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Product category: Networking Hardware
News Release from: RadiSys Corporation
Edited by the Electronicstalk Editorial Team on 03 February 2004

Q4 growth concludes profitable year for
Radisys

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Radisys has reported revenues of $55.3 million for the quarter ended 31st December 2003, a 17% increase from the same period last year, and up 10% from the prior quarter.

Radisys has reported revenues of $55.3 million for the quarter ended 31st December 2003, a 17% increase from the same period last year, and up 10% from the prior quarter Net income for the quarter was $1.5 million, or $0.08 per diluted share, versus net income of $941 thousand, or $0.05 per diluted share, a year ago

The results for the quarter ended 31st December 2003 include a loss of $1.8 million associated with the sale of an office building in Des Moines, Iowa and a $208 thousand reversal of previously accrued restructuring liabilities.

For the year ended 31st December 2003, revenues were $202.8 million, an increase of 1% from revenues of $200.1 million for the year ended 31st December 2002.

Net income for the year ended 31st December 2003 was $1.3 million, or $0.07 per diluted share, compared with a net loss of $3.3 million or $0.19 per share for the year ended 31st December 2002.

"We believe the results for the quarter reflect our strong position in a number of diverse and improving end markets", stated Scott Grout, CEO.

"In addition to growth in revenues and profitability, we generated $10 million in cash during the quarter, driven largely by a 16-day reduction in cash cycle time from the prior quarter and improved cash flow from operations.

We also raised $100 million of convertible notes in November, giving Radisys $225 million in cash and investments as we enter the new year".

The company sold an office building in Des Moines, Iowa on 29th December 2003 resulting in a loss of $1.8 million for the quarter.

However, the sale generated positive cash flow in the quarter of $360 thousand and will result in a net facilities expense reduction for the operations in Des Moines moving forward.

The company acquired the building and related assets as part of the acquisition of Microware in August of 2001.

In general, the company prefers to lease the facilities that it requires for operations.

The company will lease a portion of the facility and will continue to operate its software design centre in Des Moines.

During the quarter, the company reversed $208 thousand of restructuring liabilities.

The reversal of restructuring liabilities was primarily attributable to a reduction in future obligations associated with vacated leased facilities.

Radisys achieved 11 new design wins in the quarter.

Radisys characterises a design win as a project estimated to produce more than $500 thousand in revenue per year, when in production.

Three of the wins are larger, each of which is estimated to produce more than $2 million in revenue per year once in full production.

Of the 11 wins, five are in enterprise systems, three are in commercial systems, and three are in service provider systems.

Design wins ramp into production volume at varying rates; on average the ramp begins about twelve months after the win occurs.

The design wins reported this quarter are spread across a number of end applications, including clinical diagnostic systems, security monitoring systems, transaction terminal systems, and wireless infrastructure systems.

The addition of the fourth quarter wins brings total design wins for the year to 41 - with 18 in commercial applications, 14 in enterprise markets and nine in service provider equipment.

Commenting on the outlook, Scott Grout, CEO, said, "We currently expect to see first quarter revenue up modestly from the fourth quarter.

In addition, we will be recording a $3 million inventory sale to one of our customers.

The expected increase in revenues is exclusive of this $3 million inventory sale.

The inventory sale will be recorded as revenue but will not generate any gross margin dollars since we are selling the inventory at cost.

We expect pre-tax earnings to be slightly higher sequentially, but earnings per share is expected to decrease slightly from the fourth quarter due to the impact of projected a tax rate of approximately 25%.

Although we will be booking a tax expense, we don't anticipate any significant tax liabilities during 2004, as any tax liability will likely be offset with a reduction in our net operating loss carryforwards that reside on the balance sheet as deferred tax assets".

In closing, Grout stated: "The company made excellent progress in 2003 and is positioned well for future growth.

We achieved sequential revenue and earnings growth all four quarters in 2003, and we reduced our cost structure significantly, while at the same time strengthening our team.

We increased our cash and investments by $106 million, while continuing to buy back our existing debt.

Our team achieved 41 design wins with leading customers across multiple end markets and geographies.

We continue to invest for the future, spending $23 million this year in research and development, and increased our investment in infrastructure in emerging markets such as China.

We believe these achievements position Radisys well to continue as a leading provider of embedded systems to its customers allowing them bring better products to market, faster and at a lower total cost".

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