-----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, ExzvTwdQa3r2bYdl8pOSGLe7IkXP4SCm/aRnV/s8TzU7i1i/S8iYxiLsCt5rXYW9 pElfhv+hz4tPgyqKSzgnRA== 0000912057-96-009293.txt : 19960619 0000912057-96-009293.hdr.sgml : 19960619 ACCESSION NUMBER: 0000912057-96-009293 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RADISYS CORP CENTRAL INDEX KEY: 0000873044 STANDARD INDUSTRIAL CLASSIFICATION: 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: 96562034 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, 1996 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) 15025 S.W. Koll Parkway Beaverton, Oregon 97006 (Address of principal executive offices, including zip code) (503) 646-1800 (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 6, 1996: 7,325,436 RADISYS CORPORATION PART I. FINANCIAL INFORMATION Page No. -------- Item 1. Consolidated Financial Statements Consolidated Balance Sheet - March 31, 1996 and December 31, 1995 3 Consolidated Statement of Operations - Three months 4 ended March 31, 1996 and March 31, 1995 Consolidated Statement of Changes In Shareholders' Equity - December 31, 1993 through March 31, 1996 5 Consolidated Statement of Cash Flows - Three months ended March 31, 1996 and March 31, 1995 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 6. Exhibits and Reports on Form 8-K 12 Signatures 13 RADISYS CORPORATION CONSOLIDATED BALANCE SHEET (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
ASSETS March 31, December 31, 1996 1995 ----------- ---------- (unaudited) Current assets: Cash and cash equivalents $ 20, 049 $ 10,236 Short term investments 1,000 10,922 Accounts receivable 7,275 7,008 Inventories 5,453 6,380 Other current assets 694 374 Deferred income taxes 297 297 ----------- ---------- Total current assets 34,768 35,217 Equipment, net of accumulated depreciation of $4,162 and $3,832 4,321 3,179 Other assets 786 716 ----------- ---------- $ 39,875 $ 39,112 ----------- ---------- ----------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,806 $ 1,790 Income taxes payable 299 147 Accrued wages and bonuses 682 783 Accrued warranty costs 389 334 Other accrued liabilities 266 141 Current portion of capital lease obligation 214 214 ----------- ---------- Total current liabilities 3,656 3,409 Obligations under capital lease 826 884 ----------- ---------- Total liabilities 4,482 4,293 ----------- ---------- Commitments and contingent liabilities Shareholders' equity Common stock, 15,000,000 shares authorized, 6,022,527 and 6,014,709 shares issued and outstanding 33,633 33,627 Cumulative translation adjustment (90) (108) Retained earnings 1,850 1,300 ----------- ---------- Total shareholders' equity 35,393 34,819 ----------- ---------- $ 39,875 $ 39,112 ----------- ---------- ----------- ----------
See accompanying notes to consolidated financial statements. RADISYS CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) (UNAUDITED)
Three Months Ended March 31, March 31, 1996 1995 --------- -------- Revenues $ 11,065 $ 6,673 Cost of sales 7,398 4,219 --------- -------- Gross Profit 3,667 2,454 Research and development 1,130 698 Selling, general and administrative 1,903 1,504 --------- -------- Income from operations 634 252 Interest income, net 253 38 --------- -------- Income before income tax provision 887 290 Income tax provision 337 87 --------- -------- Net income $ 550 203 --------- -------- --------- -------- Net income per share $ 0.09 $ 0.05 --------- -------- --------- -------- Weighted average number of common and common equivalent shares outstanding 6,162 3,928 --------- -------- --------- --------
See accompanying notes to consolidated financial statements. RADISYS CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (IN THOUSANDS, EXCEPT SHARE AMOUNTS) (THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
Preferred Stock --------------------------------------------------------------- Series A Series B Series C Common stock ----------------- ------------------- -------------------- ------------------- Shares Amount Shares Amount Shares Amount Shares Amount ------- ------ --------- ------ --------- ------- --------- -------- Balances, December 31, 1993 355,556 1,500 1,820,988 4,917 2,159,504 2,973 1,372,752 322 Collection of note receivable Exercise of common stock options 111,328 156 Issuance of common stock for cash 3,030 10 Repurchase of common stock (4,910) (13) Net income for the year ------- ------ --------- ------ ---------- ------- --------- ------- 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 7,818 6 Translation adjustment Net income for the period ------- ------ --------- ------ ---------- ------- --------- ------- Balances, March 31, 1996 -- $ -- -- $ -- -- $ -- 6,022,527 $33,633 ------- ------ --------- ------ ---------- ------- --------- ------- ------- ------ --------- ------ ---------- ------- --------- ------- Cumulative Retained Notes translation (deficit) Receivable adjustment earnings Total ---------- ----------- --------- --------- Balances, December 31, 1993 (5) (1,581) 8,126 Collection of note receivable 5 5 Exercise of common stock options 156 Issuance of common stock for cash 10 Repurchase of common stock (13) Net income for the year 1,365 1,365 ---------- ----------- --------- --------- 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 6 Translation adjustment 18 18 Net income for the period 550 550 ---------- ----------- --------- --------- Balances, March 31, 1996 $ -- $ (90) $ 1,850 $ 35,393 ---------- ----------- --------- --------- ---------- ----------- --------- ---------
See accompanying notes to consolidated financial statements. RADISYS CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
Three Months Ended March 31, March 31, 1996 1995 --------- --------- Cash flows from operating activities: Net Income $ 550 $ 203 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Depreciation and amortization 330 270 Net changes in current assets and current liabilities: (Increase) in accounts receivable (267) (953) (Increase) decrease in inventories 927 (1,331) (Increase) decrease in other current assets (320) 40 Increase in accounts payable 16 993 Increase (decrease) in income tax payable 152 (151) Increase (decrease) in accrued wages and bonuses (101) (159) Increase (decrease) in accrued warranty costs 55 35 Increase (decrease) in other accrued liabilities 125 (3) ---------- --------- Net cash provided by (used for) operating activities 1,467 (1,056) ---------- --------- Cash flows from investing activities: Decrease in short term investments 9,922 Capital expenditures (1,472) (1,866) Capitalized software production costs and increase in other assets (70) (101) ---------- --------- Net cash provided by (used for) investing activities 8,380 (1,967) ---------- --------- Cash flows from financing activities: Cash proceeds from issuance of common stock, net 6 6 Proceeds from capital lease 1,272 Payments on capital lease obligation (58) ---------- --------- Net cash provided by (used for) financing activities (52) 1,278 ---------- --------- Effect of exchange rate changes on cash 18 ---------- --------- Net decrease in cash and cash equivalents 9,813 (1,745) Cash and cash equivalents, beginning of period 10,236 2,965 ---------- --------- Cash and cash equivalents, end of period $ 20,049 $ 1,220 ---------- --------- ---------- ---------
See accompanying notes to consolidated financial statements. 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, 1995. 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) outstanding during the periods, computed using the treasury stock method for stock options. 2. ACCOUNTS RECEIVABLE Trade accounts receivable are net of an allowance for doubtful accounts of $227 and $233 at March 31, 1996 and December 31, 1995, respectively. The Company's customers are concentrated in the technology industry. 3. INVENTORIES Inventories consist of the following:
March 31, December 31, 1996 1995 ---- ---- Raw Materials $ 3,983 $ 3,835 Work in Process 1,252 270 Finished Goods 218 2,275 --------- --------- $ 5,453 $ 6,380 --------- --------- --------- ---------
4. PROPERTY AND EQUIPMENT Property and equipment consists of the following:
March 31, December 31, 1996 1996 ---- ---- Land $ 1,190 $ 33 Manufacturing Equipment 3,739 3,654 Office Equipment 3,260 3,040 Leasehold Improvements 294 284 --------- --------- 8,483 7,011 Less: Accum. Depr. 4,162 3,832 --------- --------- $ 4,321 $ 3,179 --------- --------- --------- ---------
6. SHAREHOLDERS' EQUITY The Company granted and canceled 3,550 and 1,670 options, respectively, and 7,818 stock options were exercised during the three months ended March 31, 1996. 7. SUBSEQUENT EVENTS On April 29, 1996, the Company purchased substantially all of the assets of Intel Corporation ("Intel") that are dedicated to the design, manufacture and sale of all standard and custom Multibus I and Multibus II products (the "Acquisition"). In addition, pursuant to the terms of the Acquisition, Intel licensed certain Intel software to the Company. The purchase price consisted of 1,300,000 shares of the Registrant'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. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Total revenue was $11.1 million for the three months ended March 31, 1996 compared to $6.7 million for the three months ended March 31, 1995. Net income was $550,000 for the three months ended March 31, 1996 compared to $203,000 for the three months ended March 31, 1995. From time to time the Company may issue 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. The forward looking statements contained in this document regarding industry trends, product development and introductions, the acquisition of certain assets from Intel and liquidity and future business activities should be considered in light of these factors. On April 29, 1996, the Company purchased substantially all of the assets of Intel Corporation ("Intel") that are dedicated to the design, manufacture and sale of all standard and custom Multibus I and Multibus II products (the "Acquisition"). In addition, pursuant to the terms of the Acquisition, Intel licensed certain Intel software to the Company. REVENUE Three Months Ended ------------------ (in thousands, except percentage amounts) March 31, Percentage March 31, 1996 Change 1995 ---- ------ ---- Revenue $11,065 66 $6,673 The increase in revenue for the three months ended March 31, 1996 compared to the three months ended March 31, 1995 resulted primarily from volume increases in OEM sales. COST OF GOODS SOLD Three Months Ended ------------------ (in thousands, except percentage amounts) March 31, Percentage March 31, 1996 Change 1995 ---- ------ ---- Cost of Goods Sold $7,398 75 $4,219 As a Percentage of Revenue 67 63 As a percentage of revenue, total cost of goods increased for the three months ended March 31, 1996 compared to the three months ended March 31, 1995 primarily as a result of the substantial growth in sales to OEMs, which historically yield a lower gross margin. RESEARCH AND DEVELOPMENT Three Months Ended ------------------ (in thousands, except percentage amounts) March 31, Percentage March 31, 1996 Change 1995 ---- ------ ---- Research and Development $1,130 62 $ 698 As a Percentage of Revenue 10 10 The dollar increase in research and development expenses was 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. SELLING, GENERAL AND ADMINISTRATIVE Three Months Ended ------------------ (in thousands, except percentage amounts) March 31, Percentage March 31, 1996 Change 1995 ---- ------ ---- Selling, General & Admin. $1,903 26 $1,504 As a Percentage of Revenue 17 23 Selling, general and administrative expenses have increased in dollar amount in the three months ended March 31, 1996 compared to the three months ended March 31, 1995, primarily as a result of increased personnel, facilities and travel cost to support higher levels of sales. The decrease as a percentage of revenues was primarily the result of operating efficiencies achieved by spreading fixed costs over a larger revenue base, offset partially by increases in costs required to expand international operations. INTEREST INCOME, NET AND INCOME TAX PROVISION Three Months Ended ------------------ (in thousands, except percentage amounts) March 31, Percentage March 31, 1996 Change 1995 ---- ------ ---- Interest Income, net $ 253 566 $ 38 Income Tax Provision $ 337 287 $ 87 Interest income, net includes interest income, interest expense, bank charges and foreign currency transaction gains or losses. The increase in interest income, net for the three months ended March 31, 1996 compared to the three months ended March 31, 1995 was primarily the result of cash invested from the Company's initial public offering in October of 1995. The income tax provision reflect effective income tax rates of 38 percent and 30 percent for 1996 and 1995, respectively. The increase in the income tax provision is primarily attributable to the depletion of tax credits in 1995. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 1996, the Company had $21 million in cash and short term investment grade securities which represents the Company's principal source of liquidity. The Company had working capital of approximately $31.1 million. Net cash provided by operating activities for the three months ended March 31, 1996 was $1,467,000 as compared with net cash used by operations of $1,056,000 for the three months ended March 31, 1995. The increase in cash provided by operations for the first three months of 1996 was largely attributable to a decrease in inventories of $927,000. Capital expenditures were $1.5 million in the three months ended March 31, 1996 and $1.9 million for the three months ended March 31, 1995. Capital expenditures for the three months ended March 31, 1996 were primarily for the purchase of two parcels of land for future expansion. On April 29, 1996, the Company purchased substantially all of the assets of Intel Corporation ("Intel") that are dedicated to the design, manufacture and sale of all standard and custom Multibus I and Multibus II products (the "Acquisition"). In addition, pursuant to the terms of the Acquisition, Intel licensed certain Intel software to the Company. The purchase price consisted of 1,300,000 shares of the Registrant'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. The Company will fund the acquired operations from existing cash and cash equivalents. 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. PART II OTHER INFORMATION Item 6. (a) Exhibits 27 Financial Data Schedule (b) Reports on Form 8-K On May 3, 1996, the Company filed a Form 8-K dated April 29, 1996 reporting Item 2. 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 /s/ Brian V. Turner --------------------------------------------- Date: May 13, 1996 Brian V. Turner ---------------- Vice President of Finance and Chief Financial Officer (Principal Financial Officer) EXHIBIT INDEX Sequential Exhibit No. Description Page No. ----------- ----------- ---------- 27 Financial Data Schedule 15 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-31-1996 JAN-01-1996 MAR-31-1996 20,049 1,000 7,502 (227) 5,453 34,768 8,483 4,162 39,875 3,656 0 0 0 33,633 1,760 35,393 11,065 11,065 7,398 3,033 0 0 253 887 337 550 0 0 0 550 .09 .09
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