SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 2, 1998
ROSS TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-27016 74-2507960
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
5316 Highway 290 West, First Floor, Austin, Texas 78735
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (512) 436-2000
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Item 5. Other Events.
On April 2, 1998, Ross Technology, Inc. issued a press release, a copy of
which is attached hereto as Exhibit 99 and incorporated herein by reference.
Item 7. Exhibits.
99 Press Release dated April 2, 1998.
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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 hereunto duly authorized.
ROSS TECHNOLOGY, INC.
Date: April 3, 1998
By: /s/ Francis S. (Kit) Webster III
---------------------------------
Francis S. (Kit) Webster III
Chief Financial Officer
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Exhibit Index
Exhibit Description
99 Press Release dated April 2, 1998.
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EXHIBIT 99
ROSS TECNOLOGY INC.
THE SPARC SOLUTIONS COMPANY
N E W S R E L E A S E
Company Contact: Company Information:
F.S. (Kit) Webster III http://www.ross.com
Chief Financial Officer 800/ROSS-YES
(512) 436-2578 Int'l: 512/349-3108
FAX (512) 892-3402
E-Mail: [email protected]
ROSS TECHNOLOGY'S FINANCIAL RESULTS FOR ITS
FOURTH FISCAL QUARTER TO BE LOWER THAN
EXPECTED; LINE OF CREDIT EXTENDED;
STRATEGIC ALTERNATIVES BEING PURSUED
AUSTIN, Texas, April 2, 1998 -- ROSS Technology, Inc. (Nasdaq: RTEC)
today announced that revenues for its fourth fiscal quarter, ended March 30,
1998, will be substantially below the expectations of investment analysts and
internal plans and that losses for the quarter will be higher than expected.
"As we stated in the discussion of our third quarter report, sales of
the existing products have been and continue to be the biggest short-term
challenge for the Company," said Jack W. Simpson, Sr., President and Chief
Executive Officer of ROSS Technology. "During the past eight quarters, we have
experienced a substantial, continued fall-off in sales of our 32-bit
hyperSPARC(TM) products to OEM customers, and our upgrade business has not
achieved our plan to replace the OEM fall-off. Also, even though we have
expanded the sales force and developed new sales channels, the decline in sales
of these older products has not turned around. We anticipate that quarterly
revenues for the foreseeable future will be significantly lower than reported
for the third quarter of fiscal 1998. We are taking action to minimize losses
going forward."
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RTEC/Results
Page 2
The Company also announced that it had been informed by Fujitsu Limited,
its majority stockholder, that Fujitsu has agreed to extend the term of its $20
million credit guaranty for ROSS to June 30, 1998 and will consider extensions
beyond that date after review of ROSS' business plans, but there is no assurance
that Fujitsu will agree to further extend the guaranty or to increase it beyond
$20 million. The line of credit has also been extended by the lender to June 30,
1998. As of March 31, 1998, the Company had borrowed $15 million in principal
under the line of credit. The Company does not have the capability to pay off
the line of credit in the foreseeable future.
In light of the information received from Fujitsu and the Company's
revenue and earnings outlook, the Company has decided to pursue strategic
alternatives for its business.
"At this time, ROSS should be viewed by the investment community
primarily as a development stage company with significant intellectual property
and design capabilities already in place. Since we have not been able to sell
our existing products at the level necessary to fill in the gap until the new
products are available, we need to minimize our losses in the current 32-bit
products. We do intend to continue to sell and support our 32-bit microprocessor
products in both the OEM and upgrade markets, but will lower our expectations
and align our expenditures more closely to our lower level of sales," Mr.
Simpson said. "During this shift, we plan to continue development of our 64-bit
SPARC(R) microprocessor, `Viper,' and are excited about its performance and
market potential. We must focus our resources here. We will explore broader
partnerships and arrangements to realize value from these important assets."
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RTEC/Results
Page 3
Mr. Simpson noted that ongoing development of the Viper product is
dependent upon the Company's ability to secure OEM design wins and adequate
development funding, from Fujitsu or other strategic partners. "Our Viper team
expects to be able to meet the challenging technical specifications of SPECint
42, SPECfp 55 and tpm-C of greater than 13,000 @ 500 MHz. We have made
significant progress in our development but have remained behind the schedule
set forth in our Viper Development Agreement with Fujitsu by about three months,
due primarily to an architecture change made in 1997. Based on customer
feedback, we have also re-targeted Viper to a new 0.18 micron fabrication
process to provide a smaller die which is less costly and consumes less power.
This re-targeting necessitates certain specification, schedule and milestone
changes. We will be proposing those changes to Fujitsu; however, under the
Development Agreement Fujitsu has no obligation to agree to the changes. If it
does not agree, future payments to ROSS under the Development Agreement would be
in doubt because Fujitsu may terminate the Agreement if its acceptance of a
milestone is more than 120 days later than specified in the Agreement. For the
fourth quarter, as for the previous two quarters, ROSS and Fujitsu have agreed
on revised milestones for the Viper project that will result in a payment by
Fujitsu under the Development Agreement. For the fourth quarter, the Company
will record a payment, net of potential penalties, of $2.7 million as an offset
to R&D expense."
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RTEC/Results
Page 4
The Executive Committee of ROSS, acting on behalf of the Company's Board
of Directors, has determined that the Company must accelerate the exploration of
strategic alternatives for its business. The alternatives being explored include
an acquisition of Fujitsu's equity interest by a third party; a merger or an
acquisition of the entire Company by a third party; new equity investments or
development partnerships for the Viper program; the sale of various assets,
including the Company's design subsidiary in Israel, the Viper development
program and associated intellectual property, and the Austin manufacturing
operation; and, potentially, an orderly liquidation of the Company. The Company
has commenced discussions with potential investors and buyers and is in the
process of retaining Houlihan Lokey Howard & Zukin to advise the Special
Committee of the Board in these matters.
"It is clear that the current value of ROSS is primarily in its
intellectual property, its design and product engineers, its general expertise
in high performance microprocessor architecture and design, multiprocessing,
multi-chip modules, and high productivity design methodologies, and its test
site processes and capabilities. Our current business results have put a cloud
over our largest assets, and we must separately analyze each of the key
components of our business to determine the source of value, and to see if we
can unlock that value for our shareholders. While there are no assurances as to
the outcome, management believes that we have some significant assets that can
be the basis of an arrangement with major players in the industry," concluded
Simpson.
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RTEC/Results
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Safe Harbor Statement under Private Securities Litigation Reform Act of
1995: To the extent that this release contains forward-looking statements with
respect to the financial condition, results of operations and business of the
Company, such statements are subject to certain risks and uncertainties that
could cause actual results to differ materially and adversely from those set
forth in the forward-looking statements, including without limitation, the
availability of financial resources adequate to the Company's short-, medium-
and long-term needs, including renewal of its present loan and loan guaranty
arrangements; the Company's dependence on the timely development, pre-production
qualification, manufacture, introduction and customer acceptance of new
higher-speed, higher-margin products, including the "Colorado 5" and "Viper"
microprocessor products; the ability to identify and access the 32-bit
microprocessor upgrade market; and the impact on revenue, margins and
inventories of rapidly changing technology. Additional risks and uncertainties
include the ability of the Company to successfully implement its strategy of
diversifying into the system products business and the business of supplying
Java(TM)-related products; the various effects on revenue, margins, inventories
and operating expenses of repositioning the Company's product lines and overall
business; the effects of building and maintaining product inventories in the
Company's hands and in its distribution channels; product return and credit
risks with distributors, resellers and other customers; the Company's dependence
on distributors and resellers for certain product sales to end-users;
competition, downward pricing pressures and allocations of product among
different distribution channels; the effects of routine price degradation over
time in each of the Company's product lines; varying customer demand for the
Company's products; supply and manufacturing constraints and costs; the
Company's dependence on outside suppliers for wafer fabrication and raw
materials, components and certain manufacturing services; changes in plans,
programs or expenses for research, development, sales or marketing; the
Company's ability to build and maintain adequate staff infrastructures in the
areas of microprocessor design, product engineering and development, sales and
marketing, finance, accounting, and administration; supplier disputes; customer
warranty claims; general economic conditions; and the other risks and
uncertainties described from time to time in the Company's public announcements
and Securities and Exchange Commission filings, including without limitation the
Company's Current, Quarterly and Annual Reports on Forms 8-K, 10-Q and 10-K,
respectively. The Company cautions that the foregoing list of important factors
is not exclusive. The Company does not undertake to update any written or oral
forward-looking statement that may be made from time to time by or on behalf of
the Company.
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RTEC/Results
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ROSS Overview
ROSS Technology, founded in 1988, is a majority-owned subsidiary of
Fujitsu Limited. A minority position in ROSS is held by Sun Microsystems, Inc.
As of December 29, 1997, the Company's outstanding Common Stock was held 60
percent by Fujitsu, 5 percent by Sun, and 35 percent by employees and the
public. The Company's objective is to produce innovative high-performance,
cost-effective computing solutions for the Sun/SPARC market. ROSS is one of the
industry's most prominent suppliers of SPARC microprocessors and SPARC system
products to both the OEM and end-user markets.
######
Note to Editors:
ROSS and the ROSS logo are registered trademarks of ROSS Technology, Inc. All
SPARC trademarks are trademarks or registered trademarks of SPARC International.
hyperSPARC is licensed exclusively to ROSS Technology, Inc. Products bearing
SPARC trademarks are based upon an architecture developed by Sun Microsystems,
Inc. Java is a trademark of Sun Microsystems, Inc. All other products or service
names herein are trademarks of their respective owners.
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