Attached files
| file | filename |
|---|---|
| 8-K/A - FORM 8-K AMENDMENT #1 - MEMSIC Inc | d8ka.htm |
| EX-23.1 - CONSENT OF FRANK, RIMERMAN + CO. LLP - MEMSIC Inc | dex231.htm |
| EX-99.1 - AUDITED SPECIAL-PURPOSE FINANCIAL STATEMENTS - MEMSIC Inc | dex991.htm |
MEMSIC, Inc.
Unaudited Pro Forma Combined Financial Statements
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
On January 15, 2010, pursuant to the Asset Purchase Agreement dated December 16, 2009 between MEMSIC, Inc. (“MEMSIC”) and Crossbow Technology, Inc. (“Crossbow”), MEMSIC completed the acquisition of assets related to Crossbow’s commercial (non-military) Inertial Systems business and Wireless Sensor Network (WSN) “Mote” and eKo business (collectively, the “Acquired Business”), including intellectual property rights and fixed assets relating to the Acquired Business. The purchase price consisted of a payment of $18 million in cash at the closing.
The following unaudited pro forma combined balance sheet combines balance sheet data for MEMSIC and the assets acquired and liabilities assumed from the Acquired Business as of December 31, 2009 as if the acquisition had been completed on December 31, 2009. The following unaudited pro forma combined statement of operations combines the statement of operations data for MEMSIC and the direct revenues and direct expenses for the Acquired Business for the year ended December 31, 2009 as if the acquisition had been completed on January 1, 2009. The pro forma financial information is based upon the historical consolidated financial statements of MEMSIC and the special-purpose statements of the Acquired Business and the assumptions, estimates and adjustments which are described in the notes to the unaudited pro forma combined financial statements. The assumptions, estimates and adjustments are preliminary and have been made solely for purposes of developing such pro forma information. The unaudited pro forma combined financial statements include adjustments that have been made to reflect the preliminary purchase price allocations. These preliminary allocations represent estimates made for purposes of these pro forma financial statements and are subject to change upon a final determination of fair value.
The unaudited pro forma combined financial statements are presented for illustrative purposes only and are not necessarily indicative of the consolidated financial position or consolidated results of operations of MEMSIC that would have been reported had the acquisitions occurred on the dates indicated, nor do they represent a forecast of the consolidated financial position of MEMSIC at any future date or the consolidated results of operations for any future period. Furthermore, no effect has been given in the unaudited pro forma combined statements of operations for synergistic benefits or cost savings that may be realized through the combination of MEMSIC and the Acquired Business or costs that may be incurred in integrating MEMSIC and the Acquired Business. The unaudited pro forma combined financial statements should be read in conjunction with the audited consolidated financial statements and related notes, together with management’s discussion and analysis of financial condition and results of operations, contained in MEMSIC’s Annual Report on Form 10-K for the period ended December 31, 2009, which is on file with the SEC, and the historical special-purpose statements and related notes of the Acquired Business included in this Form 8-K/A.
MEMSIC, Inc.
Unaudited Pro Forma Combined Balance Sheet
As of December 31, 2009
(in thousands)
| Historical | Pro forma Adjustments |
Pro forma Combined |
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| MEMSIC | Crossbow | ||||||||||||||||
| ASSETS |
|||||||||||||||||
| Current assets: |
|||||||||||||||||
| Cash and cash equivalents |
$ | 66,971 | $ | 332 | $ | (18,000 | ) | A | $ | 49,303 | |||||||
| Restricted cash |
863 | — | — | 863 | |||||||||||||
| Short-term investments |
— | — | — | — | |||||||||||||
| Accounts receivable, net of allowance for doubtful accounts |
2,670 | 197 | — | 2,867 | |||||||||||||
| Inventories |
4,989 | 1,060 | (442 | ) | A,B | 5,607 | |||||||||||
| Deferred taxes |
96 | — | — | 96 | |||||||||||||
| Other assets |
908 | 241 | — | 1,149 | |||||||||||||
| Total current assets |
76,497 | 1,830 | (18,442 | ) | 59,885 | ||||||||||||
| Property and equipment, net |
14,592 | 351 | 243 | A,B | 15,186 | ||||||||||||
| Long-term investments |
5,353 | — | — | 5,353 | |||||||||||||
| Definite-lived intangible assets, net |
988 | — | 12,135 | A | 13,123 | ||||||||||||
| Goodwill |
— | — | 4,742 | A | 4,742 | ||||||||||||
| Deferred taxes |
55 | — | — | 55 | |||||||||||||
| Other assets |
26 | — | — | 26 | |||||||||||||
| Total assets |
$ | 97,511 | $ | 2,181 | $ | (1,322 | ) | $ | 98,370 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||||||||||||
| Current liabilities: |
|||||||||||||||||
| Accounts payable |
$ | 1,116 | $ | — | $ | — | $ | 1,116 | |||||||||
| Accrued expenses |
1,663 | 337 | 83 | C | 2,083 | ||||||||||||
| Advance research funding |
863 | — | — | 863 | |||||||||||||
| Total current liabilities |
3,642 | 337 | 83 | 4,062 | |||||||||||||
| Stockholders’ equity: |
|||||||||||||||||
| Common stock |
0 | — | — | 0 | |||||||||||||
| Additional paid-in capital |
98,112 | — | — | 98,112 | |||||||||||||
| Accumulated other comprehensive income |
2,218 | — | — | 2,218 | |||||||||||||
| Accumulated deficit |
(6,461 | ) | — | (83 | ) | C | (6,544 | ) | |||||||||
| Total stockholders’ equity |
93,869 | — | (83 | ) | 93,786 | ||||||||||||
| MEMSIC share of net assets acquired |
— | 1,487 | (1,487 | ) | — | ||||||||||||
| Non-controlling interest in majority owned Japan joint venture |
— | 357 | 165 | A,B | 522 | ||||||||||||
| Total liabilities and stockholders’ equity |
$ | 97,511 | $ | 2,181 | $ | (1,322 | ) | $ | 98,370 | ||||||||
See notes to the unaudited pro forma financial information
MEMSIC, Inc.
Unaudited Pro Forma Combined Statement of Operations
For the Year Ended December 31, 2009
(in thousands, except share and per share data)
| Historical | Pro forma Adjustments |
Pro forma Combined |
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| MEMSIC | Crossbow | ||||||||||||||||
| Net sales |
$ | 28,372 | $ | 12,135 | $ | — | $ | 40,507 | |||||||||
| Cost of goods sold |
15,436 | 7,179 | 232 | D,E,F | 22,847 | ||||||||||||
| Gross profit |
12,936 | 4,956 | (232 | ) | 17,660 | ||||||||||||
| Operating expenses: |
|||||||||||||||||
| Research and development |
5,230 | 2,085 | 11 | E,G,H | 7,326 | ||||||||||||
| Sales and marketing |
2,328 | 2,325 | 19 | G,H | 4,672 | ||||||||||||
| General and administrative |
6,295 | 188 | 1,262 | F,I,J | 7,745 | ||||||||||||
| Total operating expenses |
13,853 | 4,598 | 1,292 | 19,743 | |||||||||||||
| Operating income (loss) |
(917 | ) | 358 | (1,524 | ) | (2,083 | ) | ||||||||||
| Other income (expense): |
|||||||||||||||||
| Interest and dividend income |
819 | — | (202 | ) | K | 617 | |||||||||||
| Interest expense |
— | — | — | ||||||||||||||
| Other, net |
215 | — | 215 | ||||||||||||||
| Total other income (expense) |
1,034 | — | (202 | ) | 832 | ||||||||||||
| Earnings (loss) before income taxes |
117 | 358 | (1,726 | ) | (1,251 | ) | |||||||||||
| Provision for income taxes |
93 | — | 93 | ||||||||||||||
| Net income (loss) |
24 | 358 | (1,726 | ) | (1,344 | ) | |||||||||||
| Less: net income (loss) attributable to non-controlling interest |
— | 6 | (30 | ) | L | (24 | ) | ||||||||||
| Net income (loss) attributable to MEMSIC, Inc. |
$ | 24 | $ | 352 | $ | (1,696 | ) | $ | (1,320 | ) | |||||||
| Net income (loss) per common share: |
|||||||||||||||||
| Basic |
$ | 0.00 | $ | — | $ | — | $ | (0.06 | ) | ||||||||
| Diluted |
$ | 0.00 | $ | — | $ | — | $ | (0.06 | ) | ||||||||
| Weighted average shares outstanding used in calculating net income (loss) per common share: |
|||||||||||||||||
| Basic |
23,740,592 | — | — | 23,740,592 | |||||||||||||
| Diluted |
24,007,456 | — | — | 23,740,592 | |||||||||||||
See notes to the unaudited pro forma financial information
MEMSIC, Inc.
Notes to Unaudited Pro Forma Financial Information
(Dollar amounts in thousands)
Acquisition of Certain Business Lines of Crossbow
| (A) | The purchase price of the assets acquired from Crossbow was $18 million in cash. The allocation of the purchase price and the purchase price accounting is based upon preliminary estimates of the assets and liabilities acquired on January 15, 2010 in accordance with ASC topic 805, Business Combinations. It is anticipated that the final purchase price allocation will not differ materially from the preliminary allocations. |
The purchase price paid for the acquisition is as follows:
| Cash paid |
$ | 18,000 | |
| Total purchase price |
$ | 18,000 | |
The allocation of the purchase price is estimated as follows:
| Working capital |
$ | 1,051 | ||
| Property and equipment |
594 | |||
| Trademarks |
408 | |||
| Customer relationships |
4,728 | |||
| Developed technology |
6,999 | |||
| Goodwill |
4,742 | |||
| 18,522 | ||||
| Non-controlling interest in majority owned Japan joint venture |
(522 | ) | ||
| Allocation of purchase price |
$ | 18,000 | ||
| (B) | The following table reflects the adjustments to record the difference between the preliminary fair value and the historical amount of the acquired assets. |
| Crossbow Historical |
Net Adjustment |
Preliminary Fair Value | ||||||||
| Inventories |
$ | 1,060 | $ | (442 | ) | $ | 618 | |||
| Property and equipment, net |
351 | 243 | 594 | |||||||
| Non-controlling interest in majority owned Japan joint venture |
357 | 165 | 522 | |||||||
| (C) | Adjustment to accrue for acquisition related cost that was recorded by MEMSIC in 2010. |
| (D) | Adjustment of $194 to eliminate Crossbow manufacturing profit as required by ASC topic 805. |
| (E) | Adjustment reflects the elimination of the historical depreciation of the purchased fixed assets of $58 in the cost of goods sold and $47 in the research and development expense. |
| (F) | To record pro forma depreciation expense of the purchased fixed assets from the beginning of the period presented over their estimated remaining useful lives as follows: |
| Fair Value | Estimated (years) |
Pro Forma Depreciation Expense | ||||||
| Equipment used in manufacturing |
$ | 327 | 2 - 5 | $ | 96 | |||
| Other equipment |
267 | 2 - 5 | 78 | |||||
| Total equipment |
$ | 594 | $ | 174 | ||||
| (G) | Adjustment reflects employee stock-based compensation expense for 315,000 shares of MEMSIC stock options granted under MEMSIC 2009 Nonqualified Inducement Stock Option Plan to the 21 Crossbow employees who joined MEMSIC in connection with the acquisition. |
Pro forma employee stock-based compensation expenses are as follows:
| Pro forma employee stock-based compensation expense | |||
| Research and development |
$ | 73 | |
| Sales and marketing |
23 | ||
| Total |
$ | 96 | |
| (H) | Adjustment of $15 in research and development expense and $4 in sales and marketing expense to reflect the elimination of the historical Crossbow employee stock-based compensation expense related to employees hired by MEMSIC. |
| (I) | Adjustment to record pro forma amortization expense of purchased intangible assets from the beginning of the period presented over their estimated useful lives as follows: |
| Preliminary Fair Value |
Estimated (years) |
Pro Forma Amortization Expense | ||||||
| Trademarks—worldwide |
$ | 408 | 2 | $ | 204 | |||
| Customer relationships |
4,728 | 8 - 10 | 542 | |||||
| Developed technology |
6,999 | 8 - 10 | 734 | |||||
| Total intangible assets |
$ | 12,135 | $ | 1,480 | ||||
| (J) | Adjustment of $296 to eliminate the acquisition related cost that was recorded by MEMSIC in 2009 general and administrative expense. |
| (K) | Adjustment to eliminate interest income from MEMSIC’s statement of operations for cash used in the acquisition and not available for investment during the period. |
| (L) | Adjustment to reflect amortization expense attributable to non-controlling interest in majority owned Japan joint venture. |