3DFX Announces Three Major Initiatives to Protect
Creditors and Maximize Shareholder Value
Board of Directors Initiates Cost-Cutting Measures, Recommends to Shareholders Sale of
Company Assets to NVIDIA Corporation for $112 Million and Dissolution Of Company
SAN JOSE, Calif., Dec. 15 /PRNewswire/ -- In an effort to protect its creditors and maximize shareholder value, 3dfx Interactive,
Inc. (Nasdaq: TDFX - news) announced today that it will substantially reduce all of its workforce as part of an initiative to
significantly reduce expenses. In addition, the company said its Board of Directors will recommend to its shareholders that they
approve the sale of most of the company's assets to NVIDIA Corporation (Nasdaq: NVDA - news) as outlined in a definitive
agreement between the companies that was signed today, and also approve a plan to dissolve the company following completion of
the asset sale.
``After aggressively pursuing a wide range of options that take into consideration the interests of our creditors, our shareholders, our
employees and our customers,'' said Alex Leupp, president and CEO, 3dfx Interactive Inc., ``we strongly believe that to reduce
expenses, sell our assets and dissolve the company provides the highest return to our creditors, shareholders, and employees.''
``We expect that the combined technologies of 3dfx and NVIDIA will continue the legacy that 3dfx began in 1994,'' Leupp
continued. ``NVIDIA is the number one supplier of graphics technology to the OEM market. With the addition of 3dfx's
high-quality technology that leads the retail market, we believe the combination of the two will result in even greater PC graphics
leadership.''
The target market for 3dfx has historically been the retail graphics market, a market that 3dfx has dominated since 1998. The
segment represents approximately 10 percent of the overall graphics market, and is subject to extreme volatility and unpredictability.
Specifically, high inventory expenses, decreasing margins, and slowing demand have done irreparable harm to 3dfx. While the
company had recently announced plans to expand its business into additional markets, it has been unable to invest in its expansion
under current business and financial market conditions.
The company announced that it plans to substantially reduce its costs in order to best conserve its resources. These cost-cutting
measures include a reduction of substantially all of the company's workforce by early next year, reduction in office space, and other
efforts to reduce non-essential expenses. 3dfx is also providing manufacturing services to third parties to help cover the overhead
associated with its Juarez, Mexico manufacturing facility pending the sale of that facility. In the meantime, 3dfx expects to continue
to maintain an adequate workforce to support its customers.
The Board of Directors, with the assistance of the company's advisors, has undergone exhaustive efforts to explore many
alternatives including raising new financing to continue its operations and exploring various strategic alliances and business
combinations. It has concluded that the best interests of the creditors and shareholders will be served by selling its assets to
NVIDIA Corporation, as outlined in a definitive agreement between the companies signed today, and also to approve the plan for
dissolution. Under the terms of the agreement signed today, NVIDIA has agreed to pay a value of $112 million ($70 million cash and
one million shares of registered NVIDIA common stock as value based on NVIDIA's closing price on December 14, 2000).
Upon signing the definitive agreement, NVIDIA has agreed to loan to 3dfx $15 million for working capital, which will be credited to
the cash portion of the purchase price. In addition, 3dfx and NVIDIA have agreed to stay the patent infringement litigation between
them through closing of the transaction, at which time the suits will be jointly dismissed with prejudice. Assets included in the
transaction include all 3dfx intellectual property and chip inventory as well as certain other assets. In addition, upon signing the
definitive agreement, 3dfx transferred to NVIDIA the ``3dfx'' and ``Voodoo'' brand names and trademarks.
The closing of the transaction is subject to a variety of conditions, including 3dfx shareholder approval, receipt of governmental
approvals including the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and receipt of all necessary consents of third
parties.
After closing the NVIDIA asset sale and upon 3dfx shareholder approval, 3dfx will proceed to pay or adequately provide for its
debts and liabilities. 3dfx will thereafter distribute its remaining assets to its shareholders in one or more distributions.
3dfx will host a conference call today at 2 p.m. Pacific Standard Time, 3 p.m. Mountain, 4 p.m. Central, 5 p.m. Eastern, to discuss
current developments and its financial results for the third quarter fiscal 2001, ended October 31, 2000. To participate in the
conference call, please dial 800-521-5428.
About 3dfx Interactive
3dfx Interactive is a global leader in enabling the emerging age of visual communications, and the 3D multimedia revolution in
personal computers and consumer products. With its patented and award-winning graphics accelerator chips, boards and software,
3dfx provides the technology to create high-impact visual experiences. The company is recognized worldwide for its ability to bring
the world's finest games, educational content, interactive entertainment and media-rich business applications to life. 3dfx products
are available in retail stores worldwide, and through leading PC makers including Compaq, Dell, Falcon Northwest and Micron. 3dfx
has headquarters in San Jose, Calif., with engineering and manufacturing facilities in Richardson, Texas, Austin, Texas, and Juarez,
Mexico. The company also operates www.3dfxgamers.com, the premier online community for Voodoo owners and gaming
enthusiasts. 3dfx Interactive is available on the Web at http://www.3dfx.com .
This notice does not constitute an offer of any securities for sale. In connection with the proposed asset sale by and between 3dfx
Interactive, Inc. (``3dfx''), NVIDIA corporation (``NVIDIA'') and NVIDIA Subsidiary (the ``Asset Sale''), 3dfx and NVIDIA plan to
file with the SEC the Proxy Statement/Prospectus of 3dfx and NVIDIA relating to the Asset Sale, as well as documents
incorporated by reference therein. You are urged to read the Proxy Statement/Prospectus when it is filed and any other relevant
documents filed with the SEC because they contain important information. You may obtain the documents free of charge at the
SEC's web site, http://www.sec.gov. In addition, documents filed by 3dfx with the SEC can be obtained by contacting 3dfx at the
following address and telephone number: Shareholder Relations, 4435 Fortran Drive, San Jose, California 95134, telephone:
408-935-4400. When it becomes available, please read the Proxy Statement/Prospectus carefully before making a decision
concerning the Asset Sale. 3dfx, its officers, directors, employees and agents may be soliciting proxies from 3dfx shareholders in
connection with the Asset Sale. Information concerning the participants in the solicitation will be set forth in the Proxy
Statement/Prospectus.
This press release contains forward-looking statements based on current expectations that are inherently subject to risks and
uncertainties. The words ``estimate,'' ``project,'' ``intend,'' ``expect,'' ``believe,'' ``plan,'' and similar expressions are intended to
identify forward-looking statements. The Company's actual results could differ materially from those currently anticipated due to a
number of factors, including, but not limited to, risks associated with the Company's need for additional financing and its inability to
satisfy debt obligations in the face of a potential forced bankruptcy, claims of fraudulent conveyance by the Company's creditors in
the event proceeds from the Asset Sale are insufficient to satisfy creditors, costs incurred if the Asset Sale is terminated due to a
superior proposal or the failure of the Company to obtain shareholder approval for the Asset Sale, the failure of the Asset Sale to be
consummated, the failure of estimates of net proceeds from the Asset Sale to be realized by the Company shareholders,
amendment, delay in implementation or termination of a planned Plan of Dissolution by the Company's shareholders, the liability of
Company shareholders for Company liabilities in the event contingent reserves are insufficient to satisfy such liabilities, unexpected
revenue shortfalls and quarterly variations in operating results, the recent downturn in the retail chip market and its adverse affect on
the Company's business, cost-cutting measures prompted by the need to conserve cash reserves, the need to adequately support
the retail/distributor channel, the Company's limited operating history and the inability to assess future operating results, volatility in
the Company's stock price and its effect on the ability of shareholders to sell their shares at attractive prices, the development of
new products and technologies and the effect on financial results, management of product transitions, significant customer
concentration and the potential adverse effect on the Company's financial performance of a loss of significant customers, the
absence of long-term contracts or any assurances that historical sales volumes will continue in the future, limited product diversity,
the need for developers and publishers to write software compatible with the Company's products, dependence on single-source
manufacturers and the Company's own manufacturing facility, exposure to global economic factors, foreign business practices, tax
law and currency fluctuations, the inability to protect the Company's proprietary rights, reliance on third-party licenses, potential loss
of market share, litigation expenses, the existence of a shareholder rights plan that could discourage a third party from acquiring
control of the Company, the Company's recently completed merger with GigaPixel, as well as other factors set forth in the
Company's current report on Form 10-Q for the most recently ended fiscal quarter and other reports and documents filed by
Company with the Securities and Exchange Commission from time to time.
SOURCE: 3dfx Interactive, Inc.
Creditors and Maximize Shareholder Value
Board of Directors Initiates Cost-Cutting Measures, Recommends to Shareholders Sale of
Company Assets to NVIDIA Corporation for $112 Million and Dissolution Of Company
SAN JOSE, Calif., Dec. 15 /PRNewswire/ -- In an effort to protect its creditors and maximize shareholder value, 3dfx Interactive,
Inc. (Nasdaq: TDFX - news) announced today that it will substantially reduce all of its workforce as part of an initiative to
significantly reduce expenses. In addition, the company said its Board of Directors will recommend to its shareholders that they
approve the sale of most of the company's assets to NVIDIA Corporation (Nasdaq: NVDA - news) as outlined in a definitive
agreement between the companies that was signed today, and also approve a plan to dissolve the company following completion of
the asset sale.
``After aggressively pursuing a wide range of options that take into consideration the interests of our creditors, our shareholders, our
employees and our customers,'' said Alex Leupp, president and CEO, 3dfx Interactive Inc., ``we strongly believe that to reduce
expenses, sell our assets and dissolve the company provides the highest return to our creditors, shareholders, and employees.''
``We expect that the combined technologies of 3dfx and NVIDIA will continue the legacy that 3dfx began in 1994,'' Leupp
continued. ``NVIDIA is the number one supplier of graphics technology to the OEM market. With the addition of 3dfx's
high-quality technology that leads the retail market, we believe the combination of the two will result in even greater PC graphics
leadership.''
The target market for 3dfx has historically been the retail graphics market, a market that 3dfx has dominated since 1998. The
segment represents approximately 10 percent of the overall graphics market, and is subject to extreme volatility and unpredictability.
Specifically, high inventory expenses, decreasing margins, and slowing demand have done irreparable harm to 3dfx. While the
company had recently announced plans to expand its business into additional markets, it has been unable to invest in its expansion
under current business and financial market conditions.
The company announced that it plans to substantially reduce its costs in order to best conserve its resources. These cost-cutting
measures include a reduction of substantially all of the company's workforce by early next year, reduction in office space, and other
efforts to reduce non-essential expenses. 3dfx is also providing manufacturing services to third parties to help cover the overhead
associated with its Juarez, Mexico manufacturing facility pending the sale of that facility. In the meantime, 3dfx expects to continue
to maintain an adequate workforce to support its customers.
The Board of Directors, with the assistance of the company's advisors, has undergone exhaustive efforts to explore many
alternatives including raising new financing to continue its operations and exploring various strategic alliances and business
combinations. It has concluded that the best interests of the creditors and shareholders will be served by selling its assets to
NVIDIA Corporation, as outlined in a definitive agreement between the companies signed today, and also to approve the plan for
dissolution. Under the terms of the agreement signed today, NVIDIA has agreed to pay a value of $112 million ($70 million cash and
one million shares of registered NVIDIA common stock as value based on NVIDIA's closing price on December 14, 2000).
Upon signing the definitive agreement, NVIDIA has agreed to loan to 3dfx $15 million for working capital, which will be credited to
the cash portion of the purchase price. In addition, 3dfx and NVIDIA have agreed to stay the patent infringement litigation between
them through closing of the transaction, at which time the suits will be jointly dismissed with prejudice. Assets included in the
transaction include all 3dfx intellectual property and chip inventory as well as certain other assets. In addition, upon signing the
definitive agreement, 3dfx transferred to NVIDIA the ``3dfx'' and ``Voodoo'' brand names and trademarks.
The closing of the transaction is subject to a variety of conditions, including 3dfx shareholder approval, receipt of governmental
approvals including the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and receipt of all necessary consents of third
parties.
After closing the NVIDIA asset sale and upon 3dfx shareholder approval, 3dfx will proceed to pay or adequately provide for its
debts and liabilities. 3dfx will thereafter distribute its remaining assets to its shareholders in one or more distributions.
3dfx will host a conference call today at 2 p.m. Pacific Standard Time, 3 p.m. Mountain, 4 p.m. Central, 5 p.m. Eastern, to discuss
current developments and its financial results for the third quarter fiscal 2001, ended October 31, 2000. To participate in the
conference call, please dial 800-521-5428.
About 3dfx Interactive
3dfx Interactive is a global leader in enabling the emerging age of visual communications, and the 3D multimedia revolution in
personal computers and consumer products. With its patented and award-winning graphics accelerator chips, boards and software,
3dfx provides the technology to create high-impact visual experiences. The company is recognized worldwide for its ability to bring
the world's finest games, educational content, interactive entertainment and media-rich business applications to life. 3dfx products
are available in retail stores worldwide, and through leading PC makers including Compaq, Dell, Falcon Northwest and Micron. 3dfx
has headquarters in San Jose, Calif., with engineering and manufacturing facilities in Richardson, Texas, Austin, Texas, and Juarez,
Mexico. The company also operates www.3dfxgamers.com, the premier online community for Voodoo owners and gaming
enthusiasts. 3dfx Interactive is available on the Web at http://www.3dfx.com .
This notice does not constitute an offer of any securities for sale. In connection with the proposed asset sale by and between 3dfx
Interactive, Inc. (``3dfx''), NVIDIA corporation (``NVIDIA'') and NVIDIA Subsidiary (the ``Asset Sale''), 3dfx and NVIDIA plan to
file with the SEC the Proxy Statement/Prospectus of 3dfx and NVIDIA relating to the Asset Sale, as well as documents
incorporated by reference therein. You are urged to read the Proxy Statement/Prospectus when it is filed and any other relevant
documents filed with the SEC because they contain important information. You may obtain the documents free of charge at the
SEC's web site, http://www.sec.gov. In addition, documents filed by 3dfx with the SEC can be obtained by contacting 3dfx at the
following address and telephone number: Shareholder Relations, 4435 Fortran Drive, San Jose, California 95134, telephone:
408-935-4400. When it becomes available, please read the Proxy Statement/Prospectus carefully before making a decision
concerning the Asset Sale. 3dfx, its officers, directors, employees and agents may be soliciting proxies from 3dfx shareholders in
connection with the Asset Sale. Information concerning the participants in the solicitation will be set forth in the Proxy
Statement/Prospectus.
This press release contains forward-looking statements based on current expectations that are inherently subject to risks and
uncertainties. The words ``estimate,'' ``project,'' ``intend,'' ``expect,'' ``believe,'' ``plan,'' and similar expressions are intended to
identify forward-looking statements. The Company's actual results could differ materially from those currently anticipated due to a
number of factors, including, but not limited to, risks associated with the Company's need for additional financing and its inability to
satisfy debt obligations in the face of a potential forced bankruptcy, claims of fraudulent conveyance by the Company's creditors in
the event proceeds from the Asset Sale are insufficient to satisfy creditors, costs incurred if the Asset Sale is terminated due to a
superior proposal or the failure of the Company to obtain shareholder approval for the Asset Sale, the failure of the Asset Sale to be
consummated, the failure of estimates of net proceeds from the Asset Sale to be realized by the Company shareholders,
amendment, delay in implementation or termination of a planned Plan of Dissolution by the Company's shareholders, the liability of
Company shareholders for Company liabilities in the event contingent reserves are insufficient to satisfy such liabilities, unexpected
revenue shortfalls and quarterly variations in operating results, the recent downturn in the retail chip market and its adverse affect on
the Company's business, cost-cutting measures prompted by the need to conserve cash reserves, the need to adequately support
the retail/distributor channel, the Company's limited operating history and the inability to assess future operating results, volatility in
the Company's stock price and its effect on the ability of shareholders to sell their shares at attractive prices, the development of
new products and technologies and the effect on financial results, management of product transitions, significant customer
concentration and the potential adverse effect on the Company's financial performance of a loss of significant customers, the
absence of long-term contracts or any assurances that historical sales volumes will continue in the future, limited product diversity,
the need for developers and publishers to write software compatible with the Company's products, dependence on single-source
manufacturers and the Company's own manufacturing facility, exposure to global economic factors, foreign business practices, tax
law and currency fluctuations, the inability to protect the Company's proprietary rights, reliance on third-party licenses, potential loss
of market share, litigation expenses, the existence of a shareholder rights plan that could discourage a third party from acquiring
control of the Company, the Company's recently completed merger with GigaPixel, as well as other factors set forth in the
Company's current report on Form 10-Q for the most recently ended fiscal quarter and other reports and documents filed by
Company with the Securities and Exchange Commission from time to time.
SOURCE: 3dfx Interactive, Inc.
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