Good thing SIII bought DIMD - they are lousy without SIII's help and $ 10+ million loan!
July 22, 4:29 pm Eastern Time
Company Press Release
SOURCE: Diamond Multimedia Systems, Inc.
Diamond Multimedia Reports Results For The Second Quarter Ended June 30, 1999
SAN JOSE, Calif., July 22 /PRNewswire/ -- Diamond Multimedia Systems, Inc. (Nasdaq: DIMD - news), a leader in PC multimedia and Internet connectivity, today reported financial results for the second quarter ended June 30, 1999.
For the quarter, net revenues were $128.7 million, compared to $172.3 million for the second quarter of 1998. The company incurred a net loss for the second quarter, including losses incurred by its newly formed RioPort division, of $10.8 million, or $0.30 per share, compared to a net loss of $8.3 million, or $0.24 per share in the second quarter of last year. Excluding the losses related to the RioPort division, which the company intends to carve out as an operating subsidiary in the third quarter, net loss was $5.4 million, or $0.15 per share. Net revenues year to date were $272.7 million, compared to $358.5 million for the first two quarters of 1998. Net loss for the first half of 1999, including the RioPort division, was $9.4 million, or $0.27 per share, compared to a net loss of $0.4 million, or $0.01 per share for the first half of 1998.
''We took several actions during the second quarter which, while having a negative impact on second quarter performance, we felt were necessary to implement our longer term strategy, '' said William J. Schroeder, president and chief executive officer. ''We increased spending in our RioPort division during the quarter to aggressively pursue an early-mover opportunity available to us in the market for digital music over the Internet. Because this is a time-perishable opportunity, we felt we needed to fund it to the maximum extent we could afford. This investment has resulted in several long-term strategic wins for RioPort and, therefore, for Diamond, including our recently announced relationships with MTV and Universal Music. We also made a substantial investment in our Communications Division during the quarter, specifically in the area of home networking, including our planned residential gateway offering, and broadband modems.''
''In addition to our investment in emerging market opportunities, we took a number of steps in anticipation of our merger with S3 that also affected performance for the quarter,'' said James M. Walker, senior vice president and chief financial officer. ''We pushed hard toward the end of the quarter to clear legacy and other products out of our inventory. This was especially true of 3Dfx-based products in our core graphics business, where our focus is on the nVidia and S3 architectures, and 3Dlabs-based products in our professional graphics business, where our going forward focus is on the IBM architecture, to which we have exclusive access for our markets. This resulted in revenue with very low or no gross margin, as well as scrap charges on certain inventory items. Consequently, core graphics and professional graphics were each reduced to about breakeven for the quarter.''
About Diamond Multimedia
Diamond Multimedia is a leader in PC multimedia and Internet connectivity, providing advanced products that enable desktop computer users to create, access and experience compelling new media content from their PC's and through the Internet. Products include the Rio series of Internet audio appliances, the Stealth and Viper® series of video accelerators, the Monster series of 3D gaming accelerators, the Fire series of professional graphics accelerators, the Supra® series of modems, and the HomeFree line of home networking products. Diamond's common stock is traded on the Nasdaq under the symbol DIMD, and its web site address is diamondmm.com . The Company's Internet music portal site is at rioport.com and its e-commerce site is at estore.diamondmm.com .
The above statements concerning future results and going forward strategy, in particular, statements concerning the market opportunity for digital music over the Internet, home networking, graphics chip architectures and the potential benefits of log term relationships, constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to a number of risks and uncertainties, which could cause actual results to differ materially from those projected. Among the factors that could cause actual results to differ materially are the following: business conditions and growth in the graphics and multimedia accelerator market, the modem market, the Internet music market, the home networking market, the professional graphics market and the general economy, the volume and timing of orders received during the period, the timing of new product introductions or establishment of Internet portals by the Company and its competitors, product line maturation, competitive factors, such as rival chipset designs and pricing pressures, the availability of third-party components products at reasonable prices, inventory risks due to shifts in market demand and/or price erosion of purchased components, changes in product mix, distribution channels, and costs associated with the development, manufacture and market introduction of new products.
Additional risks are detailed in the Company's filings with the Securities and Exchange Commission, including its reports on Form 10-K filed on March 31,1999, and on Form 10-Q filed on May 15, 1999. The Company may, from time to time, make additional written and oral forward-looking statements, including statements contained in the Company's filings with the Securities and Exchange Commission and its reports to shareholders. The Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company. Readers should carefully review the risk factors described in the documents the Company files from time to time with the Securities and Exchange Commission.
Diamond Multimedia Systems, Inc.
Consolidated Statement of Operations
(Unaudited; In Thousands Except Per Share Data
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Net Sales $128,747 $172,347 $272,734 $358,543
Cost of Goods 109,646 151,884 223,740 296,454
Gross Profit 19,101 20,463 48,994 62,089
Operating Expenses:
Research and Development 7,680 7,168 14,222 14,260
Selling, general and
administrative 25,224 23,747 45,581 46,905
Amortization of Intangibles 1,089 244 2,178 488
Restructuring expenses - 1,384 - 1,384
Total Operating Expenses 33,993 32,543 61,981 63,037
Loss from operations (14,892) (12,080) (12,987) (948)
Interest income (expense), net (1,221) 157 (1,960) 493
Other income (expense), net 744 89 1,485 (55)
Loss before (benefit) for
income taxes (15,369) (11,834) (13,462) (510)
Current income tax (benefit) (4,611) (3,550) (4,039) (153)
Net Loss $(10,758) $(8,284) $(9,423) $(357)
Net Loss per share:
Basic $(0.30) $(0.24) $(0.27) $(0.01)
Diluted $(0.30) $(0.24) $(0.27) $(0.01)
Shares used in per share calculation:
Basic 35,469 34,991 35,370 34,799
Diluted 35,469 34,991 35,370 34,799
Diamond Multimedia Systems, Inc.
Consolidated Condensed Balance Sheets
(Unaudited; In Thousands)
Balance as of
June 30, December 31,
Assets: 1999 1998
Current assets:
Cash and short-term investments $21,404 $36,072
Accounts receivable, net 119,607 94,027
Inventories, net 46,504 48,892
Prepaid expenses and other current assets 8,698 13,041
Income taxes receivable 6,691 9,735
Deferred taxes 54,075 50,071
Total Current Assets 256,979 251,838
Property, Plant and Equipment, net 29,017 27,288
Other assets 1,350 1,415
Goodwill and other intangibles, net 24,157 26,369
Total Assets $311,503 $306,910
Liabilities and Stockholders' Equity
Current liabilities
Current portion of long-term debt 61,563 45,516
Trade accounts payable and other
accrued liabilities 99,912 97,706
Deferred income on shipments to distributors 2,125 7,200
Income taxes payable 8,203 8,568
Total Current Liabilities 171,803 158,990
Long-Term Debt, net of current portion 1,413 1,550
Total Liabilities 173,216 160,540
Stockholders' equity 138,287 146,370
Total Liabilities and Stockholders' Equity $311,503 $306,910
SOURCE: Diamond Multimedia Systems, Inc.
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