TMCnet News

Radiant Systems, Inc. Reports First Quarter Results
[April 26, 2007]

Radiant Systems, Inc. Reports First Quarter Results


ATLANTA --(Business Wire)-- Radiant Systems, Inc. (NASDAQ: RADS), a leading provider of innovative technology for the hospitality and retail industries, today announced financial results for the first quarter of 2007.

Summary financial results for the first quarter of 2007 are as follows:

-- Total revenues for the period were $57.4 million, an increase of 17 percent over revenues of $49.0 million for the same period in 2006.

-- Net income for the period, including the impact of employee stock option expense, was $2.0 million, or $0.06 per diluted share, an increase of $1.4 million, or $0.04 per diluted share, compared to the same period in 2006.

-- Adjusted net income (non-GAAP) for the period, which excludes amortization of acquisition-related intangible assets, non-recurring items and compensation expense related to the issuance of employee stock options, was $4.4 million, or $0.13 per diluted share, an increase of $1.0 million, or $0.03 per diluted share, compared to the same period in 2006.



John Heyman, the Company's chief executive officer said, "We are very pleased with the great start of another exciting year. We have strong momentum in our business and we believe that will translate into continued growth in 2007."

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 high returns for our customers. Execution against our operational and strategic initiatives should drive continued growth throughout the year."


"We are very pleased with the progression of our overall financial model," said Mark Haidet, the Company's chief financial officer. "We continue to have good visibility into our revenue opportunities and see leverage in our operating model. Our working capital grew by $3.7 million in the quarter and, we expect that cash from annual operations should be in line with adjusted net income for the year."

Haidet continued, "We are re-affirming our annual revenue guidance and increasing our EPS guidance based on a favorable change in our anticipated cash tax rate. Our guidance is modeled on a 15% cash tax rate which has been reduced from 20% due to our increased visibility into utilization of research and development tax credits for the year. This change did not have a material impact on our EPS reported in the first quarter"

The Company's updated guidance is as follows:

                            Adjusted
                     Revenue    Earnings
                      Range   (non-GAAP) /
                     (millions)   Share Range
---------------------------------------- ------------ ----------------
Quarter ending June 30, 2007       $ 59 - $ 61 $  .14 - $.15
---------------------------------------- ------------ ----------------
Year ending Dec. 31, 2007 - previous   $245 - $260 $  .64 - $.67
---------------------------------------- ------------ ----------------
Year ending Dec. 31, 2007 - updated   $245 - $260 $  .67 - $.70
---------------------------------------- ------------ ----------------



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. In its press releases, the Company reports its net income and earnings per share on both Generally Accepted Accounting Principles ("GAAP") (which includes the non-cash share-based compensation charge) and non-GAAP (which excludes the non-cash share-based compensation charge) bases in order to facilitate analysis of the business and meaningful period-to-period comparison.

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 operating margin, 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. Adjusted net income and adjusted operating margin has been adjusted to exclude amortization of acquisition-related intangible assets, non-recurring items and compensation expense related to the issuance of employee stock options. The income tax provision is calculated on the Company's cash tax rate for the year (based off of actual cash expected to be paid to domestic and foreign governments). 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 first quarter 2007 conference call today at approximately 4:30 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 1-888-577-8990 - reference ID# 5766832.

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.

This press release may contain "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. Forward-looking statements include all statements that are not statements of historical fact regarding intent, belief or current expectations of the Company, its directors or its officers. 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. 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
                      March 31,  December 31,
                       2007      2006
                     -------------- -------------
Current assets
Cash and cash equivalents        $   13,340 $   15,720
Accounts receivable, net            37,954    35,203
Inventories, net                27,173    26,484
Deferred tax assets               8,550     9,327
Other current assets               1,860     1,310
                     -------------- -------------
     Total current assets          88,877    88,044
Property and equipment, net           14,422    14,726
Software development costs, net          5,797     5,019
Deferred tax assets, non-current         5,603     5,252
Goodwill                     62,045    61,948
Intangibles, net                 22,237    23,447
Other long-term assets               193      219
                     -------------- -------------
                     $   199,174 $  198,655
                     ============== =============
 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt facility         $    6,489 $   6,489
Current portion of long-term debt        7,528     7,439
Accounts payable and accrued liabilities    27,137    30,430
Accrued contractual obligations and
 payables due to Related Party            -     3,665
Client deposits and unearned revenue      14,340    10,365
                     -------------- -------------
     Total current liabilities       55,494    58,388
Client deposits and deferred revenues,
net of current portion               141      188
Long-term debt, net of current portion      19,258    20,895
Other long-term liabilities            4,690     3,213
                     -------------- -------------
     Total liabilities           79,583    82,684
                     -------------- -------------
Shareholders' equity
Common stock, no par value; 100,000,000
 shares authorized; 31,077,668 and
 30,923,800 shares issued and
 outstanding, respectively              -       -
Additional paid-in capital           139,480    137,151
Accumulated other comprehensive income       628      487
Accumulated deficit              (20,517)   (21,667)
                     -------------- -------------
     Total shareholders' equity      119,591    115,971
                     -------------- -------------
                     $   199,174 $  198,655
                     ============== =============


RADIANT SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
                    For the three months ended
                        March 31,
                  2007             2007
                  GAAP   Adjustments   Non-GAAP
                  -------- -----------   --------
Revenues:
 System sales           $32,015          $32,015
 Client support, maintenance and
 other services          25,424          25,424
                  --------         --------
  Total revenues         57,439          57,439
Cost of revenues:
 System sales            16,881     (42) (a) 16,839
 Client support, maintenance and
 other services          15,605     (72) (a) 15,533
                  -------- -----------   --------
  Total cost of revenues     32,486    (114) (e) 32,372
                  -------- -----------   --------
Gross profit             24,953     114  (e) 25,067
Operating Expenses:
 Product development         5,578    (123) (a)  5,455
 Sales and marketing         6,796    (220) (a)  6,576
 Depreciation of fixed assets    1,021           1,021
 Amortization of intangible assets  1,210   (1,210) (b)    -
 Lease restructuring charges     (300)    300  (c)    -
 General and administrative     6,465    (373) (a)  6,092
                  -------- -----------   --------
  Total operating expenses    20,770   (1,626) (e) 19,144
Income from operations        4,183    1,740  (e)  5,923
Interest and other expense, net     775            775
                  -------- -----------   --------
Income from operations before
income taxes             3,408    1,740  (e)  5,148
Income tax provision         (1,371)    (599) (d)  (772)
                  -------- -----------   --------
Net income              2,037    2,339  (e)  4,376
Net income per share
  Basic             $ 0.07          $ 0.14
                  ========         ========
  Diluted            $ 0.06          $ 0.13
                  ========         ========
Weighted average shares
outstanding:
  Basic              30,980          30,980
                  ========         ========
  Diluted             32,612          32,612
                  ========         ========
                  For the three months ended March
                          31,
                   2006           2006
                   GAAP  Adjustments   Non-GAAP
                  -------- -----------   --------
Revenues:
 System sales           $26,439          $26,439
 Client support, maintenance and
 other services          22,598          22,598
                  --------         --------
  Total revenues         49,037          49,037
Cost of revenues:
 System sales            14,052     (94) (a) 13,958
 Client support, maintenance and
 other services          12,766     (52) (a) 12,714
                  -------- -----------   --------
  Total cost of revenues     26,818    (146) (e) 26,672
                  -------- -----------   --------
Gross profit             22,219     146    22,365
Operating Expenses:
 Product development         5,627    (166) (a)  5,461
 Sales and marketing         6,230    (155) (a)  6,075
 Depreciation of fixed assets     741            741
 Amortization of intangible assets  2,047   (2,047) (b)    -
 General and administrative     5,995    (308) (a)  5,687
                  -------- -----------   --------
  Total operating expenses    20,640   (2,676) (e) 17,964
Income from operations        1,579    2,822  (e)  4,401
Interest and other expense, net     617            617
                  -------- -----------   --------
Income from operations before
income taxes              962    2,822  (e)  3,784
Income tax provision          (279)    143  (d)  (422)
                  -------- -----------   --------
Net income               683    2,679  (e)  3,362
Net income per share
  Basic             $ 0.02          $ 0.11
                  ========         ========
  Diluted            $ 0.02          $ 0.10
                  ========         ========
Weighted average shares
outstanding:
  Basic              30,838          30,838
                  ========         ========
  Diluted             32,973          32,973
                  ========         ========
(a) The Company adopted SFAS 123R 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. The 2007 and 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 first quarter of 2007 and 2006 was $830,000 and
$775,000, respectively, on a pre-tax basis.
(b) Adjustments represent purchase amortization from prior
acquisitions. Such amortization is commonly excluded from GAAP net
income by software companies and we therefore exclude these
amortization costs to provide more relevant and meaningful
comparisons of our operating results to that of our competitors.
(c) The lease restructuring credit to operating expense is a result of
adjusting our estimate related to a lease restructuring charge that
was taken during 2006. As was done in previous periods, items related
to lease restructurings have been excluded because such items are not
part of our core operations and we do not believe these to be common
costs that result from normal operating activities.
(d) The Company reports its non-GAAP income tax provision on a cash
tax rate basis which is estimated to be 15% for 2007 and 11% for
2006. Note that the actual cash tax rate for 2006 was approximately
10% and therefore an adjustment was made during the fourth quarter of
2006 which resulted in a decrease in the tax expense recognized in
the first quarter of 2006.
(e) The Company provides adjusted financial information as additional
information relating to the Company's operations. The measures are
not in accordance with, or an alternative for GAAP and may be
different from other adjusted financial statements of other
companies. The adjusted financial information excludes such items as
amortization of acquisition-related intangible assets, items that are
not considered part of our normal operations and compensation expense
related to the issuance of employee stock options. The income tax
provision is calculated based on the Company's cash tax rate for the
year and excludes the impact of changes in the valuation allowance
against deferred tax assets.


[ Back To TMCnet.com's Homepage ]