Wind River Meets Revised Revenue and Earnings Guidance.Business Editors/High-Tech Writers ALAMEDA Alameda (ăləmē`də, –mā`də), city (1990 pop. 76,459), Alameda co., W central Calif., on an island just off the eastern shore of San Francisco Bay; settled 1850, inc. as a city 1884. , Calif.--(BUSINESS WIRE)--May 16, 2002 Wind River Systems, Inc. (Nasdaq: WIND) reported its first quarter fiscal 2003 operating results for the period ended April 30, 2002. Total revenues for the first quarter were $66.4 million, an 18% sequential decrease from revenues of $80.5 million in Q4 of fiscal year 2002 and a 40% decrease compared to the first quarter of fiscal year 2002. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), first quarter net loss was $18.0 million, compared to a net loss of $50.0 million in the fourth quarter of fiscal 2002 and a net loss of $24.8 million for the first quarter of fiscal 2002. Loss per share was $0.23, compared to a loss of $0.64 per share in the fourth quarter fiscal 2002 and a loss of $0.32 per share in the first quarter of fiscal 2002. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net loss for the quarter was $9.8 million, or $0.12 per share, as compared with net income of $4.9 million, or $0.06 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, in the first quarter of fiscal year 2002. Pro forma results exclude amortization of goodwill and purchased intangibles and are further defined by Wind River in the footnote Text that appears at the bottom of a page that adds explanation. It is often used to give credit to the source of information. When accumulated and printed at the end of a document, they are called "endnotes." below. "During the quarter, technology companies across most of our end-markets continued to experience difficulties that adversely impacted our results. The most significant negative impact on our revenue came from the continued deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. of the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. market," stated Tom St. Dennis Dennis is a male first name derived from the Greco-Roman name Dionysius meaning "servant of Dionysus", the Thracian god of wine, which is ultimately derived from the Greek Dios (Διος, "of Zeus") combined with Nysos or Nysa (Νυσα), where the , president and chief executive officer for Wind River. Announced Cost Reduction As announced on May 2nd, the company plans to reduce operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. up to $6.0 million per quarter as against pro forma operating expenses of $63.7 million in Q1. The full impact of these reductions is expected to be realized in the third quarter of fiscal 2003. The reduction in operating expenses will be achieved by a reduction in force as well as the implementation of other cost control measures. "We are taking the difficult steps necessary to reduce our cost structure to be more in line with our current revenue run-rate. These reductions will be fiscally responsible and strategic in nature so that we can both accurately size the company and continue to successfully serve our key markets and customers," stated Mike Zellner, vice president and chief financial officer for Wind River. Q1 FY 2003 Highlights "Although we expect the challenging environment may continue for quite some time in the telecommunications market, we do see opportunities for new products like our Tornado tornado, dark, funnel-shaped cloud containing violently rotating air that develops below a heavy cumulonimbus cloud mass and extends toward the earth. The funnel twists about, rises and falls, and where it reaches the earth causes great destruction. (R) for Intelligent Network Acceleration for iSCSI (Internet SCSI) A protocol that serializes SCSI commands and converts them to TCP/IP. See IP storage. initiators that won the best of show award for network storage at the most recent N+I conference," stated St. Dennis. "We are also encouraged by progress and growth opportunities we see in our other four end-markets including Automotive, Industrial, Digital Consumer Electronics and Aerospace/Defense. Today, we announced a partnership with Smiths Aerospace and Ada Core Technologies (company) Ada Core Technologies - (ACT) The company that maintains GNAT. Ada Core Technologies was founded in 1994 by the original authors of the GNAT compiler. ACT provides software for Ada 95 development. http://gnat.com/. to deliver a commercial off-the-shelf Commercial off-the-shelf (COTS) is a term for software or hardware, generally technology or computer products, that are ready-made and available for sale, lease, or license to the general public. solution that will be used with Boeing's C-130 Avionics Modernization modernization Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, Program and their 767 Tanker Transport. This partnership along with Raytheon's announcement of plans to submit their Advanced Wide Area Augmentation System The Wide Area Augmentation System (WAAS) is an elevated-accuracy navigation system developed for civil aviation by the Federal Aviation Administration (FAA), a division of the United States Department of Transportation (DOT). to the FAA for certification using our Tornado for DO-178B DO-178B, Software Considerations in Airborne Systems and Equipment Certification is a standard for software development published by RTCA, Incorporated. The standard was developed by RTCA and EUROCAE. The FAA accepts use of DO-178B as a means of certifying software in avionics. platform, reflect the progress we are making in the aerospace/defense market. "We are also seeing growing opportunities in our automotive business. Earlier this week, we announced what I think is a tremendous validation See validate. validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. of our technology. The governing body Noun 1. governing body - the persons (or committees or departments etc.) who make up a body for the purpose of administering something; "he claims that the present administration is corrupt"; "the governance of an association is responsible to its members"; "he of Formula One (F1) auto racing, one of the most technically and physically demanding of all motor sports, has approved the use of the VxWorks A popular real time operating system for embedded systems from Wind River, Alameda, CA (www.windriver.com). It is used to control a wide variety of products, including network and telecom devices, test and measurement equipment, computer peripherals and consumer products. (R) embedded operating system An operating system used in special-purpose applications (embedded systems). Embedded operating systems are typically very compact and often designed for real time operations. See embedded Linux, QNX, OS-9, Windows XP Embedded, Windows CE, VxWorks and Symbian OS. for all F1 teams. "In addition, our two newest solution level products, Tornado for Industrial Automation and Tornado for Car Infotainment (INFOrmation enterTAINMENT) Refers to all the information and entertainment services delivered to the home, which are essentially telephone, TV and Internet access. showed strong acceptance in the quarter, and we continued to introduce other new products like VSPWorks(TM) and WindManage(TM) that expand our market opportunities. "Also in the quarter, Toshiba Toshiba Corporation (株式会社東芝 Kabushiki-gaisha Tōshiba and Integrated Device Technology IDT (NASDAQ: IDTI) was founded in 1980 as a semiconductor vendor. Employing approximately 2500 people worldwide, headquartered in San Jose, California and operating a fab in Hillsboro, Oregon, the company both designs and fabricates semiconductor components. (IDT IDT Integrated Device Technology, Inc. (Santa Clara, CA, USA) IDT I Don't Think IDT Identity Theft IDT Interrupt Descriptor Table IDT Integrated DNA Technologies IDT Inactive Duty Training IDT Instructional Design & Technology ) joined our MIPS (Million Instructions Per Second) The execution speed of a computer. For example, .5 MIPS is 500,000 instructions per second; 100 MIPS is a hundred million instructions per second. Center of Excellence (COE See common operating environment. ) Semiconductor Partner Program. These partnerships are part of Wind River's strategy to build close relationships with key semiconductor companies. Our COE program has grown to ten partners and we look forward to adding new partners in the near future. "Finally, we are dedicated to strengthening our market position during these short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. challenges and I believe we are taking the necessary steps to ensure we emerge from this downcycle a stronger organization than before," concluded St. Dennis. Q2 FY 2003 Outlook The following statements are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and actual results may differ materially. Please consult the safe-harbor statement at the end of this press release for a description of certain risk factors and Wind River's SEC reports for a complete description of risks. In response to SEC Regulation FD (Fair Disclosure), the Company plans to disseminate dis·sem·i·nate v. dis·sem·i·nat·ed, dis·sem·i·nat·ing, dis·sem·i·nates v.tr. 1. To scatter widely, as in sowing seed. 2. its quarterly business outlook, based on current expectations, in conjunction with its quarterly earnings releases and conference calls. The Company does not plan to provide any further material guidance on analysts' financial models beyond the information provided in its quarterly earnings release and conference call. Wind River is providing the following details regarding the second quarter fiscal 2003 outlook: -- Wind River expects revenue to be flat to up 5%. -- Other income is expected to contribute approximately $1.0-$1.5 million. -- Basic and fully-diluted share counts are expected to be approximately 79 million and 80 million shares, respectively. -- Provision for income taxes, on a pro forma basis, is expected to be approximately 36.5% of pre-tax income. -- Pro forma loss per share (excluding specific charges) is expected to be in the range of $0.08 to $0.10. -- Days Sales Outstanding (DSO) are expected to come in at a range of 75-85 days. -- The company expects to take one-time cash charges of approximately $13.0-$15.0 million in the quarter related to restructuring and a reduction in workforce. Conference Call Management will host a conference call at 2:00 p.m. Pacific Time on May 16, 2002 to discuss these results. You may listen to the conference call by calling 866-418-3599 in the U.S. and 847-619-6341 internationally. You may also listen in live via our webcast at www.windriver.com. A replay of the conference call will be available after 5:00 p.m. Pacific on May 16, 2002 until 8:59 p.m. Pacific on May 23, 2002. You may listen to the replay of the conference call by calling 877-213-9653 in the U.S. and 630-652-3041 internationally and enter the conference passcode 4768197. About Wind River Wind River is a worldwide leader in integrated embedded software Instructions that permanently reside in a ROM or flash memory chip. Embedded software may be immediately available to the CPU or, for faster execution, may be transferred to RAM first and then executed. solutions for creating reliable and innovative connected devices. Wind River provides development tools, operating systems Operating systems can be categorized by technology, ownership, licensing, working state, usage, and by many other characteristics. In practice, many of these groupings may overlap. , and advanced connectivity software for use in products in network infrastructure, digital consumer electronics, automotive, industrial, and aerospace/defense markets. Wind River is How Smart Things Think(TM). Founded in 1981, Wind River is headquartered in Alameda, California Alameda is a city in Alameda County, California, United States. It is located on a small island of the same name next to Oakland, California in the San Francisco Bay. An additional part of the city is Bay Farm Island, which is adjacent to the Oakland International Airport. , with operations worldwide. Wind River Systems, the Wind River Systems logo, How Smart Things Think, VxWorks, Tornado, VSPWorks and WindManage are trademarks or registered trademarks of Wind River Systems, Inc. All other names mentioned are trademarks, registered trademarks or service marks of their respective companies or organizations. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc expected revenue and earnings levels for the second fiscal quarter ended July July: see month. 31, 2002, the amount of the quarterly reduction in operating expenses and the nature of the cost-savings initiatives, as well as to one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges and DSOs, that involve risks and uncertainties that could cause actual results to differ materially from those contemplated herein. Factors that could cause or contribute to such differences include but are not limited to the continuing slowness in the economy generally, the company's ability to align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. its costs with decreased revenue levels, the timely development, acceptance and pricing of new products, the impact of competitive products and pricing, potential slow down in customer sales, the impact of charges for restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and other costs and other risk factors detailed in the company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended January 31, 2002 and other periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. About Pro Forma Adjustments: We provide pro forma net income (loss) and pro forma net income (loss) per share data as an alternative for understanding our operating results. These measures are not in accordance with, or an alternative for, generally accepted accounting principals (GAAP) and may be materially different from pro forma measures used by other companies. We compute To perform mathematical operations or general computer processing. For an explanation of "The 3 C's," or how the computer processes data, see computer. pro forma net income (loss) by adjusting GAAP net income (loss) to exclude amortization of goodwill and purchased intangibles and related tax effects as well as assuming that a tax benefit from losses will be realized. Historically, we have excluded other specific items, which were not incurred in the periods presented.
Wind River Systems, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three months ended
April 30,
-----------------------
2002 2001
--------- ---------
Revenues, net:
Products $ 43,725 $ 73,670
Services 22,634 36,522
--------- ---------
Total revenues 66,359 110,192
--------- ---------
Cost of revenues:
Products 5,473 6,957
Services 13,988 18,180
--------- ---------
Total cost of revenues 19,461 25,137
--------- ---------
Gross profit 46,898 85,055
--------- ---------
Operating expenses:
Selling and marketing 33,815 44,422
Product development and engineering 20,622 25,307
General and administrative 9,284 10,044
Amortization of goodwill and
purchased intangibles 2,123 31,486
--------- ---------
Total operating expenses 65,844 111,259
--------- ---------
Loss from operations (18,946) (26,204)
Interest income and other, net 1,398 2,565
--------- ---------
Loss before provision for income taxes (17,548) (23,639)
Provision for income taxes 500 1,202
--------- ---------
Net loss $ (18,048) $ (24,841)
========= =========
Net loss per share:
Basic $ (0.23) $ (0.32)
Diluted $ (0.23) $ (0.32)
Shares used in per share calculation:
Basic 78,767 76,785
Diluted 78,767 76,785
Reconciliation to pro forma net
income (loss) (pro forma adjustments)
Net loss $ (18,048) $ (24,841)
Amortization of goodwill and
purchased intangibles 2,123 31,486
Benefit (provision) for income taxes 6,130 (1,741)
--------- ---------
Pro forma net income (loss) $ (9,795) $ 4,904
========= =========
Pro forma net income (loss) per share:
Basic $ (0.12) $ 0.06
Diluted $ (0.12) $ 0.06
Shares used in per share calculation:
Basic 78,767 76,785
Diluted 78,767 79,674
Wind River Systems, Inc.
Pro Forma Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three months ended
April 30,
-----------------------
2002 2001
--------- ---------
Revenues, net:
Products $ 43,725 $ 73,670
Services 22,634 36,522
--------- ---------
Total revenues 66,359 110,192
--------- ---------
Cost of revenues:
Products 5,473 6,957
Services 13,988 18,180
--------- ---------
Total cost of revenues 19,461 25,137
--------- ---------
Gross profit 46,898 85,055
--------- ---------
Operating expenses:
Selling and marketing 33,815 44,422
Product development and engineering 20,622 25,307
General and administrative 9,284 10,044
--------- ---------
Total operating expenses 63,721 79,773
--------- ---------
Income (loss) from operations (16,823) 5,282
Interest income and other, net 1,398 2,565
--------- ---------
Income (loss) before provision
for income taxes (15,425) 7,847
Provision (benefit) for income taxes (5,630) 2,943
--------- ---------
Net income (loss) $ (9,795) $ 4,904
========= =========
Net income (loss) per share:
Basic $ (0.12) $ 0.06
Diluted $ (0.12) $ 0.06
Shares used in per share calculation:
Basic 78,767 76,785
Diluted 78,767 79,674
Wind River Systems, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
April 30, January 31,
2002 2002
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 75,688 $ 131,067
Short-term investments 33,981 22,364
Accounts receivable, net 46,872 61,109
Prepaid and other current assets 15,089 18,404
--------- ---------
Total current assets 171,630 232,944
Investments 163,590 123,136
Property and equipment, net 56,277 59,804
Intangibles, net 106,339 108,409
Other assets 19,401 19,644
Restricted cash 63,683 63,683
--------- ---------
Total assets $ 580,920 $ 607,620
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,726 $ 7,191
Line of credit 12,905 14,988
Accrued liabilities 16,673 19,346
Accrued restructuring cost 4,156 5,243
Accrued compensation 17,360 17,575
Income taxes payable 6,166 7,485
Deferred revenue 31,683 34,656
--------- ---------
Total current liabilities 93,669 106,484
Convertible subordinated debt 150,000 150,000
Long-term liabilities 2,764 2,995
--------- ---------
Total liabilities 246,433 259,479
--------- ---------
Stockholders' equity:
Common stock 81 80
Additional paid in capital 741,594 737,595
Loan to stockholder (1,920) (1,893)
Treasury stock, at cost (29,488) (29,488)
Accumulated other comprehensive loss (4,344) (4,765)
Accumulated deficit (371,436) (353,388)
--------- ---------
Total stockholders' equity 334,487 348,141
--------- ---------
Total liabilities and
stockholders' equity $ 580,920 $ 607,620
========= =========
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