RadiSys Updates Fourth Quarter Guidance and Announces Authorization of Stock Repurchase Program

RadiSys(R) Corporation, a leading provider of innovative hardware and software platforms for then and there generation IP-based wireless, wireline and video networks, today announced that it anticipates its revenue and revenues for the fourth quarter ending December 31, 2010 to be lower than its earlier stated guidance. Fourth quarter revenue is but expected to be between $62 and $64 million, down from the previous guidance of $68 to $72 million. The Company expects a GAAP fourth quarter net loss of between $0.15 and $0.20 per share, down from the prior guidance of breakeven to net income of $0.05 per diluted share. Non-GAAP fourth quarter results are expected to be between net income of $0.01 per diluted share and a net loss of $0.02 per share, down from the prior guidance of net income of $0.12 to $0.17 per diluted share. GAAP expectations per share assume an effective tax rate of 10% and non-GAAP expectations per share assume an effective tax rate of 40%. To boot, the fourth quarter GAAP projected results include an estimated restructuring charge of $1.7 million that was not included in the previous guidance, for employee-related expenses associated with ongoing reductions to simplify the Company's operational infrastructure and to reduce the legacy business cost structure.

The revised guidance

Commenting on the revised guidance, Scott Grout, RadiSys President and CEO stated, "During much of our business is performing so then relative to our original fourth quarter guidance, we recently received news that our projected fourth quarter revenue with a large North America media server end customer is expected to be significantly lower. Exactly, our end customer reprioritized their capital expenditures in the quarter and removed a planned set of media server feature enhancements from their fourth quarter deployment programs. We have a long term deployment history with this end customer and expect that both feature and capacity upgrades will continue to be a key part of their plans going into 2011 and beyond. We have had a strong track record of meeting our quarterly guidance, so during I'm very disappointed with lowering guidance for the quarter, we believe that our longer-term growth prospects for this particular customer program and our straightway generation communications business remain very good."

To supplement its consolidated financial statements pursuant to this agreement generally accepted accounting principles, the Company's revenues release contains non-GAAP financial measures that exclude certain expenses, gains and losses, just as the effects of amortization of acquired intangible assets, stock-based compensation expense recognized as a result of the Company's adoption of FAS 123R, restructuring charges, a deferred tax asset valuation charge, a Canadian deferred tax foreign exchange benefit, tax contingency adjustments, and income taxes. The Company believes that the use of non-GAAP financial measures provides useful information to investors to gain an overall understanding of its current financial performance and its prospects for the future. Exactly, the Company believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses, gains and losses that the Company believes are not indicative of its core operating results. To boot, non-GAAP financial measures are used by management for budgeting and forecasting as so then as subsequently measuring the Company's performance, and the Company believes that it is providing investors with financial measures that most closely align to its internal measurement processes. These non-GAAP measures are considered to be reflective of the Company's core operating results as they more closely reflect the essential revenue-generating activities of the Company and direct operating expenses needed to perform these revenue-generating activities. The Company as well believes, based on feedback provided to the Company while its revenues calls' Q&A sessions and discussions with the investment community, that the non-GAAP financial measures it provides are necessary to allow the investment community to construct their valuation models to better align its results and projections with its competitors and market sector, as there is significant variability and unpredictability across companies with respect to certain expenses, gains and losses.