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 November 6, 2002
MADGE NETWORKS N.V.
(Translation of registrant's name into English)
Keizersgracht 62-64
1015 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 X Form 40-F
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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 X
--------- ---------
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
82- N.A.
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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 November 6, 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: November 11, 2002
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EXHIBIT INDEX
Exhibit Page
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Press Release 5
4
[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
THIRD QUARTER 2002 RESULTS
Amsterdam, The Netherlands (November 6, 2002) -- Madge Networks N.V. (NASDAQ:
MADGF), a global supplier of advanced networking product solutions, today
announced results for its third fiscal quarter ended September 30, 2002.(1)
Madge Networks revenues for the third quarter were US$7.6 million, compared to
second quarter 2002 revenues of $9.5 million and third quarter 2001 revenues of
$14.1 million. Net income and earnings per share from continuing operations for
the quarter were just above breakeven, compared to a net income from continuing
operations of $0.1 million, or just above breakeven earnings per share, for the
previous quarter and a net income from continuing operations of $4.9 million, or
$0.09 per share, for the third quarter of 2001. The net loss for the quarter,
including a charge related to discontinued operations, was $(1.8) million or a
loss of $(0.03) per share. Net income for the 2001 period included special gains
of $3.8 million relating to the release of a tax provision.
For the nine months ended September 30, 2002 net loss was $(2.2) million, or
$(0.04) per share, compared to a net income of $16.3 million, or $0.30 per share
for the nine months ended September 30, 2001. The loss for the 2002 period
included a loss of $(1.9) million related to a special charge for discontinued
operations. Net income for the 2001 period included special gains of $13.1
million partially offset by a loss from associate Red-M of $(1.5) million and a
loss from discontinued operations of $(2.5) million.
Gross margin for the quarter increased to 67.6% compared to 61.2% for the
previous quarter, and 54.1% for the third quarter of 2001. The margin for the
quarter was positively affected by a one off release of a provision relating to
a supplier. Without this release the gross margin would have been 58.5%.
"Q3 was a difficult quarter", said Martin Malina, CEO, Madge Networks. "The
seasonal weakness in Europe and continued delays in the roll out of projects
with major
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(1) With effect from September 30, 2002 the Company now operates and reports on
a quarterly calendar basis whereas previously the Company operated on the
basis of thirteen-week financial quarters.
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customers, impacted our revenues. However, I am pleased that we can present a
breakeven result from continuing operations, despite the drop in revenues."
"Our balance sheet at the end of the quarter reflects the fact that we have
reviewed our provisions for discontinued operations and the carrying value of
fixed assets. We also wrote off certain assets of discontinued operations, for
which we already had provisions and, following a rent review, we accelerated the
depreciation of leasehold improvements related to property which we lease in the
UK. With the adjustments made we now believe that no further changes will be
required in provisions for discontinued operations."
"We started shipment of our 802.11b Wireless LAN products during the quarter and
we now have 18 wireless resellers signed up and more to come. Customers and
resellers have reacted very positively to our products; the unique security and
management features and the completeness and ease with which these can be
integrated into enterprise networks have won praise. With the appointment of
Andy MacDonald as VP Sales, we now have an experienced sales professional on
board to aggressively build on this initial success. Our wireless product line
contributed a small amount to our revenue during Q3 2002 and we anticipate this
will also be the case in the fourth quarter."
Accounts receivables were $2.9 M at the end of the third quarter or 34.4 days
outstanding, compared to $3.4 M at the end of the previous quarter or 32.8 days
outstanding. Inventories, net of reserves, were $2.6 M compared to $3.3 M at
June 30, 2002, further illustrating ongoing progress in asset utilisation.
The Company ended the third quarter with $7.0 million in cash, of which $4.3
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 $0.1 million from $3.2 million at December 31, 2001.
Ends
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MANAGEMENT COMMENTS
The Company has produced a document entitled "Management's Comments on Madge
Networks' Q3 2002 results" instead of holding a conference call. This document
discusses the results for third quarter 2002 in detail and can be found on the
Investor Relations section of the Company's website.
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(TM), 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 the
Company believes there will be no further changes required in its provisions for
discontinued operations, that the interest in the wireless product will be
translated into sales of these products and that Andy MacDonald's appointment
will allow the Company to aggressively build on the initial success of the
Company's new wireless products 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' 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.
CONTACT: MADGE NETWORKS, WEXHAM SPRINGS, UNITED KINGDOM
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 Sheets(2)
(Unaudited)
(In thousands)
SEP. 30, DEC. 31,
2002 2001
ASSETS
Current assets:
Cash, cash equivalents, and short-term investments(3) $ 7,034 $ 14,958
Accounts receivable, net 2,886 3,719
Inventories 2,596 4,540
Prepaid expenses and other current assets 4,514 6,025
Current assets of discontinued operations 974 1,590
- ------------------------------------------------------------------------------------------------------
Total current assets 18,004 30,832
Property and equipment, net 3,283 7,425
Intangible assets, net -- 3,633
Investments of discontinued operations -- 2,000
Fixed assets of discontinued operations -- 2,208
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Total assets $ 21,287 $ 46,098
======================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 13,048 $ 23,358
Income taxes payable 4,502 5,001
Short-term borrowings 120 3,189
Short-term obligations 139 559
Current liabilities of discontinued operations 7,114 9,560
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Total current liabilities 24,923 41,667
Long-term obligations 1,118 1,125
Long-term obligations of discontinued operations 5,100 10,304
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Total liabilities 31,141 53,096
Shareholders' deficit (9,854) (6,998)
- ------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' deficit $ 21,287 $ 46,098
======================================================================================================
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(2) The condensed consolidated balance sheet includes our associate company,
Red-M, accounted for under equity accounting principles at a value of nil.
Madge.web is now accounted for as a discontinued operation.
(3) Cash includes a balance of $2.7M at September 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 NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2002 2001
CONTINUING OPERATIONS
Net sales $ 7,637 $ 14,076 $ 27,168 $ 58,253
Cost of sales 2,473 6,463 10,250 27,429
- -----------------------------------------------------------------------------------------------------
Gross profit 5,164 7,613 16,918 30,824
Operating expenses:
Sales & marketing 2,734 3,688 9,367 14,335
Research & development 468 300 1,671 3,332
General and administrative 2,352 2,396 6,158 6,624
Special (gain) -- (3,763) -- (5,112)
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Total operating expenses 5,554 2,621 17,196 19,179
- -----------------------------------------------------------------------------------------------------
Income (loss) from continuing operations (390) 4,992 (278) 11,645
Net interest income (expense) (87) (18) (578) 1,598
Gain on sale of investment in Red-M -- -- -- 7,997
- -----------------------------------------------------------------------------------------------------
Income (loss) from continuing operations
before tax and share of associate loss (477) 4,974 (856) 21,240
Income tax provision (benefit) (496) 37 (480) 932
- -----------------------------------------------------------------------------------------------------
Income (loss) from continuing operations
before share of associate loss 19 4,937 (376) 20,308
Associate loss -- -- -- (1,499)
- -----------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING
OPERATIONS $ 19 $ 4,937 $ (376) $ 18,809
- -----------------------------------------------------------------------------------------------------
DISCONTINUED OPERATIONS
Loss from discontinued operations (1,862) -- (1,862) (2,508)
- -----------------------------------------------------------------------------------------------------
TOTAL NET INCOME (LOSS) $ (1,843) $ 4,937 $ (2,238) $ 16,301
=====================================================================================================
Net income (loss) per share from continuing operations
Basic and diluted $ 0.00 $ 0.09 $ (0.01) $ 0.35
Net loss per share from discontinued operations
Basic and diluted $ (0.03) $ 0.00 $ (0.03) $ (0.05)
Total net income (loss) per share
Basic and diluted $ (0.03) $ 0.09 $ (0.04) $ 0.30
Weighted Average Shares Outstanding
Basic and diluted 54,040 54,038 54,039 54,012
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(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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