-----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, GOvjPzCclmvjWdjqAl/8Fk9xD1cmcpG4xuLUL/M0NL2xgIr3gi34bMYXCq3LuKGJ oN89wBfENKq1VvJvEUlz7Q== 0000893877-97-000276.txt : 19970512 0000893877-97-000276.hdr.sgml : 19970512 ACCESSION NUMBER: 0000893877-97-000276 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970509 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RADISYS CORP CENTRAL INDEX KEY: 0000873044 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 930945232 STATE OF INCORPORATION: OR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26844 FILM NUMBER: 97599070 BUSINESS ADDRESS: STREET 1: 15025 SW KOLL PARKWAY CITY: BEAVERTON STATE: OR ZIP: 97006 BUSINESS PHONE: 5036461800 10-Q 1 FORM 10-Q 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 March 31, 1997 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: 0-26844 RADISYS CORPORATION (Exact name of registrant as specified in its charter) Oregon 93-0945232 (State or other jurisdiction (I.R.S. Employer of organization or incorporation) Identification Number) 5445 NE Dawson Creek Drive Hillsboro, OR 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 report), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Number of shares of common stock outstanding as of May 5, 1997 was 7,727,347. RADISYS CORPORATION PART I. FINANCIAL INFORMATION Page No. -------- Item 1. Consolidated Financial Statements Consolidated Balance Sheet - March 31, 1997 and December 31, 1996 3 Consolidated Statement of Operations - Three months ended March 31, 1997 and 1996. 4 Consolidated Statement of Changes In Shareholders' Equity - December 31, 1994 through March 31, 1997 5 Consolidated Statement of Cash Flows - Three months ended March 31, 1997 and 1996 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION Item 2. Changes in securities 12 Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13 2
RadiSys Corporation Consolidated Balance Sheet (in thousands, except share amounts) ASSETS March 31, December 31, 1997 1996 ------------- ------------- (unaudited) Current assets Cash and cash equivalents $ 23,144 $ 24,626 Accounts receivable 24,091 20,265 Other receivables 2,214 3,396 Inventories 20,008 17,834 Other current assets 512 742 Deferred income taxes 2,079 1,794 ------------- ------------- Total current assets 72,048 68,657 Equipment, net of accumulated depreciation of $5,858 and $5,208 12,156 11,171 Other Assets 4,182 425 ------------- ------------- $ 88,386 $ 80,253 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 12,638 $ 11,461 Income taxes payable 4,328 2,996 Accrued wages and bonuses 1,747 2,230 Accrued warranty costs 1,196 1,227 Accrued sales discounts 1,635 1,360 Other accrued liabilities 2,124 2,139 Current portion of note payable 900 1,200 Current portion of capital lease obligation 214 214 ------------- ------------- Total current liabilities 24,782 22,827 ------------- ------------- Obligations under capital lease 587 648 ------------- ------------- Total liabilities 25,369 23,475 ------------- ------------- Commitments and contingent liabilities Shareholders' equity Common stock, 15,000,000 shares authorized, 7,560,377 and 7,388,410 shares issued and outstanding 48,132 45,061 Warrants 1,200 1,200 Cumulative translation adjustment (583) (329) Retained earnings 14,268 10,846 ------------- ------------- Total shareholders' equity 63,017 56,778 ------------- ------------- $ 88,386 $ 80,253 ============= ============= See accompanying notes to consolidated financial statements.
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RadiSys Corporation Consolidated Statement of Operations (in thousands, except per share amounts) (unaudited) Three Months Ended March 31, March 31, 1997 1996 ----------------- --------------- Revenues $ 27,830 $ 11,065 Cost of sales 16,185 7,398 ----------------- --------------- Gross Profit 11,645 3,667 Research and development 2,807 1,130 Selling, general and administrative 3,838 1,903 ----------------- --------------- Income from operations 5,000 634 Interest income, net 264 253 ----------------- --------------- Income before income tax provision 5,264 887 Income tax provision 1,842 337 ----------------- --------------- Net income $ 3,422 $ 550 ================= =============== Net income per share $ 0.43 $ 0.09 ================= =============== Weighted average number of common and common equivalent shares outstanding 7,899 6,162 ================= =============== See accompanying notes to consolidated financial statements.
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RadiSys Corporation Consolidated Statement of Changes in Shareholders' Equity (in thousands, except per share amounts) (Page 1 of 2) Preferred Stock ------------------------------------------------------------ Series A Series B Series C Common Stock ------------------ ------------------- ------------------- ------------------- Shares Amount Shares Amount Shares Amount Shares Amount -------- -------- ---------- ------- ---------- ------- ---------- ------- Balances, December 31, 1994 355,556 1,500 1,820,988 4,917 2,159,504 2,973 1,482,200 475 Exercise of common stock options 58,524 106 Issuance of common stock 2,175,000 23,656 Conversion of preferred stock (355,556) (1,500) (1,820,988) (4,917) (2,159,504) (2,973) 2,298,985 9,390 Translation adjustment Net income for the year -------- -------- ---------- ------- ---------- ------- ---------- ------- Balances, December 31, 1995 6,014,709 33,627 Exercise of common stock options 73,701 365 Tax effect of options exercised 569 Translation adjustment Stock issued for acquisition 1,300,000 10,500 Warrants issued for acquisition Net income for the period -------- -------- ---------- ------- ---------- ------- ---------- ------- Balances, December 31, 1996 7,388,410 45,061 Exercise of common stock options 88,467 662 Translation adjustment Stock issued for acquisition 83,500 2,409 Net income for the period -------- -------- ---------- ------- ---------- ------- ---------- ------- Balances, March 31, 1997 $ $ $ 7,560,377 $48,132 ======== ======== ========== ======= ========== ======= ========== ======= See accompanying notes to consolidated financial statements.
5a
RadiSys Corporation Consolidated Statement of Changes in Shareholders' Equity (in thousands, except per share amounts) (Page 2 of 2) Cumulative Retained Translation (deficit) Warrants Adjustment Earnings Total -------- ---------- -------- -------- Balances, December 31, 1994 (216) 9,649 Exercise of common stock options 106 Issuance of common stock 23,656 Conversion of preferred stock Translation adjustment (108) (108) Net income for the year 1,516 1,516 -------- ---------- -------- -------- Balances, December 31, 1995 (108) 1,300 34,819 Exercise of common stock options 365 Tax effect of options exercised 569 Translation adjustment (221) (221) Stock issued for acquisition 10,500 Warrants issued for acquisition 1,200 1,200 Net income for the period 9,546 9,546 -------- ---------- -------- -------- Balances, December 31, 1996 1,200 (329) 10,846 56,778 Exercise of common stock options 662 Translation adjustment (254) (254) Stock issued for acquisition 2,409 Net income for the period 3,422 3,422 -------- ---------- -------- -------- Balances, March 31, 1997 1,200 $ (583) $ 14,268 $ 63,017 ======== ========== ======== ======== See accompanying notes to consolidated financial statements.
5b
RadiSys Corporation Consolidated Statement of Cash Flows (in thousands) (unaudited) Three Months Ended March 31, March 31, 1997 1996 ------------- -------------- Cash flows from operating activities: Net Income $ 3,422 $ 550 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,078 330 Deferred income taxes (285) Net changes in current assets and current liabilities: (Increase) in accounts receivable (3,286) (267) Decrease in other receivables 1,182 (Increase) decrease in inventories (1,560) 927 (Increase) decrease in other current assets 238 (320) Increase in accounts payable 1,065 16 Increase in income tax payable 1,332 152 Decrease in accrued wages and bonuses (577) (101) Increase (decrease) in accrued warranty costs (42) 55 Increase in accrued sales discounts 275 Increase (decrease) in other accrued liabilities (351) 125 ------------- -------------- Net cash provided by operating activities 2,491 1,467 ------------- -------------- Cash flows from investing activities: Decrease in short term investments 9,922 Business acquisitions (1,060) Capital expenditures (1,821) (1,472) Capitalized software production costs and other assets 193 (70) ------------- -------------- Net cash provided by (used for) investing activities (2,688) 8,380 ------------- -------------- Cash flows from financing activities: Cash proceeds from issuance of common stock, net 662 6 Payment on notes payable (1,632) Payments on capital lease obligation (61) (58) ------------- -------------- Net cash (used for) financing activities (1,031) (52) ------------- -------------- Effect of exchange rate changes on cash (254) 18 ------------- -------------- Net (increase) decrease in cash and cash equivalents (1,482) 9,813 Cash and cash equivalents, beginning of period 24,626 10,236 ------------- -------------- Cash and cash equivalents, end of period $ 23,144 $ 20,049 ============= ============== See accompanying notes to consolidated financial statements.
6 RADISYS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share amounts) (unaudited) 1. Basis of Presentation The accompanying consolidated financial statements are unaudited and have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission and in the opinion of management include all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of results for the interim periods. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1996. The results of operations for interim periods are not necessarily indicative of the results for the entire year. Net income per share is based on the weighted average number of shares of common stock and common stock equivalents (stock options and warrants) outstanding during the periods, computed using the treasury stock method for stock options and warrants. In February 1997, the Financial Accounting Standards Board issued SFAS No. 128 "Earnings Per Share". In accordance with this pronouncement, the Company will adopt the new standard for periods ending after December 15, 1997. Management does not expect the adoption of this pronouncement to have a significant effect on reported earnings per share information. 2. Accounts Receivable Trade accounts receivable are net of an allowance for doubtful accounts of $738 and $706 at March 31, 1997 and December 31, 1996, respectively. The Company's customers are concentrated in the technology industry. 3. Inventories Inventories consist of the following:
Mar 31, Dec 31, 1997 1996 -------------- ------------- Raw Materials $ 13,112 $ 12,555 Work in Process 3,487 3,538 Finished Goods 3,409 1,741 -------------- ------------- $ 20,008 $ 17,834 ============== =============
7 4. Property and Equipment Property and equipment consists of the following:
Mar 31, Dec 31, 1997 1996 -------------- ------------- Land $ 2,062 $ 1,230 Manufacturing Equipment 8,640 8,472 Office Equipment 5,862 5,548 Leasehold Improvements 1,450 1,129 -------------- ------------- 18,014 16,379 Less: Accum. Depr. 5,858 5,208 -------------- ------------- $ 12,156 $ 11,171 ============== =============
5. Acquisitions On April 29, 1996, the Company purchased substantially all of the assets of Intel Corporation ("Intel") that were dedicated to the design, manufacture and sale of all standard and custom Multibus I and Multibus II products ("Multibus") (collectively the "Acquisition"). In addition, pursuant to the terms of the Acquisition, Intel licensed certain Intel software to the Company. The Acquisition was accounted for using the purchase method. The purchase price consisted of 1,300,000 shares of the Company's common stock ("Common Stock") and warrants to purchase an additional 300,000 shares of Common Stock exercisable within 24 months at prices per share ranging from $13.50 to $15.00, plus an aggregate of $1.2 million in cash to be paid in 1997. On April 25, 1997, Intel exercised in full the warrants it received pursuant to the Acquisition in a cashless exercise at an effective price of $13.50 a share, which resulted in the issuance of 166,667 shares of the Company's common stock to Intel and no cash proceeds to the Company. Included within other receivables is approximately $1.8 million related to inventory to be delivered by Intel to the Company in 1997. On February 18, 1997, the Company purchased substantially all of the assets of Sonitech International, Inc. The purchase price consisted of 83,500 shares of the Company's common stock and approximately $1 million in cash. The non cash portions of the above transactions have been excluded from the accompanying Consolidated Statement of Cash Flows. 8 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Total revenue was $27.8 million for the three months ended March 31, 1997 compared to $11.1 million for the three months ended March 31, 1996. Net income was $3.4 million for the three months ended March 31, 1997 compared to $0.5 million for the three months ended March 31, 1996. Information contained in this Quarterly Report on Form 10-Q and statements that may be made in the future by the Company's management regarding future industry trends, the Company's future development and introduction of products, and the Company's future liquidity, development, and business activities constitute forward looking statements that involve a number of risks and uncertainties. The following are among the factors that could cause actual results to differ materially from the forward looking statements: business conditions and growth in the electronics industry and general economies, both domestic and international; uncertainty of market development; dependence on a limited number of OEM customers; dependence on limited or sole source suppliers; dependence on the relationship with Intel Corporation ("Intel"); dependence on Intel's support of the embedded computer market; lower than expected customer orders; competitive factors, including increased competition, new product offerings by competitors and price pressures; the availability of parts and components at reasonable prices; changes in product mix; dependence on proprietary technology; technological difficulties and resource constraints encountered in developing new products; and product shipment interruptions due to manufacturing difficulties. On April 29, 1996, the Company purchased substantially all of the assets of Intel Corporation ("Intel") that were dedicated to the design, manufacture and sale of all standard and custom Multibus I and Multibus II products ("Multibus") (collectively the "Acquisition"). In addition, pursuant to the terms of the Acquisition, Intel licensed certain Intel software to the Company. On February 18, 1997, the Company purchased substantially all of the assets of Sonitech International, Inc., a provider of digital signal processing hardware and software solutions for embedded applications. Both acquisitions were accounted for using the purchase method. The results of operations for these acquisitions have been included in the financial statements since the date of the acquisition. 9
REVENUES Three Months Ended ------------------------------------------ (in thousands, except percentage amounts) March 31, Percentage March 31, 1997 Change 1996 -------- ------ -------- Revenues $27,830 152 $11,065
The increase in revenues for the three months ended March 31, 1997 compared to the three months ended March 31, 1996 resulted primarily from the acquisition of Multibus from Intel on April 29, 1996, design wins ramping into production and volume increases in OEM sales.
COST OF GOODS SOLD Three Months Ended ------------------------------------------ (in thousands, except percentage amounts) March 31, Percentage March 31, 1997 Change 1996 -------- ------ -------- Cost of Goods Sold $16,185 119 $7,398 As a Percentage of Revenues 58 67
As a percentage of revenues total cost of goods sold decreased for the three months ended March 31, 1997 compared to the three months ended March 31, 1996 primarily as a result of component pricing decreasing faster than price changes to the Company's customers, the mix of products sold through distributors versus direct sales, and product mix consisting of a larger portion of higher margin product relative to lower margin product shipped during the first quarter of 1997.
RESEARCH AND DEVELOPMENT Three Months Ended ------------------------------------------ (in thousands, except percentage amounts) March 31, Percentage March 31, 1997 Change 1996 -------- ------ -------- Research and Development $ 2,807 148 $ 1,130 As a Percentage of Revenues 10 10
The dollar increases in research and development expenses were primarily the result of increased investment in new product development and costs of enhancements to existing products. The Company continues to invest in new design wins for OEM customers and the dollar increases reflect steady increases in the number of employees working in research and development. 10
SELLING, GENERAL AND ADMINISTRATIVE Three Months Ended ------------------------------------------ (in thousands, except percentage amounts) March 31, Percentage March 31, 1997 Change 1996 -------- ------ -------- Selling, General & Admin. $ 3,838 102 $ 1,903 As a Percentage of Revenues 14 17
Selling, general and administrative expenses have increased in dollar amount in the three months ended March 31, 1997 compared to the three months ended March 31, 1996, primarily as a result of increased personnel, facilities and travel costs to support higher levels of sales. The decreases as a percentage of revenues were primarily the result of operating efficiencies achieved by spreading fixed costs over a larger revenue base.
INTEREST INCOME, NET AND INCOME TAX PROVISION Three Months Ended ------------------------------------------ (in thousands, except percentage amounts) March 31, Percentage March 31, 1997 Change 1996 -------- ------ -------- Interest Income, net $ 264 4 $ 253 Income Tax Provision $ 1,842 447 $ 337
Interest income, net includes interest income, interest expense, bank charges and foreign currency transaction gains or losses. The increase in the income tax provision is solely attributable to increased net income before taxes in 1997. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 1997, the Company had $23.1 million in cash and cash equivalents, which represents the Company's principal source of liquidity. The Company had working capital of approximately $47.3 million. Effective September 30, 1996, the Company entered into a $10.0 million line of credit with a bank. The Company has not drawn any funds under this line of credit. Net cash provided by operating activities for the three months ended March 31, 1997 was $2.5 million as compared with $1.5 million for the three months ended March 31, 1996. Capital expenditures were $1.8 million in the three months ended March 31, 1997 and $1.5 million for the three months ended March 31, 1996. Capital expenditures for the three months ended March 31, 1997 were primarily for the purchase of a parcel of land for future expansion and construction in progress for a new engineering design center which the Company plans to occupy in January 1998. The Company believes that existing cash and cash equivalents and cash from operations will be sufficient to fund its operations for at least the next 12 months. 11 PART II OTHER INFORMATION Item 2. Changes in Securities (c) On February 18, 1997, the Company issued 83,500 shares of its common stock to the three shareholders of Sonitech International, Inc. ("Sonitech"), as partial consideration for the Company's acquisition of substantially all of the assets of Sonitech. This issuance of shares was exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(2) thereof. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 Financial Data Schedule 12 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RADISYS CORPORATION BRIAN V. TURNER ------------------------------------------------ Date: May 5, 1997 Brian V. Turner Vice President of Finance and Administration and Chief Financial Officer (Principal Financial Officer) 13 EXHIBIT INDEX Sequential Exhibit No. Description Page No. - ----------- ----------- -------- 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 23,144 0 24,091 738 20,008 72,048 12,156 5,858 88,386 24,782 0 0 0 48,132 14,885 88,386 27,830 27,830 16,185 6,645 0 0 264 5,264 1,842 3,422 0 0 0 3,422 .43 .43
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