Faroudja Inc. Announces Fourth Quarter andFull Year Results
January 28, 1999 06:25 PM
SUNNYVALE, Calif.--(BUSINESS WIRE)--Jan. 28, 1999--Faroudja, Inc. FDJA today reported results of
operations for the fourth quarter and year ended December 31, 1998.
Revenues for the fourth quarter of 1998 were $2,554,000. For the quarter, the company reported a net loss of
$902,000, or $.07 per share, on 12.2 million diluted shares. For the fourth quarter of 1997, Faroudja posted
revenues of $4,130,000 and net income of $326,000 or $.03 per share on 11.6 million diluted shares.
For the full year ended December 31, 1998, Faroudja recorded revenues of $12,270,000 and a net loss of
$3,469,000, or $.29 per share on 12.1 million diluted shares. In 1997, the company reported revenues of
$17,006,000 and net income of $1,251,000, or $.13 per share on 9.9 million diluted shares.
"A number of factors affected our results in fourth quarter and full year," said Glenn W. Marschel, Jr., President
and CEO. "Softness in the Home Theater market was driven by competition, pricing pressure and the confusion
associated with the rollout of HDTV - all contributing to a short-term decline in revenues. This was partially offset
by increased Broadcast sales of our Digital Format Translator (DFT) products and cost controls in the fourth
quarter."
Mr. Marschel said, "We made significant advances toward our 1998 strategic goal of returning to the Broadcast
market through introduction of the DFT product line. We are pleased with our warm reception from broadcasters
and the increased rate of Broadcast sales in the fourth quarter. DFTs are now in service at certain CBS, NBC,
Fox and Warner Brothers television stations and we recently shipped DFTs to Home Box Office (HBO), our first
DFT customer in the cable television industry."
Faroudja recently made two significant product additions to its Home Theater line. In late December, the
company announced an alliance with In Focus Systems, Inc. ("In Focus"), the world leader in the data/video
projector market, to provide the first LCD-based projector with home theater quality video, the LS(TM) 700.
The LS700 combines Faroudja's superior video processing with the award-winning design of In Focus LCD
projectors. Also in December, the company started shipping the 58" wide, HDTV ready RP5800 - the finest
quality rear projection television system available.
"The company is reinforcing its marketing and technological initiatives with a program to maximize cost efficiencies
throughout the organization," said Robert Sheffield, Vice President of Finance/CFO, who noted that "the
company has reduced its operating expense run-rate by more than 15% while continuing our high level of
investment in development. In addition, we redirected resources to new strategic programs."
"Moving into 1999, our focus is on revenue growth and returning the company to profitability," said Mr.
Marschel. "In the near term, we expect revenue gains from DFT Broadcast sales and from the sale of LCD
projectors resulting from our joint efforts with In Focus.
"Looking forward, we will also actively refine and pursue strategies for designing and developing integrated circuit
products for the emerging digital display and computer/television convergence markets. I am pleased to announce
a key development in this area: Dr. Nikhil Balram has joined the company today as Vice President of Advanced
Technology, reporting to me. Dr. Balram, most recently Director of Systems Architecture and manager of the
Video Group at S3 Incorporated, will lead us in pursuing these new opportunities. The company will also commit
increased research and development resources in this area.
"The advances we have recently made represent a platform for translating our technology leadership into
improved financial results," Mr. Marschel concluded.
Faroudja, Inc. FDJA is a world leader in high performance video processing technologies for markets requiring
superior image quality solutions. The company provides innovative products for the HDTV broadcast, home
theater, digital television and PC/TV convergence markets. Faroudja's technologies are protected by more than
50 patents. Faroudja has received numerous awards, including an Emmy award for Engineering Development and
a Lifetime Achievement Emmy presented in June, 1998 to its founder, Yves Faroudja.
Except for historical information contained herein, this press release contains forward-looking statements that are
subject to risks and uncertainties, including fluctuations in operating results, the timely development and
acceptance of new products, product availability from suppliers, the impact of competitive products and pricing,
changing TV standards and other risks set forth under the caption "Factors Affecting Future Operating Results" in
Faroudja's Annual Report on Form 10-K for the year ended December 31, 1997, in its quarterly reports on
Form 10-Q and other filings with the SEC.
FAROUDJA INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
December 31, December 31,
1998 1997
----------- ----------
ASSETS
Current assets:
Cash, cash equivalents
and short term investments $20,419 $23,549
Accounts receivable 1,763 3,098
Inventories 3,349 2,943
Other current assets 1,179 1,538
----------- ----------
Total current assets 26,710 31,128
Property and equipment, net 1,778 2,026
Other assets 233 335
------------ ----------
$28,721 $33,489
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,125 $1,445
Other current liabilities 1,098 2,696
----------- ----------
Total current liabilities 2,223 4,141
Stockholders' equity:
Common stock 12 12
Additional paid-in capital 30,027 28,740
(Accumulated deficit) retained earnings (3,541) 596
---------- ---------
Total stockholders' equity 26,498 29,348
---------- ----------
$28,721 $33,489
========== ==========
FAROUDJA, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands, except per share data)
Three Months Ended Full Year Ended
December 31, December 31,
------------------ -------------------
1998 1997 1998 1997
-------- -------- -------- --------
Revenues:
Product sales $2,554 $3,880 $11,520 $15,506
License and royalty
revenues - 250 750 1,500
-------- -------- -------- --------
Total revenues 2,554 4,130 12,270 17,006
Cost of product sales 1,339 1,310 5,499 5,261
-------- -------- -------- --------
Gross profit 1,215 2,820 6,771 11,745
Operating expenses:
Research and development 995 1,238 4,822 4,215
Sales and marketing 698 602 3,551 3,465
General and administrative 679 678 3,458 2,182
Financing expenses - - - 312
-------- -------- -------- --------
Total operating expenses 2,372 2,518 11,831 10,174
-------- -------- -------- --------
Operating (loss) income (1,157) 302 (5,060) 1,571
Other income (expense),
net 255 224 1,134 447
-------- -------- -------- --------
(Loss) income before
provision for income
taxes (902) 526 (3,926) 2,018
Provision (benefit) for
income taxes 0 200 (457) 767
-------- -------- -------- --------
Net (loss) income ($902) $326 ($3,469) $1,251
======== ======== ======== ========
Net income per share:
Basic ($0.07) $0.03 ($0.29) $0.14
Diluted ($0.07) $0.03 ($0.29) $0.13
Number of shares used in
per share computation:
Basic 12,204 11,016 12,146 9,041
Diluted 12,204 11,604 12,146 9,925
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