Attached files
| file | filename |
|---|---|
| 8-K/A - FORM 8-K/A - SIGMA DESIGNS INC | sigm20180222_8ka.htm |
Exhibit 99.1
SIGMA DESIGNS, INC.
Unaudited Pro Forma Condensed Consolidated Financial Information
On February 15, 2018, Sigma Designs, Inc. (the “Company”) along with its direct wholly-owned subsidiary, Sigma Designs Technology Singapore Pte. Ltd., a company organized under the laws of Singapore (“Seller”), completed the previously announced sale (the “Transaction”) of all of the issued and outstanding shares of Sigma Designs Israel S.D.I Ltd., a company organized under the laws of Israel and a wholly-owned subsidiary of Seller (“Sigma Israel”), pursuant to the terms of that certain Share Purchase Agreement (the “Purchase Agreement”), dated February 6, 2018, with Integrated Silicon Solution (Cayman), Inc., a company organized under the laws of the Cayman Islands (“Buyer”). Sigma Israel conducts the Company’s Media Connectivity business, consisting primarily of the Company’s HomePNA and G.hn product lines. Pursuant to the Purchase Agreement, Seller sold to Buyer all of the issued and outstanding shares of Sigma Israel for $28,000,000, payable in cash, and adjusted for Sigma Israel’s cash and debt at closing and other adjustments for fluctuations in working capital. The consideration paid at closing and received by the Company was $23,464,101. This amount included a deduction of $335,599 in purchase price adjustments for fluctuations in working capital, and excluded $4,200,000 which is being held in escrow subject to customary adjustments after closing.
The following unaudited pro forma condensed consolidated financial information is based on the historical financial statements of the Company, with pro forma adjustments to reflect the disposition of Sigma Israel pursuant to the Purchase Agreement. Beginning with the quarter ending April 28, 2018, the historical financial results of Sigma Israel for periods prior to the closing of the transactions under the Purchase Agreement will be reflected in the Company’s consolidated financial statements as discontinued operations.
The unaudited pro forma condensed consolidated balance sheet of the Company as of October 28, 2017 is presented as if the disposition of Sigma Israel had occurred on October 28, 2017. The unaudited pro forma condensed consolidated statements of income for the nine months ended October 28, 2017 and the years ended January 28 2017, January 30, 2016, and January 31, 2015, are presented as if the disposition of Sigma Israel had occurred on February 2, 2014, the beginning of the earliest period presented. The unaudited pro forma condensed consolidated financial information and the related notes should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended January 28, 2017, and the Company’s unaudited financial statements and the notes thereto included in the Company’s Quarterly Report on Form 10-Q for the three and nine months ended October 28, 2017.
The unaudited pro forma condensed consolidated financial information has been prepared in conformity with Article 11 of Regulation S-X. In addition, this unaudited pro forma condensed consolidated financial information is based on currently available information and assumptions that the Company believes are reasonable. This unaudited pro forma condensed consolidated financial information is presented for informational purposes only, and does not purport to represent what the Company’s results of operations or financial position would have been had the disposition of Sigma Israel occurred on the dates indicated, or to project the results of operations for any future periods.
SIGMA DESIGNS, INC.
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET |
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October 28, 2017 |
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(In thousands, except share and per share data) |
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Pro Forma |
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||||||||||
| As Reported |
Adjustments (B) |
Pro Forma | ||||||||||
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ASSETS |
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Current assets |
- | |||||||||||
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Cash and cash equivalents |
$ | 69,219 | $ | 23,464 | $ | 92,683 | ||||||
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Short-term marketable securities |
- | - | - | |||||||||
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Restricted cash |
325 | (325 | ) | - | ||||||||
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Accounts receivable |
19,628 | (2,531 | ) | 17,097 | ||||||||
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Inventory |
13,679 | (373 | ) | 13,306 | ||||||||
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Prepaid expenses and other current assets |
7,869 | (551 | ) | 7,318 | ||||||||
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Total current assets |
110,720 | 19,684 | 130,404 | |||||||||
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Long-term marketable securities |
- | - | - | |||||||||
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Software, equipment and leasehold improvements, net |
18,135 | (454 | ) | 17,681 | ||||||||
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Intangible assets, net |
21,957 | (1,288 | ) | 20,669 | ||||||||
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Goodwill |
10,594 | - | 10,594 | |||||||||
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Deferred tax assets |
741 | (545 | ) | 196 | ||||||||
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Long-term investments |
910 | - | 910 | |||||||||
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Other non-current assets |
4,138 | 4,200 | 8,338 | |||||||||
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Total assets |
$ | 167,195 | $ | 21,597 | $ | 188,792 | ||||||
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities |
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Accounts payable |
$ | 14,478 | $ | (281 | ) | $ | 14,197 | |||||
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Accrued compensation and related benefits |
10,020 | (1,206 | ) | 8,814 | ||||||||
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Accrued liabilities |
16,147 | (467 | ) | 15,680 | ||||||||
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Total current liabilities |
40,645 | (1,954 | ) | 38,691 | ||||||||
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Income taxes payable |
12,929 | - | 12,929 | |||||||||
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Deferred tax liabilities |
287 | - | 287 | |||||||||
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Other long-term liabilities |
5,439 | (1,689 | ) | 3,750 | ||||||||
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Total liabilities |
59,300 | (3,643 | ) | 55,657 | ||||||||
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Shareholders’ equity |
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Preferred stock; no par value, 2,000,000 shares authorized; none issued and outstanding |
- | - | - | |||||||||
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Common stock and additional paid-in capital; par value NIS 0.01; 75,048,000 shares authorized; 18,337,360 issued and outstanding as of January 28, 2017 |
518,248 | - | 518,248 | |||||||||
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Treasury stock, at cost, 4,675,749 shares as of January 28, 2017 and January 30, 2016 |
(88,336 | ) | - | (88,336 | ) | |||||||
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Accumulated other comprehensive loss |
(891 | ) | - | (891 | ) | |||||||
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Accumulated deficit |
(321,126 | ) | 25,240 | (295,886 | ) | |||||||
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Total shareholders’ equity |
107,895 | 25,240 | 133,135 | |||||||||
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Total liabilities and shareholders’ equity |
$ | 167,195 | $ | 21,597 | $ | 188,792 | ||||||
SIGMA DESIGNS, INC.
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS |
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NINE MONTHS ENDED OCTOBER 28, 2017 |
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(In thousands, except per share data) |
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Pro Forma |
||||||||||||
| As Reported |
Adjustments (A) |
Pro Forma | ||||||||||
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Net revenue |
112,934 | (17,979 | ) | 94,955 | ||||||||
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Cost of revenue |
58,374 | (6,785 | ) | 51,589 | ||||||||
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Gross profit |
54,560 | (11,194 | ) | 43,366 | ||||||||
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Operating expenses |
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Research and development |
53,380 | (5,765 | ) | 47,615 | ||||||||
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Sales and marketing |
17,498 | (1,700 | ) | 15,798 | ||||||||
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General and administrative |
15,899 | (583 | ) | 15,316 | ||||||||
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Restructuring costs |
2,529 | - | 2,529 | |||||||||
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Impairment of IP, mask sets and design tools |
8,469 | - | 8,469 | |||||||||
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Total operating expenses |
97,775 | (8,048 | ) | 89,727 | ||||||||
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Loss from operations |
(43,215 | ) | (3,146 | ) | (46,361 | ) | ||||||
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Gain on sale of development project |
0 | - | - | |||||||||
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Impairment of privately-held investments, net of gain on sale |
0 | - | - | |||||||||
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Interest and other income (expenses), net |
(1,076 | ) | (419 | ) | (1,495 | ) | ||||||
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Loss before income taxes |
(44,291 | ) | (3,565 | ) | (47,856 | ) | ||||||
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Provision for income taxes |
2,329 | (591 | ) | 1,738 | ||||||||
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Net loss |
(46,620 | ) | (2,974 | ) | (49,594 | ) | ||||||
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Net loss per common share: |
||||||||||||
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Basic |
38,359 | 38,632 | 38,632 | |||||||||
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Diluted |
38,632 | 38,632 | 38,632 | |||||||||
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Shares used in computing net loss per share: |
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Basic |
$ | (1.22 | ) | $ | (0.08 | ) | $ | (1.28 | ) | |||
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Diluted |
$ | (1.21 | ) | $ | (0.08 | ) | $ | (1.28 | ) | |||
SIGMA DESIGNS, INC.
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS |
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FISCAL YEAR ENDED JANUARY 28, 2017 |
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(In thousands, except per share data) |
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Pro Forma |
||||||||||||
| As Reported |
Adjustments (A) |
Pro Forma | ||||||||||
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Net revenue |
220,544 | (46,013 | ) | 174,531 | ||||||||
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Cost of revenue |
114,565 | (19,379 | ) | 95,186 | ||||||||
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Gross profit |
105,979 | (26,634 | ) | 79,345 | ||||||||
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Operating expenses |
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Research and development |
73,993 | (8,189 | ) | 65,804 | ||||||||
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Sales and marketing |
23,300 | (3,356 | ) | 19,944 | ||||||||
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General and administrative |
18,860 | (983 | ) | 17,877 | ||||||||
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Restructuring costs |
- | - | - | |||||||||
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Impairment of IP, mask sets and design tools |
1,148 | - | 1,148 | |||||||||
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Total operating expenses |
117,301 | (12,528 | ) | 104,773 | ||||||||
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Loss from operations |
(11,322 | ) | (14,106 | ) | (25,428 | ) | ||||||
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Gain on sale of development project |
- | - | - | |||||||||
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Impairment of privately-held investments, net of gain on sale |
(885 | ) | - | (885 | ) | |||||||
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Interest and other income, net |
539 | (270 | ) | 269 | ||||||||
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Loss before income taxes |
(11,668 | ) | (14,376 | ) | (26,044 | ) | ||||||
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Provision for income taxes |
6,647 | (151 | ) | 6,496 | ||||||||
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Net loss |
(18,315 | ) | (14,225 | ) | (32,540 | ) | ||||||
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Net loss per common share: |
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Basic |
37,429 | 37,429 | 37,429 | |||||||||
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Diluted |
37,429 | 37,429 | 37,429 | |||||||||
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Shares used in computing net loss per share: |
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Basic |
$ | (0.49 | ) | $ | (0.38 | ) | $ | (0.87 | ) | |||
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Diluted |
$ | (0.49 | ) | $ | (0.38 | ) | $ | (0.87 | ) | |||
SIGMA DESIGNS, INC.
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS |
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FISCAL YEAR ENDED JANUARY 30, 2016 |
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(In thousands, except per share data) |
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Pro Forma |
||||||||||||
| As Reported |
Adjustments (A) |
Pro Forma | ||||||||||
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Net revenue |
227,250 | (54,707 | ) | 172,543 | ||||||||
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Cost of revenue |
114,090 | (22,247 | ) | 91,843 | ||||||||
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Gross profit |
113,160 | (32,460 | ) | 80,700 | ||||||||
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Operating expenses |
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Research and development |
68,784 | (8,521 | ) | 60,263 | ||||||||
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Sales and marketing |
22,877 | (4,020 | ) | 18,857 | ||||||||
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General and administrative |
20,862 | (1,018 | ) | 19,844 | ||||||||
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Restructuring costs |
9 | - | 9 | |||||||||
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Impairment of IP, mask sets and design tools |
1,783 | (1,365 | ) | 418 | ||||||||
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Total operating expenses |
114,315 | (14,924 | ) | 99,391 | ||||||||
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Loss from operations |
(1,155 | ) | (17,536 | ) | (18,691 | ) | ||||||
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Gain on sale of development project |
7,551 | - | 7,551 | |||||||||
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Impairment of privately-held investments, net of gain on sale |
159 | - | 159 | |||||||||
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Interest and other income, net |
794 | 741 | 1,535 | |||||||||
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(Loss) income before income taxes |
7,349 | (16,795 | ) | (9,446 | ) | |||||||
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Provision for income taxes |
7,191 | (2,160 | ) | 5,031 | ||||||||
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Net (loss) income |
158 | (14,635 | ) | (14,477 | ) | |||||||
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Net (loss) income per common share: |
||||||||||||
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Basic |
35,890 | 35,890 | 35,890 | |||||||||
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Diluted |
36,669 | 36,669 | 35,890 | |||||||||
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Shares used in computing net (loss) income per share: |
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Basic |
$ | 0.00 | $ | (0.41 | ) | $ | (0.40 | ) | ||||
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Diluted |
$ | 0.00 | $ | (0.40 | ) | $ | (0.40 | ) | ||||
SIGMA DESIGNS, INC.
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS |
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FISCAL YEAR ENDED JANUARY 31, 2015 |
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(In thousands, except per share data) |
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Pro Forma |
||||||||||||
| As Reported |
Adjustments (A) |
Pro Forma | ||||||||||
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Net revenue |
188,313 | (77,312 | ) | 111,001 | ||||||||
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Cost of revenue |
92,967 | (29,452 | ) | 63,515 | ||||||||
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Gross profit |
95,346 | (47,860 | ) | 47,486 | ||||||||
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Operating expenses |
||||||||||||
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Research and development |
67,482 | (10,310 | ) | 57,172 | ||||||||
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Sales and marketing |
22,290 | (5,188 | ) | 17,102 | ||||||||
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General and administrative |
19,641 | (1,388 | ) | 18,253 | ||||||||
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Restructuring costs |
999 | (842 | ) | 157 | ||||||||
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Impairment of IP, mask sets and design tools |
2,811 | - | 2,811 | |||||||||
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Total operating expenses |
113,223 | (17,728 | ) | 95,495 | ||||||||
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Loss from operations |
(17,877 | ) | (30,132 | ) | (48,009 | ) | ||||||
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Gain on sale of development project |
- | - | - | |||||||||
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Impairment of privately-held investments, net of gain on sale |
(602 | ) | - | (602 | ) | |||||||
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Interest and other income, net |
1,771 | 1,587 | 3,358 | |||||||||
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Loss before income taxes |
(16,708 | ) | (28,545 | ) | (45,253 | ) | ||||||
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Provision for income taxes |
4,993 | (3,618 | ) | 1,375 | ||||||||
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Net loss |
(21,701 | ) | (24,927 | ) | (46,628 | ) | ||||||
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Net loss per common share: |
||||||||||||
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Basic |
34,693 | 34,693 | 34,693 | |||||||||
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Diluted |
34,693 | 34,693 | 34,693 | |||||||||
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Shares used in computing net loss per share: |
||||||||||||
|
Basic |
$ | (0.63 | ) | $ | (0.72 | ) | $ | (1.34 | ) | |||
|
Diluted |
$ | (0.63 | ) | $ | (0.72 | ) | $ | (1.34 | ) | |||
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
1. BASIS OF PRESENTATION
The Company’s historical consolidated financial statements have been adjusted in the unaudited pro forma condensed consolidated financial information to present events that are (i) directly attributable to Sigma Israel, (ii) factually supportable and (iii) are expected to have a continuing impact on the Company’s consolidated results following the Sigma Israel disposition. The pro forma condensed consolidated statements of income do not reflect an estimated gain or loss on the sale of Sigma Israel.
2. PRO FORMA ADJUSTMENTS
The following pro forma adjustments are included in the Company’s unaudited pro forma condensed consolidated financial information:
|
(A) |
These adjustments reflect the elimination of revenue and expenses associated with Sigma Israel, including corporate support resources assigned to the business unit. |
|
(B) |
These adjustments reflect the disposition of Sigma Israel as if the transaction occurred on October 28, 2017, which was sold for $28.0 million in cash and adjusted for Sigma Israel’s cash and debt at closing and other adjustments for fluctuations in working capital of approximately $0.3 million, less estimated transaction costs. Transaction costs are estimated to be approximately $0.4 million. Approximately $4.2 million of cash will be held in escrow for a period of time following the closing as a source of recovery for indemnification claims by the Buyer. Retained earnings reflect the estimated after-tax gain from the transaction. Income taxes were determined to be negligible and not included as part of the pro form adjustments. |