| [August 28, 2008] |
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Wind River Reports Strong Second Quarter Fiscal Year 2009 Results
ALAMEDA, Calif. --(Business Wire)-- Wind River Systems, Inc. (NASDAQ: WIND), the global leader in Device Software Optimization (DSO), today reported results for the second quarter of fiscal year 2009, ended July 31, 2008. Revenues for the second quarter of fiscal 2009 were $91.9 million, compared with $84.6 million reported in the second quarter of fiscal 2008, an increase of 9 percent.
GAAP Results: Net income for the second quarter of fiscal 2009 was $8.8 million, compared to a net income of $4.3 million in the second quarter a year ago, an increase of 104 percent. Net income per diluted share for the quarter was $0.11, compared to a net income per diluted share of $0.05 in the second quarter a year ago, an increase of 120 percent.
Non-GAAP Results: Non-GAAP net income for the second quarter of fiscal 2009 was $14.0 million, compared to non-GAAP net income of $10.5 million in the second quarter a year ago, an increase of 33 percent. Non-GAAP net income per diluted share for the quarter was $0.17, compared to $0.12 in the second quarter a year ago, an increase of 42 percent. A detailed reconciliation of GAAP to non-GAAP results is provided at the end of this release.
Deferred revenues as of July 31, 2008 were $134.2 million, compared to $115.4 million as of July 31, 2007, an increase of 16 percent. Cash, cash equivalents and investments totaled $201.6 million as of July 31, 2008. During the second quarter of fiscal 2009, Wind River repurchased 2.2 million shares for a total amount of $18.6 million. Cash flows from operations for the second quarter of fiscal 2009 were $9.9 million.
"Wind River's strong business execution in the second quarter drove impressive revenue and earnings growth," said Ken Klein, chairman, president and chief executive officer of Wind River. "It is clear that investments we have made in products, sales and alliances as well as our alignment by product division and vertical market focus have continued to fuel our strong business momentum in the first half of fiscal year 2009."
Financial Outlook
For the full fiscal year 2009 ending January 31, 2009:
-- Revenue is expected to be in the range of $365.0 million to $375.0 million.
-- GAAP net income per share is expected to be in the range of $0.17 to $0.19.
-- Non-GAAP net income per share is expected to be in the range of $0.50 to $0.52.
For the third quarter fiscal 2009 ending October 31, 2008:
-- Revenue is expected to be in the range of $88.0 million to $90.0 million.
-- GAAP net income per share is expected to be in the range of $0.01 to $0.02.
-- Non-GAAP net income per share is expected to be in the range of $0.08 to $0.09.
A reconciliation of GAAP to non-GAAP targets is provided at the end of this release.
Wind River will also provide directional commentary on its expected financial performance for fiscal year 2010 during its quarterly conference call today.
Conference Call
Wind River will hold its quarterly conference call today at 5:00 p.m. ET/2:00 p.m. PT to discuss its second quarter financial results, business highlights and outlook. The conference call may be accessed via webcast at http://ir.windriver.com or by calling +1.800.399.5927 in the United States or +1.706.643.3427 internationally.
A replay of the webcast can be accessed via Wind River's web site at http://ir.windriver.com. Additionally, an audio replay of the conference call will be available through September 5, 2008 by calling +1.800.642.1687 in the United States or +1.706.645.9291 internationally (conference id required: 47350981).
Use of Non-GAAP Financial Information
This press release includes the following supplemental non-GAAP financial measures: non-GAAP gross profit, non-GAAP operating income, non-GAAP net income and non-GAAP net income per diluted share. The presentation of this supplemental non-GAAP financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with generally accepted accounting principles. In addition, these measures may be materially different from non-GAAP financial measures used by other companies. Wind River is providing these non-GAAP financial measures because it believes that such measures provide important supplemental information to management and investors about the company's core operating results, primarily because the non-GAAP measures exclude certain expenses and other amounts that management does not consider to be indicative of the company's core operating results or business outlook. Wind River management uses these non-GAAP financial measures, in addition to the corresponding GAAP financial measures, in evaluating the company's operating performance, in planning and forecasting future periods, in making decisions regarding business operations and the allocation of resources, and in comparing the company's performance against its historical performance. For a description of these non-GAAP financial measures, including the reasons management uses these measures, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP, please see the following sections of this release entitled "About Non-GAAP Financial Measures," "Reconciliation of GAAP to Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Net Income per Share Targets." All non-GAAP financial measures should be read in conjunction with the comparable information presented in accordance with GAAP. Unless specified otherwise in this release, all references to GAAP and non-GAAP net income per share are calculated on a fully-diluted basis.
Forward-Looking Statements
This press release contains forward-looking statements, including those relating to expected revenues and GAAP and non-GAAP net income per share for the three-month period ending October 31, 2008 and the fiscal year ending January 31, 2009, as well as statements made by our CEO about our business. Words such as "expects," "anticipates," "projects," "intends," "plans," "believes" and "estimates," variations of such words and similar expressions are also intended to identify forward-looking statements. These forward-looking statements 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 success of Wind River's implementation of its new and current products, the success of our business models and market strategies, the ability to address rapidly changing technology and markets and to deliver our products on a timely basis, our ability to grow our Linux business, the ability of our customers to sell products that include the company's software, the impact of competitive products and pricing, weakness in the economy generally or in the technology sector specifically, the success of the company's strategic relationships, the impact of other costs and the risk factors detailed in Wind River's Annual Report on Form 10-K for the fiscal year ended January 31, 2008, its Quarterly Reports on Form 10-Q and other periodic filings with the Securities and Exchange Commission. Wind River 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 Wind River
Wind River is the global leader in Device Software Optimization (DSO). Wind River enables companies to develop, run and manage device software faster, better, at lower cost and more reliably. Wind River platforms are pre-integrated, fully standardized, enterprise-wide development solutions. They reduce effort, cost and risk and optimize quality and reliability at all phases of the device software development process, from concept to deployed product.
Founded in 1981, Wind River is headquartered in Alameda, California, with operations worldwide. To learn more, visit Wind River at www.windriver.com or call 1-800-872-4977.
Wind River Systems and the Wind River Systems logo are trademarks of Wind River Systems, Inc., and VxWorks and WIND RIVER are registered trademarks of Wind River Systems, Inc. Third party marks and brands are the property of their respective holders.
WIND RIVER SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
July 31, July 31,
------------------ ------------------
2008 2007 2008 2007
--------- -------- -------- ---------
Revenues, net:
Product $ 34,876 $ 31,993 $ 67,774 $ 60,189
Subscription 32,507 30,228 65,577 59,053
Service 24,532 22,408 46,429 43,436
--------- -------- -------- ---------
Total revenues, net 91,915 84,629 179,780 162,678
Cost of revenues:
Product 632 667 1,382 1,192
Subscription 3,644 4,270 8,306 8,758
Service 16,063 14,381 32,809 28,351
Amortization of purchased
intangibles 531 620 1,059 1,205
--------- -------- -------- ---------
Total cost of revenues 20,870 19,938 43,556 39,506
--------- -------- -------- ---------
Gross profit 71,045 64,691 136,224 123,172
Operating expenses:
Selling and marketing 33,092 31,888 68,264 65,311
Product development and
engineering 20,825 20,819 41,132 40,700
General and administrative 8,165 9,215 17,205 19,562
Amortization of other
intangibles 108 160 215 272
Restructuring and other charges
(reversals) (13) - 2,917 -
--------- -------- -------- ---------
Total operating expenses 62,177 62,082 129,733 125,845
--------- -------- -------- ---------
Net income (loss) from
operations 8,868 2,609 6,491 (2,673)
Other income, net 1,663 1,967 4,226 3,908
--------- -------- -------- ---------
Income before income taxes 10,531 4,576 10,717 1,235
Provision for income taxes 1,736 263 1,460 1,473
--------- -------- -------- ---------
Net income (loss) $ 8,795 $ 4,313 $ 9,257 $ (238)
========= ======== ======== =========
Net income (loss) per share:
Basic and diluted $ 0.11 $ 0.05 $ 0.11 $ (0.00)
========= ======== ======== =========
Shares used in per share
calculation:
Basic 77,565 86,151 81,346 85,713
========= ======== ======== =========
Diluted 78,993 87,181 82,018 85,713
========= ======== ======== =========
WIND RIVER SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
July 31, January 31,
2008 2008
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 98,709 $ 101,635
Short-term investments 11,016 22,646
Accounts receivable, net 65,585 85,680
Prepaid and other current assets 19,183 18,855
----------- -----------
Total current assets 194,493 228,816
Long-term investments 91,837 119,867
Property and equipment, net 76,958 77,981
Goodwill 115,354 114,371
Other intangibles, net 3,786 4,961
Other assets 18,824 17,923
----------- -----------
Total assets $ 501,252 $ 563,919
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,644 $ 9,341
Accrued and other current liabilities 14,596 21,817
Accrued compensation 26,941 24,433
Income taxes payable 3,773 614
Deferred revenues 113,861 119,886
----------- -----------
Total current liabilities 166,815 176,091
Long-term deferred revenues 20,367 14,647
Other long-term liabilities 7,925 7,589
----------- -----------
Total liabilities 195,107 198,327
----------- -----------
Stockholders' equity:
Common stock 92 91
Additional paid-in-capital 880,183 865,565
Treasury stock (132,602) (49,802)
Accumulated other comprehensive income 7,296 7,057
Accumulated deficit (448,824) (457,319)
----------- -----------
Total stockholders' equity 306,145 365,592
----------- -----------
Total liabilities and stockholders' equity $ 501,252 $ 563,919
=========== ===========
WIND RIVER SYSTEMS, INC.
ABOUT NON-GAAP FINANCIAL MEASURES
In addition to the company's condensed consolidated financial
statements prepared in accordance with generally accepted accounting
principles, or GAAP, Wind River is providing in this release certain
supplemental non-GAAP measures of financial performance. These
non-GAAP financial measures include: non-GAAP gross profit, non-GAAP
operating income, non-GAAP net income and non-GAAP net income per
diluted share. For a reconciliation of these non-GAAP financial
measures to the most directly comparable financial measures prepared
in accordance with GAAP, see the following section of this release
entitled "Reconciliation of GAAP to Non-GAAP Financial Measures."
The presentation of supplemental non-GAAP financial information,
which is not prepared under any comprehensive set of accounting rules
or principles, is not intended to be considered in isolation or as a
substitute for, or superior to, the financial information prepared and
presented in accordance with GAAP. In addition, these measures may be
materially different from non-GAAP financial measures used by other
companies.
Wind River is providing these non-GAAP financial measures because it
believes that such measures provide important supplemental information
to management and investors about the company's core operating
results, primarily because the non-GAAP measures exclude certain
expenses and other amounts that management does not consider to be
indicative of the company's core operating results or business
outlook. Wind River management uses these non-GAAP financial measures,
in addition to the corresponding GAAP financial measures, in
evaluating the company's operating performance, in planning and
forecasting future periods, in making decisions regarding business
operations and the allocation of resources, and in comparing the
company's performance against its historical performance.
Wind River excludes the following items from its non-GAAP financial
measures:
Stock-based compensation expense. The company's non-GAAP financial
measures exclude stock-based compensation expense related to the
grant of stock options, other related instruments and restricted
stock issued in the Interpeak acquisition. While stock-based
compensation is a significant expense affecting the company's
results of operations, management excludes stock-based compensation
from its budget and operating decision-making processes because it
believes that these non-cash expenses do not reflect the company's
ongoing operating results. Since stock-based compensation expense is
excluded from non-GAAP financial measures, the company also excludes
unamortized stock-based compensation in its computation of non-GAAP
dilutive shares, which generally decreases the weighted number of
buyback shares under the treasury stock method.
Amortization of purchased and other intangible assets. In accordance
with GAAP, Wind River incurs expenses for the amortization of
purchased and other intangibles resulting from prior acquisitions.
These charges are not factored into management's evaluation of
potential acquisitions, or our performance after completion of
acquisitions, because they are not related to our core operating
performance. In addition, the frequency and amount of such charges
vary significantly based on the size and timing of our acquisitions
and the maturities of the businesses being acquired. Excluding this
data provides investors with a basis to compare the company against
the performance of other companies without this variability.
Costs incurred for stock option review and related litigation. The
company's non-GAAP financial measures exclude costs incurred for its
historical stock option review and the related litigation costs.
These amounts are excluded because they are not related to the
company's ongoing business operating results.
Other costs. Wind River excludes amounts from non-GAAP financial
measures related to restructuring and other charges, employer
payroll taxes on stock option exercises and impairments and net
losses on investments. The company excludes such costs because
management believes that they are not related to the company's core
operating results and because the frequency and variability in the
nature and amount of the charges can vary significantly from period
to period.
Income tax related to non-GAAP items. In order to present full
non-GAAP results, the company adjusts its provision for income taxes
to reflect the tax effects of excluding the non-GAAP items noted
above. In addition, the company includes the associated tax benefit
related to stock option net operating losses and excludes amounts in
its non-GAAP financial measures related to the establishment or
reversal of income tax valuation allowances as management believes
that such amounts are not indicative of the company's ongoing
business operating results and they are not included in budget or
planning processes.
All supplemental non-GAAP financial measures should be read in
conjunction with the comparable information presented in accordance
with generally accepted accounting principles in the United States.
WIND RIVER SYSTEMS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
July 31, July 31,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
GAAP gross profit $ 71,045 $ 64,691 $136,224 $123,172
Stock-based compensation (1) 580 690 1,229 1,276
Amortization of purchased and
other intangibles 531 620 1,059 1,205
Employer payroll taxes on
stock option exercises 14 32 43 41
--------- --------- --------- ---------
Non-GAAP gross profit $ 72,170 $ 66,033 $138,555 $125,694
========= ========= ========= =========
GAAP operating income (loss) $ 8,868 $ 2,609 $ 6,491 $ (2,673)
Stock-based compensation (1) 4,191 5,527 8,479 10,864
Amortization of purchased and
other intangibles 639 780 1,274 1,477
Costs incurred for stock
option review and related
litigation - 605 - 1,664
Restructuring and other
charges (reversals) (13) - 2,917 -
Employer payroll taxes on
stock option exercises 53 197 86 239
--------- --------- --------- ---------
Non-GAAP operating income $ 13,738 $ 9,718 $ 19,247 $ 11,571
========= ========= ========= =========
GAAP net income (loss) $ 8,795 $ 4,313 $ 9,257 $ (238)
Stock-based compensation (1) 4,191 5,527 8,479 10,864
Amortization of purchased and
other intangibles 639 780 1,274 1,477
Costs incurred for stock
option review and related
litigation - 605 - 1,664
Restructuring and other
charges (reversals) (13) - 2,917 -
Employer payroll taxes on
stock option exercises 53 197 86 239
Impairments and net losses on
investments 24 - 381 50
Income tax related to non-GAAP
adjustments 277 (908) (647) (411)
--------- --------- --------- ---------
Non-GAAP net income $ 13,966 $ 10,514 $ 21,747 $ 13,645
========= ========= ========= =========
GAAP net income (loss) per
diluted share $ 0.11 $ 0.05 $ 0.11 $ (0.00)
Stock-based compensation (1) 0.05 0.06 0.10 0.12
Amortization of purchased and
other intangibles 0.01 0.01 0.02 0.02
Costs incurred for stock
option review and related
litigation - 0.01 - 0.02
Restructuring and other
charges (reversals) - - 0.04 -
Employer payroll taxes on
stock option exercises - - - -
Impairments and net losses on
investments - - - -
Income tax related to non-GAAP
adjustments - (0.01) (0.01) -
--------- --------- --------- ---------
Non-GAAP net income per
diluted share $ 0.17 $ 0.12 $ 0.26 $ 0.16
========= ========= ========= =========
Shares used in GAAP per
diluted share amounts 78,993 87,181 82,018 85,713
Adjustments to diluted shares
related to non-GAAP items 1,295 855 981 1,865
--------- --------- --------- ---------
Shares used in non-GAAP per
diluted share amounts 80,288 88,036 82,999 87,578
========= ========= ========= =========
(1) Includes stock-based
compensation expense as
follows:
Cost of revenues:
Product $ 14 $ 19 $ 30 $ 34
Subscription 361 435 774 794
Service 205 236 425 448
--------- --------- --------- ---------
Total cost of revenues 580 690 1,229 1,276
--------- --------- --------- ---------
Operating expenses:
Selling and marketing 1,395 1,562 2,864 2,982
Product development and
engineering 848 1,044 1,777 2,227
General and administrative 1,368 2,231 2,609 4,379
--------- --------- --------- ---------
Total operating expenses 3,611 4,837 7,250 9,588
--------- --------- --------- ---------
Total stock-based compensation
expense $ 4,191 $ 5,527 $ 8,479 $ 10,864
========= ========= ========= =========
WIND RIVER SYSTEMS, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME PER SHARE TARGETS
(Unaudited)
Three Months Ending
October 31, 2008
---------------------
GAAP net income per diluted share range $ 0.01 - $ 0.02
Adjustments:
Stock-based compensation 0.05 0.05
Amortization of purchased and other
intangibles 0.01 0.01
Other adjustments (1) 0.01 0.01
--------- ---------
Non-GAAP net income per diluted share range $ 0.08 - $ 0.09
========= =========
Twelve Months Ending
January 31, 2009
---------------------
GAAP net income per diluted share range $ 0.17 - $ 0.19
Adjustments:
Stock-based compensation 0.21 0.21
Amortization of purchased and other
intangibles 0.04 0.04
Other adjustments (1) 0.08 0.08
--------- ---------
Non-GAAP net income per diluted share range $ 0.50 - $ 0.52
========= =========
(1)Other adjustments include restructuring and other charges, employer
payroll taxes on stock option exercises and the tax effects of
excluding the non-GAAP items noted above.
The GAAP and non-GAAP net income per share targets provided above and
elsewhere in this press release are estimates. Wind River's future
performance involves risks and uncertainties and the company's actual
results could differ materially from such estimates. Some of the
factors that could affect the company's operating results are set
forth under the caption "Forward-Looking Statements" above in this
release.
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