Discontinued Operations

Our Z-Wave business unit consists of those parts of the Company engaged in the IoT Devices marketplace except Mobile IoT. This business unit develops related IP software and chipsets into modules and arranges for their manufacture and sale to IoT product companies.

Our Media Connectivity business unit consists of those parts of the Company engaged in product lines related to wired home networking controller chipsets that provide connectivity solutions between various home entertainment products and incoming video streams.

January 23, 2018,

we announced the intent to sell our Z-Wave business unit to Silicon Laboratories, Inc. and completed the sale on

April 18, 2018.

Additionally, management determined that our Media Connectivity business unit met all the criteria for categorization as “held for sale” as of

February 3, 2018,

and this business unit was sold

February 15, 2018.

In accordance with U.S. GAAP, we have separated the financial statement presentation of both business units from the presentation of our on-going operations. Also required is the presentation of historical periods in a similar manner. Therefore, beginning in the

fourth

quarter of fiscal

2018,

the results of Z-Wave and Media Connectivity business units are presented as discontinued operations in our consolidated statements of operations and thus have been excluded from continuing operations for all reported periods. Furthermore, the related assets and liabilities have been classified as held for sale on our consolidated balance sheets.

The following is a reconciliation of the consolidated balance sheets to the consolidated balance sheets presented herein presenting separately the assets and liabilities held for sale for the years ended

February 3, 2018

and

January 28, 2017 (

in thousands):

FEBRUARY 3, 2018

				Adjustments
	Consolidated Balance Sheets			Assets and Liabilities Held for Sale			Other Adjustments			As Presented

ASSETS
Current assets
Cash and cash equivalents	$	40,628		$	(2,000	)	$			$	38,628
Restricted cash		335			(335	)					-
Accounts receivable, net		17,120			(7,405	)					9,715
Inventory		14,064			(11,026	)					3,038
Prepaid expenses and other current assets		7,898			(1,127	)					6,771
Current assets held for sale		-			-			21,893			21,893
Total current assets		80,045			(21,893	)		21,893			80,045

Software, equipment and leasehold improvements, net		6,178			(1,839	)					4,339
Intangible assets, net		4,630			(2,079	)					2,551
Goodwill		-			-						-
Deferred tax assets		770			(777	)		7	*		-
Non-current assets held for sale		-			-			4,703			4,703
Other non-current assets		4,467			(8	)					4,459
Total assets	$	96,090		$	(26,596	)	$	26,603		$	96,097

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	15,864		$	(6,531	)	$			$	9,333
Accrued compensation and related benefits		6,512			(2,464	)					4,048
Accrued liabilities		14,679			(4,812	)					9,867
Current liabilities held for sale		-			-			13,807			13,807
Total current liabilities		37,055			(13,807	)		13,807			37,055

Income taxes payable		15,708			(4,128	)					11,580
Deferred tax liabilities		38			-			7	*		45
Long-term liabilities held for sale		-			-			4,144			4,144
Other long-term liabilities		3,169			(16	)					3,153
Total liabilities		55,970			(17,951	)		17,958			55,977

Commitments and contingencies

Shareholders' equity
Common stock and additional paid-in capital		522,985			-						522,985
Treasury stock		(88,336	)		(56,687	)					(145,023	)
Accumulated other comprehensive loss		18			-						18
Accumulated deficit		(394,547	)		48,042			8,645			(337,860	)
Total shareholders' equity		40,120			(8,645	)		8,645			40,120

Total liabilities and shareholders' equity	$	96,090		$	(26,596	)	$	26,603		$	96,097

* Reclassification of a negative Deferred tax asset to Deferred tax liability

JANUARY 28, 2017

				Adjustments
	Consolidated Balance Sheets			Assets and Liabilities Held for Sale			Other Adjustments			As Presented

ASSETS
Current assets
Cash and cash equivalents	$	66,425		$	(2,000	)	$			$	64,425
Short-term marketable securities		4,781			-						4,781
Restricted cash		303			(303	)					-
Accounts receivable, net		35,860			(15,874	)					19,986
Inventory		18,147			(8,684	)					9,463
Prepaid expenses and other current assets		8,017			(1,139	)					6,878
Current assets held for sale		-			-			28,000			28,000
Total current assets		133,533			(28,000	)		28,000			133,533

Software, equipment and leasehold improvements, net		18,523			(7,265	)					11,258
Intangible assets, net		30,744			(2,439	)					28,305
Goodwill		10,594			-						10,594
Deferred tax assets		625			(658	)		33	*		-
Long-term investments		2,000			-						2,000
Non-current assets held for sale		-			-			10,370			10,370
Other non-current assets		5,755			(8	)					5,747
Total assets	$	201,774		$	(38,370	)	$	38,403		$	201,807

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	14,230		$	(5,918	)	$			$	8,312
Accrued compensation and related benefits		8,127			(2,609	)					5,518
Accrued liabilities		13,607			(4,762	)					8,845
Current liabilities held for sale		-			-			13,289			13,289
Total current liabilities		35,964			(13,289	)		13,289			35,964

Income taxes payable		15,752			(1,635	)					14,117
Deferred tax liabilities		287			-			33	*		320
Long-term liabilities held for sale					-			1,642			1,642
Other long-term liabilities		6,225			(7	)					6,218
Total liabilities		58,228			(14,931	)		14,964			58,261

Commitments and contingencies

Shareholders' equity
Common stock and additional paid-in capital		513,168			(56,373	)					456,795
Treasury stock		(88,336	)		-						(88,336	)
Accumulated other comprehensive loss		(2,178	)		-						(2,178	)
Accumulated deficit		(279,108	)		32,934			23,439			(222,735	)
Total shareholders' equity		143,546			(23,439	)		23,439			143,546

Total liabilities and shareholders' equity	$	201,774		$	(38,370	)	$	38,403		$	201,807

* Reclassification of a negative Deferred tax asset to Deferred tax liability

The following is a reconciliation of the consolidated statements of operations to the consolidated statements of operations presented herein presenting separately the operations held for sale for the years ended

February 3, 2018,

January 28, 2017

and

January 30, 2016 (

in thousands):

FOR THE YEAR ENDED

FEBRUARY 3, 2018

				Adjustments
	Consolidated Statements of Operations			Operations Held for Sale			Other Adjustments			As Presented

Net revenue	$	139,471		$	(73,566	)	$			$	65,905
Cost of revenue		73,735			(32,289	)					41,446
Gross profit		65,736			(41,277	)					24,459
Operating expenses
Research and development		72,309			(19,653	)					52,656
Sales and marketing		23,806			(14,720	)					9,086
General and administrative		23,097			(2,710	)					20,387
Restructuring costs		9,327			-						9,327
Impairment of IP, mask sets, design tools and goodwill		50,431			(80	)					50,351
Total operating expenses		178,970			(37,163	)					141,807
Loss from operations		(113,234	)		(4,114	)					(117,348	)
Interest and other income, net		(1,929	)		(541	)					(2,470	)
Loss before income taxes		(115,163	)		(4,655	)					(119,818	)
Provision for (benefit from) income taxes		4,878			(5,592	)					(714	)
Net loss from continuing operations		(120,041	)		937						(119,104	)
Income from discontinued operations		-			-			4,655			4,655
Provision for income taxes		-			-			5,592			5,592
Net loss from discontinued operations		-			-			(937	)		(937	)
Net loss	$	(120,041	)	$	937		$	(937	)	$	(120,041	)

FOR THE YEAR ENDED

JANUARY 28, 2017

				Adjustments
	Consolidated Statements of Operations			Operations Held for Sale			Other Adjustments		As Presented

Net revenue	$	220,544		$	(86,137	)	$		$	134,407
Cost of revenue		114,565			(35,629	)				78,936
Gross profit		105,979			(50,508	)				55,471
Operating expenses
Research and development		73,993			(16,716	)				57,277
Sales and marketing		23,300			(15,727	)				7,573
General and administrative		18,860			(2,292	)				16,568
Impairment of IP, mask sets, design tools and goodwill		1,148			-					1,148
Total operating expenses		117,301			(34,735	)				82,566
Loss from operations		(11,322	)		(15,773	)				(27,095	)
Impairment of privately-held investments, net of gain on sale		(885	)		-					(885	)
Interest and other income, net		539			(256	)				283
Loss before income taxes		(11,668	)		(16,029	)				(27,697	)
Provision for income taxes		6,647			(897	)				5,750
Net loss from continuing operations		(18,315	)		(15,132	)				(33,447	)
Income from discontinued operations		-			-			16,029		16,029
Provision for income taxes		-			-			897		897
Net income from discontinued operations		-			-			15,132		15,132
Net loss	$	(18,315	)	$	(15,132	)	$	15,132	$	(18,315	)

FOR THE YEAR ENDED

JANUARY 30, 2016

				Adjustments
	Consolidated Statements of Operations			Operations Held for Sale			Other Adjustments		As Presented

Net revenue	$	227,250		$	(101,499	)	$		$	125,751
Cost of revenue		114,090			(42,862	)				71,228
Gross profit		113,160			(58,637	)				54,523
Operating expenses
Research and development		68,784			(14,841	)				53,943
Sales and marketing		22,877			(15,420	)				7,457
General and administrative		20,862			(2,242	)				18,620
Restructuring costs		9			-					9
Impairment of IP, mask sets, design tools and goodwill		1,783			(1,365	)				418
Total operating expenses		114,315			(33,868	)				80,447
Loss from operations		(1,155	)		(24,769	)				(25,924	)
Gain on sale of development project		7,551			-					7,551
Impairment of privately-held investments, net of gain on sale		159			-					159
Interest and other income, net		794			722					1,516
Income (loss) before income taxes		7,349			(24,047	)				(16,698	)
Provision for income taxes		7,191			(2,806	)				4,385
Net income (loss) from continuing operations		158			(21,241	)				(21,083	)
Income from discontinued operations		-			-			24,047		24,047
Provision for income taxes		-			-			2,806		2,806
Net income from discontinued operations		-			-			21,241		21,241
Net income	$	158		$	21,241		$	21,241	$	158

The combined presentation of select balance sheet information of assets and liabilities held for sale is as follows (in thousands):

	February 3, 2018		January 28, 2017

ASSETS
Cash and cash equivalents	$	2,000	$	2,000
Restricted cash		335		303
Accounts receivable, net		7,405		15,874
Inventory		11,026		8,684
Prepaid expenses and other current assets		1,127		1,139
Software, equipment and leasehold improvements, net		1,839		7,265
Intangible assets, net		2,079		2,439
Deferred tax assets		777		658
Other non-current assets		8		8
Total assets held for sale	$	26,596	$	38,370

LIABILITIES
Accounts payable	$	6,531	$	5,918
Accrued compensation and related benefits		2,464		2,609
Accrued liabilities		4,812		4,762
Income taxes payable		4,128		1,635
Other long-term liabilities		16		7
Total liabilities held for sale	$	17,951	$	14,931

The combined presentation of select statement of operations information of discontinued operations is as follows (in thousands):

	Fiscal Years Ended
	February 3, 2018			January 28, 2017		January 30, 2016

Net revenue	$	73,566		$	86,137	$	101,499
Cost of revenue		32,289			35,629		42,862
Operating expenses		37,163			34,735		33,868
Interest and other income, net		541			256		(722	)
Income from discontinued operations before tax		4,655			16,029		24,047
Provision for income taxes		5,592			897		2,806
Net income (loss) from discontinued operations	$	(937	)	$	15,132	$	21,241

The combined presentation of select cash flow information of assets and liabilities held for sale is as follows (in thousands):

	Fiscal Years Ended
	February 3, 2018		January 28, 2017		January 30, 2016

Net cash provided by operating activities	$	14,102	$	19,618	$	24,628
Net cash used in investing activities	$	812	$	8,321	$	82