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 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.

SIGMA DESIGNS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

February 3, 2018

(In thousands, except share and per share data)

				Pro Forma
	As Reported			Adjustments (B)			Pro Forma
ASSETS
Current assets
Cash and cash equivalents	$	40,628		$	240,000		$	280,628
Short-term marketable securities		-			-			-
Restricted cash		335			-			335
Accounts receivable		17,120			(6,416	)		10,704
Inventory		14,064			(10,325	)		3,739
Prepaid expenses and other current assets		7,898			(652	)		7,246
Total current assets		80,045			222,607			302,652
Long-term marketable securities		-			-			-
Software, equipment and leasehold improvements, net		6,178			(1,478	)		4,700
Intangible assets, net		4,630			(803	)		3,827
Goodwill		-			-			-
Deferred tax assets		770			(201	)		569
Long-term investments		-			-			-
Other non-current assets		4,467			(8	)		4,459
Total assets	$	96,090		$	220,117		$	316,207
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	15,864		$	(5,602	)	$	10,262
Accrued compensation and related benefits		6,512			(1,529	)		4,983
Accrued liabilities		14,679			3,741			18,420
Total current liabilities		37,055			(3,390	)		33,665
Income taxes payable		15,708			1,142			16,850
Deferred tax liabilities		38			-			38
Other long-term liabilities		3,169			(16	)		3,153
Total liabilities		55,970			(2,264	)		53,706
Shareholders’ equity
Preferred stock; no par value, 2,000,000 shares authorized; none issued and outstanding		-			-			-
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
Treasury stock, at cost, 4,675,749 shares as of February 3, 2018 and January 28, 2017		(88,336	)		-			(88,336	)
Accumulated other comprehensive loss		18			-			18
Accumulated deficit		(394,547	)		222,381			(172,166	)
Total shareholders’ equity		40,120			222,381			262,501
Total liabilities and shareholders’ equity	$	96,090		$	220,117		$	316,207

SIGMA DESIGNS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FISCAL YEAR ENDED FEBRUARY 3, 2018

(In thousands, except per share data)

	Consolidated Statement of			Pro Forma
	Operations			Adjustments (A)			Pro Forma
Net revenue		139,471			53,554			85,917
Cost of revenue		73,735			24,577			49,158
Gross profit		65,736			28,977			36,759
Operating expenses
Research and development		72,309			11,589			60,720
Sales and marketing		23,806			12,500			11,306
General and administrative		23,097			1,749			21,348
Restructuring costs		9,327			-			9,327
Impairment of IP, mask sets and design tools		50,431			80			50,351
Total operating expenses		178,970			25,918			153,052
(Loss) income from operations		(113,234	)		3,059			(116,293	)
Gain on sale of development project		0			-			-
Impairment of privately-held investments, net of gain on sale		0			-			-
Interest and other income (expenses), net		(1,929	)		(7	)		(1,922	)
(Loss) income before income taxes		(115,163	)		3,052			(118,215	)
Provision for income taxes		4,878			2,053			2,825
Net (loss) income		(120,041	)		999			(121,040	)
Shares used in computing net (loss) income per share:
Basic		38,527			38,527			38,527
Diluted		38,527			38,527			38,527
Net (loss) income per common share:
Basic	$	(3.12	)	$	0.03		$	(3.14	)
Diluted	$	(3.12	)	$	0.03		$	(3.14	)

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			40,124			180,420
Cost of revenue		114,565			16,250			98,315
Gross profit		105,979			23,874			82,105
Operating expenses
Research and development		73,993			8,527			65,466
Sales and marketing		23,300			12,270			11,030
General and administrative		18,860			1,309			17,551
Restructuring costs		-			-			-
Impairment of IP, mask sets and design tools		1,148			-			1,148
Total operating expenses		117,301			22,106			95,195
(Loss) income from operations		(11,322	)		1,768			(13,090	)
Gain on sale of development project		-			-			-
Impairment of privately-held investments, net of gain on sale		(885	)		-			(885	)
Interest and other income, net		539			(14	)		553
(Loss) income before income taxes		(11,668	)		1,754			(13,422	)
Provision for income taxes		6,647			746			5,901
Net (loss) income		(18,315	)		1,008			(19,323	)
Shares used in computing net (loss) income per share:
Basic		37,429			37,429			38,527
Diluted		37,429			37,429			38,527
Net (loss) income per common share:
Basic	$	(0.49	)	$	0.03		$	(0.50	)
Diluted	$	(0.49	)	$	0.03		$	(0.50	)

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			46,792		180,458
Cost of revenue		114,090			20,615		93,475
Gross profit		113,160			26,177		86,983
Operating expenses
Research and development		68,784			6,320		62,464
Sales and marketing		22,877			11,305		11,572
General and administrative		20,862			1,224		19,638
Restructuring costs		9			-		9
Impairment of IP, mask sets and design tools		1,783			-		1,783
Total operating expenses		114,315			18,849		95,466
(Loss) income from operations		(1,155	)		7,328		(8,483	)
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			19		775
Income before income taxes		7,349			7,347		2
Provision for income taxes		7,191			646		6,545
Net income (loss)		158			6,701		(6,543	)
Shares used in computing net income (loss) per share:
Basic		35,890			35,890		38,527
Diluted		36,669			36,669		38,527
Net income (loss) per common share:
Basic	$	0.00		$	0.19	$	(0.17	)
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:

(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.

(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.