SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended Commission File Number:
March 31, 2001 0-22065
RADIANT SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Georgia 11-2749765
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3925 Brookside Parkway, Alpharetta, Georgia 30022
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (770) 576-6000
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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
----- -----
The number of the registrant's shares outstanding as of May 8, 2001 was
27,739,077.
1
RADIANT SYSTEMS, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION PAGE NO.
Item 1: Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2001
(unaudited) and December 31, 2000 (audited) 3
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 2001 and 2000 (unaudited) 4
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2001 and 2000 (unaudited) 5
Notes to Condensed Consolidated Financial Statements
(unaudited) 6-8
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations 9-14
Item 3: Quantitative and Qualitative Disclosures About Market Risks 14
PART II: OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K 15
Signatures 15
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- -----------------------------
RADIANT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 31, December 31,
2001 2000
---------- ------------
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 46,332 $ 49,560
Accounts receivable, net 22,937 22,302
Inventories 16,507 17,172
Other short-term assets 4,408 4,722
-------- --------
Total current assets 90,184 93,756
Property and equipment, net 13,793 14,092
Software development costs, net 10,894 9,358
Other long-term assets 13,486 14,055
-------- --------
$128,357 $131,261
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 12,623 $ 16,486
Client deposits and unearned revenue 8,571 6,388
-------- --------
Total current liabilities 21,194 22,874
Shareholders' equity
Common stock, no par value; 100,000,000 shares authorized;
27,687,919 and 27,647,830 shares issued and outstanding 0 0
Additional paid-in capital 114,944 116,543
Accumulated deficit (7,781) (8,156)
-------- --------
Total shareholders' equity 107,163 108,387
-------- --------
$128,357 $131,261
======== ========
The accompanying notes are an integral part of these
condensed consolidated financial statements
3
RADIANT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Unaudited
For the three months ended
March 31,
2001 2000
---------- ----------
Revenues:
System sales $20,499 $21,130
Client support, maintenance and other services 13,498 11,286
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Total revenues 33,997 32,416
Cost of revenues:
System sales 10,496 9,989
Client support, maintenance and other services 8,983 8,712
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Total cost of revenues 19,479 18,701
------- -------
Gross profit 14,518 13,715
Operating Expenses:
Product development 2,454 2,191
Sales and marketing 4,715 2,901
Depreciation and amortization 2,324 1,605
Non-recurring charges 1,023 --
General and administrative 3,998 3,379
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Income from operations 4 3,639
Interest income, net 573 707
------- -------
Income before income tax and extraordinary item 577 4,346
Income tax provision 202 1,734
------- -------
Income before extraordinary item 375 2,612
Extraordinary item:
Gain on early extinguishment of debt, net of taxes -- 1,520
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Net income $ 375 $ 4,132
======= =======
Basic income per share:
Income before extraordinary item $ 0.01 $ 0.10
Extraordinary income on early extinguishment of debt -- 0.06
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Total basic income per share $ 0.01 0.16
======= =======
Diluted income per share:
Income before extraordinary item $ 0.01 $ 0.09
Extraordinary income on early extinguishment of debt -- 0.05
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Total diluted income per share $ 0.01 $ 0.14
======= =======
Weighted average shares outstanding:
Basic 27,674 26,438
Diluted 29,442 29,711
======= =======
The accompanying notes are an integral part of these
condensed consolidated financial statements
4
RADIANT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Unaudited
For the three months ended
March 31,
2001 2000
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 375 $ 4,132
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Gain on early extinguishment of debt -- (1,518)
Amortization of deferred compensation 17 13
Depreciation and amortization 3,183 2,075
Imputed interest on shareholder note -- 57
Changes in assets and liabilities:
Accounts receivable (635) (2,310)
Inventories 665 164
Other assets 399 1,083
Accounts payable and accrued liabilities (3,863) (3,736)
Client deposits and deferred revenue 2,183 (1,491)
------- -------
Net cash provided by (used in) operating activities 2,324 (1,531)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,869) (4,333)
Capitalized software development costs (2,067) (997)
------- -------
Net cash used in investing activities (3,936) (5,330)
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of employee stock options 428 1,325
Repurchase of common stock (2,044) --
Issuance of common stock -- 10,000
Principal payments under long-term debt -- (304)
------- -------
Net cash (used in) provided by financing activities (1,616) 11,021
------- -------
(Decrease) increase in cash and cash equivalents (3,228) 4,160
Cash and cash equivalents at beginning of year 49,560 53,435
------- -------
Cash and cash equivalents at end of period $46,332 $57,595
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ -- $ --
------- -------
Income taxes $ 80 $ 30
======= =======
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles applicable
to interim financial statements. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of Radiant Systems, Inc. (the
"Company") management, these condensed consolidated financial statements contain
all adjustments (which comprise only normal and recurring accruals) necessary
for fair presentation of the consolidated financial condition and results of
operations for these periods. The interim results for the three months ended
March 31, 2001 are not necessarily indicative of the results to be expected for
the full year. These statements should be read in conjunction with the Company's
consolidated financial statements as filed in its Annual Report on Form 10-K for
the year ended December 31, 2000.
2. Net Income Per Share
Basic net income per common share is computed by dividing net income by the
weighted-average number of shares outstanding. Diluted net income per share
includes the dilutive effect of stock options.
A reconciliation of the weighted average number of common shares outstanding
assuming dilution is as follows (in thousands):
For the three months ended
March 31,
--------------------------
2001 2000
------- ------
Average common shares outstanding 27,674 26,438
Dilutive effect of outstanding stock options 1,768 3,273
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Average common shares outstanding assuming dilution 29,442 29,711
====== ======
For the quarters ended March 31, 2001 and 2000, options with an antidilutive
impact of approximately 648,000 and 4,000, respectively, shares of common stock
were excluded from the above reconciliation.
3. Segment Reporting Data
Prior to January 1, 2000 the Company operated through two primary reportable
segments (i) Global Solutions and (ii) Regional Solutions. Effective January 1,
2000, the Company restructured its business units and as a result, currently
operates under one segment, providing enterprise technology solutions to
businesses that serve the consumer. To date, the Company's product
applications have been focused primarily on the petroleum, convenience and
automotive markets; the cinema and entertainment market; and the hospitality and
food service market, as these markets require many of the same product features
and functionality. Revenues from these markets for the quarters ended March 31,
2001 and 2000 are as follows (in thousands):
6
2001 2000
------- -------
Petroleum, convenience and automotive $16,910 $16,656
Cinema and entertainment 6,324 7,900
Hospitality and food service 10,511 7,860
Other 252 --
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Total revenues $33,997 $32,416
======= =======
The Company distributes it's technology both within the United States and
internationally. During the first quarter ended March 31, 2001 and 2000,
international sales as a percentage of total revenues were 5.5% and 5.1%,
respectively.
4. Significant Events
On March 30, 2000 the Company and the former sole shareholder of RapidFire
reached an agreement whereby the Company paid to the former shareholder $200,000
and forgave a $1.5 million note receivable, and in return, was relieved in full
of its indebtedness to the shareholder. This indebtedness consisted of a
noninterest-bearing note with a lump-sum payment of $6.0 million due October 31,
2005 ($4.3 million at December 31, 1999) and was issued October 31, 1997 as part
of the Company's acquisition of RapidFire. As a result of this early
extinguishment of debt, the Company recorded an extraordinary gain of
approximately $1.5 million, net of tax, during the first quarter ended March 31,
2000.
On January 23 and 26, 2001, respectively, the Company announced the permanent
closure of its facilities in Hillsboro, Oregon and Pleasanton, California. The
decision was made to reduce costs and consolidate operations at the Company's
headquarters in Alpharetta, Georgia. The Hillsboro office had served primarily
as a sales office for the Company's small business food products, while the
Pleasanton office had served primarily as a sales office for hospitality and
food service products. The office closure costs related to these two offices are
comprised primarily of severance benefits and lease reserves. As part of the
closings, the Company terminated 25 of the 34 employees. As a result, the
Company recorded a non-recurring charge of approximately $1.0 million associated
with this action during its first quarter 2001. The Company paid one-time
severance benefits to all terminated employees in the aggregate amount of
approximately $200,000 during the first quarter 2001. The Company expects the
remaining severance benefits, lease and other exit costs to be paid by the end
of the first quarter 2002.
On March 3, 2000, the Company entered into an agreement with America Online,
Inc. and Moviefone, Inc. (collectively "AOL"), whereby AOL agreed, among other
items, to invest $25.0 million in a to-be-formed subsidiary of the Company to
engage in consumer interactive businesses other than in the entertainment
industry (e.g., interactive fuel and dispenser business and interactive
restaurant self-ordering business), with any amount not invested by AOL to be
callable by the Company into common shares of the Company. On March 19, 2001,
the Company and AOL amended this strategic relationship. Based on the new
agreement, the Company's theater exhibition point-of-sale and management systems
solution will become AOL Moviefone's preferred offering in the cinema and
entertainment industry. In addition, the Company will support AOL Moviefone
clients operating the MARS point of sale product. Additionally, both companies
have agreed not to pursue forming a subsidiary to address potential
7
business-to-consumer applications over the Internet. Alternatively, AOL, as part
of the amended agreement, has agreed to fund an amount of money to enable
current MARS clients to upgrade to the Company's systems and for the Company to
perform certain professional services for AOL and certain MARS' clients.
On April 23, 2001, the Company announced a definitive agreement to acquire
Breeze Software Proprietary Limited, a leading provider of software applications
for retailers in the Australian and Asia-Pacific marketplaces. The transaction
included the purchase of all the issued and outstanding capital stock of Breeze,
and was closed May 9, 2001.
5. Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (FAS 133). This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. The
Company adopted FAS 133 effective January 1, 2001. The adoption did not have a
material impact on the Company's results of operations.
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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Overview
The Company derives its revenues primarily from the sale of integrated systems,
including software, hardware and related support and professional services. As
discussed below, during the second quarter of 2000, the Company announced and
began offering these products pursuant to a new subscription-based pricing
model. In addition, the Company offers implementation and integration services
which are billed on a per diem basis. The Company's revenues from its various
technology solutions are, for the most part, dependent on the number of
installed sites for a client. Accordingly, while the typical sale is the result
of a long, complex process, the Company's clients usually continue installing
additional sites over an extended period of time. Revenues from software and
systems sales are recognized as products are shipped, provided that collection
is probable and no significant post shipment vendor obligations remain. Revenues
from client support, maintenance and other services are generally recognized as
the service is performed.
In 1999, the Company began developing its new generation of management systems
products -- WAVE. This product architecture is designed to combine and expand
the functionality of its Site Management Systems and Headquarter-Based
Management Systems. The Company's architecture and platforms for these products
are entirely web-based, which the Company believes will enable it to increase
the functionality while decreasing the costs of implementing and maintaining
technology solutions for retailers. Management believes that these products will
strengthen its product offerings by providing integrated, end-to-end solutions
that span from the consumer to the supply chain.
The Company intends to offer its WAVE software primarily through the application
service provider, or "ASP," delivery model. In the ASP delivery model, the
Company would remotely host applications from an off-site central server that
users can access over dedicated lines, virtual private networks or the Internet.
Additionally, the Company plans to offer the product through installations
directly in client locations as "client-hosted" systems. The Company also
intends to offer Internet solutions that will allow clients to utilize the
Internet to enhance site management and conduct business-to-business e-commerce.
9
In connection with its strategy to develop ASP-delivered products, in April 2000
the Company began converting certain new and existing products to a
subscription-based pricing model. Under this subscription-pricing model,
clients will pay a fixed, monthly fee for use of WAVE and the necessary hosting
services to utilize those applications and solutions. This represents a change
in the Company's historical pricing model in which clients were charged an
initial licensing fee for use of the Company's products and continuing
maintenance and support during the license period. The Company began offering
its products and services on the subscription-pricing model in the second
quarter of 2000. The Company will initially continue to derive a majority of
its revenue from its traditional sales model of one-time software license
revenues, hardware sales and software maintenance and support fees that will be
paid by existing clients. However, as a result of the transition to the
subscription-pricing model and the decline of revenues from legacy site
management and headquarters solutions, the Company expects to see a decline in
the one-time revenues from software license fees and hardware sales, replaced
over time by monthly subscription fees. In addition, the Company expects
revenue from maintenance and support from existing clients to decline and to be
replaced by subscription fees as existing clients convert to the subscription-
pricing model. Although the Company's subscription-based revenues to date have
been immaterial to total revenues; the Company expects the percentage of revenue
that is recurring in nature to increase substantially as a result of the change
to a subscription-pricing model.
This change in the Company's product strategy to develop and offer ASP-delivered
and Internet solutions and the transition to a subscription-pricing model
involve certain risks and assumptions. There can be no assurance that the
Company will successfully implement these changes in its organization, product
strategy or pricing model or that the changes will not have a material adverse
effect on the Company's business, financial condition or results of operations.
On April 1, 2000 the Company effected a 3-for-2 stock split. All historical
share data and weighted average shares have been restated to account for this
split.
Results of Operations
Three months ended March 31, 2001 compared to three months ended March 31, 2000
System Sales. The Company derives the majority of its revenues from sales and
licensing fees for its headquarters, back office management and point of sale
solutions. Systems sales decreased 3.0% to $20.5 million for the quarter ended
March 31, 2001 (the "first quarter 2001"), compared to $21.1 million for the
quarter ended March 31, 2000 (the "first quarter 2000"). This decrease was
primarily the result of the Company's strategy to convert certain new and
existing products and clients to the subscription-pricing model, as well as
declining sales to entertainment industry clients as a result of financial
difficulties being experienced by these clients.
Client Support, Maintenance and Other Services. The Company also derives
revenues from client support, maintenance and other services, which increased
19.6% to $13.5 million for the first quarter 2001, compared to $11.3 million for
the first quarter 2000. This increase was due to increased support, maintenance
and services revenues within existing markets, resulting from an increased
installed base. Additionally, increased client demand for professional services
such as training, custom software development, project management and
implementation services contributed to these increases.
Cost of Systems Sales. Cost of systems sales consists primarily of hardware and
peripherals for site-based systems and labor. These costs are expensed as
products are shipped. Cost of system sales increased 5.1% to $10.5 million for
the first quarter 2001, compared to $10.0 million for the first quarter 2000.
10
Additionally, cost of systems sales as a percentage of systems revenues
increased to 51.2% from 47.3%. These increases were due primarily to lower
hardware margins in the first quarter 2001 as a result of product sales mix.
Additionally, amortization of capitalized software development costs increased
13.1% to $531,000 for the first quarter 2001, compared to $470,000 during the
first quarter 2000.
Cost of Client Support, Maintenance and Other Services. Cost of client support,
maintenance and other services consists primarily of personnel and other costs
associated with the Company's services operations. Cost of client support,
maintenance and other services increased 3.1% to $9.0 million for the first
quarter 2001 from $8.7 million for the first quarter 2000. The increase was due
primarily to the Company's expansion of its professional service offerings and
the related increase in wages associated with this effort. Cost of client
support, maintenance and other services as a percentage of client support,
maintenance and other services revenues decreased to 66.6% from 77.2%, due to
increased efficiencies and staff utilization as well as the creation of a new
Client Management Services group on January 1, 2001. In order to provide its
clients improved service levels as well as provide more leverage to its sales
people, certain resources previously included in costs of client support,
maintenance and other services were reallocated to a new account management and
client logistics function within the sales and marketing group. As a result of
this change in their responsibility, approximately 44 people, or approximately
$900,000 of expense, are included in sales and marketing expenses for the first
quarter 2001.
Product Development Expenses. Product development expenses consist primarily of
wages and materials expended on product development efforts. Product
development expenses increased 12.0% to $2.5 million for the first quarter 2001,
compared to $2.2 million for the first quarter 2000. This increase was due
primarily to new hires during the first quarter 2001 over the same period a year
ago offset by higher capitalization of software costs associated with the
Company's development of its WAVE and Lighthouse generation of products. In the
first quarter 2001, software development costs of $2.1 million, or 45.7% of its
total product development costs were capitalized by the Company as compared to
$1.0 million, or 31.3% of its total product development costs for the first
quarter 2000. Product development expenses as a percentage of total revenues
increased to 7.2% from 6.8%, as product development expenses increased at a
faster pace than total revenues.
Sales and Marketing Expenses. Sales and marketing expenses increased 62.5% to
$4.7 million for the first quarter 2001, compared to $2.9 million for the first
quarter 2000. This increase was due to primarily to the creation of the new
Client Management Services group on January 1, 2001 and associated costs
previously included in cost of client support, maintenance and other services as
noted above. As a result of this change in their responsibility, approximately
44 people, or approximately $900,000 of expense, are included in sales and
marketing expenses for the first quarter 2001. Sales and marketing expenses as
a percentage of total revenues increased to 13.9% from 8.9% as sales and
marketing expenses grew at a faster pace than total revenues.
Depreciation and Amortization. Depreciation and amortization expenses increased
44.8% to $2.3 million for the first quarter 2001, compared to $1.6 million for
the first quarter 2000. This increase resulted from an increase in computer
equipment, leasehold improvements and other assets required to support an
increased number of employees and expansion of the Company's headquarters in
Alpharetta, Georgia as well as amortization of intangible assets associated with
the Company's acquisition of TimeCorp, a workforce management and planning
software business operation owned by Verifone, Inc., a subsidiary of Hewlett-
Packard, Inc., in the second quarter ended June 30, 2000. Depreciation and
amortization as a percentage of total revenues increased to 6.8% from 5.0%
during the period, as these costs increased as a pace higher than total
revenues.
11
Non-recurring charges. On January 23 and 26, 2001, respectively, the Company
announced the permanent closure of its facilities in Hillsboro, Oregon and
Pleasanton, California. The decision was made to reduce costs and consolidate
operations at the Company's headquarters in Alpharetta, Georgia. The Hillsboro
office had served primarily as a sales office for the Company's small business
food products, while the Pleasanton office had served primarily as a sales
office for hospitality and food service products. The office closure costs
related to these two offices are comprised primarily of severance benefits and
lease reserves. As part of the closings, the Company terminated 25 of the 34
employees. As a result, the Company recorded a non-recurring charge of
approximately $1.0 million associated with this action during the first quarter
2001. The Company paid one-time severance benefits to all terminated employees
in the aggregate amount of approximately $200,000 during the first quarter of
2001. No such item was recorded in the first quarter 2000.
General and Administrative Expenses. General and administrative expenses
increased 18.3% to $4.0 million for the first quarter 2001, compared to $3.4
million for the first quarter 2000. This increase was due primarily to
personnel increases needed to support current revenues as well as to support the
Company's move to the subscription-pricing model. General and administrative
expenses as a percentage of total revenues increased to 11.8% from 10.4% as
these associated personnel and related expenses increased a faster rate than
total revenues.
Interest Income, Net. Interest income, net decreased 19.0% to $573,000 for the
first quarter 2001, compared to $707,000 for the first quarter 2000. The
Company's interest income is derived from the investment of its cash and cash
equivalents. The decrease in net interest income resulted primarily as a
result of a decrease in cash and cash equivalents from an average cash balance
of $55.5 million during the first quarter 2000 to an average cash balance of
$47.9 million during the first quarter 2001 as well as a reduction in the
weighted average interest rate the Company earned on its cash balances from
5.88% in the first quarter 2000 to 5.82% during the first quarter 2001. See
"-Liquidity and Capital Resources" and Item 3, "Quantitative and Qualitative
Disclosures About Market Risks."
Income Tax Provision. The Company recorded a tax provision of $202,000, or
35.0% of pre-tax income, in first quarter 2001 and a tax provision of $1.7
million, or 40.0% of pre-tax income, during the first quarter 2000. This
decrease in the Company's effective tax rate was due to utilization of certain
tax benefits related to research and development tax credits and net operating
loss carryforwards for income tax purposes during the first quarter 2001.
Extraordinary Item. On March 30, 2000, the Company and the former sole
shareholder of RapidFire reached an agreement whereby the Company paid to the
former shareholder $200,000 and forgave a $1.5 million note receivable, and in
return, was relieved in full of its indebtedness to the shareholder. This
indebtedness consisted of a noninterest-bearing note with a lump-sum payment of
$6.0 million due October 31, 2005 ($4.3 million at December 31, 2000) and was
issued October 31, 1997 as part of the Company's acquisition of RapidFire. As a
result of this early extinguishment of debt, the Company recorded an
extraordinary gain of approximately $1.5 million, net of tax, during the first
quarter 2000. No such item was recorded in the first quarter 2001.
Net Income. Net income for the first quarter 2001 was approximately $375,000,
or $0.01 per diluted share, compared to net income of $4.1 million, or $0.14 per
diluted share, for the first quarter 2000. Excluding the non-recurring charges,
net income for the first quarter 2001 was $1.0 million, or $0.04 per diluted
share, compared to net income before extraordinary item of $2.6 million, or
$0.09 per diluted share, for the first quarter 2000.
12
Liquidity and Capital Resources
As of March 31, 2001, the Company had $46.3 million in cash and cash equivalents
and working capital of $69.0 million.
Cash provided by operating activities in the first quarter 2001 was $2.3 million
compared to cash used in operating activities of $1.5 million during the first
quarter 2000. In the first quarter 2001, cash provided by operating activities
was primarily due to depreciation and amortization expense of $3.2 million as
well as a $2.2 million increase in client deposits and unearned revenues during
the first quarter 2001 as the Company delivered products and/or services
previously paid by clients. These amounts were partially offset by increases in
accounts receivables of approximately $635,000 as well as decreased accounts
payable and accrued liabilities due to timing of certain vendor payments of $3.9
million. In the first quarter 2000, cash used in operating activities was
primarily due to increases in accounts receivables as well as decreased accounts
payable and accrued liabilities due to timing of certain vendor payments.
Additionally, client deposits and unearned revenues decreased during the first
quarter 2000 as the Company delivered products and or services previously paid
by clients.
Cash used in investing activities during the first quarter 2001 was $3.9 million
due to the purchases of property and equipment of $1.9 million and capitalized
software development costs of $2.1 million. The uses of cash in investing
activities for the first quarter 2000 consisted primarily of the purchases of
property and equipment of approximately $4.3 million. This 2000 purchase was
comprised primarily from the Company's exercise of an option to purchase land
adjacent to its Alpharetta, Georgia headquarters for approximately $4.1 million.
A portion of this land was then resold to a developer for approximately $800,000
in order to begin construction on a multi-story office building which the
Company occupied during the first quarter 2001. Additionally, during the first
quarter 2000, the Company capitalized software costs of $1.0 million associated
primarily with its continued development of its WAVE products.
Cash of $1.6 million was used in financing activities during the first quarter
2001 due primarily to the Company's repurchase of common stock from shareholders
for approximately $2.0 million partially offset by cash received from the
exercise of employee stock options of approximately $428,000. Cash of $11.0
million was provided by financing activities during the first quarter 2000 due
primarily to cash received from AOL's purchase of $10.0 million of the Company's
stock at a price of $10 per share.
In May 2000, the Board of Directors of the Company authorized a stock repurchase
program pursuant to which management is authorized to repurchase up to 1.0
million shares of common stock of the Company over the next twelve months.
During 2000, the Company repurchased and subsequently retired approximately
90,000 shares at prices ranging from $18.25 to $19.94 per share, for total
consideration of approximately $1.8 million. During the first quarter of 2001,
the Company repurchased and subsequently retired approximately 125,000 shares at
prices ranging from $12.56 to $18.67 per share, for total consideration of
approximately $2.0 million. As of May 10, 2001, the Company had repurchased in
the open market an aggregate of approximately 225,000 shares of its common stock
for a total of $3.9 million, under this repurchase plan.
On October 2, 2000, the Company and Tricon Global Restaurants, Inc. ("Tricon")
jointly announced a multi-year arrangement to implement WAVE exclusively in
Tricon's company-owned restaurants around the world. Tricon's franchisees will
also be able to subscribe to WAVE under the same terms as the company-owned
restaurants. The Company continues to have discussions with Tricon regarding
definitive agreements evidencing this arrangement and expects to finalize the
discussions within the next
13
45 days. As part of the definitive agreements, the Company will purchase from
Tricon its source code and object code for certain back office software
previously developed by Tricon for $16.4 million payable in specified annual
installments through December 31, 2003.
Forward-Looking Statements
Certain statements contained in this filing are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995, such
as statements relating to financial results and plans for future business
development activities, and are thus prospective. These statements appear in a
number of places in this Annual Report and include all statements that are not
statements of historical fact regarding intent, belief or current expectations
of the Company, its directors or its officers with respect to, among other
things: (i) the Company's financing plans; (ii) trends affecting the Company's
financial condition or results of operations; (iii) the Company's growth
strategy and operating strategy; (iv) the Company's new or future product
offerings, and (v) the declaration and payment of dividends. The words "may,"
"would," "could," "will," "expect," "estimate," "anticipate," "believe,"
"intend," "plans," and similar expressions and variations thereof are intended
to identify forward-looking statements. Investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, many of which are beyond the Company's ability to
control. Actual results may differ materially from those projected in the
forward-looking statements as a result of various factors. Among the key risks,
assumptions and factors that may affect operating results, performance and
financial condition are the Company's reliance on a small number of customers
for a larger portion of its revenues, fluctuations in its quarterly results,
ability to continue and manage its growth, liquidity and other capital resources
issues, competition and the other factors discussed in detail in the Company's
filings with the Securities and Exchange Commission, including the "Risk
Factors" section contained therein.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
- --------------------------------------------------------------------
The Company's financial instruments that are subject to market risks are its
cash and cash equivalents. During the first quarter 2001, the weighted average
interest rate on its cash balances was approximately 5.82%. A 10.0% decrease in
this rate would impact interest income by approximately $57,000.
14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits.
The following exhibits are filed with this Report:
10.1 Services Agreement dated as of March 19, 2001 by and between
Radiant Systems, Inc., America Online, Inc. and MovieFone,
Inc.**
10.2 Amendment to Marketing and Development Agreement and Stock
Purchase Agreement dated as of March 19, 2001 by and among
Radiant Systems, Inc., America Online, Inc. and MovieFone,
Inc.
** Confidential treatment has been requested for certain
confidential portions of this exhibit pursuant to Rule 24b-2
under the Securities Exchange Act of 1934, as amended. In
accordance with this rule, these confidential portions have
been omitted from this exhibit and filed separately with the
Securities and Exchange Commission.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended March 31, 2001
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.
RADIANT SYSTEMS, INC
Dated: May 14, 2001 By: /s/ John H. Heyman
---------------------- -----------------------------------
John H. Heyman, Executive
Vice President and Chief Financial
Officer (Duly authorized officer
and principal financial officer)
15
EXHIBIT INDEX
Exhibit Number Description of Exhibit
-------------- ----------------------
10.1 Services Agreement dated as of March 19, 2001 by and
between Radiant Systems, Inc., America Online, Inc. and
MovieFone, Inc.**
10.2 Amendment to Marketing and Development Agreement and
Stock Purchase Agreement dated as of March 19, 2001 by
and among Radiant Systems, Inc., America Online, Inc.
and MovieFone, Inc.
** Confidential treatment has been requested for certain
confidential portions of this exhibit pursuant to Rule 24b-2
under the Securities Exchange Act of 1934, as amended. In
accordance with this rule, these confidential portions have
been omitted from this exhibit and filed separately with the
Securities and Exchange Commission.
16