Attached files
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The following unaudited pro forma condensed combined financial information combines the historical consolidated financial statements of GigOptix and Endwave as if the merger had occurred on January 1, 2010.
Pro Forma Combined Information
The following unaudited pro forma condensed combined balance sheet as of December 31, 2010 and April 3, 2011 is based on (i) the historical consolidated balance sheets of GigOptix as of December 31, 2010 and April 3, 2011 and (ii) the historical consolidated balance sheets of Endwave as of December 31, 2010 and March 31, 2011. The following unaudited pro forma condensed combined statements of operations for the year ended December 31, 2010 and the quarter ended April 3, 2011 are based on (i) the historical consolidated statements of operations of GigOptix for the year ended December 31, 2010 and the quarter ended April 3, 2011 and (ii) the historical consolidated statements of operations of Endwave for the year ended December 31, 2010 and the quarter ended March 31, 2011.
The unaudited pro forma condensed combined financial information also reflects the effects of acquiring Endwave for an aggregate estimated consideration of approximately 9.2 million shares of GigOptix common stock based on the closing GigOptix share price of $2.65 on June 16, 2011. GigOptix issued a total of 9,128,502 shares of its common stock (a correction of the previously reported 9,128,546 shares) in the Merger representing approximately 42.45% of GigOptix’ outstanding common stock. The foregoing amounts take into account reductions in the number of shares issued to employees and directors of Endwave for any applicable withholding requirements for federal, state and other taxes.
Pro forma combined adjustments and the assumptions related to the Endwave acquisition were prepared using the purchase method of accounting and are based on the assumption that the acquisition of Endwave took place as of December 31, 2010 for purposes of the pro forma condensed combined balance sheets and January 1, 2010 for purposes of the pro forma condensed combined statements of operations.
In accordance with the purchase method of accounting, the actual consolidated financial statements of GigOptix will reflect the Endwave acquisition only from and after the date of acquisition.
The unaudited pro forma condensed combined financial information included herein does not give effect to any potential cost reductions or other operating efficiencies that could result from the Endwave acquisition, including but not limited to those associated with potential (i) reductions of corporate overhead, (ii) eliminations of duplicate functions and (iii) increased operational efficiencies through the adoption of best practices and capabilities from each company.
The pro forma condensed combined financial information has been prepared in accordance with the rules and regulations of the SEC. The pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of the combined operating results or financial position that would have occurred if such transactions had been consummated on the dates and in accordance with the assumptions described herein, nor is it necessarily indicative of future operating results or financial position.
The pro forma condensed combined financial information below should be read together with GigOptix’s and Endwave’s historical consolidated financial statements and accompanying notes which have been previously filed with the SEC.
GIGOPTIX, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of December 31, 2010
| GigOptix | Endwave | Pro Forma Combined Adjustments |
Pro Forma Combined |
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| (in thousands) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Assets |
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| Current assets: |
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| Cash and cash equivalents |
$ | 4,502 | $ | 7,147 | $ | — | $ | 11,649 | ||||||||
| Short-term investments |
— | 16,380 | 16,380 | |||||||||||||
| Accounts receivable, net |
5,366 | 2,600 | 7,966 | |||||||||||||
| Inventory |
1,609 | 3,719 | 5,328 | |||||||||||||
| Other current assets |
405 | 554 | 959 | |||||||||||||
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| Total current assets |
11,882 | 30,400 | 42,282 | |||||||||||||
| Property and equipment, net |
3,717 | 2,048 | 5,765 | |||||||||||||
| Goodwill, intangible assets, net and in-process research and development |
11,268 | — | 6,431 | (A) | 17,699 | |||||||||||
| Restricted cash |
356 | — | 356 | |||||||||||||
| Other assets |
653 | 26 | 679 | |||||||||||||
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| Total assets |
$ | 27,876 | $ | 32,474 | $ | 6,431 | (A) | $ | 66,781 | |||||||
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| Liabilities and stockholders’ equity |
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| Current liabilities: |
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| Accounts payable |
$ | 2,960 | $ | 1,837 | $ | — | $ | 4,797 | ||||||||
| Accrued and other current liabilities |
4,761 | 1,560 | 6,321 | |||||||||||||
| Line of credit |
2,999 | — | 2,999 | |||||||||||||
| Restructuring liabilities, short-term |
62 | 431 | 493 | |||||||||||||
| Long-term debt, current portion |
227 | — | 227 | |||||||||||||
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| Total current liabilities |
11,009 | 3,828 | 14,837 | |||||||||||||
| Pension liabilities |
211 | — | 211 | |||||||||||||
| Restructuring liabilities, long-term |
— | 234 | 234 | |||||||||||||
| Other long-term liabilities |
1,266 | 124 | 1,390 | |||||||||||||
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| Total liabilities |
12,486 | 4,186 | — | 16,672 | ||||||||||||
| Stockholders’ equity: |
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| Common stock |
12 | 10 | (1) | (B) | 21 | |||||||||||
| Additional paid-in capital |
88,553 | 317,291 | (273,811) | (B) | 132,033 | |||||||||||
| Other comprehensive income (loss) |
178 | (1 | ) | 1 | (B) | 178 | ||||||||||
| Accumulated deficit |
(73,353 | ) | (289,012 | ) | 280,242 | (B) | (82,123 | ) | ||||||||
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| Total stockholders’ equity |
15,390 | 28,288 | 6,431 | 50,109 | ||||||||||||
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| Total liabilities and stockholders’ equity |
$ | 27,876 | $ | 32,474 | $ | 6,431 | $ | 66,781 | ||||||||
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See accompanying notes to unaudited pro forma condensed combined financial information.
GIGOPTIX, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2010
| GigOptix | Endwave | Pro Forma Combined Adjustments |
Pro Forma Combined |
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| (in thousands, except per share data) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Revenue |
$ | 26,876 | $ | 16,716 | $ | — | $ | 43,592 | ||||||||
| Cost of revenue |
12,551 | 14,002 | 516 | (C) | 27,069 | |||||||||||
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| Gross profit |
14,325 | 2,714 | 516 | 16,523 | ||||||||||||
| Operating expenses: |
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| Research and development |
8,659 | 4,607 | — | 13,266 | ||||||||||||
| Selling, general and administrative |
8,889 | 6,105 | 162 | (C) | 15,156 | |||||||||||
| Restructuring expense |
388 | 49 | — | 437 | ||||||||||||
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| Total operating expenses |
17,936 | 10,761 | 162 | 28,859 | ||||||||||||
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| Loss from operations |
(3,611 | ) | (8,047 | ) | (678 | ) | (12,336 | ) | ||||||||
| Interest and other expense, net |
(698 | ) | (45 | ) | — | (743 | ) | |||||||||
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| Net loss before provision for income taxes |
(4,309 | ) | (8,092 | ) | (678 | ) | (13,079 | ) | ||||||||
| Provision for income taxes |
51 | — | — | 51 | ||||||||||||
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| Net loss |
$ | (4,360 | ) | $ | (8,092 | ) | $ | (678 | ) | $ | (13,130 | ) | ||||
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| Net loss per common share: |
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| Basic and diluted |
$ | (0.41 | ) | $ | (0.83 | ) | $ | (0.75 | ) | |||||||
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| Weighted-average number of shares used to compute net loss per share: |
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| Basic and diluted |
10,689 | 9,774 | (2,908 | ) (D) | 17,555 | |||||||||||
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See accompanying notes to unaudited pro forma condensed combined financial information.
GIGOPTIX, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of April 3, 2011
| GigOptix | Endwave | Pro Forma Combined Adjustments |
Pro Forma Combined |
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| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ | 4,137 | $ | 9,342 | $ | 13,479 | ||||||||||
| Short-term investments |
— | 11,880 | 11,880 | |||||||||||||
| Accounts receivable, net |
5,251 | 1,254 | 6,505 | |||||||||||||
| Inventories |
1,649 | 3,751 | 5,400 | |||||||||||||
| Prepaid and other current assets |
414 | 389 | 803 | |||||||||||||
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| Total current assets |
11,451 | 26,616 | — | 38,067 | ||||||||||||
| Property and equipment, net |
3,406 | 1,932 | 5,338 | |||||||||||||
| Goodwill, intangible assets, net and in-process research and development |
11,104 | — | 6,331 | (A) | 17,435 | |||||||||||
| Restricted cash |
256 | — | 256 | |||||||||||||
| Other assets |
595 | 13 | 608 | |||||||||||||
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| Total assets |
$ | 26,812 | $ | 28,561 | $ | 6,331 | $ | 61,704 | ||||||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current liabilities: |
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| Accounts payable |
$ | 2,896 | $ | 1,561 | $ | 4,457 | ||||||||||
| Accrued and other current liabilities |
5,559 | 1,300 | 6,859 | |||||||||||||
| Line of credit |
2,642 | — | 2,642 | |||||||||||||
| Restructuring liabilities, short-term |
34 | 926 | 960 | |||||||||||||
| Long-term debt, current portion |
138 | — | 138 | |||||||||||||
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| Total current liabilities |
11,269 | 3,787 | — | 15,056 | ||||||||||||
| Pension liabilities |
215 | — | 215 | |||||||||||||
| Restructuring liabilities, long-term |
— | 115 | 115 | |||||||||||||
| Other long term liabilities |
1,212 | 124 | 1,336 | |||||||||||||
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| Total liabilities |
12,696 | 4,026 | — | 16,722 | ||||||||||||
| Commitments and contingencies |
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| Stockholders’ Equity |
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| Preferred stock |
— | — | — | |||||||||||||
| Common stock |
12 | 10 | (1) | (B) | 21 | |||||||||||
| Additional paid-in capital |
90,795 | 317,403 | (273,810) | (B) | 134,388 | |||||||||||
| Accumulated deficit |
(76,795 | ) | (292,883 | ) | 280,142 | (B) | (89,536 | ) | ||||||||
| Accumulated other comprehensive income |
104 | 5 | 109 | |||||||||||||
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| Total stockholders’ equity |
14,116 | 24,535 | 6,331 | 44,982 | ||||||||||||
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| Total liabilities and stockholders’ equity |
$ | 26,812 | $ | 28,561 | $ | 6,331 | $ | 61,704 | ||||||||
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See accompanying notes to unaudited pro forma condensed combined financial information.
GIGOPTIX, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Quarter Ended April 3, 2011
| GigOptix | Endwave | Pro Forma Combined Adjustments |
Pro Forma Combined |
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| Revenue |
$ | 7,662 | $ | 1,237 | $ | — | $ | 8,899 | ||||||||
| Cost of revenue |
3,831 | 1,036 | 61 | (C) | 4,928 | |||||||||||
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| Gross profit |
3,831 | 201 | (61 | ) | 3,971 | |||||||||||
| Operating expenses: |
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| Research and development expense |
2,390 | 1,327 | — | 3,717 | ||||||||||||
| Selling, general and administrative expense |
2,623 | 1,927 | 40 | (C) | 4,590 | |||||||||||
| Restructuring expense |
— | 804 | — | 804 | ||||||||||||
| Merger-related expense |
1,107 | — | — | 1,107 | ||||||||||||
| Shareholder settlement expense |
1,064 | — | — | 1,064 | ||||||||||||
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| Total operating expenses |
7,184 | 4,058 | 40 | 11,282 | ||||||||||||
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| Loss from operations |
(3,353 | ) | (3,857 | ) | (101 | ) | (7,311 | ) | ||||||||
| Interest and other expense, net |
(84 | ) | (7 | ) | — | (91 | ) | |||||||||
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| Net loss before income taxes |
(3,437 | ) | (3,864 | ) | (101 | ) | (7,402 | ) | ||||||||
| Provision for income taxes |
5 | 7 | — | 12 | ||||||||||||
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| Net loss |
$ | (3,442 | ) | $ | (3,871 | ) | $ | (101 | ) | $ | (7,414 | ) | ||||
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| Net loss per share - basic and diluted |
$ | (0.28 | ) | $ | (0.39 | ) | $ | (0.39 | ) | |||||||
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| Shares used in computing basic and diluted net loss per share |
12,255 | 9,861 | (2,995 | ) (D) | 19,121 | |||||||||||
See accompanying notes to unaudited pro forma condensed combined financial information.
Notes to Unaudited Pro Forma Condensed Combined Financial Information
(1) Basis of Purchase Price Allocation
The purchase consideration for the merger of approximately $24.2 million consisted of the fair value of 9,128,502 shares of GigOptix common stock issued to Endwave’s stockholders, at a per share price of $2.65, which reflects the closing price of the Company’s common stock as of June 17, 2011.
The total purchase price of $24.2 million was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition as follows (in thousands):
| Tangible assets acquired: |
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| Cash and cash equivalents |
$ | 8,824 | ||
| Short-term investments |
9,946 | |||
| Accounts receivable |
334 | |||
| Inventory |
1,228 | |||
| Other current assets |
159 | |||
| Property, plant and equipment |
967 | |||
| Other assets |
73 | |||
| Liabilities assumed: |
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| Accounts payable |
(702 | ) | ||
| Accrued compensation |
(415 | ) | ||
| Accrued warranty |
(496 | ) | ||
| Accrued restructuring |
(2,593 | ) | ||
| Other current liabilities |
(120 | ) | ||
| Other long-term liabilities |
(124 | ) | ||
| Identifiable intangible assets acquired: |
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| Customer relationships |
720 | |||
| Customer backlog |
273 | |||
| Developed technology |
1,455 | |||
| Trade name |
83 | |||
| Goodwill acquired: |
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| Goodwill |
4,578 | |||
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| Total purchase price |
$ | 24,190 | ||
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(2) Pro Forma Combined Adjustments
The following pro forma combined adjustments have been reflected in the unaudited pro forma condensed combined financial information. These adjustments give effect to pro forma events that are (i) directly attributable to the Endwave merger, (ii) factually supportable and (iii) with respect to the statement of operations, expected to have continuing impact on the combined company.
Balance Sheet Adjustments
A) To reflect the establishment of identifiable intangible assets of $2.5 million net of amortization and goodwill of $4.6 million. For purposes of the pro forma condensed combined statement of operations, it was assumed that the $2.5 million is related to the following intangible assets: customer relationships, customer backlog, developed technology and trade name with assumed lives ranging between 0.3 to 6 years.
(B) To reflect the elimination of Endwave’s stockholders’ equity balances as of December 31, 2010 and to reflect the issuance of 9.2 million shares of GigOptix common stock (valued at $24.2 million for purposes of this pro forma combined information based on the GigOptix stock price on June 17, 2011) as consideration delivered to acquire Endwave.
Income Statement Adjustments
(C) To reflect the expense associated with the amortization of intangibles.
(D) To reflect (i) the elimination of Endwave’s basic common shares outstanding, net of (ii) the assumed issuance of basic common shares as a result of the transaction, assuming this transaction occurred at the beginning of the period.
For purposes of preparing these pro forma condensed combined financial statements, the fair value of Endwave’s inventory, accounts receivable and property, plant and equipment were estimated to approximate their carrying value on the date of acquisition.