D&M Holdings Inc. Wins Bid For ReplayTV And Rio Business Unit Assets Of SONICblue Incorporated

17-Apr-03

D&M Holdings Inc. (TSE II: 6735), parent company of Denon, Ltd. and Marantz Japan, Inc., announced that it was successful in a bid to acquire certain assets comprising the digital video recorder and MP3 business units of SONICblue Incorporated, a U.S. company. D&M Holdings will purchase those assets, which include the ReplayTVÆ and RioÆ brands, for $36.2 million. The bidding process occurred Tuesday during an auction of SONICblue's assets in the U.S. Bankruptcy court in San Jose, California. The transaction is expected to close in approximately 10 days. D&M Holdings is purchasing inventory, receivables, intellectual property, and capital equipment. The company will also take over selected contractual relationships and liabilities. D&M Holdings intends to keep all ReplayTV customers and will design, manufacture, and distribute a line of ReplayTV and Rio products. For the last 12-month period, ReplayTV had revenue of approximately $22 million and Rio had revenue of approximately $62 million. The impact to D&M Holdings' earnings in fiscal year 2003 is not fully determined at this time. Given the nature of these assets, the reduction of certain expenses, and liabilities as a result of the bankruptcy process and identified restructuring activities, D&M Holdings expects this purchase to be slightly dilutive to earnings in fiscal year 2003 but accretive thereafter. Despite this dilution and with the effects of the new businesses in fiscal year 2003, D&M Holdings remains comfortable with the consensus market analyst earnings per share estimates for fiscal year 2003. D&M Holdings also announced plans to establish a new digital development group under D&M Holdings U.S., Inc. The business assets purchased from SONICblue will be merged into this new digital development group. The new subsidiary, Digital Networks North America, Inc. (DNNA), will drive the strategy and develop the core technologies that will enable the brands within D&M Holdings to become the leaders in the emerging entertainment-based home networking market. ""Both the ReplayTV personal video recorders and Rio portable compressed audio players are innovative products that have won numerous coveted industry awards,"" said Tatsuo Kabumoto, Chief Executive Officer and President of D&M Holdings. ""We will leverage the intellectual property and the excellent engineering talent from the ReplayTV and Rio businesses across our D&M brands while positioning these businesses to be more profitable.""The agreement to purchase assets of ReplayTV and Rio represents D&M Holdings' second investment in technology to create entertainment-based, digital home networking solutions. D&M Holdings made an investment in 2002 in Mediabolic, a San Francisco-based company that provides an embedded software platform for entertainment devices. Denon will use the Mediabolic platform in new products that will be launched later this year. For more information about D&M Holdings Inc., visit www.dm-holdings.com.

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