SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended March 31, 2004
Commission File Number: 0-22065
RADIANT SYSTEMS, INC.
(Exact name of registrant as specified in its charter),
| Georgia | 11-2749765 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 3925 Brookside Parkway, Alpharetta, Georgia | 30022 | |
| (Address of principal executive offices) | (Zip Code) | |
Issuer’s telephone number, including area code: (770) 576-6000
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
The number of the registrant’s shares outstanding as of May 3, 2004 was 28,620,898
RADIANT SYSTEMS, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
2
The information contained in this report is furnished for the Registrant, Radiant Systems, Inc. (“Radiant” or the “Company”). In the opinion of management, the information in this report contains all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the results for the interim periods presented. The financial information presented herein should be read in conjunction with the financial statements included in the Registrant’s Form 10-K for the year ended December 31, 2003, as filed with the Securities and Exchange Commission.
3
RADIANT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| March 31 2004 |
December 31, 2003 |
|||||||
| (unaudited) | ||||||||
| ASSETS |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 19,534 | $ | 33,774 | ||||
| Accounts receivable, net of allowances for doubtful accounts of $2,174 and $2,664, respectively |
20,328 | 18,614 | ||||||
| Inventories, net |
15,029 | 13,098 | ||||||
| Other short-term assets |
2,953 | 4,688 | ||||||
| Total current assets |
57,844 | 70,174 | ||||||
| Property and equipment, net |
9,742 | 11,229 | ||||||
| Software development costs, net |
1,851 | 2,844 | ||||||
| Goodwill |
31,375 | 7,537 | ||||||
| Intangible assets, net |
25,274 | 884 | ||||||
| Other long-term assets |
30 | 36 | ||||||
| $ | 126,116 | $ | 92,704 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities |
||||||||
| Accounts payable |
$ | 8,888 | $ | 6,305 | ||||
| Accrued liabilities |
11,267 | 6,559 | ||||||
| Accrued contractual obligations |
4,180 | — | ||||||
| Client deposits and unearned revenue |
9,944 | 12,257 | ||||||
| Current portion of capital lease payments |
606 | 524 | ||||||
| Current portion of long-term debt due to shareholders |
5,261 | — | ||||||
| Total current liabilities |
40,146 | 25,645 | ||||||
| Client deposits and unearned revenue, less current portion |
1,621 | — | ||||||
| Long-term portion of capital lease payments |
27 | 136 | ||||||
| Long-term debt due to shareholders, less current portion |
15,656 | — | ||||||
| Total liabilities |
57,450 | 25,781 | ||||||
| Shareholders’ equity |
||||||||
| Preferred stock, no par value; 5,000,000 shares authorized, no shares issued |
— | — | ||||||
| Common stock, $0.00001 par value; 100,000,000 shares authorized; 28,626,519 and 28,105,095 shares issued and outstanding, respectively |
0 | 0 | ||||||
| Additional paid-in capital |
116,293 | 116,480 | ||||||
| Accumulated other comprehensive income |
215 | 217 | ||||||
| Accumulated deficit |
(47,842 | ) | (49,774 | ) | ||||
| Total shareholders’ equity |
68,666 | 66,923 | ||||||
| $ | 126,116 | $ | 92,704 | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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RADIANT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| For the three months ended |
||||||||
| March 31, 2004 |
March 31, 2003 |
|||||||
| Revenues: |
||||||||
| System sales |
$ | 11,890 | $ | 13,122 | ||||
| Client support, maintenance and other services |
14,951 | 12,040 | ||||||
| Total revenues |
26,841 | 25,162 | ||||||
| Cost of revenues: |
||||||||
| System sales |
5,309 | 6,846 | ||||||
| Client support, maintenance and other services |
8,645 | 7,738 | ||||||
| Total cost of revenues |
13,954 | 14,584 | ||||||
| Gross profit |
12,887 | 10,578 | ||||||
| Operating Expenses: |
||||||||
| Product development |
3,472 | 2,214 | ||||||
| Sales and marketing |
4,518 | 4,363 | ||||||
| Depreciation of fixed assets |
964 | 899 | ||||||
| Amortization of intangible assets |
1,044 | — | ||||||
| Non-recurring charges |
— | 550 | ||||||
| General and administrative |
3,606 | 2,852 | ||||||
| Total operating expenses |
13,604 | 10,878 | ||||||
| Loss from operations |
(717 | ) | (300 | ) | ||||
| Interest and other (expense) income, net |
(213 | ) | 151 | |||||
| Loss from continuing operations before income tax provision |
(930 | ) | (149 | ) | ||||
| Income tax provision |
34 | 106 | ||||||
| Loss from continuing operations |
(964 | ) | $ | (255 | ) | |||
| Income (loss) from discontinued Enterprise business (Note 2): |
||||||||
| Loss from operations of Enterprise business, net |
(913 | ) | (2,966 | ) | ||||
| Gain on disposal of Enterprise business, net |
3,809 | — | ||||||
| Income (loss) from discontinued Enterprise business, net |
2,896 | $ | (2,966 | ) | ||||
| Net income (loss) |
$ | 1,932 | $ | (3,221 | ) | |||
| Loss per share from continuing operations: |
||||||||
| Basic loss per share |
$ | (0.03 | ) | $ | (0.01 | ) | ||
| Diluted loss income per share |
$ | (0.03 | ) | $ | (0.01 | ) | ||
| Net income (loss) per share: |
||||||||
| Basic income (loss) per share |
$ | 0.07 | $ | (0.11 | ) | |||
| Diluted income (loss) per share |
$ | 0.07 | $ | (0.11 | ) | |||
| Weighted average shares outstanding: |
||||||||
| Basic |
28,906 | 28,011 | ||||||
| Diluted |
28,906 | 28,011 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
RADIANT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
| For the three months ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net income (loss) |
$ | 1,932 | $ | (3,221 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Gain on sale of Enterprise business |
(3,809 | ) | — | |||||
| Depreciation and amortization |
2,008 | 2,632 | ||||||
| Changes in assets and liabilities, net of effect of acquisitions: |
||||||||
| Accounts receivable |
2,547 | 9,338 | ||||||
| Inventories |
(1,867 | ) | (1,361 | ) | ||||
| Other assets |
(273 | ) | (181 | ) | ||||
| Accounts payable |
2,389 | (2,720 | ) | |||||
| Accrued liabilities |
2,760 | 1,539 | ||||||
| Accrued contract obligations |
(1,157 | ) | — | |||||
| Client deposits and deferred revenue |
1,515 | 1,424 | ||||||
| Net cash provided by operating activities |
6,045 | 7,450 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Purchases of equipment |
(582 | ) | (1,567 | ) | ||||
| Capitalized software development costs |
(711 | ) | (1,423 | ) | ||||
| Payments related to sale of Enterprise business |
(4,000 | ) | (1,567 | ) | ||||
| Acquisition of Aloha, net of cash acquired and acquisition costs |
(11,121 | ) | — | |||||
| Purchase of TriYumF Asset and capitalized professional services costs |
(4,026 | ) | (4,607 | ) | ||||
| Net cash used in investing activities |
(20,440 | ) | (7,667 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Exercise of employee stock options |
812 | 120 | ||||||
| Principal payments on capital lease obligations |
(156 | ) | (120 | ) | ||||
| Principal payments on shareholder loans |
(501 | ) | — | |||||
| Repurchase of common stock |
— | (879 | ) | |||||
| Other |
— | 38 | ||||||
| Net cash provided by (used in) financing activities |
155 | (841 | ) | |||||
| Decrease in cash and cash equivalents |
(14,240 | ) | (988 | ) | ||||
| Cash and cash equivalents at beginning of period |
33,774 | 43,382 | ||||||
| Cash and cash equivalents at end of period |
$ | 19,534 | $ | 42,394 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
||||||||
| Non-cash transactions related to the acquisition of Aloha (Note 2): |
||||||||
| Issuance of common stock |
$ | 15,300 | $ | — | ||||
| Long-term note payable |
$ | 21,418 | $ | — | ||||