Attached files
| file | filename |
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| 8-K/A - FORM 8-K/A - SIGMA DESIGNS INC | sigm20180424_8ka.htm |
Exhibit 99.1
SIGMA DESIGNS, INC.
Unaudited Pro Forma Condensed Consolidated Financial Information
On April 18, 2018, Sigma Designs, Inc., a corporation incorporated in the State of California (the “Company” or “Sigma”) completed the previously announced sale of its Z-Wave business (the “Transaction”) to Silicon Laboratories Inc. (“Silicon Laboratories”). The Transaction was completed pursuant to the terms of the Agreement and Plan of Merger, dated as of December 7, 2017 (the “Agreement”), by and among Silicon Laboratories, Seguin Merger Subsidiary, Inc., and Sigma. Pursuant to the Agreement, Sigma sold all of the assets which relate to Sigma’s Z-Wave business, including all of Sigma’s equity interest in certain of its subsidiaries engaged in the Z-Wave business, to Silicon Laboratories for $240 million in cash and the assumption by Silicon Laboratories of Sigma’s liabilities related to its Z-Wave business.
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 the Sigma Z-Wave business pursuant to the Agreement. Beginning with the year ended February 3, 2018, the historical financial results of the Sigma Z-Wave business for periods prior to the closing of the transactions under the Agreement have been reflected in the Company’s consolidated financial statements as discontinued operations.
The unaudited pro forma condensed consolidated balance sheet of the Company as of February 3, 2018 is presented as if the disposition of the Sigma Z-Wave business had occurred on February 3, 2018. The unaudited pro forma condensed consolidated statements of income for the years ended February 3, 2018, January 28, 2017, and January 30, 2016, are presented as if the disposition of the Sigma Z-Wave business had occurred on February 1, 2015, 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 February 3, 2018.
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 the Sigma Z-Wave business occurred on the dates indicated, or to project the results of operations for any future periods.
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SIGMA DESIGNS, INC. |
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET |
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February 3, 2018 |
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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 |
$ | 40,628 | $ | 240,000 | $ | 280,628 | ||||||
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Short-term marketable securities |
- | - | - | |||||||||
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Restricted cash |
335 | - | 335 | |||||||||
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Accounts receivable |
17,120 | (6,416 | ) | 10,704 | ||||||||
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Inventory |
14,064 | (10,325 | ) | 3,739 | ||||||||
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Prepaid expenses and other current assets |
7,898 | (652 | ) | 7,246 | ||||||||
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Total current assets |
80,045 | 222,607 | 302,652 | |||||||||
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Long-term marketable securities |
- | - | - | |||||||||
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Software, equipment and leasehold improvements, net |
6,178 | (1,478 | ) | 4,700 | ||||||||
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Intangible assets, net |
4,630 | (803 | ) | 3,827 | ||||||||
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Goodwill |
- | - | - | |||||||||
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Deferred tax assets |
770 | (201 | ) | 569 | ||||||||
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Long-term investments |
- | - | - | |||||||||
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Other non-current assets |
4,467 | (8 | ) | 4,459 | ||||||||
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Total assets |
$ | 96,090 | $ | 220,117 | $ | 316,207 | ||||||
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities |
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Accounts payable |
$ | 15,864 | $ | (5,602 | ) | $ | 10,262 | |||||
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Accrued compensation and related benefits |
6,512 | (1,529 | ) | 4,983 | ||||||||
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Accrued liabilities |
14,679 | 3,741 | 18,420 | |||||||||
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Total current liabilities |
37,055 | (3,390 | ) | 33,665 | ||||||||
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Income taxes payable |
15,708 | 1,142 | 16,850 | |||||||||
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Deferred tax liabilities |
38 | - | 38 | |||||||||
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Other long-term liabilities |
3,169 | (16 | ) | 3,153 | ||||||||
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Total liabilities |
55,970 | (2,264 | ) | 53,706 | ||||||||
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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; no par value; 100,000,000 shares authorized; 44,183,017 issued and 39,462,268 oustanding as of February 3, 2018 and 42,806,279 issued and 38,130,530 outstanding as of January 28, 2017 |
522,985 | - | 522,985 | |||||||||
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Treasury stock, at cost, 4,675,749 shares as of February 3, 2018 and January 28, 2017 |
(88,336 | ) | - | (88,336 | ) | |||||||
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Accumulated other comprehensive loss |
18 | - | 18 | |||||||||
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Accumulated deficit |
(394,547 | ) | 222,381 | (172,166 | ) | |||||||
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Total shareholders’ equity |
40,120 | 222,381 | 262,501 | |||||||||
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Total liabilities and shareholders’ equity |
$ | 96,090 | $ | 220,117 | $ | 316,207 | ||||||
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SIGMA DESIGNS, INC. |
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS |
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FISCAL YEAR ENDED FEBRUARY 3, 2018 |
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(In thousands, except per share data) |
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Consolidated Statement of |
Pro Forma |
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| Operations |
Adjustments (A) |
Pro Forma | ||||||||||
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Net revenue |
139,471 | 53,554 | 85,917 | |||||||||
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Cost of revenue |
73,735 | 24,577 | 49,158 | |||||||||
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Gross profit |
65,736 | 28,977 | 36,759 | |||||||||
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Operating expenses |
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Research and development |
72,309 | 11,589 | 60,720 | |||||||||
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Sales and marketing |
23,806 | 12,500 | 11,306 | |||||||||
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General and administrative |
23,097 | 1,749 | 21,348 | |||||||||
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Restructuring costs |
9,327 | - | 9,327 | |||||||||
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Impairment of IP, mask sets and design tools |
50,431 | 80 | 50,351 | |||||||||
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Total operating expenses |
178,970 | 25,918 | 153,052 | |||||||||
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(Loss) income from operations |
(113,234 | ) | 3,059 | (116,293 | ) | |||||||
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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 |
(1,929 | ) | (7 | ) | (1,922 | ) | ||||||
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(Loss) income before income taxes |
(115,163 | ) | 3,052 | (118,215 | ) | |||||||
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Provision for income taxes |
4,878 | 2,053 | 2,825 | |||||||||
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Net (loss) income |
(120,041 | ) | 999 | (121,040 | ) | |||||||
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Shares used in computing net (loss) income per share: |
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Basic |
38,527 | 38,527 | 38,527 | |||||||||
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Diluted |
38,527 | 38,527 | 38,527 | |||||||||
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Net (loss) income per common share: |
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Basic |
$ | (3.12 | ) | $ | 0.03 | $ | (3.14 | ) | ||||
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Diluted |
$ | (3.12 | ) | $ | 0.03 | $ | (3.14 | ) | ||||
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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 |
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| As Reported |
Adjustments (A) |
Pro Forma | ||||||||||
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Net revenue |
220,544 | 40,124 | 180,420 | |||||||||
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Cost of revenue |
114,565 | 16,250 | 98,315 | |||||||||
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Gross profit |
105,979 | 23,874 | 82,105 | |||||||||
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Operating expenses |
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Research and development |
73,993 | 8,527 | 65,466 | |||||||||
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Sales and marketing |
23,300 | 12,270 | 11,030 | |||||||||
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General and administrative |
18,860 | 1,309 | 17,551 | |||||||||
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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 | 22,106 | 95,195 | |||||||||
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(Loss) income from operations |
(11,322 | ) | 1,768 | (13,090 | ) | |||||||
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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 | (14 | ) | 553 | ||||||||
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(Loss) income before income taxes |
(11,668 | ) | 1,754 | (13,422 | ) | |||||||
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Provision for income taxes |
6,647 | 746 | 5,901 | |||||||||
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Net (loss) income |
(18,315 | ) | 1,008 | (19,323 | ) | |||||||
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Shares used in computing net (loss) income per share: |
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Basic |
37,429 | 37,429 | 38,527 | |||||||||
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Diluted |
37,429 | 37,429 | 38,527 | |||||||||
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Net (loss) income per common share: |
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Basic |
$ | (0.49 | ) | $ | 0.03 | $ | (0.50 | ) | ||||
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Diluted |
$ | (0.49 | ) | $ | 0.03 | $ | (0.50 | ) | ||||
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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 |
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| As Reported |
Adjustments (A) |
Pro Forma | ||||||||||
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Net revenue |
227,250 | 46,792 | 180,458 | |||||||||
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Cost of revenue |
114,090 | 20,615 | 93,475 | |||||||||
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Gross profit |
113,160 | 26,177 | 86,983 | |||||||||
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Operating expenses |
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Research and development |
68,784 | 6,320 | 62,464 | |||||||||
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Sales and marketing |
22,877 | 11,305 | 11,572 | |||||||||
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General and administrative |
20,862 | 1,224 | 19,638 | |||||||||
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Restructuring costs |
9 | - | 9 | |||||||||
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Impairment of IP, mask sets and design tools |
1,783 | - | 1,783 | |||||||||
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Total operating expenses |
114,315 | 18,849 | 95,466 | |||||||||
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(Loss) income from operations |
(1,155 | ) | 7,328 | (8,483 | ) | |||||||
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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 | 19 | 775 | |||||||||
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Income before income taxes |
7,349 | 7,347 | 2 | |||||||||
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Provision for income taxes |
7,191 | 646 | 6,545 | |||||||||
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Net income (loss) |
158 | 6,701 | (6,543 | ) | ||||||||
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Shares used in computing net income (loss) per share: |
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Basic |
35,890 | 35,890 | 38,527 | |||||||||
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Diluted |
36,669 | 36,669 | 38,527 | |||||||||
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Net income (loss) per common share: |
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Basic |
$ | 0.00 | $ | 0.19 | $ | (0.17 | ) | |||||
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Diluted |
$ | 0.00 | $ | 0.18 | $ | (0.17 | ) | |||||
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 the Sigma Z-Wave business, (ii) factually supportable and (iii) are expected to have a continuing impact on the Company’s consolidated results following the Sigma Z-Wave business disposition. The pro forma condensed consolidated statements of income do not reflect either an estimated gain or tax implications on the sale of the Sigma Z-Wave business.
2. PRO FORMA ADJUSTMENTS
The following pro forma adjustments are included in the Company’s unaudited pro forma condensed consolidated financial information:
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(A) |
These adjustments reflect the elimination of revenue and expenses associated with the Sigma Z-Wave business, excluding corporate support resources assigned to the business unit. |
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(B) |
These adjustments reflect the disposition of the Sigma Z-Wave business as if the transaction occurred on February 3, 2018, which was sold for $240.0 million in cash and adjusted for the Sigma Z-Wave business assets and liabilities, less estimated transaction costs, change of control payments and income taxes. Transaction costs and change of control payments are estimated to be each approximately $3.9 million included in accrued liabilities. Income taxes are estimated to be $1.1 million and are included in income taxes payable. Retained earnings reflect the estimated after-tax gain from the transaction. |