10/28/2002 - Oak Technology announced that the company has completed the acquisition of privately held TeraLogic, a leading developer of video/audio processing hardware and software for digital home entertainment platforms. The operations of TeraLogic will be merged with Oak's existing operations to form Oak's TeraLogic Group, focused on consumer entertainment.
TeraLogic, the number-one merchant supplier of high-definition television (HDTV) chipsets in the world today, brings world-class expertise in advanced video/audio and display processing technology for digital TV, HDTV and personal digital video recorders (PVR) to Oak. The companies believe the combined businesses further propel Oak's leadership position in the fast-growing digital media, digital imaging and digital home entertainment markets.
Upon completion of the acquisition, TeraLogic's stockholders received a cash payment of $38 million, and Oak assumed approximately $12 million of TeraLogic's debts and obligations. In addition, Oak reserved 2.2 million shares of the company's common stock for future issuance to the employees of TeraLogic, pursuant to options granted to them upon closing the transaction. Further terms of the agreement were not disclosed.
Oak said that although TeraLogic's December 2002 quarter revenues are forecasted to grow compared with the September 2002 quarter, the acquisition closed later than originally planned, which will reduce Oak's share of TeraLogic's revenue and expense for the second fiscal quarter, ending December 31, 2002. In addition, the company foresees the potential for additional softness in its core businesses due to the continued slow economy. Oak now expects revenue from the combined company to be down sequentially as much as 15 percent compared with the 5 percent previously forecast. The gross margin impact of the overall reduction is expected to be approximately $ 1.0 -$ 1.5 million, which should be offset almost entirely by the reduced absorption of TeraLogic operating expense. Therefore, expectations for a pro forma net loss for the quarter remain unchanged at $(0.21) to $(0.23) per share for the combined company.
About Oak Technology
Oak Technology, Inc., a leading provider of solutions for the storage, manipulation and distribution of digital content, is committed to driving the emerging world of connected Information Appliances. The company's fully integrated products and technologies target three key markets: optical storage (CD-RW and DVD for PC and consumer), digital imaging (advanced copiers, printers, faxes, scanners and MFPs), and digital home entertainment (digital TV, HDTV and PVRs). Founded in 1987, Oak is headquartered in Sunnyvale, Calif., and has sales offices, design centers and research facilities around the world. The company trades on the NASDAQ Stock Exchange under the symbol OAKT.
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