[February 03, 2012] Radisys Posts Fourth Quarter 2011 Results Tweet Feb 03, 2012 (Close-Up Media via COMTEX) -- Radisys Corp., a provider of embedded wireless infrastructure solutions for telecom, aerospace, defense and public safety applications, announced revenues for the fourth quarter of $79.5 million and non-GAAP revenue of $80.2 million, up $13.3 million or 20 percent on a non-GAAP basis when compared to the fourth quarter of 2010. In a release on January 31, the Company noted that fourth quarter GAAP net loss was $6.7 million or $0.25 per share and non-GAAP net income was $1.4 million or $0.05 per diluted share. Fourth quarter non-GAAP results exclude the impact of purchase accounting adjustments, amortization of acquired intangible assets, stock-based compensation and restructuring and acquisition-related charges. Commenting on the fourth quarter results, Mike Dagenais, Radisys' Chief Executive Officer stated, "Our fourth quarter revenue came in as we expected, and we exceeded our non-GAAP gross margin and EPS expectations with a higher mix of media server revenue. Our growing Next Generation Communications revenue is now on an annualized run-rate of over $200 million going into 2012 and represents nearly two thirds of total revenue. We also have significantly improved our customer diversification and our top customer comprised only 19 percent of total revenue in the fourth quarter. We had another fantastic design win quarter totaling approximately $95 million of expected revenue over the next five years, bringing our second half total to almost $200 million. Our customers are responding positively to our unique set of product and solution offerings and awarded us new business in many of our targeted wireless infrastructure applications such as network test, traffic management, video optimization, voice quality enhancement and military communications." Dagenais went on to say, "Our recently implemented strategy is focused on being the world's premier provider of embedded wireless telecom solutions, and I am excited about the market's early interest in our unique, fully integrated hardware and software capabilities. These unique integrated solutions, like our Security Gateway, provide more value to our customers, allow for more sustainable differentiation and return greater profitability to our stakeholders. Our strategy also entails re-investment for growth in our COMe and RMS businesses and additional investments in new target growth areas such as media server for video and voice over LTE. The integration of the two companies is proceeding as planned, and we continue to expect operating expense synergies of at least $8 to $10 million plus $5 million of cost of goods sold synergies in 2012." Fourth Quarter Financial Highlights -GAAP revenue was $79.5 million and non-GAAP revenue was $80.2 million. Next-Generation Communication Networks revenue was $51.0 million, or 64 percent of total revenue, and represents an increase of 82 percent from the same quarter last year. -GAAP gross margin was 31.2 percent. Non-GAAP gross margin was 35.5 percent and represents a 0.8 percentage point increase from the same quarter last year, primarily resulting from improved product mix. -Total GAAP Research and Development (R&D) and Selling, General and Administrative (SG&A) expenses were $28.3 million and non-GAAP R&D and SG&A expenses were $26.9 million, flat with the prior quarter. -Cash flow from operating activities was $0.9 million. Cash and cash equivalents were $47.8 million at the end of the fourth quarter, down from $55.9 million at the end of the third quarter due primarily to the purchase of $5 million of the Company's outstanding 2013 convertible notes, resulting in a reduction in the debt balance to $45 million due in February 2013. Capital expenditures were $3.9 million largely tied to ongoing integration work. In November, the Company completed an amendment to its existing line of credit, increasing the Company's line of credit availability to $40 million. 2011 Financial Highlights -GAAP revenue was $330.9 million and non-GAAP revenue was $332.9 million, up $48.6 million or 17 percent over the prior year. 2011 Next Generation Communication Networks revenues were $167.1 million, up $49.1 million or 42 percent over the prior year and represented 51 percent of total revenue. On a pro-forma basis, when including historic Continuous Computing revenue, these revenues grew by 20 percent year over year. -GAAP gross margin was 29.2 percent. Non-GAAP gross margin was 32.6 percent, down 0.5 percentage points year-over-year. This decrease was due to an expected decline in the Company's Legacy gross margin rates of approximately 7 percentage points year over year, more than offsetting the growth in Next Generation Communications revenues at higher gross margin rates. -Cash flow from operating activities was $14.8 million in 2011. Beginning in 2012, the Company will be changing its revenue reporting to more closely reflect how the Company views its revenue internally. Specifically, revenue will be disclosed in the following four product groups: ATCA Platforms, COM Express and Rackmount Server Products, Software and Solutions and Other Products. The total ATCA Platforms and Software and Solutions revenue represent the previously disclosed Next Generation Communications Networks revenue; COM Express and Rackmount Server revenue represent most of the previously disclosed Commercial Products revenue and Other Products revenue represents the previously disclosed Legacy Communications revenue as well as previously reported Commercial Products revenue that is not COM Express or Rackmount Server products. This new revenue reporting is included in the tables below for 2011 by quarter. First Quarter 2012 Outlook -Revenue: Non-GAAP revenue is expected to be between $75 and $81 million with a midpoint that is slightly down from the fourth quarter and in-line with the Company's historic seasonality. Software and Solutions revenue is expected to be down sequentially due to a strong fourth quarter of media server revenues while all other revenue categories are expected to remain relatively flat when compared to the fourth quarter. -Gross Margin: First quarter non-GAAP gross margin rate is expected to be between 33 percent and 34 percent. -Operating Expenses: First quarter non-GAAP R&D and SG&A expenses are expected to be down by approximately $2 million from the prior quarter at the midpoint of the guidance range. Acquisition-related integration and restructuring charges, excluded from non-GAAP results, are expected to be approximately $1.6 million in the first quarter. -EPS: First quarter GAAP net loss is expected to be $0.34 to $0.29 per share. First quarter non-GAAP results are expected to be between breakeven and net income of $0.06 per diluted share. The acquisition of Continuous Computing is still expected to be accretive to Radisys' non-GAAP earnings in the first quarter of 2012. 2012 Outlook -Revenue: Total non-GAAP revenues are projected to be $345 to $355 million or up 5 percent at the midpoint of the range and in line with the Company's previous guidance. Specifically, on a pro-forma basis, ATCA Platform revenues are expected to increase from the prior year by approximately 20 percent to close to 55 percent of total revenue. Software and Solutions revenues are expected to increase by approximately 20 percent with this high margin revenue representing over 15 percent of total revenue. Total COM Express and Rackmount Server revenues are expected to decrease by approximately 10 percent to around 15 percent of revenue, but the investments that are currently being made are expected to drive revenue growth in these products beginning in 2013. Lastly, Other Products revenues are projected to be down by up to 50 percent as previously expected to only 15 percent of total revenue. -Gross Margin: Non-GAAP gross margin rate is expected to increase to between 36 percent and 37 percent from 32.6 percent in 2011, with the expansion continuing to come from the Company's transition to higher value products as well as acquisition related synergies of approximately $5 million from the fourth quarter's run-rate. -Operating Expense: Total non-GAAP R&D and SG&A expenses are expected to decrease by at least $8 to $10 million in 2012 from the fourth quarter's expense run-rate as a result of acquisition synergies. Acquisition-related integration and restructuring charges are expected to approximate $3.8 million over the first three quarters of 2012 and are excluded from non-GAAP results. -EPS: 2012 non-GAAP EPS is expected to between $0.80 and $0.85 cents, which is consistent with the Company's previous guidance. 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