Wind River Reports Third Quarter Revenues of $44.6 Million - Company Financial Information

Edge: Work-Group Computing Report, Nov 22, 1999

Wind River Systems, Inc. (NASDAQ:WIND), a leading provider of software and services for smart devices in the Internet age, reported operating results for the third quarter ended October 31, 1999.

Total revenues for the third quarter were $44.6 million, a 30% increase from revenues of $34.2 million reported in the same period of fiscal 1999. Excluding charges incurred in connection with hiring a new chief executive officer, implementation of an enterprise resource planning system and amortization of goodwill, operating income in the third quarter was $10.4 million compared to $10.6 million for the corresponding period in fiscal year 1999. Also excluding these charges, net income was $7.4 million, compared to net income of $7.3 million for the third quarter of fiscal year 1999 and diluted earnings per share were $0.17 compared to diluted earnings per share of $0.17 for the same period in fiscal 1999.

Revenues for the first nine months of fiscal 2000 were $117.7 million, a 27% increase from revenues of $92.7 million in the same period of fiscal 1999. Excluding the charges mentioned above, operating income for the first nine months was $25.3 million, compared to $25.5 million for the corresponding period in fiscal year 1999. Also excluding these charges, net income was $18.4 million or $0.42 per diluted share, compared to net income of $17.6 million or $0.40 per diluted share for the first nine months of fiscal 1999.

On an as-reported basis, operating income for the third quarter was $7.9 million, compared to $10.4 million for the corresponding period in fiscal year 1999. Net income for the third quarter was $5.9 million or $0.13 per diluted share, compared to net income of $7.1 million or $0.16 per diluted share for the corresponding period of fiscal year 1999. For the first nine months, operating income was $20.1 million, compared to $24.9 million for the corresponding period in fiscal year 1999. Net income was $14.4 million or $0.33 per diluted share, compared to net income of $17.3 million or $0.40 per diluted share for the corresponding period in fiscal 1999.

During the third quarter, Wind River incurred charges of $1.3 million in connection with hiring a new chief executive officer, $975,000 related to non-capitalizable costs associated with the implementation of an enterprise resource planning system and $207,000 of amortization of goodwill.

"Overall I am pleased with the results," stated Tom St. Dennis, president and CEO of Wind River Systems. "We are continuing to grow our top line revenue while strategically investing for the future with an overall goal of growing the company by delivering reliable, adaptable software solutions that enable our customers to create innovative smart devices in the Internet age. To this end, one of the most important announcements we made during the quarter was the definitive agreement to acquire Integrated Systems, Inc. (Nasdaq:INTS). We believe that this acquisition will provide the technology and resources necessary to bring more products to market faster."

Other Highlights of the Quarter Other highlights of the quarter include a number of key relationships and interesting design wins. The Center of Excellence initiative was announced in September under which Wind River will work on a one-on-one basis with major microprocessor vendors to jointly engineer and market optimized solutions based on the Tornado embedded development platform and VxWorks real-time operating system (RTOS). The first semiconductor vendor to enter into such a collaboration with Wind River was Intel Corporation. The first joint solutions for the Intel Celeron, Pentium II and Pentium processor families are now available.

Wind River also continued to move ahead in the Internet equipment market. During the quarter, it was announced that VxWorks would be the first RTOS to support Intel's new IXP network processor. The IXP is the primary component of Intel's new initiative in the network processor market and is geared towards application-specific embedded designs for products used in the Internet infrastructure such as high-speed network switches and other network access products. Original equipment manufacturers will now be able to use Tornado and VxWorks to build IXP1200-based Internet equipment.

Finally, Lucent Technologies Microelectronics Group, Trillium Digital Systems and Wind River announced yesterday that they are jointly creating an integrated hardware/software development kit based on Lucent's system-on-a-chip (SoC) for Internet telephones that can reduce product development time by as much as six months. This collaboration provides the world's most complete integrated Internet telephone solution, giving equipment developers everything they need to quickly and easily build a voice over Internet Protocol (IP) phone.

Wind River Systems, Inc., http://www.windriver.com, is a worldwide leader in embedded software. Wind River provides software development tools, real-time operating systems, and advanced connectivity for use in products throughout the Internet, telecommunications and data communications, digital imaging, networking, medical, computer peripherals, automotive, and aerospace/defense markets. Wind River is how smart things think. Founded in 1983, Wind River is headquartered in Alameda, California, with operations in fifteen countries worldwide.