="JUSTIFY"><LI>REALmagic EM8220</I>-In June 1998, we announced the REALmagic EM8220
decoder IC. Originally designed as an enhancement to video graphics cards, today this chip can be
easily designed into set-top box applications to enable DVD playback and video on demand. This
solution has the PC interface and compatibility with major Video Graphics Array (VGA) chipsets built
into it.  </LI></P>
<I><P ALIGN="JUSTIFY"><LI>REALmagic EM8800</I>-In October 1998, we announced the REALmagic EM8800
decoder IC, the first single-chip PC solution for China's new SVCD standard.  Integrating virtually
all SVCD decoding functions on one chip, the EM8800 can turn a PC into a full-featured home theater
video player that fully exploits the improved video quality supported by the SVCD projectors.
</LI></P></UL>
</UL>

<B><P ALIGN="JUSTIFY"> </P>
<P ALIGN="JUSTIFY">REALmagic Reference Designs</P>
</B><P ALIGN="JUSTIFY">We build REALmagic reference designs, which are end-user prototype designs
showing how our silicon solutions integrate into complex consumer appliances.  These reference
designs serve several purposes, including proof of concept to prospective customers, as well as an
invaluable research and development experience for our engineers who develop the integrated end
solution.  This process always gives us ideas for what to incorporate into our next generation
solutions.</P><DIR>
<DIR>

</FONT><FONT SIZE=1><P ALIGN="JUSTIFY"><FONT FACE="Symbol">·</FONT>
</FONT><I><FONT SIZE=3>	REALmagic Set-Top Box Reference Design</I>-In April 1999, we announced
our next-generation set-top box reference design, the STB 2000.  This unique convergence appliance
represents a new wave of flexibility, performance, and cost reduction that intend to be made
available through telcos, ISPs, satellite providers, and systems integrators that are deploying high
bandwidth, digital video-ready Internet services. Our design incorporates the two primary functions
our decoder silicon enable, that is, DVD playback and video on demand.</P>
</FONT><FONT SIZE=1><P ALIGN="JUSTIFY"><FONT FACE="Symbol">·</FONT>
</FONT><I><FONT SIZE=3>	REALmagic Progressive DVD Player Reference Design</I>-In January 2000, we
announced our progressive DVD player reference design.  This new progressive DVD player reference
design is a very low-cost solution for producing a complete, standalone DVD player for both
traditional interlaced televisions as well as progressive scan output for HDTV and high definition
projects.</P>
<P ALIGN="JUSTIFY"> </P></DIR>
</DIR>

<B><P ALIGN="JUSTIFY">Marketing and Sales</P>
</B><P ALIGN="JUSTIFY">Sigma Designs currently distributes its products through sales to national
and regional distributors, VARs and OEMs in the U.S. and throughout the world.  Our U.S. distributor
is Ingram Micro, Inc., and our OEMs include Sony, Philips, IBM, Toshiba, Samsung, Utobia, LungHwa
Electronics Co., Ltd., Formosa Industrial Computing, Labway Corporation and others.  Our
international distributors are strategically located in many countries around the world.</P>
<P ALIGN="JUSTIFY">We, generally maintain products for distribution through corporate markets based
on forecasts rather than firm purchase orders.  Additionally, we generally acquire products for sale
to our OEM customers only after receiving purchase orders from such customers, which purchase orders
are typically cancelable without substantial penalty from such OEM customers.  We currently place
noncancelable orders to purchase semiconductor products from our suppliers on a twelve- to sixteen-
week lead time basis.  Consequently, if, as a result of inaccurate forecasts or canceled purchase
orders, anticipated sales and shipments in any quarter do not occur when expected, expenses and
inventory levels could be disproportionately high, requiring significant working capital and
resulting in severe pressure on our financial condition.  One customer accounted for 26% of our net
sales in fiscal 2000.</P>
<P ALIGN="JUSTIFY">Sales to distributors are typically subject to contractual rights of inventory
rotation and price protection. Regardless of particular contractual rights, the failure of one or
more distributors or OEMs to achieve sustained sell-through of REALmagic products could result in
product returns or delayed or uncollectable receivables, contributing to significant fluctuations in
our operating results.</P>
<B><P ALIGN="JUSTIFY">Research and Development</B> </P>
<P ALIGN="JUSTIFY">As of January 31, 2000, we had a staff of 45 research and development personnel.
The research and development personnel conduct all of our product development with the assistance of
a number of independent contractors and consultants.  We are focusing our development efforts
primarily on MPEG decoder products, including new and improved versions of REALmagic MPEG chipsets
and cost reduction processes.</P>
<P ALIGN="JUSTIFY">To achieve and maintain technological leadership, we must continue to make
technological advancements in the areas of MPEG video and audio compression and decompression.
These advancements include maintaining compatibility with emerging standards and multiple platforms,
making improvements to the REALmagic architecture, and developing enhancements to the REALmagic
Application Programming Interface (API).</P>
<P ALIGN="JUSTIFY">We cannot assure you that we will be able to make any such advancements in the
REALmagic MPEG technology or, if they are made, that we will be able to market such advancements to
maintain profitability.   </P>
<P ALIGN="JUSTIFY">During fiscal 2000, 1999, and 1998, our research and development expenses were
$6,397,000, $5,678,000, and $4,948,000, respectively.  We plan to continue to devote substantial
resources to research and development of future generations of MPEG and other multimedia
products.<B> </P>
<P ALIGN="JUSTIFY">Competition</P>
</B><P ALIGN="JUSTIFY">The market for MPEG decoder products is highly competitive.  Companies such
as C-Cube Microsystems have a high profile in the industry.  Although we do not believe that any
products sold by a third party are in direct competition with REALmagic decoding silicon in terms of
price and performance, the possibility that other companies with more marketing and financial
resources may develop a competitive product may inhibit the wide acceptance of REALmagic technology.
We believe that many computer product manufacturers are developing MPEG products that will compete
directly with REALmagic products in the near future.</P>
<P ALIGN="JUSTIFY">We believe that the principal competitive factors in the market for MPEG decoder
products include time to market for new product introductions, product performance, compatibility
with industry standards, price, and marketing and distribution resources.  We believe that we
compete most favorably with respect to time to market, product performance and price of our
REALmagic products.  </P>
<B><P ALIGN="JUSTIFY">Licenses, Patents and Trademarks</P>
</B><P ALIGN="JUSTIFY">We continually seek patent protection for certain software and hardware
features in current and future versions of REALmagic.  We currently have ten<B> </B>pending patent
applications for our REALmagic technology.  Ten patents have been issued to us.  We cannot assure
you that more patents will be issued or that such patents, even if issued, will provide adequate
protection for Sigma's competitive position.  We also attempt to protect our trade secrets and other
proprietary information through agreements with customers, suppliers and employees and other
security measures.  Although we intend to protect our rights vigorously, we cannot assure you that
these measures will be successful.</P>
<B><P ALIGN="JUSTIFY">Manufacturing</B> </P>
<P ALIGN="JUSTIFY">To reduce overhead expenses, along with capital and staffing requirements, we
currently use third-party contract manufacturers to fulfill all of our manufacturing needs,
including chipset manufacture and board-level assembly.  All of the chips used by us to develop our
decoding products are manufactured by outside suppliers and foundries.  Each of these suppliers is a
sole source of supply to us of the respective chips produced by such supplier.</P>
<P ALIGN="JUSTIFY">Our reliance on independent suppliers involves several risks, including the
absence of adequate capacity and reduced control over delivery schedules, manufacturing yields and
costs.  Any delay or interruption in the supply of any of the components required for the production
of REALmagic products could seriously harm our sales of products and, thus, our operating
results.</P>
<B><P ALIGN="JUSTIFY">Backlog</B> </P>
<P ALIGN="JUSTIFY">Since our customers typically expect quick deliveries, we seek to ship products
within a few weeks of receipt of a purchase order.  However, the customer may reschedule delivery of
products or cancel the purchase order entirely without significant penalty.  Historically, our
backlog has not been reflective of future sales.  We also expect that in the near term, our backlog
will continue to be not indicative of future sales.</P>
<B><P ALIGN="JUSTIFY">Employees</P>
</B><P ALIGN="JUSTIFY">As of January 31, 2000, we had 93 full-time employees, including 45 in
research and development, 24 in marketing, sales and support, 9 in operations, and 15 in finance and
administration.</P>
<P ALIGN="JUSTIFY">Our future success will depend, in part, on our ability to continue to attract,
retain and motivate highly qualified technical, marketing, engineering and management personnel, who
are in great demand.  Our employees are not represented by any collective bargaining unit, and we
have never experienced a work stoppage.  We believe that our employee relations are
satisfactory.</P>
<B><P ALIGN="JUSTIFY">Certain Factors Affecting Business, Operating Results, and Financial
Condition</P>
</B><P ALIGN="JUSTIFY">You should carefully consider the risks described below before making an
investment decision.  The risks and uncertainties described below are not the only ones facing our
company.  Additional risks and uncertainties not presently known to us or that we currently deem
immaterial may also impair our business operations.</P>
<P ALIGN="JUSTIFY">If any of the following risks actually occur, our business, financial condition
or results of operations could be materially adversely affected.  In such case, the trading price of
our Common Stock could decline, and you may lose all or part of your investment.</P>
<B><P ALIGN="JUSTIFY">We Have a History of Operating Losses and We Could Sustain Future Losses</P>
</B><P ALIGN="JUSTIFY">We incurred significant operating losses in fiscal 1995, 1996 and 1998 and
had negative cash flow in fiscal 1995 and 1998.  Since our introduction of the REALmagic MPEG
product line in November 1993, we have made significant investments in marketing and technological
innovation for our REALmagic products.  As a result of our investments, we experienced significant
losses through fiscal 1996.  Fiscal 1995, 1996 and 1998<B> </B>also included significant losses
associated with products other than those related to our REALmagic technology.  Since our inception
through January 31, 2000, our total accumulated deficit is $39,189,000.  We cannot assure you
that we will continue to sell our new REALmagic products in substantial quantities or generate
significant revenues from those sales.  We cannot assure you that we will not incur operating losses
in any future fiscal quarter or fiscal year.  </P>
<B><P ALIGN="JUSTIFY">Liquidity</P>
</B><P ALIGN="JUSTIFY">We have an Amended and Restated Business Loan Agreement with Silicon Valley
Bank, dated October 31, 1999.  Under the Agreement we gave two secured Promissory Notes in
total principal amounts of $12 million and $6 million to Silicon Valley Bank, under which we
may borrow as needed.  Under the Agreement and the Notes, we are subject to a certain profitability
covenant.  Since July 1997, we have, on occasion, been in violation of the profitability covenant
and have obtained waivers releasing us from our obligation to meet this covenant.  We may need a
waiver for the quarter ending April 30, 2000 or for future periods.  We cannot assure you that
Silicon Valley Bank will grant these waivers.  If we do not meet this covenant, and if we do not
obtain waivers, the loans may be in default.  If we are in default, then the lender could accelerate
payments on the Notes and we could suffer serious harm to our business, financial condition and
prospects.</P>
<B><P ALIGN="JUSTIFY">Marketing Risks and Volatility of OEM Customer Sales and Resale
Distribution</P>
</B><P ALIGN="JUSTIFY">Our ability to increase sales, sustain profitability and maintain REALmagic
as an industry digital video decoding standard depends substantially on our ability to achieve a
sustained high level of sales to new Original Equipment Manufacturer ("OEM") customers.
We have not executed volume purchase agreements with any of our customers.  Our customers are not
under any obligation to purchase any minimum quantity of our products.  We have not achieved
bundling agreements with many OEM customers to ensure the success of our REALmagic product line.
Also, even if we achieve new design wins, we cannot assure you that manufacturers will purchase our
products in substantial volumes.  Sales to any particular OEM customer are subject to significant
variability from quarter to quarter and to severe price pressures by competitors.  In addition, 26%
of our net sales were derived from one customer in fiscal 2000.  Any reductions in those sales could
seriously harm our business.  Based on our experience in the industry, we expect that our actual
sales to OEM customers will experience significant fluctuations.  Also, estimates of future sales to
any particular customer or groups of customers are inherently uncertain.<B> </P>
</B><P ALIGN="JUSTIFY">Our ability to sustain profitability also depends on a substantial increase
in the sales of REALmagic products through domestic and international distributors for resale
through corporate markets.  Sales to such distributors are typically subject to contractual rights
of inventory rotation or price protection.  The failure of distributors to achieve sustained sell-
through of REALmagic products could result in product returns or delayed or uncollectable
receivables.  This could contribute to fluctuations in our results of operations.  We cannot assure
you that we will be successful in obtaining or maintaining a significant market for our REALmagic
products.</P>
<B><P ALIGN="JUSTIFY">Our Market May Undergo Rapid Technological Change and Our Future Success Will
Depend on Our Ability to meet the Changing Needs of Our Industry</P>
</B><P ALIGN="JUSTIFY">The market for multimedia PC products is characterized by the
following:</P>

<BLOCKQUOTE>
<UL>

<P ALIGN="JUSTIFY"><LI> 	rapidly changing technology and user preferences;<br>
                   <LI> 	evolving formats for compression of video and audio data; and<br>
                   <LI>	frequent new product introductions.</P>

</UL>
</BLOCKQUOTE>

<P ALIGN="JUSTIFY">Our success depends, among other things, on our ability to achieve and maintain
technological leadership and to remain competitive in terms of price and product performance.</P>
<P ALIGN="JUSTIFY">To have technological leadership, we must continue to make technological
advancements and research and development investments in the area of MPEG video and audio decoding.
These advancements include the following:</P>

<BLOCKQUOTE>
<UL>

<P ALIGN="JUSTIFY"><LI> 	compatibility with emerging standards and multiple platforms;<br>
                    <LI>	improvements to the REALmagic architecture; and<br>
                   <LI> 	enhancements to the REALmagic application programming interface.</P>

</UL>
</BLOCKQUOTE>

<P ALIGN="JUSTIFY">We cannot assure you that we will be able to make these advancements to our
REALmagic technology.  If we do make these advances, we cannot assure you that we will be able to
achieve and maintain technological leadership.  Any material failure by us or OEMs and software
developers to develop or incorporate any required improvement could adversely affect the continued
acceptance of our technology and the introduction and sale of future products based on our
technology.  We cannot assure you that products or technologies developed by others will not render
obsolete our technology and the products based on our technology.</P>
<P ALIGN="JUSTIFY">To be competitive, we must anticipate the needs of the market and successfully
develop and introduce innovative new products in a timely fashion.  We cannot assure you that we
will be able to successfully complete the design of our new products, have these products
manufactured at acceptable manufacturing yields, or obtain significant purchase orders for these
products.  The introduction of new products may adversely affect sales of existing products and
contribute to fluctuations in operating results from quarter to quarter.  Our introduction of new
products also requires that we carefully manage our inventory to avoid inventory obsolescence.  In
addition, new products, as opposed to more mature products, typically have higher initial component
costs.  This higher cost could result in downward pressures on our gross margins.</P>
<B><P ALIGN="JUSTIFY">Our Industry is Highly Competitive and We Cannot Assure You That We Will Be
Able to Effectively Compete</P>
</B><P ALIGN="JUSTIFY">The market for multimedia products is highly competitive and is driven by
faster processors provided by Intel Corporation and other companies.  Intel processors have, in
recent years, included increased graphics functionality. Other companies with more experience and
financial resources may develop a competitive product that could inhibit future growth of our
REALmagic technology.  Increased competition may be generated from several major computer product
manufacturers that have developed products and technologies that could compete directly with
REALmagic products.  These competitors include:</P>


<BLOCKQUOTE>
<UL>


<P ALIGN="JUSTIFY"><LI> 	SGS Thompson Microelectronics;<br>
                   <LI> 	C-Cube Microsystems;<br>
                   <LI> 	IBM Corporation;<br>
                   <LI> 	Zoran Corporation;<br>
                   <LI> 	LSI Logic;<br>
                   <LI> 	ESS Technology;<br>
                   <LI> 	ATI Technologies; and<br>
                   <LI> 	Optibase.</P>

</UL>
</BLOCKQUOTE>

<P ALIGN="JUSTIFY">In addition, Intel computer CPU chips processors have become more powerful, such
that video decoding could eventually be done in software.  Most of our competitors have substantial
experience and expertise in audio, video and multimedia technology and in producing and selling
consumer products through retail distribution and OEM channels.  These companies also have
substantially greater engineering, marketing and financial resources than we have.  Our competitors
could form cooperative relationships that could present formidable competition to us.  We cannot
assure you that our REALmagic technology will achieve commercial success or that it will compete
effectively against other interactive multimedia products, services and technologies that currently
exist, are under development, or may be announced by competitors.</P>
<P ALIGN="JUSTIFY"> </P>
<B><P ALIGN="JUSTIFY">Our Net Sales Are Dependent on Market Demand for Multimedia Products</P>
</B><P ALIGN="JUSTIFY">Our business strategy is, and has been, to focus on REALmagic products by
investing heavily in MPEG technology.  In the fiscal year ended January 31, 2000, sales of PC-
DVD or video streaming decoding products accounted for virtually all of our net sales.  A decline in
market demand for digital video decoding products will seriously harm our operating results.  In
addition, one international customer accounted for 26%, 28%, and 39% of revenues in fiscal 2000,
1999, and 1998.</P>
<B><P ALIGN="JUSTIFY">Our Operating Results Are Subject to Significant Fluctuations Due To Many
Factors and Any of These Factors Could Adversely Affect Our Stock Price</P>
</B><P ALIGN="JUSTIFY">Our operating results have fluctuated in the past and may continue to
fluctuate in the future.  This fluctuation is due to a number of factors, including the following
and others:</P>

<BLOCKQUOTE>
<UL>


<P ALIGN="JUSTIFY"><LI> 	our new product introductions and product introductions by our competitors;<br>
<LI> 	market acceptance of our products by OEMs, software developers and end users;<br>
<LI> 	the success of our promotional programs;<br>
<LI> 	gains or losses of our significant customers;<br>
<LI> 	reductions in selling prices;<br>
<LI> 	inventory obsolescence;<br>
<LI> 	an interrupted or inadequate supply of semiconductor chips;<br>
<LI> 	our ability to protect our intellectual property; and<br>
<LI> 	loss of our key personnel.</P>

</UL>
</BLOCKQUOTE>

<P ALIGN="JUSTIFY">In addition, sales to OEM customers are subject to significant variability from
quarter to quarter.  This variability depends on OEMs' timing and release of products that
incorporate our REALmagic technology, experience with sales of these products and inventory
levels.</P>
<P ALIGN="JUSTIFY">The market for consumer electronics products is characterized by significant
seasonal swings in demand. Demand typically peaks in the fourth calendar quarter of each year.  We
expect to derive a substantial portion of our revenues from the sales of REALmagic products in the
future.  The demand for our products will depend in part on the success of digital video technology.
In light of this, our revenues may vary with the availability of and demand for DVD titles.  This
demand may increase or decrease as a result of a number of factors that cannot be predicted, such as
consumer preferences and product announcements by competitors.</P>
<P ALIGN="JUSTIFY">Announcements of directly competing products will likely have a negative effect
on our operating results.  Based on our experience, we believe that a substantial portion of our
shipments will occur in the third month of a quarter, with significant shipments completed in the
latter part of the third month.  This shipment pattern may cause our operating results to be
difficult to predict.  Currently, we place noncancellable orders to purchase semiconductor products
from our foundries with a long lead time.  If, there is a result of inaccurate forecasts or
cancelled purchase orders, our anticipated sales and shipments in any quarter do not occur when
expected, our inventory levels could be disproportionately high.  This could require significant
working capital and harm our operating results.</P>
<B><P ALIGN="JUSTIFY">We Rely Heavily on Certain Manufacturers and Suppliers</P>
</B><P ALIGN="JUSTIFY">Our REALmagic products and components are presently manufactured by outside
suppliers or foundries.  We do not have long-term contracts with these suppliers.  We conduct
business with our suppliers on a written purchase order basis.  Our reliance on independent
suppliers subjects us to several risks.  These risks include:</P>

<BLOCKQUOTE>
<UL>

<P ALIGN="JUSTIFY"><LI> 	the absence of adequate capacity;<br>
<LI> 	the unavailability of, or interruptions in access to, certain process technologies; and<br>
<LI> 	reduced control over delivery schedules, manufacturing yields and costs.</P>

</UL>
</BLOCKQUOTE>

<P ALIGN="JUSTIFY">We obtain some of our components from a single source.  In fiscal 2000 we
experienced a delay and interruption from our source due to the earthquake in Taiwan in October
1999.  We estimate that this event resulted in lost sales of about $2.5 million. Other delays or
interruptions have not occurred to date, but any delay or interruption in the supply of any of the
components required for the production of our REALmagic silicon or our REALmagic multimedia cards
currently obtained from a single source could have a material adverse impact on our sales of
REALmagic products, and on our business.</P>
<P ALIGN="JUSTIFY">We must provide our suppliers with sufficient lead-time to meet our forecasted
manufacturing objectives.  Any failure to properly forecast such quantities could materially and
adversely affect our ability to produce REALmagic products in sufficient quantities.  We cannot
assure you that our forecasts regarding new product demand will be accurate, particularly because we
sell our REALmagic products on a purchase order basis.  Manufacturing REALmagic chipsets is a
complex process, and we may experience short-term difficulties in obtaining timely deliveries.  This
could affect our ability to meet customer demand for our products.  Any such delay in delivering
products in the future could materially and adversely affect our operating results.  Also, should
any of our major suppliers become unable or unwilling to continue to manufacture our key components
in required volumes, we will have to identify and qualify acceptable additional suppliers.  This
qualification process could take up to three months or longer and additional sources of supply may
not be in a position to satisfy our requirements on a timely basis.</P>
<P ALIGN="JUSTIFY">In the past, we have experienced production delays and other difficulties, and we
could experience similar problems in the future.  In addition, product defects may occur and they
may escape identification at the factory.  This could result in unanticipated costs, cancellations,
deferrals of purchase orders, or costly recall of products from customer sites.</P>
<B><P ALIGN="JUSTIFY">We Depend on Key Personnel</P>
</B><P ALIGN="JUSTIFY">Our future success depends in large part on the continued service of our key
technical, marketing, sales and management personnel.  Given the complexity of REALmagic technology,
we are dependent on our ability to retain and motivate highly skilled engineers involved in the
ongoing hardware and software development of REALmagic products.  These engineers are required to
refine the existing hardware system and application programming interface and to introduce
enhancements in future applications.  The multimedia PC industry is characterized by high employee
mobility and aggressive recruiting of skilled personnel.  Despite incentives we provide, our current
employees may not continue to work for us, and if additional personnel were required for our
operations, we may not able to obtain the services of additional personnel necessary for our growth.
</P>
<B><P ALIGN="JUSTIFY">We Face Risks Related to Intellectual Property Rights</P>
</B><P ALIGN="JUSTIFY">Our ability to compete may be affected by our ability to protect our
proprietary information.  We currently hold ten patents covering the technology underlying the
REALmagic products.  We have filed certain patent applications and are in the process of preparing
others.  We cannot assure that any additional patents for which we have applied will be issued or
that any issued patents will provide meaningful protection of our product innovations.  Like other
emerging multimedia companies, we rely primarily on trade secrets and technological know-how in the
conduct of our business.  We also rely, in part, on copyright law to protect our proprietary rights
with respect to our REALmagic technology.  We use measures such as confidentiality agreements
to protect our intellectual property.  These methods of protecting our intellectual property may not
be sufficient.</P>
<P ALIGN="JUSTIFY">The electronics industry is characterized by frequent litigation regarding patent
and intellectual property rights.  Any such litigation could result in significant expense to us and
divert the efforts of our technical and management personnel.  In the event of an adverse result in
any such litigation, we could be required to expend significant resources to develop noninfringing
technology or to obtain licenses to the technology that is the subject of the litigation, and we may
not be successful in such development or in obtaining such licenses on acceptable terms, if at all.
In addition, patent disputes in the electronics industry have often been settled through cross-
licensing arrangements.  Because we do not yet have a large portfolio of issued patents, we may not
be able to settle an alleged patent infringement claim through a cross-licensing arrangement.</P>
<B><P ALIGN="JUSTIFY">Our International Operations Are Subject to Certain Risks</P>
</B><P ALIGN="JUSTIFY">During fiscal 2000, 1999, and 1998, sales to international customers
accounted for approximately 67%, 72%, and 64% of our net sales, respectively.  We anticipate that
sales to international customers, including sales of REALmagic products, will continue to account
for a substantial percentage of our net sales.  Also, some of the foundries that manufacture our
products and components are located in Asia.  Overseas sales and purchases to date have been
denominated in U.S. dollars.</P>
<P ALIGN="JUSTIFY">Due to the concentration of international sales and the manufacturing capacity in
Asia, we are subject to the risks of conducting business internationally.  These risks include
unexpected changes in regulatory requirements and fluctuations in the U.S. dollar that could
increase the sales price in local currencies of our products in international markets, or make it
difficult for the Company to obtain price reductions from its foundries.  We do not currently engage
in any hedging activities to reduce our exposure to exchange rate risks.  If and when we engage in
transactions in foreign currencies, our results of operations could be adversely affected by
exchange rate fluctuations.</P>
<P ALIGN="JUSTIFY">We derive a substantial portion of our revenues from sales to the Asia Pacific
region.  This region of the world is subject to increased levels of economic instability, and this
instability could seriously harm our results of operations.</P>
<B><P ALIGN="JUSTIFY">Our Stock Price May Be Volatile</P>
</B><P ALIGN="JUSTIFY">The market of our Common Stock has been subject to significant volatility.
This volatility is expected to continue.  The following factors, among others, may have a
significant impact on the market price of our Common Stock:</P>

<BLOCKQUOTE>
<UL>

<P ALIGN="JUSTIFY"><LI> 	our announcement of the introduction of new products;<br>
<LI> 	our competitors' announcements of the introduction of new products; and<br>
<LI> 	market conditions in the technology, entertainment and emerging growth
company sectors.</P>

</UL>
</BLOCKQUOTE>

<P ALIGN="JUSTIFY">The stock market has experienced, and is currently experiencing, volatility that
particularly affects the market prices of equity securities of many high technology and development
stage companies, such as those in the electronics industry.  This volatility is often unrelated or
disproportionate to the operating performance of such companies.  These fluctuations, as well as
general economic and market conditions, could decrease the price of our Common Stock.</P>


<P ALIGN="JUSTIFY"> 	 </P>
<B><P ALIGN="JUSTIFY">EXECUTIVE OFFICERS OF THE COMPANY</P>

</B><P ALIGN="JUSTIFY">The executive officers and directors of the Company and their ages as of
April 1, 2000 are as follows:</P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=651>
<TR><TD WIDTH="32%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="CENTER">Name</B></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="CENTER">Age</B></FONT></TD>
<TD WIDTH="55%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="CENTER">Position</B></FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Thinh Q. Tran</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">46</FONT></TD>
<TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Chairman of the Board, President, and Chief Executive Officer</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Silvio Perich</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">51</FONT></TD>
<TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Senior Vice President, Worldwide Sales</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Jacques Martinella</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">44</FONT></TD>
<TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Vice President, Engineering</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM">
<FONT SIZE=2><P>William Wong</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">52</FONT></TD>
<TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Vice President, Marketing</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM">
<FONT SIZE=2><P>John J. Beck III</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">43</FONT></TD>
<TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Chief Financial Officer</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Kit Tsui</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">50</FONT></TD>
<TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Director of Finance, Chief Accounting Officer, and Secretary</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM">
<FONT SIZE=2><P>William J. Almon (1)(2)</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">67</FONT></TD>
<TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Director</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM">
<FONT SIZE=2><P>William Wang (1)(2)</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">36</FONT></TD>
<TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Director</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P>__________________________________

<FONT SIZE=3><P ALIGN="JUSTIFY">	</P>
<OL>

</FONT><FONT SIZE=2><P ALIGN="JUSTIFY"><LI>Member of the Audit Committee</LI></P>
<P ALIGN="JUSTIFY"><LI>Member of the Compensation Committee</LI></P></OL>

</FONT><FONT SIZE=3><P ALIGN="JUSTIFY">Mr. Tran, a founder of the Company, has served as
President, Chief Executive Officer, and Chairman of the Board of Directors since February 1982.
Prior to joining the Company, Mr. Tran was employed by Amdahl Corporation and Trilogy Systems
Corporation, both of which were involved in the IBM-compatible mainframe computer market.</P>
<P ALIGN="JUSTIFY">Mr. Perich joined the Company in September 1985 as Director, Sales.  In
September 1992, Mr. Perich became Senior Vice President, Worldwide Sales of the Company.
Mr. Perich was a co-founder of Costar Incorporated, a manufacturer's representative
organization for high technology products, where he served as partner from October 1979 to September
1985.  From September 1972 until September 1979, Mr. Perich served in several sales management
roles at Siliconix Inc, a specialty semiconductor manufacturer.</P>
<P ALIGN="JUSTIFY">Mr. Martinella joined the Company in May 1994 as Director, VLSI Engineering.
In December 1995, Mr. Martinella became Vice President, Engineering.  From June 1990 to April
1994, Mr. Martinella served in engineering and management positions at Weitek, a microchip
manufacturer.  In addition, Mr. Martinella was an engineer at National Semiconductor, a
semiconductor manufacturer, from June 1982 to June 1990.</P>
<P ALIGN="JUSTIFY">Mr. Wong joined the Company in June 1998. as Vice President, Marketing. From 1995
to 1998 Mr. Wong served as Business Development Director at National Semiconductor Corporation.
From 1993-1995 Mr. Wong served as Vice President of Marketing for Diamond Multimedia Systems. Prior
to 1993, Mr. Wong held several senior marketing and sales management positions at Intel
Corporation for 18 years. Mr. Wong resigned his position with Sigma Designs effective April 21,
2000. </P>
<P ALIGN="JUSTIFY">Mr. Beck joined the Company in January 2000 as Chief Financial Officer.  From
1996 through 1999 Mr. Beck served as Vice President of Finance and Administration at Augeo Software.
From 1994 through 1996 Mr. Beck served as the Controller at Meta-Software.  Prior to 1994, Mr. Beck
held Chief Financial Officer or Vice President Finance positions at several technology companies.
In addition, Mr. Beck is a Certified Public Accountant.  Mr. Beck served as an Audit Supervisor at
Ernst & Young and before that at KPMG Peat Marwick.</P>
<P ALIGN="JUSTIFY">Ms. Tsui joined the Company in November 1982 as its Accounting Manager.
Ms. Tsui was promoted to Director of Finance in February 1990, acting Chief Financial Officer
and Secretary in December 1996 and to Chief Accounting Officer in January 2000.</P>
<P ALIGN="JUSTIFY">Mr. Almon has served as Director of the Company since April 1994.  Mr. Almon
also serves as a Director of Read-Rite Corporation, Netfish Technologies Inc. and HDI Inc.  Most
recently, Mr. Almon served as Chairman of the Board of Internet Image, an internet software company
that was merged with Intraware Inc. in October 1999.  In May 1994, Mr. Almon founded and served as
Chairman of the Board and Chief Executive Officer of StorMedia, Inc., a manufacturer of thin film
disks.  From December 1989 until February 1993, Mr. Almon served as President and Chief
Executive Officer of Conner Peripherals, Inc., a manufacturer of computer disk drives and storage
management devices.  Prior to 1987, Mr. Almon spent 30 years with IBM Corporation, holding
executive positions in both software and hardware management, most recently as Vice President, Low
End Storage Products.</P>
<P ALIGN="JUSTIFY">Mr. Wang became a Director of the Company in October 1995.  From January
1995 to the present, Mr. Wang has served as Chairman of the Board, Chief Executive Officer, and
President of Princeton Graphic Systems (a supplier of computer monitors) and has served since
January 1996 as a Director of Diva LABS.  From 1990 to April 1997, Mr. Wang served as Chairman
of the Board and Chief Executive Officer of MAG Innovision Co., Inc., Ltd. of Taiwan, a supplier of
computer monitors.  From 1986 until 1990, Mr. Wang worked at Tatung Company of America in the
Video Display Division.</P>


<A NAME="item2"></A>
<B><P ALIGN="JUSTIFY">ITEM 2.	FACILITIES</P>
</B><P ALIGN="JUSTIFY">The Company currently leases a 25,000 square foot facility in Milpitas,
California that is used as the Company's headquarters.  The lease will expire in September 2002.
The Company also leases facilities for sales offices in Hong Kong and Shenzhen China, and for
research and development near Paris, France.  The Company believes that it has adequate facilities
to accommodate the Company's operations in the near term.</P>

<A NAME="item3"></A>
<B><P ALIGN="JUSTIFY">ITEM 3.  LEGAL PROCEEDINGS</B><I> </P>
</I><P ALIGN="JUSTIFY">In February 1998, two punitive class action complaints were filed
against us in the United States District Court, Northern District Court of California, Romine, et
al. v. Sigma Designs, Inc., et al., No. C-98-0537-TEC (N.D.Cal.) and Shah, et al. v. Sigma
Designs, Inc., et al., No C-98-0582-MHP (N.D.Cal.).  The federal court consolidated complaint
alleges that Sigma Designs, Inc. and certain of its officers and former officers and/or directors,
issued false or misleading statements regarding our business prospects during the period
October 24, 1995 through February 13, 1997.  The complaint does not specify the amount of
damages sought by the plaintiffs.  On October 8, 1999, we filed a motion to dismiss the
consolidated complaint.  In response to this motion, the plaintiffs agreed and filed a second
amended complaint.   On April 21, 2000, we filed a motion to dismiss the second amended complaint.
The hearing on that motion is scheduled for June 26, 2000.  We believe that we have meritorious
defenses to the allegations made in the complaints and we intend to conduct a vigorous defense.</P>

<A NAME="item4"></A>
<B><P ALIGN="JUSTIFY">ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS</P>
</B><P>None.</P>



<P ALIGN="CENTER"> </P>
<B><P ALIGN="CENTER">PART II</P>

<A NAME="item5"></A>
<P>ITEM 5.	MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS</P>
</B><P ALIGN="JUSTIFY">Sigma Designs' Common Stock has been traded under the Nasdaq symbol
"SIGM" since the Company's initial public offering on May 15, 1986.  The table below
sets forth the high and low closing prices in the Nasdaq Stock Market for the quarters
indicated.</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=650>
<TR><TD WIDTH="53%" VALIGN="TOP"> </TD>
<TD WIDTH="24%" VALIGN="TOP" COLSPAN=2>
<B><U><FONT SIZE=2><P ALIGN="CENTER">Fiscal 2000</B></U></FONT></TD>
<TD WIDTH="24%" VALIGN="TOP" COLSPAN=2>
<B><U><FONT SIZE=2><P ALIGN="CENTER">Fiscal 1999</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP"> </TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="CENTER">High</B></U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="CENTER">Low</B></U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="CENTER">High</B></U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><U><FONT SIZE=2><P ALIGN="CENTER">Low</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">First quarter ended April 30</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">8   5/32</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">4  3/4</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">4 5/16</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">2 29/32</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Second quarter ended July 31</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">7 15/16</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">4  3/4</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">4   3/8</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">2     1/2</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Third quarter ended October 31</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">7    3/4</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">4 9/16</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">2  9/16</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">  31/32</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Fourth quarter ended January 31</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">14  1/4</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">5  5/8</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">5   3/4</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">1 31/32</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3><P ALIGN="JUSTIFY">As of April 12, 2000, the Company had 229 shareholders of record.
The Company has not paid cash dividends on its common stock and does not plan to pay cash dividends
to its common shareholders in the near future.  The Company was obligated to pay certain dividends
on its outstanding preferred stock.  In 2000, the Company paid $ 80,460 in dividends on such
stock.</P>
<P> </P>

<A NAME="item6"></A>
<B><P>ITEM 6.	SELECTED FINANCIAL DATA</P></B>

<p>(In thousands, except per share data and number of employees)

<pre>


<strong>
Year ended January 31,       2000      1999      1998      1997      1996
-------------------------  --------  --------  --------  --------  --------</strong>
Net sales.............     $50,324   $43,540   $36,982   $41,214   $26,374

Net income (loss)
 available to
 common shareholders..       2,263    (2,690)   (5,648)    1,529   (14,708)

Diluted net income
 (loss) per share
 available to
 common shareholders..        0.13     (0.21)    (0.51)     0.14     (1.88)

Working capital.......      27,092    23,578    18,960    20,164    11,461

Total assets..........      44,751    44,220    38,329    37,915    24,843

Shareholders' equity..      28,403    24,771    20,312    21,017    12,581

Number of employees...          93        78        71        86        60
</pre>


<br>
<br>

<A NAME="item7"></A>
<B><P>ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS</P>

<P ALIGN="JUSTIFY">Results of Operations</P>
</B><P ALIGN="JUSTIFY">For the fiscal year ended January 31, 2000, the Company's financial results
showed continued sales growth and gross margin improvement.  The Company's net sales increased 16%
to $50.3 million from $43.5 million reported for fiscal 1999.  Gross profit improved to 31% compared
to 28% for fiscal 1999. The Company reported net income available to common shareholders of
$2,263,000 or $0.13 per share, diluted, for fiscal 2000 compared to a net loss available to common
stockholders of $2,690,000, or $0.21 per share in fiscal 1999.  Excluding the dividends on preferred
stock, the Company had net income of $2,348,000 in fiscal 2000 as compared to a net loss of $151,000
in fiscal 1999.  </P>
<P ALIGN="JUSTIFY">While improvement was made in fiscal 2000, sales of the Company's products are
affected by long cycles of new product deployment to both OEM customers and corporate markets, and
price pressure in the PC market.  The Company is also affected by a number of uncertainties: the
continued weak economies in Asia, a potential shortage of silicon wafers from Taiwan suppliers as a
consequence of the earthquake on September 21, 1999, and allocation of silicon wafers due to
increasing demand from other electronic industries.</P>
<P ALIGN="JUSTIFY"> The following table shows certain items as a percentage of net sales, which are
included in the Company's Consolidated Statement of Operations:</P></FONT>

<pre>
<strong>

                                           Fiscal     Fiscal     Fiscal
                                            2000       1999       1998
                                         ---------- ---------- ---------- </strong>
Net sales...............................       100%       100%       100%
Cost of sales...........................        68%        72%        77%
                                         ---------- ---------- ----------
Gross profit............................        32%        28%        23%
Operating expenses:
  Research and development..............        13%        13%        13%
  Sales and marketing...................         9%         9%        12%
  General and administrative............         6%         7%        14%
Other (income) expense..................        -1%       --         --
Benefit from income taxes...............       --          -1%         2%
                                         ---------- ---------- ----------
Net income (loss).......................         5%       --         -14%
Dividends on preferred stock............        -1%        -6%        -1%
                                         ---------- ---------- ----------
Net income (loss) available to
     common shareholders................         4%        -6%       -15%

</pre>


<B><FONT SIZE=3><P ALIGN="JUSTIFY"> </P>
<P ALIGN="JUSTIFY">Sales</P>
</B><P ALIGN="JUSTIFY">The following table sets forth the Company's net sales in each product group
for the last three years:</P></FONT>

<pre>

(Dollars in thousands)            Fiscal 2000    Fiscal 1999    Fiscal 1998
                                 -------------- -------------- --------------
Multimedia products:
     Boards....................   $22,940   46%  $19,592   45%  $18,264   49%
     Chipsets..................    25,831   51%   22,066   51%   15,723   43%
Other..........................     1,553    3%    1,882    4%    2,995    8%
                                 ---------      ---------      ---------
  TOTAL NET SALES..............   $50,324        $43,540        $36,982
                                 =========      =========      =========

</pre>


<FONT SIZE=3><P ALIGN="JUSTIFY">The multimedia products category includes MPEG encoding and decoding
solutions for both desktop and notebook computers as well as for PC manufacturers and add-on card
makers. The board level product line is targeted at OEM customers to address the DVD upgrade market
and system integrators to address the computer-based training, kiosks, and corporate video-on-demand
markets. The chipsets are targeted toward manufacturers and large volume OEM customers building
interactive multimedia products for business and consumer markets.  The "other" category
includes CD titles, DVD ROM drives, video conferencing products, contract revenue, and set-top box
products targeted at the emerging consumer internet information appliance market - a new market the
Company entered in fiscal 2000. </P>
<P ALIGN="JUSTIFY">The table below sets forth the Company's sales by market segment for each of the
last three fiscal years:</P></FONT>

<pre>

(Dollars in thousands)             Fiscal 2000    Fiscal 1999    Fiscal 1998
                                 -------------- -------------- --------------
Internet/intranet video
  networking...................    $8,200   16%   $7,611   17%  $11,592   31%
PC-DVD upgrade.................    15,836   31%   11,956   27%    7,011   19%
Chipsets.......................    25,831   51%   22,066   51%   15,723   43%
Other..........................       457    1%    1,907    4%    2,656    7%
                                 ---------      ---------      ---------
  TOTAL NET SALES..............   $50,324        $43,540        $36,982
                                 =========      =========      =========

</pre>


<FONT SIZE=3><P ALIGN="JUSTIFY">The Company's net sales increased 16% in fiscal 2000 as compared to
an 18% increase in fiscal 1999. The increase in sales in fiscal 2000 primarily reflected an increase
in demand for the Company's proprietary DVD MPEG-2 boards and chipsets due to increased market
acceptance of DVD technology. The Company's net sales in chipsets increased 17% and 40%
respectively, in fiscal 2000 and fiscal 1999. The Company's board level products primarily consist
of two market groups: intranet/internet video streaming and DVD MPEG-2 encoding and decoding
applications. Video streaming board products accounted for 16% and 17% of the Company's net sales
respectively, in fiscal 2000 and fiscal 1999. DVD board products accounted for 32% and 28% of the
Company's net sales respectively, in fiscal 2000 and fiscal 1999.</P>

<P ALIGN="JUSTIFY">The table below sets forth the Company's sales by geographic region for each of
the last three fiscal years:</P></FONT>

<pre>

(Dollars in thousands)             Fiscal 2000    Fiscal 1999    Fiscal 1998
                                 -------------- -------------- --------------
United States..................   $16,535   33%  $12,389   28%  $13,349   36%
Asia...........................    29,379   58%   26,706   61%   20,833   56%
Europe.........................     4,114    8%    3,926    9%    2,429    7%
Canada.........................       296    1%      519    1%      371    1%
                                 ---------      ---------      ---------
  TOTAL NET SALES..............   $50,324        $43,540        $36,982
                                 =========      =========      =========
</pre>

<FONT SIZE=3><P ALIGN="JUSTIFY"> The Company's U.S. sales as a percentage of total net sales were
33% in fiscal 2000, 29% in fiscal 1999, and 36% in fiscal 1998.  Total U.S. sales increased 33% to
$16.5 million from $12.4 million in fiscal 1999.  Total Asia sales as a percentage of total sales
were 58% in fiscal 2000, 61% in fiscal 1999 and 56% in fiscal 1998.  Total Asia sales increased 10%
to $29.4 million in fiscal 2000 from $26.7 million in fiscal 1999.  The Company's Asia sales were
made predominantly to customers in Taiwan, Singapore and Hong Kong.  In fiscal 2000, Taiwan and
Singapore accounted for 30% and 16% of the Company's net sales respectively, as compared to fiscal
1999, in which Taiwan and Hong Kong accounted for 43% and 8% of the company's net sales
respectively.  In fiscal 2000 and 1999, one Taiwanese customer contributed 26% and 28% to the
Company's total net sales, respectively. The overall increase in sales was primarily attributable to
increasing sales of the Company's MPEG boards and chipsets to OEM customers and computer board
manufacturers worldwide.</P>
<B><P ALIGN="JUSTIFY">Gross Margin</P>
</B><P ALIGN="JUSTIFY">The Company's gross margin as a percentage of net sales was approximately 32%
in fiscal 2000, 28% in fiscal 1999, and 23% in fiscal 1998. The increase in gross margin in fiscal
2000 was primary attributable to the increase in sale of chipsets which have a more favorable gross
margin compared to all other products.  The increased gross margin in fiscal 1999 was largely due to
the comparatively low margin in fiscal 1998 primarily caused by an inventory charge of $1.7 million.
</P>
<B><P ALIGN="JUSTIFY">Operating Expenses</P>
</B><P ALIGN="JUSTIFY">Sales and marketing expenses increased $418,000 or 10% in fiscal 2000 over
fiscal 1999.  The increase was largely due to the addition of business development staff, sales, and
marketing-support related expenses in connection with our operation in China.  The same expenses
decreased $299,000, or 7%, in fiscal 1999 over fiscal 1998. The decrease was primarily due to a
reduction in trade show and product sample expenses and the amount of commissions paid to outside
sales representatives.  </P>
<P ALIGN="JUSTIFY">Research and development expenses increased $719,000 or 13% in fiscal 2000 over
fiscal 1999 and $730,000, or 15% in fiscal 1999 over fiscal 1998.  The increases in fiscal 2000 and
1999 were largely due to increases in technical development support, depreciation associated with
research and development equipment, and engineering personnel expenses. The year-over-year increase
in research and development expenses was primarily the result of the Company's continued efforts in
the development of its proprietary DVD/MPEG-2 based products.  In December 1999, the Company
established an R & D center in France to enable the Company to recruit engineers and expand R
& D activities from that region.    </P>
<P ALIGN="JUSTIFY">The Company's general and administrative expenses decreased $116,000 or 4% in
fiscal 2000.  The decrease was primary due to non-recurring professional fees associated with the
settlement in fiscal 1999 from the California Franchise Tax Board for a claim previously filed by
the Company.  The same expenses decreased 42% or $2.2 million to $3.0 million during fiscal 1999 as
compared to fiscal 1998. The significant reduction in general and administrative expenses was
largely attributable to a charge of $1.9 million in accounts receivable reserves in connection with
the write-off of assets associated with graphics products during fiscal 1998. Excluding the effect
of the write-off, general and administrative expenses decreased by $281,000 in fiscal 1999 over
fiscal 1998. The decrease was primarily due to less accounts receivable reserves and outside
professional services as a result of the improvement of accounts receivable.   </P>
<B><P ALIGN="JUSTIFY">Liquidity and Capital Resources</P>
</B><P ALIGN="JUSTIFY">We had cash, cash equivalents, and short-term investments of $21.7 million at
January 31, 2000 compared with $18.1 million at January 31, 1999. The increase of $3.6 million in
cash and short-term investments during fiscal 2000 was primarily generated from operating activities
and proceeds from common stock issuances.  As of January 31, 2000, the Company had $12 million
outstanding under a $12 million bank revolving line of credit that expires in October 2000 and is
collateralized by funds on deposit in accounts that have been assigned to the lender. The Company
also has a $6 million bank line of credit available that expires in October 2000 and is
collateralized by the Company's accounts receivable, inventories, equipment, and intangibles. This
asset-based line of credit had an outstanding balance of $41,000 direct borrowings, and $309,780
standby letter of credits to secure certain lease obligations. </P>
<P ALIGN="JUSTIFY">Our primary sources of funds to date have been cash generated from operations,
proceeds from preferred and common stock issuances, and bank borrowings under lines of credit. The
Company believes that its current reserve of cash and equivalents, short-term investments and the
availability of funds under its existing asset-based banking arrangements will be sufficient to meet
anticipated working capital requirements and other cash needs for the reasonable foreseeable future.
However, we may have to raise additional capital through either public or private offerings of  our
common or preferred stock or from additional bank financing  prior to that time.  There is no
assurance that such capital will be available to us.  The estimate of time our cash and other
resources will last is a forward-looking statement that is subject to the risks and uncertainties
set forth below, as well as other factors, and actual results may differ as a result of such
factors.</P>
<B><P ALIGN="JUSTIFY">Factors Affecting Future Operating Results</P>
</B><P ALIGN="JUSTIFY">The Company's annual and quarterly results have in the past and may in the
future vary significantly due to a number of factors, including but not limited to new product
introductions by the Company and its competitors; market acceptance of the technology embodied in
the Company's products generally and the Company's products in particular; customer acceptance of
the Company's products; shifts in demand for the technology embodied in the Company's products
generally and the Company's products in particular and/or those of the Company's competitors; gains
or losses of significant customers; reduction in average selling prices and gross margins, which may
occur either gradually or precipitously; inventory obsolescence; write-downs of accounts receivable;
an interrupted or inadequate supply of semiconductor chips or other materials-for example, our
source of supply for silicon wafers was, and may to be continued in the near future, affected by the
earthquake in Taiwan; the Company's inability to protect its intellectual property; loss of key
personnel; technical problems in the development, ramp up, and manufacture of products causing
shipping delays; and availability of third-party manufacturing capacity for production of certain of
the Company's products. The Company derives a substantial portion of its revenues from sales to the
Asia Pacific region, a region of the world that is subject to increased economic instability. There
can be no assurance that such instability will not have a material adverse effect on the Company's
future international sales. Any adverse change in the foregoing or other factors could have a
material adverse effect on the Company's business, financial condition, and results of
operations.</P>
<P ALIGN="JUSTIFY">Due to the factors noted above, the Company's future earnings and stock price may
be subject to significant volatility, particularly on a quarterly basis. Past financial performance
should not be considered a reliable indicator of future performance, and investors should not use
historical trends to anticipate results or trends of future periods. Any shortfall in revenue or
earnings could have an immediate and significant adverse effect on the trading price of the
Company's common stock. Additionally, the Company may not learn of such shortfall until late in a
fiscal quarter, which could result in even more immediate and adverse effect on the trading price of
the Company's common stock. Further, the Company operates in a highly dynamic industry, which often
results in volatility of the Company's common stock price.</P>
<B><P ALIGN="JUSTIFY">Recently Issued Accounting Standards</P>

</B><P>In June 1998, Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Accounting," was issued which defines derivatives, requires
all derivatives be carried at fair value, and provides for hedging accounting when certain
conditions are met. This statement is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999.  In June 1999, the Financial Accounting Standards Board issued Statement No.
137, "Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective
Date of FASB Statement No. 133".  Statement No. 137 amended the effective date of Statement 133
to all fiscal quarters of fiscal years beginning after June 15, 2000.  Although the Company has not
fully assessed the implications of this new statement, the Company does not believe adoption of this
statement will have a material<B> </B>impact on the Company's financial statements.</P>
<B><P> </P>


<A NAME="item7a"></A>
<P>ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</P>

</B><P ALIGN="JUSTIFY">The following discussion about the Company's market risk disclosures involves
forward-looking statements.  Actual results could differ materially from those projected in the
forward-looking statements.  The Company faces exposure to market risk from adverse movements in
interest rates and foreign currency exchange rates, which could affect its operations and financial
condition.  The Company does not use derivative financial instruments for speculative purposes.</P>
<I><P ALIGN="JUSTIFY"> Interest Rate Sensitivity</I>.  At January 31, 2000, the Company held
$6.2 million in short-term investments consisting of U.S. government and corporate debt
securities with an average original maturity of less than one year.  These available-for-sale
securities are subject to interest rate risk and will fall in value if market interest rates
increase.  If market rates were to increase immediately and uniformly by 10 percent from levels at
January 31, 2000, the fair market value of the short-term investments would decline by an
immaterial amount.  The Company generally expects to have the ability to hold its investments until
maturity and therefore would not expect operating results or cash flows to be affected to any
significant degree by the effect of a sudden change in market interest rates for short-term
investments.</P>
<P ALIGN="JUSTIFY">At January 31, 2000, the Company had $12,000,000 outstanding under a
$12,000,000 variable interest rate bank line of credit and $41,000 outstanding under a $6,000,000
variable interest rate bank line of credit.  If short-term interest rates were to increase 10
percent, the increased interest expense associated with these arrangements would not have a material
impact on the Company' net income and cash flows.</P>

<I><P>Foreign Currency Exchange Rate Sensitivity</I>.  The Hong Kong dollar and French franc are the
financial currency in the Company's subsidiaries in Hong Kong and France.  The Company does not
currently enter into foreign exchange forward contracts to hedge certain balance sheet exposures and
intercompany balances against future movements in foreign exchange rates.  However, the Company does
maintain cash balances denominated in the Hong Kong dollar and French franc.  If foreign exchange
rates were to weaken against the U.S. dollar immediately and uniformly by 10 percent from the
exchange rate at January 31, 2000, the fair value of these foreign currency amounts would
decline by an immaterial amount.</P>
<B><P> </P>

<A NAME="item8"></A>
<P>ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA</P>
</B><P ALIGN="JUSTIFY">Sigma's financial statements, the notes thereto, and the independent
auditors' report appear on pages F-1 through F-21 and S-1 of this Annual Report on Form 10-K.</P>



<A NAME="item9"></A>
<B><P>ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE</P>

</B><P ALIGN="JUSTIFY">Not applicable.</P>
<P ALIGN="JUSTIFY"> </P>
<P ALIGN="JUSTIFY"> </P>



<B><P ALIGN="CENTER">PART III</P>

<A NAME="item10"></A>
<P>ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY</P>

</B><P ALIGN="JUSTIFY">The information required by this item concerning the Company's directors and
executive officers is incorporated by reference from the information set forth in the sections
entitled "Election of Directors" and "Other Information" contained in the
Company's Proxy Statement relating to the 2000 Annual Meeting of Shareholders to be filed with the
Securities and Exchange Commission within 120 days after the end of the Company's fiscal year
pursuant to General Instruction G(3) of Form 10-K (the "Proxy Statement").  Certain
information required by this item concerning the executive officers of the Company is incorporated
by reference to the information set forth in Part I of the Annual Report on 10-K.</P>


<A NAME="item11"></A>
<B><P>ITEM 11.	EXECUTIVE COMPENSATION</P>


</B><P ALIGN="JUSTIFY">The information required by this item regarding executive compensation is
incorporated by reference from the information set forth in the sections entitled "Election of
Directors-Compensation of Directors" and "Other Information-Executive Compensation"
contained in the Proxy Statement.</P>


<A NAME="item12"></A>
<B><P>ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</P>

</B><P ALIGN="JUSTIFY">The information required by this item regarding security ownership of certain
beneficial owners and management is incorporated by reference from the information set forth in the
section entitled "Other Information-Security Ownership of Certain Beneficial Owners and
Management" contained in the Proxy Statement.</P>


<A NAME="item13"></A>
<B><P>ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</P>



</B><P ALIGN="JUSTIFY">Not applicable.</P>
<P> </P>



<P ALIGN="CENTER"> </P>
<B><P ALIGN="CENTER">PART IV</P>


<A NAME="item14"></A>
<P>ITEM 14.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K</P></B>

<DIR>
<P>(a)</P>


<P ALIGN="JUSTIFY">1.	Financial Statements</P>
<P ALIGN="JUSTIFY">The following documents are filed as part of this Annual Report on Form 10-K:</P>
<P ALIGN="JUSTIFY"></P></FONT>

<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=570>
<TR><TD WIDTH="86%" VALIGN="TOP"> </TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Page</FONT></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="JUSTIFY">Independent Auditors' Report</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">
<A HREF="#report">
F-1</A>
</FONT></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="JUSTIFY">Consolidated Balance Sheets as of January 31, 2000 and
1999</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">
<A HREF="#bs">
F-2</A>
</FONT></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="JUSTIFY">Consolidated Statements of Operations for the years ended
January 31, 2000, 1999, and 1998</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">
<A HREF="#ops">
F-3</A>
</FONT></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="JUSTIFY">Consolidated Statements of Shareholders' Equity and Comprehensive
Income (Loss) for the years ended January 31, 2000, 1999, and 1998</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">
<A HREF="#equity">
F-4</A>
</FONT></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="JUSTIFY">Consolidated Statements of Cash Flows for the years ended
January 31, 2000, 1999 and 1998</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">
<A HREF="#flows">
F-6</A>
</FONT></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="JUSTIFY">Notes to Consolidated Financial Statements</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">
<A HREF="#notes">
F-8</A>
</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=3><P ALIGN="JUSTIFY">2.	Financial Statements Schedules</P>
<P ALIGN="JUSTIFY">The following financial statement schedule is filed as part of this Annual Report
on Form 10-K:</P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=570>
<TR><TD WIDTH="86%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="JUSTIFY">Schedule II-Valuation and Qualifying Accounts and
Reserves</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">S-1</FONT></TD>
</TR>
</TABLE>
</CENTER></P>


<FONT SIZE=3><P ALIGN="JUSTIFY">All other schedules have been omitted as they are not required, not
applicable, or the required information is otherwise included.</P>

<P ALIGN="JUSTIFY">(b)	Reports on Form 8-K</P>
<P ALIGN="JUSTIFY">No reports on Form 8-K were filed during the fourth quarter ended
January 31, 1999.</P>
<P ALIGN="JUSTIFY">(c)	Exhibits</P>

<P ALIGN="JUSTIFY">The exhibits listed on the accompanying index to exhibits immediately following
the financial statement schedules are incorporated by reference into this Annual Report on Form 10-K.</P>

</DIR>

<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>
<A HREF="#sign"></A>
<P ALIGN="CENTER">SIGNATURES<B> </P>
</B><P ALIGN="JUSTIFY">Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Milpitas, State of California, on the 28th
day of April, 2000.</P>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>

<P>SIGMA DESIGNS, INC.</P>

<P>By: <U>	/s/ Thinh Q. Tran	</U><br>
	Chairman of the Board,<br>
	President, and Chief Executive Officer </P></DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>

<B><P ALIGN="CENTER">POWER OF ATTORNEY</P>
</B><P ALIGN="JUSTIFY">KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thinh Q. Tran and Kit Tsui, and each of them, jointly and
severally, his true and lawful attorneys-in-fact, each with full power of substitution and
resubstitution, for him in any and all capacities, to sign any or all amendments to this Annual
Report on Form 10-K, with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and purposes as he or she
might or could do if personally present, hereby ratifying and confirming all that each said
attorney-in-fact and agent, or his or her substitute or substitutes or any of them, may lawfully do
or cause to be done by virtue hereof.</P>
<P ALIGN="JUSTIFY">PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1934, THIS ANNUAL REPORT ON
FORM 10-K HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF THE OF THE REGISTRANT AND IN
THE CAPACITIES AND ON THE DATES INDICATED:</P>
<P ALIGN="JUSTIFY"></P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=5 WIDTH=665>
<TR><TD WIDTH="41%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Signature</B></FONT></TD>
<TD WIDTH="39%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Title</B></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Date</B></FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP"> </TD>
<TD WIDTH="39%" VALIGN="TOP"> </TD>
<TD WIDTH="20%" VALIGN="TOP"> </TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<U><FONT SIZE=2><P>/s/ Thinh Q. Tran	</P>
</U><B><P ALIGN="CENTER">Thinh Q. Tran</B></FONT></TD>
<TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=2><P>Chairman of the Board, President, and Chief Executive Officer (Principal Executive
Officer)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">April 28, 2000</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<U><FONT SIZE=2><P>/s/ John J. Beck III	</P>
</U><B><P ALIGN="CENTER">John J. Beck III</B></FONT></TD>
<TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=2><P>Chief Financial Officer (Principal Financial Officer)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">April 28, 2000</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<U><FONT SIZE=2><P>/s/ Kit Tsui	</P>
</U><B><P ALIGN="CENTER">Kit Tsui</B></FONT></TD>
<TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=2><P>Director of Finance, Chief Accounting Officer and Secretary (Principal Accounting
Officer)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">April 28, 2000</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<U><FONT SIZE=2><P>/s/ William J. Almon	</P>
</U><B><P ALIGN="CENTER">William J. Almon</B></FONT></TD>
<TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=2><P>Director </FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">April 28, 2000</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<U><FONT SIZE=2><P>/s/ William Wang	</P>
</U><B><P ALIGN="CENTER">William Wang</B></FONT></TD>
<TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=2><P>Director</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">April 28, 2000</FONT></TD>
</TR>
</TABLE>


<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>



<A NAME="report"></A>
<P ALIGN="CENTER"><B> INDEPENDENT AUDITORS' REPORT</P>

</B></FONT><FONT SIZE=3><P ALIGN="JUSTIFY">		</P>
<P>To the Board of Directors and Shareholders of<BR>
	Sigma Designs, Inc.:			</P>
<P ALIGN="JUSTIFY">We have audited the accompanying consolidated balance sheets of Sigma Designs,
Inc. and subsidiaries as of January 31, 2000 and 1999, and the related consolidated statements
of operations, shareholders' equity and comprehensive income (loss) and cash flows for each of the
three years in the period ended January 31, 2000.  Our audits also include the financial
statement schedule listed in Item 14(a)2.  These financial statements and financial statement
schedule are the responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements and financial statement schedule based on our audits.</P>
<P ALIGN="JUSTIFY">We conducted our audits in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.  An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.</P>
<P ALIGN="JUSTIFY">In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Sigma Designs, Inc. and subsidiaries at
January 31, 2000 and 1999, and the results of their operations and their cash flows for each of
the three years in the period ended January 31, 2000 in conformity with generally accepted
accounting principles.  Also, in our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.</P>
</FONT><FONT FACE="Times,Times New Roman" SIZE=3><P>/s/ Deloitte & Touche LLP</P>
</FONT><FONT SIZE=3><P>San Jose, California<BR>
February 28, 2000</P>


<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>
<A NAME="bs"></A>
<p><strong>SIGMA DESIGNS, INC.<br>
<br>
CONSOLIDATED BALANCE SHEETS<br>
JANUARY 31, 2000 and 1999 (Dollars in thousands)
<pre>

                                                               2000      1999
                                                             --------- ---------
ASSETS                                                                 </strong>
CURRENT  ASSETS:
  Cash and equivalents.......................................  $3,459    $2,946
  Short-term investments.....................................   6,198    15,112
  Accounts receivable (net of allowances
    of $414 and $3,306)......................................  13,053    13,648
  Inventories................................................   8,022    10,418
  Restricted cash............................................  12,000        --
  Prepaid expenses and other assets..........................     497       629
                                                             --------- ---------
           Total current assets                                43,229    42,753
EQUIPMENT  - Net.............................................   1,243     1,311
OTHER  ASSETS................................................     279       156
                                                             --------- ---------
TOTAL........................................................ $44,751   $44,220
                                                             ========= =========
<strong>
LIABILITIES AND SHAREHOLDERS' EQUITY                                   </strong>
CURRENT LIABILITIES:
  Bank line of credit........................................ $12,041   $13,716
  Accounts payable...........................................   2,277     4,109
  Accrued liabilities........................................   1,511     1,132
  Current portion of capital lease obligations...............     308       218
                                                             --------- ---------
           Total current liabilities.........................  16,137    19,175
                                                             --------- ---------
CAPITAL LEASE OBLIGATIONS....................................     211       274

COMMITMENTS AND CONTINGENCIES (Notes 9 and 12)

SHAREHOLDERS' EQUITY:
  Preferred stock - no par value:  2,000,000 shares
   authorized; shares outstanding: 2000, none; 1999, 1,900...     --      1,536
  Common stock - no par value:  20,000,000
   shares authorized; shares outstanding:
   2000, 16,220,780; 1999, 15,435,094........................  67,461    64,699
  Shareholder notes receivable...............................     (11)      (12)
  Accumulated other comprehensive income.....................     142        --
  Accumulated deficit........................................ (39,189)  (41,452)
                                                             --------- ---------
           Shareholders' equity                                28,403    24,771
                                                             --------- ---------
TOTAL........................................................ $44,751   $44,220
                                                             ========= =========
</pre>
See notes to consolidated financial statements.



<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>
<A NAME="ops"></A>
<p><strong>SIGMA DESIGNS, INC.<br>
<br>
CONSOLIDATED STATEMENTS OF OPERATIONS<br>
YEARS ENDED JANUARY 31, 2000, 1999 AND 1998<br>
(In thousands, except per share amounts)
<pre>

                                            2000       1999       1998
                                         ---------- ---------- ---------- </strong>
NET SALES...............................   $50,324    $43,540    $36,982

COSTS AND EXPENSES:
  Cost of sales.........................    34,481     31,259     28,296
  Research and development..............     6,397      5,678      4,948
  Sales and marketing...................     4,490      4,072      4,371
  General and administrative............     2,869      2,985      5,166
                                         ---------- ---------- ----------
           Total costs and expenses.....    48,237     43,994     42,781
                                         ---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS                2,087       (454)    (5,799)
  Interest income.......................       929        935        820
  Interest expense......................      (770)      (946)      (927)
  Other income (expense), net...........       162         (7)         6
                                         ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES.......     2,408       (472)    (5,900)
(PROVISION FOR) BENEFIT FROM
  INCOME TAXES..........................       (60)       321        824
                                         ---------- ---------- ----------
NET INCOME (LOSS).......................     2,348       (151)    (5,076)
DIVIDENDS ON PREFERRED STOCK............        85      2,539        572
                                         ---------- ---------- ----------
NET INCOME (LOSS) AVAILABLE TO COMMON
  SHAREHOLDERS..........................    $2,263    ($2,690)   ($5,648)
                                         ========== ========== ==========
NET INCOME (LOSS) PER SHARE AVAILABLE
  TO COMMON SHAREHOLDERS:
  Basic.................................     $0.14     ($0.21)    ($0.51)
                                         ========== ========== ==========
  Diluted...............................     $0.13     ($0.21)    ($0.51)
                                         ========== ========== ==========
SHARES USED IN COMPUTATION:
  Basic.................................    15,728     12,899     11,012
                                         ========== ========== ==========
  Diluted...............................    17,704     12,899     11,012
                                         ========== ========== ==========

</pre>
See notes to consolidated financial statements.



<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>
<A NAME="equity"></A>
<p><strong>SIGMA DESIGNS, INC.<br>
<br>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)<br>
YEARS ENDED JANUARY 31, 2000, 1999 AND 1998
(Dollars in thousands)
<pre>
<font size="1">

                                                                                          Accumu-
                                                                                           lated
                                                                                  Share-   Other                          Total
                                                                       Deferred   holder  Compre-                        Compre-
                                 Preferred Stock     Common Stock        Stock    Notes   hensive   Accumu-              hensive
                              ------------------ ---------------------  Compen-  Receiv-   Income    lated               Income
                               Shares   Amount     Shares     Amount    sation     able    (Loss)   Deficit     Total    (Loss)
                              -------- --------- ----------- --------- --------- -------- -------- ---------- --------- ---------</strong>
Balances, February 1, 1997..      --       $--   11,091,062   $54,311     ($100)    ($80)     $--   ($33,114)  $21,017

Net loss....................      --        --          --        --        --       --        --     (5,076)   (5,076)  ($5,076)
Unrealized gain on
  short-term investments....      --        --          --        --        --       --         3        --          3         3
                                                                                                                        ---------
Comprehensive loss..........                                                                                             ($5,073)
                                                                                                                        =========
Common stock issued under
  stock plans...............      --        --      150,220       239       --       --        --        --        239
Amortization of deferred
  stock compensation........      --        --          --        --         25      --        --        --         25
Cancellation of stock
  options...................      --        --          --        (75)       75      --        --        --        --
Issuance of Series A
  preferred stock, net of
  issuance costs of $368....   45,000     4,132      10,000        44       --       --        --        --      4,176
Accretion of discount for
  Series A preferred
  stock.....................      --        500         --        --        --       --        --       (500)      --
Conversion of Series A
  preferred stock...........  (18,450)   (1,917)    445,745     1,917       --       --        --        --        --
Dividends on Series A
  preferred stock...........      --        --          --        --        --       --        --        (72)      (72)
Cancellation of Active
  Designs shares............      --        --      (51,151)      (17)      --        17       --        --        --
                              -------- --------- ----------- --------- --------- -------- -------- ---------- ---------
Balances, January 31, 1998..   26,550     2,715  11,645,876    56,419       --       (63)       3    (38,762)   20,312

Net loss....................      --        --          --        --        --       --        --       (151)     (151)    ($151)
Unrealized loss on
  short-term investments....      --        --          --        --        --       --        (3)       --         (3)       (3)
                                                                                                                        ---------
Comprehensive loss..........                                                                                               ($154)
                                                                                                                        =========
Common stock issued under
  stock plans...............      --        --      111,057       237       --       --        --        --        237
Issuance of Series B
  preferred stock, net of
  issuance costs of $390....    5,000     4,610       5,000        18       --       --        --        --      4,628
Issuance of Series C
  preferred stock, and
  common stock warrants,
  net of issuance costs
  of $364...................    1,900     1,536         --        259       --       --        --        --      1,795
Conversion of Series A
  preferred stock...........  (24,550)   (2,489)  1,417,984     2,489       --       --        --        --        --
Conversion of Series B
  preferred stock...........   (3,400)   (3,143)  2,325,241     5,293       --       --        --     (2,150)      --
Repurchase of Series A
  preferred stock...........   (2,000)     (215)        --        --        --       --        --        --       (215)
Repurchase of Series B
  preferred stock...........   (1,600)   (1,478)        --        --        --       --        --       (322)   (1,800)
Dividends on Series A
  preferred stock...........      --        --          --        --        --       --        --        (63)      (63)
Dividends on Series C
  preferred stock...........      --        --          --        --        --       --        --         (4)       (4)
Cancellation of Active
  Designs shares............      --        --      (70,064)      (16)      --        16       --        --        --
Forgiveness of shareholder
  notes receivable..........      --        --          --        --        --        35       --        --         35
                              -------- --------- ----------- --------- --------- -------- -------- ---------- ---------
Balances, January 31, 1999..    1,900     1,536  15,435,094    64,699       --       (12)      --    (41,452)   24,771

Net income..................      --        --          --        --        --       --        --      2,348     2,348    $2,348
Unrealized gain on
  investments...............      --        --          --        --        --       --       142        --        142       142
                                                                                                                        ---------
Comprehensive income........                                                                                              $2,490
                                                                                                                        =========
Common stock issued under
  stock plans...............      --        --      418,570       987       --       --        --        --        987
Exercise of common stock
  warrants..................      --        --       40,000       207       --       --        --        --        207
Conversion of Series C
  preferred stock...........   (1,900)   (1,536)    330,416     1,536       --       --        --        --        --
Dividends on Series C
  preferred stock...........      --        --          --        --        --       --        --        (85)      (85)
Cancellation of Active
  Designs shares............      --        --       (3,300)       (1)      --         1       --        --        --
Tax benefit of employee
  stock transactions........      --        --          --         33       --       --        --        --         33
                              -------- --------- ----------- --------- --------- -------- -------- ---------- ---------
Balances, January 31, 2000..      --      $ --   16,220,780   $67,461     $ --      ($11)    $142   ($39,189)  $28,403
                              ======== ========= =========== ========= ========= ======== ======== ========== =========
</font size="1">
</pre>
See notes to consolidated financial statements.


<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>
<A NAME="flows"></A>
<p><strong>SIGMA DESIGNS, INC.<br>
<br>
CONSOLIDATED STATEMENTS OF CASH FLOWS<br>
YEARS ENDED JANUARY 31, 2000, 1999 AND 1998
(In thousands)

<pre>

                                                     2000      1999      1998
                                                   --------- --------- --------- </strong>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)...............................   $2,348     ($151)  ($5,076)
  Adjustments to reconcile net income (loss)
    to net cash provided by (used for)
    operating activities:
    Depreciation and amortization.................      720       571       519
    Forgiveness of shareholder notes receivable...       --        35        --
    Loss on disposal of assets....................       22        11        --
    Amortization of deferred stock compensation...       --        --        25
    Changes in assets and liabilities:
      Accounts receivable.........................      595    (1,253)       82
      Inventories.................................    2,396    (3,104)   (2,434)
      Prepaid expenses and other..................      165       (37)      (29)
      Accounts payable............................   (1,832)    1,095      (272)
      Accrued liabilities.........................      374      (409)   (1,160)
                                                   --------- --------- ---------
       Net cash provided by (used for)
         operating activities.....................    4,788    (3,242)   (8,345)
                                                   --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Fixed asset additions...........................     (466)      (34)     (553)
  Proceeds from sales of equipment................       36        50        --
  Purchases of short-term investments.............  (29,118)  (19,312)  (15,948)
  Maturity of short-term investments..............   38,009    20,148    11,801
  Other assets....................................       42       (17)       (6)
                                                   --------- --------- ---------
      Net cash provided by (used for)
        investing activities......................    8,503       835    (4,706)
                                                   --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Bank line of credit borrowings, net.............   (1,675)      400     2,485
  Increrase in restricted cash....................  (12,000)       --        --
  Proceeds from sale of common stock..............    1,194       237       239
  Proceeds from sale of preferred stock and
    warrants, net of issuance costs...............       --     6,423     4,176
  Dividends paid..................................      (80)      (93)      (23)
  Repurchase of preferred stock...................       --    (2,015)       --
  Repayment of capital lease obligations..........     (217)     (296)      (74)
                                                   --------- --------- ---------
      Net cash provided by financing activities...  (12,778)    4,656     6,803
                                                   --------- --------- ---------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS.......      513     2,249    (6,248)

CASH AND EQUIVALENTS:
  Beginning of year...............................    2,946       697     6,945
                                                   --------- --------- ---------
  End of year.....................................   $3,459    $2,946      $697
                                                   ========= ========= =========

CASH PAID FOR INTEREST............................     $707      $880      $956
                                                   ========= ========= =========

CASH PAID FOR INCOME TAXES........................      $75      $ --      $ --
                                                   ========= ========= =========

NONCASH INVESTING AND FINANCING ACTIVITIES:
  Equipment acquired under capital leases.........     $244      $668       $92
                                                   ========= ========= =========

  Issuance costs for preferred stock paid in
    common stock..................................     $ --       $18      $ --
                                                   ========= ========= =========

  Accretion of discount for Series A preferred
    stock.........................................     $ --      $ --      $500
                                                   ========= ========= =========

  Adjustment of E-Motions, Inc. purchase price....     $ --      $ --      $ --
                                                   ========= ========= =========

  Dividends on Series A preferred stock...........     $ --       $14       $49
                                                   ========= ========= =========

  Dividends on Series B preferred stock...........     $ --    $2,150      $ --
                                                   ========= ========= =========

  Dividends on Series C preferred stock...........     $ --        $4      $ --
                                                   ========= ========= =========

  Conversion of Series A preferred stock into
    common stock..................................     $ --    $2,489    $1,917
                                                   ========= ========= =========

  Conversion of Series B preferred stock into
    common stock..................................     $ --    $3,143      $ --
                                                   ========= ========= =========

  Conversion of Series C preferred stock into
    common stock..................................   $1,536      $ --      $ --
                                                   ========= ========= =========

  Cancellation of notes receivable and related
    common stock..................................       $1       $16      $ --
                                                   ========= ========= =========

  Tax benefit of employee stock transactions......      $33      $ --      $ --
                                                   ========= ========= =========

  Conversion of investment in private equity
    securities into marketable equity securities..     $100      $ --      $ --
                                                   ========= ========= =========

</pre>
See notes to consolidated financial statements.

<br>
<br>
<br>
<HR WIDTH="85%">
<br>
<br>
<br>
<A NAME="notes"></A>
<p><strong>SIGMA DESIGNS, INC.<br>
<br>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<br>
YEARS ENDED JANUARY 31, 2000, 1999 AND 1998
</strong>


<FONT SIZE=3><P>1.	NATURE  OF  OPERATIONS  AND  SIGNIFICANT  ACCOUNTING  POLICIES</P>
<I><P ALIGN="JUSTIFY">Nature of Operations</B> </I>- Sigma Designs, Inc. (the Company) develops,
manufactures and markets multimedia computer devices and products.  The Company sells its products
to computer manufacturers, distributors, value-added resellers and corporate customers<I>.</P>
<B><P ALIGN="JUSTIFY">Principles of Consolidation</B> - </I>The consolidated financial statements
include Sigma Designs, Inc. and subsidiaries.  Intercompany balances and transactions are
eliminated<I>.</P>
<B><P ALIGN="JUSTIFY">Accounting Period</B> - </I>The Company's fiscal year ends on the Saturday
closest to January 31.  For convenience, the financial statements are shown as ending
January 31, although the fiscal years ended on January 29, 2000, January 30, 1999 and
January 31, 1998, respectively.  Fiscal 2000, 1999 and 1998 each included 52 weeks.</P>
<B><I><P ALIGN="JUSTIFY">Pervasiveness of Estimates</B> </I>- The preparation of financial
statements in conformity with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.  Actual results could differ from
those estimates.</P>
<B><I><P ALIGN="JUSTIFY">Concentration of Credit Risk</B> - </I>Financial instruments which
potentially subject the Company to concentrations of credit risk consist primarily of cash and cash
equivalents, short-term investments and accounts receivable.  The majority of the Company's cash and
cash equivalents are on deposit with one financial institution.  The Company's short-term
investments are managed by a major domestic financial institution, in a portfolio with defined
investment objectives of competitive money market returns, high liquidity and safety of capital.
Its portfolio of short-term investments typically include United States government obligations and
corporate obligations.  From time to time, the Company also makes investments in certificates of
deposit with financial institutions, outside of its third-party managed portfolio.  The Company
performs ongoing credit evaluations of its customers and generally does not require collateral for
sales on credit.  The Company maintains reserves for potential credit losses<I>.</P>
<B><P ALIGN="JUSTIFY">Cash Equivalents</B> - </I>The Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash equivalents.</P>
<B><I><P ALIGN="JUSTIFY">Investments</B> </I>- The Company's short-term investments represent debt
securities which are stated at fair value.  Included in other assets is an investment in marketable
securities which is stated at fair value.  All short-term investments are classified as available-
for-sale.  Any temporary difference between an investment's cost and its market value is recorded as
a separate component of shareholders' equity until such gains and losses are realized.  Available-
for-sale securities are classified in the balance sheet based on management's current intended use
for the securities.  Gains and losses on the sale of securities are computed using the specific
identification method.</P>

<B><I><P ALIGN="JUSTIFY">Inventories</B></I> are stated at the lower of cost (first-in, first-out)
or market.</P>

<B><I><P ALIGN="JUSTIFY">Restricted Cash</I> </B>represents funds on deposit in accounts which have
been assigned to the Company's lender under a bank line of credit (see note 6)</P>
<B><I><P ALIGN="JUSTIFY">Investment</B>s</I> in  private equity securities of less than 20% owned
companies are accounted for using the cost method unless the Company can exercise significant
influence or the investee is economically dependent upon the Company, in which case the equity
method is used.  </P>
<B><I><P ALIGN="JUSTIFY">Equipment</B></I> is stated at cost.  Depreciation and amortization are
computed using the straight-line method based on the useful lives of the assets (three to five
years) or the lease term if shorter.</P>
<B><I><P ALIGN="JUSTIFY">Long Lived Assets</B></I> - The Company evaluates long-lived assets for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.</P>
<B><I><P ALIGN="JUSTIFY">Revenue Recognition</B></I> - Sales are recognized upon shipment.
Allowances for sales returns, price protection and warranty costs are recorded at the time that
sales are recognized.</P>
<B><I><P ALIGN="JUSTIFY">Research and development</B></I> expenses include costs and expenses
associated with the design and development of new products.  To the extent that such costs include
the development of computer software, they are generally incurred prior to the establishment of the
technological feasibility of the related product that is under development.  Accordingly, software
costs incurred after the establishment of technological feasibility have not been material and
therefore have been expensed.  All other research and development is expensed as incurred.</P>
<B><I><P ALIGN="JUSTIFY">Income Taxes</B></I> - Deferred income taxes are provided for temporary
differences between financial statement and income tax reporting.  Income taxes are accounted for
under an asset and liability approach.  Deferred tax liabilities are recognized for future taxable
amounts and deferred tax assets are recognized for future deductions net of a valuation allowance to
reduce deferred tax assets to amounts that are more likely than not to be realized.</P>
<B><I><P ALIGN="JUSTIFY">Stock-Based Compensation</B> - </I>The Company accounts for stock-based
awards to employees using the intrinsic value method in accordance with APB No. 25,
"Accounting for Stock issued to Employees."</P>
<B><I><P ALIGN="JUSTIFY">Comprehensive Loss</B> - </I>In fiscal year 1999, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income," which requires an enterprise to report, by major components and as a single total, the
change in net assets during the period from nonowner sources.  Statements of comprehensive income
(loss) for fiscal 2000, 1999, and 1998 have been included with the statements of shareholders'
equity.</P>
<B><I><P ALIGN="JUSTIFY">Net Income (Loss) per Share</B></I> - Basic earnings per share (EPS)
excludes dilution and is computed by dividing net income by the weighted average of common shares
outstanding for the period.  Diluted EPS reflects the potential dilution that would occur if
securities or other contracts to issue common stock were exercised or converted into common stock
(see Note 7)</P>
<B><I><P ALIGN="JUSTIFY">Fair Value of Financial Instruments</B> - </I>In accordance with the
provisions of SFAS No. 107 "Disclosure About Fair Value of Financial Instruments,"
which requires the disclosure of fair value information about both on and off balance sheet
financial instruments where it is practicable to estimate the value, the Company has estimated the
fair value of its financial instruments.  The Company believes that carrying amounts reported in the
balance sheet for cash and cash equivalents and investments as of January 31, 2000 approximate
fair market value.</P>
<B><I><P ALIGN="JUSTIFY">Geographic Operating Information</B> </I>- In fiscal year 1999, the Company
adopted SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information," which establishes annual and interim reporting standards for an enterprise's
business segments and related disclosures about its products, services, geographical areas and major
customers.  The Company operates in one reportable segment (Note 11).</P>
<B><I><P ALIGN="JUSTIFY">Recently Issued Accounting Standards</I> </B>- In June 1998, Statement of
Financial Accounting Standards   No. 133, "Accounting for Derivative Instruments and Hedging
Accounting" was issued which defines derivatives, requires all derivatives be carried at fair
value, and provides for hedging accounting when certaim conditions are met.  This statement is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.  In June 1999, the
Financial Accounting Standards Boards issued Statement No. 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133".
Statement No. 137 amended the effective date of Statement No. 133 to all fiscal quarters of fiscal
years beginning after June 15, 2000.  Although the Company has not fully assessed the implication s
of this new statement, the Company does not believe adoption of this statement will have a material
impact on the Company's financial statements.</P>
<P ALIGN="JUSTIFY"> </P>


<B><P>2.	INVESTMENTS</P>
</B><P ALIGN="JUSTIFY">Short-term investments included the following equity securities and gross
unrealized losses and gains as of January 31, 2000 and 1999 (in thousands).  Fair values are
based on quoted market prices obtained from the Company's broker.  All of the Company's short-term
investments are classified as available for sale, since the Company intends to sell them as needed
for operations.</P>

<pre>
<strong>
                                          Unrealized  Unrealized
                                           Loss on     Gain on
                                           Invest-     Invest-     Market
                                 Cost        ment        ment       Value
                               ---------  ----------  ----------  ---------</strong>
January 31, 2000:
  Corporate debt securities..     6,221        ($24)         $1      6,198
                               =========  ==========  ==========  =========

January 31, 1999:
  Certificates of deposit....   $12,155      $ --        $ --      $12,155
  Corporate debt securities..     2,957        --          --        2,957
                               ---------  ----------  ----------  ---------
Total........................   $15,112      $ --        $ --      $15,112
                               =========  ==========  ==========  =========

</pre>



<FONT SIZE=3><P ALIGN="JUSTIFY">At January 31, 2000, other assets include the Company's
investment in publicly-traded common stock of Intraware, Inc., which is recorded at a fair market
value of approximately $216,000 (cost of approximately $51,000).</P>

<B><P>3.	INVENTORIES</P>

</B><P ALIGN="JUSTIFY">Inventories at January 31 consist of (in thousands):</P>


<pre>
<strong>
                                                        2000       1999
                                                     ---------- ----------</strong>
      Raw materials.................................    $3,797     $3,604
      Work in process...............................     1,985      3,086
      Finished goods................................     2,240      3,728
                                                     ---------- ----------
      Inventory - net...............................    $8,022    $10,418
                                                     ========== ==========
</pre>



<p><strong>4.    EQUIPMENT</strong>

<p>     Equipment at January 31 consists of (in thousands):

<pre>
<strong>
                                                        2000       1999
                                                     ---------- ----------</strong>
      Computers and equipment.......................    $3,602     $2,644
      Furniture and fixtures........................       542      1,279
      Other.........................................       327        409
                                                     ---------- ----------
      Total.........................................     4,471      4,332
      Accumulated depreciation and amortization.....    (3,228)    (3,021)
                                                     ---------- ----------
      Equipment - net...............................    $1,243     $1,311
                                                     ========== ==========

</pre>

<P ALIGN="JUSTIFY">At January 31, 2000 and 1999, equipment with
a net book value of $475,000 and $506,000 (net of accumulated
amortization of $463,000 and $162,000, respectively), has been leased
under capital leases.</P>


<p><strong>5.    ACCRUED  LIABILITIES</strong>

<p>      Accrued liabilities at January 31 consist of (in thousands):

<pre>
<strong>
                                                        2000       1999   </strong>
                                                     ---------- ----------
      Accrued salary and benefits...................      $534       $499
      Other accrued liabilities.....................       977        633
                                                     ---------- ----------
      Total.........................................    $1,511     $1,132
                                                     ========== ==========

</pre>

<FONT SIZE=3><P> </P>

<B><P>6.	BANK  LINES  OF  CREDIT</P>
</B><P ALIGN="JUSTIFY">The Company has $12,000,000 outstanding at January 31, 2000 under a
$12,000,000 bank line of credit that expires in October 2000, bears interest at the U.S. Treasury
Bill rate (4.95% at January 31, 2000) plus 1%, and is collateralized by funds on deposit in
accounts which have been assigned to the lender and included in the Company's Balance Sheet as of
January 31, 2000 as restricted cash.</P>
<P ALIGN="JUSTIFY">The Company also has $41,000 outstanding at January 31, 2000 under a
$6,000,000 bank line of credit that expires in October 2000, bears interest at the bank's prime rate
(8.5% at January 31, 2000) plus 0.75%, is collateralized by the Company's accounts receivable,
inventories, equipment and intangibles.  In addition, the Company has $310,000 of standby letters of
credit outstanding as of January 31, 2000 under the same bank line of credit. Borrowings under this
line of credit are generally limited to 70% to 90% of eligible accounts receivable (as
defined).</P>
<P ALIGN="JUSTIFY">The lines of credit contain certain covenants that, among other things, require
the Company to maintain tangible net worth plus subordinated debt of at least $15,000,000, quarterly
net income, and certain financial ratios.  At January 31, 2000, the Company was in compliance
with all covenants.</P>


<B><P>7.	SHAREHOLDERS'  EQUITY</P>

<I>Preferred Stock</I></B>

<P ALIGN="JUSTIFY">At January 31, 2000, warrants to purchase 64,285 shares of the
Company's common stock issued in connection with the issuance of Series A nonvoting cumulative
preferred stock are outstanding.  The warrants are exercisable at $5.16 per share beginning in
January 1998 and expire in January 2001.  </P>
<P ALIGN="JUSTIFY">During fiscal 1999, the Company issued 5,000 shares of Series B nonvoting
convertible preferred stock for $1,000 per share and warrants to purchase 50,000 shares of the
Company's common stock.  The warrants are exercisable at $5.16 per share and expire on
April 30, 2001.</P>
<P ALIGN="JUSTIFY">During fiscal 1999, the Company issued 1,900 shares of Series C nonvoting
convertible preferred stock for $1,000 per share and warrants to purchase 95,000 shares of the
Company's common stock.  The warrants are exercisable at $5.16 per share and expire on
January 22, 2001.  In fiscal 2000, warrants to purchase 40,000 shares of the Company's common
stock were exercised for proceeds of approximately $207,000,</P>
<P ALIGN="JUSTIFY">During fiscal 1999, holders of Series A preferred stock converted 24,550
shares of preferred stock into 1,417,984 shares of common stock.  During fiscal 1999, holders of
Series B preferred stock converted 3,400 shares of preferred stock into 2,325,241 shares of
common stock resulting in a deemed dividend of $2,150,000.</P>
<P ALIGN="JUSTIFY">During fiscal 1999, the Company repurchased 2,000 shares of Series A
preferred stock with a carrying amount of $215,000 for $215,000.  During fiscal 1999, the Company
repurchased 1,600 shares of Series B preferred stock with a carrying amount of $1,478,000 for
$1,800,000, resulting in a deemed dividend of $322,000.</P>
<P ALIGN="JUSTIFY">During fiscal 2000, holders of Series C preferred stock converted 1,900
shares of preferred stock into 330,416 shares of common stock.</P>

<B><I><P ALIGN="JUSTIFY">Common Stock</P>

</B></I><P ALIGN="JUSTIFY">Each share of common stock incorporates a purchase right which entitles
the shareholder to buy, under certain circumstances, one newly issued share of the Company's common
stock at an exercise price per share of $75. The rights become exercisable if a person or group
acquires 20% or more of the Company's common stock or announces a tender or exchange offer for 30%
or more of the Company's common stock under certain circumstances.  In the event of certain merger
or sale transactions, each right will then entitle the holder to acquire shares having a value of
twice the right's exercise price. The Company may redeem the rights at $.01 per right prior to the
earlier of the expiration of the rights on November 27, 2000 or at the time that 20% or more of
the Company's common stock has been acquired by a person or group.  Until the rights become
exercisable, they have no dilutive effect on the earnings of the Company.</P>

<P ALIGN="JUSTIFY">The following is a reconciliation of the numerators and denominators of the basic
and diluted EPS computations for the periods presented (in thousands, except per-share data):</P>

<pre>
<strong>
                                              Years Ended January 31,
                                         --------------------------------
                                            2000       1999       1998
                                         ---------- ---------- ---------- </strong>
Numerator-
  Net income (loss) available to
    common shareholders, basic
    and diluted.........................    $2,263    ($2,690)   ($5,648)
                                         ---------- ---------- ----------
Denominator:
  Weighted average common shares
     outstanding........................    15,784     12,957     11,215
  Common shares outstanding subject
     to repurchase......................       (56)       (58)      (203)
                                         ---------- ---------- ----------
Shares used in computation, basic.......    15,728     12,899     11,012

Effect of dilutive securities:
  Common shares subject to repurchase...        56        --         --
  Stock options.........................     1,876        --         --
  Warrants..............................        44        --         --
                                         ---------- ---------- ----------
Shares used in computation, diluted.....    17,704     12,899     11,012
                                         ---------- ---------- ----------

Net income (loss) per share:
  Basic.................................     $0.14     ($0.21)    ($0.51)
                                         ========== ========== ==========

  Diluted...............................     $0.13     ($0.21)    ($0.51)
                                         ========== ========== ==========
</pre>


<P ALIGN="JUSTIFY">The Company excluded certain potentially dilutive securities in fiscal 1999
and 1998 from its dilutive EPS computation because either the exercise price of the securities
exceeded the average fair values of the Company's common stock or the Company had net losses, and,
therefore, these securities were antidilutive.</P>

<P ALIGN="JUSTIFY">A summary of the excluded potential derivative securities as of the end of each
fiscal year follows (in thousands):</P>

<pre>
<strong>

                                              Years Ended January 31,
                                         --------------------------------
                                            2000       1999       1998
                                         ---------- ---------- ---------- </strong>
Common shares subject to repurchase.....        --         58        203
Stock options...........................        --      3,019      2,275
Stock warrants..........................        --        209         64
Convertible preferred stock.............        --          2         27

</pre>


<B><I><P ALIGN="JUSTIFY"> Stock Option Plan</I></B>

<P ALIGN="JUSTIFY">The Company's 1994 stock option plan provides for the granting of
options to purchase up to 4,400,000 shares of common stock at the fair market value on the date of
grant.  Of this amount, 1,000,000 shares were authorized for grant by the Board of Directors in
fiscal 1997, 1998 and 2000.  Generally, options granted under the 1994 plan become exercisable over
a five-year period and expire no more than ten years from the date of grant (all options outstanding
at January 31, 2000 expire ten years from date of grant).  The Company repriced 1,167,779
options to purchase common stock to $2.31, the market price on April 22, 1997.  The repriced
options are treated as canceled and regranted; however, they retain their original vesting
terms.</P>

<P>Stock option activity and balances are summarized as follows:

<pre>
<strong>

                                                                     Weighted
                                                                     Average
                                                                     Exercise
                                                          Number      Price
                                                            of         Per
                                                          Shares      Share
                                                        ----------- ----------</strong>
      Balances, February 1, 1997 (441,362 exercisable
        at a weighted-average price of $4.17).........   1,592,379      $4.57

      Granted (weighted-average fair value of $1.37)
        (includes repricing of 1,167,779 options).....   2,235,779       2.38
      Canceled........................................  (1,441,776)      5.01
      Exercised.......................................    (111,554)      0.98
                                                        -----------
      Balances, January 31, 1998 (663,709 exercisable
        at a weighted-average price of $2.34).........   2,274,828       2.34

      Granted (weighted-average fair value of $1.32)..   1,124,000       2.07
      Canceled........................................    (303,709)      2.07
      Exercised.......................................     (65,224)      1.85
                                                        -----------
      Balances, January 31, 1999 (1,090,538
        exercisable at a weighted-average price
        of $2.36).....................................   3,029,895       2.25

      Granted (weighted-average fair value of $4.09)..     335,500       5.70
      Canceled........................................    (154,003)      2.40
      Exercised.......................................    (375,316)      2.23
                                                        -----------
      Balances, January 31, 2000......................   2,836,076      $2.65
                                                        =========== ==========

</pre>

<P ALIGN="JUSTIFY">At January 31, 2000, options to purchase 904,322 shares were available
for future grant.</P>

<pre>
<strong>

                             Options Outstanding          Options Exercisable
                      ---------------------------------- ----------------------

                        Number                             Number
                      Outstanding  Weighted    Weighted  Exercisable  Weighted
                          at        Average    Average       at       Average
  Range of Exercise   January 31,  Remaining   Exercise  January 31,  Exercise
       Prices            2000        Life       Price       2000       Price
--------------------- ----------- ----------- ---------- ----------- ----------</strong>
       $0.088              6,572        2.88     $0.088       6,572     $0.088
       $1.0000           418,959        8.75      1.000      73,141      1.000
   $2.310 - $3.060     2,059,843        7.49      2.480   1,256,655      2.410
   $3.810 - $5.190        46,702        7.36      5.020      21,402      4.890
   $5.750 - $6.380       304,000        9.71      5.760       2,500      6.380
                      -----------                        -----------
   $0.088 - $6.380     2,836,076        7.90     $2.250   1,360,270     $2.365
                      ===========                        ===========

</pre>

<P ALIGN="JUSTIFY">The Company uses the intrinsic value method specified by Accounting Principles
Board Opinion No. 25 to calculate compensation expense associated with issuing stock options
and, accordingly, has recorded no such expense through January 31, 2000 as such issuances have
been at the fair value of the Company's common stock at the date of grant.</P>
<P ALIGN="JUSTIFY">Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," (SFAS 123) requires the disclosure of pro forma net income
and earnings per share had the Company adopted the fair value method as of the beginning of fiscal
1996.  Under SFAS 123, the fair value of stock-based awards to employees is calculated through
the use of option pricing models, even though such models were developed to estimate the fair value
of freely tradable, fully transferable options without vesting restrictions, which significantly
differ from the Company's stock option awards.  These models also require subjective assumptions,
including future stock price volatility and expected time to exercise, which greatly affect the
calculated values.  The Company's calculations were made using the Black-Scholes option pricing
model with the following weighted average assumptions for fiscal 2000, 1999 and 1998, respectively:
expected life, 19, 14 and 14 months following vesting; stock volatility, 97%, 91% and 89%; risk
free interest rates, 5.5%, 5.7% and 5.6%; and no dividends during the expected term.  The Company's
calculations are based on a multiple option valuation approach and forfeitures are recognized as
they occur.  If the computed fair values of awards in fiscal 2000, 1999 and 1998 had been amortized
to expense over the vesting period of the awards, pro forma net income (loss) available to
common shareholders would have been (in thousands, except per share amounts):</P>

<pre>
<strong>
                                              Years Ended January 31,
                                         --------------------------------
                                            2000       1999       1998
                                         ---------- ---------- ---------- </strong>
  Net income (loss) available to
    common shareholders:
    As reported.........................    $2,263    ($2,690)   ($5,648)
                                         ========== ========== ==========

    Proforma............................    $1,279    ($3,993)   ($7,283)
                                         ========== ========== ==========

  Net income (loss) per share
    available to common shareholders:

    As reported:
      Basic.............................     $0.14     ($0.21)    ($0.51)
                                         ========== ========== ==========
      Diluted...........................     $0.13     ($0.21)    ($0.51)
                                         ========== ========== ==========

    Proforma:
      Basic.............................     $0.08     ($0.31)     $0.66
                                         ========== ========== ==========
      Diluted...........................     $0.07     ($0.31)    ($0.66)
                                         ========== ========== ==========

</pre>


<FONT SIZE=3><P ALIGN="JUSTIFY">However, the impact of outstanding non-vested stock options granted
prior to February 1, 1995 has been excluded from the pro forma calculation; accordingly,
the pro forma adjustments for fiscal 2000, 1999 and 1998 are not indicative of future period
pro forma adjustments, when the calculation will apply to all applicable stock options.</P>

<B><I><P ALIGN="JUSTIFY"> Employee Stock Purchase Plan</I></B>

<FONT SIZE=3><P ALIGN="JUSTIFY">The Company's 1986 Employee Stock Purchase Plan (1986 ESPP) provides
for the sale of up to 300,000 shares of common stock.  Eligible employees may authorize payroll
deductions of up to 10% of their regular base salaries to purchase common stock at 85% of the fair
market value at the beginning or end of each six-month offering period.  During fiscal 2000, 1999
and 1998, 43,254, 45,833 and 38,666 shares were purchased at an average price of $3.45, $2.50 and
$3.35 per share, respectively.  At January 31, 2000, 35,144 shares remain available for
issuance under 1986 ESPP.</P>

<B><P>8.	INCOME  TAXES</P>
</B><P ALIGN="JUSTIFY">As a result of net operating loss carryforwards and net losses in fiscal 2000
and 1999, respectively, the Company has recorded no material income tax provision for all years
presented.</P>
<P ALIGN="JUSTIFY">Deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes, and (b) operating losses and tax credit
carryforwards.</P>
<P ALIGN="JUSTIFY">The tax effects of significant items comprising the Company's deferred taxes are
as follows (in thousands):</P>

<pre>
<strong>

                                                               January 31,
                                                            -------------------
                                                              2000      1999
                                                            --------- --------- </strong>
      Deferred tax assets:
        Net operating losses and tax credit carryforwards.   $19,131   $20,913
        Reserves not currently deductible.................     1,480     1,204
        Capitalized R&D expenditures......................       465       334
        Other.............................................       100       111
                                                            --------- ---------
                                                              21,176    22,562
      Valuation allowance.................................   (21,176)  (22,562)
                                                            --------- ---------
      Net deferred taxes..................................    $  --     $  --
                                                            ========= =========
</pre>

<P ALIGN="JUSTIFY">SFAS 109 requires that the tax benefit of net operating losses, temporary
differences and credit carryforwards be recorded as an asset to the extent that management assesses
that realization is "more likely than not."  Realization of the future tax benefits is
dependent on the Company's ability to generate sufficient taxable income within the carryforward
period.  Because of the Company's recent history of operating losses, risks associated with its new
product introduction including the dependence on rapid acceptance of new technology, the dependence
on development of complimentary software by third parties and other risks, such as technological
change in the industry, short product life cycles and reliance on a limited number of suppliers and
manufacturing contractors, management believes that recognition of the deferred tax assets arising
from the above-mentioned future tax benefits is currently not appropriate and, accordingly, has
provided a valuation allowance.</P>


<P ALIGN="JUSTIFY">Net operating losses and tax credit carryforwards as of January 31, 2000
are as follows (in thousands):</P>

<pre>
<strong>

                                           Amount
                                             (in          Expiration
                                          thousands)        Years
                                          ---------  --------------------</strong>
      Net operating losses, federal....    $46,638       2009 - 2018
      Net operating losses, state......     12,651       2000 - 2002
      Tax credits, federal.............      1,430       2006 - 2009
      Tax credits, state...............        200            -
      Net operating losses, foreign....      1,246            -


</pre>


<P>The effective tax rate of the Company's provision for (benefit from) income taxes differs from
the federal statutory rate as follows (in thousands):</P>

<pre>
<strong>

                                            2000       1999       1998
                                          ---------  ---------  ---------
                                                    (in thousands)       </strong>
      Computed at 35%...................      $842      ($165)   ($2,053)
      State taxes, expiration of net
        operating loss carryforwards....      $226        --         --
      Valuation allowance...............    (1,386)       446      1,895
      Other.............................       378       (281)       158
      Refund of state taxes from
        prior years.....................       --        (321)       --
      Benefit of net operating loss
        carryback refund................       --         --        (824)
                                          ---------  ---------  ---------
      Total.............................       $60      ($321)     ($824)
                                          =========  =========  =========

</pre>


<B><P>9.	COMMITMENTS  AND  LEASES</P>
<I><P ALIGN="JUSTIFY">Leases</B> - </I>The Company's primary facilities are leased under a
noncancelable lease which expires through September 2002.  In addition, the Company leases certain
equipment under capital lease arrangements.  Future minimum annual payments under capital and
operating leases are as follows:</P>

<pre>
<strong>

      Fiscal Year Ending                              Capital   Operating
        January 31,                                    Leases     Leases
      -------------------------------                ---------- ----------</strong>
           2001.....................................      $322       $332
           2002.....................................       192        359
           2003.....................................        53        239
                                                     ---------- ----------
      Total minimum lease payments..................       567       $930
      Amount representing interest at a rates                   ==========
        of 7.84% to 9.42%...........................       (48)
                                                     ----------
      Present value of minimum lease payments.......       519
      Current portion...............................      (308)
                                                     ----------
      Long-term portion.............................      $211
                                                     ==========

</pre>

<P>Rent expense was $448,000, $235,000 and $266,000 for fiscal 2000, 1999 and 1998,
respectively.</P>

<B><I><P ALIGN="JUSTIFY">Royalties</B> </I>- The Company pays royalties for the right to sell
certain products under various license agreements.  During fiscal 2000, 1999 and 1998, the Company
recorded royalty expense of $732,000, $405,000 and $425,000, respectively<I>.  </P>
<B><P ALIGN="JUSTIFY">Benefit Plan</B> </I>- The Company sponsors a 401(k) savings plan in which
most employees are eligible to participate.  The Plan commenced in fiscal 1994.  The Company is not
obligated to make contributions to the plan and no contributions have been made by the
Company.</P>


<B><P>10.	MAJOR  CUSTOMERS</P>
</B><P ALIGN="JUSTIFY">No domestic customer accounted for more than 10% of net sales in fiscal 2000
and 1999.  During fiscal 2000, two international customers accounted for 26% and 13% of net sales,
respectively.  During fiscal 1999, one international customer accounted for 28% of net sales.
During fiscal 1998, one international customer accounted for 39% of net sales.</P>


<B><P>11.	SEGMENT  AND  GEOGRAPHICAL  INFORMATION</P>
</B><P ALIGN="JUSTIFY">As discussed in Note 1, the Company follows the requirements of SFAS
No. 131, "Disclosures About Segments of an Enterprise and Related Information."  The
Company's operating segments consist of its geographically based entities in the United States, Hong
Kong and France.  All such operating entities segments have similar economic characteristics, as
defined in SFAS No. 131, and accordingly, the Company operates in one reportable segment: the
development, manufacturing and marketing of multimedia computer devices and products.  </P>
<P ALIGN="JUSTIFY">For the years ended January 31, 2000, 1999 and 1998, the Company recorded
sales from customers throughout the United States and Canada, Taiwan, Hong Kong, Singapore; Germany,
Belgium, Denmark, Finland, The Netherlands, Norway, Sweden, The United Kingdom, France, Italy, Spain
(collectively referred to as "Europe"); Japan, Korea, China, Thailand, New Zealand
(collectively "Rest of Asia/New Zealand").  The following table summarizes total net sales
and long-lived assets attributed to significant countries as of and for the fiscal years ended
January 31 (in thousands):</P>

<pre>
<strong>

                                            2000       1999       1998
                                          ---------  ---------  ---------</strong>
Total net sales:
  Taiwan...............................    $15,021    $18,674    $14,564
  United States........................     16,535     12,389     13,349
  Hong Kong............................      2,754      3,659      3,497
  Singapore............................      8,208      3,384        626
  Europe...............................      4,114      3,926      2,429
  Rest of Asia/New Zealand.............      3,396        989      2,146
  Canada...............................        296        519        371
                                          ---------  ---------  ---------
Total net sales*.......................    $50,324    $43,540    $36,982
                                          =========  =========  =========

Long-lived assets:
  United States........................     $1,218     $1,288     $1,208
  Hong Kong............................          4         23         33
  Europe...............................         21         --         --
                                          ---------  ---------  ---------
Total long-lived assets................     $1,243     $1,311     $1,241
                                          =========  =========  =========

</pre>

<p>* Net sales are attributed to countries based on invoicing location of customer.



<B><P>12.	CONTINGENCY  (LITIGATION)</P>

</B><P ALIGN="JUSTIFY">In February 1998, two punitive class action complaints were filed
against the Company in the United States District Court, Northern District Court of California,
<I>Romine, et al. v. Sigma Designs, Inc., et al.</I>,No. C-98-0537-TEC (N.D.Cal.) and<I> Shah,
et al. v. Sigma Designs, Inc., et al.</I>, No C-98-0582-MHP (N.D.Cal.).  The federal court
consolidated complaint alleges that Sigma Designs, Inc. and certain of its officers and former
officers and/or directors, issued false or misleading statements regarding the Company's business
prospects during the period October 24, 1995 through February 13, 1997.  The complaint
does not specify the amount of damages sought by the plaintiffs.  On October 8, 1999, the
Company filed a motion to dismiss the consolidated complaint.  In response to this motion, the
plaintiffs agreed and filed a second amended complaint.   On April 21, 2000, the Company filed a
motion to dismiss the second amended complaint.  The hearing on that motion is scheduled for June
26, 2000.  The Company believes that it has meritorious defenses to the allegations made in the
complaints and intends to conduct a vigorous defense.</P>
<P ALIGN="JUSTIFY"> </P>


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<p align="center"><font size="3"><strong>
  SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<pre>

                                Balance                Deductions:    Balance
                                   at                     Write         at
                               Beginning                 Offs of      End of
       Classification           of Year     Additions  Accounts(1)     Year
----------------------------- ------------ ----------- ------------ -----------</strong>
Allowance for returns and
 doubtful accounts, price
 protection, and sales
 returns:
  Year ended January 31,
  2000......................   $3,306,000    $274,000   $3,166,000    $414,000
  1999......................    3,332,000     395,000      421,000   3,306,000
  1998......................      892,000   2,600,000      160,000   3,332,000

Inventory reserves:
  Year ended January 31,
  2000......................   $1,943,000  $1,350,000      $78,000  $3,215,000
  1999......................    3,792,000     655,000    2,504,000   1,943,000
  1998......................    2,455,000   1,753,000      416,000   3,792,000

</pre>

<P>____________________
<p>(1) Amount written off, net of recoveries.



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<P ALIGN="CENTER"><B>INDEX TO EXHIBITS</B></P></FONT>

<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>EXHIBIT<br>
NUMBER</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">DESCRIPTION</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>2.1(7)</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Agreement and Plan of Reorganization by and among the Registrant, Sigma Acquisition
Corporation and Active Design Corp. dated as of April 23, 1996.</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>3.1(1)</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Restated Articles of Incorporation, as amended.	</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>3.2(8)</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Certificate of Determination of Preferences of Series A Preferred
Stock.</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>3.3(9)</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Certificate of Determination of Preferences of Series B Preferred
Stock.</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>3.4(10)</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Certificate of Determination of Preferences of Series C Preferred
Stock.</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>3.5(2)</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Bylaws of Registrant, as amended.</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>4.1(10)</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Form of Subscription Agreement by and between the Company and the purchasers of the
Series C Preferred Stock and warrants.</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>4.2(10)</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Form of Registration Rights Agreement by and between the Company and the purchasers
of the Series C Preferred Stock and warrants.</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>4.3(10)</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Form of Stock Purchase Warrant.</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>10.1(3)</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Distribution Agreement dated September 10, 1985.</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>10.2(4)</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Registrant's 1986 Employee Stock Purchase Plan, as amended, and form of Subscription
Agreement.</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>10.6</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Sublease between the Registrant and Sun Microsystems, Inc.</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>10.7(5)</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Registrant's 1994 Stock Plan and form of Stock Option Agreement.</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>10.8(6)</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Registrant's 1994 Director Stock Option Plan and form of Director Option
Agreement.</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>10.9(11)</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Registrant's 1995 Business Loan Agreement with Silicon Valley Bank, as
amended.</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>23.1</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Independent Auditors' Consent.</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>24.1</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Power of Attorney (See page 22).</FONT></TD>
</TR>
<TR><TD WIDTH=15%" VALIGN="TOP">
<FONT SIZE=2><P>27</FONT></TD>
<TD WIDTH=85%" VALIGN="TOP">
<FONT SIZE=2><P>Financial Data Schedule.</FONT></TD>
</TR>
</TABLE>
<DIR>

<FONT SIZE=1><P> </FONT><FONT SIZE=2>(1)	Incorporated by reference to exhibit filed with the
Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1988.</P>
<P>(2)	Incorporated by reference to exhibit filed with the Registrant's Annual Report on Form 10-
K for the fiscal year ended January 31, 1989.</P>
<P>(3)	Incorporated by reference to exhibit filed with the Registrant's Registration Statement on
Form S-1 (No. 33-4131) filed March 19, 1986, Amendment No. 1 thereto filed April 28, 1986 and
Amendment No. 2 thereto filed May 15, 1986, which Registration Statement became effective May 15,
1986.</P>
<P>(4)	Incorporated by reference to exhibit filed with the Registrant's Registration Statement on
Form S-8 (No. 333-61549) filed August 14, 1998.</P>
<P>(5)	Incorporated by reference to exhibit filed with the Registrant's Registration Statement on
Form S-8 (No. 33-81914) filed July 25, 1994.</P>
<P ALIGN="JUSTIFY">(6)	Incorporated by reference to exhibit filed with the Registrant's
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.</P>
<P ALIGN="JUSTIFY">(7)	Incorporated by reference to exhibit filed with the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 31, 1996.</P>
<P ALIGN="JUSTIFY">(8)	Incorporated by reference to exhibit filed with the Registrant's
Registration Statement on Form S-3 (No. 333-33147) filed on August 7, 1997.</P>
<P ALIGN="JUSTIFY">(9)	Incorporated by reference to exhibit filed with the Registrant's
Registration Statement on Form S-3 (No. 333-47835) filed on March 12, 1998.</P>
<P ALIGN="JUSTIFY">(10)	Incorporated by reference to exhibit filed with the Registrant's
Registration Statement on Form S-3 (No. 333-48023) filed on April 30, 1999.</P>
<P ALIGN="JUSTIFY">(11)	Incorporated by reference to exhibit filed with the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 31, 1998.</P></FONT>
</DIR>
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