ALAMEDA, Calif.--(BUSINESS WIRE)--May 20, 1999--Wind River Systems, Inc. (Nasdaq:WIND), the world leader in embedded development software and engineering services for the post-PC era, reported operating results for the first quarter ended April 30, 1999. Total revenues for the first quarter were $32.6 million, a 23% increase from revenues of $26.4 million reported in the same period of fiscal 1999. Operating income in the first quarter was $6.4 million, compared to $6.3 million for the corresponding period in fiscal year 1999. Net income, including one-time charges, for the first quarter of fiscal year 2000 was $4.2 million, compared to net income of $4.4 million for the first quarter of fiscal year 1999. As announced on April 7, 1999, Wind River Systems purchased certain assets of Xact, Inc. As part of this acquisition, Wind River Systems hired the Xact employee team and incurred pre-tax charges of approximately $800,000 related to the impairment of previous investments and distribution arrangements with Xact. The one-time charges are included in other income. For the first quarter, diluted earnings per share of $0.10 decreased from $0.11 earned in the same period in fiscal 1999. Excluding the pre-tax charges associated with the Xact transaction, Wind River Systems would have earned $0.11 per diluted share. All diluted earnings per share numbers have been adjusted to reflect a 3-for-2 stock split on February 4, 1999. "Given the quarter reset that we made in early April, I am happy that we met the revised revenue and earnings goals," stated Ronald A. Abelmann, president and CEO. "Our acquisition of the assets of Xact and the successful recruitment of its engineering team, combined with the production release of Tornado(TM) II, should provide an excellent baseline for continued growth through the year," added Abelmann. "Shortly after the close of the quarter, we began shipping Tornado II, the first major upgrade to our award-winning development environment for embedded software. As the embedded industry becomes more mainstream and post-PC era takes hold, new developers are entering our market with a different set of expectations. The ease-of-use in Tornado II will fuel innovation and accelerate the introduction of new products," said Jerry Fiddler, chairman and co-founder of Wind River Systems. Other Highlights of the Quarter Wind River technology is being used in many of today's most innovative products. During the quarter Wind River software could be found in throughout the Internet, in infrastructure technology and connected devices. Products in the Internet infrastructure based on Tornado and VxWorks(R) include Broadband Access Systems' Cuda 12000 IP access switch which was selected as the best new product in the WAN and remote-access equipment category at the recent NetWorld + InterOp tradeshow. Crossroads Systems, Inc., also chose Wind River's software for the development of its next generation storage networking solution. Crossroads Systems has become the defacto standard in storage routing and is at the forefront of the future integration of networks and storage solutions that will deliver startling advances in the way that data is stored, retrieved and managed. On the Internet appliance side, Tadpole Technology Plc announced that it is using VxWorks and Wind River's Java solution, Personal JWorks(TM)for its new Internet appliance, the Tadpole-CartesiaJ-Slate. This device is a unique, Java-based mobile information system that allows utility workers to retrieve and update on-line information while in the field. Telestream'ClipMail Pro allows digital master quality video, audio, and timecode to be sent and received over existing data networks. ClipMail Pro which is based on Tornado and the Company's Zinc(R) graphics software, won the "Editor's Pick of Show" at the 1999 National Association of Broadcasters exhibition. Traditional embedded markets like medical equipment continue to take advantage of Wind River technology. The Cardiac Rhythm Management Division of St. Jude Medical chose Wind River software to develop its state-of-the-art APS3500 programmer, a user-friendly GUI-based system used to program implantable pacemakers. Wind River's integrated development environment enabled St. Jude to move to a competitively-priced commercial RTOS and development tools from a single source. Wind River Systems, Inc. An ISO 9001 registered company, Wind River Systems, Inc., is the leading provider of integrated software development tools for real-time embedded applications in the Internet, telecommunications, data communications, office automation, networking, computer peripherals, medical, automotive, industrial, aerospace/defense and multimedia markets. Through the industry's most comprehensive and technically advanced product line, Wind River enables over 30,000 developers worldwide to develop and reuse application software across a variety of products and platforms, giving developers and original equipment manufacturers (OEMs) competitive advantage through shortened development cycles and improved time-to-market. Incorporated in 1983, Wind River is headquartered in Alameda and has over 320 partners worldwide. Except for the historical information contained herein, this news release contains forward-looking statements, including those relating to contemplated product offerings and market share, 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 timely development, acceptance and pricing of new products, the impact of competitive products and pricing, and other risk factors detailed in the company's 1999 Annual Report on Form 10-K 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. Wind River Systems, Inc. Condensed Consolidated Statements of Income (in thousands, except per share amounts) (unaudited) Three months ended April 30, 1999 1998 ------- ------- Revenues: Products $22,708 $19,322 Services 9,892 7,078 ------- ------- Total revenues 32,600 26,400 ------- ------- Cost of revenues: Products 1,713 1,968 Services 4,198 2,821 ------- ------- Total cost of revenues 5,911 4,789 ------- ------- Gross profit 26,689 21,611 ------- ------- Operating expenses: Selling and marketing 12,286 9,876 Product development and engineering 5,731 3,774 General and administrative 2,236 1,704 ------- ------- Total operating expenses 20,253 15,354 ------- ------- Income from operations 6,436 6,257 Interest income and other, net 211 948 ------- ------- Income before provision for income taxes 6,647 7,205 Provision for income taxes 2,493 2,770 ------- ------- Net income $ 4,154 $ 4,435 ======= ======= Net income per share: Basic $ 0.10 $ 0.11 Diluted $ 0.10 $ 0.11 Shares used in per share calculation Basic 40,535 38,796 Diluted 42,586 41,968 Net income per share and shares used in per share calculation have been adjusted to reflect a 3-for-2 stock split on February 4, 1999. Wind River Systems, Inc. Condensed Consolidated Balance Sheets (in thousands, except per share amount) (unaudited) April 30, January 31, 1999 1999 ------- ------- ASSETS Current assets: Cash and cash equivalents $ 67,567 $ 42,514 Short-term investments 5,407 9,143 Accounts receivable, net 24,575 30,375 Prepaid and other current assets 12,135 10,598 --------- --------- Total current assets 109,684 92,630 Investments 139,587 155,618 Property and equipment, net 32,690 31,350 Other assets 12,754 13,021 Restricted cash 36,044 34,157 --------- --------- Total assets $ 330,759 $ 326,776 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,199 $ 3,389 Accrued liabilities 11,739 10,005 Accrued compensation 6,473 5,950 Income taxes payable 2,330 405 Deferred revenue 16,605 17,062 --------- --------- Total current liabilities 41,346 36,811 Convertible subordinated notes 140,000 140,000 --------- --------- Total liabilities 181,346 176,811 --------- --------- Minority interest in consolidated subsidiary 700 551 --------- --------- Stockholders' equity: Common stock 41 41 Additional paid in capital 124,780 124,605 Treasury stock, at cost (29,488) (25,491) Accumulated other comprehensive loss (3,188) (2,155) Retained earnings 56,568 52,414 --------- --------- Total stockholders' equity 148,713 149,414 --------- --------- Total liabilities and stockholders' equity $ 330,759 $ 326,776 ========= =========  