S3 and VIA Sign Restructured Agreement to Transfer Graphics Chip Business
SANTA CLARA, Calif., Aug. 29 /PRNewswire/ -- S3® Incorporated (Nasdaq: SIII - news) announced today that it has signed a restructured agreement with VIA Technologies (TAIEX: 2388) to complete the transfer of S3's graphics chip assets into a new venture. The restructured agreement addresses accounting-related concerns expressed by the Taiwanese government that had previously delayed the closing of S3 and VIA's original agreement. The strategic aspects of the new agreement structure remain as originally announced, while certain accounting considerations have been revised by accelerating the payment schedule and restructuring the transfer of certain assets and liabilities that are not directly related to graphics chip development. S3 has also eliminated in the revised agreement certain obligations to provide continued support for the graphics chip manufacturing operations that were provided for in the previous version of the agreement.
Under the terms of the new agreement, S3 will receive a cash payment of $208 million at the closing of the agreement and the benefit of approximately $60 million in assumed or reduced contingent and other liabilities, as compared to the prior agreement. In addition, the revised agreement is expected to reduce S3's tax liability by up to $45 million as compared to the original agreement.
VIA may elect to substitute its 13 million shares of S3 stock for the initial cash payment. S3 may also receive additional earn-out payments as defined in the prior agreement if the new venture meets certain aggressive profitability goals. VIA will also receive a warrant to purchase up to 2 million shares of S3 stock, exercisable for an additional $20 million. The revised transaction will be promptly resubmitted for any necessary government review.
``We believe that not only does this new agreement address the concerns of the Taiwanese Government by reducing the accounting impact on VIA, but this is a better deal financially for S3,'' stated Ken Potashner, CEO and Chairman of S3 Incorporated. ``The accelerated payment schedule in the new agreement allows us to put the proceeds to work immediately to fuel the growth of our business. Should VIA elect to fund the initial payment with its 13 million S3 shares, it will have all the attributes of a substantial stock buy back initiative. We view this as a powerful opportunity for the company.''
``We are pleased to have successfully worked with S3 to achieve this restructured agreement,'' said Wen-Chi Chen, President and CEO of VIA Technologies, Inc. ``We have significant expectations for this graphics business moving forward and we anticipate highlighting the success of S3 and VIA's joint graphics efforts to date with a series of new design win announcements following the clear approval of our new agreement with S3.''
About VIA Technologies, Inc.
VIA Technologies, Inc. is the world's leading fabless supplier of PC core logic chipsets, microprocessors, and multimedia and communications chips. VIA delivers value to the PC industry by designing, marketing, and selling high-performance VIA Apollo core logic chipsets for the full range of PC platforms, as well as cost-effective VIA Cyrix® processors for Value PCs and Internet Appliances. Its customers include the world's top OEMs, mainboard manufacturers, and system integrators.
VIA is headquartered in Taipei, Taiwan, at the center of the Greater China high-tech manufacturing engine, and has branch offices in the US, China and Europe. The company is listed on the Taiwan Stock Exchange (TSE2388), and achieved annual revenues of US$356 million in 1999.
About S3 Incorporated
Combining the recently announced shutdown of its graphics board business with the revision of its graphics chip agreement with VIA Technologies, S3 has taken the next step in completing its transition from a PC graphics company to an internet and digital media device company focusing on high-growth consumer markets. With significant financial assets, global marketing capabilities and a focused technology portfolio, that includes Rio(TM) digital audio players, HomeFree(TM) home networking solutions, internet access products and forthcoming information appliances, S3 is now set to relaunch itself as a leading innovator in the rapidly converging Internet and consumer device markets
VIA PR Contacts
US International
Contact: Timothy Chen Contact: Richard Brown
Phone: (510)-908-9697 Phone: (886)-2-2218-5452 #6201
Fax: (510)-683-3301 Fax: (886)-2-2218-5453
Email: Timothy_Chen@via.com.tw Email: Richard_Brown@via.com.tw
S3 Press Contact S3 Investor Contact
US Contact: Paul Crossley US Contact: Tracy Perry
Phone: (408) 588-8664 Phone: (408) 588-8086
Email: pcross@S3.com
SOURCE: VIA Technologies |
