SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): June 7, 2001
SILICON IMAGE, INC.
(Exact name of the Registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation) |
000-26887 (Commission File Number) |
77-0396307 (IRS Employer Identification No.) |
1060 East Arques Avenue, Sunnyvale, CA (Address of principal executive offices) |
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94086 (Zip Code) |
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(408) 616-4000
(The Registrant's telephone number)
(Former name or former address, if changed since last report)
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.
On June 20, 2001, Silicon Image, Inc. filed a Form 8-K to report the completion of its acquisition of CMD Technology, Inc., a California corporation. On August 10, 2001, Silicon Image filed the pro forma financial information required by Item 7 of Form 8-K. Silicon Image is filing this Amendment No. 2 to provide pro forma financial information.
The documents filed as Exhibit 99.02 to Amendment No. 1 this report on August 10, 2001 are incorporated into this report by reference.
The following documents appear as Exhibit 99.03 to this report and are incorporated into this report by reference:
Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2001.
Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2000.
Unaudited Pro Forma Condensed Combined Statement of Operations for the six months ended June 30, 2001.
Notes to Unaudited Pro Forma Condensed Combined Financial Information.
23.01* Consent of Independent Auditors.
99.02* Financial Statements of CMD Technology, Inc.
99.03 Pro Forma Financial Information.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: October 2, 2001 | SILICON IMAGE, INC. | |||
By: |
/s/ DANIEL K. ATLER Daniel K. Atler Vice President, Finance and Administration, and Chief Financial Officer |
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| 23.01* | Consent of Independent Auditors. | |
99.02* |
Financial Statements of CMD Technology, Inc. |
|
99.03 |
Pro Forma Financial Information. |
Unaudited Pro Forma Condensed Combined Financial Information
Unaudited Pro Forma Condensed Combined Balance Sheet
As of March 31, 2001
| |
Silicon Image |
CMD |
Pro Forma Adjustments |
|
Pro Forma Balances |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||||||||||||
| Current assets: | ||||||||||||||||||
| Cash and cash equivalents | $ | 36,808,000 | $ | 51,000 | $ | — | $ | 36,859,000 | ||||||||||
| Short-term investments | 20,725,000 | — | — | 20,725,000 | ||||||||||||||
| Accounts receivable, net | 4,198,000 | 5,015,000 | — | 9,213,000 | ||||||||||||||
| Inventories | 3,269,000 | 7,535,000 | — | 10,804,000 | ||||||||||||||
| Prepaid and other current assets | 1,714,000 | 432,000 | — | 2,146,000 | ||||||||||||||
| Total current assets | 66,714,000 | 13,033,000 | — | 79,747,000 | ||||||||||||||
| Property and equipment, net | 4,486,000 | 5,940,000 | — | 10,426,000 | ||||||||||||||
| Goodwill and intangible assets, net | 19,132,000 | — | 29,123,000 | (A) | 48,255,000 | |||||||||||||
| Other assets | 2,154,000 | 116,000 | — | 2,270,000 | ||||||||||||||
| $ | 92,486,000 | $ | 19,089,000 | $ | 29,123,000 | $ | 140,698,000 | |||||||||||
Liabilities and Stockholders' Equity |
||||||||||||||||||
| Current liabilities: | ||||||||||||||||||
| Accounts payable | $ | 2,370,000 | $ | 3,179,000 | $ | — | $ | 5,549,000 | ||||||||||
| Accrued liabilities | 4,642,000 | 2,475,000 | 865,000 | (A) | 7,982,000 | |||||||||||||
| Capital lease and other obligations, current | 1,166,000 | 801,000 | — | 1,967,000 | ||||||||||||||
| Notes payable, current | — | 4,003,000 | 4,003,000 | |||||||||||||||
| Deferred margin on sales to distributors | 3,199,000 | — | — | 3,199,000 | ||||||||||||||
| Total current liabilities | 11,377,000 | 10,458,000 | 865,000 | 22,700,000 | ||||||||||||||
| Capital lease and other obligations, long term | 805,000 | 437,000 | — | 1,242,000 | ||||||||||||||
| Total liabilities | 12,182,000 | 10,895,000 | 865,000 | 23,942,000 | ||||||||||||||
| Stockholders' equity | ||||||||||||||||||
| Common stock | 54,000 | 1,264,000 | 6,000 | (A) | 60,000 | |||||||||||||
| (1,264,000 | ) | (B) | ||||||||||||||||
| Additional paid-in capital | 138,627,000 | — | 44,260,000 | (A) | 182,887,000 | |||||||||||||
| Notes receivable from stockholders | (162,000 | ) | — | — | (162,000 | ) | ||||||||||||
| Unearned compensation | (8,032,000 | ) | — | (6,314,000 | ) | (A) | (14,346,000 | ) | ||||||||||
| Retained earnings | (50,183,000 | ) | 6,930,000 | (1,500,000 | ) | (A)(E) | (51,683,000 | ) | ||||||||||
| (6,930,000 | ) | (B) | ||||||||||||||||
| Total stockholders' equity | 80,304,000 | 8,194,000 | 28,258,000 | 116,756,000 | ||||||||||||||
| Commitments and contingencies | ||||||||||||||||||
| $ | 92,486,000 | $ | 19,089,000 | $ | 29,123,000 | $ | 140,698,000 | |||||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
1
Unaudited Pro Forma Condensed Combined Statement of Operations
Year Ended December 31, 2000
| |
Silicon Image |
CMD |
Pro Forma Adjustments |
|
Pro Forma Balances |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total revenue | $ | 50,035,000 | $ | 40,082,000 | $ | — | $ | 90,117,000 | ||||||||||
Cost of product revenue |
18,798,000 |
19,668,000 |
38,466,000 |
|||||||||||||||
| Research and development expenses | 12,811,000 | 14,933,000 | — | 27,744,000 | ||||||||||||||
| Selling, general and administrative expenses | 18,902,000 | 9,357,000 | — | 28,259,000 | ||||||||||||||
| In-process research and development | 8,410,000 | — | — | 8,410,000 | ||||||||||||||
| Amortization of goodwill and intangible assets | 4,356,000 | — | 13,105,000 | (C) | 17,461,000 | |||||||||||||
| Stock compensation and warrant expense | 13,616,000 | — | 4,294,000 | (D) | 17,910,000 | |||||||||||||
| Total cost and operating expenses | 76,893,000 | 43,958,000 | 17,399,000 | 138,250,000 | ||||||||||||||
| Loss from operations | (26,858,000 | ) | (3,876,000 | ) | (17,399,000 | ) | (48,133,000 | ) | ||||||||||
| Interest income and other, net | 3,983,000 | (201,000 | ) | — | 3,782,000 | |||||||||||||
| Net loss before provision for income taxes | (22,875,000 | ) | (4,077,000 | ) | (17,399,000 | ) | (44,351,000 | ) | ||||||||||
| Provision for income taxes | 368,000 | 35,000 | (403,000 | ) | (F) | — | ||||||||||||
| Net loss | $ | (23,243,000 | ) | $ | (4,112,000 | ) | $ | (16,996,000 | ) | $ | (44,351,000 | ) | ||||||
Net loss per share: |
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| Basic and diluted | $ | (0.47 | ) | $ | (0.79 | ) | ||||||||||||
| Weighted average shares | 49,720,000 | 6,438,000 | 56,158,000 | |||||||||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
2
Unaudited Pro Forma Condensed Combined Statement of Operations
Six Months Ended June 30, 2001
| |
Silicon Image |
CMD |
Pro Forma Adjustments |
|
Pro Forma Balances |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total revenue | $ | 22,452,000 | $ | 12,330,000 | $ | — | $ | 34,782,000 | |||||||||
Cost of product revenue |
9,843,000 |
7,713,000 |
— |
17,556,000 |
|||||||||||||
| Research and development expenses | 10,053,000 | 4,464,000 | — | 14,517,000 | |||||||||||||
| Selling, general and administrative expenses | 8,878,000 | 4,744,000 | — | 13,622,000 | |||||||||||||
| Amortization of goodwill and intangible assets | 5,174,000 | — | 6,553,000 | (C) | 11,727,000 | ||||||||||||
| Stock compensation and warrant expense | 5,146,000 | — | 2,147,000 | (D) | 7,293,000 | ||||||||||||
| In-process research and development | 1,500,000 | — | — | 1,500,000 | |||||||||||||
| Total cost and operating expenses | 40,594,000 | 16,921,000 | 8,700,000 | 66,215,000 | |||||||||||||
Loss from operations |
(18,142,000 |
) |
(4,591,000 |
) |
(8,700,000 |
) |
(31,433,000 |
) |
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Interest income and other, net |
1,602,000 |
(306,000 |
) |
— |
1,296,000 |
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| Net loss | $ | (16,540,000 | ) | $ | (4,897,000 | ) | $ | (8,700,000 | ) | $ | (30,137,000 | ) | |||||
Net loss per share: |
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| Basic and diluted | $ | (0.31 | ) | $ | (0.52 | ) | |||||||||||
| Weighted average shares | 53,073,000 | 5,307,000 | 58,380,000 | ||||||||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
3
Notes to Unaudited Pro Forma Condensed Combined Financial Information
(1) Basis of Presentation
On June 7, 2001, the Company issued approximately 6.4 million shares of its common stock in exchange for all outstanding shares of CMD and upon closing, the Company refinanced CMD's debt outstanding under the revolving note payable, the term note due on March 1, 2003, and the multiple disbursement note for the amounts then outstanding. This new loan matures in September 2001, is secured by a certificate of deposit totaling $3.1 million, and bears interest at 2% above the rate in effect under the certificate of deposit (3.5% at June 30, 2001).
This acquisition was accounted for using the purchase method of accounting in accordance with APB Opinion No. 16. The purchase method of accounting requires the purchase price to be allocated to the assets acquired and liabilities assumed based on their estimated fair values. The pro forma financial information has been prepared on the basis of assumptions described in the accompanying notes and includes assumptions relating to the allocation of the consideration paid for the assets and liabilities of CMD based on estimates of their fair values.
The unaudited pro forma condensed combined balance sheet as of March 31, 2001 gives effect to the acquisition as if it had occurred on March 31, 2001. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2000 and for the six months ended June 30, 2001 give effect to the acquisition as if it had occurred on January 1, 2000.
The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the acquisition had been consummated as of the dates indicated, nor is it necessarily indicative of future operating results.
The unaudited pro forma condensed combined financial information, including the notes thereto, is qualified in its entirety by reference to, and should be read in conjunction with, the historical financial statements of Silicon Image included in its Form 10-K and Form 10-Q filed April 2, 2001 and May 15, 2001, respectively, with the Securities and Exchange Commission, and the historical financial statements of CMD included in Amendment No. 1 to this Form 8-K, filed August 10, 2001.
(2) Purchase Price Allocation
On June 7, 2001, the Company issued approximately 6.4 million shares of its common stock in exchange for all outstanding shares of CMD. The total purchase price for this acquisition was $45.1 million, consisting of common stock with a fair value of $30.7 million, 3.7 million stock options with a fair value of $13.6 million, and transaction costs, consisting of investment advisory, legal and other professional service fees, of $865,000. Common stock was valued at $4.94 per share using the Company's average stock price for the four day period ended June 7, 2001 and has been reduced for known contingencies pursuant to the Escrow Agreement. Stock options were valued using the Black-Scholes option pricing model, applying a weighted average expected life of 2.75 years, a weighted average risk-free rate of 5.0%, an expected dividend yield of zero percent, a volatility of 90% and a deemed fair value of $4.94 per share. The intrinsic value of these options, totaling approximately $6.3 million, has been recorded as unearned compensation.
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Notes to Unaudited Pro Forma Condensed Combined Financial Information
The Company's allocation of the aggregate purchase price is based on management's analysis and estimates of the fair values of the tangible assets, intangible assets and in-process research and development, which was expensed during the quarter ended June 30, 2001. Intangible assets recorded in connection with this acquisition will be amortized to expense over their estimated useful lives. However, effective January 1, 2002, upon the adoption of Statement of Financial Accounting Standard No. 142, goodwill and certain intangible assets will no longer be amortized to earnings, but will be subject to periodic testing for impairment. The purchase price allocation and related amortization periods are summarized below:
| Net assets acquired | $ | 8,194,000 | |||
| Acquired technology | 10,178,000 | 18-42 months | |||
| Unearned compensation | 6,314,000 | 30 months | |||
| Acquired workforce | 2,340,000 | 24 months | |||
| Customer agreement | 1,939,000 | 24 months | |||
| In-process research and development expense | 1,500,000 | ||||
| Trade name | 435,000 | 42 months | |||
| Goodwill | 14,231,000 | 42 months | |||
| $ | 45,131,000 | ||||
(3) Purchase Adjustments
The following adjustments were made to develop the pro forma condensed combined financial statements:
5