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FOR IMMEDIATE RELEASE
At Virata Corporation At The Financial Relations Board
Andrew Vought Marcia Nakamura (general info)
Chief Financial Officer Susan Katz (analysts/investors)
Kelly Morris Chris Wood (media)
Director of Public Relations (415) 986-1591
(408) 566-1000
VIRATA REPORTS RECORD QUARTERLY REVENUE
Record Revenues and New Customers Drive Virata to Pro-Forma Profitability
SANTA CLARA, CA, July 25, 2000 - Virata(R) Corporation (Nasdaq: VRTA), a leading
semiconductor supplier for broadband communications, today reported record
results for its fiscal first quarter ended July 2, 2000. The company also
announced today in a separate press release its plans to acquire privately-held
Agranat Systems, which will provide the company with access to critical Web
technologies and network management software.
Total revenues for the first quarter of fiscal 2001 were $27.7 million, an
increase of 130 percent over the prior quarter and a 939 percent increase over
the same quarter one year ago. As described later in this press release, pro
forma adjusted net income per basic and diluted share for the first fiscal
quarter 2001 was $0.02; compared to a pro forma adjusted net loss per basic and
diluted share of $0.03 for the prior quarter; and a pro forma adjusted net loss
per basic and diluted share of $0.09 for the same quarter one year ago. The
company reported GAAP net loss per basic and diluted share of $0.26 for the
first fiscal quarter of 2001, compared to a net loss per basic and diluted share
of $0.35 for the prior quarter and $0.76 for the same quarter one year ago.
First quarter highlights include:
. Record number of communications processors shipped - nearly 3 times any
prior quarter
. Record number of new customers added in the quarter - taking our total to
more than 90
. Substantial increase in new designs, taking Virata's total design win count
to more than 160
. 20 new voice software licenses secured in the quarter; highlighting our
success at integrating D2 Technologies voice software into the Virata
business model and organization
. Completed acquisition of Inverness Systems
. Announced strategic relationship with Texas Instruments under which Virata
will resell TI's TMS320C54x DSPs under the Virata name, combined with
Virata's line of voice and advanced telephony software
. Launch of Azurite and Magnesium, the world's most integrated voice IAD
chipset and voice processing DSP solution
. Completed two-for-one stock split on May 18, 2000
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. Pending acquisition of Excess Bandwidth to spearhead Virata's entry into
the high-growth symmetric DSL market.
. Announced follow-on stock offering, which was completed on July 18;
approximately 6.9 million shares were sold by Virata at $71 per share,
resulting in net proceeds of approximately $462 million for Virata
"Our strong performance in the first quarter of fiscal 2001 enabled Virata to
set a number of new records and move into pro-forma profitability for the first
time," said Charles Cotton, chief executive officer of Virata Corporation. "We
continue to win major contracts with customers worldwide and our substantial
growth in revenue and earnings was driven by a significant increase in
communications processor and software shipments to this record-high customer
base."
Cotton continued, "During the quarter, Helium represented the majority of our
shipments and we continued to sample and secure design wins with our next
generation Beryllium and Boron chips; as well as for our recently-announced
Azurite voice Integrated Access Device (IAD) chipset. Moving forward, we
believe we are well positioned with a strong portfolio of integrated
semiconductor and software solutions that will enable us to maintain further
growth in the DSL and broadband wireless markets. In the last two quarters, we
have strengthened this portfolio through our completed acquisitions of D2
Technologies and Inverness Systems and proposed acquisitions of Excess Bandwidth
and Agranat Systems - and as a result, we continue to stay ahead of the
competition in terms of product range, price, functionality and time-to-market."
Financial Results Detailed
Including acquired in-process research and development charges, amortization of
purchased intangible assets, stock compensation expense and National Insurance
Contribution charge on stock options, the company reported GAAP net loss of
$12.8 million, or $0.26 per basic and diluted share for the quarter. These
results include a $1.2 million charge for in-process research and development
relating to the acquisition accounting for Inverness Systems, $9.9 million of
amortization of intangible assets, $150,000 of unearned stock compensation
expense and a $2.5 million charge for National Insurance Contribution on stock
options.
The National Insurance Contribution on stock options for the quarter was $2.5
million. The allocation of the expense, by function, is $600,000 to research and
development, $500,000 to sales and marketing, and $1.4 million to general and
administrative. The provision is calculated as the difference between the
market value of Virata stock at the close of the period and the strike price of
the option multiplied by the 12.2 percent tax rate. The calculation is applied
to all stock options granted to Virata's UK employees, vested and unvested. The
$2.5 million charge is the change to the provision as a result of the movement
in Virata's stock price from April 2, 2000 to July 2, 2000.
On a pro-forma basis, excluding acquired in-process research and development,
amortization of purchased intangible assets, stock compensation expense and
National Insurance Contribution on stock options, Virata reported adjusted net
income of $1.0 million, or $0.02 per basic and diluted share for the quarter,
compared with a $2.6 million adjusted net loss for the prior first fiscal
quarter ended June 30, 1999, or a loss of $0.09 per basic and diluted share.
Pro forma adjusted net loss for the previous quarter was $1.3 million or $0.03
per basic and diluted share. The pro forma adjusted income does not include the
pro forma impact of income taxes. At July 2, 2000, Virata had $72.4 million in
cash and investments and working capital of $69.4 million, prior to
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its receipt of approximately $462 million in connection with the follow-on
offering completed on July 18, 2000.
About Virata
Virata Corporation provides communications processors combined with integrated
software modules to manufacturers of equipment utilizing digital subscriber line
(DSL) technologies. These "integrated software on silicon" product solutions
enable customers to develop a diverse range of broadband wireless and DSL
equipment including modems, gateways, routers, and integrated access devices
targeted at the voice and high-speed data network access market. Virata's
products are designed to enable DSL equipment manufacturers to simplify product
development, reduce the time it takes for products to reach the market and focus
resources on product differentiation and improvement.
Virata is a principal member of the ATM Forum, DSL Forum, MPLS Forum, UPnP
Forum, HomePNA, ITU and the official Bluetooth SIG organization. A publicly
traded company on The Nasdaq Stock Market, Virata was founded in 1993 and is
headquartered in Santa Clara, California.
Virata is a registered trademark and Azurite, Magnesium, Beryllium, Boron and
Helium are trademarks of Virata Corporation. All other trade, product, or
service names referenced in this release may be trademarks or registered
trademarks of their respective holders.
Except for historical information contained herein, this press release contains
forward-looking statements that involve risks and uncertainties. Actual results
may differ materially. Factors that might cause a difference include, but are
not limited to, those relating to evolving industry standards, the pace of
development and market acceptance of Virata's products and the DSL market
generally, commercialization and technological delays or difficulties, the
impact of competitive products and technologies, competitive pricing pressures,
manufacturing risks, the possibility of our products infringing patents and
other intellectual property of third parties, product defects, costs of product
development, the company's ability to complete the acquisitions in the time
period outlined, or at all, and extract value from the acquisitions, and
manufacturing and government regulation. Virata will not update these forward-
looking statements to reflect events or circumstances after the date hereof.
More detailed information about potential factors that could affect Virata's
financial results is included in the documents Virata files from time to time
with the Securities and Exchange Commission.
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VIRATA CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data, unaudited)
<TABLE>
<CAPTION>
Three Months Ended
July 2, June 30,
2000 2000
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<S> <C> <C>
Revenues:
Semiconductor $ 21,465 $ 1,419
License 4,157 274
Services and royalty 968 373
Systems 1,106 599
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Total revenues 27,696 2,665
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Cost of revenues:
Semiconductor 14,092 811
License 124 --
Services and royalty 186 138
Systems 458 324
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Total cost of revenues 14,860 1,273
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Gross profit 12,836 1,392
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Operating expenses:
Research and development 5,032 2,549
Selling and marketing 4,366 923
General and administrative 3,318 903
National Insurance Contribution on options 2,520 --
Amortization of intangible assets and other 10,099 460
Acquired in-process research and development 1,170 --
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Total operating expenses 26,505 4,835
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Loss from operations (13,669) (3,443)
Interest expense (25) (13)
Interest and other income (expense), net 909 441
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Net loss $ (12,785) $ (3,015)
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Basic and diluted net loss per share $ (0.26) $ (0.76)
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Weighted average common shares - basic and diluted 48,417 3,984
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Pro forma basic and diluted net loss per share (A) $ (0.26) $ (0.11)
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Pro forma weighted average common shares - basic and diluted (A) 48,417 27,048
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Pro forma adjusted basic net earnings (loss) per share (B) $ 0.02 $ (0.09)
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Pro forma adjusted diluted net earnings (loss) per share (B) $ 0.02 $ (0.09)
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Pro forma weighted average common shares - basic 48,417 27,048
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Pro forma weighted average common shares - diluted (C) 55,311 27,048
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</TABLE>
(A) Pro forma basic and diluted net loss per share assumes that the conversion
of the outstanding shares of convertible preferred stock into common stock
that occurred upon the closing of the initial public offering occurred as
of the beginning of the three month period ended June 30, 1999
(B) Pro forma adjusted net income (loss) per share excludes the National
Insurance Contribution on options, amortization of intangible assets and
other, and acquired in-process research and development charges of $13,789
for the three month period ended July 2, 2000, and $460 for the three month
period ended June 30, 1999. The pro forma adjusted income does not include
the pro forma impact of income tax
(C) For the three month period ended July 2, 2000, the pro forma weighted
average diluted shares include approximately 6,894 potential common shares
issuable upon the exercise of stock options, using the treasury stock
method
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VIRATA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
July 2, April 2,
2000 2000
(unaudited) (audited)
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 54,251 $ 60,193
Short-term investments 18,115 18,006
Accounts receivable, net 16,219 7,524
Inventories 2,284 409
Other current assets 2,828 2,895
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Total current assets 93,697 89,027
Property and equipment, net 4,328 3,222
Intangible assets 174,844 89,113
Other assets 392 --
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Total assets $ 273,261 $ 181,362
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,890 $ 4,887
Accrued liabilities 3,115 3,484
Accrued employee benefits 2,763 2,555
Accrued National Insurance Contribution on options 6,718 4,471
Deferred revenue 2,130 2,215
Capital lease obligation, current 686 784
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Total current liabilities 24,302 18,396
Capital lease obligation, long-term 968 1,178
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Total liabilities 25,270 19,574
Stockholders' equity:
Common stock 49 23
Additional paid-in capital 337,340 238,857
Accumulated other comprehensive income 664 335
Unearned stock compensation (541) (691)
Accumulated deficit (89,521) (76,736)
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Total stockholders' equity 247,991 161,788
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Total liabilities and stockholders' equity $ 273,261 $ 181,362
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</TABLE>
