SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended July 31, 2004
or
| ¨ | 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 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 ¨
As of August 31, 2004, there were 82,250,132 shares of the registrant’s common stock outstanding.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JULY 31, 2004
TABLE OF CONTENTS
Unless stated otherwise, references in this report to “Wind River,” “we,” “our,” “us” or “the Company” refer to Wind River Systems, Inc., a Delaware corporation, and its consolidated subsidiaries.
-i-
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended July 31, |
Six Months Ended July 31, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues, net: |
||||||||||||||||
| Product |
$ | 31,211 | $ | 28,713 | $ | 57,975 | $ | 55,560 | ||||||||
| Subscription |
12,332 | 4,129 | 21,837 | 6,500 | ||||||||||||
| Service |
15,895 | 17,571 | 32,398 | 36,896 | ||||||||||||
| Total revenues, net |
59,438 | 50,413 | 112,210 | 98,956 | ||||||||||||
| Cost of revenues: |
||||||||||||||||
| Product |
1,190 | 2,977 | 2,520 | 5,720 | ||||||||||||
| Subscription |
3,151 | 1,191 | 5,485 | 1,987 | ||||||||||||
| Service |
7,831 | 9,427 | 16,763 | 19,117 | ||||||||||||
| Amortization of purchased intangibles |
334 | 1,418 | 1,321 | 2,883 | ||||||||||||
| Total cost of revenues |
12,506 | 15,013 | 26,089 | 29,707 | ||||||||||||
| Gross profit |
46,932 | 35,400 | 86,121 | 69,249 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Selling and marketing |
22,625 | 20,674 | 43,584 | 44,118 | ||||||||||||
| Product development and engineering |
14,215 | 14,083 | 29,331 | 28,432 | ||||||||||||
| General and administrative |
5,189 | 6,421 | 10,399 | 13,910 | ||||||||||||
| Amortization of other purchased intangibles |
126 | 315 | 297 | 692 | ||||||||||||
| Restructuring and other charges |
819 | 2,016 | 2,057 | 2,016 | ||||||||||||
| Impairment of purchased intangibles |
— | 1,400 | — | 1,400 | ||||||||||||
| Total operating expenses |
42,974 | 44,909 | 85,668 | 90,568 | ||||||||||||
| Income (loss) from operations |
3,958 | (9,509 | ) | 453 | (21,319 | ) | ||||||||||
| Other income (expense): |
||||||||||||||||
| Interest income |
1,646 | 2,137 | 3,353 | 4,967 | ||||||||||||
| Interest expense |
(1,798 | ) | (1,876 | ) | (3,657 | ) | (3,587 | ) | ||||||||
| Other income (expense), net |
(212 | ) | 579 | 342 | 1,132 | |||||||||||
| Total other income (expense) |
(364 | ) | 840 | 38 | 2,512 | |||||||||||
| Income (loss) before provision for income taxes |
3,594 | (8,669 | ) | 491 | (18,807 | ) | ||||||||||
| Provision for income taxes |
250 | 609 | 950 | 1,244 | ||||||||||||
| Net income (loss) |
$ | 3,344 | $ | (9,278 | ) | $ | (459 | ) | $ | (20,051 | ) | |||||
| Basic and diluted net income (loss) per share |
$ | 0.04 | $ | (0.12 | ) | $ | (0.01 | ) | $ | (0.25 | ) | |||||
| Shares used in per share calculation |
||||||||||||||||
| Basic |
81,677 | 79,921 | 81,485 | 79,772 | ||||||||||||
| Diluted |
83,813 | 79,921 | 81,485 | 79,772 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
-1-
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
(Unaudited)
| July 31, 2004 |
January 31, 2004 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 22,792 | $ | 32,254 | ||||
| Short-term investments |
39,021 | 19,580 | ||||||
| Accounts receivable, net |
39,277 | 43,153 | ||||||
| Prepaid and other current assets |
11,920 | 10,301 | ||||||
| Asset held for sale |
9,848 | — | ||||||
| Total current assets |
122,858 | 105,288 | ||||||
| Investments |
175,104 | 162,661 | ||||||
| Property and equipment, net |
81,449 | 92,388 | ||||||
| Goodwill |
84,428 | 84,428 | ||||||
| Other intangibles, net |
544 | 2,184 | ||||||
| Other assets |
8,309 | 9,271 | ||||||
| Restricted investments |
— | 46,332 | ||||||
| Total assets |
$ | 472,692 | $ | 502,552 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 3,943 | $ | 2,744 | ||||
| Accrued liabilities |
15,023 | 15,721 | ||||||
| Accrued restructuring costs |
2,576 | 2,851 | ||||||
| Accrued compensation |
16,612 | 16,533 | ||||||
| Income taxes payable |
1,270 | 2,559 | ||||||
| Deferred revenues |
44,495 | 39,128 | ||||||
| Total current liabilities |
83,919 | 79,536 | ||||||
| Convertible subordinated notes |
150,000 | 150,000 | ||||||
| Other long-term debt |
— | 40,000 | ||||||
| Total liabilities |
233,919 | 269,536 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock, par value $0.001, 325,000 shares authorized; 83,854 and 82,743 shares issued as of July 31, 2004 and January 31, 2004, respectively; 81,985 and 80,807 shares outstanding as of July 31, 2004 and January 31, 2004, respectively |
84 | 83 | ||||||
| Additional paid-in capital |
759,707 | 753,257 | ||||||
| Loan to stockholder |
— | (1,872 | ) | |||||
| Treasury stock, 1,869 and 1,936 shares at cost as of July 31, 2004 and January 31, 2004, respectively |
(32,520 | ) | (32,860 | ) | ||||
| Accumulated other comprehensive loss |
(2,849 | ) | (468 | ) | ||||
| Accumulated deficit |
(485,649 | ) | (485,124 | ) | ||||
| Total stockholders’ equity |
238,773 | 233,016 | ||||||
| Total liabilities and stockholders’ equity |
$ | 472,692 | $ | 502,552 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
-2-
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Six Months Ended July 31, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (459 | ) | $ | (20,051 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operations: |
||||||||
| Depreciation and amortization |
6,063 | 10,694 | ||||||
| Non-cash compensation, including 401(k) match and stock compensation |
925 | 1,300 | ||||||
| Interest on loan to stockholder |
— | 59 | ||||||
| Restructuring charge |
2,057 | 812 | ||||||
| Gain on investments and sale of technology |
(513 | ) | (416 | ) | ||||
| Provision for loan to stockholder, net |
— | 1,200 | ||||||
| Impairment of purchased intangibles |
— | 1,400 | ||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable, net |
3,306 | 4,842 | ||||||
| Prepaid and other current assets |
(1,619 | ) | 1,220 | |||||
| Accounts payable |
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