GigPeak, Inc. (NYSE MKT:GIG):
- In a separate announcement, it was
announced today that GigPeak has entered into a definitive
agreement to be acquired in an all cash transaction by Integrated
Device Technology, Inc. (IDT®) (NASDAQ: IDTI), for total cash
consideration of $3.08 per share, or approximately $250
million in cash, including various expenses and amounts paid to
employees and directors
- Under the terms of the agreement, IDT
will commence a cash tender offer for all outstanding shares of
GigPeak for $3.08 per share in cash. This per share consideration
would represent a premium of approximately 22% to GigPeak’s closing
share price on February 10, 2017, and an approximately 30% premium
to its last 9-month average trading price as of February 10,
2017
- The transaction has been unanimously
approved by the board of directors of both companies, with closing
expected during second quarter of calendar 2017, and the Board of
Directors of GigPeak has resolved to recommend that stockholders
accept the offer, once it is commenced
- Due to the announced definitive
agreement with Integrated Device Technology, Inc., GigPeak will not
be holding the previously announced conference call today to
discuss its fourth quarter and fiscal year financial results
GigPeak Financial Results
- FY16 record revenue of $58.7 million,
an increase of 45 percent above the $40.4 million in FY15
- FY16 record GAAP net income of $2.2
million, or net income of $0.04 per diluted share, up from net
income of $1.2 million, or $0.03 per diluted share in FY15
- FY16 record non-GAAP net income of
$12.1 million, or net income of $0.20 per diluted share, up from
net income $7.3 million, or $0.19 per diluted share in FY15. The
earnings per diluted share results for FY16 and FY15 are based on
an average diluted share count of 61.4 million and 38.1 million
shares, respectively
- FY16 record Adjusted EBITDA of $16.5
million, up from $10.1 million in FY15
- Q4 FY16 record revenue of $16.2
million, up 3 percent from $15.8 million in Q3 FY16, and up 46
percent from $11.1 million in Q4 FY15
- Q4 FY16 record GAAP and non-GAAP gross
margin of 71 percent and 74 percent, respectively. This compares
with GAAP and non-GAAP gross margin of 67 percent and 72 percent,
respectively, in Q3 FY16, and 65 percent and 67 percent,
respectively, in Q4 FY15
- Q4 FY16 GAAP and record non-GAAP net
income of $1.5 million and $3.6 million, respectively. This
compares with GAAP and non-GAAP net income of $0.7 million and $3.5
million, respectively, in Q3 FY16, and $0.3 million and $2.2
million, respectively, in Q4 FY15
- Q4 FY16 GAAP and non-GAAP earnings per
diluted share of $0.02 and $0.05, respectively. This compares with
GAAP and non-GAAP earnings per diluted share $0.01 and $0.05,
respectively, in Q3 FY16, and $0.01 and $0.05, respectively, in Q4
FY15. The earnings per diluted share results were based on share
counts of 70.4 million, 69.4 million, and 47.1 million in Q4 FY16,
Q3 FY16 and Q4 FY15, respectively
- Q4 FY16 Adjusted EBITDA was a record of
$5.0 million, and compares with $4.6 million in Q3 FY16 and $2.9
million in Q4 FY15
- Cash and cash equivalents and
restricted cash as of December 31, 2016, were $35.8 million,
compared with $38.6 million at the end of Q3 FY16
- The Company will not be providing a
financial outlook due to the announced definitive agreement with
Integrated Device Technology, Inc.
GigPeak, Inc. (NYSE MKT:GIG), a leading innovator of
semiconductor ICs and software solutions for high-speed
connectivity and high-quality video compression over the network
and the cloud, today announced financial results for its fourth
quarter and fiscal year 2016, which ended December 31, 2016.
Fiscal Year 2016 GAAP
Results
Total revenue was a record $58.7 million, an increase of 45
percent above the $40.4 million in FY 2015.
Gross margin was a record 68 percent, compared with 63 percent
in FY 2015.
Net income was a record $2.2 million, compared with net income
of $1.2 million in FY 2015.
Earnings per diluted share were a record $0.04, compared with
earnings per diluted share of $0.03 in FY 2015. The earnings per
diluted share results for FY16 and FY15 are based on an average
diluted share count of 61.4 million and 38.1 million shares,
respectively.
Fiscal Year 2016 Non-GAAP
Results1
Non-GAAP gross margin was a record 72 percent, compared with 65
percent in FY 2015.
Non-GAAP net income was a record $12.1 million, compared with
non-GAAP net income of $7.3 million in FY 2015. Earnings per
diluted share were $0.20, up from $0.19 per diluted share in FY
2015.
Adjusted EBITDA1 was a record $16.5 million, compared with $10.1
million in FY 2015.
Fourth Quarter Fiscal 2016 GAAP
Results
Total revenue in Q4 FY16 was a record $16.2 million, and
compares with revenue of $15.8 million in Q3 FY16, and $11.1
million in Q4 FY15.
Gross margin in Q4 FY16 was 71 percent, and compares with 67
percent in Q3 FY16, and 65 percent in Q4 FY15.
Net income in Q4 FY16 was $1.5 million, or $0.02 per diluted
share. This compares with net income of $0.7 million, or $0.01 per
share in Q3 FY16, and net income of $0.3 million, or $0.01 per
diluted share in Q4 FY15.
The GAAP financial results include costs related to the
Company’s acquisition and other strategic development activities,
which would not have occurred in the absence of such activity, of
approximately $189,000, $745,000, and $846,000 for the periods
ended Q4 FY16, Q3 FY16 and Q4 FY15, respectively.
Cash and cash equivalents and restricted cash as of
December 31, 2016, were $35.8 million, compared with $38.6 million
at the end of Q3 FY16.
Fourth Quarter Fiscal 2016 Non-GAAP
Results1
Gross margin for Q4 FY16 was a record 74 percent, and compares
with 72 percent in Q3 FY16, and 67 percent in Q4 FY15.
Net income for Q4 FY16 was a record $3.6 million, or $0.05 per
diluted share. This compares with net income of $3.5 million, or
$0.05 per diluted share in Q3 FY16, and net income of $2.2 million,
or $0.05 per diluted share in Q4 FY15. The earnings per diluted
share results were based on share counts of 70.4 million, 69.4
million, and 47.1 million in Q4 FY16, Q3 FY16 and Q4 FY15,
respectively.
Adjusted EBITDA1 for Q4 FY16 was a record $5.0 million. This
compares with Adjusted EBITDA of $4.6 million in Q3 FY16, and
Adjusted EBITDA of $2.9 million in Q4 FY15.
“Fiscal 2016 was a transformative year for GigPeak and
culminated in the best quarterly and annual financial performance
in the Company’s history,” said Dr. Avi Katz, Founder, Chairman and
CEO of GigPeak, Inc. “We significantly expanded the product
portfolio during the year with the strategic acquisition of Magnum
Semiconductor. This addition greatly expanded the addressable
markets we serve, namely cloud connectivity, which include the
network and broadcast segments, and further diversified our revenue
stream. In addition, it increased our customer base and drove
additional cross-selling opportunities to existing customers. In FY
2016 we also released a large number of new devices to support next
generation data center communication links, as well as advanced
optical ASICs.
“Since founding the Company ten years ago, we are delighted that
our outstanding achievements in technology, innovation, product
diversification and financial performance have proven to be
attractive to a respected industry leader such as IDT. We are
confident that under the much larger umbrella of IDT, we will be
able to generate greater value for our customers, employees and
stakeholders. We are confident this acquisition will open new
opportunities that will enable our current products and
technologies to be synergistic with the larger installed customer
base, engineering prowess and worldwide market reach of IDT for
many years to come,” said Dr. Katz.
1Non-GAAP Measures - GigPeak reports gross margin,
operating income and net income on a Generally Accepted
Accounting Principles (GAAP) and non-GAAP basis. In addition,
GigPeak reports Adjusted EBITDA. Adjusted EBITDA is defined as net
earnings before interest, taxes, other expense (income), net,
depreciation and amortization, including amortization of
intangibles, stock-based compensation, acquisition and strategic
activities related costs and loss on equity method investment.
Adjusted EBITDA differs from net earnings, as calculated in
accordance with GAAP, in that it excludes the foregoing items. We
have made numerous investments in our business, such as
acquisitions and capital expenditures, which we believe we have
adjusted for in Adjusted EBITDA, and we have used equity as a
compensatory method that is also excluded. Adjusted EBITDA also
does not give effect to cash used for debt service requirements and
thus does not reflect funds available for reinvestments or other
discretionary uses. Management believes Adjusted EBITDA and the
other non-GAAP financial measures are important indicators of the
ongoing operations of GigPeak’s business and provide an additional
metric for comparability between reporting periods and provide an
additional baseline for analyzing trends in GigPeak’s operations
because these financial measures provide a view of our operations
that excludes items that management believes are not reflective of
the operating performance, such as items traditionally removed from
net earnings in the calculation of EBITDA as well as other expense
(income), net. As a result, these non-GAAP measures are provided to
supplement investors’ overall understanding of, and an enhanced
level of transparency into, GigPeak’s financial performance. In
addition, Adjusted EBITDA is used in determining compliance with
covenants in our term loan and revolving line agreement. Adjusted
EBITDA is not presented as an alternative measure of operating
performance, as determined in accordance with GAAP; nor should it
be considered a substitute for, or superior to the comparable GAAP
measures. Rather, these measures should be considered in
addition to results prepared in accordance with GAAP. No other
adjustments were made during the three month periods and fiscal
years ended December 31, 2016 and 2015. A reconciliation of these
GAAP to non-GAAP measurements and Adjusted EBITDA for the three
months and fiscal years ended December 31, 2016 and 2015, can
be found in the “Reconciliation of GAAP to Non-GAAP Financial
Information” table attached to this press release.
About GigPeak, Inc.
GigPeak, Inc. (NYSE MKT: GIG) is a leading innovator of
semiconductor ICs and software solutions for high-speed
connectivity and high-quality video compression over the network
and the cloud. The focus of the company is to develop and deliver
products that enable lower power consumption and faster data
connectivity, more efficient use of network infrastructure, broader
connectivity to the cloud, and reduce the total cost of ownership
of existing network pipes from the core to the end user. GigPeak
addresses both the speed of data transmission and the amount of
bandwidth the data consumes within the network, and provides
solutions that increase the efficiency of the Internet of Things,
leveraging its strength in high-speed connectivity and high-quality
video compression. The extended product portfolio provides more
flexibility to support changing market requirements from ICs and
MMICs through full software programmability and cost-efficient
custom ASICs.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Such statements contain words such as “believe,” “will,” and
“expect,” or the negative thereof or comparable terminology, and
include (without limitation) statements regarding the anticipated
consummation of the acquisition of GigPeak and the timing and
benefits thereof, products, development and future product demand,
bandwidth demand and data traffic growth, addressable markets and
additional potential acquisitions. Forward-looking statements
involve certain risks and uncertainties, and actual results may
differ materially from those discussed in any such statement. These
risks include, but are not limited to: the risks related to IDT’s
ability to complete the transaction on the proposed terms and
schedule; whether IDT or GigPeak will be able to satisfy their
respective closing conditions related to the transaction; whether
sufficient stockholders of GigPeak tender their shares of GigPeak
common stock in the transaction; whether IDT will obtain financing
for the transaction on the expected timeline and terms; the outcome
of legal proceedings that may be instituted against GigPeak and/or
others relating to the transaction; the possibility that competing
offers will be made; risks associated with acquisitions, such as
the risk that the businesses will not be integrated successfully,
that such integration may be more difficult, time-consuming or
costly than expected or that the expected benefits of the
transaction will not occur; risks related to future opportunities
and plans for the acquired company and its products, including
uncertainty of the expected financial performance of the acquired
company and its products; disruption from the proposed transaction,
making it more difficult to conduct business as usual or maintain
relationships with customers, employees or suppliers; the
calculations of, and factors that may impact the calculations of,
the acquisition price in connection with the proposed merger and
the allocation of such acquisition price to the net assets acquired
in accordance with applicable accounting rules and methodologies;
and the possibility that if the acquired company does not achieve
the perceived benefits of the proposed transaction as rapidly or to
the extent anticipated by financial analysts or investors, the
ability to extend product offerings into new areas or products, the
ability to commercialize technology, unexpected occurrences that
deter the full documentation and “bring to market” plan for
products, trends and fluctuations in the industry, changes in
demand and purchasing volume of customers, unpredictability of
suppliers, the ability to attract and retain qualified personnel,
the ability to move product sales to production levels, the ability
to compete for client design-in opportunities, the ability to
cross-sell to new clients and to diversify and the success of
product sales in new markets or of recently produced product
offerings, including bundled product solutions. Additional factors
that could cause actual results to differ are discussed under the
heading “Risk Factors” and in other sections of the GigPeak filings
with the SEC, and in its other current and periodic reports filed
or furnished from time to time with the SEC. All forward-looking
statements in this press release are made as of the date hereof,
based on information available to GigPeak as of the date hereof,
and GigPeak assumes no obligation to update any forward-looking
statement.
Additional Information and Where to Find It
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities. The tender offer
for the outstanding shares of GigPeak’s common stock described in
this press release has not commenced. At the time the tender offer
is commenced, IDT will file or cause to be filed a Tender Offer
Statement on Schedule TO with the SEC and GigPeak will file a
Solicitation/Recommendation Statement on Schedule 14D-9 with the
SEC related to the tender offer. The Tender Offer Statement
(including an Offer to Purchase, a related Letter of Transmittal
and other tender offer documents) and the
Solicitation/Recommendation Statement will contain important
information that should be read carefully before any decision is
made with respect to the tender offer. Those materials will be made
available to GigPeak’s stockholders at no expense to them by the
information agent to the tender offer, which will be announced. In
addition, all of those materials (and any other documents filed
with the SEC) will be available at no charge on the SEC’s website
at www.sec.gov.
GIGPEAK, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands, except share amounts)
(Unaudited) December 31,
December 31, Net Change 2016
2015
$
%
ASSETS Current assets: Cash and cash equivalents $ 35,757 $
30,245 $ 5,512 18 % Accounts receivable, net 15,258 10,596 4,662 44
% Inventories 13,687 6,880 6,807 99 % Prepaid and other current
assets 658 580 78 13 %
Total current assets 65,360 48,301 17,059 35 % Property and
equipment, net 3,840 3,133 707 23 % Intangible assets, net 26,717
4,530 22,187 490 % Goodwill 42,977 12,565 30,412 242 % Restricted
cash 87 330 (243 ) (74 %) Other assets 1,454
251 1,203 479 % Total assets $ 140,435
$ 69,110 $ 71,325 103 %
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $
7,093 $ 3,659 $ 3,434 94 % Accrued compensation 3,166 1,782 1,384
78 % Notes payable, current 2,898 - 2,898 - Other current
liabilities 2,872 2,219 653
29 % Total current liabilities 16,029 7,660 8,369 109 %
Pension liabilities 345 349 (4 ) (1 %) Notes payable, net of
current portion 9,853 - 9,853 - Other long-term liabilities
3,896 912 2,984 327 % Total
liabilities 30,123 8,921 21,202
238 % Stockholders' Equity Common stock 69 45 24 53 %
Additional paid-in capital 213,557 163,036 50,521 31 % Treasury
stock, at cost; 1,781,142 shares and 701,754 as of December 31,
2016 and 2015, respectively (4,972 ) (2,209 ) (2,763 ) 125 %
Accumulated other comprehensive income 440 332 108 33 % Accumulated
deficit (98,782 ) (101,015 ) 2,233 (2
%) Total stockholders' equity 110,312 60,189
50,123 83 % Total liabilities and
stockholders' equity $ 140,435 $ 69,110 $ 71,325
103 %
GIGPEAK, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except per share
amounts) (Unaudited) Three months
ended Twelve months ended December 31,
September 25, December
31, December 31, December
31, 2016 %
2016 % 2015 %
2016
%
2015
%
Total revenue $ 16,217 100 % $ 15,796 100 % $ 11,075 100 % $ 58,743
100 % $ 40,394 100 % Total cost of revenue 4,706 29 %
5,148 33 % 3,858 35 % 18,730
32 % 14,898 37 % Gross profit 11,511
71 % 10,648 67 % 7,217 65 %
40,013 68 % 25,496 63 % Research and
development expense 5,704 35 % 5,395 34 % 3,383 31 % 20,314 35 %
12,955 32 % Selling, general and administrative expense
3,808 23 % 4,360 28 % 3,447 31 %
16,336 28 % 11,127 28 % Total operating
expenses 9,512 59 % 9,755 62 %
6,830 62 % 36,650 62 % 24,082 60
% Income from operations 1,999 12 % 893 6 % 387 3 % 3,363 6 % 1,414
4 % Interest expense, net (182 ) -1 % (236 ) -1 % (7 ) 0 % (674 )
-1 % (19 ) 0 % Other income (expense), net (146 ) -1 %
14 0 % (53 ) 0 % (217 ) 0 % (76
) 0 % Income before provision for (benefit from) income taxes 1,671
10 % 671 4 % 327 3 % 2,472 4 % 1,319 3 % Provision for (benefit
from) income taxes 142 1 % - 0 %
(6 ) 0 % 239 0 % 67 0 % Income from
consolidated companies 1,529 9 % 671 4 % 333 3 % 2,233 4 % 1,252 3
% Loss on equity method investment - 0 % -
0 % - 0 % - 0 % 3
0 % Net income $ 1,529 9 % $ 671 4 % $ 333 3 %
$ 2,233 4 % $ 1,249 3 % Basic net income per
share $ 0.02 $ 0.01 $ 0.01 $ 0.04 $ 0.03 Diluted net income per
share $ 0.02 $ 0.01 $ 0.01 $ 0.04 $ 0.03 Weighted average
number of shares used in basic net income per share calculation
67,647 67,623 44,317 58,713 36,624 Weighted average number of
shares used in diluted net income per share calculation 70,369
69,399 47,128 61,412 38,114
GIGPEAK, INC. NON-GAAP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In
thousands, except per share amounts) (Unaudited)
Three months ended Twelve months ended
December 31, September 25,
December 31, December 31,
December 31, 2016 %
2016 % 2015
% 2016 % 2015
% Total revenue $ 16,217 100 % $ 15,796 100 % $
11,075 100 % $ 58,743 100 % $ 40,394 100 % Total cost of revenue
4,219 26 % 4,423 28 % 3,680
33 % 16,555 28 % 14,095 35 %
Gross profit 11,998 74 % 11,373 72 %
7,395 67 % 42,188 72 % 26,299
65 % Research and development expense 5,291 33 % 5,020 32 %
2,991 27 % 18,728 32 % 11,454 28 % Selling, general and
administrative expense 2,646 16 % 2,665
17 % 2,134 19 % 10,277 17 %
7,374 18 % Total operating expenses 7,937 49 %
7,685 49 % 5,125 46 % 29,005
49 % 18,828 47 % Income from operations 4,061
25 % 3,688 23 % 2,270 20 % 13,183 22 % 7,471 18 % Interest expense,
net (182 ) -1 % (236 ) -1 % (7 ) 0 % (674 ) -1 % (19 ) 0 % Other
income (expense), net (146 ) -1 % 14 0 %
(53 ) 0 % (217 ) 0 % (76 ) 0 % Income before
provision for (benefit from) income taxes 3,733 23 % 3,466 22 %
2,210 20 % 12,292 21 % 7,376 18 % Provision for (benefit from)
income taxes 142 1 % - 0 % (6 )
0 % 239 0 % 67 0 % Net income $ 3,591
22 % $ 3,466 22 % $ 2,216 20 % $ 12,053
21 % $ 7,309 18 % Basic net income per share $ 0.05 $
0.05 $ 0.05 $ 0.21 $ 0.20 Diluted net income per share $ 0.05 $
0.05 $ 0.05 $ 0.20 $ 0.19 Weighted average number of shares
used in basic net income per share calculation 67,647 67,623 44,317
58,713 36,624 Weighted average number of shares used in diluted net
income per share calculation 70,369 69,399 47,128 61,412 38,114
GIGPEAK, INC. RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL INFORMATION (In thousands) (Unaudited)
Three months ended, Twelve months
ended December 31, September 25,
December 31, December 31, December 31,
2016 2016
2015 2016 2015
GAAP Total cost of revenue $ 4,706 $ 5,148 $ 3,858 $ 18,730
$ 14,898 Stock-based compensation (61 ) (74 ) (72 ) (293 ) (387 )
Amortization of intangible assets (426 ) (641 ) (103 ) (1,872 )
(413 ) Special bonus COGS - (10 ) (3 )
(10 ) (3 ) Non-GAAP Total cost of revenue $ 4,219
$ 4,423 $ 3,680 $ 16,555 $ 14,095
GAAP Gross profit $ 11,511 $ 10,648 $ 7,217 $ 40,013
$ 25,496 Stock-based compensation 61 74 72 293 387 Amortization of
intangible assets 426 641 103 1,872 413 Special bonus -
10 3 10 3
Non-GAAP Gross profit $ 11,998 $ 11,373 $
7,395 $ 42,188 $ 26,299 GAAP Operating
expenses $ 9,512 $ 9,755 $ 6,830 $ 36,650 $ 24,082 Stock-based
compensation (1,072 ) (1,023 ) (644 ) (4,294 ) (3,461 )
Amortization of intangible assets (314 ) (312 ) (218 ) (1,155 )
(578 ) Acquisition and strategic activities related costs (189 )
(50 ) (296 ) (1,511 ) (668 ) Special bonus -
(685 ) (547 ) (685 ) (547 ) Non-GAAP Operating
expenses $ 7,937 $ 7,685 $ 5,125 $ 29,005
$ 18,828 GAAP Income from operations $ 1,999 $
893 $ 387 $ 3,363 $ 1,414 Stock-based compensation 1,133 1,097 716
4,587 3,848 Amortization of intangible assets 740 953 321 3,027 991
Acquisition and strategic activities related costs 189 50 296 1,511
668 Special bonus - 695 550
695 550 Non-GAAP Income from
operations $ 4,061 $ 3,688 $ 2,270 $ 13,183
$ 7,471 GAAP Net income $ 1,529 $ 671 $ 333 $
2,233 $ 1,249 Stock-based compensation 1,133 1,097 716 4,587 3,848
Amortization of intangible assets 740 953 321 3,027 991 Acquisition
and strategic activities related costs 189 50 296 1,511 668 Special
bonus - 695 550 695 550 Loss on equity method investment -
- - - 3
Non-GAAP Net income $ 3,591 $ 3,466 $ 2,216
$ 12,053 $ 7,309 Adjusted EBITDA
reconciliation: GAAP Income from operations $ 1,999 $ 893 $ 387 $
3,363 $ 1,414 Depreciation and amortization 1,636 1,866 951 6,343
3,595 Stock-based compensation 1,133 1,097 716 4,587 3,848
Acquisition and strategic activities related costs 189 50 296 1,511
668 Special bonus - 695 550
695 550 Adjusted EBITDA $ 4,957
$ 4,601 $ 2,900 $ 16,499 $ 10,075
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170213006161/en/
Darrow Associates, Inc.Jim Fanucchi,
408-404-5400ir@gigpeak.com
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