S3 tossed this fish back in the water????
Number Nine Visual Technology Reports Results For The First Quarter 1998; Financing and Technology Arrangements with Silicon Graphics, Inc. Announced
May 8, 1998 07:29 AM
LEXINGTON, Mass., May 8 /PRNewswire/ -- Number Nine Visual Technology Corporation NINE today announced revenues and operating results for its first quarter of fiscal 1998 ended March 28, 1998. Revenues for the first quarter of 1998 were $8.1 million, a decrease of 42% from approximately $14.0 million in the first quarter of 1997. The Company reported a net loss of $3.0 million or $(0.33) per share on 9.2 million weighted average common shares outstanding for the first quarter of 1998 compared to net loss of approximately $2.4 million or $(0.26) per share on 9.1 million weighted average common shares outstanding for the first quarter of 1997.
The results for the first quarter of 1998 were marked by a continued competitive pricing environment for our products. In particular, the revenue performance for the Company's Revolution(TM)3D graphics product was less than anticipated as the Company had to take larger than anticipated pricing actions in response to competition. The Company did lower operating expenses and managed cash-flow from operations during the quarter alleviating the need for financing during the period.
"In the first quarter, we focused our efforts on completing development of the Company's fourth generation 128-bit graphics chip, as well as addressing our strategic and financing requirements," said Andrew Najda, Chief Executive Officer of Number Nine Visual Technology Corporation. "As a result, we are pleased with the progress we have made in both areas. In particular, the Company has just received first silicon of our fourth generation chip. This 2D, 3D/video accelerator chip with an integrated DAC is a major step for the Company and should improve our price/performance paradigm."
Najda continued, "At the conclusion of the third quarter of 1997, the Company indicated that in view of the increasingly competitive market and the Company's working capital requirements, it would require additional financing. The Company is announcing a relationship that will not only enhance our competitive position in this technology marketplace, but raise the necessary financing."
"The Company has entered into a loan arrangement, convertible into preferred stock, with Silicon Graphics, Inc., and has granted Silicon Graphics an intellectual property license from Number Nine. The companies are exploring opportunities to work more closely to bring compelling visual computing technologies to the PC market. We are pleased to begin a relationship with one of the most innovative visual technology computing companies and look forward to working together in the future," Najda continued.
The companies' financial arrangement is structured as a loan pursuant to which the company may borrow up to $9 million. The loan is convertible into preferred stock at a conversion price of $2.75 per share. The loan, if not converted, is payable on demand 180 days after September 30, 1998. The loan is subordinate to the Company's existing secured line of credit and is secured by essentially all of the company's assets. If Silicon Graphics converts the loan and maintains an equity interest equal to or greater than 5% of the issued and outstanding Common Stock on an as-converted basis, it is entitled to elect one (1) director as a class. Silicon Graphics was also issued a 3-year Warrant to purchase up to 3% of the outstanding Common Stock at the time of exercise, exercisable at a price of $2.75, only if Number Nine repays the outstanding principal and interest under Loan. In conjunction with this transaction, shareholder approval was required pursuant to NASD Marketplace Rule 4460i; however, the Company sought and obtained from Nasdaq a "financial viability" exception from the shareholder approval, because a delay in securing shareholder approval would seriously jeopardize the financial viability of the Company. The Audit Committee of Number Nine's Board of Directors has expressly approved Number Nine's reliance upon the "financial viability" exception, as required under the NASD By-Laws.
Graphics Pioneers announce Technology and Financial Relationship
Number Nine Visual today also announced a technology relationship with Silicon Graphics, Inc. SGI , the leader in high-performance 3D graphics technology and systems. The companies plan to explore joint marketing and technology opportunities in the future.
"Silicon Graphics and Number Nine Visual Technology share a common view of the value advanced visualization technologies have in the broad PC marketplace, and we look forward to exploring ways for the two companies to work more closely in this space," said David Orton, Senior Vice President of Silicon Graphics' Visual Systems Group.
"Number Nine and Silicon Graphics are very complementary companies," noted Najda. "No company is more innovative than SGI in visual computing technology systems and components, and no company is more focused on delivering the highest quality, professional visual computing solutions for mainstream PC markets than Number Nine. We are strengthening our capabilities on providing innovative graphics solutions to major PC OEM's."
With over 16 years of experience and innovation in PC graphics, Number Nine has an established reputation as a technology and performance leader. Number Nine's innovations in the PC markets include: the world's first 128-bit graphics processor and accelerator boards for the PC and MAC markets, the first 128-bit PC 2D/3D WideBus (TM) Architecture, the first 256-bit video engine processor, and HawkEye(R) -- the first integrated graphics display software utilities.
Continuing the history of graphics innovation, Number Nine's Revolution(TM)3D graphics accelerator, powered by the company's "Ticket to Ride(TM)" 128-bit graphics processor, has been recognized as one of the industry's most highly decorated graphics accelerators during the past year, winning Editors Choice Awards from PC Magazine, Byte and VAR Business Magazine. Annually awarded honors include those from PC Computing (MVP Award), NewMedia Magazine (Hyper Award) and PC Graphics and Video Magazine (Editors' Choice).
About Number Nine
Number Nine Visual Technology Corporation, nine.com, is a leading supplier of high-performance visual technology solutions, including video/graphics accelerator subsystems, chips and productivity-enhancing software. Number Nine is one of the first companies to offer its users drivers certified by Microsoft's Windows Hardware Quality Labs (WHQL). The company is a pioneer in PC graphics, delivering the first 128-bit graphics accelerator, the first 256-color and 16.8 million-color cards, and three consecutive lines of 128-bit graphics chips and boards. Number Nine is a publicly-held company headquartered in Lexington, Massachusetts, with R&D, sales and/or marketing offices in Munich, Germany; Redmond, Washington; and Tokyo, Japan.
About Silicon Graphics
Silicon Graphics, Inc., (www.sgi.com), is a leading supplier of high- performance interactive computing systems. The company offers the broadest range of products in the industry--- from low-end desktop workstations to servers and high-end Cray(R) supercomputers. Silicon Graphics also markets Alias Wavefront(TM) entertainment and design software and other software products. The company's key markets include the manufacturing, government, science and industries, communications and entertainment sectors. Silicon Graphics and its subsidiaries have offices throughout the world and headquarters in Mountain View, California. Silicon Graphics is a publicly- held company and is traded on the New York Stock Exchange under the symbol SGI.
Number Nine is a registered trademark and Revolution3D and Ticket-to-Ride are trademarks of Number Nine Visual Technology Corporation. All other trademarks are properties of their respective companies. All rights reserved.
This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described herein, including, but not limited to such factors as are described under "Certain Factors That May Affect Future Results of Operations" in the Company's Annual Report on Form 10-K for its 1997 fiscal year ended December 27, 1997 as filed with the Securities and Exchange Commission.
NUMBER NINE VISUAL TECHNOLOGY CORPORATION
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended
March 28, 1998 March 29, 1997
Revenue $ 8,137 $ 13,964
Cost of sales 7,325 11,550
Gross profit 812 2,414
Sales, general, & administrative 2,155 3,299
Research & development 1,639 1,481
Total operating expenses 3,794 4,780
Income (loss) from operations (2,982) (2,366)
Other expense (income), net (70) (9)
Income (loss) before income taxes (3,032) (2,357)
Provision (benefit)
for income taxes -- --
Net income (loss) (3,032) (2,357)
Net income (loss) per common
and equivalent share - diluted $ (0.33) $ (0.26)
Net income (loss) per common
and equivalent share - primary $ (0.33) $ (0.26)
Weighted average number of
common and equivalent shares
outstanding - diluted 9,199 9,077
Weighted average number of
common and equivalent shares
outstanding - primary 9,199 9,077
NUMBER NINE VISUAL TECHNOLOGY CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
March 28, 1998 December 27, 1997
Current assets:
Cash and cash equivalents $ 616 $ 2,481
Accounts receivable 8,246 10,506
Receivable from manufacturing
contractor and other 1,689 1,678
Inventories 3,331 2,864
Other current assets 386 274
Total current assets 14,268 17,803
Long-term assets 3,660 4,056
Total assets $ 17,928 $ 21,859
Current liabilities:
Revolving line of credit $ 5,976 $ 8,500
Accounts payable 7,781 6,148
Accrued expenses and
other current liabilities 1,238 1,429
Total current liabilities 14,995 16,077
Total stockholders' equity 2,933 5,782
Total liabilities and
stockholders' equity $ 17,928 $ 21,859
SOURCE Number Nine Visual Technology
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