RadiSys Announces Financial Results for Quarter Ended December 31, 1999 - Company Financial Information

Edge: Work-Group Computing Report, Jan 31, 2000

RadiSys Corporation Wednesday reported revenues of $72.9 million for the quarter ended December 31, 1999, a 52% increase from revenues of $47.9 million for the quarter ended December 31, 1998.

Net income for the quarter was $5.8 million or $0.32 per share (diluted), which represented 113% earnings per share growth, compared to $2.4 million or $0.15 per share (diluted) for the quarter ended December 31, 1998.

For the year ended December 31, 1999 revenues were $251.1 million, a 35% increase from revenues of $186.5 million for the year ended December 31, 1998. Excluding non-recurring charges associated with the merger with Texas Micro, a gain associated with a prior divestiture, and the changes in the federal income tax laws effective June 25, 1999, net income for the year ended December 31, 1999 was $17.3 million or $1.01 per share (diluted), which represented 110% earnings per share growth, compared to $7.8 million or $0.48 per share (diluted) for the year ended December 31, 1998. Including the non-recurring charges, gain, and tax adjustment, net income for the year ended December 31, 1999 was $19.0 million or $1.11 per share (diluted).

The Company's gross margin increased to 37.3% this quarter from 36.5% in the quarter ended September 30, 1999. This increase was primarily the result of manufacturing volume efficiencies and material price improvements. R&D expenses tracked sales growth, staying at 11.6% of sales, as the Company continued to invest in technology and design wins. SG&A, excluding amortization, decreased as a percentage of revenue to 13.4% from 14.6% for the quarter ended September 30, 1999. Operating income, as a percentage of revenue for the quarter was 11.2%, compared with 9.1%, which excludes combination costs, for the quarter ended September 30, 1999.

"The fourth quarter was a great one for us in that all of the important indicators went in the right direction: sales and earnings were up strongly, design wins were up, gross margin was up, and inventory significantly decreased," stated Dr. Glen Myers, Chairman and Chief Executive Officer. "We achieved all this while taking some big steps forward in terms of capabilities for the future. We built a new design center from scratch in Birmingham in the United Kingdom and they are well underway in the development of an initial product. We closed, in the last week of December, the acquisition of the Open Computing Platforms business from IBM, which gives us a new set of capabilities in providing total system solutions to telecom equipment manufacturers."

RadiSys achieved 23 major new design wins in the quarter. The Company characterizes a design win as a project estimated to produce $500,000 or more in revenue per year when in production. Of the 23 wins, 10 are estimated to produce $2 million or more in revenue per year once in full production, 17 of the wins were for telecommunications equipment, 4 for manufacturing automation, and 2 in other categories. Design wins ramp into production volume at varying rates; typically the ramp begins 6-12 months after the win occurs. A variety of risks can affect these programs before the start of production, such as schedule delays and changes in customer markets.

RadiSys designs and manufactures embedded subsystems that are used in a wide variety of electronics systems, from telecommunications equipment to medical devices to robotics applications. Its subsystems include Intel-based embedded computers, signal processors, communications interfaces, and certain types of embedded software. 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 of using its intellectual property to design high-volume customer- and application-specific subsystems.

                     RadiSys Corporation
                  Consolidated Balance Sheet
                        (in thousands)

                            ASSETS
                                        December 31,  December 31,
                                            1999          1998
                                                        Restated

Restated
Current assets
   Cash and cash equivalents                $ 15,708     $ 43,792
   Accounts receivable, net                   58,619       33,661
   Inventories, net                           41,374       27,382
   Other current assets                        1,747        2,255
   Deferred income taxes                       4,723          805

 Total current assets                        122,171      107,895

   Equipment, net                             21,211       17,011
   Goodwill and intangible
assets, net                                   34,177        3,188
   Other assets                               10,004        3,633

 Total assets                               $187,563     $131,727

             LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
   Accounts payable                         $ 19,878     $ 12,553
   Short term borrowings                      13,931         --
   Income taxes payable                        3,527        1,052
   Accrued wages and bonuses                   6,706        4,272
   Accrued sales discounts                     1,258          748
   Other accrued liabilities                   7,935        5,910
   Current portion of capital
 lease obligation                                 73          277

 Total current liabilities                    53,308       24,812

   Non-current portion of
    capital lease obligation                    --             88

     Total liabilities                        53,308       24,900

Shareholders' equity
   Common stock, 50,000,000
    shares authorized, 16,489,433 and
    15,838,836 shares issued and outstanding 141,030      132,368
   Accumulated other comprehensive loss:
 Cumulative translation adjustment            (1,546)      (1,096)
     Unrealized loss on securities
      available for sale                        (349)        (568)
   Accumulated deficit                        (4,880)     (23,877)

     Total shareholders' equity              134,255      106,827

     Total liabilities and
      shareholders' equity                $  187,563   $  131,727

                      RadiSys Corporation
             Consolidated Statement of Operations
           (in thousands, except per share amounts)

                        Three Months Ended    Twelve Months Ended
                            (unaudited)
                        Dec. 31,   Dec. 31,   Dec. 31,   Dec. 31,
                          1999       1998       1999       1998
                                   Restated              Restated

Revenues                $ 72,945   $ 47,854   $251,090   $186,548
Cost of goods sold        45,770     31,150    158,793    123,864

Gross Profit              27,175     16,704     92,297     62,684

Research and development   8,491      5,516     30,464     22,190
Selling, general and
 administrative            9,807      8,601     36,798     31,526
Goodwill and intangibles
 amortization                727        100      2,460        399
Combination costs           --         --        5,971       --

Income from operations     8,150      2,487     16,604      8,569

Interest income, net         264        538      1,200      1,930
Other income/(expense)      (134)       218      1,873        458

Income before income tax
 provision                 8,280      3,243     19,677     10,957
Income tax provision       2,487        823        680      3,139

Net income              $  5,793   $  2,420   $ 18,997   $  7,818

Net income per share
 (basic)                $   0.35   $   0.15   $   1.18   $   0.49

Net income per share
 (diluted)              $   0.32   $   0.15   $   1.11   $   0.48

Weighted Average Shares
 (basic)                  16,386     15,832     16,158     15,854

Weighted Average Shares
 (diluted)                17,835     16,122     17,110     16,129