RadiSys Reports Q2, Lays Off 119

RadiSys announced revenues of $78.1M for the quarter ended June 30, 2009, down 20% versus the same quarter last year, and is cutting 119 employees as part of its outsourcing effort

July 28, 2009

4 Min Read

HILLSBORO, Ore. -- RadiSys® Corporation (NASDAQ:RSYS - News), a leading global provider of advanced embedded solutions, announced revenues of $78.1 million for the quarter ended June 30, 2009, down 20% versus the same quarter last year. The Company’s GAAP net loss improved to $2.1 million or $0.09 per share in the second quarter, versus a net loss of $3.1 million or $0.14 per share in the same quarter last year. Second quarter non-GAAP net income increased to $4.9 million or $0.19 per diluted share, versus net income of $3.5 million or $0.14 per diluted share in the same quarter last year. Non-GAAP results in the second quarter exclude the impact of restructuring charges, amortization of acquired intangible assets and stock-based compensation expense. A reconciliation of GAAP to non-GAAP results is included in the tables below.

Commenting on the second quarter results, Scott Grout, RadiSys President and CEO stated, “We delivered better than expected results in the second quarter due to strong demand for our next-generation communications products including a customer-driven acceleration of a network build out that was originally planned for the second half of 2009. The growth in our next-generation communication revenues has substantially changed our business model over the past couple of years. As a result of our higher gross margins and lower operating expenses, we delivered non-GAAP operating margins of 7.7% in the second quarter and further strengthened our cash position. We also had another very strong design win quarter in each of our target markets with particular strength in Asia and with our next-generation communications products.” Mr. Grout continued to say, “In addition, we launched initiatives within our operations organization to complete our transition to a fully outsourced manufacturing model, and we established a plan to consolidate our North American product development into our Hillsboro, Oregon and Vancouver, BC design centers. These activities are intended to strengthen our ability to develop and deliver more competitive products while expanding our margin profile over time.”

Second Quarter Financial Highlights

  • Revenue was $78.1 million, down 20% from the prior year and up 1% from the prior quarter. As expected, the Company’s traditional wireless and commercial businesses were down from the prior year due to general softness in these markets. 44% of the Company’s revenue came from the Asia Pacific region in the second quarter compared to 31% last year.

  • GAAP gross margin was 31.1%, up 6.0 percentage points year-over-year. Non-GAAP gross margin was 33.5%, up 4.1 percentage points year-over-year, mainly due to a favorable mix of next-generation higher margin products as well as improved manufacturing and operational costs.

  • Total GAAP R&D and SG&A expenses were $21.8 million, down $4.3 million or 16.6% from the same quarter last year and $1.2 million from the prior quarter. Non-GAAP R&D and SG&A expenses were $20.1 million, down $3.8 million or 15.9% from the same quarter last year and down $0.7 million from the prior quarter.

  • The Company recorded a restructuring charge of $3.0 million in the second quarter mainly associated with strategic initiatives in the Company’s manufacturing operations and engineering organizations. The restructuring plan includes completing the transition to a fully outsourced manufacturing model, which will involve transferring the remaining manufacturing in Hillsboro, Oregon to the Company’s contract manufacturing partners in Asia. The plan also includes consolidating the Company’s North American research and development employees and programs, and specifically transferring programs from its Boca Raton, Florida design center into its other existing R&D centers. These efforts are expected to result in a total workforce reduction of 119 employees, of which 84 are in manufacturing, 28 in R&D, principally from the Company’s Boca Raton site, and 7 in SG&A. These transitions are expected to be complete by the third quarter of 2010 and are estimated to save $1.0 to $2.0 million a quarter in manufacturing costs, reduce inventory levels by $5 to $10 million, and save $0.5 to $1.0 million a quarter in development costs, while increasing the Company’s product development and operational capabilities.

  • GAAP operating loss was $1.1 million. Non-GAAP operating income was $6.1 million or 7.7% of revenues, which equates to 2.8 percentage points of improvement over the same quarter last year.

  • Cash flow from operating activities was $8.3 million and cash and cash equivalents were $87.6 million at the end of the second quarter.

Radisys Corp. (Nasdaq: RSYS)

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