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Technology Stocks : 3DFX
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To: Michael G. Potter who wrote (12123)4/29/1999 1:52:00 AM
From: Obewon  Read Replies (2) of 16960
 
Based on the Proxy statement, management expects the following costs will be incurred due to the merger in either the first or second quarter of 1999:

1) Restructuring costs: $1.0M
- a) Employee relocations - $0.6M
- b) Employee separations - $0.1M
- c) Facility consolidation - $0.3M

2) In-process R&D - $4.3M (expensed immediately upon completion of merger)

3) Intangibles
- a) Existing technology - $11.4M
- b) Trademarks - $4.4M
- c) Work Force-in-place - $2.3M
- d) Executive Covenants - $1.0M
- e) Goodwill - $0.4M
(Collectively $7.6M of these five charges will be amortized over the first year, half of total has a useful life of 3 years or less)

(NOTE: The Goodwill amount will change up or down depending on whether 3dfx's stock price is above or below $14.045/share at the time of completion of the merger. Using $16.50/share, Goodwill would increase to approx. $10.0M with a five year useful life)

Additionally, you have the following expenses not directly related to the merger gleaned from public statements by the company:

4) Reserve against recovery of A/R owed by Diamond Multimedia - $3.9M

5) Consumer marketing and advertising campaign - $20.0M

Total Expenses added to 1Q99 and 2Q99 quarter = $33.0M (Assumes no increase in goodwill)

Obewon
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