WIND RIVER SYSTEMS INC - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2003

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-21342

WIND RIVER SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware		94-2873391
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

500 Wind River Way, Alameda, California 94501
(Address of principal executive offices, including zip code)

(510) 748-4100
(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 ý No o

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

As of September 10, 2003, there were 84,158,661 shares of the registrant’s common stock outstanding.

WIND RIVER SYSTEMS, INC.
FORM 10-Q
FOR THE QUARTER ENDED JULY 31, 2003

INDEX

	Page
Part I-Financial Information

Item 1. Financial Statements (unaudited)
Condensed Consolidated Statements of Operations for the three and six months ended July 31, 2003 and 2002	1
Condensed Consolidated Balance Sheets as of July 31, 2003 and January 31, 2003	2
Condensed Consolidated Statements of Cash Flows for the six months ended July 31, 2003 and 2002	3
Notes to Condensed Consolidated Financial Statements	4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures about Market Risk	35
Item 4. Controls and Procedures	35

Part II-Other Information

Item 1. Legal Proceedings	37
Item 2. Changes in Securities and Use of Proceeds	37
Item 3. Defaults Upon Senior Securities	37
Item 4. Submission of Matters to a Vote of Security Holders	37
Item 5. Other Information	37
Item 6. Exhibits and Reports on Form 8-K	38

Signature	39

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WIND RIVER SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended July 31,						Six Months Ended July 31,
	2003			2002			2003			2002
Revenues, net:
Products	$	32,943		$	42,301		$	62,204		$	86,026
Services	17,470			21,281			36,752			43,915
Total revenues, net	50,413			63,582			98,956			129,941

Cost of revenues:
Products	3,383			4,709			6,542			10,182
Services	10,212			12,992			20,282			26,980
Total cost of revenues	13,595			17,701			26,824			37,162

Gross profit	36,818			45,881			72,132			92,779

Operating expenses:
Selling and marketing	20,674			32,747			44,118			66,562
Product development and engineering	14,083			17,792			28,432			38,414
General and administrative	6,421			8,397			13,910			17,681
Amortization of purchased intangibles	1,733			2,395			3,575			4,518
Impairment of purchased intangibles	1,400			—			1,400			—
Restructuring and other charges	2,016			17,665			2,016			17,665
Total operating expenses	46,327			78,996			93,451			144,840

Loss from operations	(9,509		)	(33,115		)	(21,319		)	(52,061		)

Other income (expense):
Interest income	2,137			3,147			4,967			6,539
Interest expense	(1,876		)	(1,773		)	(3,587		)	(3,561		)
Other income (expense), net	579			(4,928		)	1,132			(5,134		)
Total other income (expense)	840			(3,554		)	2,512			(2,156		)

Loss before provision for income taxes	(8,669		)	(36,669		)	(18,807		)	(54,217		)
Provision for income taxes	609			275			1,244			775
Net loss	$	(9,278	)	$	(36,944	)	$	(20,051	)	$	(54,992	)

Basic and diluted net loss per share	$	(0.12	)	$	(0.47	)	$	(0.25	)	$	(0.70	)
Shares used in basic and diluted per share calculation	79,921			79,035			79,772			78,901

The accompanying notes are an integral part of these condensed consolidated financial statements.

WIND RIVER SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
(Unaudited)