Exhibit 99.1
CONTACT: |
|
|
Mike Zellner |
| Tyler Painter |
Wind River |
| Wind River |
Chief Financial Officer |
| Treasurer & Director, Investor Relations |
+1.510.749.2750 |
| +1.510.749.2551 |
mike.zellner@windriver.com |
| tyler.painter@windriver.com |
ALAMEDA, Calif., November 18, 2003— Wind River Systems, Inc. (Nasdaq: WIND), the worldwide market leader in embedded software and services, today reported its third quarter fiscal 2004 operating results for the period ended October 31, 2003. Total revenues for the third quarter were $49.6 million, a 2% decrease compared to revenues of $50.4 million in the second quarter of fiscal 2004, and a 15% decrease compared to revenues of $58.3 million in the third quarter of fiscal 2003.
“We are pleased with our progress, both financially and in terms of aligning our strategy with evolving market needs. The positive cash flow reported during the quarter is a major step in putting the company on a solid financial footing”, said Naren Gupta, interim president and chief executive officer. “We are excited about the strategic initiatives, marketing programs, and products that we are introducing to better serve our customers.”
Following the end of the quarter, the company announced the appointment of Kenneth R. Klein as chairman and chief executive officer, effective January 5, 2004. “Ken is a tremendous leader with a track record of successes in the software industry. The company will benefit greatly from his unparalleled leadership, vision, and operational excellence”, added Gupta.
“Last year at this time, Wind River put a stake in the ground and revolutionized the embedded market with the introduction of WIND RIVER PLATFORMS and our subscription based business model. With the introduction of our second generation PLATFORMS, Wind River continues to deliver on this strategy,” said Jerry Fiddler, co-founder and chairman of Wind River. “By embracing innovative technologies such as IPv6, IPsec, Linux, Web Services and WiFi, the company is helping our customers drive to a connected world where the enterprise, the desktop and device meet.”
In accordance with generally accepted accounting principles (GAAP), third quarter fiscal 2004 net loss was $6.9 million, compared to a net loss of $9.3 million for the second quarter of fiscal 2004 and $14.3 million for the third quarter of fiscal 2003. GAAP net loss per share was $0.09 for the third quarter of fiscal 2004, compared to a net loss of $0.12 per share for the second quarter of fiscal 2004 and $0.18 per share for the third quarter of fiscal 2003. Company guidance entering the quarter was for a GAAP net loss per share of $0.10 to $0.15.
Pro forma net loss for the third quarter of fiscal 2004 was $4.1 million, or a net loss of $0.05 per share, compared to a net loss of $4.1 million, or $0.05 per share in the second quarter of fiscal 2004 and a net loss of $7.4 million, or $0.09 per share, reported for the third quarter of fiscal 2003.
Wind River provides pro forma data as a useful alternative for understanding the company’s operating results and ongoing business trends. Pro forma data is not in accordance with, or an alternative for, GAAP and may be materially different from pro forma measures used by other companies. Pro forma net loss for the three and nine months ended October 31, 2003 and 2002 was computed by adjusting GAAP net loss to exclude amortization and impairment of purchased intangibles, restructuring and other charges, gains and losses on investments and technology, and stock compensation. Pro forma net loss for the three and nine months ended October 31, 2002, also assumes that a tax benefit from losses will be realized. Wind River provides a reconciliation of its GAAP and pro forma net loss for the three and nine months ended October 31, 2003 and 2002 on page four of this release.
Other Financial Highlights
• The company reported positive cash flow for the quarter with cash and cash equivalents and total investments, including restricted cash, up to $252.9 million at the end of the third quarter FY 2004 as compared to $249.6 million at the end of the second quarter FY 2004.
• Deferred Revenue increased to $33.7 million at the end of the third quarter FY 2004 as compared to $31.5 million at the end of the second quarter FY 2004.
• Days Sales Outstanding (DSOs) in accounts receivable at the end of the third quarter FY 2004 were 69 days.
“Our continued focus on growing the WIND RIVER PLATFORMS business and aggressively managing our costs had a very positive impact on our financial results for the quarter,” stated Mike Zellner, chief financial officer and senior vice president of finance and administration. “Momentum of our Platforms business was on target. The subscription nature of these licenses will improve visibility in future quarters.”
Outlook and Goals
The following statements are forward-looking and actual results may differ materially. Please consult the safe-harbor statement at the end of this press release for a description of certain risk factors and Wind River’s SEC reports for a complete description of risks. In response to SEC Regulation Fair Disclosure (Reg FD), the Company plans to disseminate its business outlook, based on current expectations, in conjunction with its quarterly earnings releases and conference calls. Wind River does not plan to provide any further material guidance on analysts’ financial models beyond the information provided in its quarterly earnings release and conference call.
Fourth Quarter Guidance:
• Wind River expects revenue for Q4 FY 2004 to be in the range of $50 million to $53 million.
• GAAP net loss per share for Q4 FY 2004 is expected to be 4¢ to 8¢ per share.
• Pro-forma net loss per share for Q4 FY 2004 is expected to be 2¢ to 6¢ per share.
• The Company expects cash flow from operations, excluding restructuring activities, to be positive for Q4 FY 2004.
Conference Call
Management will host a conference call at 2:00 p.m. Pacific Time on November 18, 2003 to discuss these results. You may listen to the conference call by dialing +1.800.399.5927 in the U.S. or +1.706.643.3427 internationally. You may also listen in live via our webcast at www.windriver.com. A replay of the conference call will be available after 5:00 p.m. Pacific on November 18, 2003 until 8:00 p.m. Pacific on November 25, 2003. You may listen to the replay of the conference call on the web or by dialing +1.800.642.1687 in the U.S. and +1.706.645.9291 internationally and entering the conference i.d. 3294106.
About Wind River
Wind River is the worldwide leader in embedded software and services. It provides market-specific embedded platforms that integrate real-time operating systems, development tools and technologies. Wind River’s products and professional services are used in multiple markets including aerospace and defense, automotive, digital consumer, industrial, and network infrastructure. Wind River provides high-integrity technology and expertise that enables its customers to create superior products more efficiently. Companies from around the world turn to Wind River to create the most reliable products and to accelerate their time to market.
Founded in 1981, Wind River is headquartered in Alameda, California, with operations worldwide. To learn more, visit Wind River at http://www.windriver.com.
Wind River Systems and the Wind River Systems logo are trademarks of Wind River Systems, Inc. WIND RIVER is a registered trademark of Wind River Systems, Inc. All other names mentioned are trademarks, registered trademarks or service marks of their respective companies.
This press release contains forward-looking statements, including those relating to expected revenue GAAP and Proforma Net, loss per share, operating cash flow levels for the fiscal quarter ending January 31, 2004 and for the fiscal year ending January 31, 2004, and the expected adoption rate of the Company’s new business model that involve risks and uncertainties that could cause actual results to differ materially from those contemplated herein. Factors that could cause or contribute to such differences include but are not limited to the continuing weakness in the economy generally, Wind River’s ability to align its costs with decreased revenue levels, the impact of competitive products and pricing, the success of the Company’s implementation of its new business model and the rate of its adoption, potential slow down in customer sales, the impact of charges for restructuring and other costs and other risk factors detailed in the Wind River’s Annual Report on Form 10-K for the fiscal year ended January 31, 2003, its Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission. Wind River undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
Wind River Systems, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
|
| Three months ended |
| Nine months ended |
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| 2003 |
| 2002 |
| 2003 |
| 2002 |
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Revenues, net: |
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Products |
| $ | 27,957 |
| $ | 36,317 |
| $ | 83,516 |
| $ | 122,051 |
|
Subscriptions |
| 5,995 |
| 1,002 |
| 12,640 |
| 1,294 |
| ||||
Services |
| 15,634 |
| 20,962 |
| 52,386 |
| 64,877 |
| ||||
Total revenues |
| 49,586 |
| 58,281 |
| 148,542 |
| 188,222 |
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Cost of revenues: |
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Products |
| 2,323 |
| 3,948 |
| 8,043 |
| 14,109 |
| ||||
Subscriptions |
| 1,551 |
| 116 |
| 3,538 |
| 147 |
| ||||
Services |
| 8,705 |
| 12,483 |
| 27,822 |
| 39,453 |
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Total cost of revenues |
| 12,579 |
| 16,547 |
| 39,403 |
| 53,709 |
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Gross profit |
| 37,007 |
| 41,734 |
| 109,139 |
| 134,513 |
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Operating expenses: |
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Selling and marketing |
| 20,937 |
| 27,431 |
| 65,055 |
| 93,993 |
| ||||
Product development and engineering |
| 13,790 |
| 18,049 |
| 42,222 |
| 56,463 |
| ||||
General and administrative |
| 6,181 |
| 8,749 |
| 20,091 |
| 26,430 |
| ||||
Amortization of purchased intangibles |
| 1,465 |
| 2,259 |
| 5,040 |
| 6,777 |
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Restructuring and other costs |
| 971 |
| — |
| 2,987 |
| 17,665 |
| ||||
Impairment of purchased intangibles |
| — |
| — |
| 1,400 |
| — |
| ||||
Total operating expenses |
| 43,344 |
| 56,488 |
| 136,795 |
| 201,328 |
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Loss from operations |
| (6,337 | ) | (14,754 | ) | (27,656 | ) | (66,815 | ) | ||||
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Other income (expense), net |
| 71 |
| 411 |
| 2,583 |
| (1,745 | ) | ||||
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Loss before provision for income taxes |
| (6,266 | ) | (14,343 | ) | (25,073 | ) | (68,560 | ) | ||||
Provision for income taxes |
| 667 |
| — |
| 1,911 |
| 775 |
| ||||
Net loss |
| (6,933 | ) | (14,343 | ) | (26,984 | ) | (69,335 | ) | ||||
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Net loss per share: |
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Basic and diluted |
| $ | (0.09 | ) | $ | (0.18 | ) | $ | (0.34 | ) | $ | (0.88 | ) |
Shares used in per share calculation: |
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Basic and diluted |
| 80,496 |
| 79,089 |
| 79,924 |
| 78,965 |
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Reconciliation to Pro Forma Net Loss |
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Net loss |
| $ | (6,933 | ) | $ | (14,343 | ) | $ | (26,984 | ) | $ | (69,335 | ) |
Amortization and impairment of purchased intangibles |
| 1,465 |
| 2,259 |
| 6,440 |
| 6,777 |
| ||||
Restructuring and other charges |
| 971 |
| — |
| 2,987 |
| 17,665 |
| ||||
Gains and losses on investments and technology |
| — |
| 408 |
| (616 | ) | 4,667 |
| ||||
Stock compensation |
| 428 |
| — |
| 640 |
| — |
| ||||
Benefit from income taxes |
| — |
| 4,262 |
| — |
| 15,175 |
| ||||
Pro forma net loss |
| $ | (4,069 | ) | $ | (7,414 | ) | $ | (17,533 | ) | $ | (25,051 | ) |
Pro forma net loss per share: |
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Basic and diluted |
| $ | (0.05 | ) | $ | (0.09 | ) | $ | (0.22 | ) | $ | (0.32 | ) |
Shares used in per share calculation: |
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Basic and diluted |
| 80,496 |
| 79,089 |
| 79,924 |
| 78,965 |
| ||||
Wind River Systems, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
|
| October 31, |
| January 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
| $ | 24,912 |
| $ | 31,938 |
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Short-term investments |
| 21,308 |
| 31,110 |
| ||
Accounts receivable, net |
| 37,419 |
| 42,129 |
| ||
Prepaid and other current assets |
| 9,692 |
| 11,763 |
| ||
Total current assets |
| 93,331 |
| 116,940 |
| ||
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Investments |
| 160,183 |
| 161,575 |
| ||
Property and equipment, net |
| 94,684 |
| 45,618 |
| ||
Intangibles, net |
| 88,100 |
| 94,376 |
| ||
Other assets |
| 9,861 |
| 11,645 |
| ||
Restricted cash |
| 46,504 |
| 60,300 |
| ||
Total assets |
| $ | 492,663 |
| $ | 490,454 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
| $ | 1,568 |
| $ | 2,063 |
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Accrued liabilities |
| 17,508 |
| 19,230 |
| ||
Accrued restructuring costs |
| 3,750 |
| 18,717 |
| ||
Accrued compensation |
| 16,406 |
| 15,264 |
| ||
Income taxes payable |
| 1,363 |
| 4,392 |
| ||
Deferred revenues |
| 33,707 |
| 28,863 |
| ||
Total current liabilities |
| 74,302 |
| 88,529 |
| ||
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Convertible subordinated debt |
| 150,000 |
| 150,000 |
| ||
Other long-term debt |
| 40,000 |
| — |
| ||
Total liabilities |
| 264,302 |
| 238,529 |
| ||
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Stockholders’ equity: |
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Common stock |
| 83 |
| 82 |
| ||
Additional paid-in-capital |
| 750,154 |
| 747,642 |
| ||
Loan to stockholder |
| (747 | ) | (2,006 | ) | ||
Treasury stock, at cost |
| (32,997 | ) | (34,185 | ) | ||
Accumulated other comprehensive loss |
| (638 | ) | 644 |
| ||
Accumulated deficit |
| (487,494 | ) | (460,252 | ) | ||
Total stockholders’ equity |
| 228,361 |
| 251,925 |
| ||
Total liabilities and stockholders’ equity |
| $ | 492,663 |
| $ | 490,454 |
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