3Dlabs Reports First Quarter 2001 Results

Revenues Increase 66% Compared to First Quarter of 2000 Operating Losses

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Apr 25, 2001, 01:00 ET from 3DLabs, Inc. Ltd.

    HAMILTON, Bermuda, April 25 /PRNewswire/ --
 3Dlabs(R), Inc. Ltd. (Nasdaq:   TDDD) today announced unaudited financial
 results for the first quarter ended March 31, 2001.
     Total revenues for the first quarter of 2001 were just under $25 million,
 up 66% from the $15 million reported in the first quarter of 2000. During the
 period, 3Dlabs continued to narrow its losses substantially, reporting an
 operating loss of ($0.8) million compared to ($1.9) million in the
 fourth quarter of 2000.
     For the quarter ended March 31, 2001, 3Dlabs reported a loss before
 amortization of goodwill and other intangibles and special costs of
 ($1.6) million, or ($0.07) per share, compared to ($2.6) million, or
 ($0.12) per share for the fourth quarter of 2000.
     "We posted strong revenue growth despite the widely reported industry
 slowdown and made great strides in reducing our operating losses," said
 Osman Kent, President and CEO of 3Dlabs.
     "The demand for our products continued to be strong both in the channel
 and among the OEMs and during the quarter we announced new design wins at
 Compaq, Dell, SGI and Sun Microsystems. As we reported earlier, a significant
 portion of our business during the quarter continued to be supply limited.
 However, we expect this situation to gradually ease in the coming quarters. In
 our quest to return the company to profitability, we also took certain
 measures to reduce our operating expenses from April onwards, while still
 planning to grow our business," Kent continued.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/19990623/TDDDLOGO )
     At the end of the quarter, the company effected a cost reduction plan
 aimed at reducing operating expenses from the beginning of April. This plan
 included, among other measures, a 15% reduction of the company's workforce by
 the end of March 2001, primarily from non-technical functions. Accordingly, in
 the first quarter 3Dlabs incurred a one-time charge of $1.4 million,
 associated with this restructuring.
     Kent added, "With the clear goal of realizing profitability before the end
 of 2001 and gaining operational efficiencies, we have taken actions to
 immediately lower our cost structure while continuing our focus on key
 products and customers. The steps we took in the first quarter will strengthen
 the company and help exploit synergies as we build revenue and work towards
 operational profitability."
     During the first quarter, 3Dlabs announced a series of key design wins
 with Compaq, Dell and SGI for its new Wildcat II 5110 graphics accelerator,
 the next leap in professional graphics. The company also announced that its
 acclaimed Wildcat II graphics technology is providing the core graphics
 technology for the new Sun Expert3D-Lite professional graphics card from
 Sun Microsystems.
     Kent concluded, "We recently began volume deliveries of these new products
 and as a result we expect our sequential revenue growth to continue in the
 second quarter. The management of the company is focused more than ever on
 growing our business, returning to profitability and building long-term
 shareholder value and we plan to take whatever action is necessary to achieve
 those goals."
 
     About 3Dlabs
     Founded in 1994, 3Dlabs is a leading supplier of integrated hardware and
 software graphics accelerator solutions for workstations and design
 professionals. 3Dlabs develops silicon, boards and software drivers to create
 products that effectively meet the performance and quality needs of users who
 rely on graphics for their productivity. 3Dlabs sells its award-winning Oxygen
 and Wildcat products to leading system OEMs including Compaq, Dell,
 Hewlett-Packard, IBM, Hitachi, NEC, SGI and Sun Microsystems, through an
 international distributor and reseller network and directly to end-users at
 3Dlabs' online store. 3Dlabs has operations in Alabama, California, Colorado,
 Texas, Washington, Germany, Japan and the United Kingdom. For more
 information, please visit www.3dlabs.com.
 
     Forward Looking Statements
     This release contains forward looking statements about the Company's goal
 to return to profitability before the end of 2001, expected reductions in the
 company's cost structure, sequential revenue growth in coming quarters, and
 shipments of products in volume based on the Wildcat II technology to
 customers in coming quarters. These statements are subject to risks and
 uncertainties that may cause actual results and events to differ materially.
 These risks and uncertainties include the ability of the Company to secure an
 adequate supply of chips and other components from its vendors, the ability of
 the Company's ASIC vendor to deliver components in accordance with their
 current supply outlook, the ability of the Company's contract manufacturers to
 produce an adequate supply of quality products in a timely manner, the ability
 of the Company to expand its credit facilities to help finance its operations,
 the ability of the Company to obtain and keep design wins for its Wildcat II
 and next generation Oxygen products and the ability of the Company to increase
 revenues quarter over quarter.
 
 
                                 3Dlabs Inc., Ltd.
             Pro Forma Consolidated Condensed Statements of Operations
                      (In thousands, except per share amounts)
                                    (Unaudited)
 
                                   Three Months Ended     Three Months Ended
                                              March 31,          December 31,
                                        2001            2000          2000
     Revenues                        $24,960         $15,021       $24,060
 
     Cost of revenues                 14,448           7,870        14,260
 
     Gross profit                     10,512           7,151         9,800
 
     Operating expenses:
       Research and development        5,242           2,580         4,871
       Sales and marketing             3,380           2,584         3,678
       General and administrative      2,714           1,424         3,121
 
     Total operating expenses         11,336           6,588        11,670
 
     Income (loss) from operations     (824)             563       (1,870)
 
     Other income (expense),
      net                              (308)             106         (536)
     Income (loss) before income
      taxes, special items and
      amortization                   (1,132)             669       (2,406)
     Provision for income taxes          471             202           200
 
     Income (loss) before special
      item and amortization          (1,603)             467       (2,606)
 
     Costs related to reduction in
      force and restructuring          1,439              --            --
     Amortization of goodwill
      and other intangibles            1,514             326         1,130
 
     Net income (loss)              $(4,556)            $141      ($3,735)
 
     Net income (loss) per share:
       Basic                         $(0.19)           $0.01       $(0.17)
       Diluted                       $(0.19)           $0.01       $(0.17)
     Income (loss) before
      amortization and
      special item                  $(1,603)            $467      $(2,606)
     Loss per share before special
      item and amortization:
       Basic                         $(0.07)           $0.03       $(0.12)
       Diluted                       $(0.07)           $0.02       $(0.12)
 
     Weighted average shares used in
      computing net loss per share:
       Basic                          23,132          18,391        22,281
       Diluted                        23,132          20,506        22,281
 
     Pro forma statements of operations present the Company's operating results
 reflecting amortization of goodwill and other purchase-related intangibles and
 special items for the periods presented below Income(loss) from operations.
     During the three-month period ended March 31, 2001, the special item
 represented costs related to a reduction in force and restructuring.
    The format presented above is not in conformity with generally accepted
 accounting principles. Please refer to the Company's website (www.3dlabs.com)
 for the Company's statements of operations for this reported period in
 accordance with generally accepted accounting principles.
 
                                 3Dlabs Inc., Ltd.
                       Consolidated Condensed Balance Sheets
                                   (In thousands)
                                    (Unaudited)
 
                                                     March 31,    December 31,
                                                        2001           2000
     Assets
     Current assets:
      Cash and short-term investments                 $13,384        $14,813
      Trade and other accounts receivable, net         25,095         23,526
      Inventories,net                                   8,930          9,383
      Prepaid expenses and other current assets         3,119          4,446
 
       Total current assets                            50,528         52,168
 
     Property and equipment, net                        3,682          4,381
     Other long-term assets                             2,261          2,261
     Goodwill and other intangibles                    24,059         25,572
 
       Total Assets                                   $80,530        $84,382
 
 
     Liabilities and Shareholders' Equity
     Current liabilities:
      Accounts payable and accrued liabilities        $18,710        $17,352
      Obligation to issue common stock                     --         10,000
      Bank note payable                                12,344         13,325
      Income taxes payable                              2,364          2,173
      Current portion of capital lease obligations        543            614
 
     Total current liabilities                         33,961         43,464
 
     Convertible debt                                  15,851         15,682
     Non-current portion of capital lease
      obligations                                         686            814
 
       Total Liabilities                               50,498         59,960
 
     Shareholders' Equity
      Common stock                                        300            222
      Additional paid-in capital                       70,193         60,042
      Accumulated comprehensive loss                 (40,461)       (35,842)
 
     Total Shareholders' Equity                        30,032         24,422
 
     Total Liabilities and Shareholders' Equity       $80,530        $84,382
 
                      MAKE YOUR OPINION COUNT - Click Here
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SOURCE 3DLabs, Inc. Ltd.
    HAMILTON, Bermuda, April 25 /PRNewswire/ --
 3Dlabs(R), Inc. Ltd. (Nasdaq:   TDDD) today announced unaudited financial
 results for the first quarter ended March 31, 2001.
     Total revenues for the first quarter of 2001 were just under $25 million,
 up 66% from the $15 million reported in the first quarter of 2000. During the
 period, 3Dlabs continued to narrow its losses substantially, reporting an
 operating loss of ($0.8) million compared to ($1.9) million in the
 fourth quarter of 2000.
     For the quarter ended March 31, 2001, 3Dlabs reported a loss before
 amortization of goodwill and other intangibles and special costs of
 ($1.6) million, or ($0.07) per share, compared to ($2.6) million, or
 ($0.12) per share for the fourth quarter of 2000.
     "We posted strong revenue growth despite the widely reported industry
 slowdown and made great strides in reducing our operating losses," said
 Osman Kent, President and CEO of 3Dlabs.
     "The demand for our products continued to be strong both in the channel
 and among the OEMs and during the quarter we announced new design wins at
 Compaq, Dell, SGI and Sun Microsystems. As we reported earlier, a significant
 portion of our business during the quarter continued to be supply limited.
 However, we expect this situation to gradually ease in the coming quarters. In
 our quest to return the company to profitability, we also took certain
 measures to reduce our operating expenses from April onwards, while still
 planning to grow our business," Kent continued.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/19990623/TDDDLOGO )
     At the end of the quarter, the company effected a cost reduction plan
 aimed at reducing operating expenses from the beginning of April. This plan
 included, among other measures, a 15% reduction of the company's workforce by
 the end of March 2001, primarily from non-technical functions. Accordingly, in
 the first quarter 3Dlabs incurred a one-time charge of $1.4 million,
 associated with this restructuring.
     Kent added, "With the clear goal of realizing profitability before the end
 of 2001 and gaining operational efficiencies, we have taken actions to
 immediately lower our cost structure while continuing our focus on key
 products and customers. The steps we took in the first quarter will strengthen
 the company and help exploit synergies as we build revenue and work towards
 operational profitability."
     During the first quarter, 3Dlabs announced a series of key design wins
 with Compaq, Dell and SGI for its new Wildcat II 5110 graphics accelerator,
 the next leap in professional graphics. The company also announced that its
 acclaimed Wildcat II graphics technology is providing the core graphics
 technology for the new Sun Expert3D-Lite professional graphics card from
 Sun Microsystems.
     Kent concluded, "We recently began volume deliveries of these new products
 and as a result we expect our sequential revenue growth to continue in the
 second quarter. The management of the company is focused more than ever on
 growing our business, returning to profitability and building long-term
 shareholder value and we plan to take whatever action is necessary to achieve
 those goals."
 
     About 3Dlabs
     Founded in 1994, 3Dlabs is a leading supplier of integrated hardware and
 software graphics accelerator solutions for workstations and design
 professionals. 3Dlabs develops silicon, boards and software drivers to create
 products that effectively meet the performance and quality needs of users who
 rely on graphics for their productivity. 3Dlabs sells its award-winning Oxygen
 and Wildcat products to leading system OEMs including Compaq, Dell,
 Hewlett-Packard, IBM, Hitachi, NEC, SGI and Sun Microsystems, through an
 international distributor and reseller network and directly to end-users at
 3Dlabs' online store. 3Dlabs has operations in Alabama, California, Colorado,
 Texas, Washington, Germany, Japan and the United Kingdom. For more
 information, please visit www.3dlabs.com.
 
     Forward Looking Statements
     This release contains forward looking statements about the Company's goal
 to return to profitability before the end of 2001, expected reductions in the
 company's cost structure, sequential revenue growth in coming quarters, and
 shipments of products in volume based on the Wildcat II technology to
 customers in coming quarters. These statements are subject to risks and
 uncertainties that may cause actual results and events to differ materially.
 These risks and uncertainties include the ability of the Company to secure an
 adequate supply of chips and other components from its vendors, the ability of
 the Company's ASIC vendor to deliver components in accordance with their
 current supply outlook, the ability of the Company's contract manufacturers to
 produce an adequate supply of quality products in a timely manner, the ability
 of the Company to expand its credit facilities to help finance its operations,
 the ability of the Company to obtain and keep design wins for its Wildcat II
 and next generation Oxygen products and the ability of the Company to increase
 revenues quarter over quarter.
 
 
                                 3Dlabs Inc., Ltd.
             Pro Forma Consolidated Condensed Statements of Operations
                      (In thousands, except per share amounts)
                                    (Unaudited)
 
                                   Three Months Ended     Three Months Ended
                                              March 31,          December 31,
                                        2001            2000          2000
     Revenues                        $24,960         $15,021       $24,060
 
     Cost of revenues                 14,448           7,870        14,260
 
     Gross profit                     10,512           7,151         9,800
 
     Operating expenses:
       Research and development        5,242           2,580         4,871
       Sales and marketing             3,380           2,584         3,678
       General and administrative      2,714           1,424         3,121
 
     Total operating expenses         11,336           6,588        11,670
 
     Income (loss) from operations     (824)             563       (1,870)
 
     Other income (expense),
      net                              (308)             106         (536)
     Income (loss) before income
      taxes, special items and
      amortization                   (1,132)             669       (2,406)
     Provision for income taxes          471             202           200
 
     Income (loss) before special
      item and amortization          (1,603)             467       (2,606)
 
     Costs related to reduction in
      force and restructuring          1,439              --            --
     Amortization of goodwill
      and other intangibles            1,514             326         1,130
 
     Net income (loss)              $(4,556)            $141      ($3,735)
 
     Net income (loss) per share:
       Basic                         $(0.19)           $0.01       $(0.17)
       Diluted                       $(0.19)           $0.01       $(0.17)
     Income (loss) before
      amortization and
      special item                  $(1,603)            $467      $(2,606)
     Loss per share before special
      item and amortization:
       Basic                         $(0.07)           $0.03       $(0.12)
       Diluted                       $(0.07)           $0.02       $(0.12)
 
     Weighted average shares used in
      computing net loss per share:
       Basic                          23,132          18,391        22,281
       Diluted                        23,132          20,506        22,281
 
     Pro forma statements of operations present the Company's operating results
 reflecting amortization of goodwill and other purchase-related intangibles and
 special items for the periods presented below Income(loss) from operations.
     During the three-month period ended March 31, 2001, the special item
 represented costs related to a reduction in force and restructuring.
    The format presented above is not in conformity with generally accepted
 accounting principles. Please refer to the Company's website (www.3dlabs.com)
 for the Company's statements of operations for this reported period in
 accordance with generally accepted accounting principles.
 
                                 3Dlabs Inc., Ltd.
                       Consolidated Condensed Balance Sheets
                                   (In thousands)
                                    (Unaudited)
 
                                                     March 31,    December 31,
                                                        2001           2000
     Assets
     Current assets:
      Cash and short-term investments                 $13,384        $14,813
      Trade and other accounts receivable, net         25,095         23,526
      Inventories,net                                   8,930          9,383
      Prepaid expenses and other current assets         3,119          4,446
 
       Total current assets                            50,528         52,168
 
     Property and equipment, net                        3,682          4,381
     Other long-term assets                             2,261          2,261
     Goodwill and other intangibles                    24,059         25,572
 
       Total Assets                                   $80,530        $84,382
 
 
     Liabilities and Shareholders' Equity
     Current liabilities:
      Accounts payable and accrued liabilities        $18,710        $17,352
      Obligation to issue common stock                     --         10,000
      Bank note payable                                12,344         13,325
      Income taxes payable                              2,364          2,173
      Current portion of capital lease obligations        543            614
 
     Total current liabilities                         33,961         43,464
 
     Convertible debt                                  15,851         15,682
     Non-current portion of capital lease
      obligations                                         686            814
 
       Total Liabilities                               50,498         59,960
 
     Shareholders' Equity
      Common stock                                        300            222
      Additional paid-in capital                       70,193         60,042
      Accumulated comprehensive loss                 (40,461)       (35,842)
 
     Total Shareholders' Equity                        30,032         24,422
 
     Total Liabilities and Shareholders' Equity       $80,530        $84,382
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X38255714
 
 SOURCE  3DLabs, Inc. Ltd.