UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a – 16 or 15d – 16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For July 31, 2002
MADGE NETWORKS N.V.
(Translation of registrant’s name into English)
Keizersgracht 62-64
1015 CS Amsterdam
The Netherlands
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F
Form 20-F | Form 40-F |
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
Yes | No |
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_________
Page 1 of 9 Pages
Exhibit Index appears on page 4
MADGE NETWORKS N.V.
Item 1. Press Release
Attached as Exhibit 1 to this Form 6-K is a copy of the Press Release issued by Madge Networks N.V. on July 31, 2002
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Madge Networks N.V.
By: | /s/ Martin Malina | |
Martin Malina Managing Director |
Date: October 7, 2002
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EXHIBIT INDEX
Exhibit | Page | |||
Press Release | 5 |
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(MADGE LOGO)
Madge Networks N.V.
Keizersgracht 62-64
1015 CS Amsterdam
The Netherlands
Main: (+44) 1753 661 000
Fax: (+44) 1753 661 011
MADGE NETWORKS N.V. REPORTS
SECOND QUARTER 2002 RESULTS
Amsterdam, The Netherlands (July 31, 2002) — Madge Networks N.V. (NASDAQ: MADGF), a global supplier of advanced networking product solutions, today announced results for its second fiscal quarter ended June 30, 2002.1
Madge Networks revenues for the second quarter were US$9.5 million, compared to first quarter 2002 revenues of $10.0 million and second quarter 2001 revenues of $20.8 million. Net income for the quarter was $0.1 million, or just above breakeven earnings per share, compared to a net loss of $(0.5) million, or $(0.01) per share, for the previous quarter and a net income of $9.0 million, or $0.17 per share, for the second quarter of 2001. Net income for the 2001 period included special gains of $9.3 million relating primarily to the sale of Red-M shares, partially offset by a loss from associate Red-M of $1.5 million and a loss from discontinued operations of $2.5 million.
For the six months ended June 30, 2002 net loss was $(0.4) million, or $(0.01) per share, compared to a net income of $11.4 million, or $0.21 per share for the six months ended June 30, 2001. Net income for the 2001 period included special gains of $9.3 million relating primarily to the sale of Red-M shares, partially offset by a loss from associate Red-M of $1.5 million and a loss from discontinued operations of $2.5 million.
“We are pleased to report a return to profitability this quarter despite continuing difficult market conditions. Revenues, compared to last quarter, have remained relatively stable and we have continued to make good progress in our cost management efforts. This quarter, we again achieved improved gross margins and reduced operating costs compared to both the prior quarter and the second quarter of 2001. We also achieved excellent results in further reducing our inventories and in maintaining our days sales outstanding,” said Martin Malina, CEO, Madge Networks. “We have continued to add to our token ring product set and our new wireless product family offering is now available. Initial customer feedback from the wireless product road shows hosted in Europe and
1 For the purposes of presentation, the Company has indicated its fiscal quarters within the year as ending on the calendar month end, whereas, in fact, the Company operates on the basis of thirteen-week financial quarters. |
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America has been positive. We expect modest revenues from these new products in 2002.”
The Company ended the first quarter with $9.0 million in cash, of which $5.4 million was not restricted. The Company continues its focus on working capital management, highlighted by the drop in the level of short-term borrowings, reduced to $1.4 million from $3.2 million at December 31, 2001. The large majority of Madge.web liabilities have now been negotiated, and whilst exposure to these liabilities and the timing and amount of expected funding repayments could still materially impact liquidity, much of the uncertainty surrounding the financial outcome of the Madge.web administration has been removed.
ENDS
Conference Call
Investors will have the opportunity to listen to management’s discussion of its second quarter 2002 results in a conference call to be held on Thursday, August 1, 2002 at 8:30 a.m. (Eastern Time) over the Internet. To listen to the live call please go to our web site, www.madge.com, at least fifteen minutes early to register, download, and install any necessary audio software. A replay of the conference call will be available after 10.30 a.m. (Eastern Time) on August 1, 2002 for seven days by dialing 800-633-8284 (402-977-9140 for international callers), reservation #20781564, or by visiting our web site.
About Madge Networks N.V.
Madge Networks N.V. (NASDAQ: MADGF) is a global supplier of advanced networking product solutions to large enterprises, and is the market leader in Token Ring. Madge Networks is pioneering next generation networking solutions, which enable the painless deployment of Wireless and also 100Mbps and Gigabit speed IP-based applications within existing corporate networks while protecting customers’ investments in Token Ring. Madge Networks also has an associate company, Red-M™, a market leader in wireless networking solutions. Madge Networks’ main business centers are located in Wexham Springs, United Kingdom and New York. Information about Madge Networks’ complete range of products and services can be accessed at www.madge.com.
Private Securities Litigation Reform Act Statement
Investors should take note that certain statements in this press release are forward-looking and may not give full weight to all of the potential risks (e.g., the risk that there will be a continuing downturn in the market for Token Ring products and in the economy generally, the probability that the Company will not be repaid the full funding that it provided to the administrators, the possibility that the Company’s exposure to Madge.web liabilities could still materially impact the Company’s liquidity and the impact on the financial position of Madge Networks resulting from these and other factors, including the new wireless product family generating sufficient revenue). Forward-looking statements in this press release include statements that refer to the fact that the Company expects modest revenues from its new wireless products, there is still exposure to the Madge.web liabilities and the timing and amount of expected funding repayments from the Administrators of Madge.web is uncertain, of which each factor could still materially impact liquidity and other statements which are not completely historical. These statements may differ materially from actual future actions, events or results. For more information on risks, please refer to Madge Networks’ recent SEC filings.
Madge, the Madge logo and Red-M are trademarks, and in some jurisdictions may be registered trademarks of Madge Networks or its affiliated or associated companies. Other trademarks appearing in this release are those of their respective owners.
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Contact: Madge Networks, Wexham Springs, United Kingdom
Investor Relations
Rhonda Hainsworth, Investor Relations Manager
MADGE NETWORKS N.V.
UK tel: +44 1753 661 609 or US tel: +1 212 709 1007
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Madge Networks N.V.
Condensed Consolidated Balance Sheets2
(Unaudited)
(In thousands)
Jun. 30, | Dec. 31, | |||||||
2002 | 2001 | |||||||
Assets Current assets: | ||||||||
Cash, cash equivalents, and short-term investments3 | $ | 9,049 | $ | 14,958 | ||||
Accounts receivable, net | 3,425 | 3,719 | ||||||
Inventories | 3,284 | 4,540 | ||||||
Prepaid expenses and other current assets | 5,077 | 6,025 | ||||||
Current assets of discontinued operations | 1,252 | 1,590 | ||||||
Total current assets | 22,087 | 30,832 | ||||||
Property and equipment, net | 6,755 | 7,425 | ||||||
Intangible assets, net | 1,007 | 3,633 | ||||||
Investments of discontinued operations | 2,000 | 2,000 | ||||||
Fixed assets of discontinued operations | 2,208 | 2,208 | ||||||
Total assets | $ | 34,057 | $ | 46,098 | ||||
Liabilities and Shareholders’ Equity Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 17,690 | $ | 23,358 | ||||
Income taxes payable | 5,000 | 5,001 | ||||||
Short-term borrowings | 1,384 | 3,189 | ||||||
Short-term obligations | 288 | 559 | ||||||
Current liabilities of discontinued operations | 7,357 | 9,560 | ||||||
Total current liabilities | 31,719 | 41,667 | ||||||
Long-term obligations | 1,121 | 1,125 | ||||||
Long-term obligations of discontinued operations | 9,200 | 10,304 | ||||||
Total liabilities | 42,040 | 53,096 | ||||||
Shareholders’ deficit | (7,983 | ) | (6,998 | ) | ||||
Total liabilities and shareholders’ deficit | $ | 34,057 | $ | 46,098 | ||||
2 The condensed consolidated balance sheet includes our associate company, Red-M, accounted for under equity accounting principles. Madge.web is now accounted for as a discontinued operation. | ||
3 Cash includes a balance of $3.6M at June 30, 2002 and $6.4M at December 31, 2001 that had restricted use. |
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Madge Networks N.V.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands)
Group Results 4 | ||||||||||||||||
Three months | Six months | |||||||||||||||
ended | ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2002 | 2001 | 2002 | 2001 | |||||||||||||
Continuing Operations Net sales | $ | 9,504 | $ | 20,813 | 19,531 | $ | 44,177 | |||||||||
Cost of sales | 3,683 | 9,446 | 7,777 | 20,966 | ||||||||||||
Gross profit | 5,821 | 11,367 | 11,754 | 23,211 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales & marketing | 3,087 | 3,838 | 6,633 | 10,647 | ||||||||||||
Research & development | 568 | 197 | 1,203 | 3,032 | ||||||||||||
General and administrative | 1,872 | 3,017 | 3,806 | 4,228 | ||||||||||||
Special (gain) | — | (1,349 | ) | — | (1,349 | ) | ||||||||||
Total operating expenses | 5,527 | 5,703 | 11,642 | 16,558 | ||||||||||||
Income (loss) from continuing operations | 294 | 5,664 | 112 | 6,653 | ||||||||||||
Net interest income (expense) | (200 | ) | 157 | (491 | ) | 1,616 | ||||||||||
Gain on sale of investment in Red-M | — | 7,997 | — | 7,997 | ||||||||||||
Income (loss) from continuing operations before tax and share of associate loss | 94 | 13,818 | (379 | ) | 16,266 | |||||||||||
Income tax provision (benefit) | (23 | ) | 823 | 16 | 895 | |||||||||||
Income (loss) from continuing operations before share of associate loss | 117 | 12,995 | (395 | ) | 15,371 | |||||||||||
Associate loss | — | (1,499 | ) | — | (1,499 | ) | ||||||||||
Net income (loss) from continuing operations | $ | 117 | $ | 11,496 | $ | (395 | ) | $ | 13,872 | |||||||
Discontinued Operations Loss from discontinued operations | — | (2,508 | ) | — | (2,508 | ) | ||||||||||
Total net income (loss) from operations | $ | 117 | $ | 8,988 | $ | (395 | ) | $ | 11,364 | |||||||
Net income (loss) per share from continuing operations Basic and diluted | $ | 0.00 | $ | 0.22 | $ | (0.01 | ) | $ | 0.26 | |||||||
Net loss per share from discontinued operations Basic and diluted | — | $ | (0.05 | ) | — | $ | (0.05 | ) | ||||||||
Total net income (loss) per share Basic and diluted | $ | 0.00 | $ | 0.17 | $ | (0.01 | ) | $ | 0.21 | |||||||
Weighted Average Shares Outstanding Basic and diluted | 54,039 | 54,038 | 54,039 | 54,000 |
4 The group results include our associate company, Red-M, accounted for under equity accounting principles. Madge.web is now accounted for as a discontinued operation. |
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