RadiSys Announces Second Quarter Results
HILLSBORO, Ore., Jul 18, 2001 (BUSINESS WIRE) -- RadiSys Corporation (Nasdaq:
RSYS chart, msgs), a leading provider of building blockS enabling next-generation Internet and
communications systems, today reported revenues of $61.8 million for the quarter ended June 30, 2001,
up 10% from the previous quarter, and down 28% from the second quarter of 2000.
Pro forma net loss, excluding the previously announced restructuring charge and other adjustments, was
$1.6 million, or $.09 per share (diluted), compared with a pro forma loss of $.13 per share (diluted) last
quarter and earnings of $0.38 per share (diluted) a year ago.
In the quarter ended June 30, 2001, the Company reported a restructuring charge, previously announced
on June 27, of $3.2 million pre-tax, or $.14 per share (diluted) after-tax. The restructuring charge was
broken down into the following components: $1.4 million for severance, $0.3 million of asset write-offs
and expenses attributable to closing the Company's design center in Newton, Massachusetts and $1.5
million of capitalized software. The Company expects to see quarterly cost and expense improvements
moving forward of approximately $1.5 million a quarter once fully implemented.
The Company also incurred other adjustments of $7.2 million pre-tax, or $.32 per share (diluted)
after-tax. The adjustments include $6.8 million of inventory write-downs for excess material resulting from
reduced demand and decreasing component prices in the marketplace. The remaining adjustment of
$0.4 million is severance cost not attributable to the restructuring. Including the restructuring charge and
other adjustments, the net loss was $9.5 million, or $.55 per share (diluted).
Cash loss per share for the current quarter, excluding the restructuring charge and adjustments, was
$0.02 per share (diluted). The Company defines cash earnings per share as net income excluding
goodwill and intangibles amortization. The Company generated positive cash flow from operations of $2.8
million during the quarter.
Q2 Highlights
RadiSys achieved 13 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.
Two of the wins are estimated to produce more than $10 million annually once in full production. 8 of the
13 wins were in communications equipment, two in electronics manufacturing equipment, one in medical
equipment, one in test and measurement 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.
"Our actions and results in Q2 show that we are walking the fine line of investing in the future while
realigning our cost structure to reduce our break-even point." stated Dr. Glen Myers, Chairman and CEO.
"We want to place ourselves in the strongest possible position for when the inevitable turnaround occurs.
Aside from the acquisition of S-Link Corporation, our cash flow was positive, representing a significant
improvement over the prior quarter."
"Design-win opportunities are being affected by the slowdown in telecom and other types of capital
equipment, but our 13 wins in Q2 show that we are in a strong competitive position and are building for
the future. Where we previously mentioned that in January we won a large project that is expected to be
the largest win in our history, I'm happy to say that one of our 13 Q2 wins is expected to be even larger.
This is an innovative high-availability system platform for a variety of 3G wireless infrastructure network
elements. We expect to ship prototypes to our customer by year-end and start production ramp in the
latter part of 2002."
The Company completed its acquisition of S-Link in Q2. S-Link had been a development-stage company
focused on producing SS7 signaling software and system products for next-generation packet networks.
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 "We see no signs of improvement in our marketplace, and if
anything the market is still softening. For instance, since the beginning of June, a number of our largest
customers have announced lowered revenue projections or further reductions in employee headcount and
R&D spending. Production ramps we expected to see this year for prior design wins are being pushed
out in time by our customers. The revenue increase we saw from Q1 to Q2 is not a trend, and Q3
revenue is expected to dip back below $60 million. We've reduced our break-even point significantly, so
Q3 earnings could improve if the revenue holds up reasonably well. As a gauge, our break-even point
should be slightly above $60 million in revenue."
The Company will provide further guidance relating to the acquisition, previously announced on July 2,
2001, of Microware Systems Corporation once the acquisition is complete. The completion of the
acquisition is currently anticipated to be sometime during the second half of the Company's current third
quarter.
In closing, Myers stated "This continues to be a difficult environment but I'm confident in our ability to
weather this storm given our strong balance sheet and the steps we have taken to get back to
profitability. We are well positioned to capitalize on the deployment of next-generation Internet and
communication equipment when the market turns around."
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 212/287-1616,
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 402/220-6534 or via audio webcast at www.radisys.com.
RadiSys is a leading provider of building blocks enabling next-generation Internet and communications
systems. The building blocks provided to telecommunications equipment manufacturers include
Intel-architecture embedded computers, network processors, DSP modules and algorithms, network
interfaces and protocols, high-availability switch-fabric system platforms, and SS7/signaling blades and
gateways. RadiSys' highly differentiated position in the market is a result of its focus on Intel-based
technology, its broad array of building-block technology, its tight "virtual division" relationships with its
customers, and its use of intellectual property to generate "perfect fit" solutions for its customers.
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 September 8, 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 October 17, 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: Stuart Cohen, Vice President of Marketing, RadiSys,
503/615-1433
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 Six Months Ended
(unaudited) (unaudited)
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
-------- -------- ---------- ---------
Revenues $61,803 $86,170 $117,962 $167,464
Cost of sales 44,713 55,635 87,224 108,071
-------- -------- ---------- ---------
Gross profit 17,090 30,535 30,738 59,393
Research and development 9,167 9,306 18,451 18,286
Selling, general and
administrative 8,358 9,707 16,964 19,249
Goodwill and intangibles
amortization 1,656 1,727 3,212 3,451
-------- -------- ---------- ---------
Income (loss) from
operations (2,091) 9,795 (7,889) 18,407
Interest income, net 70 260 594 203
Other (expense), net (17) (232) (324) (250)
-------- -------- ---------- ---------
Income (loss) before
income tax provision
(benefit) (2,038) 9,823 (7,619) 18,360
Income tax provision
(benefit) (483) 2,977 (3,759) 5,490
-------- -------- ---------- ---------
Net income (loss) $(1,555) $ 6,846 $(3,860) $ 12,870
======== ======== ========== =========
Net income (loss) per share
(basic) $ (0.09) $ 0.40 $ (0.22) $ 0.77
======== ======== ========== =========
Net income (loss) per share
(diluted) $ (0.09) $ 0.38 $ (0.22) $ 0.71
======== ======== ========== =========
Weighted average shares
(basic) 17,218 16,905 17,174 16,788
======== ======== ========== =========
Weighted average shares
(diluted) 17,218 18,193 17,174 18,199
======== ======== ========== =========
Proforma income statement for 2001 excludes restructuring charges and other adjustments. Proforma
income statement for 2000 excludes a gain on sale of investments.
RadiSys Corporation
Consolidated Statement of Operations
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
(unaudited) (unaudited)
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
-------- -------- --------- ---------
Revenues $61,803 $86,170 $117,962 $167,464
Cost of sales 51,513 55,635 97,924 108,071
-------- -------- --------- ---------
Gross profit 10,290 30,535 20,038 59,393
Research and development 9,167 9,306 18,451 18,286
Selling, general and
administrative 8,708 9,707 18,114 19,249
Goodwill and intangibles
amortization 1,656 1,727 3,212 3,451
Restructuring charges 3,219 - 13,062 -
-------- -------- --------- ---------
Income (loss) from
operations (12,460) 9,795 (32,801) 18,407
Interest income, net 70 260 594 203
Other income (expense), net (17) (232) (724) 606
-------- -------- --------- ---------
Income (loss) before income
tax provision (benefit) (12,407) 9,823 (32,931) 19,216
Income tax provision
(benefit) (2,945) 2,977 (14,991) 5,739
-------- -------- --------- ---------
Net income (loss) $(9,462) $ 6,846 $(17,940) $ 13,477
======== ======== ========= =========
Net income (loss) per share
(basic) $ (0.55) $ 0.40 $ (1.04) $ 0.80
======== ======== ========= =========
Net income (loss) per share
(diluted) $ (0.55) $ 0.38 $ (1.04) $ 0.74
======== ======== ========= =========
Weighted average shares
(basic) 17,218 16,905 17,174 16,788
======== ======== ========= =========
Weighted average shares
(diluted) 17,218 18,193 17,174 18,199
======== ======== ========= =========
RadiSys Corporation
Consolidated Balance Sheet
(in thousands)
ASSETS
June 30, Dec. 31,
2001 2000
(unaudited)
-------- --------
Current assets
Cash and cash equivalents $ 60,862 $124,086
Short term investments 63,978 9,799
Accounts receivable, net 44,898 68,241
Inventories, net 50,480 53,247
Other current assets 6,321 2,783
Deferred income taxes 6,680 4,682
-------- --------
Total current assets 233,219 262,838
Property and equipment, net 24,478 28,128
Goodwill and intangible assets, net 32,388 30,444
Other assets 16,770 12,593
-------- --------
Total assets $306,855 $334,003
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 21,424 $ 32,602
Accrued restructuring 6,197 -
Accrued interest payable 2,062 2,185
Income taxes payable 235 5,642
Accrued wages and bonuses 5,610 7,876
Other accrued liabilities 9,006 9,176
-------- --------
Total current liabilities 44,534 57,481
-------- --------
Convertible subordinated notes 97,338 97,191
-------- --------
Total liabilities 141,872 154,672
-------- --------
Shareholders' equity
Common stock, 100,000 shares authorized,
17,255 and 17,070 shares issued and
outstanding 156,997 153,482
Accumulated other comprehensive income (loss):
Cumulative translation adjustment (1,867) (1,917)
Unrealized gain on securities available
for sale 27 -
Accumulated earnings 9,826 27,766
-------- --------
Total shareholders' equity 164,983 179,331
-------- --------
Total liabilities and shareholders' equity $306,855 $334,003
======== ========
Contact:
RadiSys Corporation
Brian Bronson, 503/615-1281
brian.bronson@radisys.com
Copyright © 2000 Business Wire
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