EX-99.1 2 a5196779ex99-1.htm EXHIBIT 99.1 Exhibit 99.1
 
Exhibit 99.1
 
 
For More Information,
Please Contact
Sara Ford (770) 576-6832
 
Radiant Systems, Inc. Reports Second Quarter Results
 
 
Record Company revenue results in adjusted earnings of $0.13 per diluted share in the second quarter
 
 
ATLANTA--(BUSINESS WIRE)--July 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 second quarter and six months ended June 30, 2006.
 
Summary financial results for the second quarter of 2006 are as follows:
 
·  
Total revenues for the period were $54.9 million, an increase of 39 percent over revenues of $39.5 million for the same period in 2005.
·  
Net income for the period, including the impact of employee stock option expense, was $11.6 million, or approximately $0.35 per diluted share, an increase of $10.4 million, or $0.31 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 $4.3 million, or $0.13 per diluted share, an increase of $1.3 million, or $0.03 per diluted share, compared to the same period in 2005.
·  
During the period, the Company recorded two significant one-time items: a lease restructuring charge of $1.7 million associated with the relocation of a group to new facilities; and a gain of $11.3 million associated with the removal of the valuation allowance against the Company’s deferred tax assets. These two one-time items have been excluded from adjusted net income (non-GAAP) for the period.
 
Summary year to date financial results for the six month period ended June 30, 2006 are as follows:
 
·  
Total revenues for the period were $103.9 million, an increase of 35 percent over revenues of $76.9 million for the same period in 2005.
·  
Net income for the period, including the impact of employee stock option expense, was $12.3 million, or approximately $0.37 per diluted share, an increase of $9.9 million, or $0.29 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 $7.7 million, or $0.23 per diluted share, an increase of $2.2 million, or $0.05 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 reception our offerings are seeing in the marketplace, as indicated by another record revenue quarter. New product introductions increased sales activity and complementary acquisitions 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. These factors should result in increased revenues and earnings 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 execute well on increasing our operating leverage and working capital management. Year to date we have purchased approximately 453,000 shares of common stock under our stock repurchase program at an average market price of $10.91 per share, representing a long term value-creation opportunity for our shareholders.”
 
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.” 
 
The Company’s updated guidance is as follows:
 
 
Revenue Range (millions)
Adjusted Earnings (non-GAAP) / Share Range
Quarter ending September 30, 2006
$55-$57
$.13 - $.15
Year ending Dec. 31, 2006 - previous
$210 - $218
$.48 - $.55
Year ending Dec. 31, 2006 - updated
$213 - $218
$.50 - $.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 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 second 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# 2690012.
 
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 900 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; (iv) the Company's new or future product offerings, and (v) the declaration and payment of dividends. 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.

 
 
- ### -
 
 
 
RADIANT SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
           
           
ASSETS
          
           
   
June 30,
 
December 31,
 
   
2006
  
2005
  
               
               
Current assets 
              
Cash and cash equivalents
  
$
10,854
  
$
17,641
  
Accounts receivable, net
    
32,627
   
27,559
 
Inventories
    
26,268
   
18,093
 
Deferred tax ssets
    
3,826
   
-
 
Other short-term assets
    
2,234
   
2,287
 
Total current assets
    
75,809
   
65,580
 
               
Property and equipment, net 
    
13,095
   
9,607
 
Software development costs, net 
    
3,059
   
2,249
 
Deferred tax assets, non-current 
    
10,414
   
-
 
Goodwill 
    
61,420
   
44,239
 
Intangibles, net 
    
27,542
   
20,537
 
Other long-term assets 
    
227
   
293
 
               
Total assets 
  
$
191,566
  
$
142,505
  
               
               
LIABILITIES AND SHAREHOLDERS' EQUITY 
              
               
               
Current liabilities
              
Short-term debt facility
    
1,800
   
-
 
Current portion of long-term debt
    
7,271
   
4,329
 
Accounts payable and accrued liabilities
    
33,142
   
23,992
 
Accrued contractual obligations and payables due to RelatedParty
    
2,962
   
1,947
 
Customer deposits and unearned revenue
    
14,358
   
12,490
 
Total current liabilities
    
59,533
   
42,758
 
               
               
Client deposits and deferred revenues, net of current portion
    
282
   
376
 
Long-term debt, less current portion 
    
24,084
   
14,133
 
Other long-term liabilities 
    
1,138
   
805
 
Total liabilities
    
85,037
   
58,072
 
               
Shareholders' equity 
              
Common stock, no par value; 100,000,000 shares authorized;
              
30,697,132 and 30,094,973 shares issued and outstanding, respectively
    
-
   
-
 
Additional paid-in capital
    
134,251
   
124,744
 
Accumulated other comprehensive loss
    
(28
)
  
(287
)
Accumulated deficit
    
(27,694
)
  
(40,024
)
Total shareholders' equity
    
106,529
   
84,433
 
           
 
Total liabilities and shareholders' equity 
  
$
191,566
  
$
142,505
  
               
 
 
 
RADIANT SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
                         
                         
 
    
For the three months ended June 30,
  
     
2006
              
2006
  
 
    
GAAP 
    
Adjustments
        
Non-GAAP
  
Revenues:
                        
System sales
  
$
32,088
            
$
32,088
  
Client support, maintenance and other services
    
22,789
             
22,789
 
Total revenues
    
54,877
             
54,877
 
                         
Cost of revenues:
                        
System sales
    
16,570
   
(134
)
(a
)
  
16,436
 
Client support, maintenance and other services
    
14,065
   
(50
)
(a
)
  
14,015
 
Total cost of revenues
    
30,635
   
(184
)
      
30,451
 
                         
Gross profit
    
24,242
   
184
       
24,426
 
                         
Operating Expenses:
                        
Product development
    
5,377
   
(152
)
(a
)
  
5,225
 
Sales and marketing
    
6,601
   
(196
)
(a
)
  
6,405
 
Depreciation of fixed assets
    
801
             
801
 
Amortization of intangible assets
    
2,047
   
(2,047
)
(b
)
  
-
 
Lease restructuring charges
    
1,663
   
(1,663
)
(c
)
  
-
 
General and administrative
    
6,620
   
(327
)
(a
)
  
6,293
 
Total operating expenses
    
23,109
   
(4,385
)
      
18,724
 
                         
Income from operations
    
1,133
   
4,569
       
5,702
 
                         
Interest and other expense, net
    
625
             
625
 
                         
Income from operations before income taxes
    
508
   
4,569
        
5,077
 
                         
Income tax benefit (provision)
    
11,139
   
(11,906
)
(d
)
  
(767
)
                         
Net income
  
$
11,647
    
(7,337
)
    
$
4,310
  
                         
Net income per share
                        
Basic
  
$
0.38
            
$
0.14
  
Diluted
  
$
0.35
            
$
0.13
  
                         
Weighted average shares outstanding:
                        
Basic
    
30,994
             
30,994
 
Diluted
    
32,893
             
32,893
 
                         
                         
 
    
For the three months ended June 30,
  
     
2005
              
2005
  
 
    
GAAP 
    
Adjustments
        
Non-GAAP
  
                         
Revenues:
                        
System sales
  
$
21,752
            
$
21,752
  
Client support, maintenance and other services
    
17,773
             
17,773
 
Total revenues
    
39,525
             
39,525
 
                         
Cost of revenues:
                        
System sales
    
11,143
             
11,143
 
Client support, maintenance and other services
    
11,725
             
11,725
 
Total cost of revenues
    
22,868
   
-
       
22,868
 
                         
Gross profit
    
16,657
             
16,657
 
                         
Operating Expenses:
                        
Product development
    
3,336
             
3,336
 
Sales and marketing
    
4,504
             
4,504
 
Depreciation of fixed assets
    
815
             
815
 
Amortization of intangible assets
    
1,283
   
(1,283
)
(b
)
  
-
 
Impairment of HotelTools software
    
550
   
(550
)
(c
)
  
-
 
Lease restructuring charges
    
-
             
-
 
General and administrative
    
4,488
             
4,488
 
Total operating expenses
    
14,976
   
(1,833
)
      
13,143
 
                         
Income from operations
    
1,681
   
1,833
       
3,514
 
                         
Interest and other expense, net
    
211
             
211
 
                         
Income from operations before income taxes
    
1,470
   
1,833
       
3,303
 
                         
Income tax provision
    
241
   
91
 
(d
)
  
332
 
                         
Net income
  
$
1,229
    
1,742
     
$
2,971
  
                         
Net income per share
                        
Basic
  
$
0.04
            
$
0.10
  
Diluted
  
$
0.04
            
$
0.10
  
                         
Weighted average shares outstanding:
                        
Basic
    
29,231
             
29,231
 
Diluted
    
31,199
             
31,199
 
                         
         
 
    
For the six months ended June 30,
  
     
2006
              
2006
  
 
    
GAAP 
    
Adjustments
        
Non-GAAP
  
Revenues:
                        
System sales
  
$
58,527
            
$
58,527
  
Client support, maintenance and other services
    
45,387
             
45,387
 
Total revenues
    
103,914
             
103,914
 
                         
Cost of revenues:
                        
System sales
    
30,622
   
(227
)
(a
)
  
30,395
 
Client support, maintenance and other services
    
26,831
   
(103
)
(a
)
  
26,728
 
Total cost of revenues
    
57,453
   
(330
)
      
57,123
 
                         
Gross profit
    
46,461
   
330
       
46,791
 
                         
Operating Expenses:
                        
Product development
    
11,004
   
(318
)
(a
)
  
10,686
 
Sales and marketing
    
12,831
   
(352
)
(a
)
  
12,479
 
Depreciation of fixed assets
    
1,542
             
1,542
 
Amortization of intangible assets
    
4,094
   
(4,094
)
(b
)
  
-
 
Lease restructuring charges
    
1,663
   
(1,663
)
(c
)
  
-
 
General and administrative
    
12,615
   
(634
)
(a
)
  
11,981
 
Total operating expenses
    
43,749
   
(7,061
)
      
36,688
 
                         
Income from operations
    
2,712
   
7,391
       
10,103
 
                         
Interest and other expense, net
    
1,242
             
1,242
 
                         
Income from operations before income taxes
    
1,470
   
7,391
       
8,861
 
                         
Income tax benefit (provision)
    
10,860
   
(12,050
)
(d
)
  
(1,190
)
                         
Net income
  
$
12,330
    
(4,659
)
    
$
7,671
  
                         
Net income per share
                        
Basic
  
$
0.40
            
$
0.25
  
Diluted
  
$
0.37
            
$
0.23
  
                         
Weighted average shares outstanding:
                        
Basic
    
30,916
             
30,916
 
Diluted
    
33,060
             
33,060
 
                         
                         
 
    
For the six months ended June 30,
  
     
2005
              
2005
  
 
    
GAAP 
    
Adjustments
        
Non-GAAP
  
                         
Revenues:
                        
System sales
  
$
42,154
            
$
42,154
  
Client support, maintenance and other services
    
34,710
             
34,710
 
Total revenues
    
76,864
             
76,864
 
                         
Cost of revenues:
                        
System sales
    
21,772
             
21,772
 
Client support, maintenance and other services
    
22,985
             
22,985
 
Total cost of revenues
    
44,757
   
-
       
44,757
 
                         
Gross profit
    
32,107
             
32,107
 
                         
Operating Expenses:
                        
Product development
    
6,309
             
6,309
 
Sales and marketing
    
8,715
             
8,715
 
Depreciation of fixed assets
    
1,626
             
1,626
 
Amortization of intangible assets
    
2,566
   
(2,566
)
(b
)
  
-
 
Impairment of HotelTools software
    
550
   
(550
)
(c
)
  
-
 
Lease restructuring charges
    
-
             
-
 
General and administrative
    
9,048
             
9,048
 
Total operating expenses
    
28,814
   
(3,116
)
      
25,698
 
                         
Income from operations
    
3,293
   
3,116
       
6,409
 
                         
Interest and other expense, net
    
468
             
468
 
                         
Income from operations before income taxes
    
2,825
   
3,116
       
5,941
 
                         
Income tax provision
    
424
   
91
 
(d
)
  
515
 
                         
Net income
  
$
2,401
    
3,025
     
$
5,426
  
                         
Net income per share
                        
Basic
  
$
0.08
            
$
0.19
  
Diluted
  
$
0.08
            
$
0.18
  
                         
Weighted average shares outstanding:
                        
Basic
    
29,240
             
29,240
 
Diluted
    
30,802
             
30,802
 
                         
(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. 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 month and six month periods ended June 30, 2006 was approximately $0.9 million and $1.7 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 and 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.