The Company’s 2008 annual revenues were $372.6 million, up 15% from $325.2 million in the prior year. The Company’s 2008 GAAP net loss was $66.0 million or $2.92 per share, which included the non-cash goodwill impairment charge. This compares to a net loss of $17.6 million or $0.80 per share in the prior year. Non-GAAP net income was $12.5 million or $0.49 per diluted share in 2008, versus $8.2 million or $0.34 per diluted share in the prior year.
Commenting on the fourth quarter and full year results, Scott Grout, RadiSys President and CEO stated, “I am pleased that we delivered better than expected revenues and non-GAAP earnings in the fourth quarter with notable strength in our Media Server business. In 2008, we made meaningful progress on a number of our core strategies and grew our overall next-generation communications revenues to over $100 million for the year. Our strategic focus is to provide more complete and valuable solutions to our customers. Our progress on this strategy, combined with continuing improvements in operational execution, allowed us to increase our gross margin rate every quarter in 2008. Our expanded gross margin along with reductions in spending throughout 2008 allowed us to meaningfully increase our full year Non-GAAP operating income over 2007. Finally, we generated operating cash flow of over $11 million in the fourth quarter, over $34 million in the year, and we ended the year with $74 million of cash and cash equivalents.”
Fourth Quarter Financial Highlights
- Revenue was higher than the Company’s expectations at $88.7 million and was down 11% from the prior year. Revenues were down due to lower wireless demand as well as a sequential decrease in ATCA revenues attributable to revenue recognized in the third quarter for shipments in prior quarters. Media server revenues also reached another record high for the Company in the fourth quarter.
- GAAP gross margin was 28.5%, up 7.2 percentage points year-over-year. Non-GAAP gross margin was 31.6%, up 5 percentage points year-over-year, mainly due to a greater mix of next-generation higher margin products as well as improved manufacturing costs.
- Total GAAP R&D and SG&A expenses were $23.9 million, down from $24.9 million in the same quarter last year and $24.7 million in the prior quarter. Non-GAAP R&D and SG&A expenses were $21.9 million versus $22.7 million in the same quarter last year and $22.5 million in the prior quarter.
- GAAP operating loss was $66.5 million, which included the goodwill impairment charge of $67.3 million. Non-GAAP operating income was $6.1 million or 6.9% of revenues, which equates to 3.2 percentage points of improvement versus $3.7 million or 3.7% of revenues in the same quarter last year.
- Cash flow from operating activities was $11.6 million versus $14.0 million in the same quarter last year. Cash and cash equivalents were $74.0 million at the end of fourth quarter.
- In November, the Company repurchased all $37.5 million of its 1-3/8% Convertible Senior Notes at par. Also in the quarter, the Company repurchased $5.0 million in aggregate principal amount of its 2-3/4% 2013 Convertible Senior Notes for $3.1 million, leaving $50 million outstanding due in 2013.
- The Company entered into a contract with UBS Bank USA (UBS) that requires the bank to repurchase, at par, the Company’s $62.7 million of student loan Auction Rate Securities (ARS’s) no later than June 30, 2010. As part of the agreement, the Company received a no net interest loan from UBS for approximately $40 million, which represents 75% of the market value of the Company’s ARS’s held by UBS.
- In the third quarter, the Company borrowed $20 million on a $30 million line of credit with Silicon Valley Bank (SVB) as a precautionary measure. In the fourth quarter, the Company repaid the $20 million to SVB with a portion of the $40 million of proceeds received from the no net interest loan from UBS.
- 2008 revenue was $372.6 million, up $47.4 million or 15% over the prior year. 2008 next-generation communication revenue, consisting of ATCA and media server products, was over $100 million for the full year compared to $90 million that was previously expected and $36 million in the prior year.
- GAAP gross margin was 25.8%, up 3.7 percentage points over the prior year. Non-GAAP gross margin was 29.9%, up 2.8 percentage points year-over-year, mainly due to a greater mix of next-generation higher margin products as well as improved manufacturing costs.
- Cash flow from operating activities was $34.9 million for the year, up 75% from $20.0 million in the prior year.