UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
or
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File No. 0-26844
RADISYS CORPORATION
(Exact name of registrant as specified in its charter)
| Oregon | 93-0945232 | |
| (State of Incorporation) | (I.R.S. Employer Identification No.) | |
5445 NE Dawson Creek Drive, Hillsboro, Oregon 97124
(Address of principal executive offices, including zip code)
(503) 615-1100
(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 x No o
The number of shares of the registrant’s common stock outstanding on November 11, 2002 was 17,653,175 shares.
RADISYS CORPORATION
| PART I. FINANCIAL INFORMATION | ||||
| Page No. | ||||
Item 1.
|
Consolidated Financial Statements (Unaudited)
|
|||
Consolidated Statements of Operations - Three months
and nine months ended September 30, 2002 and 2001
|
3 | |||
Consolidated Balance Sheets - September 30, 2002 and December 31, 2001
|
4 | |||
Consolidated Statement of Changes in Shareholders’ Equity - December
31, 2001 through September 30, 2002
|
5 | |||
Consolidated
Statements of Cash Flows - Nine months ended September 30, 2002 and 2001
|
||||
Notes to Consolidated Financial Statements
|
7 | |||
Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
26 | ||
Item 3.
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Quantitative and Qualitative Disclosures about Market Risk
|
48 | ||
Item 4.
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Controls and Procedures
|
49 | ||
| PART II. OTHER INFORMATION | ||||
Item 6.
|
Exhibits and Reports on Form 8-K
|
50 | ||
Signatures and Certifications
|
51 | |||
2
RadiSys Corporation
Consolidated Statements of Operations
(In thousands, except per share amounts, unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2002 | 2001 | 2002 | 2001 | ||||||||||||
Revenues
|
$ | 47,927 | $ | 53,902 | $ | 152,842 | $ | 171,864 | |||||||
Cost of sales
|
32,824 | 40,356 | 107,946 | 138,280 | |||||||||||
Gross margin
|
15,103 | 13,546 | 44,896 | 33,584 | |||||||||||
Research and development
|
7,026 | 8,395 | 23,528 | 26,846 | |||||||||||
Selling, general, and administrative expense
|
7,518 | 8,398 | 24,692 | 26,512 | |||||||||||
Goodwill amortization
|
— | 1,413 | — | 4,082 | |||||||||||
Intangible assets amortization
|
765 | 612 | 2,314 | 1,155 | |||||||||||
Restructuring charges
|
— | — | 4,281 | 13,062 | |||||||||||
Loss from operations
|
(206 | ) | (5,272 | ) | (9,919 | ) | (38,073 | ) | |||||||
Interest (expense) income, net
|
(579 | ) | (132 | ) | (2,029 | ) | 462 | ||||||||
Other expense, net
|
(264 | ) | (360 | ) | (674 | ) | (1,084 | ) | |||||||
Gain on early extinguishments of convertible subordinated notes
|
— | — | 2,859 | — | |||||||||||
Loss before income tax benefit
|
(1,049 | ) | (5,764 | ) | (9,763 | ) | (38,695 | ) | |||||||
Income tax benefit
|
(528 | ) | (2,590 | ) | (5,517 | ) | (17,581 | ) | |||||||
Net loss
|
$ | (521 | ) | $ | (3,174 | ) | $ | (4,246 | ) | $ | (21,114 | ) | |||
Net loss per share (basic)
|
$ | (0.03 | ) | $ | (0.18 | ) | $ | (0.24 | ) | $ | (1.23 | ) | |||
Net loss per share (diluted)
|
$ | (0.03 | ) | $ | (0.18 | ) | $ | (0.24 | ) | $ | (1.23 | ) | |||
Weighted average shares outstanding (basic)
|
17,526 | 17,308 | 17,475 | 17,219 | |||||||||||
Weighted average shares outstanding (diluted)
|
17,526 | 17,308 | 17,475 | 17,219 | |||||||||||
The accompanying notes are an integral part of these financial statements.
3
RadiSys Corporation
Consolidated Balance
Sheets
(In thousands)
| September 30, 2002 |
December 31, 2001 |
|||||||
| (Unaudited) | ||||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents (Note 1)
|
$ | 27,492 | $ | 29,036 | ||||
Short-term investments, net (Note 2)
|
73,611 | 71,117 | ||||||
Accounts receivable, net (Note 3)
|
28,071 | 41,694 | ||||||
Inventories, net (Note 4)
|
26,737 | 32,651 | ||||||
Other current assets
|
3,306 | 4,278 | ||||||
Deferred tax assets (Note 8)
|
9,616 | 13,474 | ||||||
Total current assets
|
168,833 | 192,250 | ||||||
Property and equipment, net (Notes 5 and 15)
|
27,307 | 30,205 | ||||||
Goodwill (Notes 6 and 15)
|
29,819 | 30,679 | ||||||
Intangible assets, net (Notes 7 and 15)
|
11,904 | 14,188 | ||||||
Long-term investments, net (Note 2)
|
13,568 | 13,197 | ||||||
Long-term deferred tax assets (Notes 1 and 8)
|
20,859 | 20,284 | ||||||
Other assets (Notes 1 and 9)
|
2,724 | 4,398 | ||||||
Total assets
|
$ | 275,014 | $ | 305,201 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities
|
||||||||
Accounts payable (Note 12)
|
$ | 19,181 | $ | 24,512 | ||||
Accrued restructuring (Note 10)
|
7,872 | 7,490 | ||||||
Accrued interest payable
|
566 | 2,068 | ||||||
Accrued wages and bonuses
|
5,511 | 5,463 | ||||||
Other accrued liabilities
|
6,339 | 10,777 | ||||||
Total current liabilities
|
39,469 | 50,310 | ||||||
Long-term liabilities (Note 12)
|
||||||||
Convertible subordinated notes, net (Note 9)
|
78,389 | 97,521 | ||||||
Mortgage payable
|
6,609 | 6,659 | ||||||
Total long-term liabilities
|
84,998 | 104,180 | ||||||
Total liabilities
|
124,467 | 154,490 | ||||||
Commitments and contingencies (Note 13)
|
— | — | ||||||
Shareholders’ equity (Note 14):
|
||||||||
Common stock - 100,000 shares authorized; 17,499 and
17,347 shares outstanding at September 30, 2002 and December 31, 2001
|
160,836 | 158,716 | ||||||
Accumulated deficit
|
(10,966 | ) | (6,720 | ) | ||||
Accumulated other comprehensive income (loss):
|
||||||||
Cumulative translation adjustments
|
652 | (1,285 | ) | |||||
Unrealized gain on securities available for
sale, net (Notes 1 and 9)
|
25 | — | ||||||
Total shareholders’ equity
|
150,547 | 150,711 | ||||||
Total liabilities and shareholders’ equity
|
$ | 275,014 | $ | 305,201 | ||||
The accompanying notes are an integral part of these financial statements.
4
RadiSys Corporation
Consolidated
Statement of Changes in Shareholders’ Equity
(In thousands, unaudited)
| Common Stock | Cumulative translation | Unrealized (loss) gain | Accumulated | Total comprehensive | ||||||||||||||||||||||||
| Shares | Amount | adjustments | on securities | deficit | Total | income (loss) | ||||||||||||||||||||||
Balances, December 31, 2001
|
17,347 | $ | 158,716 | $ | (1,285 | ) | $ | — | $ | (6,720 | ) | $ | 150,711 | |||||||||||||||
Shares issued pursuant to benefit plans
|
105 | 1,387 | — | — | — | 1,387 | — | |||||||||||||||||||||
Tax benefits of options exercised
|
— | 153 | — | — | — | 153 | — | |||||||||||||||||||||
Translation adjustments
|
— | — | 784 | — | — | 784 | 784 | |||||||||||||||||||||
Unrealized loss on security available for sale
|
— | — | — | (20 | ) | — | (20 | ) | (20 | ) | ||||||||||||||||||
Net loss for the period
|
— | — | — | — | (653 | ) | (653 | ) | (653 | ) | ||||||||||||||||||
Balances, March 31, 2002
|
17,452 | 160,256 | (501 | ) | (20 | ) | (7,373 | ) | 152,362 | |||||||||||||||||||
Total comprehensive income, three months ended March 31, 2002
|
$ | 111 | ||||||||||||||||||||||||||
Shares issued pursuant to benefit plans
|
72 | 844 | — | — | — | 844 | ||||||||||||||||||||||
Tax benefits of options exercised
|
— | 32 | — | — | — | 32 | ||||||||||||||||||||||
Translation adjustments
|
— | — | 812 | — | — | 812 | 812 | |||||||||||||||||||||
Unrealized gain on securities available for sale
|
— | — | — | 13 | — | 13 | 13 | |||||||||||||||||||||
Net loss for the period
|
— | — | — | — | (3,072 | ) | (3,072 | ) | (3,072 | ) | ||||||||||||||||||
Balances, June 30, 2002
|
17,524 | 161,132 | 311 | (7 | ) | (10,445 | ||||||||||||||||||||||