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Radisys Reports Third Quarter 2012 Results

Third Quarter Financial Highlights

  • Revenue was $63.7 million. ATCA and Software-Solutions revenues were $39.3 million, representing 62% of total revenue.
  • GAAP gross margin was 27.7%. Non-GAAP gross margin was 31.6%. An unfavorable revenue mix from sequentially lower Software-Solutions revenue and an unfavorable mix within ATCA products temporarily reduced overall gross margin.
  • Total GAAP Research and Development (R&D) and Selling, General and Administrative (SG&A) expenses were $23.6 million and non-GAAP R&D and SG&A expenses were $22.8 million, representing a $0.5 million sequential reduction when compared to the second quarter.
  • Operating expense included a $29.7 million non-cash goodwill impairment charge. The Company is considered a single reporting unit from an accounting perspective and the recent decline in its stock price triggered an impairment analysis of the Company's goodwill. As a result of this analysis, it was concluded that the fair value of the tangible and intangible assets was greater than its current market value leaving no value for an allocation to goodwill. The Company was required to write-off its entire goodwill balance.
  • Cash used in operating activities was $0.6 million as later than normal shipments grew accounts receivable, despite the reduction in overall revenue levels.
  • The Company repurchased $10.1 million of its convertible debt at a modest discount, leaving a balance of $16.9 million due in February of 2013 and $18.0 million due in February of 2015.
  • Cash and cash equivalents were $31.8 million at the end of the third quarter.

Fourth Quarter 2012 Outlook

  • Revenue: Fourth quarter revenue is expected to be between $61 million and $69 million.
  • Gross Margin: Fourth quarter non-GAAP gross margin rate is expected to increase to approximately 33% of sales.
  • Operating Expenses: Fourth quarter non-GAAP R&D and SG&A expenses are expected to decrease sequentially by approximately $1.0 million from third quarter levels.
  • EPS: Fourth quarter non-GAAP net income is expected to be between a loss of $0.06 per diluted share and breakeven.
  • Operating Cash Flow: The Company expects to generate positive operating cash flow in the fourth quarter.

Mr. Bronson continued, “The Board and I are 100% aligned on a fundamental belief that the Company needs focus. This does not mean we are going to take another year to define a new strategy or address new markets with different products. In several areas, we already have market leading products. Now is the time to focus our investments to ensure the success of those products that create the most long-term differentiation and value for our shareholders and enable a sustainable return to non-GAAP profitability and cash generation.”

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