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Filed by 3dfx Interactive, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: 3dfx Interactive, Inc.
Commission File No. 333-38678
The following Letter to Shareholders accompanies 3dfx Interactive's 2000 Annual
Report to Shareholders, which is being mailed on June 12, 2000.
Letter to Shareholders
Dear Fellow 3dfx Investors:
As I write this letter in June, 2000, 3dfx is a vastly different company than
when I was named President and CEO in December 1999. We are energized by our
planned acquisition of GigaPixel, which will bring us new technology and enhance
our engineering staff. We are in the process of launching our much anticipated
Voodoo 4 and Voodoo 5 product family. We are effecting a cultural change from
being a feature-driven company to a company seeking to introduce important new
products on a regular basis. We plan on extending our markets from providing the
technology that primarily serves gamers to providing technology that will make
graphics an important differentiator for a wide variety of products ranging from
handheld digital assistants to cell phones. We are enjoying the benefits of a
terrific branding effort that provides us the leading mind-share among consumers
with both our Voodoo and 3dfx names. And, most importantly, we see revenue
growth and profitable quarters ahead of us.
But as exciting as our current outlook may be, the 12-month period
ended January 31, 2000 (our 2000 fiscal year) was a real disappointment.
Although total revenues increased from $202.6 million to $360.5 million, largely
due to the fact that the May 1999 acquisition of STB allowed us to sell board
level products as compared to chip only sales in the prior year, we lost $63.3
million, or ($2.81) per share, compared to net income of $21.7 million, or $1.45
per share, in the year earlier period. The FY 2000 results included
restructuring charges of approximately $4.4 million, a one time write off of
in-process R&D of $4.3 million and non-cash expenses of $10.2 million for the
amortization of goodwill and intangibles, (both of which were associated with
the STB acquisition) and a one-time write-down of approximately $1.0 million
associated with our FY 2000 sale of our Specialized Technology Group.
The first step we undertook to remedy our FY 2000 financial results was
to accurately analyze our business situation, which led us to some fundamental
premises. We are a technology leader, albeit our lead has been challenged
significantly in recent times. We have great brand name awareness globally, and
control our distribution channels, our quality and our branding. We have a track
record for establishing standards in concert with software developers, who write
their programs to those standards resulting in de facto industry standards.
However, we need to
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extend that skill into new markets and leverage off of this success more
aggressively. We are growing at a time when accelerating changes in technology
result in dramatic new business opportunities, and we need to identify and
pursue those opportunities with a passion for growth and success.
Based on this analysis, we made some significant management changes,
are acquiring leading edge technology, accelerated our development cycle,
reduced costs, and adjusted our business model so that we could serve new
markets. Additionally, we adopted a new approach to shareholder communications,
making ourselves directly available to you via conference calls held not only to
explain our quarterly results, but also to discuss major corporate events. We
are committed to converse with you as often as appropriate and in as candid
terms as allowed by law and good business sense.
Turning a company around takes time, patience and effort. Although it
will not happen overnight, I am confident that we have the knowledge, team and
competence to move 3dfx forward. Clearly we are on the right path. We believe
that the dual priorities of working hard every day to build our company and
keeping you clearly informed of our progress in that effort will translate into
greater support for our stock and an increase in our enterprise value, which is
our ultimate goal. On behalf of everyone at 3dfx Interactive, I want to thank
you for your support and assure you that we will continue to seek that goal
relentlessly.
Sincerely,
/s/ Alex Leupp
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Dr. Alex Leupp
President and Chief Executive Officer
3dfx Interactive, Inc.
In connection with the proposed merger by and among 3dfx Interactive, Inc.
("3dfx"), Galapagos Acquisition Corp. and GigaPixel Corporation (the "Merger"),
3dfx has filed with the SEC the Proxy Statement/Prospectus/Information Statement
of 3dfx and GigaPixel Corporation relating to the Merger, as well as documents
incorporated by reference therein. The Proxy Statement/Prospectus/Information
Statement is included in the mailing to shareholders containing the Annual
Report and this Letter to Shareholders. We urge investors to read the Proxy
Statement/Prospectus/Information Statement, the related Registration Statement
on Form S-4, and any other relevant documents filed with the SEC because they
contain important information. Investors are able to obtain the documents free
of charge at the SEC's website, http://www.sec.gov. In addition, documents filed
by 3dfx with the SEC can be obtained by contacting 3dfx at the following address
and phone number: Shareholder Relations, 4435 Fortran Drive, San Jose,
California 95134, telephone (408)935-4400. Please read the Proxy
Statement/Prospectus/Information Statement carefully before making a decision
concerning the Merger. Information concerning the participants in the
solicitation is set forth in the Proxy Statement/Prospectus/Information
Statement.
