-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QILZDjB9VjbaJldebKQIx3f+jk+VDgkD/W+7/Zl8hBTkEBs79Kk6tn2UQShrJVjd E2WQHn9Q/xyugAE4kAoV4w== 0000931763-99-001687.txt : 19990518 0000931763-99-001687.hdr.sgml : 19990518 ACCESSION NUMBER: 0000931763-99-001687 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RADIANT SYSTEMS INC CENTRAL INDEX KEY: 0000845818 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 112749765 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22065 FILM NUMBER: 99625391 BUSINESS ADDRESS: STREET 1: 1000 ALDERMAN DR STREET 2: STE A CITY: ALPHARETTA STATE: GA ZIP: 30202 BUSINESS PHONE: 7707723000 MAIL ADDRESS: STREET 1: 1000 ALDERMAN DRIVE STREET 2: STE A CITY: ALPHARETTA STATE: GA ZIP: 30202 10-Q 1 FORM 10-Q 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 Commission File Number: March 31, 1999 0-22065 RADIANT SYSTEMS, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Georgia 11-2749765 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) 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 N/A - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (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 ---- ---- The number of the registrant's shares outstanding as of May 10, 1999 was 16,316,014. RADIANT SYSTEMS, INC. AND SUBSIDIARIES FORM 10-Q TABLE OF CONTENTS --------
PART I: FINANCIAL INFORMATION PAGE NO. Item 1: Financial Statements Condensed Consolidated Balance Sheets as of March 31, 1999 and December 31, 1998 3 Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 1999 and 1998 4 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1999 and 1998 5 Notes to Condensed Consolidated Financial Statements 6-8 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 9-13 Item 3: Quantitative and Qualitative Disclosures About Market Risks 13 PART II: OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K 14 Signature 14
2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements - ----------------------------- RADIANT SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
March 31, 1999 December 31, 1998 -------------- ----------------- (unaudited) (audited) ASSETS Current assets Cash and cash equivalents................................................... $31,169 $25,537 Accounts receivable, net of allowance for doubtful accounts of $800 and $750............................................................. 18,404 17,645 Inventories................................................................... 10,968 11,965 Other short-term assets....................................................... 2,738 2,997 ------- ------- Total current assets..................................... 63,279 58,144 Property and equipment, net................................................... 8,110 8,341 Software development costs, net............................................... 4,393 3,718 Intangibles, net.............................................................. 5,958 6,271 Other long-termassets......................................................... 7,465 7,692 ------- ------- $89,205 $84,166 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable............................................................ $ 6,152 $ 4,844 Accrued liabilities......................................................... 4,134 3,210 Client deposits and unearned revenue........................................ 4,392 2,600 Current portion of long-term debt........................................... 160 161 ------- ------ Total current liabilities................................ 14,838 10,815 Long-term debt, less current portion.......................................... 4,147 4,106 -------- -------- Total liabilities........................................ 18,985 14,921 Shareholders' equity Common stock, no par value; 30,000,000 shares authorized; 16,144,400 and 15,505,565 shares issued and outstanding................. - - Additional paid-in capital................................................................. 92,970 92,144 Deferred compensation...................................................... (328) (353) Accumulated deficit........................................................ (22,422) (22,546) -------- -------- Total shareholders' equity............................. 70,220 69,245 -------- -------- $ 89,205 $ 84,166 ======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements 3 RADIANT SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Unaudited
For the three months ended March 31, ---------------------------- 1999 1998 ------------- ----------- Revenues: System sales............................................. $17,235 $16,647 Client support, maintenance and other services........... 7,039 4,897 ------------ ----------- Total revenues........................................ 24,274 21,544 Cost of Revenues: System sales............................................. 8,484 7,996 Client support, maintenance and other services........... 5,886 4,154 ------------ ----------- Total cost of revenues................................. 14,370 12,150 Gross Profit............................................... 9,904 9,394 Operating expenses: Product development...................................... 2,575 2,793 Sales and marketing...................................... 2,927 2,823 Depreciation and amortization............................ 1,379 987 General and administrative............................... 3,159 3,051 ------------ ----------- Loss from operations....................................... (136) (260) Interest income, net..................................... (343) (539) ------------ ----------- Income before income tax provision......................... 207 279 Income tax provision..................................... 83 111 ------------ ----------- Net income................................................. $ 124 $ 168 ============ =========== Basic and diluted earnings per share....................... $ 0.01 $ 0.01 ============ =========== Weighted average shares outstanding Basic 16,078 15,926 ============ =========== Diluted 17,491 18,624 ============ ===========
The accompanying notes are an integral part of these condensed consolidated financial statements 4 RADIANT SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Unaudited
For the three months ended March 31, -------------------------- 1999 1998 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income..................................................................... $ 124 $ 168 Adjustments to reconcile net income to net cash provided by (used in )operating activities: Amortization of deferred compensation.......................................... 25 45 Depreciation and amortization.................................................. 1,557 987 Imputed interest on shareholder note........................................... 57 57 Changes in assets and liabilities: Accounts receivable........................................................ (758) (3,207) Inventories................................................................ 994 (2,891) Other assets............................................................... 382 (62) Accounts payable........................................................... 1,307 (511) Accrued liabilities........................................................ 924 (2,007) Client deposits and deferred revenue....................................... 1,793 (1,338) --------- --------- Net cash provided by (used in) operating activities.................. 6,405 (8,759) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment............................................ (729) (1,786) Capitalized software development costs......................................... (853) (643) --------- --------- Net cash used in investing activities................................ (1,582) (2,429) CASH FLOWS FROM FINANCING ACTIVITIES: Exercise of employee stock options............................................. 1,340 666 Repurchase of common stock..................................................... (514) -- Shareholder loans.............................................................. -- (500) Principal payments under capital lease obligations............................. (12) (71) Principal payments under long-term debt........................................ (4) (383) --------- --------- Net cash provided by (used in) financing activities.................. 810 (288) --------- --------- Increase (decrease) in cash and cash equivalents............................... 5,633 (11,476) Cash and cash equivalents at beginning of year................................. 25,536 47,567 --------- --------- Cash and cash equivalents at end of period..................................... $31,169 $36,091 ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest..................................................................... $ 3 $ 76 --------- --------- Income taxes................................................................. $ -- $ 1,556 ========= =========
The accompanying notes are an integral part of these condensed consolidated financial statements 5 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to interim financial statements. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of Radiant Systems, Inc. (the "Company") management, these condensed consolidated financial statements contain all adjustments (which comprise only normal and recurring accruals) necessary for fair presentation of the consolidated financial condition and results of operations for these periods. The interim results for the three months ended March 31, 1999 are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with the Company's consolidated financial statements as filed in its Annual Report on Form 10-K for the year ended December 31, 1998. 2. Net Income Per Share Basic net income per common share is computed by dividing net income by the weighted-average number of shares outstanding. Diluted net income per share includes the dilutive effect of stock options. The following table represents a reconciliation of basic and dilutive weighted average shares and earnings per share.
For the three months ended March 31, ---------------------------------- 000s omitted except per share data 1999 1998 - --------------------------------------------------------------------------------------------- Basic weighted average shares outstanding.............. 16,078 15,926 Shares of common stock assumed issued upon exercise of common stock equivalents using the "treasury stock" method as it applies to the computation of diluted earnings per share............................................ 1,413 2,698 ------- ------- Diluted weighted average shares outstanding......................................... 17,491 18,624 ======= ======= Net earnings used in the computation of basic and diluted earnings per share.................................. $ 124 $ 168 ======= ======= Earnings per share: Basic........................................... $ 0.01 $ 0.01 ======= ======= Diluted......................................... $ 0.01 $ 0.01 ======= =======
For the three months ended March 31, 1999 and March 31, 1998, options to purchase approximately 83,000 and 10,000 shares of common stock, respectively, were excluded from the above reconciliation, as the options were anti-dilutive for the periods then ended. 3. Segment Reporting Data The Company operates through two primary reportable segments (i) Global Solutions and (ii) Regional Solutions. Although both groups provide enterprise- wide technology solutions to the retail industry, the distinguishing factor between them is primarily the size of the clients served and the nature of the services 6 performed. Global Solutions' clients tend to be clients with greater than fifty owned and operated sites, while Regional Solutions' clients typically have less than fifty owned and operated sites. Additionally, the purchasing behavior of the Global Solutions clients is typically characterized by the use of fewer, larger contracts. These contracts typically involve longer negotiating cycles, and often require the dedication of substantial amounts of working capital and other resources. The accounting policies of the segments are substantially the same as those described in the summary of significant accounting polices included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. The Company's management evaluates the performance of the segments based on an internal measure of contribution margin, or income and loss from operations, before certain allocated costs of development and corporate overhead. The Company accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current market prices. The Other nonreportable segment includes miscellaneous businesses, certain unallocated corporate operating expenses and the elimination of intersegment sales. The summary of the Company's operating segments is as follows (in thousands):
For the three months ended March 31, 1999 --------------------------------------------------------------------------------------- Global Regional Solutions Solutions Other Consolidation ----------------- ----------------- ----------------- ------------------- Revenues $ 20,531 $ 3,743 -- $ 24,274 Contribution margin 5,811 (252) $ (689) 4,870 Operating income (loss) 1,730 (1,177) (689) (136) For the three months ended March 31, 1998 --------------------------------------------------------------------------------------- Global Regional Solutions Solutions Other Consolidation ----------------- ----------------- ----------------- ------------------- Revenues $ 18,013 $ 3,531 -- $ 21,544 Contribution margin 4,077 (331) -- 3,746 Operating income (loss) 575 (835) -- (260)
Identifiable assets allocated between the segments are comprised primarily of accounts receivable, inventory and intangible assets. There have been no material changes in these balances from those reported in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. 4. Accounting Pronouncements In the first quarter of 1998, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130 establishes standards for reporting and disclosing comprehensive income and its components. Comprehensive income is defined as the change in equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. In addition to net income, SFAS 130 requires the reporting of other comprehensive income, defined as revenues, expenses, gains and losses that under generally accepted accounting principles are not included in net income. As of March 31, 1999, the Company had no items of other comprehensive income. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," (SFAS 133) which established accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value, and changes in the derivative fair value be recognized currently in earnings unless specific accounting criteria are met. The Company plans to adopt SFAS 133 in the first quarter of fiscal 2000. 7 Management does not believe that adoption of this statement will have a material effect on the consolidated financial statements of the Company. In March 1998, the American Institute of Certified Public Accountants issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." Under SOP 98-1, computer software costs incurred in the preliminary project state are expensed as incurred. Additional, specified upgrades and enhancements may be capitalized; however, external costs related to maintenance, unspecified upgrades, and enhancements should be recognized as expense over the contract period on a systematic basis. Internal costs incurred for maintenance should be expensed as incurred. SOP 98-1 is effective for the Company's fiscal year beginning January 1, 1999. The adoption of SOP 98-1 during the first quarter ended March 31, 1999 did not have a material effect on the consolidated financial statements of the Company. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results - ------------------------------------------------------------------------------- of Operations - ------------- Overview The Company provides enterprise-wide technology solutions to the retail industry. The Company offers fully integrated retail automation solutions including point of sale systems, consumer-activated ordering systems, back office management systems and headquarters-based management systems. The Company's products enable retailers to interact electronically with their clients, capture detailed data at the point of sale, manage labor and inventory at their sites and communicate electronically with their sites, vendors and credit networks. In addition, the Company offers system planning, design and implementation services to tailor its solutions to each retailer's specifications. The Company derives its revenues primarily from the sale of integrated systems, including software, hardware and related support and consulting services. The Company plans to increase licensing of certain of its software products on a stand-alone basis. In addition, the Company offers implementation and integration services which are billed on a per diem basis. The Company's revenues from its various technology solutions are, for the most part, dependent on the number of installed sites a client has. Accordingly, while the typical sale is the result of a long, complex process, the Company's clients usually continue installing additional sites over an extended period of time. Revenues from software and systems sales are recognized as products are shipped, provided that collection is probable and no significant post shipment vendor obligations remain. Revenues from client support, maintenance and other services are generally recognized as the service is performed. Throughout the course of 1997 and 1998, the Company entered additional retail markets facilitated primarily through the acquisition of several companies and product offerings. Combined with its existing products, the Company began developing, marketing, deploying and supporting a variety of products. As a result, during 1998 the Company's management determined that significant internal cost efficiencies and increased market appeal could be obtained through the consolidation of its legacy products into a single family of products, Lighthouse(TM). This consolidation effort integrated the best business and technical knowledge from multiple markets. During 1998, the Company began developing Lighthouse, its next generation software technology. Management believes its Lighthouse generation of software products, which leverages both Microsoft Windows(R) CE and NT operating systems, represents an innovative platform based on open, modular software and hardware architecture and offers increased functionality and stability compared to other open systems in the marketplace. Additionally, management believes the Lighthouse family of products will uniquely position the Company to serve the needs of retailers who cross business segments (i.e., a convenience store or cinema with a fast food operation), further differentiating the Company's systems from those of its competitors and allowing the Company to significantly reduce future development and support costs. Additionally, the Company continues to review products and solutions utilizing the Internet. In 1998, a number of factors impacted the Company's revenue growth and operating results. Most notable was the fact that a number of the Company's larger clients were involved in mergers and acquisitions which, for a variety of reasons, interrupted or delayed roll outs of the Company's products. In addition, the purchasing behavior of the Company's largest clients became increasingly characterized by the use of fewer, larger contracts. These contracts typically involve longer negotiating cycles, require the dedication of substantial amounts of working capital and other resources, and in general require costs that may substantially precede recognition of associated revenues. Moreover, in return for larger, longer-term purchase commitments, clients often demand more stringent acceptance criteria, which can also cause revenue recognition delays. The above, coupled with investments by the Company in product development and other areas of business negatively impacted operating results and contributed to losses during 1998. 9 Results of Operations Three months ended March 31, 1999 compared to three months ended March 31, 1998 System Sales. The Company derives the majority of its revenues from sales and licensing fees for its headquarters, back office management and point of sale solutions. Systems sales increased 3.5% to $17.2 million for the quarter ended March 31, 1999 (the "first quarter 1999"), compared to $16.6 million for the quarter ended March 31, 1998 (the "first quarter 1998"). The increase related to sales and license fees from new and existing clients. Client Support, Maintenance and Other Services. The Company also derives revenues from client support, maintenance and other services, which increased 43.7% to $7.0 million for the first quarter 1999, compared to $4.9 million for the first quarter 1998. The increase was due to increased support, maintenance and services revenues within its existing markets resulting from increased system sales. Additionally, increased client demand for professional services contributed to this increase. Cost of Systems Sales. Cost of systems sales consists primarily of hardware and peripherals for site-based systems and labor. These costs are expensed as products are shipped. Cost of system sales increased 6.1% to $8.5 million for the first quarter 1999, compared to $8.0 million for the first quarter 1998. The increase was attributable to the increase in systems sales. Cost of systems sales as a percentage of systems revenues increased to 49.2% from 48.0%. This increase was due primarily to changes in product mix between site-based manufactured systems and back office and headquarters-based management systems between the two periods. The back office and headquarters systems typically have higher gross margins than the site-based systems sold by the Company. Cost of Client Support, Maintenance and Other Services. Cost of client support, maintenance and other services consists primarily of personnel and other costs associated with the Company's services operations. Cost of client support, maintenance and other services increased 41.7% to $5.9 million for the first quarter 1999 from $4.2 million for the first quarter 1998. The increase was due primarily to the Company's expansion its professional service offerings and the related increase in wages associated with this effort. Cost of client support, maintenance and other services as a percentage of client support, maintenance and other services revenues decreased to 83.6% from 84.8%, due to increased efficiencies and staff utilization. Product Development Expenses. Product development expenses consist primarily of wages and materials expended on product development efforts. Product development expenses decreased 7.8% to $2.6 million for the first quarter 1999, compared to $2.8 million for the first quarter 1998. The increase was due primarily to higher capitalization of software costs associated with the Company's development of its Lighthouse generation of products. In the first quarter 1999, software development costs of $853,000, or 24.9% of its total product development costs were capitalized by the Company as compared to $643,000, or 18.7% of its total product development costs for the first quarter 1998. Product development expenses as a percentage of total revenues decreased to 10.6% from 13.0%, as total revenues increased while product development expenses decreased. Sales and Marketing Expenses. Sales and marketing expenses increased 3.7% to $2.9 million during the first quarter 1999, compared to $2.8 million in the first quarter 1998. The increase was associated with the continued expansion of the Company's sales activities and increased commission expense attributable to higher sales. Sales and marketing expenses as a percentage of total revenues decreased to 12.1% from 13.1%. 10 Depreciation and Amortization. Depreciation and amortization expenses increased 39.7% to $1.4 million for the first quarter 1999, compared to $987,000 for the first quarter 1998. The increase resulted from an increase in computer equipment and other assets required to support an increased number of employees and locations. Depreciation and amortization as a percentage of total revenues increased to 5.7% from 4.6% during the period, primarily because associated personnel support costs increased at a pace higher than associated revenues. General and Administrative Expenses. General and administrative expenses increased 3.5% to $3.2 million for the first quarter 1999, compared to $3.1 million for the first quarter 1998. The increase was due primarily to personnel increases needed to support additional revenues. General and administrative expenses as a percentage of total revenues decreased to 13.0% from 14.2% as personnel and related expenses grew at a slower rate than revenues. Interest Income, Net. Interest income, net decreased 36.4% to $343,000 for the first quarter 1999, compared to $539,000 for the first quarter 1998. The Company's interest income is derived from the investment of its cash and cash equivalents. The decrease in net interest income resulted primarily as a result of a decline in cash and cash equivalents from an average cash balance of $41.8 million during the first quarter 1998 to an average cash balance of $28.4 million during the first quarter of 1999. See--"Liquidity and Capital Resources". Income Tax Provision. The Company recorded a tax provision of 40.0% in both the first quarter 1998 and the first quarter 1999. Net Income. Net income for the first quarter ended March 31, 1999, was $124,000, or $0.01 per share, a decrease of $44,000 over net income of $168,000, or $0.01 per share for the same period in 1998 due to the reasons noted above. Liquidity and Capital Resources In July 1997, the Company completed a public offering of 2.6 million shares of common stock and received net proceeds of approximately $58.4 million after deducting estimated underwriting discounts and offering expenses. A portion of the offering proceeds was used to repay $3.3 million of debt incurred in connection with the acquisition of ReMACS. The remaining proceeds will be used for general corporate purposes, including research and development, sales and marketing, possible strategic acquisitions and the increased working capital requirements of the Company generated by its growth. As of March 31, 1999, the Company had $31.2 million in cash and cash equivalents. The Company provided cash from operating activities in the first quarter 1999 of $6.4 million compared to a use of cash of $8.8 million in the first quarter 1998. In the first quarter 1999, the Company provided cash from operating activities primary due to decreased accounts receivables and inventories along with increased accounts payable and accrued liabilities due to timing of certain vendor payments. Additionally, client deposits and unearned revenues increased during the first quarter 1999 as the Company delivered products and/or services previously paid by clients. In the first quarter 1998, the Company's uses of cash were the primary result of increased accounts receivable and inventory due to increased sales, and a decrease in client deposits and unearned revenues as the Company delivered products and/or services previously paid by clients. Cash used in investing activities in the first quarter 1999 and the first quarter 1998 was $1.6 million and $2.4 million, respectively. The uses of cash in investing activities for the first quarter 1999 consisted primarily of the purchases of property and equipment for approximately $729,000 and capitalized software costs of $853,000. The uses of cash in investing activities for the first quarter 1998 consisted primarily of the 11 purchases of property and equipment of approximately $1.8 million and capitalized software costs of $643,000. Cash of $810,000 was provided by financing activities during the first quarter 1999 due primarily to cash received from the exercise of employee stock options of $1.3 million offset by the Company's purchase of common stock from shareholders for approximately $514,000. Cash of $288,000 was used in financing activities during the first quarter 1998 due primarily to an advance made by the Company to the former sole shareholder of RapidFire under its agreement to loan up to $1.5 million, which debt matures October 31, 2005 and bears interest at 5.0% per annum. In September 1998, the Board of Directors of the Company authorized a stock repurchase program pursuant to which management is authorized to repurchase up to 3,000,000 shares of common stock of the Company. As of May 6, 1999, the Company had repurchased in the open market an aggregate of 680,154 shares of its common stock for a total of $4.5 million. These purchases were, and any future purchase will be, financed from the Company's cash reserves. Year 2000 Issue The Year 2000 Issue is the result of computer programs being written using two digits rather than four to define the applicable year. Any of the Company's computer programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions or invoices sent, or engage in similar normal business activities. The Company is in the process of conducting an inventory and business risk assessment of its non-information technology systems. The Company will develop remediation plans for such non-information technology systems if its business risk assessment indicates such is warranted. All costs associated with analyzing the Year 2000 Issue or making conversions to existing systems are being expensed as incurred. Management presently believes that the costs to modify its information technology infrastructure to be Year 2000 compliant will not have a material adverse impact to its financial condition or results of operations during any quarterly or annual reporting period. However, the Company is currently identifying and considering various contingency options to minimize the risk of any Year 2000 problems. The Company is conducting communications with all of its significant suppliers of goods and services to determine the extent to which the Company's operations and systems are vulnerable to those third parties' failure to remediate their own Year 2000 Issues. There can be no guarantee that the systems of other companies on which the Company's operations and systems rely will be timely converted and would not have an adverse effect on the Company's systems or result of operations. The Company will utilize predominantly internal resources to reprogram, or replace, and test the software for Year 2000 modifications. The Company anticipates completing the Year 2000 project by September 30, 1999, which is prior to any anticipated impact on its operating systems. The costs of the project and the date on which the Company believes it will complete the Year 2000 modifications are based on management's best estimates, which were derived utilizing numerous assumptions of future events, including the continued availability of certain resources, third party modification plans and other factors. However, there can be no guarantee that these estimates will be achieved and actual results could differ materially from those anticipated. Specific factors that might cause such material difference include, but are not limited to, the availability and cost of personnel trained in this area, the ability to locate and correct all relevant computer codes, and similar uncertainties. 12 Forward-Looking Statements Certain statements contained in this filing are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to financial results and plans for the future business development activities, and are thus prospective. Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions, competition and other uncertainties detailed from time to time in the Company's Securities and Exchange Commission filings. Item 3. Quantitative and Qualitative Disclosures About Market Risks - -------------------------------------------------------------------- The Company's financial instruments that are subject to market risks are its cash and cash equivalents. During the first quarter 1999, the weighted average interest rate on its cash balances was approximately 4.65%. A 10.0% decrease in this rate would impact interest income by approximately $34,000. 13 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibits. The following exhibit is filed with this Report: 27.1 Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended March 31, 1999 RADIANT SYSTEMS, INC Dated: May 14, 1999 By: /s/ John H. Heyman ---------------------------- ----------------------------- John H. Heyman, Executive Vice President and Chief Financial Officer 14 EXHIBIT INDEX Exhibit Number Description of Exhibit - -------------- ---------------------- 27.1 Financial Data Schedule 15 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 31,169 0 19,204 (800) 10,968 2,738 14,716 (6,606) 89,205 14,838 0 0 0 0 70,220 89,205 24,274 24,274 14,370 14,370 10,040 0 (343) 207 83 124 0 0 0 124 0.01 0.01
-----END PRIVACY-ENHANCED MESSAGE-----