UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 
 FORM
10-K/A
 (Amendment
No. 1)
 
 (Mark
One)
 x
              Annual Report pursuant to
      Section 13 or 15(d) of the Securities Exchange Act of
      1934
 
 For
the fiscal year ended: January 31, 2009
 
 OR
 
  ̈
              Transition Report pursuant to
      Section 13 or 15(d) of the Securities Exchange Act of
      1934
 
 For
the transition period from ____________ to _____________
 
 Commission
File Number 001-32207
 
 SIGMA
DESIGNS, INC.
 (Exact
name of Registrant as specified in its charter)
 
 California
                94-2848099(State or other jurisdiction
      of incorporation or
      organization)
                (I.R.S.
      Employer Identification Number)1778
      McCarthy Blvd Milpitas, California
                95035(Address
      of principal executive offices)
                (Zip
      code)
 
 Registrant’s
telephone number, including area code: (408) 262-9003
 Securities
registered pursuant to Section 12(b) of the Act:
  Title
      of each class
              
              Name
      of each exchange on which registeredCommon
      Stock, no par value
              
              The
      NASDAQ Stock Market LLC
  Securities
registered pursuant to Section 12(g) of the Act: None
  Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes   ̈    No  x
  Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the
Act.  Yes   ̈    No  x
  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   ̈
  Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).  Yes   ̈    No   ̈
  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
  Indicate
by check mark whether the registrant is a large accelerated filer, or an
accelerated filer, or a non-accelerated filer.  See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act.  (Check one):
  Large
accelerated filer   ̈           Accelerated
filer  x           Non-accelerated
filer   ̈            Smaller
reporting company   ̈
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
  Yes   ̈               No  x
 
 The
aggregate market value of the registrant’s common stock, no par value, held by
non-affiliates of the registrant on August 1, 2008, the last business day of the
registrant’s most recently completed second fiscal quarter, was approximately
$433,890,122 based on the closing sale price of $17.21 per share on that
date.  Shares of common stock held by each executive officer, director
and shareholders known by the registrant to own 10% or more of the registrant’s
outstanding common stock based on Schedule 13G or 13D filings and other
information known to the registrant, have been excluded because such persons may
be deemed to be affiliates.  This determination of affiliate status is
not necessarily a conclusive determination for other purposes.
 
 There
were 26,604,647 shares of the Registrant’s Common Stock outstanding on March 13,
2009.
  
  
  EXPLANATORY
NOTE
  This Amendment No. 1 on Form 10-K/A
(this “Amendment”) amends the Registrant’s Annual Report on Form 10-K for the
fiscal year ended January 31, 2009, originally filed on April 2, 2009 (the
“Original Filing”). This Amendment reflects the addition of the information
required by Part III of the report.  The reference on the cover of the
Original Filing to the incorporation by reference of the Registrant’s definitive
proxy statement into Part III of the Report is hereby amended to delete that
reference. In addition, in connection with the filing of this Amendment and
pursuant to the rules of the Securities and Exchange Commission, the Registrant
is including with this Amendment certain currently dated certifications. Except
as otherwise stated herein, no other information contained in the Original
Filing is amended hereby.
  PART
III
  ITEM 10.
              DIRECTORS,
      EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE
    GOVERNANCE
 
 Directors
and Executive Officers
 
 The
following table sets forth certain information about our executive officers,
directors and other key employees as of May 18, 2009:
 
 Name
                Age
                Position(s) with the
  CompanyThinh
      Q. Tran
                55
                President,
      Chief Executive Officer and DirectorThomas
      E. Gay III
                60
                Chief
      Financial Officer and SecretaryDavid
      Lynch
                53
                Senior
      Vice President of Sales and MarketingJacques
      Martinella
                53
                Vice
      President of EngineeringKenneth
      Lowe
                53
                Vice
      President of Strategic MarketingWilliam
      J. Almon (1)(2)(3)
                76
                DirectorJulien
      Nguyen (1)(2)(3)
                52
                DirectorLung
      C. Tsai (1)(2)(3)
                61
                Director
 ___________________
 (1)           Member
of the Audit Committee.
 (2)           Member
of the Compensation Committee.
 (3)           Member
of the Nominating and Corporate Governance Committee.
 
 Mr. Tran, one of our founders,
has served as our President and Chief Executive Officer and as Chairman of our
Board of Directors since February 1982.  Prior to joining us, Mr. Tran
was employed by Amdahl Corporation and Trilogy Systems Corporation, both of
which were involved in the IBM-compatible mainframe computer
market.
 
 Mr. Gay has served as our
Chief Financial Officer and Secretary since June 2007.  From May 1998
to May 2007, Mr. Gay served as the Vice President of Finance and Administration
and Chief Financial Officer of Catalyst Semiconductor, Inc., a memory and
analog/mixed-signal semiconductor company.  Prior to joining Catalyst
Semiconductor, Inc., Mr. Gay held positions at Wireless Access, Inc., a
communications device manufacturing company, where he was Controller, and
Sanmina Corporation, a contract manufacturer, where he was the Corporate
Controller.
 
 Mr. Lynch has served as our
Senior Vice President of Sales and Marketing since September 2008, after joining
us as Vice President and General Manager of our VXP Division in February
2008.  Prior to this, Mr. Lynch worked at Gennum Corporation, a
semiconductor company, as Senior Vice President and General Manager of Image
Processing from August 2007 to February 2008,  Senior Vice President
and General Manager of the Video Products Division from February 2004 to August
2007 with the additional role of Chief Technology Officer added in January
2007,  VP and General Manager of Video Products Division from June
2000 to February 2004 and Vice President of Research and Development from April
1994 to June 2000.  From 1978 to 1994, Mr. Lynch worked for the
semiconductor design group in Bell Northern Research in a variety of senior
engineering management and staff positions.
 
 
 Mr. Martinella has served as
our Vice President of Engineering since December 1995.  Prior to his
current position Mr. Martinella served as our Director of VLSI Engineering
beginning in May 1994 when he joined us.  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.
 
 Mr. Lowe has served as our
Vice President of Strategic Marketing since December 2000.  He joined
us in May 2000 as our Vice President of Marketing.  From August 1998
to May 2000, Mr. Lowe served as the Director of Multimedia Marketing for Cadence
Design Systems, a design automation software company.  From 1996 to
1998, Mr. Lowe served as the Vice President of Marketing for Chrontel, Inc., a
digital video semiconductor company.  Prior to 1996, Mr. Lowe held
various marketing management positions at Sierra Semiconductor, Dataquest,
Personal CAD Systems, Performix and Gould-Biomation.  In the late
1980's, Mr. Lowe served as our Product Marketing Director.
 
 Mr. Almon has served as one of
our directors since April 1994.  Mr. Almon served as the President,
Chief Executive Officer and Chairman of the Board of Grandis, Inc., a
solid-state memory company, from May 2002 to June 2006.  Prior to
that, Mr. Almon was Managing Director of Netfish Technology from 1999 to May
2001 when it was acquired by Iona Technologies PLC.  He was Chairman
of the Board of Internet Image, an internet software company, from January 1999
to December 1999, when it merged with Intraware, Inc.  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
Operating Officer of Conner Peripherals, Inc., a manufacturer of computer disk
drives and storage management devices.  Mr. Almon retired from
IBM in 1987 after 30 years of service, most recently as Vice President Low End
Storage.
 
 Mr. Nguyen has served as one
of our directors since May 2000.  Since March 2005, Mr. Nguyen has
served as the Managing Partner of Concept Ventures, an early stage venture
capital fund.  In May 2001, Mr. Nguyen founded Applied Materials
Ventures, a corporate venture fund, and served as its Managing Partner until
March 2005.  In January 1999, Mr. Nguyen co-founded Ezlogin, a
developer of personalization infrastructure tools for internet sites and
wireless carriers and served as its Chairman from January 1999 to June
2000.  From June 1996 to September 1998, Mr. Nguyen founded Novita
Communications and served as its Chief Executive Officer.  Novita, a
Java-based communications software company, was acquired by PlanetWeb in
1998.  From February 1995 to October 1996, Mr. Nguyen served as our
Co-Chairman and Chief Technical Officer.  From August 1993 until
January 1995, he served as our Vice President, Engineering and Chief Technical
Officer.  From May 1992 until October 1993, Mr. Nguyen was President
and Chief Executive of E-Motions, which was acquired by Sigma in
1993.  Prior to founding E-Motions, Mr. Nguyen worked at Radius Inc.
as Director of Product Development.
 
 Mr. Tsai has served as one of
our directors since June 2003.  He is one of the co-founders of
MechanicNet Group, Inc., a software company serving the automotive aftermarket
industry, and has served as its Chairman and Chief Executive Officer since
1999.  Prior to MechanicNet Group, Inc., Mr. Tsai co-founded Internet
Image, a Java solutions company for online software deployment and served as its
Chief Executive Officer from 1993 until its acquisition by Intraware, Inc. in
1999.  Previously, Mr. Tsai co-founded and served as Vice President of
Operations and Vice President of Sales & Marketing for Destiny Technology
Corp., a laser printer controller firmware development company from 1987 to
1993.  Prior to Destiny Technology Corp, Mr. Tsai served as Vice
President of System Development for Mellon Bank and Bank of
America.
 
 There are
no family relationships among any of our directors and executive
officers.
 
 Compliance
with Section 16(a) of the Exchange Act
  Section
16(a) of the Securities Exchange Act of 1934 requires our executive officers and
directors, and persons who own more than 10% of a registered class of our equity
securities, to file reports of ownership on Forms 3, 4 and 5 with the SEC.
Officers, directors and greater than 10% stockholders are required to furnish us
with copies of all Forms 3, 4 and 5 they file.
 
 Based
solely on our review of the copies of such forms we have received and written
representations from certain reporting persons that they filed all required
reports, we believe that all of our officers, directors and greater than 10%
stockholders complied with all Section 16(a) filing requirements applicable to
them with respect to transactions during fiscal 2009, except that Jacques
Martinella filed one form 4 late to report the acquisition of 334 shares upon
exercise of a stock option and subsequent sale of these shares and David Lynch
and Trinh Tran each filed one form 4 late to report the grant of 100,000
options.
 
 Code
of Ethics
  The
Company has adopted a Code of Business Ethics and Conduct, which is applicable
to our directors, officers and employees.  The Code of Business Ethics
and Conduct is available on the Company’s website at http://www.sigmadesigns.com—“Investors”—“Governance”.  The
Company will disclose any amendment to the Code or waiver of a provision of the
Code applicable to an officer or director, including the name of the officer to
whom the waiver was granted, on the Company’s website at http://www.sigmadesigns.com—“Investors”—“Governance.”
 
 Audit
Committee
 
 The Audit
Committee currently consists of Messrs. Almon, Nguyen and Tsai, each of whom is
a non-management member of our Board of Directors.  Mr. Almon is our
audit committee financial expert as currently defined under Securities and
Exchange Commission rules.  The Audit Committee’s primary functions,
among others, are to approve the selection, compensation, evaluation and
replacement of, and oversee the work of, Sigma's independent registered public
accounting firm, pre-approve all fees and terms of audit and non-audit
engagement of such auditors, including the audit engagement letter, and review
Sigma's accounting policies and its systems of internal accounting
controls.  We believe that the composition of our Audit Committee
meets the criteria for independence under, and the functioning of our Audit
Committee complies with the applicable requirements of, the Sarbanes-Oxley Act
of 2002, the current rules of The NASDAQ Stock Market and Securities and
Exchange Commission rules and regulations.  The Audit Committee held
nine meetings in fiscal 2009.
 
 ITEM 11.
              EXECUTIVE
      COMPENSATION
 
 Compensation
Discussion and Analysis
  This section contains a discussion and
analysis of how we compensate our Chief Executive Officer, Chief Financial
Officer and our top three highest paid other executive officers as of January
31, 2009, who we refer to collectively as our named executive
officers.  In this section, we discuss our executive officer
compensation philosophy and objectives, the process under which our executive
officer compensation is determined and the elements of our executive
compensation program, including a discussion of our compensation decisions for
fiscal 2009 and 2010.
  The Compensation Committee of our Board
of Directors, which we refer to as the Committee in this section, administers
the compensation program for our named executive officers, with the assistance
of our Chief Executive Officer and an independent compensation
consultant.
  Our
Executive Compensation Philosophy and Objectives
  We are
engaged in a dynamic and competitive industry and currently face a very
challenging economic environment.  Our success depends upon our
talented employees and the leadership provided by our named executive officers
is a key factor in our success.  The Committee has designed our
executive compensation program to achieve the following objectives:
  ·
              Attract and retain highly
      qualified talent.  We compete for talented executives
      with leading technology companies worldwide along with both technology
      start-ups and established businesses.  Our compensation programs
      allow us to attract and retain dynamic, experienced people who are
      motivated by the challenges and opportunities of growing our
      business.
  
 ·
              Align the interests of our
      executives with stockholders.  We believe our programs
      should reward our executive officers for contributions to increase our
      shareholder value.
  ·
              Manage resources
      efficiently.  Employee compensation is a significant
      expense for us.  We strive to manage our compensation programs
      to balance our need to reward and retain executives with preserving
      stockholder value.
  Components
of Compensation
  In an effort to meet these objectives,
our executive compensation program consists of the following
components:
  ·
              Base
      salary.  The Committee believes that base salary should
      provide executives with a predictable income sufficient to attract and
      retain strong talent in a competitive marketplace.  We generally
      set executive base salaries at levels that we believe enable us to hire
      and retain individuals in a competitive
  environment.
  ·
              Equity
      Awards.  The Committee believes that long-term equity
      incentives, such as stock options that vest over a period of time, focus
      executives on increasing long-term shareholder value and are key retention
      devices for executives through use of multi-year vesting
      periods.
  ·
              Discretionary Cash Bonus
      Awards.  Our Committee has historically awarded cash
      bonuses on occasion in recognition of strong company performance or to
      reward significant individual contributions.  Historically, our
      Committee has retained the discretion to determine individual cash bonus
      awards after the completion of a fiscal
year.
  ·
              General
      Benefits.  We provide generally competitive benefits
      packages, such as medical, life and disability insurance, to our
      executives on the same terms as our other
  employees.
  The
Committee views these components of executive compensation as related, but does
not believe that compensation should be derived entirely from one component, or
that significant compensation from one component should necessarily reduce
compensation from other components.  The Committee has not adopted a
formal or informal policy for allocating compensation between long-term and
current compensation or between cash and non-cash compensation.
  Our
Process of Establishing Executive Compensation
  Our executive compensation program is administered by
the Committee with the assistance of our Chief Executive Officer.  In
fiscal 2009, the Committee retained an independent compensation consultant,
Compensation Resources, Inc., or CRI, to assist with the
compensation-determination process for all executive officers, including our
Chief Executive Officer, and to conduct a comparative study of our executive
compensation policies, practices and procedures relative to other publicly
traded companies.  CRI worked with the Committee to gather and analyze
third-party data about our peer companies’ compensation practices and provided
feedback regarding proposed compensation decisions.  The Committee
also engaged CRI to assist in its review of the compensation of our non-employee
directors.
 
 The Committee typically reviews our executive officers’
compensation on an annual basis.  The Committee has
historically met to review compensation for our Chief Executive Officer at the
beginning of each fiscal year and again as part of its typical review of
compensation of all our executive officers toward the end of the fiscal
year.  In light of the critical functions and leadership role of our
Chief Executive Officer, who is our founder and has served as our Chief
Executive Officer since our inception over 25 years ago, the Committee believes
our Chief Executive Officer should be our mostly highly compensated officer and
has typically reviewed his compensation twice a year to ensure we are providing
a competitive compensation package consistent with our overall business
performance.  In connection with its review of the compensation of our
Chief Executive Officer that occurs at the start of a fiscal year, the Committee
reviews our prior year performance, our Chief Executive Officer’s contributions
to that performance and other relevant factors, such as compensation paid to
chief executive officers of our peer companies.
  
 In making
its compensation decisions in fiscal 2009, the Committee engaged in a
multi-faceted review process.  At the outset, the Committee worked
directly with CRI to conduct a market assessment of our executives’ base
salaries, total cash compensation (base salary plus cash bonuses), long-term
incentive compensation (the three-year average of all equity-based awards) and
total compensation (total cash compensation, long-term incentive compensation
plus all other compensation).  The market assessment consisted of a
review of compensation information from a select group of peer companies and
utilized information from the following surveys: (i) Radford Executive Survey
2008; (ii) 2008 Executive Comp Survey; (iii) 2008 Executive Assessor; (iv) 2008
Benchmark Database Executive Survey; (v) 2008 ChiPs Executive & Sr.
Management Total Compensation Survey; and (vi) 2007-2008 Survey Report on Top
Management Compensation.
  The
Committee, with the assistance of CRI, developed the list of peer companies
based on companies meeting one or more of the following criteria: (i) industry
group, a company that competes within the semiconductor and related devices
industry; (ii) geographic location; (iii) annual revenue of between one-half to
two times our annual revenue; and (iv) a number of employees comparable to our
workforce.  Based on these criteria, the following forty-two companies
were selected to form our peer group:
  Actel
      Corp.
                      Advanced
      Energy Inds Inc.
                      Anadigics
      Inc.Applied
      Micro Circuits Corp.
                      Asyst
      Technologies Inc.
                      Atheros
      Communications, Inc.Atmi
      Inc.
                      Axcelis
      Technologies Inc.
                      Cabot
      Microelectronics Corp.Cirrus
      Logic Inc.
                      Cohu
      Inc.
                      Diodes
      Inc.DSP
      Group Inc.
                      Emcore
      Corp.
                      Formfactor
      Inc.Hittie
      Microwave Corp.
                      Integrated
      Silicon Solution Inc.
                      Ixys
      Corp.Lattice
      Semiconductor Corp.
                      Mattson
      Technology Inc.
                      Micrel
      Inc.Microsemi
      Corp.
                      Mindspeed
      Technologies, Inc.
                      Monolithic
      Power Systems, Inc.Photronics
      Inc.
                      PMC
      Sierra Inc.
                      Power
      Integrations Inc.Rambus
      Inc.
                      Rudolph
      Technologies Inc.
                      Semitool
      Inc.Semtech
      Corp.
                      Silicon
      Image Inc.
                      Silicon
      Laboratories Inc.Silicon
      Storage Technology
                      SiRF
      Technology Holdings Inc.
                      Standard
      Microsystems CorpTessera
      Technologies Inc.
                      Trident
      Microsystems Inc.
                      Triquent
      Semiconductor Inc.Ultra
      Clean Holdings Inc.
                      Veeco
      Instruments Inc.
                      Zoran
      Corp.
  To
determine a market consensus of the various compensation elements for a
particular executive position, CRI used the average of various measures,
including the mean and median of the information.  In general, the
Committee has established general guidelines, which provide that executives’
base salaries should be within ten percentage points higher or lower than the
market consensus, and total cash compensation, long-term incentive compensation
and total compensation should be within twenty percentage points higher or lower
than market consensus.  However, the Committee may approve
compensation of individual executives above or below these general guidelines
based upon the executive’s performance, position and experience, evaluation of
total compensation, as well as external factors affecting our business and
market generally.
  In
setting compensation levels for our executive officers, the Committee considers
a number of factors other than the Committee’s general guidelines in making its
decision, including the recommendations of our Chief Executive Officer, as
described below, internal pay fairness, each executive’s scope of
responsibility, domain expertise, business knowledge and significance to our
corporate objectives among other factors, and uses the market data simply as a
general reference point.
  As part
of its review process, the Committee also meets separately with our Chief
Executive Officer to discuss executive compensation.  Our chief
executive officer reviews with the Committee the individual performance of each
executive and the leadership demonstrated by the executive during the prior
period.  Although there are no qualitative or quantitative measures
established prior to an evaluation of an individual’s performance, the Committee
reviews the contributions made by an officer to our overall business performance
and the performance of the business department for which the officer is
primarily responsible.  The type of contributions can vary depending
on the officer and the business department.  For example, in its
evaluation of our Chief Financial Officer in fiscal 2009, the Committee noted
his contributions to the improvements in our internal control over financial
reporting.  Our Chief Executive Officer makes recommendations to the
Committee for the base salary, cash bonus awards and equity awards for our
executive officers, other than for himself.  These recommendations are
not determinative but are taken into account by the Committee in making its
compensation decisions.  Our Chief Executive Officer also provides the
Committee a self-evaluation of his performance and contributions made to our
overall performance.  In 2009, the Committee took into account this
self-evaluation, but then worked directly with CRI to make decisions for our
chief executive officer’s compensation separately and without his
participation.
  
 Our
Compensation Program Decisions
  Base Salary
  In February 2008, the Committee met to
review the base salary of our Chief Executive Officer.  In connection
with its review, the Committee reviewed our performance in fiscal 2008, our
Chief Executive Officer’s contributions to that performance and other relevant
factors, such as compensation paid to chief executive officers of our peer
companies.  The Committee increased the base salary of our Chief
Executive Officer from $420,000 to $550,000 effective as of the start of fiscal
2009, primarily in light of our increase in revenues, profitability and
shareholder value and the successful completion of our follow-on public offering
in fiscal 2008
  In October 2008, the Committee
commenced its evaluation of compensation for all of our executive officers,
including our Chief Executive Officer.  The Committee determined that
no change was necessary to the base salary of our Chief Executive
Officer.  In making this determination, the Committee noted our Chief
Executive Officer’s base salary was above our general guidelines for base
salaries.  However, the Committee considered that a reduction on our
Chief Executive Officer’s base salary was not necessary because his total
compensation was within the Committee’s general guidelines.  In
addition, the Committee views the base salary of our Chief Executive Officer
differently than our other executive officers as a result of his critical role
and leadership across all apects of our business.  The Committee
believes our Chief Executive Officer’s base salary, which is above our general
guidelines for base salaries, reflects his unique contributions to our
business.
  The Committee determined it was
important to recognize the talent of our other executives with increases in base
salary.  With respect to our Chief Financial Officer, the Committee
determined that his fiscal 2008 base salary was more than 10% below market
consensus; and therefore, fell below the general guidelines of the
Committee.  The Committee determined to increase our Chief Financial
Officer’s base salary by 6% primarily in light of this market information and
his individual performance.  Altough our Chief Financial Officer’s
revised base salary continued to be below the market consensus, the six percent
pay increase caused his base salary to fall within the general guidelines of the
Committee.  In light of the Committee’s review of the VP,
Engineering’s performance and contributions, internal pay equity considerations
and our general guidelines, the Committee determined to raise our VP of
Engineering’s base salary by 6%, which continued to be within the Committee’s
general guidelines.  The Committee determined to increase our VP of
Strategic Marketing’s base salary by 6%, which continued to be below the general
guidelines.  However, the Committee took into account internal pay
equity and the total compensation received by the VP of Strategic Marketing,
including higher than market consensus long-term incentive compensation, in
deciding not to increase his salary to be within the general guidelines of the
Committee.  In review of the base salary of our Senior VP of Sales
& Marketing, the Committee noted that his base salary was significantly
below the market consensus.  This was due, in part, to the fact that
our Senior VP of Sales & Marketing was transitioning into that role after
having been with us for a period of time in a different role.  The
Committee determined to increase his base salary by 33%, which continued to be
below the Committee’s general guidelines for base salary.  However,
the Committee believed the base salary amount was appropriate in light of the
significant increase, as a percentage of prior base salary, along with the fact
that our Senior VP of Sales & Marketing was continuing to transition into
his new role.
  Equity Awards
  Ourequity-based incentive program for the entire
company, including executive officers, currently consists of stock option grants
and our employee stock purchase program.  In determining the number of
options to be granted to executive officers, the Committee takes into account
the market data discussed above, internal pay fairness, the individual’s
position and scope of responsibility, the vesting period (and thus, retention
value) remaining on the executive’s existing options, the executive’s ability to
affect profitability and stockholder value, the individual’s historic and recent
job performance and the value of stock options in relation to other elements of
total compensation.
  
 In fiscal
2008, the Committee granted annual retention stock option awards to each of our
executive officers, except for our senior vice president, worldwide sales who
was on an extended sabbatical, as a form of long-term incentive
awards.  These stock options vest in
accordance with our standard schedule, which provides for vesting over
five years at the rate of twenty percent of
the shares on the date that is one year after the vesting commencement date
specified in the grants and 1/60th of the
shares each month thereafter.  In February 2008, the Committee granted
our chief executive officer an option to purchase 100,000 shares of common stock
in recognition of his performance in fiscal 2008.  This option was
fully vested and exercisable on February 11, 2008.
  In
connection with the annual review of our executive officer compensation in
fiscal 2009, the Committee granted stock options to our executive officers as
outlined in the Fiscal 2009 Grants of Plan-Based Awards Table below that vest in
accordance with our standard schedule described above.  However, as a
result of the limited number of shares available for grant under our incentive
plan at the time of the Committee’s annual review of executive compensation in
late fiscal 2009, the Committee granted only half of the equity award it
determined should be awarded to our Chief Executive Officer at that
time.  In February 2009, the Committee met again to determine whether
our Chief Executive Officer should be awarded an additional option grant and
determined to award the remaining amount it had previously determined should be
awarded now that there were sufficient shares available for grant under our
incentive plan.
  Discretionary Cash Bonus
Awards
  The Committee, from time to time, may
award discretionary cash bonuses to our executive officers.  The
Committee has not historically adopted a cash incentive plan with specified
performance criteria so that it could maintain flexibility to award cash bonuses
when extraordinary company or individual performance or other special
circumstances warrant such an award.
  In early fiscal 2009, the Committee
awarded our Chief Executive Officer a cash bonus of $100,000 for our performance
in fiscal 2008 and his individual contributions and leadership.  In
connection with the annual evaluation of executive compensation that occurred
later in fiscal 2009, however, the Committee determined not to award any
discretionary cash bonuses to our other executives.  By that time in
the year, the Committee was aware of the potential economic challenges that we
might face from a slowdown in the macroeconomic environment, generally, and the
impact such a slowdown would have on our business, specifically.  The
Committee did not feel it was appropriate to award our executives discretionary
cash bonuses under those circumstances.  In addition, the Committee
believed all of the executive officers’ total compensation, after taking into
account the adjustments to base salary and long-term incentive awards and other
equity holdings, were within the Committee’s general guidelines for total
compensation.
  General Benefits
  In
addition to the compensation opportunities we
describe above, wealso provide our executive officers and other
employees benefits such as medical insurance, life and disability insurance and
our 401(k) Savings/Retirement Plan, in each case on the same basis as other
employees.
  Section
162(m) Treatment Regarding Performance-Based Equity Awards
  Section
162(m) of the Internal Revenue Code provides that public companies cannot deduct
non-performance based compensation paid to certain named executive officers in
excess of $1 million per year.  These officers include any employee
who, as of the close of the taxable year, is the principal executive officer,
and any employee whose total compensation for the taxable year is required to be
reported to shareholders under the Securities Exchange Act of 1934 by reason of
such employee being among the three highest compensated officers for that
taxable year, other than the principal executive officer or the principal
financial officer.  The Committee intends to preserve the
deductibility of compensation payable to our executives, although deductibility
will be only one of the many factors considered in determining appropriate
levels or modes of compensation.
  
 
 Fiscal
2009 Summary Compensation Table
 
 The
following table sets forth information regarding compensation earned during
fiscal 2009 by our Chief Executive Officer, Chief Financial Officer and our top
three highest paid other executive officers as of January 31, 2009, who we refer
to collectively as our “named executive officers.”
  FISCAL
      2009 SUMMARY COMPENSATION
TABLE
  Name
      and Principal Position
                                                      
                                                      Fiscal
      Year
                                                      
                                                      Salary
      ($)
                                                      
                                                      Bonus
      ($)
                                                      
                                                      Option
      Awards ($)(1)
                                                      
                                                      Non-Equity
      Incentive Plan Compensation
                                                      
                                                      All
      Other Compensation ($)
                                                      
                                                      Total
      ($)Thinh
      Q. Tran
                                                      
                                                      2009
                                                      
                                                      547,500
                                                      
                                                      —
                                                      
                                                      2,924,490
                                                      
                                                      —
                                                      
                                                      23,021
                                                      (2)
                                                      3,495,011President
      and Chief Executive Officer
                                                      
                                                      2008
                                                      
                                                      420,538
                                                      
                                                      100,000
                                                      
                                                      740,456
                                                      
                                                      —
                                                      
                                                      21,583
                                                      (3)
                                                      1,282,5772007
                                                      
                                                      350,000
                                                      
                                                      35,000
                                                      
                                                      709,639
                                                      
                                                      —
                                                      
                                                      10,000
                                                      (4)
                                                      1,104,639Thomas
      E. Gay III
                                                      
                                                      2009
                                                      
                                                      258,827
                                                      
                                                      —
                                                      
                                                      446,048
                                                      
                                                      —
                                                      
                                                      8,256
                                                      (5)
                                                      713,131Chief
      Financial Officer and Secretary
                                                      
                                                      2008
                                                      
                                                      165,385
                                                      (6)
                                                      25,000
                                                      (7)
                                                      295,674
                                                      
                                                      —
                                                      
                                                      433
                                                      (8)
                                                      486,4922007
                                                      
                                                      —
                                                      
                                                      —
                                                      
                                                      —
                                                      
                                                      —
                                                      
                                                      —
                                                      
                                                      —David
      Lynch
                                                      
                                                      2009
                                                      
                                                      180,945
                                                      (9)
                                                      —
                                                      
                                                      181,014
                                                      
                                                      —
                                                      
                                                      48,138
                                                      (10)
                                                      410,097Senior
      Vice President, Worldwide Sales
                                                      
                                                      2008
                                                      
                                                      —
                                                      
                                                      —
                                                      
                                                      —
                                                      
                                                      —
                                                      
                                                      —
                                                      
                                                      —2007
                                                      
                                                      —
                                                      
                                                      —
                                                      
                                                      —
                                                      
                                                      —
                                                      
                                                      —
                                                      
                                                      —Jacques
      Martinella
                                                      
                                                      2009
                                                      
                                                      258,827
                                                      
                                                      —
                                                      
                                                      267,166
                                                      
                                                      —
                                                      
                                                      6,289
                                                      (11)
                                                      532,282Vice
      President, Engineering
                                                      
                                                      2008
                                                      
                                                      242,008
                                                      
                                                      —
                                                      
                                                      161,322
                                                      
                                                      —
                                                      
                                                      962
                                                      (8)
                                                      404,2922007
                                                      
                                                      223,549
                                                      
                                                      —
                                                      
                                                      148,048
                                                      
                                                      —
                                                      
                                                      —
                                                      
                                                      371,597Kenneth
      Lowe
                                                      
                                                      2009
                                                      
                                                      207,062
                                                      
                                                      —
                                                      
                                                      234,347
                                                      
                                                      —
                                                      
                                                      4,980
                                                      (12)
                                                      446,389Vice
      President, Strategic Marketing
                                                      
                                                      2008
                                                      
                                                      192,597
                                                      
                                                      —
                                                      
                                                      139,029
                                                      
                                                      —
                                                      
                                                      308
                                                      (8)
                                                      331,9342007
                                                      
                                                      177,844
                                                      
                                                      —
                                                      
                                                      126,176
                                                      
                                                      —
                                                      
                                                      —
                                                      
                                                      304,020
 ______________
 
 (1)
              Amounts
      listed in this column represent the compensation expense of option awards
      recognized by the Company, before forfeitures, under FAS 123R for the
      corresponding fiscal year, rather than amounts paid to or realized by the
      named individual, and includes expense recognized in the corresponding
      fiscal year for awards granted prior to such year.  Please refer
      to the footnotes to our consolidated financial statements in our 2008
      Annual Report on Form 10-K and 2007 Annual Report on Form 10-K for the
      underlying assumptions for this expense.  There can be no
      assurance that options will be exercised (in which case no value will be
      realized by the individual) or that the value on exercise will approximate
      the compensation expense recognized by
us.
 (2)
              Represents
      $15,000 paid for annual retainer for
      services on the Board of Directors, $6,007 for 401K match and $2,014 for
      group term life insurance.  As of October 28, 2008, Mr. Tran was
      no longer paid additional compensation for serving on the board of
      directors.
 (3)
              Represents
      $20,000 paid for annual retainer for
      services on the Board of Directors and $1,583 for 401K
      match.
 (4)
              Represents
      $10,000 paid for annual retainer for
      services on the Board of Directors and no 401K match was paid in fiscal
      2007.
 (5)
              Represents
      $5,164 paid for 401K match and $3,092 for group term life
      insurance.
 (6)
              Mr. Gay joined us as our Chief Financial Officer
      onJune 1, 2007.
 (7)
              Represents
      amount paid as sign on bonus in connection with Mr. Gay’s acceptance of
      employment with us.
 (8)
              Represents
      amount paid as 401K match.
 (9)
              Mr. Lynch became our Senior Vice President on
      September 1, 2008.
 (10)
              Represents
      $3,947 paid for Registered Retirement Savings Plan match and $290 for
      group term life insurance.
 (11)
              Represents
      $5,212 paid for 401K match and $1,078 for group term life
      insurance.
 (12)
              Represents
      $3,903 paid for 401K match and $1,078 for group term life
      insurance.
 
 
 Fiscal
2009 Grants of Plan-Based Awards Table
 
 The
following table shows information regarding stock option awards we granted to
the named executive officers during the year ended January 31,
2009.  The options granted to our named executive officers in fiscal
2009 were granted under our 2001 Stock Plan.
 
 
  Estimated
      Future Payouts under Non-Equity Incentive Plan Awards
                                                          
                                                          
                                                          All
      Other Option Awards: Number of Securities UnderlyingOptions
                                                          
                                                          
                                                          Exercise
      or Base Price of Option Awards
                                                          
                                                          
                                                          Grant
      Date Fair Value of Stock and Option AwardsName
                                                          
                                                          Grant
      Date
                                                          
                                                          Threshold
                                                          
                                                          
                                                          Target
                                                          
                                                          
                                                          Maximum
                                                          
                                                          
                                                          (#)(1)
                                                          
                                                          
                                                          ($/Sh)
                                                          
                                                          
                                                          (2)Thinh
      Q. Tran
                                                          
                                                          11/3/2008
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          87,500
                                                          
                                                          
                                                          $
                                                          10.87
                                                          
                                                          
                                                          $
                                                          581,884President
      and Chief Executive Officer
                                                          
                                                          2/11/2008
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          100,000
                                                          
                                                          
                                                          $
                                                          41.58
                                                          
                                                          
                                                          $
                                                          2,716,220Thomas
      E. Gay III.
                                                          
                                                          11/3/2008
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          30,000
                                                          
                                                          
                                                          $
                                                          10.87
                                                          
                                                          
                                                          $
                                                          199,503Chief
      Financial Officer and SecretaryDavid
      Lynch
                                                          
                                                          11/3/2008
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          100,000
                                                          
                                                          
                                                          $
                                                          10.87
                                                          
                                                          
                                                          $
                                                          665,010Senior
      Vice President, Worldwide SalesJacques
      Martinella
                                                          
                                                          11/3/2008
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          30,000
                                                          
                                                          
                                                          $
                                                          10.87
                                                          
                                                          
                                                          $
                                                          199,503Vice
      President, EngineeringKenneth
      Lowe
                                                          
                                                          11/3/2008
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          —
                                                          
                                                          
                                                          
                                                          20,000
                                                          
                                                          
                                                          $
                                                          10.87
                                                          
                                                          
                                                          $
                                                          133,002Vice
      President, Strategic Marketing
 ______________
 
 (1)
              All
      options listed are exercisable as to 20% of the shares on the first
      anniversary of the grant date, with the remaining shares vesting ratably
      each month thereafter over the following four years, except for Mr. Tran’s
      .grant on February 11, 2009 that vested in full on the date of
      grant.  The option has a term of ten years, subject to earlier
      termination in certain events relating to termination of
      employment.
 (2)
              The
      grant date fair value was determined under FAS 123R for financial
      reporting purposes. Please refer to the footnotes to our consolidated
      financial statements in our 2009 Annual Report on Form 10-K for the
      underlying assumptions for this expense.  There can be no
      assurance that options will be exercised (in which case no value will be
      realized by the individual) or that the value on exercise will approximate
      the compensation expense recognized by
us.
 
 Outstanding
Equity Awards At Fiscal Year-End 2009
 
 The
following table sets forth information regarding the outstanding equity awards
held by our named executive officers as of January 31, 2009:
 
  
  Number
      of
                                                            
                                                            Number
      of SecuritiesSecurities
      Underlying
                                                            
                                                            UnderlyingUnexercised
      Options
                                                            
                                                            Unexercised
      Options(#)
                                                            
                                                            (#)
                                                            
                                                            Option
      Exercise
                                                            
                                                            Option
      ExpirationName
                                                            
                                                            Exercisable
                                                            
                                                            Unexercisable
                                                            
                                                            Price
      ($)
                                                            
                                                            Date
      (1)Thinh
      Q. Tran
                                                            
                                                            45,833
                                                            
                                                            
                                                            —
                                                            
                                                            
                                                            $
                                                            3.50
                                                            
                                                            5/31/2010President
      and Chief Executive Officer
                                                            
                                                            31,667
                                                            
                                                            
                                                            —
                                                            
                                                            
                                                            $
                                                            1.25
                                                            
                                                            11/7/201140,986
                                                            
                                                            
                                                            —
                                                            
                                                            
                                                            $
                                                            1.69
                                                            
                                                            10/18/201244,000
                                                            
                                                            
                                                            —
                                                            
                                                            
                                                            $
                                                            3.40
                                                            
                                                            2/20/20132,500
                                                            (2)
                                                            
                                                            17,500
                                                            (2)
                                                            
                                                            $
                                                            5.43
                                                            
                                                            3/15/20102,500
                                                            (3)
                                                            
                                                            52,500
                                                            (3)
                                                            
                                                            $
                                                            9.89
                                                            
                                                            (9)58,000
                                                            (4)
                                                            
                                                            62,000
                                                            (4)
                                                            
                                                            $
                                                            11.06
                                                            
                                                            8/25/2016100,000
                                                            (5)
                                                            
                                                            —
                                                            
                                                            
                                                            $
                                                            41.58
                                                            
                                                            2/11/2018—
                                                            
                                                            
                                                            87,500
                                                            (6)
                                                            
                                                            $
                                                            10.87
                                                            
                                                            11/3/2018Thomas
      E. Gay, III
                                                            
                                                            38,000
                                                            (7)
                                                            
                                                            82,000
                                                            (7)
                                                            
                                                            $
                                                            28.63
                                                            
                                                            6/1/2017Chief
      Financial Officer
                                                            
                                                            —
                                                            
                                                            
                                                            30,000
                                                            (6)
                                                            
                                                            $
                                                            10.87
                                                            
                                                            11/3/2018David
      Lynch
                                                            
                                                            —
                                                            
                                                            
                                                            100,000
                                                            (6)
                                                            
                                                            $
                                                            10.87
                                                            
                                                            11/3/2018Senior
      Vice President, Worldwide SalesJacques
      Martinella
                                                            
                                                            20,000
                                                            
                                                            
                                                            —
                                                            
                                                            
                                                            $
                                                            5.75
                                                            
                                                            11/1/2009Vice
      President, Engineering
                                                            
                                                            22,916
                                                            
                                                            
                                                            —
                                                            
                                                            
                                                            $
                                                            3.50
                                                            
                                                            5/31/20101,000
                                                            
                                                            
                                                            —
                                                            
                                                            
                                                            $
                                                            1.69
                                                            
                                                            10/18/20129,166
                                                            
                                                            
                                                            —
                                                            
                                                            
                                                            $
                                                            3.40
                                                            
                                                            2/20/2013500
                                                            (2)
                                                            
                                                            3,500
                                                            (2)
                                                            
                                                            $
                                                            5.43
                                                            
                                                            3/15/20106,500
                                                            (3)
                                                            
                                                            10,500
                                                            (3)
                                                            
                                                            $
                                                            9.89
                                                            
                                                            (10)14,499
                                                            (4)
                                                            
                                                            15,501
                                                            (4)
                                                            
                                                            $
                                                            11.06
                                                            
                                                            8/25/20165,133
                                                            (8)
                                                            
                                                            16,867
                                                            (8)
                                                            
                                                            $
                                                            45.83
                                                            
                                                            11/5/2017—
                                                            
                                                            
                                                            30,000
                                                            (6)
                                                            
                                                            $
                                                            10.87
                                                            
                                                            11/3/2018Kenneth
      Lowe
                                                            
                                                            10,000
                                                            
                                                            
                                                            —
                                                            
                                                            
                                                            $
                                                            3.50
                                                            
                                                            5/31/2010Vice
      President, Strategic Marketing
                                                            
                                                            834
                                                            
                                                            
                                                            —
                                                            
                                                            
                                                            $
                                                            3.40
                                                            
                                                            3/15/20095,417
                                                            (2)
                                                            
                                                            2,917
                                                            (2)
                                                            
                                                            $
                                                            5.43
                                                            
                                                            (11)5,416
                                                            (3)
                                                            
                                                            8,751
                                                            (3)
                                                            
                                                            $
                                                            9.89
                                                            
                                                            (12)12,082
                                                            (4)
                                                            
                                                            12,918
                                                            (4)
                                                            
                                                            $
                                                            11.06
                                                            
                                                            8/25/20164,666
                                                            (8)
                                                            
                                                            15,334
                                                            (8)
                                                            
                                                            $
                                                            45.83
                                                            
                                                            11/5/2017—
                                                            
                                                            
                                                            20,000
                                                            (6)
                                                            
                                                            $
                                                            10.87
                                                            
                                                            11/3/2018
 ______________
 
 (1)
              Except
      as otherwise noted, the options have a term of 10 years, subject to
      earlier termination in certain events relating to termination of
      employment.
 (2)
              Exercisable
      as to 20% of the shares on the first anniversary of 8/9/04, with the remaining shares vesting
      ratably each month thereafter over the following four
    years.
 (3)
              Exercisable
      as to 20% of the shares on the first anniversary of 10/28/05, with the remaining shares vesting
      ratably each month thereafter over the following four
    years.
 (4)
              Exercisable
      as to 20% of the shares on the first anniversary of 8/25/06, with the remaining shares vesting
      ratably each month thereafter over the following four
    years.
 (5)
              The
      option was fully vested and fully exercisable on the date of grant,
      February 11, 2008.
 (6)
              Exercisable
      as to 20% of the shares on the first anniversary of 11/3/08, with the remaining shares vesting ratably
      each month thereafter over the following four
  years.
 (7)
              Exercisable
      as to 20% of the shares on the first anniversary of 6/1/07,with the remaining shares vesting ratably
      each month thereafter over the following four
  years.
 (8)
              Exercisable
      as to 20% of the shares on the first anniversary of 11/5/07, with the
      remaining shares vesting ratably each month thereafter over the following
      four years.
 (9)
              30,000
      shares underlying this option expire on 3/15/10.  25,000 shares
      underlying this option expire on
3/15/11.
 (10)
              6,000
      shares underlying this option expire on 3/15/09.  6,000 shares
      underlying this option expire on 3/15/10.  5,000 shares
      underlying this option expire on
3/15/11.
 (11)
              5,000
      shares underlying this option expire on 3/15/09.  3,334 shares
      underlying this option expire on
3/15/10.
 (12)
              5,000
      shares underlying this option expire on 3/15/09.  5,000 shares
      underlying this option expire on 3/15/10.  4,167 shares
      underlying this option expire on
3/15/11.
 
 
 Fiscal
2009 Option Exercises and Stock Vested
 
 The
following table sets forth the number of shares acquired pursuant to the
exercise of options by our named executive officers during fiscal 2009 and the
aggregate dollar amount realized by our named executive officers upon exercise
of the option:
  Option
      AwardsName
                                    
                                    Number
      of Shares Acquired on Exercise (#)
                                    
                                    Value
      Realized on Exercise ($)(1)Thinh
      Q. Tran
                                    
                                    221,240
                                    
                                    6,477,005President
      and Chief Executive OfficerThomas
      E. Gay III.
                                    
                                    —
                                    
                                    —Chief
      Financial Officer and SecretaryDavid
      Lynch
                                    
                                    —
                                    
                                    —Senior
      Vice President, Worldwide SalesJacques
      Martinella
                                    
                                    29,168
                                    
                                    808,166Vice
      President, EngineeringKenneth
      Lowe
                                    
                                    6,833
                                    
                                    105,747Vice
      President, Strategic Marketing
  (1)
                            The aggregate dollar value realized upon the
      exercise of an option represents the difference between the market price
      of the underlying shares on the date of exercise as measured by the
      closing price on The NASDAQ Global Market and the exercise price of the
      option, multiplied by the number of shares
    exercised.
 Potential
Payment upon Change of Control
 
 Acceleration
of Outstanding Option Awards
  Our 2001
Stock Option Plan provides that in the event of a merger or the sale of
substantially all of our assets (a “Change of Control Event”), each option
outstanding under the 2001 Stock Option Plan that is not assumed or an
equivalent option substituted by the successor corporation will fully vest and
become exercisable.  The table below shows the number of options that
would have vested immediately assuming a Change of Control Event occurred on
January 31, 2009:
   Name
                        Number of OptionsThinh
      Q. Tran
                        219,500President
      and Chief Executive OfficerThomas
      E. Gay, III
                        112,000Chief
      Financial OfficerDavid
      Lynch
                        100,000Senior
      Vice President, Worldwide SalesJacques
      Martinella
                        76,368Vice
      President, EngineeringKenneth
      Lowe
                        59,920Vice
      President of Strategic Marketing
 
 Offer
Letter with Kenneth Lowe
  Pursuant
to the terms of our offer letter with Kenneth Lowe, Mr. Lowe is entitled receive
his monthly base salary for a period of twelve weeks following his termination
if he is terminated without cause.  The offer letter defines cause to
mean termination for any of the following reasons:  (i) engaging in
misconduct which is demonstrably injurious to us, (ii) conviction of a crime,
(iii) an act of fraud or misappropriation of our property, (iv) a material
breach of the offer letter or our proprietary rights agreement, or (v) serving
as an employee or consultant for another person or entity during employment with
us.  Termination without cause is defined as termination for any
reason other than cause.  If Mr. Lowe had been terminated without
cause on January 31, 2009, he would have been entitled to receive his gross
salary of $8,154, minus any deductions, on a biweekly basis for six pay periods
for a total of $48,923.
  Fiscal
2009 Director Compensation
 
 The
following chart shows the compensation paid to each non-employee director for
their service in fiscal 2009:
  Director
                    
                    Fees
      Earned or Paid in Cash
                      ($)(1)
                    
                    
                    Option
      Awards
                      ($)(2)(3)
                    
                    
                    Total
                      ($)William
      J. Almon
                    
                    $
                    25,000
                    
                    
                    $
                    68,229
                    
                    
                    $
                    93,229Julien
      Nguyen
                    
                    
                    25,000
                    
                    
                    
                    56,400
                    
                    
                    
                    81,400Lung
      C. Tsai
                    
                    
                    25,000
                    
                    
                    $
                    68,229
                    
                    
                    
                    93,229
   ______________
 (1)
              The amounts listed under “Fees Earned or Paid in
      Cash” is based on actual payments made to our non-employee directors,
      which consisted of the standard board retainer fee of $20,000 per year,
      which was increased effective at the beginning of our last fiscal quarter
      in fiscal 2009 to an annual retainer of $40,000 per year (paid
      quarterly).
 (2)
              Amounts in this column represent the compensation
      cost of stock option awards recognized during fiscal 2009 for the stock
      option awards granted.  The stock option awards granted prior to
      fiscal 2008 have been accounted for using the intrinsic value measurement
      provisions of APB No. 25 and the stock option awards granted in fiscal
      2008 have been calculated in accordance with SFAS No.
      123R  (“SFAS 123R”) using the Black-Scholes option pricing model
      which utilizes certain assumptions outlined in the footnotes to the
      Company’s financial statements included in the Company’s Annual Report on
      Form 10-K for the year ended January 31,
  2009.
 (3)
              The grant date fair value of each stock option
      award reflected in this column, computed in accordance with SFAS 123R, was
      as follows: Mr. Almon $347,342, Mr. Nguyen $312,762 and Mr. Tsai
      $341,711.  The following number of option awards were held by
      each director and outstanding as of January 31, 2009: Mr. Almon 10,000
      shares, Mr. Nguyen 26,875 shares and Mr. Tsai 30,000
      shares.
 
 At the
beginning of fiscal 2009, each of our directors, including our Chief Executive
Officer who serves as a director, received an annual cash retainer fee of
$20,000 for services as a director.  This cash retainer was paid on a
quarterly basis in equal installments.  Pursuant to the terms of our
2003 Director Stock Option Plan, our non-employee directors were also
automatically granted options to purchase 5,000 shares on June 2, 2008, each at
an exercise price of $18.26 per share, the closing per share price of our common
stock as quoted on The Nasdaq Global Market on the date of
grant.  Under the terms of our 2003 Director Stock Option Plan, each
non-employee director is automatically granted an option to purchase 5,000
shares of our Common Stock on June 1st of each year.  To be eligible
for this grant, a non-employee director must have served on the Board for at
least six months as of June 1 of that year and remain a member of the Board of
Directors on June 1st.  The option term is ten years and shall be
exercisable only while the non-employee director remains a director of the
Company.  The exercise price per share shall be 100% of the fair
market value per share on the date of grant of the option.  The option
becomes fully exercisable upon the first anniversary from its date of
grant.
  In
connection with its annual review of executive officer compensation in October
2008, the Compensation Committee retained Compensation Resources, Inc., an
independent compensation consultant, to assist with an evaluation of the
compensation of our directors.  As a result of this evaluation, the
annual cash retainer was increased from $20,000 to $40,000 per year, to be paid
quarterly.  The increase was effective for the fourth quarter of
fiscal 2009.  The Committee also determined that our Chief Executive
Officer would no longer be eligible to receive any separate compensation for his
services on our board of directors, but rather his service on the board would be
taken into account during the review of his compensation as an executive
officer.  Our directors do not receive any additional cash
compensation for services on the committees of the board, nor do they receive
additional cash compensation for attendance at meetings.
  
 During
its review in October 2008, the Compensation Committee also determined to award
to non-employee directors an additional option to purchase 5,000 shares, which
award will occur automatically on June 1stof
every year, or if June 1st is not a business day, on the first business day
following June 1st.  This option grant shall be made under our 2001
Stock Plan, and is in addition to the automatic grant described above pursuant
to our 2003 Director Stock Option Plan.  To be eligible for this
additional grant, a non-employee director must have served as a director for at
least six months and remain a director on such date.  The additional
option grant shall have an exercise price equal to the closing price of our
common stock on The Nasdaq Global Market on the date of grant and shall vest in
full on the first anniversary of the date of grant.
  Compensation
Committee
 
 The
current members of the Compensation Committee are Messrs. Almon, Nguyen and
Tsai, each of whom is a non-management member of our Board of
Directors.  We believe that the composition of our Compensation
Committee meets the criteria for independence under, and the functioning of our
Compensation Committee complies with the applicable requirements of the
Sarbanes-Oxley Act of 2002, the current rules of The NASDAQ Stock Market and
Securities and Exchange Commission rules and regulations.  The
Compensation Committee’s primary functions, among others, are to review and make
recommendations to the Board of Directors concerning Sigma’s executive
compensation policy, including establishing salaries, incentives and other forms
of compensation for the Company’s executive officers.  The
Compensation Committee held six meetings in fiscal 2009.  Additional
information concerning the Compensation Committee’s processes and procedures for
the consideration and determination of executive compensation is set forth under
the heading “Compensation Discussion and Analysis” on page 3.
 
 Compensation
Committee Interlocks and Insider Participation
 
 No member
of our Compensation Committee was at any time during fiscal 2009 one of our
officers or employees.  None of our executive officers serves as a
member of the Board of Directors or compensation committee of any entity that
has one or more executive officers serving as a member of our Board of Directors
or Compensation Committee.
 
 Compensation
Committee Report
 
 The
following report has been submitted by the Compensation Committee of our Board of Directors:
 
 The
Compensation Committee of our Board of
Directors has reviewed and discussed the Compensation Discussion and Analysis
with management.  Based on this review and discussion, the
Compensation Committee recommended to our
Board of Directors that the Compensation Discussion and Analysis be included in
this Annual Report on Form 10-K/A filed
with the Securities and Exchange Commission.
 
 The
foregoing report was submitted by the Compensation Committee of the Board of
Directors and shall not be deemed to be “soliciting material” or to be “filed”
with the Commission or subject to Regulation 14A promulgated by the Commission
or Section 18 of the Securities Exchange Act of 1934.
 
 
 Respectfully
submitted,
 
 William
J. Almon
 Julien
Nguyen
 Lung C.
Tsai
 
 
  ITEM 12.
              SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      SHAREHOLDER MATTERS
 
 Security
Ownership of Certain Beneficial Owners and Management
 
 The
following table sets forth certain information as of May 1, 2009, as to shares
of Common Stock beneficially owned by:  (i) each person who is known
by the Company to own beneficially more than 5% of the Common Stock, (ii) each
of the Company’s directors, (iii) each of the Company’s executive officers named
under “Executive Compensation—Summary Compensation Table” (the “named executive
officers”) and (iv) all directors and named executive officers of the Company as
a group.  Ownership information is based upon information furnished by
the respective individuals or entities, as the case may be.  Unless
otherwise indicated below, the address of each beneficial owner listed on the
table is c/o Sigma Designs, Inc., 1778 McCarthy Blvd., Milpitas,
California 95035.  The percentage of Common Stock beneficially
owned is based on 26,605,877 shares outstanding as of May 1, 2009.  In
addition, shares issuable pursuant to options or other convertible securities
which may be acquired within 60 days of May 1, 2009 are deemed to be issued and
outstanding and have been treated as outstanding in calculating determining the
beneficial ownership and percentage ownership of those persons possessing such
interest, but not for any other individuals.
  Name
      and Address of Beneficial Owner
                          
                          Shares
      Beneficially Owned(1)
                          
                          Percentage
      Beneficially Owned5%
      ShareholderMorgan
      Stanley (2)
                          
                          2,177,833
                          
                          8.2%Royce
      & Associates, LLC (3)
                          
                          2,781,696
                          
                          10.5%Named
      Executive Officers, Directors and Nominees for DirectorThinh
      Q. Tran (4)
                          
                          869,279
                          
                          3.3%Thomas
      E. Gay III (5)
                          
                          51,000
                          
                          *David
      Lynch
                          
                          —
                          
                          *Jacques
      Martinella (6)
                          
                          106,264
                          
                          *Kenneth
      Lowe (7)
                          
                          35,498
                          
                          *William
      J. Almon (8)
                          
                          98,297
                          
                          *Julien
      Nguyen (9)
                          
                          28,475
                          
                          *Lung
      C. Tsai (10)
                          
                          30,000
                          
                          *All
      directors and executive officers as a group (8 persons)
    (11)
                          
                          1,218,813
                          
                          4.6%
 ________________
 
 *
                Represents
      less than 1% of our Common
Stock.
 (1)
                The
      persons named in the table have sole voting and investment power with
      respect to all shares of Common Stock shown as beneficially owned by them,
      subject to community property laws where applicable and the information
      contained in the footnotes to this
table.
 (2)
                Based
      on information contained in the Schedule 13G which was filed by this
      stockholder pursuant to Section 13 of the Securities and Exchange Act of
      1934, as amended, on February 17, 2009.  The address of Morgan
      Stanley is 1585 Broadway New York, NY
10036.
 (3)
                Based
      on information contained in the Schedule 13G which was filed by this
      stockholder pursuant to Section 13 of the Securities and Exchange Act of
      1934, as amended, on January 30, 2009.  1414 Avenue of the
      Americas, New York,
NY 10019
 (4)
                Includes
      360,486 shares issuable upon exercise of outstanding options which were
      exercisable at May 1, 2009 or within sixty (60) days thereafter; and
      480,293 shares of Common Stock held by Thinh Q Tran’s family trust and
      28,500 shares of Common Stock held by his three children’s trusts (9,500
      shares each).  Mr. Tran disclaims beneficial ownership of Common
      Stock held by these trusts.
 (5)
                Includes
      50,000 shares issuable upon the exercise of outstanding options which were
      exercisable at May 1, 2009 or within sixty (60) days
      thereafter.
 (6)
                Includes
      82,548 shares issuable upon the exercise of outstanding options which were
      exercisable at May 1, 2009 or within sixty (60) days
      thereafter.
 (7)
                Includes
      35,498 shares issuable upon the exercise of outstanding options which were
      exercisable at May 1, 2009 or within sixty (60) days
      thereafter.
 (8)
              Includes
      10,000 shares issuable upon the exercise of outstanding options which were
      exercisable at May 1, 2009 or within sixty (60) days
      thereafter.
 (9)
              Includes
      26,875 shares issuable upon the exercise of outstanding options which were
      exercisable at May 1, 2008 or within sixty (60) days
      thereafter.
 (10)
              Includes
      30,000 shares issuable upon the exercise of outstanding options which were
      exercisable at May 1, 2009 or within sixty (60) days
      thereafter.
 (11)
              Includes
      627,073 shares issuable upon the exercise of outstanding options held by
      eight officers and directors which were exercisable at May 1, 2009 or
      within sixty (60) days thereafter.
 
 
 Equity
Compensation Plan Information
 
 The
following table sets forth required information for the Company’s equity
compensation plans as of January 31, 2009:
  Number
      of securities to be issued upon exercise of outstanding options, warrants,
      and rights
                        
                        
                        Weighted-average
      exercise price of outstanding options, warrants, and
rights
                        
                        
                        Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities reflected in column
                          (a)(1)(2)(3)Plan
      Category
                        
                        (a)
                        
                        
                        (b)
                        
                        
                        (c)Equity
      Compensation Plans approved by security holders
                        
                        
                        4,457,757
                        
                        
                        $
                        17.50
                        
                        
                        
                        164,810Equity
      Compensation Plans not approved by security holders
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        —Totals
                        
                        
                        4,457,757
                        
                        
                        $
                        17.50
                        
                        
                        
                        164,810
 ______________
 (1)
              The
      2001 Stock Plan contains a provision that automatically increases the
      number of shares reserved for issuance on the first day of the Company’s
      fiscal year of each succeeding year by the lesser of (i) 1,000,000 shares,
      (ii) 4% of our outstanding Common Stock on the first day of the fiscal
      year or (iii) the number of shares determined by the board of
      directors.  On February 1, 2009, the number of securities
      remaining available for future issuance under equity compensation plans
      increased by 1,000,000 shares.
 (2)
              The
      2001 Employee Stock Purchase Plan contains a provision that automatically
      increases the number of shares reserved for issuance on the first day of
      the Company’s fiscal year of each succeeding year by the lesser of (i)
      500,000 shares, (ii) 2% of our outstanding Common Stock on the first day
      of the fiscal year or (iii) the number of shares determined by the board
      of directors.  On February 1, 2009, the number of securities
      remaining available for future issuance under 2001 Employee Stock Purchase
      Plan increased by 300,000 shares.
 (3)
              The
      2003 Director Stock Option Plan was adopted to replace the predecessor
      1994 Director Stock Option Plan which expired in fiscal
    2005.
 
 ITEM 13.
              CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE
 
 Certain
Relationships and Related Transactions
 
 It is the
Company’s policy that all employees, officers and directors must avoid any
activity that is or has the appearance of conflicting with the interests of the
Company.  This policy is included in the Company’s Code of Business
Ethics and Conduct.  The Company conducts a review of all related
party transactions for potential conflict of interest situations on an ongoing
basis.  The Company’s Audit Committee must approve any waiver of the
Code of Ethics for Senior Executives, including related party
transactions.  All waivers to the Code of Business Ethics and Conduct
must be approved by the Company’s Board of Directors or a committee of the Board
of Directors responsible for corporate governance.
 
 Director
Independence
 
 The Board
of Directors has determined that each of Messrs. Almon, Nguyen and Tsai is an
“independent director” within the meaning of Rule 5605(a)(2) of The NASDAQ Stock
Market.
 
 ITEM 14.
              PRINCIPAL
      ACCOUNTING FEES AND SERVICES
 
 Fees
Paid to Independent Registered Public Accounting Firm
 
 The
following table sets forth the fees billed for services rendered by Armanino
McKenna LLP for each of our last two fiscal years.
 
 
  2009
                        
                        
                        2008Audit
      fees (1)
                        
                        
                        2,519,000
                        
                        
                        
                        2,076,000Audit-related
      fees (2)
                        
                        
                        —
                        
                        
                        
                        301,000Tax
      fees (3)
                        
                        
                        357,000
                        
                        
                        
                        299,000Total
                        
                        
                        2,876,000
                        
                        
                        
                        2,676,000
 ______________
 (1)
              Audit
      fees represent fees for professional services provided in connection with
      their audit of the Company’s consolidated financial statements, their
      audit of management’s assessment of the effectiveness of internal control
      over financial reporting and the effectiveness of internal control over
      financial reporting, reviews of the consolidated financial statements
      included in its quarterly reports on Form 10-Q and related statutory and
      regulatory filings.
 (2)
              The
      audit-related fees as of the year ended February 2, 2008 were for services
      related to Company’s registration statement on Form S-1, that are not
      included in the “audit fees”.
 (3)
              Tax
      fees represent fees for professional services related to tax compliance,
      tax advice and tax planning.
 
 Pre-Approval
Policies and Procedures
 
 The
Company’s Audit Committee is responsible for appointing, setting compensation
for and overseeing the work of the Company’s independent registered public
accounting firm.  In connection with these responsibilities, the
Company’s Audit Committee adopted a policy for pre-approving the services and
associated fees of the Company’s independent registered public accounting
firm.  Under this policy, the Audit Committee must pre-approve all
audit and audit related services.  All of the services in fiscal 2008
and 2009 were pre-approved by the Audit Committee.  The policy also
mandates that no engagements of the Company’s independent registered public
accounting firm for non-audit services may be entered into without the express
approval of the Audit Committee.
 
  PART
IV
  ITEM
15.                      
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  Exhibit
  The
following documents are filed as part of this report:
 
 Exhibit No.
                Description31.1
                Certification
      Pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to section
      302 of the Sarbanes-Oxley Act of 2002*31.2
                Certification
      Pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to section
      302 of the Sarbanes-Oxley Act of
2002*
 *     Filed
herewith
  
  SIGNATURES
 
 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 29th day
of May 2009.
  SIGMA
      DESIGNS, INC.By:
                    /s/ Thinh Q.
      TranThinh
      Q. TranChairman
      of the Board,President
      and Chief Executive
Officer
  
 POWER
OF ATTORNEY
 
 KNOW ALL
PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Thinh Q. Tran and Thomas E. Gay III, 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.
 
 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:
  Signature
                      
                      Title
                      
                      Date/s/
      Thinn Q. TranThinh
      Q. Tran
                      
                      Chairman
      of the Board, President, and Chief Executive Officer (Principal Executive
      Officer)
                      
                      May
      29, 2009/s/
      Thomas E. Gay IIIThomas
      E. Gay III
                      
                      Chief
      Financial Officer and Secretary (Principal Financial and Accounting
      Officer)
                      
                      May
      29, 2009/s/
      William J. AlmonWilliam
      J. Almon
                      
                      Director
                      
                      May
      29, 2009/s/
      Julien NguyenJulien
      Nguyen
                      
                      Director
                      
                      May
      29, 2009/s/
      Lung C. TsaiLung
      C. Tsai
                      
                      Director
                      
                      May
      29, 2009