A little late but here's the last quarter's report
RadiSys Announces Fourth Quarter and Year-End Results
HILLSBORO, Ore., Jan 24, 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 $82.5 million for the quarter ended December
31, 2000, a 13% increase from revenues of $72.9 million for the quarter ended December 31,
1999. Net income for the quarter was $10 million, or $0.56 per share (diluted), which represented
75% earnings per share growth, compared to $5.8 million or $0.32 per share (diluted) for the
quarter ended December 31, 1999.
Net income for the current quarter includes an extraordinary gain, net of tax, of $3.3 million
associated with the buyback of $20 million principal amount of 5 1/2% convertible subordinated
notes previously announced on October 30th. In addition, pre-tax income for the quarter includes a
loss of $766 thousand, which is the result of a permanent write-down of an investment received in
connection with a prior divestiture. The quarter's effective tax rate was a 38.8% benefit, significantly
lower than a normalized tax provision rate of 29.9%. The favorable rate was primarily the result of
benefits related to the 1999 merger with Texas Microsystems. Excluding the extraordinary gain from
the debt buyback, the loss on investment, and normalizing the tax rate, net income for the quarter
was $3.9 million, or $0.22 per share.
Cash earnings per share for the current quarter, excluding the extraordinary gain for the debt
buyback, the loss on investment, and normalizing the tax rate to 29.9%, was $0.28 per share
(diluted). The company defines cash earnings per share as net income excluding goodwill and
intangibles amortization.
For the year ended December 31, 2000 revenues were $340.7 million, a 36% increase from
revenues of $251.1 million for the year ended December 31, 1999. Net income for the year ended
December 31, 2000 was $32.6 million, or $1.80 per share (diluted), which represented 62%
earnings per share growth, compared to $19 million or $1.11 per share (diluted) for the year ended
December 31, 1999.
Q4 Highlights
RadiSys achieved 20 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. Thirteen
of the wins are significantly larger, estimated to produce more than $2 million in revenue per year
once in full production. Sixteen of the 20 wins were in telecommunications equipment, two in test
and measurement equipment, and two in medical equipment. Design wins ramp into production
volume at varying rates; typically the ramp begins 6-12 months after the win occurs.
"In terms of total potential revenue magnitude, Q4 was a record-breaking design-win quarter for us
by a significant margin," stated Dr. Glen Myers, Chairman and CEO. "Five of the design wins are
projected to produce more than $10 million a year in production, the most we've ever had in this
category in one quarter. The application areas of the five are also well diversified; one is for an
optical network switch, two are for high-speed packet-network switching applications, and the other
two are next-generation enterprise communications equipment."
A variety of risks can adversely affect a design win before the start of production, such as schedule
delays, cancellations and changes in customer markets.
During the quarter, the company repurchased 297,000 shares of common stock, at a cost of $8.1
million, under a previously announced, ongoing program.
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 for 2001, Myers said "Many companies in and around our marketplace
have already projected significant weaknesses in their businesses in the short term. We are not
immune to this and have seen widespread weakness in bookings in the current quarter; customers
are reducing near-term forecasts and pushing orders out. Unlike the start of the weakness that we
saw at the beginning of the fourth quarter, the weakness in the first quarter seems to span most
customers and applications."
"Specifically," he added, "our outlook for the first quarter is that revenue will be down to
approximately $70 to $74 million. Earnings per share, except for one-time events, is expected to be
5 to 8 cents. We project a significant rebound in the second quarter, with revenue expected to be up
to about $78 to $83 million, and earnings per share are expected to be within the range of 15 to 25
cents."
"Although current economic conditions warrant caution, we are optimistic about continued growth in
the third and fourth quarters because of design wins that are scheduled to ramp into production for
such applications as GPRS wireless, 3G wireless, packet networks, and SS7. So we anticipate
sequential increases in revenue of 10 to 20% in each of Q3 and Q4, and operating income as a
percentage of sales should return to above 10%."
"Another reason for our optimism," Myers added, "is a design win we received a few days ago, a
win that appears to be the largest single design win in our history. This win is a voice/data
convergence, voice-over-IP, application with a top telecommunications equipment company, and it
ramps into production this summer and is expected to be a very large source of revenue in 2002.
This Q1 win also reinforces our belief that our strategy of creating building blocks that enable
next-generation Internet and communications systems is right on target to maximize value for both
our customers and our shareholders."
RadiSys also plans to complete, during the first quarter, its consolidation of all surface-mount board
production into its high-volume plant in Hillsboro, Oregon. SMT production in the company's
Houston Texas plant will be brought to a close, although system-level assembly will continue in the
Houston plant. Employees involved in SMT production in Houston have been offered the
opportunity to relocate to Hillsboro, with relocation assistance, and a severance package will be
provided to those choosing not to relocate. By completing the consolidation, the company expects to
reduce its overall manufacturing costs. The company will take a pretax charge in the first quarter,
which is currently estimated to be $1 million to $2 million.
"Despite year-end weaknesses seen by us and most players associated with the telecommunications
industry, our investors shouldn't lose sight of the fact that we grew our revenues and operating
earnings in 2000 by 36% and 32% respectively," concluded Myers. "We had a strong base of
design wins in the first half of 2000 that will be ramping into production at various points in 2001.
And our tremendous base of design wins in the last few months, sixteen of which are for new
telecommunications equipment applications, supports our belief that this industry will soon resume its
pattern of strong growth."
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
1-312-470-7109, 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 1-402-530-7768 or via audio webcast
at www.radisys.com.
RadiSys (Nasdaq: RSYS chart, msgs) is a leading provider of building blocks for next-generation
Internet and communications equipment, as well as for certain other equipment types such as test
and measurement, medical, and manufacturing automation. 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 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; 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; difficulties in integrating acquired businesses and assets;
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 March 19th, 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's financial results or expectations. The quiet period will continue until the date
RadiSys issues its next quarterly earnings release currently scheduled for April 18th, 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 1-503-615-RSYS.
For more information about RadiSys, press only: Eric Stebel, Public Relations Manager, RadiSys,
1-713-541-8200
To receive these releases via email, visit our web page at www.radisys.com and subscribe to our
electronic mailing list.
RadiSys Corporation
Consolidated Statement of Operations
(in thousands, except per share amounts)
Three Months Ended Year Ended
(unaudited)
December 31, December 31,
2000 1999 2000 1999
Revenues $ 82,493 $ 72,945 $ 340,676 $ 251,090
Cost of goods sold 56,370 45,770 223,779 158,793
Gross profit 26,123 27,175 116,897 92,297
Research and
development 9,441 8,491 37,269 30,464
Selling, general and
administrative 10,094 9,807 39,059 36,798
Goodwill and
intangibles
amortization 1,556 727 6,564 2,460
Combination costs -- -- -- 5,971
Income from
operations 5,032 8,150 34,005 16,604
Interest income, net 573 264 1,179 1,200
Other income (expense),
net (792) (134) 147 1,873
Income before income tax
provision (benefit) 4,813 8,280 35,331 19,677
Income tax provision
(benefit) (1,868) 2,487 5,986 680
Net income before
extraordinary gain 6,681 5,793 29,345 18,997
Extraordinary gain,
net of 35% tax 3,301 -- 3,301 --
Net income $ 9,982 $ 5,793 $ 32,646 $ 18,997
Net income per share
before extraordinary
gain (basic) $ 0.39 $ 0.35 $ 1.73 $ 1.18
Net income per share
before extraordinary
gain (diluted $ 0.38 $ 0.32 $ 1.62 $ 1.11
Net income per
share (basic) $ 0.58 $ 0.35 $ 1.92 $ 1.18
Net income per
share (diluted) $ 0.56 $ 0.32 $ 1.80 $ 1.11
Weighted Average
Shares (basic) 17,177 16,386 16,974 16,158
Weighted Average
Shares (diluted) 17,772 17,835 18,161 17,110
RadiSys Corporation
Consolidated Balance Sheet
(in thousands)
ASSETS
December 31, December 31,
2000 1999
Current assets
Cash and cash equivalents $ 124,086 $ 15,708
Short term investments 9,799 --
Accounts receivable, net 68,241 58,619
Inventories, net 53,247 41,374
Other current assets 2,783 1,747
Deferred income taxes 4,682 4,723
Total current assets 262,838 122,171
Property and equipment, net 28,128 21,211
Goodwill and intangible
assets, net 30,444 34,177
Other assets 12,593 10,004
Total assets $ 334,003 $ 187,563
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 32,602 $ 19,878
Short term borrowings -- 13,931
Accrued interest payable 2,185 --
Income taxes payable 5,642 3,527
Accrued wages and bonuses 7,876 6,706
Other accrued liabilities 9,176 9,266
Total current liabilities 57,481 53,308
Convertible subordinated notes 97,191 --
Total liabilities 154,672 53,308
Shareholders' equity
Common stock, 100,000 shares authorized,
17,070 and 16,489 shares issued and
outstanding 153,482 141,030
Accumulated other comprehensive
income (loss):
Cumulative translation adjustment (1,917) (1,546)
Unrealized loss on securities
available for sale -- (349)
Accumulated earnings (deficit) 27,766 (4,880)
Total shareholders' equity 179,331 134,255
Total liabilities and
shareholders' equity $ 334,003 $ 187,563
Contact:
RadiSys Corporation
Brian Bronson, Investor Relations, 503/615-1281
brian.bronson@radisys.com
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