<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to_______.
Commission file number 0-21336
THE 3DO COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 94-3177293
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 GALVESTON DRIVE,
REDWOOD CITY, CALIFORNIA 94063
(Address of principal executive offices, including zip code)
(415) 261-3000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
As of July 31, 1996, the number of outstanding shares of the registrants' common
stock was 26,850,697.
<PAGE> 2
THE 3DO COMPANY
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
<S> <C>
Item 1. Consolidated Financial Statements 3
Consolidated Balance Sheets at
June 30, 1996 and March 31, 1996 3
Consolidated Statements of Operations for
the three months ended June 30, 1996 and 1995 4
Consolidated Statements of Cash Flows for
the three months ended June 30, 1996 and 1995 5
Condensed Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
2
<PAGE> 3
PART I FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
THE 3DO COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
June 30, 1996 March 31, 1996
------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 29,923 $ 9,459
Short-term investments 42,865 40,686
Accounts receivable, net 2,640 2,060
Inventory 2,132 1,270
Prepaid and other current assets 2,518 942
--------- ---------
Total current assets 80,078 54,417
Property and equipment, net 9,282 8,642
Deposits and other assets 2,507 271
--------- ---------
Total assets $ 91,867 $ 63,330
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,219 $ 1,905
Accrued expenses 3,018 3,814
Deferred revenue 54,820 47,818
Current portion of capital lease obligations 1,243 1,424
Hardware incentive obligations 2,944 4,620
Other current liabilities 4,274 1,787
--------- ---------
Total current liabilities 68,518 61,368
Deferred revenue 20,143 44
Capital lease obligations, net of current portion 1,055 1,287
Other liabilities 715 500
--------- ---------
Total liabilities 90,431 63,199
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares
authorized; no shares issued -- --
Common stock, $.01 par value; 50,000,000 and 25,000,000
shares authorized, respectively; 27,758,763 and 26,003,402
shares issued and outstanding, respectively 278 260
Additional paid-in capital 162,236 150,541
Cumulative translation adjustment (206) (189)
Accumulated deficit (160,872) (150,481)
--------- ---------
Total stockholders' equity 1,436 131
--------- ---------
Total liabilities and stockholders' equity $ 91,867 $ 63,330
========= =========
</TABLE>
See accompanying condensed Notes to consolidated financial statements.
3
<PAGE> 4
THE 3DO COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the three months ended
June 30,
----------------------
1996 1995
-------- --------
<S> <C> <C>
Revenues:
Royalties and license fees $ 14,178 $ 3,379
Software publishing 892 2,036
Developer products and other 259 1,770
-------- --------
Total revenues $ 15,329 $ 7,185
-------- --------
Cost of revenues:
Royalties and pressing fees 186 396
Software publishing 133 286
Developer products and other 813 523
-------- --------
Total cost of revenues 1,132 1,205
-------- --------
Gross profit 14,197 5,980
-------- --------
Operating expenses:
Research and development 9,290 9,362
In-process research and development 7,700 --
Sales and marketing 1,144 2,351
General and administrative 2,780 2,033
-------- --------
Total operating expenses 20,914 13,746
-------- --------
Operating loss (6,717) (7,766)
Net interest and other income (expense) 326 (26)
-------- --------
Loss before income
and foreign withholding taxes (6,391) (7,792)
Income and foreign
withholding taxes 4,000 136
-------- --------
Net loss $(10,391) $ (7,928)
======== ========
Net loss per common and common
equivalent share $ (0.39) $ (0.32)
======== ========
Common and common equivalent shares
used in computing per share amounts 26,618 24,479
======== ========
</TABLE>
See accompanying condensed Notes to consolidated financial statements.
4
<PAGE> 5
THE 3DO COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
For the three months ended
June 30,
-----------------------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(10,391) $ (7,928)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1,545 1,436
Deferred revenue 27,101 (396)
In-process research and development 7,700 --
Changes in operating assets and liabilities:
Accounts receivable, net 635 (1,793)
Inventory (335) (151)
Prepaid and other assets (952) (1,273)
Accounts payable (523) 837
Accrued expenses (804) (111)
Hardware incentives (1,236) 968
Other liabilities 1,924 252
-------- --------
Net cash provided (used) in operating activities 24,664 (8,159)
-------- --------
Cash flows from investing activities:
Short-term investments, net (2,199) (1,510)
Capital expenditures (2,002) (384)
-------- --------
Net cash used in investing activities (4,201) (1,894)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock, net 412 14,593
Payments on capital lease obligations (414) (364)
-------- --------
Net cash provided by financing activities (2) 14,229
-------- --------
Effect of foreign currency translation 3 96
-------- --------
Net increase (decrease) in cash and cash equivalents 20,464 4,272
Cash and cash equivalents at beginning of period 9,459 4,846
-------- --------
Cash and cash equivalents at end of period $ 29,923 $ 9,118
======== ========
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 297 $ 186
Income and foreign withholding taxes $ 4,000 $ 118
</TABLE>
See accompanying condensed Notes to consolidated financial statements.
5
<PAGE> 6
THE 3DO COMPANY AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The consolidated financial statements of The 3DO Company, a Delaware
corporation (the "Company"), as of June 30, 1996 and for the three months ended
June 30, 1996 and 1995 are unaudited, and in the opinion of management, include
all adjustments (consisting of only normal recurring items) necessary for the
fair presentation of the financial position and results of operations for the
interim periods. Certain amounts for prior periods have been reclassified to
conform to the current period presentation.
These consolidated financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1996. The results of
operations for the three months ended June 30, 1996 are not necessarily
indicative of the results expected for the entire year.
NOTE 2 - ACQUISITIONS
In May 1996, the Company entered into an agreement to issue 592,000
shares of stock in exchange for the stock of Archetype Interactive Corporation
("Archetype"), a software developer of a multi-user role playing game designed
to be played over the Internet. The Company accounted for this acquisition using
the "pooling of interests" method; however, prior periods have not been restated
because the results of operations of Archetype were immaterial to the
consolidated results of operations of the Company for all periods presented.
In June 1996, the Company purchased certain assets and assumed certain
liabilities of New World Computing, Inc. ("NWC"), a PC platform game developer
located in Agoura Hills, California. As consideration for the purchase, the
Company will issue approximately 1.05 million shares of its common stock to NWC.
The actual number of shares to be issued by the Company will be adjusted based
on the amount of certain NWC assets and liabilities on the closing date. In
addition, under the terms of the agreement, the Company will be obligated to
make a cash payment to NWC in the event that the value of the 3DO stock issued
in the transaction falls below an amount equal to approximately $10 per share
during a period following the closing date. The Company recorded this
transaction as of June 30, 1996 using the purchase method of accounting. A
one-time charge was recorded in the quarter for $7.7 million representing the
amount of the purchase price assigned to in-process research and development.
Also included as part of the purchase price were intangibles valued at $1.35
million and $0.9 million, to be amortized on a straight line basis over 5 years
and 5 quarters, respectively.
Pro forma financial information including NWC (in thousands):
6/30/96 6/30/95
------- -------
Revenue................... 16,170 7,909
Net income................ (11,945) (8,383)
Earnings per share........ (0.43) (0.33)
6
<PAGE> 7
NOTE 3 - INVENTORY
Inventory consists of raw materials and finished goods which are stated
at the lower of average cost or market value.
NOTE 4 - REVENUE RECOGNITION
The Company recognizes revenue from royalty and pressing fee agreements
upon receipt of documentation indicating that the compact disc ("CD")
manufacturer shipped CDs to the software title developers or publishers, or the
licensed chipset foundry shipped chipsets to the hardware manufacturers. Revenue
from the sale of software titles published and distributed by the Company and
developer products is recognized at the time of shipment, provided the Company
has no outstanding obligations. Subject to certain limitations, the Company
permits customers to obtain exchanges of software titles published and
distributed by the Company, within certain specified periods, and provides price
protection on certain unsold merchandise. Software publishing revenue is
reflected net of an allowance for returns and price protection. Revenue from
third party engineering and licensing agreements are recognized using the
percentage-of-completion method.
Deferred revenue consists primarily of payments received in advance of
revenue being earned under engineering and licensing agreements.
NOTE 5 - NET LOSS PER SHARE
Net loss per share is computed based on the weighted average number of
common shares outstanding. The computation of net loss for the quarter includes
1.05 million shares, an estimate of the number of shares to be issued for the
purchase of New World Computing, Inc.
NOTE 6 - INCENTIVE PROGRAMS
The Company provided manufacturing incentives of $5.00, $4.00 and $3.00
for each 3DO Multiplayer system distributed in calendar years 1993, 1994 and
1995, respectively. Amounts under this and certain other incentive programs were
accrued as the obligations arose, and as of June 30, 1996 the Company had
accrued approximately $2.9 million. During the quarter ended June 30, 1996, one
of the Company's hardware licensees elected to receive 47,090 shares of the
Company's stock in lieu of a cash payment of $0.4 million. In addition, a cash
payment of $1.2 million was paid on April 1, 1996. The June 30, 1996 balance is
due to be paid on April 1, 1997.
The Company entered into an agreement with its hardware system
licensees to provide two shares of 3DO Common Stock for each 3DO hardware system
they shipped from February 1, 1994 through September 30, 1994 at or below
certain suggested retail prices. This program was extended through December 31,
1994 for one licensee. The market value of the stock issued or to be issued
under this incentive program was recognized as an expense at the time the
Company incurred the obligation to issue the stock, and is separately reflected
in the Consolidated Statements of Operations. The Company issued 400,000 shares
as of June 30, 1996 and anticipates issuing an additional 90,090 shares under
this program.
7
<PAGE> 8
In October 1994, the Company established a Market Development Fund
("MDF") program under which a pressing fee is charged to authorized CD pressing
facilities for each copy of a licensed software title that is manufactured
outside of Japan. In the quarter ended December 31, 1994, all funds collected
under this program were used for advertising and promoting the 3DO format and
product family. Beginning January 1, 1995, a portion of the MDF funds were used
by the Company for advertising and promotions, while the remainder was to be
paid to qualifying hardware system licensees, based on their shipments of 3DO
hardware systems in certain markets, to encourage production and reduced pricing
of such systems. All such pressing fees are recognized as revenue, and the
amount due to hardware systems licensees is accrued and recorded as an offset to
revenue, as the applicable CDs are pressed. The related advertising and
promotions expenditures under the program are recorded as incurred, and are
separately reflected as an operating expense in the Statements of Operations.
NOTE 7 - INCOME TAXES
For the quarters ended June 30, 1996 and 1995, income tax expense is
$4.0 million and $0.1 million respectively, representing foreign income and
withholding taxes, and minimum state taxes.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The 3DO Company ("3DO" or the "Company") designs, integrates, licenses
and sells interactive technologies and applications software products. The
Company is focused on creating technologies and entertainment products for the
advanced 64-bit market and is engaged in the development of software titles for
multiple hardware platforms including the IBM-compatible PC-CDROM platform (the
"PC"), the 64-bit M2 platform being developed by Matsushita, and the Internet,
and enhancing and leveraging the Company's existing technologies beyond the
video game console market to the personal computer and digital video markets.
References to "3DO" or the "Company" mean The 3DO Company, a Delaware
corporation, and its subsidiaries and predecessor entities.
The Company developed a next generation 64-bit technology (the "M2
Technology") and in December 1995, the Company and Matsushita entered into a
definitive license agreement, pursuant to which the Company granted Matsushita a
perpetual, exclusive, worldwide license, with the right to grant sublicenses,
with respect to the M2 Technology, for use in both hardware and software for
games and all other applications (the "Technology Licensing Agreement"). The
license was granted in exchange for an upfront license payment of $100 million,
and for certain royalties which shall be paid to 3DO for certain software
products manufactured after January 1, 1998, which are compatible with the M2
Technology. Under the terms of the Technology Licensing Agreement, Matsushita
has granted 3DO a non-exclusive license to use the M2 Technology for the
development, manufacture and distribution of hardware products designed for use
in the computer field, of software and peripherals compatible with hardware
products developed by Matsushita or its sublicensees that incorporate the M2
Technology, and of development systems to third parties outside of Japan that
are authorized by Matsushita to develop and publish software products compatible
with hardware products that incorporate the M2 Technology. Revenue pertaining to
the license fees under the Technology Licensing Agreement is being recognized by
the Company using the percentage-of-completion method based on the costs
incurred to fulfill its commitments to deliver technology as specified in the
agreement. The Company estimates that it will recognize revenue in connection
with the Technology Licensing Agreement through the fourth quarter of the
Company's fiscal year ending March 31, 1998.
On April 24, 1996, the Company agreed to make certain modifications to
the M2 system design, pursuant to the terms of an addendum (the "Addendum") to
the Technology Licensing Agreement with Matsushita. As consideration for
providing engineering and certain support services, the Company will receive an
additional aggregate fee of approximately $4.5 million to be received in
installments in fiscal 1997 and 1998. The payments by Matsushita are contingent
upon the Company meeting certain milestones by particular dates, as stipulated
in the Addendum. The Company intends to recognize this revenue using the
percentage-of-completion method.
9
<PAGE> 10
In February 1996, the Company licensed the 3-D graphics portion of the
M2 Technology to Cirrus Logic, a leader in video graphics controllers, for the
potential development of high-end 3-D graphics chips for the PC market. Under
the terms of the Joint Development and License Agreement (the "Cirrus
Agreement") the Company will develop certain modifications to the "3-D Engine,"
which is a component of the proprietary semiconductor technology which is part
of the M2 Technology. As partial consideration under such agreement, the Company
has received a non-refundable sum of $2.5 million as of June 30, 1996. Revenue
pertaining to the Cirrus Agreement is recognized using the
percentage-of-completion method.
Prior to the fourth quarter of fiscal year 1996, the Company generated
a majority of its revenue from software royalties and pressing fees on titles
published by its software licensees. During the fourth quarter of fiscal year
1996 and this quarter, however, the Company derived the majority of its revenue
from the recognition of income from the Technology Licensing Agreement. To a
lesser extent, during this quarter, the Company also generated revenue from its
licensing agreement with Cirrus Logic and from the licensing and distribution
of software titles published by the Company and others.
The Company generally recognizes revenue from the sale of software
titles published and distributed by the Company and developer products at the
time of shipment, and recognizes semiconductor and software title royalty and
pressing fee revenue upon receipt of evidence of shipment from the relevant
semiconductor foundry or the CD pressing plant. Revenue pertaining to the
Cirrus Agreement and the Technology Licensing Agreement is recognized using
the percentage-of-completion method.
The Company provided manufacturing incentives of $5.00, $4.00 and $3.00
for each 3DO Multiplayer system distributed in calendar years 1993, 1994 and
1995, respectively. Amounts under this and certain other incentive programs were
accrued as the obligations arose and as of June 30, 1996 the Company had accrued
approximately $2.9 million. During the quarter ended June 30, 1996, one of the
Company's hardware licensees elected to receive 47,090 shares of the Company's
stock in lieu of a cash payment of $0.4 million. In addition, a cash payment of
$1.2 million was paid on April 1, 1996. The June 30, 1996 balance is due to be
paid on April 1, 1997.
On May 31, 1996, the Company acquired all the outstanding capital
stock of Archetype Interactive Corporation ("Archetype"), a software developer
of a multi-user role playing game designed to be played over the Internet. In
exchange for the outstanding capital stock of Archetype, the Company issued
shares of its common stock to the Archetype shareholders. The Company accounted
for this acquisition using the "pooling of interests" method.
On June 30, 1996, the Company purchased certain assets and assumed
certain liabilities of New World Computing, Inc. ("NWC"), a PC platform game
developer located in Agoura Hills, California. As consideration for the
purchase, the Company will issue approximately 1.05 million shares of its
common stock to NWC. The actual number of shares to be issued by the Company
will be adjusted based on the amount of certain NWC assets and liabilities on
the closing date. In addition, under the terms of the agreement, the Company
will be obligated to make a cash payment to NWC in the event that the value of
the 3DO stock issued in the transaction falls below an amount equal to
approximately $10 per share during a period following the closing date. The
Company recorded this transaction as of June 30, 1996 using the purchase method
of accounting. A one-time charge was recorded in the quarter for $7.7 million
representing the amount of the purchase price assigned to in-process
research and development.
The Company will continue to incur substantial expenditures to develop
its business in fiscal year 1997, particularly in an effort to increase market
acceptance of products based on its current technologies and to complete the
development of its next generation technology. The Company expects that its
operating results will fluctuate as a result of a wide variety of factors,
including changes in the composition of the Company's revenues, the timing of
new hardware and software product introductions by its licensees and by its
competitors, the Company's expenditures on
10
<PAGE> 11
research and development, marketing and promotional programs, and the general
state of the national and global economies. In addition, the Company's revenue
will be affected by the seasonal nature of the market for consumer electronics
products and variations as a result of the demand for a particular software
title.
RESULTS OF OPERATIONS
For the three months ended June 30, 1996 and 1995, the Company incurred
net losses of $10.4 million and $7.9 million, respectively. Included in the net
loss for the three months ended June 30, 1996 is a $7.7 million charge for
in-process research and development related to the acquisition of the assets of
New World Computing, Inc. and $4.0 million in withholding taxes related to the
payment of $40 million by Matsushita pursuant to the Technology Licensing
Agreement.
Revenue for the quarter ended June 30, 1996 totaled $15.3 million
compared to $7.2 million for the quarter ended June 30, 1995. The largest
component of revenue was $14.2 million in royalties and license fees compared to
$3.4 million for the comparable quarter in the prior year. This increase is due
primarily to recognition of $12.3 million related to the Technology Licensing
Agreement with Matsushita and $1.6 million from the Cirrus Agreement. Revenue
from these contracts is recorded using the percentage-of-completion method.
Software publishing revenues totaled $0.9 million compared to $2.0
million in the comparable quarter in the prior year. The reduction between
years was due primarily to the recognition in 1995 of $1.4 million in revenue
from Matsushita, for an agreement the Company entered into under which
Matsushita was granted the right to license, manufacture and distribute certain
software titles developed by or for 3DO. During the quarter ended June 30,
1996, the Company shipped two new titles; one for the 32-bit 3DO Multiplayer
platform and one for the PC platform, and also recognized certain license
revenue from an agreement with Acclaim. This agreement licenses the rights for
Acclaim to publish certain 3DO titles on the Sega, Sony and PC platforms.
Developer products and other revenue was $0.3 million, compared to $1.8
million in the prior comparable quarter. Developer products sales have decreased
as the growth in software licensees has declined. For the quarter ended June 30,
1996, other revenue included $0.2 million in digital video sales of the
MPEGXpress systems. Included in other revenue for the quarter ended June 30,
1995 is approximately $0.6 million of revenue recognized for engineering and
software development services provided to U S West.
Cost of revenues of approximately $1.1 million and $1.2 million for the
quarters ended June 30, 1996 and 1995, respectively, consists primarily of
direct costs associated with developer products and software titles sold. The
decrease is primarily due to the increased proportion of royalties and license
fees recognized for the quarter ended June 30, 1996, which have significantly
lower associated costs of revenues.
Research and development expenses, including in-process research and
development expenses, increased significantly, from approximately $9.4 million
for the quarter ended June 30, 1995 to approximately $17.0 million for the
period ended June 30, 1996. This increase is almost entirely due to the
one-time $7.7 million expense for in-process research and development related
to the Company's acquisition of the assets of New World Computing. The Company
anticipates that research and development expenses may increase in future
periods due to the Company's activities in developing software titles for
publishing and distribution by 3DO.
Sales and marketing expenses decreased from $2.4 million for the three
months ended June 30, 1995 to $1.1 million for the same period in 1996, due to
the disposition of 3DO Japan Co., Ltd. that resulted in a $0.7 million expense
reduction and $0.5 million related to the reduction of advertising to promote
the 32-bit 3DO Multiplayer format. It is anticipated that this expense will
increase in future periods as the Company promotes the release of its
software titles.
11
<PAGE> 12
General and administrative expenses were $0.8 million higher for the
quarter ended June 30, 1996 as compared to 1995, totaling $2.8 million and $2.0
million, respectively. This increase is primarily due to accrued expenses for
employee benefits.
Net interest and other income increased from an expense of $.03 million
to an income of $0.3 million for the quarters ended June 30, 1995 and 1996,
respectively, due primarily to interest earned on higher cash balances as a
result of proceeds collected from the Technology Licensing Agreement with
Matsushita.
The majority of the provision for income and foreign withholding taxes
of $4.0 million for the quarter ended June 30, 1996, is attributable to the 10%
foreign withholding taxes on the $40 million payment received from Matsushita in
connection with the Technology Licensing Agreement.
The Company anticipates that operating expenses may increase in future
periods. This increase is expected to be mostly attributable to the Company's
activities in developing software titles and increasing its publishing and
distribution efforts.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity are its cash and cash
equivalent balances and short-term investment balances, which totaled
approximately $72.8 million at June 30, 1996. At March 31, 1996, cash and
short-term investments totaled $50.1 million. This increase is primarily due to
the net proceeds of $36 million received from Matsushita for the Technology
Licensing Agreement, offset by operating losses and capital expenditures. Net
cash provided by operating activities of approximately $24.7 million for the
quarter ended June 30, 1996 increased as compared with net cash used of
approximately $8.2 million for the same period in 1995. The increase is due
principally to the $36 million payment from Matsushita. For the three month
period ended June 30, 1996, the Company invested approximately $2.0 million
($0.4 million in the same period in 1995) in fixed assets, excluding stock or
asset acquisitions or assets acquired under capital lease obligations, which
were primarily purchases of computer equipment, software applications and
office furnishings.
The Company anticipates that the existing cash resources, future lease
and working capital financing and all other sources of funds should be
sufficient to fund the Company's activities through the end of fiscal year 1997.
There can be no assurance that additional capital will not be required in fiscal
year 1997 since cash flows will be affected by the rate at which the Company's
hardware and software licensees introduce their products and the resulting sale
of these products, the market acceptance of such products, the levels of
advertising and promotions required to promote market acceptance of the
Company's and its licensees' products, the resources required to complete the
Company's next generation technology, and the rate at which the Company
independently develops, publishes and distributes software titles. The Company
anticipates that it will require additional capital beyond fiscal year 1997. The
level of financing required beyond fiscal year 1997 will depend on these and
other factors. If the Company needs to raise additional funds through public or
private financings, no assurance can be given that additional financing will be
available or that, if available, it will be available on terms acceptable to the
Company or its stockholders. Additional financings may result in substantial and
immediate dilution to existing stockholders. If adequate funds are not available
to satisfy either short or long term capital requirements, the Company may be
required to curtail its operations significantly or to obtain funds through
arrangements with strategic partners or others that may require the Company to
relinquish material rights to certain of its technologies and/or potential
markets.
As part of its business strategy, the Company frequently evaluates
opportunities to enter into strategic alliances, joint ventures, acquisitions of
businesses, products or technologies and other similar transactions. The Company
has no present understanding, commitment or agreement with respect to any such
transactions.
12
<PAGE> 13
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits have been filed with this report:
11.01 Computation of Net Loss Per Share
27.01 Financial Data Schedule
(b) No Form 8-K was filed during the quarter ended June 30, 1996.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE 3DO COMPANY
Dated: August 14, 1996 /s/ PAUL J. MILLEY
------------------
Paul J. Milley
Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
(Duly authorized officer)
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit # Description of Document
<C> <S>
11.01 Computation of Net Loss Per Share
27.01 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 11.01
THE 3DO COMPANY
COMPUTATION OF NET LOSS PER SHARE(1)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Net loss ($ 10,391) ($ 7,928)
============ ============
Weighted average number of shares outstanding:
Preferred stock 0 0
Common stock 26,618,240 24,479,182
------------ ------------
Common and common equivalent shares 26,618,240 24,479,182
============ ============
Net loss per common and common equivalent share ($ 0.39) ($ 0.32)
============ ============
</TABLE>
(1) This schedule should be read with Note 7 - Net Loss Per Share in the
Condensed Notes to Consolidated Financial Statements.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 29,923
<SECURITIES> 42,865
<RECEIVABLES> 5,344
<ALLOWANCES> 2,704
<INVENTORY> 2,132
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0
0
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</TABLE>
