RadiSys Reports Second Quarter GAAP EPS of 2 Cents and Non-GAAP EPS of 15 Cents

HILLSBORO, Ore.--(BUSINESS WIRE)-- RadiSys® Corporation (NASDAQ: RSYS), a leading provider of innovative hardware and software platforms for next generation IP-based wireless, wireline and video networks, announced revenues for the second quarter of $75.0 million, GAAP net income of $0.6 million or $0.02 per diluted share, and non-GAAP net income of $3.9 million or $0.15 per diluted share.

Commenting on second quarter results, Scott Grout, RadiSys President and CEO stated, "I am very pleased with the continued growth in our Next Generation revenues and our overall financial performance for the quarter. In the quarter, we also successfully completed the integration of Pactolus, a leader in next-generation IP communication solutions for converged TDM/IP and SIP enabled VoIP networks. This acquisition further strengthens our higher value, software-based media server solutions. From a design win perspective, our largest win in the quarter was for a fully integrated network security application based on ATCA. This marks one of our first wins for a complete turnkey network element solution built on our market leading platform. We also saw our wins expand in the military/aerospace market reinforcing our strategy of applying our highly reliable solutions into this large and growing sector. Finally, in the quarter we materially completed the outsourcing of all manufacturing to Asia. While we have ongoing work to optimize our operating model, all products have been successfully transitioned out of our Hillsboro facility."

Conference call on Tuesday

RadiSys will host a conference call on Tuesday, July 27, 2010 at 5:00 p.m. ET to discuss the second quarter 2010 results and to review the financial and business outlook for the third quarter and the full year of 2010.

(a) Amortization of acquired intangible assets: Amortization of acquisition-related intangible assets primarily relate to core and existing technologies, patents, trade name and customer relationships that were acquired with the acquisition of Convedia, MCPD and Pactolus. The Company excludes the amortization of acquisition-related intangible assets because it does not reflect the Company's ongoing business and it does not have a direct correlation to the operation of the Company's business. In addition, in accordance with GAAP, the Company generally recognizes expenses for internally-developed intangible assets as they are incurred, notwithstanding the potential future benefit such assets may provide. Unlike internally-developed intangible assets, however, and also in accordance with GAAP, the Company generally capitalizes the cost of acquired intangible assets and recognizes that cost as an expense over the useful lives of the assets acquired. As a result of their GAAP treatment, there is an inherent lack of comparability between the financial performance of internally-developed intangible assets and acquired intangible assets. Accordingly, the Company believes it is useful to provide, as a supplement to its GAAP operating results, non-GAAP financial measures that exclude the amortization of acquired intangibles in order to enhance the period-over-period comparison of its operating results, as there is significant variability and unpredictability across companies with respect to this expense.

(b) Stock-based compensation: Stock-based compensation consists of expenses recorded under GAAP, in connection with stock awards such as stock options, restricted stock awards and restricted stock units granted under the Company's equity incentive plans and shares issued pursuant to the Company's employee stock purchase plan. The Company excludes stock-based compensation from non-GAAP financial measures because it is a non-cash measurement that does not reflect the Company's ongoing business and because the Company believes that investors want to understand the impact on the Company of the adoption of the applicable GAAP surrounding share based payments; the Company believes that the provision of non-GAAP information that excludes stock-based compensation improves the ability of investors to compare its period-over-period operating results, as there is significant variability and unpredictability across companies with respect to this expense.

(c) Restructuring (reversals) charges, net: Restructuring primarily relates to activities engaged in by the Company's management to simplify its infrastructure. Restructuring and other charges are excluded from non-GAAP financial measures because they are not considered core operating activities. Although the Company has engaged in various restructuring activities over the past several years, each has been a discrete event based on a unique set of business objectives. The Company does not engage in restructuring activities in the ordinary course of business. As such, the Company believes it is appropriate to exclude restructuring charges from its non-GAAP financial measures because it enhances the ability of investors to compare the Company's period-over-period operating results.

INDUSTRY KEYWORDS:   Technology  Hardware  Internet  Networks  Software  Audio/Video  Telecommunications  Mobile/Wireless  VoIP