SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended July 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 0-21342
WIND RIVER SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-2873391
(State of incorporation) (I.R.S. Employer Identification No.)
1010 ATLANTIC AVENUE, ALAMEDA, CALIFORNIA 94501
(Address of principal executive office)
(510) 748-4100
(Telephone number)
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 reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
------ -------
Indicate the number of shares outstanding of each of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock: 25,489,329 shares outstanding as of August 31, 1997
WIND RIVER SYSTEMS, INC.
FORM 10-Q
QUARTER ENDED JULY 31, 1997
INDEX
Part I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Income Statements for the three
and six month periods ended July 31, 1997 and
July 31, 1996
Consolidated Balance Sheets at July 31, 1997
and January 31, 1997
Consolidated Cash Flows Statements for the
six month periods ended July 31, 1997 and
July 31, 1996
Item 2. Management Discussion and Analysis of
Financial Condition and Results of Operations
Part II: OTHER INFORMATION
Item 4. Submission of Matters to the Vote of
Securityholders
Item 6. Exhibits and Reports on Form 8-K
Signature
2
WIND RIVER SYSTEMS, INC.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying financial information is unaudited but, in the opinion of
management, reflects all adjustments (which include only normally recurring
adjustments) necessary for a fair presentation of the results for the periods
shown. The unaudited consolidated financial statements and analyses should be
read in conjunction with the audited consolidated financial statements and notes
thereto for the year ended January 31, 1997 included in the Annual Report on
Form 10-K previously filed with the Securities and Exchange Commission.
The results for the three months and six months ended July 31, 1997, are not
necessarily indicative of the results to be expected for the entire year.
3
WIND RIVER SYSTEMS, INC.
CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------ -----------------------
JULY 31, JULY 31,
------------------------ -----------------------
1997 1996 1997 1996
---- ---- ---- ----
Revenues:
Products $ 15,926 $ 10,700 $ 29,183 $ 19,231
Services 6,074 4,300 11,217 8,369
- --------------------------------------------------------------------------------------------------------------
Total revenues 22,000 15,000 40,400 27,600
- --------------------------------------------------------------------------------------------------------------
Cost of revenues:
Products 1,601 1,246 3,007 2,335
Services 2,362 1,744 4,300 3,305
- --------------------------------------------------------------------------------------------------------------
Total cost of revenues 3,963 2,990 7,307 5,640
- --------------------------------------------------------------------------------------------------------------
Gross profit 18,037 12,010 33,093 21,960
- --------------------------------------------------------------------------------------------------------------
Operating expenses:
Sales and marketing 8,346 5,767 15,601 10,906
Product development 3,005 1,913 5,439 3,508
General and administrative 1,565 1,133 3,102 2,151
- --------------------------------------------------------------------------------------------------------------
Total operating expenses 12,916 8,813 24,142 16,565
- --------------------------------------------------------------------------------------------------------------
Operating income 5,121 3,197 8,951 5,395
- --------------------------------------------------------------------------------------------------------------
Other income (expense):
Interest income 890 255 1,698 445
Minority interest in consolidated subsidiary 36 (62) 8 (60)
- --------------------------------------------------------------------------------------------------------------
Total other income 926 193 1,706 385
- --------------------------------------------------------------------------------------------------------------
Income before income taxes 6,047 3,390 10,657 5,780
Provision for income taxes 2,177 1,300 3,837 2,220
- --------------------------------------------------------------------------------------------------------------
Net income $ 3,870 $ 2,090 $ 6,820 $ 3,560
- --------------------------------------------------------------------------------------------------------------
Net income per share $ 0.14 $ 0.08 $ 0.24 $ 0.15
- --------------------------------------------------------------------------------------------------------------
Weighted average common and common equivalent shares 28,373 24,728 28,174 24,385
- --------------------------------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
4
WIND RIVER SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
(UNAUDITED)
JULY 31, JANUARY 31,
1997 1997
---------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 150,153 $ 9,848
Short-term investments 20,641 46,895
Accounts receivable, net of allowances
of $1,164 and $1,204 12,544 13,296
Prepaid and other current assets 5,631 4,780
- -------------------------------------------------------------------------------------
Total current assets 188,969 74,819
Investments 70,692 43,004
Equipment and furniture, net of
accumulated depreciation of $8,924 and $7,328 11,521 8,426
Capitalized software costs, net of
accumulated amortization of $2,682 and $2,382 1,263 828
Deposits and other assets 7,228 1,584
- -------------------------------------------------------------------------------------
Total assets $ 279,673 $ 128,661
- -------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,204 $ 1,340
Accrued liabilities 6,269 5,530
Accrued compensation 4,449 4,391
Income taxes payable 3,408 1,941
Deferred revenue 11,423 6,271
- -------------------------------------------------------------------------------------
Total current liabilities 27,753 19,473
Long-term debt 140,000 -
Deferred rent 117 127
- -------------------------------------------------------------------------------------
Total liabilities 167,870 19,600
- -------------------------------------------------------------------------------------
Minority interest in consolidated subsidiary 304 312
- -------------------------------------------------------------------------------------
Stockholders' equity:
Common stock, par value $.001, 75,000
shares authorized, 25,802 and 25,382 shares
issued, and 25,489 and 25,269 shares outstanding 26 25
Additional paid in capital 92,112 89,890
Cumulative translation adjustments (630) (310)
Unrealized loss on securities (494) (353)
Retained earnings 29,438 22,618
Less treasury stock, 313 and 113 shares, at cost (8,953) (3,121)
- -------------------------------------------------------------------------------------
Total stockholders' equity 111,499 108,749
- -------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 279,673 $ 128,661
- -------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
5
WIND RIVER SYSTEMS, INC.
CONSOLIDATED CASH FLOWS STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
---------------------------
JULY 31,
---------------------------
1997 1996
---- ----
Cash flows from operating activities:
Net income $ 6,820 $ 3,560
Adjustments to reconcile net income to net cash
provided by operations:
Provision for doubtful accounts receivables (40) -
Depreciation and amortization 1,596 929
Amortization of capitalized software costs 300 313
Deferred rent (10) 12
Minority interest in consolidated subsidiary (8) 66
Change in assets and liabilities:
Accounts receivable 792 (1,310)
Prepaid and other assets (1,720) (369)
Accounts payable 864 (134)
Accrued liabilities 739 1,076
Accrued compensation 58 269
Income taxes payable 1,467 379
Deferred revenue 5,152 863
- --------------------------------------------------------------------------------------------
Net cash provided by operating activities 16,010 5,654
- --------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (4,691) (2,977)
Capitalized software costs (735) (360)
Investment sales 34,591 -
Investment purchases (36,166) (64,284)
- --------------------------------------------------------------------------------------------
Net cash used in investing activities (7,001) (67,621)
- --------------------------------------------------------------------------------------------
Cash flows from financing activities:
Common stock issuances 2,223 54,988
Treasury stock purchases (5,832) (3,929)
Sales of treasury stock - 9,532
Long-term debt issuance 135,225 -
- --------------------------------------------------------------------------------------------
Net cash provided by financing activities 131,616 60,591
- --------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (320) (345)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 140,305 (1,721)
- --------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period 9,848 9,205
- --------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 150,153 $ 7,484
- --------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
- --------------------------------------------------------------------------------------------
Cash paid for income taxes $ 2,987 $ 2,286
- --------------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
6
WIND RIVER SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 1997 AND 1996
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In accordance with the rules and regulations of the Securities and Exchange
Commission, the unaudited consolidated financial statements omit or condense
certain information and footnote disclosures normally required for complete
financial statements prepared in accordance with generally accepted accounting
principles.
2. EARNINGS PER SHARE
Earnings per share is computed under the treasury stock method using the
weighted average number of common shares and dilutive common stock equivalent
shares outstanding during the period. The 5% Convertible Subordinated Notes
(see Note 5) are not common stock equivalents and, therefore, have been excluded
from the computation of earnings per share. The 5% Convertible Subordinated
Notes presently have an anti-dilutive effect on the three-month and six-month
computations of fully diluted earnings per share.
3. COMMON STOCK TRANSACTIONS
On March 10, 1997, the Company effected a three-for-two stock split by means of
a stock dividend, to holders of the Company's Common Stock on February 24, 1997.
All share numbers and prices in this document have been retroactively adjusted
to give effect to the stock split.
The Company repurchased and held as treasury stock, 100,000 shares of common
stock at a cost of $2.3 million and 100,000 shares of common stock at a cost of
$3.6 million in the first and second quarters of fiscal year 1998, respectively.
4. RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement No.
128 (FAS 128), "Earnings per Share". The statement simplifies the standards for
computing earnings per share (EPS) previously found in APB Opinion No. 15,
"Earnings per Share", and makes them more comparable to international EPS
standards. The Standard replaces the presentation of primary EPS with a
presentation of basic EPS. It also requires dual presentation of basic and
diluted EPS on the face of the financial statements for all entities with
complex capital structures.
7
Basic EPS excludes dilution and is computed by dividing income available to
common stockholders by the weighted-average number of common shares outstanding
for the period. Diluted EPS is computed similarly to fully diluted EPS under
APB Opinion No. 15. FAS 128 must be adopted in connection with the Company's
annual financial statements for the year ending January 31, 1998. The following
table represents unaudited, pro forma disclosures of basic and diluted earnings
per share in accordance with FAS 128 assuming the standard was applied during
all periods presented below:
- --------------------------------------------------------------------------------
Three months ended Six months ended
- --------------------------------------------------------------------------------
July 31, July 31,
1997 1996 1997 1996
---- ----- ---- ----
Net income per common share, as reported $0.14 $0.08 $0.24 $0.15
Basic net income per common
share, pro forma $0.15 $0.10 $0.27 $0.17
Diluted net income
per common share, pro forma $0.14 $0.08 $0.24 $0.15
- --------------------------------------------------------------------------------
In June, 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130 (FAS 130), "Reporting
Comprehensive Income", and Statement of Financial Accounting Standards No.
131 (FAS 131), "Disclosures about Segments of an Enterprise and Related
Information". The adoption of both statements is required for fiscal years
beginning after December 15, 1997.
FAS 130 establishes standards of disclosure and financial statement display for
reporting total comprehensive income and its individual components. FAS 131
changes current practice under FAS 14, "Financial Reporting of Segments of a
Business Enterprise", by establishing a new framework on which to base segment
reporting (referred to as the management approach) and also requires interim
reporting of segment information.
The Company is studying the implications of these new statements and the impact
of their implementation on its consolidated financial statements.
8
5. LONG-TERM DEBT
In July 1997, the Company issued $140 million of 5.0% Convertible
Subordinated Notes (the "Notes"), due 2002. The Notes are subordinated to all
existing and future senior debt and, commencing 90 days following original
issuance, are convertible into shares of the Company's common stock at a
conversion price of $48.50 per share. The Notes are redeemable at the option
of the Company in whole or in part at any time on or after August 2, 2000 at
102% initially, and thereafter at prices declining to 100% at maturity, in
cash plus accrued interest. Each holder of these Notes has the right, subject
to certain conditions and restrictions, to require the Company to offer to
repurchase all outstanding Notes, in whole or in part, owned by such holder,
at specified repurchase prices plus accrued interest upon the occurrence
of certain events. The costs incurred in connection with the offering
of $4.8 million are included in the prepaid and other assets balance. These
costs are being amortized over the 5-year term of the Notes using the
straight-line method, which approximates the effective interest method.
Interest on the Notes began accruing July 31, 1997 and is payable semi-annually
on February 1 and August 1, commencing February 1, 1998.
9
WIND RIVER SYSTEMS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Except for the historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties. The
Company's actual results could differ materially from those discussed herein.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed below, as well as in the Company's Annual Report on
Form 10-K for the fiscal year ended January 31, 1997.
RESULTS OF OPERATIONS
REVENUES
Total revenues for the three and six months ended July 31, 1997 were $22.0
million and $40.4 million, respectively, compared to $15.0 million and $27.6
million for the same periods in fiscal 1997.
Revenue from the sale of products increased 49% and 52% to $15.9 million and
$29.2 million for the three-month and six-month periods in fiscal 1998, compared
to $10.7 million and $19.2 million for the same periods in fiscal 1997. These
increases were due primarily to the continued market acceptance of the Company's
flagship product, Tornado-TM- and increased sales to the telecommunication and
computer equipment manufacturing industries.
Service revenues for the three and six months ended July 31, 1997 increased $1.8
million and $2.8 million, respectively, representing increases of 41% and 34%,
respectively, over the comparable periods in fiscal 1997. Increases in service
revenues were due to an increased number of customers requiring consulting and
custom software design services. In addition, increased sales of the
Tornado-TM- software development environment has generated additional revenue
from maintenance support agreements.
COSTS OF REVENUES
The overall cost of products and services as a percentage of total revenues
decreased to 18% in both the three months and six months ended July 31, 1997,
from 20% in the same periods in fiscal 1997. Product-related cost of sales
decreased as a percentage of product revenues to 10% in both the three-month and
six-month periods of fiscal 1998 from 12% in the same periods of fiscal 1997.
These decreases were due to
10
increases in sales of products which did not carry royalty costs.
Service-related cost of revenues decreased as a percentage of service
revenues to 39% and 38% for the three-month and six-month periods fiscal
1998, respectively, from 41% and 39% in the same periods in fiscal 1997,
respectively. Although the cost of services revenues as a percentage of total
revenues was slightly lower than in the three and six month periods of the
prior fiscal year, the Company believes it will be necessary to make
significant investments in support-related services for its customers in the
future. Accordingly, the Company expects such percentage may increase as a
result of these increased investments.
OPERATING EXPENSES
Sales and marketing expenses remained steady as a percentage of total revenues
at 38% in the second quarters of fiscal years 1998 and 1997. The same expenses
decreased as a percentage of total revenues to 39% in the first six months of
fiscal 1998, compared to 40% in the same period of fiscal 1997. In overall
dollars, sales and marketing expenses increased $2.6 million and $4.7 million,
or 45% and 43%, in the three-month and six-month periods of fiscal 1998,
respectively, over comparable periods in the prior fiscal year. The growth in
total revenues continued to increase at a faster rate than sales and marketing
costs in both the three-month and six-month periods of fiscal year 1998. The
increase in overall dollars resulted primarily from increases in sales personnel
and increases in expenses related to marketing and advertising programs.
Management expects to continue investing heavily in sales and marketing over the
current year to expand its customer base and introduce new products.
Product development expenses, which consist primarily of personnel costs,
increased to 14% of total revenues for the second quarter of fiscal 1998, from
13% for the same period in fiscal 1997. The percentage of total revenues for
the first six months of fiscal years 1998 and 1997 remained steady at 13%. In
overall dollars, product development expenses increased $1.1 million and $1.9
million, or 57% and 55%, for the second quarter and first six months of in
fiscal 1998, respectively, over the comparable periods in fiscal 1997. The
Company believes it will continue to be necessary to make significant
investments in product development for the foreseeable future.
General and administrative expenses decreased to 7% of total revenues for the
second quarter of in fiscal 1998 from 8% for the same period in fiscal 1997.
The percentage of total revenues for the first six months of in both fiscal
years 1998 and 1997 remained steady at 8%. In overall dollars, these expenses
increased $432,000 and $951,000 for the three-month and six-month periods in
fiscal 1998, respectively, compared to the same periods in fiscal 1997. This
increase was primarily due to the growth in worldwide staff and infrastructure
investments in the areas of information systems, finance and administration.
11
The effective tax rate in both the second quarter and first six months of fiscal
1998 decreased to 36% from 38% in the same periods of fiscal 1997. The
provision for income taxes is an estimate based on the Company's anticipated
effective tax rate at the end of the fiscal year. The decrease in the effective
tax rate between the first quarters of fiscal 1998 and 1997 was due to increased
income from tax-free investment instruments.
RISK FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS
The Company typically charges a one-time fee for a development license and a
run-time license fee for each copy of the Company's operating system embedded in
the customer's product. A key component of the Company's strategy is to
increase revenue through run-time license fees. Any increase in the percentage
of revenues attributable to run-time licenses will depend on the Company's
successful negotiation of run-time license agreements and on the successful
commercialization by the Company's customers of the underlying products. In
addition, the Company has experienced significant period-to-period fluctuations
in revenues and operating results and anticipates that such fluctuations will
continue. These fluctuations have been caused by a number of factors, including
customer buying patterns, product development cycles, delays in shipments of new
products and the timing of significant sales of the Company's products.
In connection with the sale of Convertible Subordinated Notes, the Company
incurred $140 million in debt which resulted in an increase in its ratio of
long-term debt to total capitalization. As a result of this additional
indebtedness, the Company's principal and interest obligations have increased
substantially. The degree to which the Company will be leveraged could
materially and adversely affect the Company's ability to obtain financing for
working capital, acquisitions or other purposes and could make it more
vulnerable to industry downturns and competitive pressures. The Company's
ability to meet its debt service obligations will be dependent upon the
Company's future performance, which will be subject to financial, business and
other factors affecting operations of the Company, many of which are beyond its
control.
Due to the foregoing factors, the Company believes that period-to-period
comparisons of its results of operations may not be meaningful and should not be
relied upon as an indication of future performance. It is likely that, in some
future quarters, the Company's operating results will be below the expectations
of stock market analysts and investors. In such event, the price of the
Company's Common Stock would likely be materially adversely affected.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement No.
128 (FAS 128), "Earnings per Share". The statement simplifies the standards for
12
computing earnings per share (EPS) previously found in APB Opinion No. 15,
"Earnings per Share", and makes them more comparable to international EPS
standards. The Standard replaces the presentation of primary EPS with a
presentation of basic EPS. It also requires dual presentation of basic and
diluted EPS on the face of the financial statements for all entities with
complex capital structures. Basic EPS excludes dilution and is computed by
dividing income available to common stockholders by the weighted-average number
of common shares outstanding for the period. Diluted EPS is computed similarly
to fully diluted EPS under APB Opinion No. 15. FAS 128 must be adopted in
connection with the Company's annual financial statements for the year ending
January 31, 1998.
The following table represents unaudited, pro forma disclosures of basic and
diluted earnings per share in accordance with FAS 128 assuming the standard was
applied during all periods presented below:
- --------------------------------------------------------------------------------
Three months ended Six months ended
- --------------------------------------------------------------------------------
July 31, July 31,
1997 1996 1997 1996
---- ---- ---- ----
Net income per common share, as reported $0.14 $0.08 $0.24 $0.15
Basic net income per common $0.15 $0.10 $0.27 $0.17
share, pro forma
Diluted net income per common $0.14 $0.08 $0.24 $0.15
share, pro forma
- --------------------------------------------------------------------------------
In June, 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130 (FAS 130), "Reporting
Comprehensive Income", and Statement of Financial Accounting Standards No.
131 (FAS 131), "Disclosures about Segments of an Enterprise and Related
Information". The adoption of both statements is required for fiscal years
beginning after December 15, 1997.
FAS 130 establishes standards of disclosure and financial statement display for
reporting total comprehensive income and its individual components. FAS 131
changes current practice under FAS 14, "Financial Reporting of Segments of a
Business Enterprise", by establishing a new framework on which to base segment
reporting (referred to as the management approach) and also requires interim
reporting of segment information.
13
The Company is studying the implications of these new statements and the impact
of their implementation on its consolidated financial statements.
LIQUIDITY AND CAPITAL RESOURCES
At July 31, 1997, the Company had working capital in excess of $161 million, and
approximately $171 million in cash and short-term investments. The Company also
had long-term investments in excess of $70 million.
Net cash provided by operating activities in the first six months of fiscal
years 1998 and 1997 totaled $11.1 million and $5.7 million, respectively. In the
first six months of fiscal 1998, net income, depreciation and amortization, and
changes in accounts receivable, accounts payable, accrued liabilities, accrued
taxes payable, and deferred revenue were partially offset by the change in
prepaid and other assets. Deferred revenues increased because of the increases
in maintenance agreement sales and in prepaid distributor purchase commitments.
The increase in prepaid and other assets was due primarily to escrow deposits
and prepaid costs for land acquisition. Income tax payable increased due to
increased operating income. In the same period of fiscal 1997, net income,
depreciation and amortization, and changes in accrued liabilities and deferred
revenue were partially offset by a change in accounts receivable.
Net cash used in investing activities in the first six months of fiscal years
1998 and 1997 totaled $6.9 million and $67.6 million, respectively. In the first
six months of fiscal 1998, uses of cash in capital expenditures, capitalized
software costs, and purchases of security investments were partially offset by
cash provided from the sales of security investments. In the same period of
fiscal 1997, uses of cash were from purchases of security investments, capital
expenditures and capitalized software cost. Capital expenditures were $4.7
million in the first six months of fiscal 1998 compared to $3.0 million in the
same period of fiscal 1997. The Company will continue to invest in capital
equipment to support its anticipated revenue growth.
Net cash provided by financing activities in the first six months of fiscal
years 1998 and 1997 totaled $136.4 million and $60.6 million, respectively. In
July 1997, the Company sold $140 million of 5% Convertible Subordinated Notes
due 2002, realizing $ 135.2 million in proceeds after deducting offering
expenses. The Notes are convertible into common stock at a price of $48.50 per
share. In the first six months of fiscal 1998, the Company also repurchased and
held as treasury stock 200,000 shares of common stock at a cost of $5.8 million.
The purchases of treasury stock were partially offset by the issuance of common
stock for employee stock option exercises and for the employee stock purchase
program in the first six-month period of fiscal year 1998. In the same period of
fiscal 1997, the sale of treasury stock and issuance of common stock as part of
a public offering were partially offset by the repurchase of common shares, held
as treasury stock.
On March 10, 1997, the Company effected a three-for-two stock split by means of
a
14
stock dividend to all holders of the Company's Common Stock on February 24,
1997. All share numbers and prices in this document have been retroactively
adjusted to give effect to the stock split.
During the quarter, the Company negotiated an option to purchase real property
in the City of Alameda, California. The property is currently undeveloped land
that can be developed for future expansion of customer support, engineering and
administrative operations. If the option is exercised, the Company will use
existing liquid resources to fund the purchase. On September 12, 1997, the
Company executed agreements providing for the construction financing and lease
of planned improvements in the event the option to purchase the land is
exercised.
Management believes that the Company's working capital and the cash flow
generated from operations are sufficient to meet its working capital
requirements for planned expansion, product development and capital expenditures
through fiscal 1998.
15
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO THE VOTE OF SECURITY HOLDERS
At the Annual meeting of Stockholders held July 24, 1997, the stockholders
elected directors of the Company with the following nominees receiving the votes
indicated:
Name For Withheld
- ---- --- --------
Jerry L. Fiddler 25,163,599 87,125
Ronald A. Abelmann 25,163,749 86,975
David Wilner 25,163,749 86,975
William B. Elmore 25,163,749 86,975
David B. Pratt 25,163,749 86,975
The stockholders ratified the selection of Price Waterhouse LLP as independent
accountants of the Company for its fiscal year ending January 31, 1998 by a vote
of 25,229,827 for, 7,945 against, and 12,952 abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
10.16 Indenture between the Company and Deutschebank AG as
Trustee, dated as of July 31, 1997.
10.17 Convertible Subordinated Notes Purchase Agreement between
the Registrant and Deutsche Morgan Grenfell Inc., Hambrecht
& Quist LLC, and Wessels, Arnold & Henderson, L.L.C., dated
as of July 31, 1997.
10.18 Registration Rights Agreement between the Registrant and
Deutsche Morgan Grenfell Inc., Hambrecht & Quist LLC and
Wessels, Arnold & Henderson, L.L.C., dated as of July 31,
1997.
11 Computation of Earnings per Share
27 Financial Data Schedule
16
(b) Reports on form 8-K
(i) The Company filed a report on Form 8-K, dated July
17, 1997, with respect to an announcement of a
private placement of Convertible Subordinated
Notes.
(ii) The Company filed a report on Form 8-K, dated July
22, 1997, reporting the pricing of its Convertible
Subordinated Notes.
(iii) The Company filed a report on Form 8-K, dated July
31, 1997, reporting the sale of $23,330,000
aggregate principal amount of 5% Convertible
Subordinated Notes pursuant to Regulation S under
the Securities Act.
No other items.
SIGNATURE
Pursuant to the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto authorized.
WIND RIVER SYSTEMS, INC.
Date: September 15, 1997 RICHARD W. KRABER
----------------------------
Richard W. Kraber
Chief Financial Officer
17
Exhibit Index
Exhibit No. Exhibit Name
- ----------- ------------
10.16 Indenture between the Company and Deutschebank AG as Trustee,
dated as of July 31, 1997.
10.17 Convertible Subordinated Notes Purchase Agreement between the
Registrant and Deutsche Morgan Grenfell Inc., Hambrecht & Quist
LLC, and Wessels, Arnold & Henderson, L.L.C., dated as of July
31, 1997.
10.18 Registration Rights Agreement between the Registrant and Deutsche
Morgan Grenfell Inc., Hambrecht & Quist LLC and Wessels, Arnold &
Henderson, L.L.C., dated as of July 31, 1997.
11 Computation of Earnings per Share
27 Financial Data Schedule