Exhibit 99.1
Radiant Systems, Inc. Reports Third Quarter Results
Record Company Revenue Results in Adjusted Earnings of $0.15 Per
Diluted Share in the Third Quarter
ATLANTA--(BUSINESS WIRE)--Oct. 26, 2006--Radiant Systems, Inc.
(NASDAQ: RADS), a leading provider of innovative technology for the
hospitality and retail industries, today announced financial results
for the third quarter and nine months ended September 30, 2006.
Summary financial results for the third quarter of 2006 are as
follows:
-- Total revenues for the period were $57.6 million, an increase
of 23 percent over revenues of $46.8 million for the same
period in 2005.
-- Net income for the period, including the impact of employee
stock option expense, was $2.4 million, or approximately $0.08
per diluted share, an increase of $1.7 million, or $0.06 per
diluted share, compared to the same period in 2005.
-- Adjusted net income (non-GAAP) for the period, which excludes
amortization of acquisition-related intangible assets,
non-recurring items, the impact of changes in the valuation
allowance against deferred tax assets and compensation expense
related to the issuance of employee stock options, was $4.9
million, or $0.15 per diluted share, an increase of $1.5
million, or $0.04 per diluted share, compared to the same
period in 2005.
Summary year to date financial results for the nine month period
ended September 30, 2006 are as follows:
-- Total revenues for the period were $161.5 million, an increase
of 31 percent over revenues of $123.7 million for the same
period in 2005.
-- Net income for the period, including the impact of employee
stock option expense, was $14.8 million, or approximately
$0.45 per diluted share, an increase of $11.6 million, or
$0.35 per diluted share, compared to the same period in 2005.
-- Adjusted net income (non-GAAP) for the period, which excludes
amortization of acquisition-related intangible assets,
non-recurring items, the impact of changes in the valuation
allowance against deferred tax assets and compensation expense
related to the issuance of employee stock options, was $12.6
million, or $0.38 per diluted share, an increase of $3.7
million, or $0.10 per diluted share, compared to the same
period in 2005.
John Heyman, the Company's chief executive officer said, "We are
very pleased with the continued success of our products in the
marketplace, as indicated by another record revenue quarter. The value
delivered by our products combined with the strong execution of our
people and channel partners have been key drivers of our growth."
Heyman added, "We continue to see strong demand across our
segments. Our pipeline is growing, our customer base is diverse and
our products are delivering strong returns for our customers.
Additionally, we have seen good progress with the integration and the
financial contribution of both MenuLink and Synchronics. The execution
of our strategy has resulted in a very successful year thus far and
demonstrates the momentum we have built toward a successful 2007."
"We are very pleased with the progression of our overall financial
model," said Mark Haidet, the Company's chief financial officer. "We
continue to execute well on increasing our operating leverage while we
invest in long-term growth initiatives."
Haidet continued,
"Based on our results in the quarter, as well as our strong
pipeline and visibility into the business, we are updating our
guidance for 2006. In addition, we are providing an initial revenue
range of $245 million to $260 million for 2007. We expect to grow
adjusted operating income by 25% to 30% and adjusted earnings per
share by 10% to 20% over 2006. We expect our cash tax rate to increase
to approximately 25% for 2007."
The Company's updated guidance is as follows:
Revenue Range Adjusted Earnings
(millions) (non-GAAP) /
Share Range
- ----------------------------------------------------------------------
Quarter ending December 31, 2006 $57-$59 $.15 - $.17
- ----------------------------------------------------------------------
Year ending Dec. 31, 2006 - previous $213 -$218 $.50 - $.55
- ----------------------------------------------------------------------
Year ending Dec. 31, 2006 - updated $218 -$220 $.53 - $.55
- ----------------------------------------------------------------------
Commencing in the first quarter of 2006, the Company implemented
the Statement of Financial Accounting Standards No. 123R ("FAS 123R").
FAS 123R requires companies to expense the fair value of grants made
under stock option programs over the vesting period of the options.
This share-based compensation expense is a non-cash expense. The
Company utilized the "Modified Prospective Application" transition
method to adopt FAS 123R, which did not require retroactive
restatement of previously issued financial statements. In its press
releases, the Company reports its net income and earnings per share
during fiscal year 2006 on both Generally Accepted Accounting
Principles ("GAAP") (which includes the share-based compensation
charge, which represents the non-cash stock option expense) and
non-GAAP (which excludes the share-based compensation charge) bases in
order to facilitate analysis of the business and meaningful
period-to-period comparison.
On October 6, 2005 the Company completed its acquisition of
MenuLink Computer Solutions, Inc. ("MenuLink"). All MenuLink
operations are included in the Company's 2005 financial statements as
of the date of the acquisition. On January 3, 2006, the Company
completed the acquisition of substantially all of the assets of
Synchronics, Inc. ("Synchronics"). All Synchronics operations are
included in the Company's 2006 financial statements as of the date of
the acquisition.
The Company provides adjusted net income and adjusted net income
per share in this press release as additional information relating to
the Company's operating results. The measures are not in accordance
with, or an alternative for GAAP and may be different from adjusted
net income and adjusted net income per share measures used by other
companies. Net income has been adjusted to exclude amortization of
acquisition-related intangible assets, non-recurring items, the impact
of changes in the valuation allowance against deferred tax assets and
compensation expense related to the issuance of employee stock
options. The Company believes that this non-GAAP presentation provides
useful information to investors regarding certain additional financial
and business trends relating to the Company's financial condition and
results of operations, and valuable insight into the Company's ongoing
operations and earnings power.
Radiant will hold its third quarter 2006 conference call today at
approximately 5 p.m. Eastern Time. This call is being webcast by CCBN
and can be accessed at Radiant's web site at
http://phx.corporate-ir.net/phoenix.zhtml?c=115271&p=irol-irhome. The
call will also be available via telephone at 1-888-587-0679 -
reference ID# 8018632.
Radiant Systems, Inc. (www.radiantsystems.com) is a leader in
providing innovative technology to the hospitality and retail
industries. Offering unmatched reliability and ease of use, Radiant's
hardware and software products have been deployed in over 60,000 sites
across more than 100 countries. Radiant has approximately 1,000
employees worldwide, 325 certified sales and service partners and over
1,800 field service representatives. Founded in 1985, the Company is
headquartered in Atlanta with regional offices throughout the United
States as well as in Europe, Asia and Australia.
Certain statements contained in this press release 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 release 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, including the Company's projected revenues and earnings
per share guidance; (iii) the Company's growth strategy and operating
strategy, and (iv) the Company's new or future product offerings. 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 clients for a large portion of its
revenues, fluctuations in its quarterly results, its 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 periodic filings with the Securities and Exchange
Commission. The Company undertakes no obligation to update any
forward-looking statements.
RADIANT SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
September 30, December 31,
2006 2005
-------------- -------------
Current assets
Cash and cash equivalents $6,464 $17,641
Accounts receivable, net 39,960 27,559
Inventories, net 28,287 18,093
Deferred tax assets 3,826 -
Other short-term assets 2,184 2,287
-------------- -------------
Total current assets 80,721 65,580
Property and equipment, net 14,654 9,607
Software development costs, net 3,904 2,249
Deferred tax assets, non-current 11,172 -
Goodwill 60,934 44,239
Intangibles, net 25,495 20,537
Other long-term assets 200 293
-------------- -------------
Total assets $197,080 $142,505
============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt facility 7,489 -
Current portion of long-term debt 7,346 4,329
Accounts payable and accrued liabilities 33,102 23,992
Accrued contractual obligations and
payables due to Related Party 2,275 1,947
Client deposits and unearned revenues 12,913 12,490
-------------- -------------
Total current liabilities 63,125 42,758
Client deposits and unearned revenues,
net of current portion 235 376
Long-term debt, less current portion 22,540 14,133
Other long-term liabilities 706 805
-------------- -------------
Total liabilities 86,606 58,072
-------------- -------------
Shareholders' equity
Common stock, no par value; 100,000,000
shares authorized; 30,813,129 and
30,094,973 shares issued and outstanding,
respectively - -
Additional paid-in capital 135,694 124,744
Accumulated other comprehensive income
(loss) 41 (287)
Accumulated deficit (25,261) (40,024)
-------------- -------------
Total shareholders' equity 110,474 84,433
-------------- -------------
Total liabilities and shareholders'
equity $197,080 $142,505
============== =============
- -
RADIANT SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
For the three months ended
September 30,
2006 2006
GAAP Adjustments Non-GAAP
-------- ------------ --------
Revenues:
System sales $34,497 $34,497
Client support, maintenance and other
services 23,056 23,056
-------- --------
Total revenues 57,553 57,553
Cost of revenues:
System sales 18,548 (142) (a) 18,406
Client support, maintenance and other (a)
services 14,361 (61) 14,300
-------- -------- --------
Total cost of revenues 32,909 (203) 32,706
-------- -------- --------
Gross profit 24,644 203 24,847
Operating Expenses:
Product development 5,418 (123) (a) 5,295
Sales and marketing 6,335 (206) (a) 6,129
Depreciation of fixed assets 979 979
Amortization of intangible assets 2,047 (2,047) (b) -
General and administrative 6,102 (279) (a) 5,823
-------- -------- --------
Total operating expenses 20,881 (2,655) 18,226
Income from operations 3,763 2,858 6,621
Interest and other expense, net 813 813
-------- --------
Income from operations before income
taxes 2,950 2,858 5,808
Income tax provision (517) (395) (d) (912)
-------- --------
Net income $2,433 2,463 $4,896
Net income per share
Basic $0.08 $0.16
======== ========
Diluted $0.08 $0.15
======== ========
Weighted average shares outstanding:
Basic 30,740 30,740
======== ========
Diluted 32,327 32,327
======== ========
For the three months ended
September 30,
2005 2005
GAAP Adjustments Non-GAAP
-------- ------------ --------
Revenues:
System sales $27,470 $27,470
Client support, maintenance and other
services 19,366 19,366
-------- --------
Total revenues 46,836 46,836
Cost of revenues:
System sales 16,443 16,443
Client support, maintenance and other
services 12,686 12,686
-------- -------- --------
Total cost of revenues 29,129 - 29,129
-------- -------- --------
Gross profit 17,707 17,707
Operating Expenses:
Product development 3,686 3,686
Sales and marketing 4,940 4,940
Depreciation of fixed assets 794 794
Amortization of intangible assets 1,283 (1,283) (b) -
Lease restructuring charges 1,450 (1,450) (c) -
General and administrative 4,405 4,405
-------- -------- --------
Total operating expenses 16,558 (2,733) 13,825
Income from operations 1,149 2,733 3,882
Interest and other expense, net 268 268
-------- --------
Income from operations before income
taxes 881 2,733 3,614
Income tax provision (150) (65) (d) (215)
-------- --------
Net income $731 2,668 $3,399
Net income per share
Basic $0.02 $0.11
======== ========
Diluted $0.02 $0.11
======== ========
Weighted average shares outstanding:
Basic 29,596 29,596
======== ========
Diluted 31,999 31,999
======== ========
For the nine months ended
September 30,
2006 2006
GAAP Adjustments Non-GAAP
-------- ------------ --------
Revenues:
System sales $93,024 $93,024
Client support, maintenance and other
services 68,443 68,443
-------- --------
Total revenues 161,467 161,467
Cost of revenues:
System sales 49,202 (370) (a) 48,832
Client support, maintenance and other (a)
services 41,161 (164) 40,997
-------- -------- --------
Total cost of revenues 90,363 (534) 89,829
-------- -------- --------
Gross profit 71,104 534 71,638
Operating Expenses:
Product development 16,423 (441) (a) 15,982
Sales and marketing 19,166 (557) (a) 18,609
Depreciation of fixed assets 2,521 2,521
Amortization of intangible assets 6,142 (6,142) (b) -
Lease restructuring charges 1,663 (1,663) (c) -
General and administrative 18,717 (911) (a) 17,806
-------- -------- --------
Total operating expenses 64,632 (9,714) 54,918
Income from operations 6,472 10,248 16,720
Interest and other expense, net 2,052 2,052
-------- --------
Income from operations before income
taxes 4,420 10,248 14,668
Income tax benefit (provision) 10,343 (12,445) (d) (2,102)
-------- --------
Net income $14,763 (2,197) $12,566
Net income per share
Basic $0.48 $0.41
======== ========
Diluted $0.45 $0.38
======== ========
Weighted average shares outstanding:
Basic 30,857 30,857
======== ========
Diluted 32,703 32,703
======== ========
For the nine months ended
September 30,
2005 2005
GAAP Adjustments Non-GAAP
-------- ------------ --------
Revenues:
System sales $69,623 $69,623
Client support, maintenance and other
services 54,077 54,077
-------- --------
Total revenues 123,700 123,700
Cost of revenues:
System sales 38,215 38,215
Client support, maintenance and other
services 35,671 35,671
-------- -------- --------
Total cost of revenues 73,886 - 73,886
-------- -------- --------
Gross profit 49,814 49,814
Operating Expenses:
Product development 9,995 9,995
Sales and marketing 13,654 13,654
Depreciation of fixed assets 2,420 2,420
Amortization of intangible assets 3,850 (3,850) (b) -
Impairment of HotelTools software 550 (550) (c) -
Lease restructuring charges 1,450 (1,450) (c) -
General and administrative 13,453 13,453
-------- -------- --------
Total operating expenses 45,372 (5,850) 39,522
Income from operations 4,442 5,850 10,292
Interest and other expense, net 735 735
-------- --------
Income from operations before income
taxes 3,707 5,850 9,557
Income tax provision (575) (157) (d) (732)
-------- --------
Net income $3,132 5,693 $8,825
Net income per share
Basic $0.11 $0.30
======== ========
Diluted $0.10 $0.28
======== ========
Weighted average shares outstanding:
Basic 29,360 29,360
======== ========
Diluted 31,333 31,333
======== ========
(a) The Company adopted SFAS 123(R) on January 1, 2006 using the
Modified Prospective Method, which requires us to expense the fair
value of grants made under stock option programs over the vesting
period of the options. Previously we did not record compensation
expense for employee stock options granted at the money. The 2006
adjustments to costs of sales and operating expenses represent stock-
based compensation expense recorded during the period. Total stock-
based compensation expense during the three and nine month periods
ended September 30, 2006 was approximately $0.8 million and $2.4
million, respectively, on a pre-tax basis.
(b) Adjustment represents the exclusion of amortization of intangible
assets from non-GAAP results.
(c) These items are considered non-recurring charges.
(d) Tax effect of the non-GAAP adjustments described above and the
elimination of the benefit related to the removal of a substantial
portion of the allowance against deferred tax assets recognized in
the second quarter of 2006, which amounted to $11.3 million.
CONTACT: Radiant Systems, Inc., Atlanta
Sara Ford, 770-576-6832