RadiSys Announces First Quarter Results
HILLSBORO, Ore., Apr 18, 2001 (BUSINESS WIRE) -- RadiSys Corporation (Nasdaq:
RSYS chart, msgs) today reported revenues of $56.2 million for the quarter ended March 31, 2001,
versus $81.3 million a year earlier. Pro forma net loss, excluding the restructuring charge and other
adjustments, was $2.3 million, or $.13 per share (diluted), compared with earnings of $6.6 million or
$0.36 per share (diluted) a year ago.
In the quarter ended March 31, 2001, the Company reported a restructuring charge of $9.8 million
pre-tax, or $.24 per share (diluted) after-tax. Part of the restructuring charge was the result of the
Company's previously disclosed plan to consolidate all board-level manufacturing from its Houston,
Texas plant into its Hillsboro, Oregon plant. The majority of the restructuring charge was attributable to
the Company's recent decision to eliminate all remaining internal manufacturing operations at the
Houston facility in the next six months, thus closing the Houston manufacturing plant and consolidating
all internal manufacturing operations in the Company's Hillsboro, Oregon plant. The Company will
continue to operate a major design center in Houston, as well as a product-repair center. The Company
expects to see quarterly cost and expense improvements throughout the three remaining quarters of
2001 as the restructuring progresses and anticipates that this restructuring activity will improve operating
performance by at least $8 million a year once fully implemented.
The Company also incurred other adjustments of $5.1 million pre-tax, or $.12 per share (diluted)
after-tax. The adjustments included $3.9 million of inventory write-downs for excess material resulting
from reduced demand and for the acceleration of end-of-life programs on non-strategic products. The
remaining adjustments were $800 thousand in costs to consolidate other Company facilities and $400
thousand to permanently write-down an investment received in connection with a prior divestiture.
Including the restructuring charge and other adjustments the net loss was $8.5 million, or $.49 per share
(diluted).
Cash loss per share for the current quarter, excluding the restructuring charge and adjustments, was
$0.10 per share (diluted). The Company defines cash earnings per share as net income excluding
goodwill and intangibles amortization.
Q1 Highlights
RadiSys achieved 12 new design wins in the quarter. RadiSys characterizes a design win as a project
estimated to produce more than $500,000 in revenue per year when in production. Nine of the wins are
significantly larger, estimated to produce more than $2 million in revenue per year once in full production.
Seven of the 12 wins were in communications equipment, two in electronics manufacturing equipment,
two in medical equipment and one in a transaction terminal application. Design wins ramp into
production volume at varying rates; typically the ramp begins 6-12 months after the win occurs.
"We are obviously disappointed with our financial results and the recession-like atmosphere within our
markets," stated Dr. Glen Myers, chairman and CEO. "During this slowdown, the best moves that we
can make are continuing to invest in R&D and technology, focusing on securing design wins, and
realigning our cost structure to reduce our break-even point.
"On the design win front we had another great quarter, and the number of large wins continued to
increase. Four of the large wins are estimated to produce over $10 million in revenue per year once in
production. As previously announced, one of these is the largest design win in the history of Company.
This is a next-generation system that manages converged voice and data traffic at the enterprise level.
Initial revenues from it are expected to flow by the summer, ramping to significant revenues in 2002."
RadiSys also announced that it had signed an agreement for the acquisition of S-Link Corporation today.
S-Link is a leader in the intersection of SS7 signaling with IP protocol, and this technology is
fundamental to the operation of packet networks and next-generation wireless systems. S-Link's initial
products, nearing completion of development, will enhance the suite of building blocks RadiSys can
make available to customers developing equipment for next-generation networks. The S-Link acquisition
is expected to close by the end of the week.
Business Outlook
The following statements are based on current expectations. These statements are forward-looking, and
actual results may differ materially.
Commenting on the outlook, Myers said, "The term everyone is using is visibility, meaning the lack
thereof, and it certainly applies to our markets and customers. Based on current backlog and forecasts,
while realizing that visibility is poor and forecasts change daily in this business climate, we believe that
revenue will increase in the second quarter over the first quarter. This higher revenue base and
improvements in operating expenses should move us close to break-even.
"While I'm extremely disappointed with the overall economic conditions and the effect it is having on our
financial performance, I'm pleased about our progress in differentiating ourselves from the competition by
securing large design wins and aggressively developing new technology for next-generation networks,
both of which will fuel our growth when the telecom market turns around. We're a very nimble company
with strong resources, and we'll continue to use this downturn as an opportunity to be a stronger
company when the inevitable upturn occurs."
More details about financial guidance will be given in today's conference call, scheduled for 5 PM
Eastern Time. The public is invited to participate in the conference call by either calling 415/228-4965,
password is RadiSys, or listening via live audio webcast on the RadiSys web-site at www.radisys.com.
Replays of the call will be available at 402/998-0655 or via audio webcast at www.radisys.com.
RadiSys (Nasdaq: RSYS chart, msgs) is a leading provider of building blocks enabling next-generation
Internet and communications systems. As a leading independent provider to OEMs, RadiSys delivers a
time-to-market advantage in a tight "virtual division" relationship with its customers. The building blocks
include Intel-based embedded computers, DSP modules and algorithms, network interfaces and
protocols, systems platforms, embedded software, systems engineering and integration services.
RadiSys' highly differentiated position in the market is a result of its intense focus on Intel-based
technology, having the broadest array of building blocks, and having a "perfect fit" product development
strategy using its intellectual property to design customer subsystems.
RadiSys is a registered trademark. All other products are trademarks or registered trademarks of their
respective companies.
Except for the historical information contained herein, the matters discussed in this press release,
including the statements regarding expectations of future operating performance, future development and
business activities, expectations of future orders, future revenues and earnings, and estimated revenues
and earnings from design wins, are forward-looking statements that involve risks and uncertainties. The
following are among the factors that could cause actual results to differ materially: general business and
economic conditions in the markets RadiSys serves, particularly the communications market; changes
in customer order patterns or inventory levels; dependence on the relationship with Intel Corporation and
its products; lower than expected or delayed sales by our customers in the communications market;
lower than expected design wins with key OEMs; failure of leading OEMs to incorporate RadiSys'
solutions in successful products; schedule delays or cancellations in design wins; execution of the
development or production ramp for design wins; inability to successfully integrate acquired businesses
and assets, deliveries of products containing errors, defects and bugs; dependence on a limited number
of suppliers or, in some cases, one supplier for components and equipment used to manufacture
products; competition in the embedded computer market, which may lead to pricing pressures; political,
economic and regulatory risks associated with international operations; technological developments; the
inability to protect RadiSys' intellectual property or successfully to defend against infringement claims by
others; availability of qualified personnel; technological difficulties and resource constraints encountered
in developing new products; and difficulty or inability to meet obligations to repay indebtedness. The
forward-looking statements should be considered in light of these factors.
RadiSys will keep this press release publicly available on its web-site (www.radisys.com). Prior to the
start of the quiet period (described below), the public can continue to rely on the guidance provided in
this press release on the web-site as still being RadiSys' current expectations on matters covered,
unless RadiSys publishes a notice stating otherwise. Beginning June 9, 2001, RadiSys will observe a
"quiet period" during which the guidance provided in this press release will no longer constitute the
Company's current expectations. During the quiet period, all the information in this press release should
be considered to be historical, speaking as of its date only and not subject to update by the Company.
During the quiet period, RadiSys representatives will not comment concerning RadiSys' financial results
or expectations. The quiet period will continue until the date RadiSys issues its next quarterly earnings
release currently scheduled for July 18, 2001.
To obtain copies of the press release and other Company material please visit the web-site at
www.radisys.com or contact investor relations at investor.relations@radisys.com or call the RadiSys
Investor Line at 503/615-RSYS.
For more information about RadiSys, press only: Eric Stebel, Public Relations Manager, RadiSys,
713/541-8200
To receive these releases via email, visit our web page at www.radisys.com and subscribe to our
electronic mailing list.
RadiSys Corporation
Proforma Consolidated Statement of Operations
(in thousands, except per share amounts)
Three Months Ended
(unaudited)
March 31, March 31,
2001 2000
----------- ------------
Revenues $ 56,159 $ 81,293
Cost of sales 42,511 52,435
----------- ------------
Gross profit 13,648 28,858
Research and development 9,284 8,981
Selling, general and administrative 8,606 9,542
Goodwill and intangibles amortization 1,556 1,724
----------- ------------
Income (loss) from operations (5,798) 8,611
Interest income (expense), net 524 (56)
Other income (expense), net (307) 838
----------- ------------
Income (loss) before income
tax provision (benefit) (5,581) 9,393
Income tax provision (benefit) (3,276) 2,762
----------- ------------
Net income (loss) $ (2,305) $ 6,631
=========== ============
Net income (loss) per share (basic) $ (0.13)$ 0.40
=========== ============
Net income (loss) per share (diluted) $ (0.13)$ 0.36
=========== ============
Weighted average shares (basic) 17,130 16,670
Weighted average shares (diluted) 17,130 18,204
The Pro Forma Consolidated Statement of Operations presented above for the three months ended
March 31, 2001 excludes the restructuring charge of $9.8 million pre-tax, or $.24 per share (diluted)
after-tax, associated with the Company's decision to eliminate all internal manufacturing operations at its
Houston, Texas facility. The Pro Forma Statement also excludes other adjustments of $5.1 million
pre-tax, or $.12 per share (diluted) after-tax. The adjustments include $3.9 million of inventory
write-downs for excess material resulting from reduced demand and acceleration of end-of-life programs
on non-strategic products, $800 thousand in costs to consolidate other Company facilities and $400
thousand to permanently write-down an investment received in connection with a prior divestiture.
RadiSys Corporation
Consolidated Statement of Operations
(in thousands, except per share amounts)
Three Months Ended
(unaudited)
March 31, March 31,
2001 2000
---------- ----------
Revenues $ 56,159 $ 81,293
Cost of sales 46,411 52,435
---------- ----------
Gross profit 9,748 28,858
Research and development 9,284 8,981
Selling, general and administrative 9,406 9,542
Goodwill and intangibles amortization 1,556 1,724
Restructuring charges 9,843 -
---------- ----------
Income (loss) from operations (20,341) 8,611
Interest income (expense), net 524 (56)
Other income (expense), net (707) 838
---------- ----------
Income (loss) before income
tax provision (benefit) (20,524) 9,393
Income tax provision (benefit) (12,046) 2,762
---------- ----------
Net income (loss) $ (8,478) $ 6,631
========== ==========
Net income (loss) per share (basic) $ (0.49) $ 0.40
========== ==========
Net income (loss) per share (diluted) $ (0.49) $ 0.36
========== ==========
Weighted average shares (basic) 17,130 16,670
========== ==========
Weighted average shares (diluted) 17,130 18,204
========== ==========
RadiSys Corporation
Consolidated Balance Sheet
(in thousands)
ASSETS
March 31, Dec. 31,
2001 2000
(unaudited)
--------- ----------
Current assets
Cash and cash equivalents $ 75,990 $ 124,086
Short term investments 50,317 9,799
Accounts receivable, net 53,711 68,241
Inventories, net 56,214 53,247
Other current assets 6,229 2,783
Deferred income taxes 6,137 4,682
--------- ---------
Total current assets 248,598 262,838
Property and equipment, net 25,345 28,128
Goodwill and intangible assets, net 29,297 30,444
Other assets 14,257 12,593
--------- ---------
Total assets $ 317,497 334,003
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 24,982 $ 32,602
Accrued restructuring 6,157 -
Accrued interest payable 688 2,185
Income taxes payable 283 5,642
Accrued wages and bonuses 5,469 7,876
Other accrued liabilities 9,741 9,176
--------- ---------
Total current liabilities 47,320 57,481
--------- ---------
Convertible subordinated notes 97,248 97,191
--------- ---------
Total liabilities 144,568 154,672
--------- ---------
Shareholders' equity
Common stock, 100,000 shares authorized,
17,180 and 17,070 shares issued and
outstanding 155,600 153,482
Accumulated other
comprehensive income (loss):
Cumulative translation adjustment (1,959) (1,917)
Accumulated earnings 19,288 27,766
--------- ---------
Total shareholders' equity 172,929 179,331
--------- ---------
Total liabilities and
shareholders' equity $ 317,497 $ 334,003
========= =========
Contact:
RadiSys Corporation
Brian Bronson, 503/615-1281
brian.bronson@radisys.com
Copyright © 2000 Business Wire
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