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EPS Growth of 56% Excluding Investment GainsStrong Market Acceptance of Company's DVD Chipset Solutions |
| FREMONT,
Calif., Oct. 18 /PRNewswire/ -- ESS Technology, Inc. (Nasdaq: ESST -
news), a leader in digital multimedia solutions, today announced
record third quarter results. Earnings per diluted share (excluding
investment gains) were $0.28, up 56 percent compared to the $0.18 per
diluted share reported a year ago and also in the second quarter of
2000. Earnings including investment gains were $0.71 per diluted
share.
The company attributed its record performance to strong sales of its DVD, VCD and softmodem chipsets. Asian manufacturers purchase the majority of ESS's DVD chipsets for use in DVD players manufactured for export to the U.S. and Europe. In addition, ESS reported strong worldwide sales of its digital video VCD chipsets. VCDs, a popular low-cost alternative to DVD players, are gaining rapid market acceptance in emerging markets such as India, Indonesia, Malaysia, Turkey and Brazil. Net revenues for the September quarter were $87.7 million, a 16 percent increase compared to the third quarter of 1999, and a 10 percent increase compared to the sequential June 2000 quarter. Net income for the quarter was $32.7 million, including the previously announced gain following Cisco's acquisition of Komodo Technology. Excluding net investment gains and losses, net income for the quarter was $12.7 million, compared to net income of $8.1 million a year ago and $8.5 million in the second quarter of 2000. Gross margins were 40 percent in the third quarter, compared to 38 percent a year ago and 38 percent in the second quarter of 2000. Robert Blair, president and CEO of ESS, commented on the company's record results: ``We reported record revenue and earnings this quarter, driven by the strong sales and high margins of our DVD business. We believe ESS has become the market leader in DVD chipsets and that our market share will continue to grow during the hot holiday season.'' ``ESS's strong results were achieved despite the slowdown in PC sales. This is due to our success in transforming ESS from a PC audio company to a digital video and communications company,'' Blair concluded. About ESS Technology ESS Technology, Inc., a leader in Internet, communications, digital video and PC audio, provides advanced products enabling the convergence of communications, computer, consumer, and Internet markets. ESS's subsidiary, Vialta, provides advanced, easy-to-use products and applications for the Internet. Products include multimedia appliances, applications, and content for the Internet which enable the user to experience new levels of entertainment and e-Commerce. ESS, headquartered in Fremont, Calif., has R&D, sales and technical support offices worldwide. ESS Technology's common stock is traded on the Nasdaq under the symbol ESST. ESS's web site address is: http://www.esstech.com (ATTACHMENTS: Consolidated Financial Statements) The matters discussed in this news release
include certain forward-looking statements that involve risks and
uncertainties, including, but limited to, the timely availability and
acceptance of the Company's new products, the impact of competitive
products and pricing, the dependence on continued growth in demand for
PC and consumer multimedia products, as well as the other risks
detailed from time to time in the SEC reports of ESS, including the
reports on Form 10-K and Form 10Q. Actual results could differ
materially from those projected in the forward-looking statements. ESS TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
Sep. 30 Dec. 31
2000 1999
ASSETS
Current Assets:
Cash and cash equivalents $45,196 $40,413
Cash and cash equivalents - ViAlta 75,100 90,500
Short-term investments 45,637 28,274
Short-term investments - ViAlta 44,085 22,344
Accounts receivable, net 78,573 34,362
Inventories 63,847 42,347
Deferred income taxes 10,758 10,758
Prepaid expenses and other assets 5,100 2,199
Total current assets 368,296 271,197
Property, plant and equipment, net 37,874 40,564
Other assets 8,666 9,266
Total Assets $414,836 $321,027
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $72,331 $72,303
Income taxes payable and deferred income taxes 36,265 12,285
Total current liabilities 108,596 84,588
Minority Interest 75,869 52,860
Shareholders' equity:
Common stock 129,153 140,597
Retained earnings 101,218 42,982
Total shareholders' equity 230,371 183,579
Total Liabilities and Shareholders' Equity $414,836 $321,027
ESS TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Three Months Ended Nine Months Ended
Sep. 30 Sep. 30 Sep. 30 Sep. 30
2000 1999 2000 1999
Net revenues $87,714 $75,400 $250,898 $221,923 Cost of revenues 52,521 46,949 154,931 135,869 Gross profit 35,193 28,451 95,967 86,054
Operating expenses:
Research and development 10,752 9,637 33,619 27,304
In-process
research and development - - 2,625 -
Selling, general
and administrative 13,836 10,460 36,233 28,429
Operating income 10,605 8,354 23,490 30,321
Nonoperating income 36,841 1,202 42,589 3,412
Income before
provision for income taxes 47,446 9,556 66,079 33,733
Provision for income taxes 17,183 1,433 22,364 5,060
Net income before
minority interest 30,263 8,123 43,715 28,673
Minority Interest 2,456 - 6,186 -
Net Income $32,719 $8,123 $49,901 $28,673
Net income per share - basic $0.76 $0.20 $1.17 $0.71
Net income per share - diluted $0.71 $0.18 $1.08 $0.63
Shares used in calculating
net income per share - basic 43,310 40,545 42,535 40,485
Shares used in calculating
net income per share - diluted 46,138 46,021 46,403 45,518
ESS Technology, Inc.
Condensed Consolidated Statement of Operations
(unaudited)
(in thousands, except per share data)
Three
Three Months Ended Sep. 30, Months
2000 Ended
ESS ViAlta Elim- Consoli Sep. 30,
-ination -dated 1999
Net revenues $87,629 $330 ($245) $87,714 $75,400
Cost of revenues 51,925 794 (198) 52,521 46,949
Gross profit (loss) 35,704 (464) (47) 35,193 28,451
Gross margin 40.7% -140.6% 40.1% 37.7%
Research
and development 7,483 3,269 10,752 9,637
Selling, general
and administrative 11,085 2,751 -- 13,836 10,460
Operating income (loss) 17,136 (6,484) (47) 10,605 8,354
Other income 36,575 266 36,841 1,202
Income (loss)
before income taxes 53,711 (6,218) (47) 47,446 9,556
Provision for
income taxes 17,183 - - 17,183 1,433
Net income (loss) before
minority interest 36,528 (6,218) (47) 30,263 8,123
Minority Interest - 2,456 - 2,456 -
Net income (loss) $36,528 ($3,762) ($47) $32,719 $8,123 EPS - Diluted $0.79 $0.71 $0.18 Nine Nine Months Ended Sep. 30, Months 2000 Ended ESS ViAlta Elim- Consoli Sep. 30,
SOURCE: ESS Technology, Inc. |
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