Attached files
| file | filename |
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| 8-K - 8-K - INTEGRATED DEVICE TECHNOLOGY INC | idti8-kpmcxsierra.htm |
Exhibit 99.1
Integrated Device Technology, Inc. | |||||||||||
Unaudited Pro Forma Condensed Combined Statement of Operations | |||||||||||
Twelve Months Ended March 31, 2013 | |||||||||||
As Reported | Pro Forma Adjustments | Pro Forma | |||||||||
(in thousands, except per share amounts) | |||||||||||
Revenues | $ | 487,236 | $ | (1,479 | ) | a | $ | 485,757 | |||
Cost of revenues | 217,636 | (1,194 | ) | a | 216,442 | ||||||
Gross profit | 269,600 | (285 | ) | 269,315 | |||||||
Operating expenses: | |||||||||||
Research and development | 169,833 | (11,196 | ) | a | 158,637 | ||||||
Selling, general and administrative | 125,684 | (743 | ) | a | 124,941 | ||||||
Total operating expenses | 295,517 | (11,939 | ) | 283,578 | |||||||
Operating income (loss) | (25,917 | ) | 11,654 | (14,263 | ) | ||||||
Other-than-temporary impairment loss on investments | (1,708 | ) | (1,708 | ) | |||||||
Gain on divestiture | 7,986 | 7,986 | |||||||||
Interest income and other, net | 1,708 | 1,708 | |||||||||
Income (loss) from continuing operations before income taxes | (17,931 | ) | 11,654 | (6,277 | ) | ||||||
Provision (benefit) for income taxes | (2,007 | ) | 173 | k | (1,834 | ) | |||||
Net income (loss) from continuing operations | $ | (15,924 | ) | $ | 11,481 | $ | (4,443 | ) | |||
Basic net income (loss) per share - continuing operations | $ | (0.11 | ) | $ | (0.03 | ) | |||||
Diluted net income (loss) per share - continuing operations | $ | (0.11 | ) | $ | (0.03 | ) | |||||
Weighted average shares: | |||||||||||
Basic | 144,014 | 144,014 | |||||||||
Diluted | 144,014 | 144,014 | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Integrated Device Technology, Inc. | |||||||||||
Unaudited Pro Forma Condensed Combined Balance Sheets | |||||||||||
As of March 31, 2013 | |||||||||||
As Reported | Pro Forma Adjustments | Pro Forma | |||||||||
(in thousands) | |||||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 130,837 | $ | 96,098 | b | $ | 226,935 | ||||
Short-term investments | 166,333 | 166,333 | |||||||||
Accounts receivable, net | 62,083 | 62,083 | |||||||||
Inventories | 56,555 | (653 | ) | c | 55,902 | ||||||
Income tax receivable | 192 | 192 | |||||||||
Prepayments and other current assets | 24,505 | 24,505 | |||||||||
Total current assets | 440,505 | 95,445 | 535,950 | ||||||||
Property, plant and equipment, net | 74,988 | (1,242 | ) | d | 73,746 | ||||||
Goodwill | 144,924 | (7,339 | ) | e | 137,585 | ||||||
Acquisition-related intangible assets, net | 48,602 | 48,602 | |||||||||
Deferred non-current tax assets | 671 | 671 | |||||||||
Other assets | 18,889 | (338 | ) | f | 18,551 | ||||||
Total Assets | $ | 728,579 | $ | 86,526 | $ | 815,105 | |||||
Liabilities and stockholders' equity | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | 23,244 | $ | 23,244 | |||||||
Accrued compensation and related expenses | 21,090 | 1,458 | h,i | 22,548 | |||||||
Deferred income on shipments to distributors | 14,539 | 14,539 | |||||||||
Deferred tax liabilities | 1,000 | 1,000 | |||||||||
Other accrued liabilities | 14,652 | 1,514 | g | 16,166 | |||||||
Total current liabilities | 74,525 | 2,972 | 77,497 | ||||||||
Deferred tax liabilities | 1,552 | 1,552 | |||||||||
Long-term income tax payable | 454 | 454 | |||||||||
Other long-term liabilities | 22,022 | 22,022 | |||||||||
Total liabilities | 98,553 | 2,972 | 101,525 | ||||||||
Stockholders' equity: | |||||||||||
Preferred stock | — | — | |||||||||
Common stock | 146 | 146 | |||||||||
Additional paid-in capital | 2,407,998 | 2,407,998 | |||||||||
Treasury stock at costs | (977,296 | ) | (977,296 | ) | |||||||
Accumulated deficit | (802,308 | ) | 83,554 | j | (718,754 | ) | |||||
Accumulated other comprehensive income | 1,486 | 1,486 | |||||||||
Total stockholders' equity | 630,026 | 83,554 | 713,580 | ||||||||
Total liabilities and stockholders' equity | $ | 728,579 | $ | 86,526 | $ | 815,105 | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Note 1. Description of Transaction
On July 12, 2013, Integrated Device Technology, Inc. and Integrated Device Technology (Malaysia) Sdn. Bhd., a wholly-owned subsidiary of IDT (collectively “IDT”), completed the sale of certain assets of its PCI Express ("PCIe") enterprise flash controller business to PMC-Sierra, Inc., a Delaware corporation (“PMC”), for approximately $96 million in cash.
Pursuant to the terms of the Asset Purchase Agreement (the "Purchase Agreement") by and among IDT and PMC, dated May 29, 2103, IDT sold (i) substantially all of the assets that were used by IDT and its subsidiaries in the business of designing, developing, manufacturing, testing, marketing, supporting, maintaining, distributing, provisioning and selling non-volatile memory (flash) controllers and (ii) all technology and intellectual property rights owned by IDT or any of its subsidiaries and used exclusively in, or developed exclusively for use in, (a) switching circuits having the primary function of flexible routing of data from/to multiple switch interface ports, where all switch interface ports conform to the PCIe protocol, or (b) circuits having the primary function of executing all of the capturing, re-timing, re-generating and re-transmitting PCIe signals to help extend the physical reach of the signals in a system (the “Acquisition”).
In connection with the closing of the Acquisition, the license agreement that was entered into by IDT and a subsidiary of PMC simultaneously with the Purchase Agreement, whereby IDT will license certain intellectual property rights and technology to PMC, and PMC will license back to IDT certain of the intellectual property rights and technology acquired by PMC in the Acquisition, became effective.
In connection with the closing of the Acquisition, IDT and PMC entered into (a) a transition services agreement and (b) a supply agreement, whereby IDT will manufacture certain products for PMC.
Additional details regarding the Acquisition are provided in the related Current Report on Form 8-K previously filed by IDT on May 29, 2013.
Note 2. Pro Forma Adjustments
The accompanying unaudited pro forma condensed consolidated financial statements have been prepared to illustrate the effect of the Purchase Agreement on the Company’s historical results of operations and financial position. The accompanying unaudited pro forma condensed consolidated statements of operations are represented as if the transaction described in Note 1 had occurred on April 2, 2012 (the beginning of fiscal 2013). The unaudited pro forma condensed consolidated balance sheet is presented as if the transaction had occurred on March 31, 2013 (the end of fiscal 2013). The actual effect of the transaction could differ from the pro forma adjustments presented here. However, management believes that the assumptions used and the adjustments made are reasonable under the circumstances and given the information available.
These unaudited pro forma condensed consolidated financial statements are presented for illustrative purpose only and not necessarily indicative of the operating results or the financial position that would have been achieved had the sale been consummated as of the dates indicated or of the results that may be obtained in the future. These unaudited pro forma condensed consolidated financial statements and accompanying notes should be read together with the Company’s audited consolidated financial statements and accompanying notes as of and for the year ended March 31, 2013, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2013.
The pro forma adjustments are as follows:
a. To eliminate the revenues, cost of revenues and operating expenses which the Company believes are directly attributable to the divested business.
b. To record the cash consideration received from PMC.
c. To eliminate the inventory sold to PMC.
d. To eliminate fixed assets and photo masks transferred to PMC.
e. To eliminate the goodwill allocated to the divested business.
f. To accelerate amortization of prepaid assets due to the divestiture.
g. To accrue for the estimated transaction costs associated with the sale.
h. To accrue employee retention liabilities of $1.6 million.
i. To record the transfer of $0.2 million in employee payroll liabilities to PMC.
j. To record the preliminary gain on sale of IDT's PCIe enterprise flash controller business assets as if the transaction had benn consummated on March 31, 2013:
(in thousands) | ||||
Proceeds from sale | $ | 100,000 | ||
Purchase consideration adjustment for employee liabilities in Italy | (155 | ) | ||
Purchase consideration adjustment for retention payments | (3,754 | ) | ||
Other adjustments | 8 | |||
Net consideration | 96,098 | |||
Inventories sold | (653 | ) | ||
Accelerate amortization of prepaid assets | (338 | ) | ||
Fixed assets sold | (1,242 | ) | ||
Goodwill allocated | (7,339 | ) | ||
Employee liabilities transferred to PMC | 155 | |||
Accrued retention expense | (280 | ) | ||
Post close incentive accrued by IDT | (1,334 | ) | ||
Accrued Brokers Fee | (1,442 | ) | ||
Accrued legal costs Q2FY14 | (50 | ) | ||
Accrued other costs Q2FY14 | (23 | ) | ||
Net gain on divestiture | $ | 83,554 | ||
k. To record the tax effects related to the divestiture.