<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
JULY 6, 2000
SILICON IMAGE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 000-26887 77-0517246
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification Number)
incorporation)
1060 EAST ARQUES AVENUE, SUNNYVALE, CA 94086
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
Registrant's telephone number, including area code:
(408) 616-4000
<PAGE>
Item 2. ACQUISITION OF ASSETS
On July 6, 2000, the Registrant acquired DVDO, Inc. ("DVDO"), pursuant
to an Amended and Restated Agreement and Plan of Reorganization, dated as of May
19, 2000 (the "Agreement"). Under the terms of the Agreement, DVDO's
shareholders received an aggregate of approximately 726,000 shares of the
Registrant's Common Stock, and DVDO's optionholders received the right to
purchase approximately 26,000 shares of the Registrant's Common Stock pursuant
to the DVDO options that were assumed. The consideration given was determined by
arms'-length negotiations between the parties. Prior to execution of the
Agreement, there was no material relationship between DVDO and the Registrant or
any of its affiliates, any director or officer of the Registrant, or any
associate of any such director or officer.
A copy of the press release announcing the closing of the acquisition
is attached as Exhibit 99.1 and is incorporated herein by reference.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
<PAGE>
DVDO, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants..................................... F-3
Balance Sheets........................................................ F-4
Statements of Operations.............................................. F-5
Statements of Shareholders' Deficit................................... F-6
Statements of Cash Flows.............................................. F-7
Notes to Financial Statements......................................... F-8
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
DVDO, Inc.
In our opinion, the accompanying balance sheets and the related
statements of operations, of shareholders' deficit and of cash flows present
fairly, in all material respects, the financial position of DVDO, Inc. at
December 31, 1998 and 1999, and for each of the two years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
San Jose, California
June 16, 2000, except as to Note 8
which is as of July 6, 2000
F-3
<PAGE>
DVDO, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------- MARCH 31,
1998 1999 2000
------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 41 $ 287 $ 160
Accounts receivable, net 1 268 362
Prepaid expenses and other 44 219 189
Inventory - 540 545
------------ ----------- -----------
Total current assets 86 1,314 1,256
Property and equipment, net 235 202 200
------------ ----------- -----------
Total assets $ 321 $ 1,516 $ 1,456
------------ ----------- -----------
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED
SECURITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Accounts payable $ 169 $ 803 $ 1,349
Accrued expenses 123 676 607
Notes payable - 200 100
------------ ----------- -----------
Total current liabilities 292 1,679 2,056
Total liabilities 292 1,679 2,056
------------ ----------- -----------
Commitments and contingencies (Note 7)
Redeemable convertible preferred securities (Note 4) 2,075 3,967 4,348
------------ ----------- -----------
Shareholders' deficit:
Common stock, 30,000,000 shares authorized; 9,000,000,
10,860,000 and 11,099,000 shares issued and outstanding
at December 31, 1998, 1999 and March 31, 2000 (unaudited), respectively 9 696 1,457
Unearned compensation - (175) (741)
Accumulated deficit (2,055) (4,651) (5,664)
------------ ----------- -----------
Total shareholders' deficit (2,046) (4,130) (4,948)
------------ ----------- -----------
Total liabilities, redeemable convertible preferred securities
and shareholders' deficit $ 321 $ 1,516 $ 1,456
------------ ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
DVDO, INC.
STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED FOR THE THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
---------------------------------- ----------------------------------
1998 1999 1999 2000
---------------- ---------------- ---------------- ----------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues $ 1 $ 1,580 $ 2 $ 825
Cost of revenues - 880 1 785
---------------- ---------------- ---------------- ----------------
Gross profit 1 700 1 40
---------------- ---------------- ---------------- ----------------
Operating expenses:
Research and development 1,603 1,997 513 639
Sales and marketing 7 597 106 171
General and administrative 302 572 75 231
---------------- ---------------- ---------------- ----------------
Total operating expenses 1,912 3,166 694 1,041
---------------- ---------------- ---------------- ----------------
Loss from operations (1,911) (2,466) (693) (1,001)
---------------- ---------------- ---------------- ----------------
Other income and expenses:
Interest income 5 1 - -
Interest and other expense (2) (131) (2) (12)
---------------- ---------------- ---------------- ----------------
Total other income and expense 3 (130) (2) (12)
---------------- ---------------- ---------------- ----------------
Net loss $ (1,908) $ (2,596) $ (695) $ (1,013)
---------------- ---------------- ---------------- ----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
DVDO, INC.
STATEMENTS OF SHAREHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
AND THE THREE MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
-------------------------------- UNEARNED ACCUMULATED SHAREHOLDERS'
SHARES AMOUNT COMPENSATION DEFICIT DEFICIT
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1997 9,000 $ 9 $ - $ (147) $ (138)
Net loss - - - (1,908) (1,908)
--------------- --------------- --------------- --------------- ---------------
Balances at December 31, 1998 9,000 9 - (2,055) (2,046)
Exercise of stock options for cash 1,860 133 - - 133
Expense on options to consultants - 56 - - 56
Unearned compensation - 498 (498) - -
Amortization of unearned
compensation - - 323 - 323
Net loss - - - (2,596) (2,596)
--------------- --------------- --------------- --------------- ---------------
Balances at December 31, 1999 10,860 696 (175) (4,651) (4,130)
Exercise of stock options for cash
(unaudited) 239 26 - - 26
Expense on options to consultants
(unaudited) - 38 - - 38
Unearned compensation (unaudited) - 697 (697) - -
Amortization of unearned
compensation (unaudited) - - 131 - 131
Net loss (unaudited) - - - (1,013) (1,013)
--------------- --------------- --------------- --------------- ---------------
Balances at March 31, 2000 (unaudited) 11,099 $ 1,457 $ (741) $ (5,664) $ (4,948)
--------------- --------------- --------------- --------------- ---------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
DVDO, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED FOR THE THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
---------------------------- ----------------------------
1998 1999 1999 2000
------------- ------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,908) $ (2,596) $ (695) $ (1,013)
Adjustments to reconcile net loss to net cash used in
operating activities:
Amortization and depreciation 76 76 - 32
Stock compensation and warrant expense - 387 117 169
Interest expense on stock subscriptions - 98 - -
Reserve for doubtful accounts - - - 30
Changes in assets and liabilities:
Accounts receivable (1) (267) (1) (124)
Prepaid expenses (41) (175) (72) 30
Inventory - (540) - (5)
Accounts payable 143 634 82 546
Accrued expenses 123 553 205 (69)
------------- ------------- ------------- -------------
Net cash used in operating activities (1,608) (1,830) (364) (404)
------------- ------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (299) (43) - (30)
------------- ------------- ------------- -------------
Net cash used in investing activities (299) (43) - (30)
------------- ------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of redeemable convertible preferred stock,
net of issuance costs 370 1,111 - 381
Proceeds from issuance of common stock - 133 38 26
Proceeds from issuance of stock subscriptions for redeemable
convertible preferred stock 1,085 675 300 -
Proceeds from (repayment of) notes payable - 200 100 (100)
------------- ------------- ------------- -------------
Net cash provided by financing activities 1,455 2,119 438 307
------------- ------------- ------------- -------------
Net increase (decrease) in cash and cash equivalents (452) 246 74 (127)
Cash and cash equivalents at beginning of period 493 41 41 287
------------- ------------- ------------- -------------
Cash and cash equivalents at end of period $ 41 $ 287 $ 115 $ 160
------------- ------------- ------------- -------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
Cash paid for interest $ - $ 33 $ 2 $ 12
------------- ------------- ------------- -------------
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES:
Preferred stock warrants issued in connection with services rendered $ - $ 8 $ - $ -
------------- ------------- ------------- -------------
Interest expense on stock subscriptions $ - $ 98 $ - $ -
------------- ------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
DVDO, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES:
THE COMPANY
DVDO, Inc. (the "Company") was incorporated in California in August,
1997. The Company designs, manufactures and markets chip and system level
technology for the existing and next generation of mass-market consumer
electronics video, internet enabled and interactive set-top products.
USE OF ESTIMATES
The preparation of financial statements in conformity with general
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
UNAUDITED INTERIM RESULTS
The accompanying interim financial statements as of March 31, 2000 and
for the three months ended March 31, 2000 and March 31, 1999 are unaudited. The
unaudited interim financial statements have been prepared on the same basis as
the annual financial statements and, in the opinion of management, reflect all
adjustments, which include only normal recurring adjustments, necessary to
present fairly the Company's financial position, results of operations and its
cash flows as of March 31, 2000 and for the three months ended March 31, 2000
and March 31, 1999. The financial data and other information disclosed in the
these notes to financial statements related to these periods are unaudited. The
results for the three months ended March 31, 2000 and March 31, 1999 are not
necessarily indicative of the results to be expected for the respective full
year.
REVENUE RECOGNITION
The Company recognizes revenue from product sales upon shipment if a
signed purchase order exists, the fee is fixed and determinable and collection
of the resulting receivable is probable. Estimated sales returns and warranty
costs are recorded at the time the product revenue is recognized.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Carrying amounts of certain of the Company's financial instruments,
including cash and cash equivalents, accounts receivable and accounts payable,
approximate fair value due to their short maturities.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments having a maturity of
three months or less on the date of purchase to be cash equivalents.
F-8
<PAGE>
DVDO, INC.
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
INVENTORY
Inventory is stated at the lower of cost, using the first in first out
method, or market.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost, less accumulated
depreciation. Depreciation is computed using the straight-line basis over the
estimated useful lives of the assets, generally three years. Assets held under
capital leases are amortized using the straight-line method over the shorter of
the lease term or the estimated useful life.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company evaluates the recoverability of its long-lived assets in
accordance with Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" ("SFAS 121"). SFAS No. 121 requires recognition of impairment of long-lived
assets in the event the net book value of such assets exceeds the future
undiscounted cash flows attributable to such assets. As of December 31, 1999,
the Company does not consider any assets to be impaired.
SEGMENT INFORMATION
The Company identifies its operating segments based on business
activities, management responsibility and geographical location. The Company
operates in one business segment, primarily in the United States.
RESEARCH AND DEVELOPMENT
Research and development expenditures are charged to expense as incurred.
ADVERTISING EXPENSE
The Company accounts for advertising costs as expense in the period in
which they are incurred. Advertising expense for the years ended December 31,
1998 and 1999 was zero and $92,000, respectively.
STOCK-BASED COMPENSATION
The Company accounts for stock compensation arrangements in accordance
with provisions of Accounting Principles Board Opinion ("APB") No. 25,
"Accounting for Stock Issued to Employees," ("APB No. 25") and complies with the
disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation." Under APB No. 25, stock compensation is based on the difference,
if any, on the date of grant, between the estimated fair value of the Company's
common stock and the exercise price. The Company accounts for stock issued to
non-employees in accordance with the provisions of SFAS No. 123. Expense
associated with stock-based compensation is amortized on an accelerated basis
over the vesting period of the individual award consistent with the method
described in Financial Accounting Standards Boards ("FASB") Interpretation No.
28.
F-9
<PAGE>
DVDO, INC.
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
COMPREHENSIVE INCOME
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income," ("SFAS No. 130"). SFAS No. 130
establishes standards for reporting and display of comprehensive income and its
components and is effective for periods beginning after December 15, 1997. To
date, the Company has not had any transactions that are required to be reported
as items of other comprehensive income.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," ("SFAS No. 133"). SFAS No. 133 establishes
a model for accounting for derivative and hedging activities and supercedes and
amends a number of existing accounting standards. SFAS No. 133 requires that all
derivatives be recognized in the balance sheet at their fair market value, and
the corresponding derivative gains or losses be either reported in the statement
of operations or as a deferred item depending on the type of hedge relationship
that exists with respect to such derivative. To date, the Company has not
engaged in derivative or hedging activities.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements," which provides guidance on the recognition, presentation, and
disclosure of revenue in financial statements filed with the SEC. SAB 101
outlines the basic criteria that must be met to recognize revenue and provides
guidance for disclosures related to revenue recognition policies. Management
believes that the impact of SAB 101 will not have a material effect on the
financial position or results of the operations of the Company.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of temporary cash investments
(including money market accounts) and accounts receivable. The Company places
its cash and cash equivalents with a major financial institution and such
deposits may exceed federally insured limits.
The Company performs ongoing credit evaluations of its customers'
financial condition. The Company does not generally require collateral, and will
reserve for potential credit losses on customer accounts when deemed necessary.
At December 31, 1998, one customer accounted for 100% of product revenue and
gross accounts receivable. In 1999, no customers accounted for 10% of product
revenue. At December 31, 1999, four customers accounted for 20.3%, 14.3%, 13.8%
and 10.8% of gross accounts receivable. At December 31, 1998 and 1999, the
Company did not have an allowance for doubtful accounts. The allowance for
doubtful accounts at March 31, 2000 was $30,000 (unaudited).
F-10
<PAGE>
DVDO, INC.
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
NOTE 2 - RELATED PARTY TRANSACTIONS:
The Company entered into two short-term note payable agreements with a
founder and a consultant on February 4, 1999 and April 1, 1999 for $100,000
each, respectively. The notes bear interest at the commercial lending rate plus
1% (9.5% at December 31, 1999) and are payable in full on February 4, 2000 and
April 1, 2000, respectively. The aggregate principal amount outstanding on these
notes at December 31, 1999 is $200,000.
NOTE 3 - BALANCE SHEET COMPONENTS:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------- MARCH 31,
1998 1999 2000
--------------- ---------------- ----------------
(IN THOUSANDS) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
PREPAID EXPENSES:
Prepaid engineering design costs $ 26 $ 165 $ -
Other prepaid expenses 18 54 189
--------------- ---------------- ----------------
$ 44 $ 219 $ 189
--------------- ---------------- ----------------
INVENTORY:
Work in progress $ - $ 440 $ 181
Finished goods - 100 364
--------------- ---------------- ----------------
$ - $ 540 $ 545
--------------- ---------------- ----------------
PROPERTY AND EQUIPMENT:
Computers and software $ 211 $ 220 $ 235
Furniture and equipment 101 135 150
--------------- ---------------- ----------------
312 355 385
Less: Accumulated depreciation (77) (153) (185)
--------------- ---------------- ----------------
$ 235 $ 202 $ 200
--------------- ---------------- ----------------
ACCRUED EXPENSES:
Employee benefit and compensation accrual $ 123 $ 612 $ 517
Other accrued expenses - 64 90
--------------- ---------------- ----------------
$ 123 $ 676 $ 607
--------------- ---------------- ----------------
</TABLE>
F-11
<PAGE>
DVDO, INC.
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
NOTE 4 - REDEEMABLE CONVERTIBLE PREFERRED SECURITIES:
The articles of incorporation of the Company, as amended, authorize
12,000,000 shares of redeemable convertible preferred stock of which 3,194,000
shares have been designated for Series A Redeemable Convertible Preferred Stock
and 8,000,000 shares have been designated for Series B Redeemable Convertible
Preferred Stock. A summary of redeemable convertible preferred securities is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1998 1999
---------------- ----------------
(IN THOUSANDS)
<S> <C> <C>
Series A Redeemable Convertible Preferred Stock,
3,194,000 Series A shares issued and outstanding at
December 31, 1998 and 1999 (liquidation value of $990,000 at
December 31, 1999) $ 990 $ 990
Preferred Stock Subscriptions for Redeemable Convertible Preferred Stock 1,085 -
Series B Redeemable Convertible Preferred Stock,
zero and 3,855,000 Series B shares issued and outstanding at December 31,
1998 and 1999 (liquidation value of $3,007,000 at December 31, 1999) - 2,605
Redeemable Convertible Preferred Stock Warrants - Series B - 372
---------------- ----------------
$ 2,075 $ 3,967
---------------- ----------------
</TABLE>
SERIES A AND B REDEEMABLE CONVERTIBLE PREFERRED STOCK
The holders of Series A and B Redeemable Convertible Preferred Stock have
various rights and preferences as follows:
VOTING
The holders of the Series A and B Redeemable Convertible Preferred Stock
are entitled to vote, together with the holders of Common Stock, on all matters
submitted to stockholders for a vote. Each stockholder of Series A and B
Redeemable Convertible Preferred Stock is entitled to the number of votes equal
to the number of shares of Common Stock into which each share of Series A and B
Redeemable Convertible Preferred Stock is convertible at the time of such vote.
DIVIDENDS
Holders of Series A and B Redeemable Convertible Preferred Stock are
entitled to receive noncumulative dividends, when and if declared by the Board
of Directors, and out of funds legally available, at the per annum rate of
$0.0248 and $0.0624 per share, respectively, before any dividend is declared or
paid on shares of Common Stock. Through December 31, 1999, no dividends have
been declared or paid by the Company.
F-12
<PAGE>
DVDO, INC.
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
LIQUIDATION
In the event of any liquidation, dissolution or winding up of the
Company, including a merger, acquisition or sale of assets where the beneficial
owners of the Company's common stock and redeemable convertible preferred stock
do not own a majority of the outstanding shares of the surviving, purchasing, or
newly resulting corporation, the holders of Series A and B Redeemable
Convertible Preferred Stock are entitled to receive an amount per share equal to
the original issue price plus, any declared but unpaid dividends prior to and in
preference to any distribution to the holders of common stock. Thereafter, the
remaining assets, if any, shall be distributed on a pro rata basis to the
holders of common stock in an aggregate amount equal to the first distribution
paid to the preferred shareholders. After the holders of common stock receive
such distribution, then the remaining assets, if any, shall be distributed to
preferred and common shareholders in proportion to common stock equivalents
held. Should the Company's legally available assets be insufficient to satisfy
the liquidation preferences, the funds will be distributed ratably to the Series
A and B Redeemable Convertible Preferred Shareholders, in proportion to the
respective amounts that would be payable on the shares held by them if their
respective preference amounts were paid in full.
CONVERSION
Each share of redeemable convertible preferred stock is convertible into
shares of the Company's Common Stock, upon the earlier of (i) the date specified
by vote of holders of at least 66 2/3% of the then outstanding shares of
Redeemable Convertible Preferred Stock, (ii) the closing of an under written
public offering registered under the Securities Act of 1993, at an aggregate
public offering price of not less than $10,000,000 prior to underwriting
discounts, commissions and expenses or (iii) a proposed business combination,
consolidation or merger of the Corporation with or into another corporation, or
a proposed sale or transfer to another corporation of all or substantially all
of the assets of the Corporation on the earlier of (a) the record date, if any,
for voting by holders of Common Stock on such event, and (b) the date of such
event. Each share of Series A and B Redeemable Convertible Preferred Stock shall
be convertible into the number of shares of Common Stock that results from
dividing the Series A and B conversion price in effect at the time of conversion
into the Series A and B original issue price of $0.31 and $0.78, respectively
for each share of Series A and B being converted. The Series A and B Redeemable
Convertible Preferred Stock conversion price shall be subject to adjustments
from time to time in certain instances.
F-13
<PAGE>
DVDO, INC.
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
STOCK SUBSCRIPTIONS FOR REDEEMABLE CONVERTIBLE PREFERRED STOCK
During 1998 and 1999, the Company issued stock subscriptions for
$1,085,000 and $675,000, respectively. The stock subscriptions plus accrued
interest are mandatorily convertible into Series B Redeemable Convertible
Preferred Stock based upon the future issuance price of Series B, or if the
Series B was not issued by certain dates, convertible into Series A on a $0.31
per share basis. Stock subscriptions issued during 1998 bore interest at 5.26%
per annum and issuance rights for Redeemable Convertible Preferred Stock
Warrants up to 75% of the stock subscription proceeds. Stock subscriptions
issued during 1999 bore interest at 7.50% per annum and issuance rights for
Redeemable Convertible Preferred Stock Warrants up to 100% of the stock
subscription proceeds. In December 1999, the Company converted the stock
subscriptions and accrued interest into 2,382,000 shares of Series B Redeemable
Convertible Preferred Stock upon the closing of the Series B round. The stock
subscriptions were not repayable in cash to the investors.
REDEEMABLE CONVERTIBLE PREFERRED STOCK WARRANTS - SERIES B
During 1999, in connection with the conversion of the stock subscriptions
for Series B Redeemable Convertible Preferred Stock, the Company granted
immediately exercisable warrants to purchase 1,877,000 shares of Series B
Redeemable Convertible Preferred Stock at $0.78 per share. The estimated fair
value of the warrants is $364,000. The warrants expire on the earlier of (i)
December 31, 2000, (ii) the closing of the initial public offering of the
Company's Common Stock or, (iii) the sale of all or substantially all the
capital stock, or substantially all the assets of the Company in a merger,
business combination or other form of business transaction in which the
Company's shareholders' do not own at least a majority of the outstanding voting
securities of the surviving corporation.
During 1999, for services rendered, the Company granted a warrant to
purchase 25,000 shares of Series B Redeemable Convertible Preferred Stock at
$0.78 per share. The estimated fair value of the warrants of $8,000 was fully
expensed. The warrants became exercisable when the amended and restated Articles
of Incorporation were filed authorizing the Company to issue Series B Redeemable
Convertible Preferred Stock. The warrants will expire on April 1, 2001.
F-14
<PAGE>
DVDO, INC.
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
NOTE 5 - STOCKHOLDER'S EQUITY:
The Company has authorized 30,000,000 shares of Common Stock. The Company
issued to founders, common stock subject to repurchase rights. The Company has
the right to repurchase all or any portion of the unvested shares of Common
Stock at the original purchase price, with such rights expiring over a three
year vesting period. During the year ended December 31, 1997, the Company sold
9,000,000 shares of Common Stock to founders for a total of $9,000. Termination
of the Corporation's repurchase option will accelerate upon the earlier of (i) a
merger or acquisition in which the Company is not the surviving entity, (ii) the
sale, transfer or other disposition of all or substantially all of the assets of
the Company, or (iii) any reverse merger in which the Company is the surviving
entity but in which fifty percent or more of the Company's outstanding voting
stock is transferred to holders different from those holding such stock
immediately prior to the merger. At December 31, 1999, 2,025,000 shares of the
Common Stock issued to founders were subject to the Company's repurchase option.
STOCK OPTION PLAN
In October 1997, the Board of Directors adopted the 1997 Stock Option
Plan (the "1997 Plan") which provides for the granting of stock options to
employees, directors and consultants of the Company. Options granted under the
1997 Stock Plan may be either incentive stock options ("ISO's") or non qualified
stock options ("NSO's"). ISO's may only be granted to employees of the Company,
including directors who are also employees. NSO's may be granted to employees,
consultants and directors who are not employees. In accordance with the 1997
Plan, the stated exercise price, as determined by the Board of Directors, (i)
shall not be less than 100% and 85% of the estimated fair market value of Common
Stock on the date of grant for ISO's and NSO's, respectively, and (ii) shall not
be less than 110% and 100% of the estimated fair value of the shares on the date
of grant for ISO's and NSO's, respectively, granted to a 10% shareholder. The
1997 Plan provides that the options shall be exercisable over a period not to
exceed ten years and the options generally vest over a period of three years. In
October 1998, the 1997 Plan was amended to allow options to be exercised prior
to vesting. The Company has the right to repurchase such shares at their
original price if the optionee is terminated from service prior to vesting. Such
rights expire as the options vest over the vesting period. The Company has
reserved 4,000,000 shares of Common Stock for issuance under the 1997 Plan.
F-15
<PAGE>
DVDO, INC.
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
The following table summarizes activity under the Company's 1997 Plan
from January 1, 1998 through December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
----------------------------------
WEIGHTED
SHARES AVERAGE
AVAILABLE FOR NUMBER OF EXERCISE
GRANT SHARES PRICE
---------------- ---------------- ---------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C>
Balances at January 1, 1998 2,000 - $ -
Granted (815) 815 0.03
Cancelled 100 (100) 0.03
---------------- ----------------
Balance at December 31, 1998 1,285 715 0.03
Additional shares reserved 2,000 - -
Granted (1,448) 1,448 0.10
Exercised - (1,860) 0.07
Cancelled 130 (130) 0.10
---------------- ----------------
Balances, December 31, 1999 1,967 173 $ 0.10
---------------- ----------------
</TABLE>
At December 31, 1999, options for 1,006,000 shares were vested and
exercisable and options for 892,000 unvested shares had been exercised and
remain subject to the Company's repurchase rights.
OPTION DATA
The following table summarizes information about stock options
outstanding at December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS CURRENTLY EXERCISABLE
--------------------------------------------------- ----------------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
EXERCISE NUMBER OF CONTRACTUAL EXERCISE NUMBER OF EXERCISE
PRICE SHARES LIFE (YEARS) PRICE SHARES PRICE
----------------- ---------------- ---------------- --------------- ---------------- ----------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
$ 0.10 173 9.42 $ 0.10 173 $ 0.10
---------------- ----------------
173 173
---------------- ----------------
</TABLE>
F-16
<PAGE>
DVDO, INC.
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
The weighted average fair value at the date of grant for options granted
was $0.01 and $0.44 per option during 1998 and 1999, respectively. The fair
value of options at the date of grant was estimated on the date of grant based
on the minimum value method using the Black-Scholes pricing model and using the
following assumptions:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1998 1999
---------------- ----------------
<S> <C> <C>
Risk-free interest rate 5.59% 4.80%
Expected life (years) 3 3
Dividend yield $ - $ -
</TABLE>
PRO FORMA EXPENSE
Had compensation cost for the 1997 Plan been determined based on the fair
value at the grant dates for the awards under a method prescribed be SFAS No.
123, the pro forma net loss for the years ended December 31, 1998 and 1999 would
have been $(1,908,000) and $(2,609,000), respectively.
STOCK COMPENSATION
During the year ended December 31, 1999, the Company granted options to
employees and recognized unearned stock compensation of $498,000. Such unearned
stock compensation will be amortized using an accelerated method over the
vesting period and may decrease due to employees that terminate service prior to
vesting.
OPTIONS TO CONSULTANTS
During the year ended December 1999, the Company granted options to
purchase 148,000 shares of Common Stock to consultants with a weighted average
exercise price of $0.10 per share. The charge related to options granted to
consultants is calculated at the end of each reporting period based upon the
Black-Scholes model, which approximates fair value and is amortized based on the
term of the consulting agreement or service period. The amount of the charge in
each period can fluctuate depending on the Company's stock price and volatility.
NOTE 6 - INCOME TAXES:
At December 31, 1999, the Company had approximately $3,436,000 of federal
and state net operating loss carryforwards available to reduce future taxable
income which will begin to expire in 2019 for federal and 2004 for state tax
purposes, respectively.
The Company's ability to utilize its net operating loss carryforwards to
offset future taxable income may be subject to limitations attributable to
equity transactions that result in changes in ownership as defined in the Tax
Reform Act of 1986. These restrictions may limit, on an annual basis, the
Company's future use of its net operating loss carryforwards.
F-17
<PAGE>
DVDO, INC.
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
Deferred tax assets comprise the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1998 1999
---------------- ----------------
<S> <C> <C>
Net operating loss carryforward $ 622 $ 1,359
Depreciation and amortization 155 146
Reserves and accruals 39 134
Research and development credit 116 249
Other 8 9
---------------- ----------------
Gross deferred tax asset 940 1,897
Valuation allowance (940) (1,897)
---------------- ----------------
Net deferred tax assets $ - $ -
---------------- ----------------
</TABLE>
The deferred tax assets valuation allowance at December 31, 1998 and 1999
is attributable to federal and state deferred tax assets. Management believes
that sufficient uncertainty exists with regard to the realizability of these tax
assets such that a full valuation allowance is necessary. These factors include
the lack of a significant history of consistent profits and the lack of
carryback capacity to realize these assets. Based on this absence of objective
evidence, management is unable to assert that it is more likely than not that
the Company will generate sufficient taxable income to realize the Company's net
deferred tax assets.
Reconciliation of the statutory federal income tax to the Company's
effective tax:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1998 1999
---------------- ----------------
<S> <C> <C>
Tax at federal statutory rate 34% 34%
State rates, net of federal benefit 8% 8%
Change in valuation allowance (46)% (39)%
Other 4% (3)%
---------------- ----------------
Provision for taxes -% -%
---------------- ----------------
</TABLE>
F-18
<PAGE>
DVDO, INC.
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
NOTE 7 - COMMITMENTS AND CONTINGENCIES:
LEASE OBLIGATIONS
The Company leases certain equipment and its facility under various
noncancelable operating leases.
Future minimum lease payments under operating leases as of December 31,
1999 are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED OPERATING
DECEMBER 31, LEASES
------------ -------------
(IN THOUSANDS)
<S> <C>
2000 $ 138
2001 28
2002 4
2003 3
2004 -
----------------
Total minimum payments $ 173
----------------
</TABLE>
Rent expense was $64,000 and $111,000 for the years ended December 31,
1998 and 1999, respectively.
NOTE 8 - SUBSEQUENT EVENTS:
ACQUISITION BY SILICON IMAGE, INC.
On March 30, 2000, the Company entered into a definitive agreement to be
acquired by Silicon Image, Inc., a publicly-held provider of high-bandwidth
semiconductor solutions. The transaction will be accounted for as a purchase.
With valuation collars on the transaction through the closing, a total of
approximately 643,000 shares of Silicon Image, Inc., common stock will be
exchanged for all of the Company's preferred stock and common stock. In
addition, approximately 109,000 shares of Silicon Image, Inc. common stock
will be issued or reserved in exchange for the Company's outstanding unvested
founders common stock and unvested options to acquire common stock. The
transaction was completed on July 6, 2000.
ISSUANCE OF SERIES B
In January 2000, the Company issued 360,000 shares of Series B Redeemable
Convertible Preferred Stock at a price of $0.78 per share, for net proceeds to
the Company of $281,000.
REPAID NOTES PAYABLE
In February 2000 and April 2000, the Company repaid promissory notes of
$200,000 which were outstanding at December 31, 1999 (see Note 2).
F-19
<PAGE>
DVDO, INC.
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
WARRANTS
On March 31, 2000, the holders of 128,000 warrants to purchase shares of
Series B Redeemable Convertible Preferred Stock exercised their right to
purchase such shares at $0.78 per share, resulting in total cash proceeds to the
Company of $100,000.
SECURED PROMISSORY NOTE
On June 22, 2000, the Company entered into a Secured Promissory Note with
Silicon Image, Inc., for $250,000. The note accrues interest at 8% per annum,
includes no repayment penalties and grants Silicon Image, Inc., the rights to
the Company's intellectual property as collateral until such period as the loan
is repaid or December 15, 2000, which ever is sooner.
F-20
<PAGE>
(b) UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma combined condensed financial statements
give effect to the acquisition by Silicon Image, Inc of all outstanding shares
of DVDO, Inc. in a transaction to be accounted for as a purchase.
The unaudited pro forma combined condensed balance sheet as of March 31, 2000
gives effect to this acquisition as if it had occurred on March 31, 2000. The
unaudited pro forma combined condensed statements of operations for the year
ended December 31, 1999 and for the three months ended March 31, 2000 give
effect to the acquisition as if it had occurred on January 1, 1999.
The unaudited pro forma combined condensed financial information is presented
for illustrative purposes only and is not necessarily indicative of the
operating results or financial position that would have actually occurred if the
acquisition had been consummated as of the dates indicated, nor is it
necessarily indicative of future operating results or financial position. The
unaudited pro forma combined condensed financial information, including the
notes thereto, is qualified in its entirety by reference to, and should be read
in conjunction with, the historical financial statements of Silicon Image
included in its Form 10-K and Form 10-Q filed March 30, 2000 and May 15, 2000,
respectively, with the Securities and Exchange Commission and the historical
financial statements of DVDO included in this Form 8-K.
1
<PAGE>
SILICON IMAGE, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF MARCH 31, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
SILICON PROFORMA PROFORMA
IMAGE DVDO ADJUSTMENTS BALANCES
--------- ------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 37,857 $ 160 $ - $ 38,017
Short-term investments 23,802 - - 23,802
Accounts receivable, net 2,383 362 - 2,745
Inventory 2,118 545 - 2,663
Prepaid expenses and other current assets 1,626 189 - 1,815
--------- ------- ----------- -----------
Total current assets 67,786 1,256 - 69,042
Property and equipment, net 2,073 200 - 2,273
Goodwill and other intangibles - - 24,598 (A) 24,598
Other assets 884 - - 884
--------- ------- ----------- -----------
Total assets $ 70,743 $1,456 $ 24,598 $ 96,797
========= ======= =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,808 $1,349 $ - $ 4,157
Accrued liabilities 4,619 607 500 (A) 5,726
Capital lease obligations, current 508 - - 508
Deferred margin on sales to distributors 3,687 - - 3,687
Note payable - 100 - 100
--------- ------- ----------- -----------
Total current liabilities 11,622 2,056 500 14,178
Capital lease obligations, long-term 401 - - 401
--------- ------- ----------- -----------
Total liabilities 12,023 2,056 500 14,579
Commitments and contingencies
Redeemable convertible preferred stock - 4,348 (4,348) (B) -
Stockholders' equity
Common stock 26 1,457 (1,457) (B) 27
1 (A)
Additional paid-in capital 88,871 - 31,906 (A) 125,674
4,897 (C)
Note receivable from stockholder (1,248) - - (1,248)
Unearned compensation (6,715) (741) 741 (B) (11,612)
(4,897) (C)
Accumulated (deficit) (22,214) (5,664) 5,664 (B) (30,623)
(8,409) (E)
--------- ------- ----------- -----------
Total stockholder's equity 58,720 (4,948) 28,446 82,218
--------- ------- ----------- -----------
Total liabilities and stockholder's equity $ 70,743 $1,456 $ 24,598 $ 96,797
========= ======= =========== ===========
</TABLE>
2
<PAGE>
SILICON IMAGE, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SILICON PROFORMA PROFORMA
IMAGE DVDO ADJUSTMENTS BALANCES
-------- -------- ----------- --------
<S> <C> <C> <C> <C>
Revenue:
Product revenue $ 10,104 $ 825 $ - $ 10,929
Development and license revenue - - - -
-------- -------- ----------- --------
Total revenue 10,104 825 - 10,929
Cost and operating expenses:
Cost of product revenue 3,689 785 - 4,474
Research and development 2,754 639 3,393
Selling, general and administrative 3,890 402 4,292
Stock compensation and warrant expense 2,455 - 238 (C) 2,693
Amortization of goodwill and other intangibles - - 2,075 (D) 2,075
-------- -------- ----------- --------
Total cost and operating expenses 12,788 1,826 2,313 16,927
-------- -------- ----------- --------
Loss from operations (2,684) (1,001) (2,313) (5,998)
Interest income 977 - - 977
Interest expense and other, net (35) (12) - (47)
-------- -------- ----------- --------
Net loss before provision for income taxes (1,742) (1,013) (2,313) (5,068)
Provision for income taxes (71) - - (71)
-------- -------- ----------- --------
Net loss $ (1,813) $ (1,013) $ (2,313) $ (5,139)
======== ========= =========== ========
Net loss per share:
Basic and diluted $ (0.08) $ (0.21)
======== ========
Weighted average shares 24,010 674 24,684
======== =========== ========
</TABLE>
3
<PAGE>
SILICON IMAGE, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SILICON PROFORMA PROFORMA
IMAGE DVDO ADJUSTMENTS BALANCES
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
Revenue:
Product revenue $ 20,669 $ 1,580 $ - $ 22,249
Development and license revenue 575 - - 575
-------- ------- ----------- --------
Total revenue 21,244 1,580 - 22,824
Cost and operating expenses:
Cost of product revenue 7,985 880 - 8,865
Research and development 7,168 1,997 9,165
Selling, general and administrative 8,110 1,169 9,279
Stock compensation and warrant expense 6,678 - 2,993 (C) 9,671
Amortization of goodwill and other intangibles - - 8,295 (D) 8,295
-------- ------- ----------- --------
Total cost and operating expenses 29,941 4,046 11,288 45,275
-------- ------- ----------- --------
Loss from operations (8,697) (2,466) (11,288) (22,451)
Interest income 1,250 1 1,251
Interest expense and other, net (174) (131) (305)
-------- ------- ----------- --------
Net loss before provision for income taxes (7,621) (2,596) (11,288) (21,505)
Provision for income taxes - - -
-------- ------- ----------- --------
Net loss $ (7,621) $(2,596) $ (11,288) $(21,505)
======== ======== =========== ========
Net loss per share:
Basic and diluted $ (0.75) $ (2.00)
======== ========
Weighted average shares 10,096 649 10,745
======== =========== ========
</TABLE>
4
<PAGE>
NOTE 1 - BASIS OF PRESENTATION:
Silicon Image, Inc ("the Company") acquired DVDO, Inc. ("DVDO") on July 6,
2000 for a total purchase price of $32.4 million in a transaction to be
accounted for as a purchase. The Company exchanged approximately 643,000 shares
of Silicon Image common stock with a fair value of approximately $31.7 million
for all of the outstanding stock of DVDO. In addition, the Company issued
approximately 83,000 shares of restricted stock subject to repurchase rights.
The common stock was valued using the Company's average stock price for the
five-day period ending July 6, 2000. The average price was $49.33. Silicon Image
also assumed outstanding stock options to purchase approximately 26,000 shares
of common stock of which the fair value component of the options of
approximately $172,000 will be included in the purchase price. Direct
transaction costs related to the merger are estimated to be approximately
$500,000. In addition, Silicon Image will record $4.9 million of unearned
compensation related to the intrinsic value of assumed unvested stock options
and unvested restricted stock.
The acquisition was accounted for under the purchase method of accounting
in accordance with APB Opinion No. 16. Under the purchase method of accounting,
the purchase price is allocated to the assets acquired and liabilities assumed
based on their estimated fair value. The pro forma financial information has
been prepared on the basis of assumptions described in the following notes and
include assumptions relating to the allocation of the consideration paid for the
assets and liabilities of DVDO based on preliminary estimates of their fair
values from an independent appraisal. The actual allocation of such
consideration may differ from that reflected in the pro forma financial
statements after valuations have been completed. Silicon Image does not expect
that the final allocation of the purchase price will differ materially from the
preliminary allocation.
The unaudited pro forma combined condensed balance sheet as of March 31,
2000 gives effect to the acquisition as if it had occurred on March 31, 2000.
The unaudited pro forma combined condensed statements of operations for the year
ended December 31, 1999 and for the three months ended March 31, 2000 give
effect to the acquisition as if it had occurred on January 1, 1999.
The unaudited pro forma combined condensed financial information is
presented for illustrative purposes only and is not necessarily indicative of
the operating results or financial position that would have actually occurred if
the acquisition had been consummated as of the dates indicated, nor is it
necessarily indicative of future operating results or financial position.
NOTE 2 - PURCHASE PRICE ALLOCATION:
The unaudited pro forma combined information reflects a total purchase
price of $32.4 million from approximately 643,000 shares of common stock, the
fair value component of options to acquire approximately 26,000 shares of
common stock and acquisition related expenses, consisting primarily of
investment advisory, legal and other professional service fees. The options
were valued using the Black-Scholes option pricing model, applying an average
expected life of 2.75 years, a weighted average risk-free interest rate of
6.28%, an expected dividend yield of zero percent, a volatility of 75% and a
deemed fair value of $49.33. In accordance with Financial Accounting Standards
Board Interpretation Number 44 (FIN 44), the fair value component of these
options, totaling approximately $172,000, is allocated to the purchase price.
The intrinsic value of these options, totaling approximately $803,000, is
recorded as unearned compensation. In addition, the Company issued
approximately 83,000 shares of restricted stock subject to repurchase rights.
The Company has the right to repurchase all or any portion of the unvested
shares at the original purchase price, with such right expiring over a
33-month vesting period. The value of these restricted shares of approximately
$4.1 million is recorded as unearned compensation. All unearned compensation
recorded as part of this transaction will be amortized over the vesting period
using an accelerated method.
The Company's allocation of the aggregate purchase price is based on
management's preliminary analysis and estimates of the fair values of the
tangible assets, intangible assets and in-process research and development,
which has not reached technological feasibility and therefore, has no
alternative future use. The book values of
5
<PAGE>
tangible assets and liabilities acquired are assumed to approximate fair
values. The acquired workforce and trade name will be amortized over an
estimated useful life of two years, and the current technology, patents and
goodwill will be amortized over an estimated useful life of three years.
In-process research and development will be charged to the statement of
operations in the period the acquisition is consummated. The allocation is
summarized below (in thousands):
<TABLE>
<S> <C>
Net (liabilities) acquired $(600)
Current technology 10,767
In-process research and development 8,409
Acquired workforce and trade name 573
Patents 1,275
Goodwill 11,982
-------
Total $32,406
=======
</TABLE>
NOTE 3 - UNAUDITED PRO FORMA COMBINED NET LOSS PER SHARE:
The net loss per share and shares used in computing the net loss per share
for the year ended December 31, 1999 are based upon the Company's historical
weighted average common shares outstanding together with the shares issued in
the transaction as if such shares were issued January 1, 1999. Common stock
issuable upon the exercise of stock options, warrants and unvested restricted
stock has been excluded, as the effect would be anti-dilutive for all periods
presented.
NOTE 4 - PURCHASE ADJUSTMENTS:
The following adjustments were applied to the combined financial
statements:
(A) To reflect the issuance of shares in the acquisition and to record
estimated transaction costs and other assets and liabilities at their
fair values.
(B) To reflect the elimination of the stockholders' equity accounts of
DVDO.
(C) To record stock compensation associated with shares issued subject to
repurchase rights and the intrinsic value of unvested stock options.
Unearned compensation is amortized on an accelerated basis over the
vesting period of 33 months.
(D) To record amortization of goodwill and other intangibles. Goodwill and
other intangibles are amortized on a straight-line basis over two to
three years.
(E) The Company will record an immediate write-off of in-process research
and development at the consummation of the acquisition. The unaudited
pro forma condensed statements of operations do not include the charge
for in-process research and development of approximately $8.4 million
since it is considered a non-recurring charge. The amount will be
expensed in the three months ended September 30, 2000.
6
<PAGE>
(c) Exhibits:
Exhibit 2.01 Amended and Restated Agreement and Plan of
Reorganization, dated as of May 19, 2000, by and among the Registration, Video
Acquisition Corp., and DVDO, Inc. and Laurence A. Thompson, Dale R. Adams, Cheng
Hwee Chee, and David Buuck (incorporated by reference to Exhibit 2.01 of the
Form 10-K/A filed by Registrant on May 19, 2000).
Exhibit 2.02 First Amendment to the Amended and Restated
Agreement and Plan of Reorganization, dated as of May 31, 2000, by and among the
Registration, Video Acquisition Corp., and DVDO, Inc. and Laurence A. Thompson,
Dale R. Adams, Cheng Hwee Chee, and David Buuck.
Exhibit 23.01 Consent of Independent Accountants.
Exhibit 99.1 Press release announcing the execution of the
Agreement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SILICON IMAGE, INC.
By: /s/ Daniel K. Atler
---------------------------------
DANIEL K. ATLER
Chief Financial Officer and Secretary
Dated: July 20, 2000
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
EXHIBITS
TO
FORM 8-K
DATED JULY 6, 2000
