6-K 1 u45515e6vk.txt 6-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For November 6, 2002 MADGE NETWORKS N.V. (Translation of registrant's name into English) Keizersgracht 62-64 1015 Amsterdam The Netherlands (Address of principal executive office) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F Form 20-F X Form 40-F --------- --------- Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 Yes No X --------- --------- If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- N.A. ------------- Page 1 of 9 Pages Exhibit Index Appears on Page 4 MADGE NETWORKS N.V. ITEM 1. PRESS RELEASE Attached as Exhibit 1 to this Form 6-K is a copy of the Press Release issued by Madge Networks N.V. on November 6, 2002 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. Madge Networks N.V. By: /s/ Martin Malina ---------------------- Martin Malina Managing Director Date: November 11, 2002 3 EXHIBIT INDEX Exhibit Page ------- ---- Press Release 5 4 [MADGE LOGO] MADGE NETWORKS N.V. Keizersgracht 62-64 1015 CS Amsterdam The Netherlands Main: (+44) 1753 661 000 Fax: (+44) 1753 661 011 MADGE NETWORKS N.V. REPORTS THIRD QUARTER 2002 RESULTS Amsterdam, The Netherlands (November 6, 2002) -- Madge Networks N.V. (NASDAQ: MADGF), a global supplier of advanced networking product solutions, today announced results for its third fiscal quarter ended September 30, 2002.(1) Madge Networks revenues for the third quarter were US$7.6 million, compared to second quarter 2002 revenues of $9.5 million and third quarter 2001 revenues of $14.1 million. Net income and earnings per share from continuing operations for the quarter were just above breakeven, compared to a net income from continuing operations of $0.1 million, or just above breakeven earnings per share, for the previous quarter and a net income from continuing operations of $4.9 million, or $0.09 per share, for the third quarter of 2001. The net loss for the quarter, including a charge related to discontinued operations, was $(1.8) million or a loss of $(0.03) per share. Net income for the 2001 period included special gains of $3.8 million relating to the release of a tax provision. For the nine months ended September 30, 2002 net loss was $(2.2) million, or $(0.04) per share, compared to a net income of $16.3 million, or $0.30 per share for the nine months ended September 30, 2001. The loss for the 2002 period included a loss of $(1.9) million related to a special charge for discontinued operations. Net income for the 2001 period included special gains of $13.1 million partially offset by a loss from associate Red-M of $(1.5) million and a loss from discontinued operations of $(2.5) million. Gross margin for the quarter increased to 67.6% compared to 61.2% for the previous quarter, and 54.1% for the third quarter of 2001. The margin for the quarter was positively affected by a one off release of a provision relating to a supplier. Without this release the gross margin would have been 58.5%. "Q3 was a difficult quarter", said Martin Malina, CEO, Madge Networks. "The seasonal weakness in Europe and continued delays in the roll out of projects with major ---------- (1) With effect from September 30, 2002 the Company now operates and reports on a quarterly calendar basis whereas previously the Company operated on the basis of thirteen-week financial quarters. 5 customers, impacted our revenues. However, I am pleased that we can present a breakeven result from continuing operations, despite the drop in revenues." "Our balance sheet at the end of the quarter reflects the fact that we have reviewed our provisions for discontinued operations and the carrying value of fixed assets. We also wrote off certain assets of discontinued operations, for which we already had provisions and, following a rent review, we accelerated the depreciation of leasehold improvements related to property which we lease in the UK. With the adjustments made we now believe that no further changes will be required in provisions for discontinued operations." "We started shipment of our 802.11b Wireless LAN products during the quarter and we now have 18 wireless resellers signed up and more to come. Customers and resellers have reacted very positively to our products; the unique security and management features and the completeness and ease with which these can be integrated into enterprise networks have won praise. With the appointment of Andy MacDonald as VP Sales, we now have an experienced sales professional on board to aggressively build on this initial success. Our wireless product line contributed a small amount to our revenue during Q3 2002 and we anticipate this will also be the case in the fourth quarter." Accounts receivables were $2.9 M at the end of the third quarter or 34.4 days outstanding, compared to $3.4 M at the end of the previous quarter or 32.8 days outstanding. Inventories, net of reserves, were $2.6 M compared to $3.3 M at June 30, 2002, further illustrating ongoing progress in asset utilisation. The Company ended the third quarter with $7.0 million in cash, of which $4.3 million was not restricted. The Company continues its focus on working capital management, highlighted by the drop in the level of short-term borrowings, reduced to $0.1 million from $3.2 million at December 31, 2001. Ends 6 MANAGEMENT COMMENTS The Company has produced a document entitled "Management's Comments on Madge Networks' Q3 2002 results" instead of holding a conference call. This document discusses the results for third quarter 2002 in detail and can be found on the Investor Relations section of the Company's website. ABOUT MADGE NETWORKS N.V. Madge Networks N.V. (NASDAQ: MADGF) is a global supplier of advanced networking product solutions to large enterprises, and is the market leader in Token Ring. Madge Networks is pioneering next generation networking solutions, which enable the painless deployment of Wireless and also 100Mbps and Gigabit speed IP-based applications within existing corporate networks while protecting customers' investments in Token Ring. Madge Networks also has an associate company, Red-M(TM), a market leader in wireless networking solutions. Madge Networks' main business centers are located in Wexham Springs, United Kingdom and New York. Information about Madge Networks' complete range of products and services can be accessed at www.madge.com. PRIVATE SECURITIES LITIGATION REFORM ACT STATEMENT Investors should take note that certain statements in this press release are forward-looking and may not give full weight to all of the potential risks (e.g., the risk that there will be a continuing downturn in the market for Token Ring products and in the economy generally, the probability that the Company will not be repaid the full funding that it provided to the administrators, the possibility that the Company's exposure to Madge.web liabilities could still materially impact the Company's liquidity and the impact on the financial position of Madge Networks resulting from these and other factors, including the new wireless product family generating sufficient revenue). Forward-looking statements in this press release include statements that refer to the fact the Company believes there will be no further changes required in its provisions for discontinued operations, that the interest in the wireless product will be translated into sales of these products and that Andy MacDonald's appointment will allow the Company to aggressively build on the initial success of the Company's new wireless products and other statements which are not completely historical. These statements may differ materially from actual future actions, events or results. For more information on risks, please refer to Madge Networks' SEC filings. Madge, the Madge logo and Red-M are trademarks, and in some jurisdictions may be registered trademarks of Madge Networks or its affiliated or associated companies. Other trademarks appearing in this release are those of their respective owners. CONTACT: MADGE NETWORKS, WEXHAM SPRINGS, UNITED KINGDOM Investor Relations Manager MADGE NETWORKS N.V. UK tel: +44 1753 661 609 or US tel: +1 212 709 1007 7 Madge Networks N.V. Condensed Consolidated Balance Sheets(2) (Unaudited) (In thousands)

~~UNITED~~SEP. ~~STATES SECURITIES~~30, DEC. 31, 2002 2001 ASSETS Current assets: Cash, cash equivalents, and short-term investments(3) $ 7,034 $ 14,958 Accounts receivable, net 2,886 3,719 Inventories 2,596 4,540 Prepaid expenses and other current assets 4,514 6,025 Current assets of discontinued operations 974 1,590 ------------------------------------------------------------------------------------------------------ Total current assets 18,004 30,832 Property and equipment, net 3,283 7,425 Intangible assets, net -- 3,633 Investments of discontinued operations -- 2,000 Fixed assets of discontinued operations -- 2,208 ------------------------------------------------------------------------------------------------------ Total assets $ 21,287 $ 46,098 ====================================================================================================== LIABILITIES AND ~~EXCHANGE~~SHAREHOLDERS' ~~COMMISSION Washington~~EQUITY Current liabilities: Accounts payable and accrued liabilities $ 13,048 ~~D.C.~~$ ~~20549~~ 23,358 Income taxes payable 4,502 5,001 Short-term borrowings 120 3,189 Short-term obligations 139 559 Current liabilities of discontinued operations 7,114 9,560 ------------------------------------------------------------------------------------------------------ Total current liabilities 24,923 41,667 Long-term obligations 1,118 1,125 Long-term obligations of discontinued operations 5,100 10,304 ------------------------------------------------------------------------------------------------------ Total liabilities 31,141 53,096 Shareholders' deficit (9,854) (6,998) ------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' deficit $ 21,287 $ 46,098 ======================================================================================================

---------- (2) The condensed consolidated balance sheet includes our associate company, Red-M, accounted for under equity accounting principles at a value of nil. Madge.web is now accounted for as a discontinued operation. (3) Cash includes a balance of $2.7M at September 30, 2002 and $6.4M at December 31, 2001 that had restricted use. 8 Madge Networks N.V. Condensed Consolidated Statements of Operations (Unaudited) (In thousands)

~~FORM~~GROUP RESULTS(4) THREE MONTHS NINE MONTHS ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, 2002 2001 2002 2001 CONTINUING OPERATIONS Net sales $ 7,637 $ 14,076 $ 27,168 $ 58,253 Cost of sales 2,473 6,463 10,250 27,429 -K ---------------------------------------------------------------------------------------------------- Gross profit 5,164 7,613 16,918 30,824 Operating expenses: Sales & marketing 2,734 3,688 9,367 14,335 Research & development 468 300 1,671 3,332 General and administrative 2,352 2,396 6,158 6,624 Special (gain) -- (3,763) -- (5,112) ----------------------------------------------------------------------------------------------------- Total operating expenses 5,554 2,621 17,196 19,179 ----------------------------------------------------------------------------------------------------- Income (loss) from continuing operations (390) 4,992 (278) 11,645 Net interest income (expense) (87) (18) (578) 1,598 Gain on sale of investment in Red-M -- -- -- 7,997 ----------------------------------------------------------------------------------------------------- Income (loss) from continuing operations before tax and share of associate loss (477) 4,974 (856) 21,240 Income tax provision (benefit) (496) 37 (480) 932 ----------------------------------------------------------------------------------------------------- Income (loss) from continuing operations before share of associate loss 19 4,937 (376) 20,308 Associate loss -- -- -- (1,499) ----------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM CONTINUING OPERATIONS $ 19 $ 4,937 $ (376) $ 18,809 ----------------------------------------------------------------------------------------------------- DISCONTINUED OPERATIONS Loss from discontinued operations (1,862) -- (1,862) (2,508) ----------------------------------------------------------------------------------------------------- TOTAL NET INCOME (LOSS) $ (1,843) $ 4,937 $ (2,238) $ 16,301 ===================================================================================================== Net income (loss) per share from continuing operations Basic and diluted $ 0.00 $ 0.09 $ (0.01) $ 0.35 Net loss per share from discontinued operations Basic and diluted $ (0.03) $ 0.00 $ (0.03) $ (0.05) Total net income (loss) per share Basic and diluted $ (0.03) $ 0.09 $ (0.04) $ 0.30 Weighted Average Shares Outstanding Basic and diluted 54,040 54,038 54,039 54,012

---------- (4) The group results include our associate company, Red-M, accounted for under equity accounting principles. Madge.web is now accounted for as a discontinued operation. 9

REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a – 16 or 15d – 16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For July 31, 2002

MADGE NETWORKS N.V. (Translation of registrant’s name into English)

Keizersgracht 62-64 1015 CS Amsterdam The Netherlands (Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F

Form 20-F Form 40-F

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934

Yes No

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_________

Page 1 of 9 Pages Exhibit Index appears on page 4

MADGE NETWORKS N.V.

Item 1. Press Release

Attached as Exhibit 1 to this Form 6-K is a copy of the Press Release issued by Madge Networks N.V. on July 31, 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Madge Networks N.V.

By: /s/ Martin Malina Martin Malina Managing Director

Date: October 7, 2002

EXHIBIT INDEX

Exhibit		Page
Press Release			5

(MADGE LOGO)

Madge Networks N.V. Keizersgracht 62-64 1015 CS Amsterdam The Netherlands

Main: (+44) 1753 661 000 Fax: (+44) 1753 661 011

MADGE NETWORKS N.V. REPORTS SECOND QUARTER 2002 RESULTS

Amsterdam, The Netherlands (July 31, 2002) — Madge Networks N.V. (NASDAQ: MADGF), a global supplier of advanced networking product solutions, today announced results for its second fiscal quarter ended June 30, 2002.1

Madge Networks revenues for the second quarter were US$9.5 million, compared to first quarter 2002 revenues of $10.0 million and second quarter 2001 revenues of $20.8 million. Net income for the quarter was $0.1 million, or just above breakeven earnings per share, compared to a net loss of $(0.5) million, or $(0.01) per share, for the previous quarter and a net income of $9.0 million, or $0.17 per share, for the second quarter of 2001. Net income for the 2001 period included special gains of $9.3 million relating primarily to the sale of Red-M shares, partially offset by a loss from associate Red-M of $1.5 million and a loss from discontinued operations of $2.5 million.

For the six months ended June 30, 2002 net loss was $(0.4) million, or $(0.01) per share, compared to a net income of $11.4 million, or $0.21 per share for the six months ended June 30, 2001. Net income for the 2001 period included special gains of $9.3 million relating primarily to the sale of Red-M shares, partially offset by a loss from associate Red-M of $1.5 million and a loss from discontinued operations of $2.5 million.

“We are pleased to report a return to profitability this quarter despite continuing difficult market conditions. Revenues, compared to last quarter, have remained relatively stable and we have continued to make good progress in our cost management efforts. This quarter, we again achieved improved gross margins and reduced operating costs compared to both the prior quarter and the second quarter of 2001. We also achieved excellent results in further reducing our inventories and in maintaining our days sales outstanding,” said Martin Malina, CEO, Madge Networks. “We have continued to add to our token ring product set and our new wireless product family offering is now available. Initial customer feedback from the wireless product road shows hosted in Europe and

1 For the purposes of presentation, the Company has indicated its fiscal quarters within the year as ending on the calendar month end, whereas, in fact, the Company operates on the basis of thirteen-week financial quarters.

America has been positive. We expect modest revenues from these new products in 2002.”

The Company ended the first quarter with $9.0 million in cash, of which $5.4 million was not restricted. The Company continues its focus on working capital management, highlighted by the drop in the level of short-term borrowings, reduced to $1.4 million from $3.2 million at December 31, 2001. The large majority of Madge.web liabilities have now been negotiated, and whilst exposure to these liabilities and the timing and amount of expected funding repayments could still materially impact liquidity, much of the uncertainty surrounding the financial outcome of the Madge.web administration has been removed.

ENDS

Conference Call Investors will have the opportunity to listen to management’s discussion of its second quarter 2002 results in a conference call to be held on Thursday, August 1, 2002 at 8:30 a.m. (Eastern Time) over the Internet. To listen to the live call please go to our web site, www.madge.com, at least fifteen minutes early to register, download, and install any necessary audio software. A replay of the conference call will be available after 10.30 a.m. (Eastern Time) on August 1, 2002 for seven days by dialing 800-633-8284 (402-977-9140 for international callers), reservation #20781564, or by visiting our web site.

About Madge Networks N.V. Madge Networks N.V. (NASDAQ: MADGF) is a global supplier of advanced networking product solutions to large enterprises, and is the market leader in Token Ring. Madge Networks is pioneering next generation networking solutions, which enable the painless deployment of Wireless and also 100Mbps and Gigabit speed IP-based applications within existing corporate networks while protecting customers’ investments in Token Ring. Madge Networks also has an associate company, Red-M™, a market leader in wireless networking solutions. Madge Networks’ main business centers are located in Wexham Springs, United Kingdom and New York. Information about Madge Networks’ complete range of products and services can be accessed at www.madge.com.

Private Securities Litigation Reform Act Statement Investors should take note that certain statements in this press release are forward-looking and may not give full weight to all of the potential risks (e.g., the risk that there will be a continuing downturn in the market for Token Ring products and in the economy generally, the probability that the Company will not be repaid the full funding that it provided to the administrators, the possibility that the Company’s exposure to Madge.web liabilities could still materially impact the Company’s liquidity and the impact on the financial position of Madge Networks resulting from these and other factors, including the new wireless product family generating sufficient revenue). Forward-looking statements in this press release include statements that refer to the fact that the Company expects modest revenues from its new wireless products, there is still exposure to the Madge.web liabilities and the timing and amount of expected funding repayments from the Administrators of Madge.web is uncertain, of which each factor could still materially impact liquidity and other statements which are not completely historical. These statements may differ materially from actual future actions, events or results. For more information on risks, please refer to Madge Networks’ recent SEC filings.

Madge, the Madge logo and Red-M are trademarks, and in some jurisdictions may be registered trademarks of Madge Networks or its affiliated or associated companies. Other trademarks appearing in this release are those of their respective owners.

Contact: Madge Networks, Wexham Springs, United Kingdom Investor Relations Rhonda Hainsworth, Investor Relations Manager MADGE NETWORKS N.V. UK tel: +44 1753 661 609 or US tel: +1 212 709 1007

Madge Networks N.V. Condensed Consolidated Balance Sheets2 (Unaudited) (In thousands)

	Jun. 30,			Dec. 31,
	2002			2001
Assets Current assets:
Cash, cash equivalents, and short-term investments3	$	9,049		$	14,958
Accounts receivable, net		3,425			3,719
Inventories		3,284			4,540
Prepaid expenses and other current assets		5,077			6,025
Current assets of discontinued operations		1,252			1,590
Total current assets		22,087			30,832
Property and equipment, net		6,755			7,425
Intangible assets, net		1,007			3,633
Investments of discontinued operations		2,000			2,000
Fixed assets of discontinued operations		2,208			2,208
Total assets	$	34,057		$	46,098
Liabilities and Shareholders’ Equity Current liabilities:
Accounts payable and accrued liabilities	$	17,690		$	23,358
Income taxes payable		5,000			5,001
Short-term borrowings		1,384			3,189
Short-term obligations		288			559
Current liabilities of discontinued operations		7,357			9,560
Total current liabilities		31,719			41,667
Long-term obligations		1,121			1,125
Long-term obligations of discontinued operations		9,200			10,304
Total liabilities		42,040			53,096
Shareholders’ deficit		(7,983	)		(6,998	)
Total liabilities and shareholders’ deficit	$	34,057		$	46,098

2 The condensed consolidated balance sheet includes our associate company, Red-M, accounted for under equity accounting principles. Madge.web is now accounted for as a discontinued operation. 3 Cash includes a balance of $3.6M at June 30, 2002 and $6.4M at December 31, 2001 that had restricted use.

Madge Networks N.V. Condensed Consolidated Statements of Operations (Unaudited) (In thousands)

				Group Results 4
	Three months						Six months
	ended						ended
	June 30,						June 30,
	2002			2001			2002			2001
Continuing Operations Net sales	$	9,504		$	20,813			19,531		$	44,177
Cost of sales		3,683			9,446			7,777			20,966
Gross profit		5,821			11,367			11,754			23,211
Operating expenses:
Sales & marketing		3,087			3,838			6,633			10,647
Research & development		568			197			1,203			3,032
General and administrative		1,872			3,017			3,806			4,228
Special (gain)		—			(1,349	)		—			(1,349	)
Total operating expenses		5,527			5,703			11,642			16,558
Income (loss) from continuing operations		294			5,664			112			6,653
Net interest income (expense)		(200	)		157			(491	)		1,616
Gain on sale of investment in Red-M		—			7,997			—			7,997
Income (loss) from continuing operations before tax and share of associate loss		94			13,818			(379	)		16,266
Income tax provision (benefit)		(23	)		823			16			895
Income (loss) from continuing operations before share of associate loss		117			12,995			(395	)		15,371
Associate loss		—			(1,499	)		—			(1,499	)
Net income (loss) from continuing operations	$	117		$	11,496		$	(395	)	$	13,872
Discontinued Operations Loss from discontinued operations		—			(2,508	)		—			(2,508	)
Total net income (loss) from operations	$	117		$	8,988		$	(395	)	$	11,364
Net income (loss) per share from continuing operations Basic and diluted	$	0.00		$	0.22		$	(0.01	)	$	0.26
Net loss per share from discontinued operations Basic and diluted		—		$	(0.05	)		—		$	(0.05	)
Total net income (loss) per share Basic and diluted	$	0.00		$	0.17		$	(0.01	)	$	0.21
Weighted Average Shares Outstanding Basic and diluted		54,039			54,038			54,039			54,000

4 The group results include our associate company, Red-M, accounted for under equity accounting principles. Madge.web is now accounted for as a discontinued operation.

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