Sigma Designs (SIGM) 8-K/A Completion of Acquisition or Disposition of Assets

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.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

October 28, 2017

(In thousands, except share and per share data)

				Pro Forma
	As Reported			Adjustments (B)			Pro Forma
ASSETS
Current assets								-
Cash and cash equivalents	$	69,219		$	23,464		$	92,683
Short-term marketable securities		-			-			-
Restricted cash		325			(325	)		-
Accounts receivable		19,628			(2,531	)		17,097
Inventory		13,679			(373	)		13,306
Prepaid expenses and other current assets		7,869			(551	)		7,318
Total current assets		110,720			19,684			130,404
Long-term marketable securities		-			-			-
Software, equipment and leasehold improvements, net		18,135			(454	)		17,681
Intangible assets, net		21,957			(1,288	)		20,669
Goodwill		10,594			-			10,594
Deferred tax assets		741			(545	)		196
Long-term investments		910			-			910
Other non-current assets		4,138			4,200			8,338
Total assets	$	167,195		$	21,597		$	188,792
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	14,478		$	(281	)	$	14,197
Accrued compensation and related benefits		10,020			(1,206	)		8,814
Accrued liabilities		16,147			(467	)		15,680
Total current liabilities		40,645			(1,954	)		38,691
Income taxes payable		12,929			-			12,929
Deferred tax liabilities		287			-			287
Other long-term liabilities		5,439			(1,689	)		3,750
Total liabilities		59,300			(3,643	)		55,657
Shareholders’ equity
Preferred stock; no par value, 2,000,000 shares authorized; none issued and outstanding		-			-			-
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
Treasury stock, at cost, 4,675,749 shares as of January 28, 2017 and January 30, 2016		(88,336	)		-			(88,336	)
Accumulated other comprehensive loss		(891	)		-			(891	)
Accumulated deficit		(321,126	)		25,240			(295,886	)
Total shareholders’ equity		107,895			25,240			133,135
Total liabilities and shareholders’ equity	$	167,195		$	21,597		$	188,792

SIGMA DESIGNS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

NINE MONTHS ENDED OCTOBER 28, 2017

(In thousands, except per share data)

				Pro Forma
	As Reported			Adjustments (A)			Pro Forma
Net revenue		112,934			(17,979	)		94,955
Cost of revenue		58,374			(6,785	)		51,589
Gross profit		54,560			(11,194	)		43,366
Operating expenses
Research and development		53,380			(5,765	)		47,615
Sales and marketing		17,498			(1,700	)		15,798
General and administrative		15,899			(583	)		15,316
Restructuring costs		2,529			-			2,529
Impairment of IP, mask sets and design tools		8,469			-			8,469
Total operating expenses		97,775			(8,048	)		89,727
Loss from operations		(43,215	)		(3,146	)		(46,361	)
Gain on sale of development project		0			-			-
Impairment of privately-held investments, net of gain on sale		0			-			-
Interest and other income (expenses), net		(1,076	)		(419	)		(1,495	)
Loss before income taxes		(44,291	)		(3,565	)		(47,856	)
Provision for income taxes		2,329			(591	)		1,738
Net loss		(46,620	)		(2,974	)		(49,594	)
Net loss per common share:
Basic		38,359			38,632			38,632
Diluted		38,632			38,632			38,632
Shares used in computing net loss per share:
Basic	$	(1.22	)	$	(0.08	)	$	(1.28	)
Diluted	$	(1.21	)	$	(0.08	)	$	(1.28	)

SIGMA DESIGNS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FISCAL YEAR ENDED JANUARY 28, 2017

(In thousands, except per share data)

				Pro Forma
	As Reported			Adjustments (A)			Pro Forma
Net revenue		220,544			(46,013	)		174,531
Cost of revenue		114,565			(19,379	)		95,186
Gross profit		105,979			(26,634	)		79,345
Operating expenses
Research and development		73,993			(8,189	)		65,804
Sales and marketing		23,300			(3,356	)		19,944
General and administrative		18,860			(983	)		17,877
Restructuring costs		-			-			-
Impairment of IP, mask sets and design tools		1,148			-			1,148
Total operating expenses		117,301			(12,528	)		104,773
Loss from operations		(11,322	)		(14,106	)		(25,428	)
Gain on sale of development project		-			-			-
Impairment of privately-held investments, net of gain on sale		(885	)		-			(885	)
Interest and other income, net		539			(270	)		269
Loss before income taxes		(11,668	)		(14,376	)		(26,044	)
Provision for income taxes		6,647			(151	)		6,496
Net loss		(18,315	)		(14,225	)		(32,540	)
Net loss per common share:
Basic		37,429			37,429			37,429
Diluted		37,429			37,429			37,429
Shares used in computing net loss per share:
Basic	$	(0.49	)	$	(0.38	)	$	(0.87	)
Diluted	$	(0.49	)	$	(0.38	)	$	(0.87	)

SIGMA DESIGNS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FISCAL YEAR ENDED JANUARY 30, 2016

(In thousands, except per share data)

				Pro Forma
	As Reported			Adjustments (A)			Pro Forma
Net revenue		227,250			(54,707	)		172,543
Cost of revenue		114,090			(22,247	)		91,843
Gross profit		113,160			(32,460	)		80,700
Operating expenses
Research and development		68,784			(8,521	)		60,263
Sales and marketing		22,877			(4,020	)		18,857
General and administrative		20,862			(1,018	)		19,844
Restructuring costs		9			-			9
Impairment of IP, mask sets and design tools		1,783			(1,365	)		418
Total operating expenses		114,315			(14,924	)		99,391
Loss from operations		(1,155	)		(17,536	)		(18,691	)
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			741			1,535
(Loss) income before income taxes		7,349			(16,795	)		(9,446	)
Provision for income taxes		7,191			(2,160	)		5,031
Net (loss) income		158			(14,635	)		(14,477	)
Net (loss) income per common share:
Basic		35,890			35,890			35,890
Diluted		36,669			36,669			35,890
Shares used in computing net (loss) income per share:
Basic	$	0.00		$	(0.41	)	$	(0.40	)
Diluted	$	0.00		$	(0.40	)	$	(0.40	)

SIGMA DESIGNS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FISCAL YEAR ENDED JANUARY 31, 2015

(In thousands, except per share data)

				Pro Forma
	As Reported			Adjustments (A)			Pro Forma
Net revenue		188,313			(77,312	)		111,001
Cost of revenue		92,967			(29,452	)		63,515
Gross profit		95,346			(47,860	)		47,486
Operating expenses
Research and development		67,482			(10,310	)		57,172
Sales and marketing		22,290			(5,188	)		17,102
General and administrative		19,641			(1,388	)		18,253
Restructuring costs		999			(842	)		157
Impairment of IP, mask sets and design tools		2,811			-			2,811
Total operating expenses		113,223			(17,728	)		95,495
Loss from operations		(17,877	)		(30,132	)		(48,009	)
Gain on sale of development project		-			-			-
Impairment of privately-held investments, net of gain on sale		(602	)		-			(602	)
Interest and other income, net		1,771			1,587			3,358
Loss before income taxes		(16,708	)		(28,545	)		(45,253	)
Provision for income taxes		4,993			(3,618	)		1,375
Net loss		(21,701	)		(24,927	)		(46,628	)
Net loss per common share:
Basic		34,693			34,693			34,693
Diluted		34,693			34,693			34,693
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.