Digital Video Systems Announces Third Quarter Results
Business Wire - February 12, 1998 20:47
LOS GATOS, Calif.--(BUSINESS WIRE)--Feb. 12, 1998--Digital Video Systems, Inc. (DVS) (NASDAQ:DVID) today reported financial results for the third
fiscal quarter 1998, the three-month period ending December 31, 1997. Total revenues increased 44.6% to $5.4 million, compared to $3.7 million for the quarter
ended September 30, 1997. The Company reported a net loss for the third quarter of fiscal 1998 of $4.8 million or $0.39 per share, compared to a net loss of
$4.2 million, or $0.34 per share in the second quarter of fiscal 1998. At December 31, 1997 the Company's working capital was approximately $21.1 million. The
Company has chosen to consolidate the financial results of its Panyu, China Joint Venture through only September 30, 1997 due to several administrative and
operational issues associated with the joint venture. Therefore, the Company's third quarter results do not include the China Joint Venture's third quarter financial
results for the three-month period ending December 31, 1997. The joint venture was formed on August 5, 1997. Thomas R. Parkinson, President and COO
stated, "We are disappointed that we were unable to incorporate the Company's China Joint Venture's financial results through December 31, 1997. However, this
was the most fiscally prudent action that could be taken due to the combination of administrative and operational issues. DVS recently increased its interest in Panyu
China Joint Venture to 90%, thus ensuring full control over the operations. DVS is fully committed to the success of our Panyu operations and we are devoting the
necessary financial, technical and operational support to assure its success. As we transition our Panyu manufacturing operations to include the production of DVD
players and other new products with higher gross margins, this should help the company in attaining our ultimate goal of profitability for our China operations. The
China market continues to offer a significant opportunity and strategic advantage to DVS, which we must nurture and strengthen." The Company for the nine months
ended December 31, 1997, reported total revenues of $14.5 million versus $9.6 million for the prior fiscal period. The net loss for the period increased to $10.8
million versus the prior fiscal period's loss of $8.6 million.
About DVS
Digital Video Systems develops and markets DVD players, Video CD players, including subassemblies and components, DVD products, Video on Demand
network products, kiosk products, digital ad insertion products, and MPEG encoding and authoring products for entertainment, business and educational uses.
Established in 1992, DVS is a publicly held company based in Los Gatos, California, with branch offices in Suwanee (Metro-Atlanta), Georgia; Taipei; Tokyo;
Hong Kong; and Panyu Municipality, Guangdong Province, China. In the United States, Digital Video Systems, Inc. recently acquired Synchrome Technology,
Inc., which develops innovative and leading edge products for the multimedia PC market. This release contains forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 that involve various risks and uncertainties, including, without limitation,
statements with respect to the Company's strategy, proposed sales of the Company's products, markets for the Company's products, and the development of the
Company's products. Actual results may differ materially from those described in those forward-looking statements due to a number of factors, including, but not
limited to the need to complete certain administrative matters necessary to enable the Company to consolidate the financial joint venture results for financial
reporting purposes and to properly maintain its legal status as a joint venture, including obtaining all required licenses, the appropriate payment and recording of
various transactions on behalf of the joint venture, the uncertainty of market acceptance of Video CD and DVD players and sub assemblies and other Company
products, including network video and digital ad insertion products, and PC peripheral products, planned rapid growth of the Company's operations, including
acquisitions and potential acquisitions of other businesses or technologies, dependence on a limited number of suppliers of certain components used in the
Company's products, conducting business in foreign countries, such as China and the competitive market for the Company's products, and other factors described
the in the Company's Annual Report on Form 10-KSB for the fiscal year ended March 31, 1997 or in other documents the Company files from time-to-time with
the Securities and Exchange Commission, including the Company's Current Report on Form 10-QSB for the fiscal quarter ending September 30, 1997.
Digital Video Systems, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
Dec. 31, March 31,
1997 1997
--------- ---------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 8,380 $ 32,221
Restricted cash 1,708 --
Short-term investments 2,510 --
Accounts receivable, net 8,073 2,875
Inventories 4,038 1,016
Prepaid expenses and other current assets 1,071 485
--------- ----------
Total current assets 25,780 36,597
--------- ---------
Property and equipment, net 2,021 1,420
Intangible assets 1,903 --
Other assets 75 56
--------- ---------
$ 29,779 $ 38,073
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,387 $ 3,044
Accrued liabilities 2,301 854
--------- ---------
Total current liabilities 4,688 3,898
Minority interest in consolidated joint venture 241 --
Stockholders' equity:
Common stock 2 2
Additional paid-in capital 56,482 54,628
Accumulated deficit (31,332) (20,297)
Cumulative foreign currency translation
adjustments (226) (72)
Deferred compensation (76) (86)
--------- ---------
Total stockholders' equity 24,850 34,175
--------- ---------
$ 29,779 $ 38,073
========= =========
Digital Video Systems, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
Three Months Nine Months
Ended December 31, Ended December 31,
1997 1996 1997 1996
-------- -------- -------- --------
Revenue:
Product revenue $4,727 $2,523 $11,384 $5,108
Development and
services revenue 644 58 645 208
Component revenue -- 3,461 2,444 4,235
-------- -------- -------- --------
Total revenue 5,371 6,042 14,473 9,551
Cost of product revenue 4,221 2,199 10,121 5,317
Cost of development and
services revenue 2 19 2 254
Cost of component revenue -- 3,423 2,400 4,221
-------- -------- --------- ---------
Gross margin 1,148 401 1,950 (241)
Operating
expenses:
Research and development 1,702 678 4,194 1,360
Sales and marketing 1,394 413 2,880 1,067
General and administrative 2,805 1,447 5,973 3,073
Purchased in-process
research and development -- 1,819 617 1,819
-------- -------- -------- --------
Total operating expenses 5,901 4,357 13,664 7,319
-------- -------- -------- --------
Loss from operations (4,753) (3,956) (11,714) (7,560)
Other income (expense), net 178 260 921 246
-------- -------- -------- --------
Net loss before
extraordinary item (4,575) (3,696) (10,793) (7,314)
-------- -------- -------- --------
Extraordinary item-
loss on early
extinguishment
of bridge notes -- -- -- (1,264)
-------- -------- -------- --------
Net loss before
provision for income
taxes and minority
interest (4,575) (3,696) (10,793) (8,578)
Provision for income
taxes -- (22) -- (22)
-------- -------- -------- --------
Net loss before
minority interest (4,575) (3,718) (10,793) (8,600)
Minority interest (241) -- (241) --
-------- -------- -------- --------
Net loss $(4,816) $(3,718) $(11,034) $(8,600)
======== ======== ======== ========
Net loss per share before
extraordinary item $(0.39) $(0.39) $(0.91) $(0.80)
======== ======== ======== ========
Net loss per share $(0.39) $(0.39) $(0.91) $(0.95)
======== ======== ======== ========
Shares used in the
calculation of net
loss per share 12,355 9,527 12,182 9,087
======== ======== ======== ========
CONTACT: Digital Video Systems
Diana Nelson, 408/874-8206
or
Access Communications
Mark Smotroff, 415/904-7070 ext. 270 |
