##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549


Form 10-Q

|           |  |                                                                                                    
|---------- |  | ---------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                    
|þ          |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.       
|          
|           |  | For the quarterly period ended March 31,
    2004.                                                 
|          
|or        
|          
|o          |  | TRANSITIONAL REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934.
|          
|           |  | For the transition period
    from:           to:          .                                       

Commission file number 0-32809

Vialta, Inc.

(Exact name of registrant as specified in its
charter)


|                                                                                                                                    |  |                                         
|----------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                                                                                            |  | 94-3337236                              
|(State or Other Jurisdiction of
    Incorporation or Organization)                                                                  |  | (I.R.S. Employer
    Identification No.)
|                                                                                                                                   
|48461 Fremont Boulevard
    Fremont, California 94538(Address, including zip code, of
    Registrants principal executive offices)

(510) 870-3088

(Registrants telephone number, including
area code)


Indicate
by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject
to such filing requirements for the past
90 days.     Yes þ          No o

Indicate
by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange
Act).     Yes o          No þ

The
number of outstanding shares of the registrants common
stock, par value $0.001 per share, on May 3, 2004 was
82,879,017 shares.



---






---










VIALTA, INC.

FORM 10-Q: QUARTER ENDED MARCH 31,
2004

TABLE OF CONTENTS

|                                    |  |                                                                                                      |    |      |    | 
|----------------------------------- |  | ---------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                                    |  |                                                                                                      |    | Page
|                                    |  |                                                                                                      |    |     
|PART I.   FINANCIAL
    INFORMATION
|Item 1.                             |  | Financial Statements
    (unaudited)                                                                 |    |      | 2  | 
|                                    |  | Condensed Consolidated
    Balance Sheets  March 31, 2004 and
    December 31, 2003                 |    |      | 2  | 
|                                    |  | Condensed Consolidated
    Statements of Operations  three months ended
    March 31, 2004 and 2003 |    |      | 3  | 
|                                    |  | Condensed Consolidated
    Statements of Cash Flows  three months ended
    March 31, 2004 and 2003 |    |      | 4  | 
|                                    |  | Notes to Condensed
    Consolidated Financial Statements                                             |    |      | 5  | 
|Item 2.                             |  | Managements Discussion
    and Analysis of Financial Condition and Results of Operations            |    |      | 11 | 
|Item 3.                             |  | Quantitative and Qualitative
    Disclosures About Market Risk                                       |    |      | 14 | 
|Item 4.                             |  | Controls and Procedures                                                                              |    |      | 14 | 
|PART II.   OTHER
    INFORMATION   
|Item 6.                             |  | Exhibits and Reports on
    Form 8-K                                                                 |    |      | 14 | 
|Signatures                          |  |                                                                                                      | 15 |     
|Exhibit Index                       |  |                                                                                                      |    |     
|EXHIBIT 31.1                       
|EXHIBIT 31.2                       
|EXHIBIT 32.1                       
|EXHIBIT 32.2                       



1



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##### Table of Contents






PART I.     FINANCIAL
INFORMATION






|        |                     
|------- | --------------------
|Item 1: | Financial Statements

VIALTA, INC.



CONDENSED CONSOLIDATED BALANCE
SHEETS


|                                         |                                        |                                            |     |                   |        |  |     |          |        | 
|---------------------------------------- | -------------------------------------- | ------------------------------------------ | --- | ----------------- | ------ |  | --- | -------- | ------ | 
|                                         |                                        | March 31, 2004                             |     | December 31, 2003
|                                         |                                        |                                            |     |                  
|                                         |                                        |                                           
|                                         |                                        | (In thousands)                            
|                                         |                                        | (unaudited)                               
|ASSETS                                  
|Current assets:                          |                                        |                                            |     |                   |        |  |     |         
|                                         | Cash and cash equivalents              |                                            | $   | 14,592            |        |  | $   | 13,756   |       
|                                         | Restricted cash                        |                                            |     | 3,033             |        |  |     | 2,226    |       
|                                         | Short-term investments                 |                                            |     | 8,107             |        |  |     | 10,552   |       
|                                         | Accounts receivable, net               |                                            |     | 1,880             |        |  |     | 3,941    |       
|                                         | Inventories                            |                                            |     | 6,110             |        |  |     | 5,196    |       
|                                         | Prepaid expenses and other             |                                            |     | 495               |        |  |     | 729      |       
|                                         |                                        |                                            |     |                   |        |  |     |         
|                                         |                                        | Total current assets                       |     |                   | 34,217 |  |     |          | 36,400 | 
|Property and equipment, net              |                                        |                                            | 494 |                   |        |  | 685 |         
|Other assets                             |                                        |                                            | 29  |                   |        |  | 29  |         
|                                         |                                        |                                            |     |                   |        |  |     |         
|                                         |                                        | Total assets                               |     | $                 | 34,740 |  |     | $        | 37,114 | 
|                                         |                                        |                                            |     |                   |        |  |     |         
|                                        
|LIABILITIES AND STOCKHOLDERS
    EQUITY
|Current liabilities:                     |                                        |                                            |     |                   |        |  |     |         
|                                         | Accounts payable                       |                                            | $   | 759               |        |  | $   | 1,915    |       
|                                         | Accrued liabilities and other          |                                            |     | 2,485             |        |  |     | 3,149    |       
|                                         | Deferred profit                        |                                            |     | 1,955             |        |  |     | 3,997    |       
|                                         |                                        |                                            |     |                   |        |  |     |         
|                                         |                                        | Total current liabilities                  |     |                   | 5,199  |  |     |          | 9,061  | 
|                                         |                                        |                                            |     |                   |        |  |     |         
|Stockholders equity:                    |                                        |                                            |     |                   |        |  |     |         
|                                         | Common stock                           |                                            |     | 95                |        |  |     | 95       |       
|                                         | Additional paid-in capital             |                                            |     | 144,114           |        |  |     | 144,114  |       
|                                         | Treasury stock                         |                                            |     | (9,458            | )      |  |     | (9,458   | )     
|                                         | Accumulated deficit                    |                                            |     | (105,223          | )      |  |     | (106,709 | )     
|                                         | Accumulated other comprehensive income |                                            |     | 13                |        |  |     | 11       |       
|                                         |                                        |                                            |     |                   |        |  |     |         
|                                         |                                        | Total stockholders equity                 |     |                   | 29,541 |  |     |          | 28,053 | 
|                                         |                                        |                                            |     |                   |        |  |     |         
|                                         |                                        | Total liabilities and stockholders equity |     | $                 | 34,740 |  |     | $        | 37,114 | 
|                                         |                                        |                                            |     |                   |        |  |     |         

The accompanying notes are an integral part of
these unaudited

condensed consolidated financial
statements.


2



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##### Table of Contents



VIALTA, INC.



CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS


|                                            |                             |                          |       |        |       |   |       |        |       | 
|------------------------------------------- | --------------------------- | ------------------------ | ----- | ------ | ----- | - | ----- | ------ | ----- | 
|                                            |                             |                         
|                                            |                             | Three Months Ended      
|                                            |                             | March 31,               
|                                            |                             |                         
|                                            |                             | 2004                     |       | 2003  
|                                            |                             |                          |       |       
|                                            |                             |                         
|                                            |                             | (In thousands, except   
|                                            |                             | per share data)         
|                                            |                             | (Unaudited)             
|Net revenue                                 |                             | $                        | 4,974 |        |       | $ | 3,843 |       
|Cost of goods sold                          |                             |                          | 1,396 |        |       |   | 863   |       
|                                            |                             |                          |       |        |       |   |       |       
|Gross profit                                |                             |                          | 3,578 |        |       |   | 2,980 |       
|                                            |                             |                          |       |        |       |   |       |       
|Operating expenses:                         |                             |                          |       |        |       |   |       |       
|                                            | Engineering and development |                          |       | 336    |       |   |       | 968    |      
|                                            | Sales and marketing         |                          |       | 605    |       |   |       | 442    |      
|                                            | General and administrative  |                          |       | 1,360  |       |   |       | 1,730  |      
|                                            |                             |                          |       |        |       |   |       |       
|                                            |                             | Total operating expenses |       |        | 2,301 |   |       |        | 3,140 | 
|                                            |                             |                          |       |        |       |   |       |       
|Operating income (loss)                     |                             |                          | 1,277 |        |       |   | (160  | )     
|Interest income and other, net              |                             |                          | 209   |        |       |   | 188   |       
|                                            |                             |                          |       |        |       |   |       |       
|Net income                                  |                             | $                        | 1,486 |        |       | $ | 28    |       
|                                            |                             |                          |       |        |       |   |       |       
|Net income per share:                       |                             |                          |       |        |       |   |       |       
|                                            | Basic                       |                          | $     | 0.02   |       |   | $     | 0.00   |      
|                                            |                             |                          |       |        |       |   |       |       
|                                            | Diluted                     |                          | $     | 0.02   |       |   | $     | 0.00   |      
|                                            |                             |                          |       |        |       |   |       |       
|Weighted average common shares outstanding: |                             |                          |       |        |       |   |       |       
|                                            | Basic                       |                          |       | 82,803 |       |   |       | 82,238 |      
|                                            |                             |                          |       |        |       |   |       |       
|                                            | Diluted                     |                          |       | 88,552 |       |   |       | 84,153 |      
|                                            |                             |                          |       |        |       |   |       |       

The accompanying notes are an integral part of
these unaudited

condensed consolidated financial
statements.


3



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##### Table of Contents



VIALTA, INC.



CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS


|                                                   |                                                                                   |                                              |                                                    |                                            |     |        |        |        |     |        |        |  
|-------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------- | -------------------------------------------------- | ------------------------------------------ | --- | ------ | ------ | ------ | --- | ------ | ------ | -
|                                                   |                                                                                   |                                             
|                                                   |                                                                                   | Three Months Ended                          
|                                                   |                                                                                   | March 31,                                   
|                                                   |                                                                                   |                                             
|                                                   |                                                                                   | 2004                                         |                                                    | 2003                                      
|                                                   |                                                                                   |                                              |                                                    |                                           
|                                                   |                                                                                   |                                             
|                                                   |                                                                                   | (In thousands)                              
|                                                   |                                                                                   | (Unaudited)                                 
|CASH FLOWS FROM OPERATING ACTIVITIES:              |                                                                                   |                                              |                                                    |                                            |     |        |        |       
|                                                   | Net income                                                                        |                                              | $                                                  | 1,486                                      |     |        | $      | 28     |    
|                                                   | Adjustments to reconcile net income to net cash
    used in operating activities: |                                              |                                                    |                                            |     |        |        |        |    
|                                                   |                                                                                   | Depreciation                                 |                                                    |                                            | 197 |        |        |        | 565 |       
|                                                   |                                                                                   | Changes in operating assets and liabilities: |                                                    |                                            |     |        |        |        |     |       
|                                                   |                                                                                   |                                              | Accounts receivable, net                           |                                            |     | 2,061  |        |        |     | 936    |       
|                                                   |                                                                                   |                                              | Inventories                                        |                                            |     | (914   | )      |        |     | (111   | )     
|                                                   |                                                                                   |                                              | Prepaid expenses and other                         |                                            |     | 234    |        |        |     | 333    |       
|                                                   |                                                                                   |                                              | Restricted cash deposit                            |                                            |     | (807   | )      |        |     |       |       
|                                                   |                                                                                   |                                              | Deferred profit                                    |                                            |     | (2,042 | )      |        |     | (2,122 | )     
|                                                   |                                                                                   |                                              | Accounts payable and accrued liabilities and other |                                            |     | (1,820 | )      |        |     | (1,755 | )     
|                                                   |                                                                                   |                                              |                                                    |                                            |     |        |        |       
|                                                   |                                                                                   |                                              |                                                    | Net cash used in operating activities      |     |        | (1,605 | )      |     |        | (2,126 | )
|                                                   |                                                                                   |                                              |                                                    |                                            |     |        |        |       
|CASH FLOWS FROM INVESTING ACTIVITIES:              |                                                                                   |                                              |                                                    |                                            |     |        |        |       
|                                                   | Purchases of short-term investments                                               |                                              |                                                    | (3,564                                     | )   |        |        |       |    
|                                                   | Proceeds from sales of short-term investments                                     |                                              |                                                    | 6,011                                      |     |        |        | 10,783 |    
|                                                   | Purchases of long-term investments                                                |                                              |                                                    |                                           |     |        |        | (2,084 | )  
|                                                   | Acquisitions of property and equipment                                            |                                              |                                                    | (6                                         | )   |        |        | (4     | )  
|                                                   |                                                                                   |                                              |                                                    |                                            |     |        |        |       
|                                                   |                                                                                   |                                              |                                                    | Net cash provided by investing activities: |     |        | 2,441  |        |     |        | 8,695  |  
|                                                   |                                                                                   |                                              |                                                    |                                            |     |        |        |       
|CASH FLOWS FROM FINANCING ACTIVITIES:              |                                                                                   |                                              |                                                    |                                            |     |        |        |       
|                                                   | Repurchases of shares of common stock                                             |                                              |                                                    |                                           |     |        |        | (295   | )  
|                                                   |                                                                                   |                                              |                                                    |                                            |     |        |        |       
|                                                   |                                                                                   |                                              |                                                    | Net cash used in financing activities:     |     |        |       |        |     |        | (295   | )
|                                                   |                                                                                   |                                              |                                                    |                                            |     |        |        |       
|Net decrease in cash and cash equivalents          |                                                                                   |                                              | 836                                                |                                            |     |        | 6,274  |       
|Cash and cash equivalents, beginning of the period |                                                                                   |                                              | 13,756                                             |                                            |     |        | 21,863 |       
|                                                   |                                                                                   |                                              |                                                    |                                            |     |        |        |       
|Cash and cash equivalents, end of the period       |                                                                                   | $                                            | 14,592                                             |                                            |     | $      | 28,137 |       
|                                                   |                                                                                   |                                              |                                                    |                                            |     |        |        |       

The accompanying notes are an integral part of
these unaudited

condensed consolidated financial
statements.


4



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##### Table of Contents



VIALTA, INC.



NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS


(Unaudited)




|        |            
|------- | -----------
|NOTE 1. | THE COMPANY

We develop, design and market consumer
electronics products designed to maximize the advantages of
digital technology in a convenient and easy-to-use manner. Our
primary products are the BeamerTM personal videophone
line and the VistaFrameTM digital picture frame. Our
Beamer videophone products add color video to phone calls,
enabling users to see the person they are calling. Since both
parties to a video call must have a Beamer videophone product
(or compatible videophone), our videophone products are
primarily sold in pairs. Our Beamer videophone products work
with any home phone over any standard (analog) home phone
line, at no additional cost to a regular phone call. Our Beamer
videophone products include models that are standalone (such as
our first videophone product known as Beamer) or connect through
most televisions (the Beamer TV), and may include the ability to
send and receive digital pictures (the Beamer FX), depending on
the model. Beamer videophone products are carried by such
retailers as Best Buy, Frys Electronics, The Good Guys,
The Sharper Image and Cinmar (The Frontgate Catalog), among
others.

Our VistaFrame product is a digital picture frame
that allows users to display photographs directly from a digital
camera memory card or from VistaFrames internal memory.
VistaFrame is compatible with most standard card formats and
does not require a camera or computer connection, special wiring
or web based services to display digital photographs. With
VistaFrame, consumers can view digital pictures individually or
in a custom slideshow format with the user selecting the
pictures, the display sequence, display interval and the
transition effect. VistaFrame is currently available at
retailers such as The Sharper Image, The Good Guys and Cinmar,
among others.

Since our inception, we have incurred substantial
losses and negative cash flows from operations. Although we
earned net income for the quarter ending March 31, 2004, we
expect operating losses and negative cash flows from operations
to continue for the foreseeable future and anticipate that
losses may increase from current levels because of additional
costs and expenses related to sales and marketing activities,
continued expansion of operations, expansion of product
offerings and development of relationships with other
businesses. We believe that we have sufficient cash and cash
equivalents, restricted cash and investments to fund our
existing operations through March 31, 2005. However, in the
longer term, failure to generate sufficient revenues, raise
additional capital or reduce spending could have a material
adverse effect on our ability to continue to operate our
business.



|        |                                               
|------- | ----------------------------------------------
|NOTE 2. | SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES



| |                      
| | ---------------------
| | Basis of Presentation

The accompanying unaudited condensed consolidated
financial statements have been prepared by us pursuant to the
rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles in the United States of America
have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, the accompanying
unaudited condensed interim financial statements contain all
adjustments, all of which are normal and recurring in nature,
necessary to fairly present our financial position, operating
results and cash flows. These unaudited condensed consolidated
financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto for
the year ended December 31, 2003, included in our Annual
Report on Form 10-K filed on March 26, 2004. The
results of operations for the three months ended March 31,
2004 are not necessarily indicative of the results that may be
expected for any other period or for the fiscal year ending
December 31, 2004.

5



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##### Table of Contents



VIALTA, INC.


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                            
| | ---------------------------
| | Principles of Consolidation

The consolidated financial statements include the
accounts of Vialta, Inc. and our subsidiaries. All material
intercompany accounts and transactions have been eliminated in
consolidation.



| |                                     
| | ------------------------------------
| | Cash Equivalents and
    Investments

We consider all highly liquid investments with an
initial maturity of 90 days or less to be cash equivalents.
Cash equivalents primarily represent money market funds.

Investments are comprised primarily of debt
instruments that have been classified as available-for-sale.
Management determines the appropriate classification of
securities at the time of purchase and re-evaluates the
classification at each reporting date. Marketable equity and
debt securities are carried at their fair market value based on
quoted market prices as of the balance sheet date. Realized
gains or losses are determined using the specific identification
method and are reflected in income. Net unrealized gains or
losses are recorded directly in stockholders equity except
those unrealized losses that are deemed to be other than
temporary, which are reflected in investment losses.

Investments with maturity dates of 90 days
or more are classified as short-term investments since we have
the ability to redeem them within the year.



| |                    
| | -------------------
| | Revenue Recognition

Products sold to retailers and distributors are
subject to rights of return. We defer recognition of revenue on
products sold to retailers and distributors until the retailers
and distributors sell the products to their customers. Revenue
is also deferred for the initial thirty-day period during which
our direct customers, retailers and distributors have the
unconditional right to return products.

We generally recognize revenue on products sold
to end customers upon shipment provided that we have no
post-sale obligations, we can reliably estimate and accrue
warranty costs and sales returns, the price is fixed or
determinable and collection of the resulting receivable is
reasonably assured. For sales to international distributors and
strategic partners we generally recognize revenue based on the
above criteria and upon receipt of payment in full. For sales to
end customers that do not meet the above criteria, revenue is
deferred until such criteria are met.



| |                             
| | ----------------------------
| | Allowances for Sales Returns

Allowances are provided for estimated returns.
Provision for return allowances are recorded at the time when
revenue is recognized based on historical returns, current
economic trends and changes in customer demand. Such allowances
are adjusted periodically to reflect actual experience and
anticipated returns.



| |         
| | --------
| | Warranty

We provide a limited warranty on our products for
periods ranging from 90 days to 12 months from the
date of sale to the end customers. We estimate warranty costs
based on historical experience and accrue for estimated costs as
a charge to cost of sales when revenue is recognized. The
following table shows the details of the product warranty
accrual, as required by FASB Interpretation No. 45,
Guarantors Accounting and

6



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##### Table of Contents



VIALTA, INC.


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, for the
three months ended March 31, 2004 (in thousands):

|                                                 |  |           |      |  
|------------------------------------------------ |  | --------- | ---- | -
|                                                 |  | March 31,
|                                                 |  | 2004     
|                                                 |  |          
|Beginning balance                                |  | $         | 484  |  
|Accruals for warranties issued during the period |  |           | 460  |  
|Settlements made during the period               |  |           | (285 | )
|                                                 |  |           |      |  
|Ending balance                                   |  | $         | 659  |  
|                                                 |  |           |      |  



| |                     
| | --------------------
| | Comprehensive Income

Comprehensive income is defined to include all
changes in equity during a period from non-owner sources. For
the three months ended March 31, 2004 and March 31,
2003, comprehensive income approximated the net income reported.



| |                         
| | ------------------------
| | Stock-based Compensation

We account for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board
Opinion No. 25, or APB No. 25, Accounting for
Stock Issued to Employees. Under APB No. 25,
compensation cost is measured as the excess, if any, of the
quoted market price of its stock at the date of grant over the
exercise price of the option granted. Compensation cost for
stock options, if any, is recognized ratably over the vesting
period. We provide additional pro forma disclosures as required
under SFAS No. 123, Accounting for Stock-Based
Compensation and SFAS No. 148, Accounting
for Stock-Based Compensation, Transition and Disclosure.

The following table illustrates the effect on our
net income and net income per share if we had recorded
compensation costs based on the estimated grant date fair value
as defined by SFAS No. 123 for all granted stock-based
awards (in thousands, except per share amounts).

|                                                                                                                                                    |         |                 |       |      |  |   |      |       |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | --------------- | ----- | ---- |  | - | ---- | ----- | -
|                                                                                                                                                    |         |                
|                                                                                                                                                    |         | Three Months   
|                                                                                                                                                    |         | Ended March 31,
|                                                                                                                                                    |         |                
|                                                                                                                                                    |         | 2004            |       | 2003
|                                                                                                                                                    |         |                 |       |     
|Net income, as reported                                                                                                                             |         | $               | 1,486 |      |  | $ | 28   |      
|Deduct: Total stock-based employee compensation
    expense determined under fair value based method for all awards,
    net of related tax effects |         |                 | (234  | )    |  |   | (349 | )    
|                                                                                                                                                    |         |                 |       |      |  |   |      |      
|Pro forma net income (loss)                                                                                                                         |         | $               | 1,252 |      |  | $ | (321 | )    
|                                                                                                                                                    |         |                 |       |      |  |   |      |      
|Pro forma net income (loss) per share:                                                                                                              |         |                 |       |      |  |   |      |      
|                                                                                                                                                    | Basic   |                 | $     | 0.02 |  |   | $    | (0.00 | )
|                                                                                                                                                    | Diluted |                 | $     | 0.01 |  |   | $    | (0.00 | )

7



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##### Table of Contents



VIALTA, INC.


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

NOTE 3.     RELATED
PARTY TRANSACTIONS

The following is a summary of major transactions
between us and ESS Technology, Inc., which was our parent
company prior to August 2001, for the periods presented (in
thousands):

|                                                      |                      |              |      |      |   |   |     |      |  
|----------------------------------------------------- | -------------------- | ------------ | ---- | ---- | - | - | --- | ---- | -
|                                                      |                      |             
|                                                      |                      | Three Months
|                                                      |                      | Ended       
|                                                      |                      | March 31,   
|                                                      |                      |             
|                                                      |                      | 2004         |      | 2003
|                                                      |                      |              |      |     
|Net receivables (payables) at beginning of
    period |                      | $            | (281 | )    |   | $ | (33 | )   
|Charges by Vialta to ESS                              |                      |              |     |      |   |   | 2   |     
|Charges by ESS to Vialta:                             |                      |              |      |      |   |   |     |     
|                                                      | Purchase of products |              |      | (339 | ) |   |     | (4   | )
|                                                      | Building lease       |              |      | (124 | ) |   |     | (463 | )
|                                                      | Other                |              |      | (6   | ) |   |     | (32  | )
|Cash receipts from ESS                                |                      |              |     |      |   |   | (1  | )   
|Cash payments made to ESS                             |                      |              | 436  |      |   |   | 519 |     
|                                                      |                      |              |      |      |   |   |     |     
|Net receivables (payables) at end of period           |                      | $            | (314 | )    |   | $ | (12 | )   
|                                                      |                      |              |      |      |   |   |     |     

NOTE 4.     INVENTORIES

The following table summarizes the activity in
inventories and reserves for the three months ended
March 31, 2004 (in thousands):

|                               |  |       |        |         |  |     |        |   |  |   |       |  
|------------------------------ |  | ----- | ------ | ------- |  | --- | ------ | - |  | - | ----- | -
|                               |  | Gross |        | Reserve |  | Net
|                               |  |       |        |         |  |    
|As of December 31, 2003        |  | $     | 9,332  |         |  | $   | (4,136 | ) |  | $ | 5,196 |  
|Purchase of inventories        |  |       | 1,960  |         |  |     |       |   |  |   | 1,960 |  
|Shipments and Returns          |  |       | (1,927 | )       |  |     | 935    |   |  |   | (992  | )
|Use or Disposal of inventories |  |       | (52    | )       |  |     | (2     | ) |  |   | (54   | )
|                               |  |       |        |         |  |     |        |   |  |   |       |  
|As of March 31, 2004           |  | $     | 9,313  |         |  | $   | (3,203 | ) |  | $ | 6,110 |  
|                               |  |       |        |         |  |     |        |   |  |   |       |  
|Raw Material                   |  | $     | 6,085  |         |  | $   | (1,771 | ) |  | $ | 4,314 |  
|Finished Goods                 |  |       | 3,228  |         |  |     | (1,432 | ) |  |   | 1,796 |  
|                               |  |       |        |         |  |     |        |   |  |   |       |  
|                               |  | $     | 9,313  |         |  | $   | (3,203 | ) |  | $ | 6,110 |  
|                               |  |       |        |         |  |     |        |   |  |   |       |  

Because a significant portion of our inventory
expenditures for raw materials and finished goods for Beamer
were expensed in prior periods, the cost of goods sold related
to Beamer revenue recognized during the three months ended
March 31, 2004 was lower than what would have been recorded
had inventory costs not been previously reserved. If we had not
previously expensed inventory costs, our cost of goods sold for
the three months ended March 31, 2004 would have been
approximately $3.4 million.

8



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##### Table of Contents



VIALTA, INC.


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

NOTE 5.     BALANCE
SHEET COMPONENTS

|                                                                       |  |                |        |              |  |   |         |  
|---------------------------------------------------------------------- |  | -------------- | ------ | ------------ |  | - | ------- | -
|                                                                       |  | March 31,      |        | December 31,
|                                                                       |  | 2004           |        | 2003        
|                                                                       |  |                |        |             
|                                                                       |  |               
|                                                                       |  | (In thousands)
|Cash and cash equivalents                                              |  |                |        |              |  |   |         |  
|Cash and money market funds, at cost which
    approximates fair value |  | $              | 14,592 |              |  | $ | 13,756  |  
|                                                                       |  |                |        |              |  |   |         |  
|Restricted cash                                                        |  |                |        |              |  |   |         |  
|Cash restricted under letters of credit                                |  | $              | 3,033  |              |  | $ | 2,226   |  
|                                                                       |  |                |        |              |  |   |         |  
|Short-term investments                                                 |  |                |        |              |  |   |         |  
|US Government debt securities                                          |  | $              | 4,964  |              |  | $ | 3,480   |  
|Corporate debt securities                                              |  |                | 3,143  |              |  |   | 7,072   |  
|                                                                       |  |                |        |              |  |   |         |  
|                                                                       |  |                | 8,107  |              |  |   | 10,552  |  
|Due after one year                                                     |  |                | 2,960  |              |  |   | 1,974   |  
|                                                                       |  |                |        |              |  |   |         |  
|Due within one year                                                    |  | $              | 5,147  |              |  | $ | 8,578   |  
|                                                                       |  |                |        |              |  |   |         |  
|Accounts receivable, net                                               |  |                |        |              |  |   |         |  
|Accounts receivable                                                    |  | $              | 1,935  |              |  | $ | 4,004   |  
|Less: Allowance for doubtful accounts                                  |  |                | (55    | )            |  |   | (63     | )
|                                                                       |  |                |        |              |  |   |         |  
|                                                                       |  | $              | 1,880  |              |  | $ | 3,941   |  
|                                                                       |  |                |        |              |  |   |         |  
|Prepaid expenses and other                                             |  |                |        |              |  |   |         |  
|Prepaid insurance                                                      |  | $              | 182    |              |  | $ | 308     |  
|Other current assets                                                   |  |                | 313    |              |  |   | 421     |  
|                                                                       |  |                |        |              |  |   |         |  
|                                                                       |  | $              | 495    |              |  | $ | 729     |  
|                                                                       |  |                |        |              |  |   |         |  
|Property and equipment, net                                            |  |                |        |              |  |   |         |  
|Machinery and equipment                                                |  | $              | 1,037  |              |  | $ | 5,918   |  
|Furniture and fixtures                                                 |  |                | 551    |              |  |   | 561     |  
|Software and web site development cost                                 |  |                | 259    |              |  |   | 5,323   |  
|                                                                       |  |                |        |              |  |   |         |  
|                                                                       |  |                | 1,847  |              |  |   | 11,802  |  
|Less: Accumulated depreciation                                         |  |                | (1,353 | )            |  |   | (11,117 | )
|                                                                       |  |                |        |              |  |   |         |  
|                                                                       |  | $              | 494    |              |  | $ | 685     |  
|                                                                       |  |                |        |              |  |   |         |  
|Accrued liabilities and other                                          |  |                |        |              |  |   |         |  
|Accrued compensation costs                                             |  | $              | 1,023  |              |  | $ | 1,241   |  
|Customer deposits                                                      |  |                |       |              |  |   | 764     |  
|Product return/warranty liability                                      |  |                | 659    |              |  |   | 484     |  
|Accrued charges, related party                                         |  |                | 314    |              |  |   | 281     |  
|Other current liabilities                                              |  |                | 489    |              |  |   | 379     |  
|                                                                       |  |                |        |              |  |   |         |  
|                                                                       |  | $              | 2,485  |              |  | $ | 3,149   |  
|                                                                       |  |                |        |              |  |   |         |  
|Deferred profit                                                        |  |                |        |              |  |   |         |  
|Deferred revenue                                                       |  | $              | 3,067  |              |  | $ | 5,198   |  
|Deferred costs                                                         |  |                | (1,112 | )            |  |   | (1,201  | )
|                                                                       |  |                |        |              |  |   |         |  
|Deferred profit                                                        |  | $              | 1,955  |              |  | $ | 3,997   |  
|                                                                       |  |                |        |              |  |   |         |  

9



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VIALTA, INC.


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

NOTE 6.     COMPUTATION
OF NET INCOME PER SHARE

Basic net income per share is computed by
dividing the net income for the three months ended
March 31, 2004 and March 31, 2003 by the weighted
average number of shares of common stock outstanding during the
periods.

Diluted net income per share is calculated by
using the weighted average number of common shares outstanding
for the three months ended March 31, 2004 and
March 31, 2003 and gives effect to all dilutive potential
common shares outstanding for the three months ended
March 31, 2004 and March 31, 2003. The reconciling
difference between the computation of basic and diluted net
income per share for the three months ended March 31, 2004
and March 31, 2003 presented is the inclusion of the
dilutive effect of stock options issued to employees under
employee stock option plans.

Diluted net income per share excludes
out-of-the-money stock options totaling 2.6 million shares
and 8.1 million shares for the three months ended
March 31, 2004 and March 31, 2003, respectively. While
these options are currently anti-dilutive, they could be
dilutive in the future. A reconciliation of basic and diluted
income per share is presented below (in thousands, except per
share amounts):

|                                              |  |                      |        |      |  |   |        | 
|--------------------------------------------- |  | -------------------- | ------ | ---- |  | - | ------ | 
|                                              |  |                     
|                                              |  | For the Three Months
|                                              |  | Ended March 31,     
|                                              |  |                     
|                                              |  | 2004                 |        | 2003
|                                              |  |                      |        |     
|Basic:                                        |  |                      |        |      |  |   |        | 
|Net income                                    |  | $                    | 1,486  |      |  | $ | 28     | 
|                                              |  |                      |        |      |  |   |        | 
|Weighted shares outstanding                   |  |                      | 82,803 |      |  |   | 82,238 | 
|                                              |  |                      |        |      |  |   |        | 
|Net income per share                          |  | $                    | 0.02   |      |  | $ | 0.00   | 
|                                              |  |                      |        |      |  |   |        | 
|Diluted:                                      |  |                      |        |      |  |   |        | 
|Net income                                    |  | $                    | 1,486  |      |  | $ | 28     | 
|                                              |  |                      |        |      |  |   |        | 
|Weighted shares outstanding                   |  |                      | 82,803 |      |  |   | 82,238 | 
|Effects of dilutive securities: stock options |  |                      | 5,749  |      |  |   | 1,915  | 
|                                              |  |                      |        |      |  |   |        | 
|Diluted weighted shares outstanding           |  |                      | 88,552 |      |  |   | 84,153 | 
|                                              |  |                      |        |      |  |   |        | 
|Net income per share                          |  | $                    | 0.02   |      |  | $ | 0.00   | 
|                                              |  |                      |        |      |  |   |        | 

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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 2: | Managements Discussion and Analysis
    of Financial Condition and Results of Operations

The following discussion includes
forward-looking statements with respect to our future financial
performance. Actual results may differ materially from those
currently anticipated depending on a variety of factors,
including those described below under the sub-heading
Other Factors That May Affect Our Business and Future
Results and the risks discussed in our most recent filing
with the Securities and Exchange Commission. The following
discussion should be read in conjunction with the unaudited
Condensed Consolidated Financial Statements and notes thereto
that appear elsewhere in this report. References herein to
we, our, us, and similar
words or phrases are references collectively to Vialta, Inc. and
its subsidiaries.

Overview

We develop, design and market consumer
electronics products designed to maximize the advantages of
digital technology in a convenient and easy-to-use manner. Our
primary products are the Beamer personal videophone line and the
VistaFrame digital picture frame. Our Beamer videophone products
add color video to phone calls, enabling users to see the person
they are calling. Since both parties to a video call must have a
Beamer videophone product (or compatible videophone), our
products are primarily sold in pairs. Our Beamer videophones
work with any home phone over any standard (analog) home
phone line, at no additional cost to a regular phone call. Our
videophone products include models that are standalone (such as
our first videophone product known as Beamer) or connect through
most televisions (the Beamer TV), and may include the ability to
send and receive digital pictures (the Beamer FX), depending on
the model. You can find our Beamer videophone products carried
by such retailers as Best Buy, Frys Electronics, The Good
Guys, The Sharper Image and Cinmar (The Frontgate Catalog),
among others.

Our VistaFrame product is a digital picture frame
that allows users to display photographs directly from a digital
camera memory card or from VistaFrames internal memory.
VistaFrame is compatible with most standard card formats and
does not require a camera or computer connection, special wiring
or web based services. With VistaFrame consumers can view
digital pictures individually or in a custom slideshow format
with the user selecting the pictures, the display sequence,
display interval and the transition effect. VistaFrame is
currently available at retailers such as The Sharper Image, The
Good Guys and Cinmar, among others.

Since our inception, we have financed our
operations primarily from funds raised in private offerings of
convertible preferred stock and common stock and through vendor
credit. For the three months ended March 31, 2004 and
March 31, 2003 we had net income of $1.5 million and
$28,000, respectively, however we expect to incur losses for at
least the remainder of fiscal 2004. As of March 31, 2004,
we had an accumulated deficit of $105.2 million.

Results of Operations



| |                                                                                                  
| | -------------------------------------------------------------------------------------------------
| | For the three months ended March 31,
    2004 compared with three months ended March 31,
    2003

Net revenue.Net
revenue was $5.0 million for the three months ended
March 31, 2004 compared to $3.8 million for the three
months ended March 31, 2003. Revenue for the first quarter
of 2004 includes the recognition of deferred revenue of
approximately $3.3 million related to product sales which
occurred in the fourth quarter of 2003. Revenue for the first
quarter of 2003 included the recognition of approximately
$2.8 million of deferred revenue related to shipments of
Beamer, which occurred in the fourth quarter of 2002. The
increase in net revenue was the result of an increase in the
number of retailers and distributors which carry our products
combined with an increase in the number of products offered. Net
revenue for the three months ended March 31, 2004 included
$1.7 million in revenue from new products, such as
Beamer TV and VistaFrame. Since these new products were
introduced in the second half of 2003, there were on comparable
revenues for the three months ended March 31, 2003.

Cost of goods sold.Cost of goods sold was $1.4 million for the three months
ended March 31, 2004 compared to $863,000 for the three
months ended March 31, 2003. Because in prior periods we
expensed inventory expenditures for raw materials and finished
goods related to Beamer revenue, cost of goods sold for the
first quarter of 2004 and 2003 was lower than what would have
been recorded had inventory costs not been

11



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##### Table of Contents



expensed. If we had not previously expensed
inventory costs, our cost of goods sold for the three months
ended March 31, 2004 and March 31, 2003 would have
been $3.4 million and $2.8 million, respectively.


Gross profit.Gross
profit was $3.6 million for the three months ended
March 31, 2004 compared to $3.0 million for the three
months ended March 31, 2003. If we had not previously
expensed inventory costs, our gross profit for the first quarter
of 2004 and 2003 would have been approximately $1.6 million
and $1.0 million, respectively.

Engineering and
development.Engineering and
development expenses were $336,000 for the three months ended
March 31, 2004, compared to $968,000 for the three months
ended March 31, 2003. The decrease was primarily due to
reductions in engineering and development personnel and the
reclassification of depreciation expense from engineering and
development to general and administrative. We expect engineering
and development expenses to be relatively constant in future
periods.

Sales and marketing.Sales and marketing expenses were $605,000 for the three months
ended March 31, 2004, compared to $442,000 for the three
months ended March 31, 2003. The increase was primarily due
to an increase in outside commissions as a result of increased
sales and to certain marketing initiatives such as e-marketing
and direct mail. We expect sales and marketing spending to be
relatively constant in future periods to support retail and
consumer marketing initiatives, including direct mail,
e-marketing campaigns, in-store promotions, targeted advertising
and other initiatives, for our products. We do not currently
have the resources to support a significant and sustained
national advertising and consumer awareness program which may be
necessary to significantly increase sales.

General and
administrative.General and
administrative expenses were $1.4 million for the three
months ended March 31, 2004 compared to $1.7 million
for the three months ended March 31, 2003. The decrease was
primarily due to a decrease in rent. In July 2003, we amended
the lease agreement for our headquarters with ESS. The terms of
the amendment included a reduction in the monthly rent to
current market. We expect general and administrative expenses to
be relatively constant in future periods.

Interest income and other,
net.Interest income and other, net,
was $209,000 for the three months ended March 31, 2004,
compared to $188,000 for the three months ended March 31,
2003.

Liquidity and Capital Resources

As of March 31, 2004, we had
$25.8 million in cash and cash equivalents, restricted cash
and short-term investments compared to $30.3 million as of
March 31, 2003, representing a decrease of
$4.5 million.

Our principal sources of liquidity are cash and
cash equivalents and investments. Net cash used in operating
activities was $1.6 million for the three months ended
March 31, 2004 compared to $2.1 million for the three
months ended March 31, 2003, representing a decrease of
approximately $500,000. The decrease in cash used in operating
activities during the three months ended March 31, 2004
compared to the three months ended March 31, 2003, was
primarily due to a significant increase in cash received from
sales of our products offset by purchases of inventory.

Net cash provided by investing activities for the
three months ended March 31, 2004 was $2.4 million
compared to $8.7 million for the three months ended
March 31, 2003. Net cash provided by investing activities
for the three months ended March 31, 2004 and 2003 was
primarily related to the proceeds from the sale of short-term
investments.

There was no net cash used in financing
activities for the three months ended March 31, 2004
compared to $295,000 for the three months ended March 31,
2003. Net cash used in financing activities for the three months
ended March 31, 2003 was primarily related to repurchases
of our common stock.

Capital expenditures for the 9-month period
ending December 31, 2004 are anticipated to be less than
$100,000, primarily to acquire capital equipment. We may utilize
cash to acquire or invest in complementary businesses or
products or to obtain the right to use complementary
technologies. Any such acquisition or investment may
significantly increase our planned requirements for capital.
From time to time, in the ordinary

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##### Table of Contents



course of our business, we may evaluate potential
acquisitions of or investments in such businesses, products or
technologies owned by third parties.


In September 2001, the Board of Directors
authorized the repurchase of up to 10,000,000 shares of our
common stock in open market or private transactions over a
twelve-month period. In June 2002, the Board of Directors
authorized the existing stock repurchase program be extended to
include the repurchase of up to an additional
10,000,000 shares of common stock. Through
December 31, 2002, we repurchased approximately
11,205,000 shares of common stock at an aggregate cost of
$9.1 million. During the first quarter of 2003, we
repurchased approximately 759,000 shares for an aggregate
cost of approximately $295,000. There were no common stock
repurchases in the second, third and fourth quarters of 2003 nor
in the first quarter of 2004. As of March 31, 2004,
approximately 8,036,000 shares remain authorized for
repurchase.

In January 2000, we entered into a three-year
non-cancelable lease agreement for our headquarters with ESS. In
July 2003, we amended the lease. The terms of the amendment
include a 60% reduction in the amount of square footage leased,
a reduction in the monthly rent to current market rates and an
extension of the term from December 31, 2003 to
June 30, 2005. Under the terms of this and other leases,
with various expiration dates through 2006, our future minimum
rental payments as of March 31, 2004 are as follows:
$386,000, $320,000 and $126,000 for the nine months ended 2004
and for the years ended 2005, and 2006 respectively.

We believe that our existing cash and cash
equivalents and investments will be sufficient to fund our
operations through March 31, 2005. However, to continue our
operations beyond that date, or if our current level of
operations change, or to achieve our longer-term goals of
introducing additional products to consumers, we believe we will
need to raise additional capital, which may not be available on
acceptable terms, if at all. We have historically used vendor
credit as well as private offerings of convertible preferred
stock and common stock to fund operations and provide for
capital requirements. However, the price per share of any future
equity-related financing will be determined at the time the
offering is made and cannot be anticipated at this time. If
additional funds are raised through the issuance of equity
securities, the percentage ownership of current stockholders is
likely to or will be reduced and such equity securities may have
rights, preferences or privileges better than those of current
stockholders. We cannot assure you that any additional financing
will be available or that, if available, it will be sufficient
or it can be obtained on terms favorable to us or our
stockholders. If adequate funds are not available if and when
needed, we would be required to delay, limit or eliminate some
or all of our proposed operations.

Critical Accounting Policies

Our critical accounting policies were disclosed
in Item 7, Managements Discussion and Analysis
of Financial Condition and Results of Operations, of our
Annual Report on Form 10-K for the year ended
December 31, 2003. On an ongoing basis, we re-evaluate our
judgments and estimates including those related to valuation of
inventories, valuation of long-lived assets and certain risks
and concentrations. We base our estimates and judgments on our
historical experience, knowledge of current conditions and our
beliefs of what could occur in the future considering available
information. Actual results may differ from these estimates
under different assumptions or conditions. We apply our
estimates and judgments consistently for all periods presented.

Other Factors That May Affect Our Business and
Future Results

Factors that could impact our future business,
consolidated financial position, results of operations or cash
flows and cause future results to differ from our expectations
include the following: the ability to achieve revenues and
profitability; the ability to raise additional capital;
competition; pricing pressures; the dependence on a limited
number of products and the need to develop new products and
features; the success of our existing products and other
consumer products we may develop; component supply shortages;
potential conflicts with ESS Technology, Inc., our former
parent; the success of current distribution and retail
relationships and the ability to enter into additional
distribution agreements; risks associated with the expansion of
our business, including increased costs and the strain on
management and other resources; the risk of product defects,
system failures or interruptions; general economic, political
and regulatory changes including in Asia; claims

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##### Table of Contents



by third parties of intellectual property
infringement; dependence on key management personnel and the
need to attract and retain additional qualified personnel; risks
associated with possible business acquisitions; regulatory
changes that affect consumer electronics, telecommunications,
copyrights or the internet; quarterly fluctuations in operating
results; risks of class action lawsuits based on fluctuations in
our stock price; seasonal trends; and risks identified in the
our Annual Report on Form 10-K for the fiscal year ended
December 31, 2003 and other filings with the Securities and
Exchange Commission.







|        |                                                              
|------- | -------------------------------------------------------------
|Item 3: | Quantitative and Qualitative Disclosure
    About Market Risk

Interest Rate Risks.We invest in short-term &
long-term investments. Consequently, we are exposed to
fluctuation in interest rates on these investments. Increases or
decreases in interest rates generally translate into decreases
and increases in the fair value of these investments. In
addition, the credit worthiness of the issuer, relative values
of alternative investments, the liquidity of the instrument, and
other general market conditions may affect the fair values of
interest rate sensitive investments. In order to reduce the risk
from fluctuation in rates, we invest in highly liquid
governmental notes and bonds with contractual maturities of less
than two years. All of the investments have been classified as
available for sale, and at March 31, 2004, are recorded at
market values.

Foreign Exchange Risks.Because our products are manufactured
primarily in Asia, we are exposed to market risk from changes in
foreign exchange rates, which could affect our results of
operations and financial condition. In order to reduce the risk
from fluctuation in foreign exchange rates, our product sales
and all of our arrangements with our third party manufacturers
and component vendors are denominated in U.S. dollars. We
do not engage in any currency hedging activities.






|        |                        
|------- | -----------------------
|Item 4: | Controls and Procedures

Our Chief Executive Officer and Chief Financial
Officer (our principal executive officer and principal financial
officer, respectively) have concluded, based on their evaluation
as of the end of the period covered by this quarterly report,
that our disclosure controls and procedures are effective to
ensure that material information required to be disclosed by us
in reports filed or submitted by us under the Securities
Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported within the time period specified in the
SECs rules and forms, and includes controls and procedures
designed to ensure that material information required to be
disclosed by us in such reports is accumulated and communicated
to our management, including our Chief Executive Officer and
Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.

There have been no significant changes in our
internal controls or in other factors that could significantly
affect these controls subsequent to the date of our evaluation.



PART II.

OTHER INFORMATION






|        |                                     
|------- | ------------------------------------
|Item 6: | Exhibits and Reports on
    Form 8-K

(a) Exhibits. We incorporate by
reference all exhibits filed in connection with our annual
report on Form 10K for the year ended December 31,
2003.

31.1 Certification of Chief Executive
Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002

31.2 Certification of Chief Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002

32.1 Certification of Chief Executive
Officer pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002

32.2 Certification of Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002

(b) Reports on Form 8-K. No reports
were filed on Form 8-K for the quarter ended March 31,
2004.

14



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SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



| |                          
| | -------------------------
| | VIALTA, INC. (REGISTRANT)



| |     |                  
| | --- | -----------------
| | By: | /s/ DIDIER PIETRI

| |                                          
| | -----------------------------------------
| |                                          
| | Didier Pietri                            
| | President and Chief Executive
    Officer



| |     |                               
| | --- | ------------------------------
| | By: | /s/ WILLIAM M. SCHARNINGHAUSEN

| |                           
| | --------------------------
| |                           
| | William M. Scharninghausen
| | Chief Financial Officer   

Date: May 13, 2004

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EXHIBIT INDEX

|        |    |             |  |                                                                                                       
|------- | -- | ----------- |  | ------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 31 | .1          |  | Certification of Chief Executive Officer pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002
|        | 31 | .2          |  | Certification of Chief Financial Officer pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002
|        | 32 | .1          |  | Certification of Chief Executive Officer pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002
|        | 32 | .2          |  | Certification of Chief Financial Officer pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002