Radisys Corporation (NASDAQ: RSYS), a global leader of open
telecom solutions, today announced financial results for the second
quarter ended June 30, 2018.
Second Quarter Summary
- Consolidated revenue of $24.4 million,
with Software-Systems representing over 50% of total revenue
including growth of nearly 20% over prior year;
- GAAP gross margin of 37.5% and non-GAAP
gross margin of 45.3%;
- GAAP loss of ($0.12) per share and
non-GAAP earnings of $0.06 per diluted share; and
- Entered into a definitive agreement on
June 29 to be acquired by Reliance Industries Limited (“Reliance”)
for $1.72 per share.
“Second quarter revenue and EPS exceeded the high-end of our
expectations, including the achievement of non-GAAP profitability
for the quarter,” said Brian Bronson, Radisys President and Chief
Executive Officer. “Our second quarter results benefited from
strength in our Software-Systems segment driven by early 5G
licensing opportunities as well as upside residual demand from our
legacy hardware business.
“Additionally, at the end of the second quarter we announced a
definitive agreement for Radisys to be acquired by Reliance. While
we will continue to work independently on driving our future growth
and innovation, this transaction will help to accelerate our
strategy and provide the scale required by our current and
prospective customers to more fully embrace Radisys’ suite of
products and services. Moreover, we expect the addition of
Reliance’s visionary leadership and strong market position to
further enhance our ability to develop and integrate large-scale,
disruptive, open-centric end-to-end solutions.”
Software-Systems Results
For the second quarter of 2018, Software-Systems revenue was
$13.7 million, compared to $11.1 million in the prior quarter and
$11.5 million in the second quarter of 2017.
Gross margin was 64.6%, compared to 49.2% in the prior quarter
and 54.3% in the second quarter of 2017. Operating income was $0.9
million, compared to an operating loss of $3.1 million in the prior
quarter and an operating loss of $1.9 million in the second quarter
of 2017.
Hardware Solutions Results
For the second quarter of 2018, Hardware Solutions revenue was
$10.7 million, compared to $15.0 million in the prior quarter and
$23.6 million in the second quarter of 2017.
Gross margin was 20.9%, compared to 20.7% in the prior quarter
and 24.3% in the second quarter of 2017. Operating income was $0.8
million, compared to operating income of $1.0 million in the prior
quarter and operating income of $0.2 million in the second quarter
of 2017.
Consolidated Results
For the second quarter of 2018, consolidated revenue was $24.4
million, compared to $26.2 million in the prior quarter and $35.1
million in the second quarter of 2017.
On a GAAP basis, gross margin in the second quarter of 2018 was
37.5%, compared to 26.6% in the prior quarter and 28.5% in the
second quarter of 2017. Second quarter 2018 research and
development and selling, general, and administrative expenses on a
GAAP basis were $9.7 million, compared to $11.0 million in the
prior quarter and $14.2 million in the second quarter of 2017.
On a non-GAAP basis, second quarter 2018 gross margin was 45.3%,
compared to 32.8% in the prior quarter and 34.1% in the second
quarter of 2017. Second quarter 2018 research and development and
selling, general and administrative expenses on a non-GAAP basis
were $9.4 million, compared to $10.7 million in the prior quarter
and $13.7 million in the second quarter of 2017.
For the second quarter of 2018, the Company recorded a GAAP net
loss of $4.6 million, or ($0.12) per share, compared to a GAAP net
loss of $6.4 million, or ($0.16) per share, in the prior quarter
and a GAAP net loss of $7.6 million, or ($0.19) per share, in the
second quarter of 2017. On a non-GAAP basis, the Company recorded
net income of $2.2 million, or $0.06 per diluted share, in the
second quarter of 2018, compared to a net loss of $3.3 million, or
($0.08) per share, in the prior quarter and a net loss of $2.2
million, or ($0.06) per share, in the second quarter of 2017.
Proposed Acquisition of Radisys by Reliance
As previously announced on June 29, 2018, Radisys Corporation
and Reliance Industries entered into a definitive agreement under
which Reliance will acquire Radisys for US$1.72 per share in cash.
The transaction is subject to certain customary closing conditions,
including regulatory approvals and approval of Radisys’
shareholders, and is expected to close in the fourth quarter of
2018. Due to the pending acquisition, the Company will not be
providing guidance on anticipated financial results for future
periods.
Additional information on the proposed transaction can be found
in the preliminary proxy statement filed by Radisys with the SEC on
July 30, 2018.
Conference Call and Webcast Information
The Company will host a conference call to discuss second
quarter 2018 results on July 31, 2018, at 5:00 p.m. ET. To
participate in the live conference call, dial 888-333-0027 in the
U.S. and Canada or 706-634-4990 for all other countries and
reference conference ID # 2686128. The live conference call will
also be available via webcast on the Radisys investor relations
website at http://www.radisys.com/investor-relations.
A replay of the conference call will be available two hours
after the call is complete until 11:59 p.m. on August 14, 2018. To
access the replay, dial 855-859-2056 or 404-537-3406 and reference
conference ID# 2686128. A replay of the webcast will be available
for an extended period of time on the Radisys investor relations
website at http://www.radisys.com/investor-relations.
About Radisys
Radisys (NASDAQ: RSYS), a global leader in open telecom
solutions, enables service providers to drive disruption with new
open architecture business models. Radisys’ innovative
disaggregated and virtualized enabling technology solutions
leverage open reference architectures and standards, combined with
open software and hardware to power business transformation for the
telecom industry, while its world-class services organization
delivers systems integration expertise necessary to solve
communications and content providers’ complex deployment
challenges. For more information, visit www.Radisys.com.
Forward-Looking Statements
Certain statements contained in this communication may
constitute “forward-looking statements.” Forward-looking statements
can usually be identified by the use of words such as “aim,”
“anticipate,” “believe,” “continue,” “could,” “estimate,” “evolve,”
“expect,” “forecast,” “intend,” “looking ahead,” “may,” “opinion,”
“plan,” “possible,” “potential,” “project,” “should,” “will” and
other expressions which indicate future events or trends. Such
statements include statements as to the expected timing of
completion of the merger, the expected benefits and costs of the
transaction, management plans relating to the transaction and the
satisfaction of all closing conditions to the transaction,
including the ability to obtain shareholder and regulatory
approvals.
These forward-looking statements are based upon certain
expectations and assumptions and are subject to risks and
uncertainties. Actual results could differ materially from those
anticipated as a result of various factors, including the
following: Radisys’ shareholders may not approve the transaction;
conditions to the closing of the transaction, including receipt of
required regulatory approvals, may not be satisfied timely, if at
all; the transaction may involve unexpected costs, liabilities or
delays; revenues following the transaction may be lower than
expected; operating costs, customer loss and business disruption
(including, without limitation, difficulties in maintaining
relationships with employees, customers, clients or suppliers) may
be greater than expected following the transaction; uncertainties
surrounding the transaction; the outcome of any legal proceedings
related to the transaction; Radisys may be adversely affected by
other economic, business, and/or competitive factors; risks that
the pending transaction disrupts current plans and operations; the
retention of key employees of Radisys; other risks to consummation
of the transaction, including circumstances that could give rise to
the termination of the merger agreement and the risk that the
transaction will not be consummated within the expected time period
or at all; and the other risks described from time to time in
Radisys’ reports filed with the Securities and Exchange Commission
(the “SEC”) under the heading “Risk Factors,” including the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2017, subsequent Quarterly Reports on Form 10-Q and in
other of Radisys’ filings with the SEC.
All forward-looking statements are qualified by, and should be
considered in conjunction with, such cautionary statements. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date on which such
statements were made. Except as required by applicable law, Radisys
undertakes no obligation to update forward-looking statements to
reflect events or circumstances arising after such date.
Additional Information and Where to Find It
In connection with the transaction, Radisys intends to file
relevant materials with the SEC, including a proxy statement on
Schedule 14A. Following the filing of the definitive proxy
statement with the SEC, Radisys will mail the definitive proxy
statement and a proxy card to each shareholder entitled to vote at
the special meeting relating to the transaction. BEFORE MAKING ANY
VOTING DECISION, RADISYS SHAREHOLDERS ARE URGED TO CAREFULLY READ
THESE MATERIALS (AND ANY AMENDMENTS OR SUPPLEMENTS) AND ANY OTHER
RELEVANT DOCUMENTS THAT RADISYS FILES WITH THE SEC WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The
definitive proxy statement, the preliminary proxy statement and
other relevant materials in connection with the transaction (when
they become available), and any other documents filed by Radisys
with the SEC, may be obtained free of charge at the SEC’s website
(http://www.sec.gov), at Radisys’ investor website
(http://radisys.com/investor-relations), or by writing or calling
Radisys at Radisys Corporation, 5435 NE Dawson Creek Drive
Hillsboro, OR 97124 or by (503) 615-1685.
Participants in the Solicitation
Radisys and its directors and executive officers may be deemed
to be participants in the solicitation of proxies from Radisys’
shareholders with respect to the transaction. Information about
Radisys’ directors and executive officers and their ownership of
Radisys’ common stock is set forth in Radisys’ Amendment No. 1 to
Annual Report on Form 10-K/A filed with the SEC on April 26, 2018.
To the extent that holdings of Radisys’ securities have changed
since the amounts printed in Radisys’ Form 10-K/A, such changes
have been or will be reflected on Statements of Change in Ownership
on Form 4 filed with the SEC. Additional information regarding the
identity of the participants in the proxy solicitation, and their
direct or indirect interests in the transaction, by security
holdings or otherwise, will be set forth in the proxy statement and
other materials to be filed with SEC in connection with the
transaction.
Non-GAAP Financial Measures
To supplement its consolidated financial statements in
accordance with generally accepted accounting principles (GAAP),
the Company's earnings release contains non-GAAP financial measures
that exclude certain expenses, gains and losses, such as the
effects of (a) amortization of acquired intangible assets, (b)
stock-based compensation expense, (c) restructuring and other
charges (reversals), net, (d) non-cash income tax expense, (e)
restructuring inventory adjustment, (f) amortization of financing
activities expenses, and (g) change in fair value of warrants. 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. Specifically, 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.
In addition, non-GAAP financial measures are used by management for
budgeting and forecasting as well 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 (resulting
in cash expenditures) needed to perform these revenue-generating
activities. The Company also believes, based on feedback provided
to the Company during its earnings 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.
The non-GAAP financial information is presented using a
consistent methodology from quarter-to-quarter and year-to-year.
These measures should be considered in addition to results prepared
in accordance with GAAP. In addition, these non-GAAP financial
measures are not based on any comprehensive set of accounting rules
or principles. The Company believes that non-GAAP financial
measures have limitations in that they do not reflect all of the
amounts associated with the Company's results of operations as
determined in accordance with GAAP and that these measures should
only be used to evaluate the Company's results of operations in
conjunction with the corresponding GAAP financial measures.
A reconciliation of non-GAAP information to GAAP information is
included in the tables below. The non-GAAP financial measures
disclosed by the Company should not be considered a substitute for
or superior to financial measures calculated in accordance with
GAAP, and reconciliations between GAAP and non-GAAP financial
measures included in this earnings release should be carefully
evaluated. The non-GAAP financial measures used by the Company may
be calculated differently from, and therefore may not be comparable
to, similarly titled measures used by other companies.
Radisys® is a registered trademark of
Radisys
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share
amounts, unaudited)
Three Months Ended Six Months Ended June
30, June 30, 2018 2017 2018
2017 Revenues Product $ 15,226 $ 26,340 $ 32,868 $
55,039 Service 9,187 8,753
17,735 17,664 Total revenues 24,413
35,093 50,603 72,703
Cost of sales: Product 8,407 17,913 20,715 40,089 Service
4,927 5,245 9,914 10,530 Amortization of purchased technology
1,927 1,927 3,854
3,854 Total cost of sales 15,261 25,085
34,483 54,473 Gross margin 9,152
10,008 16,120 18,230 Operating expenses: Research and development
3,235 5,994 6,921 12,474 Selling, general and administrative 6,454
8,214 13,788 17,596 Intangible assets amortization 198 1,260 396
2,520 Restructuring and other charges, net 1,289
1,235 2,860 1,470 Loss
from operations (2,024 ) (6,695 ) (7,845 ) (15,830 ) Change in fair
value of warrant liability (2,355 ) — (503 ) — Interest expense
(1,365 ) (224 ) (2,795 ) (496 ) Other income (expense), net
1,434 (130 ) 1,253 (427 ) Loss
before income tax expense (4,310 ) (7,049 ) (9,890 ) (16,753 )
Income tax expense 324 505 1,189
809 Net loss $ (4,634 ) $ (7,554 ) $ (11,079 )
$ (17,562 ) Net loss per share: Basic $ (0.12 ) $ (0.19 ) $
(0.28 ) $ (0.45 ) Diluted $ (0.12 ) $ (0.19 ) $ (0.28 ) $ (0.45 )
Weighted average shares outstanding Basic 39,493
38,966 39,424 38,840
Diluted 39,493 38,966 39,424
38,840
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands,
unaudited)
June 30, 2018 December 31, 2017
ASSETS Current assets: Cash and cash equivalents $ 5,599 $
8,124 Restricted cash 4,000 — Accounts receivable, net 30,310
32,820 Inventories, net 3,813 4,265 Other current assets
3,815 6,607 Total current assets 47,537 51,816
Property and equipment, net 3,569 4,728 Intangible assets, net
2,613 6,862 Other assets, net 2,208 2,623
Total assets $ 55,927 $ 66,029
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Accounts payable $ 7,858 $ 18,297 Deferred revenue 6,276 4,200
Other accrued liabilities 10,634 14,116 Line of credit 12,176
16,000 Short term obligations 7,500 — Warrant liability
4,361 — Total current liabilities 48,805
52,613 Long term debt obligations, net 5,882 — Other long-term
liabilities 6,578 6,866 Total
liabilities 61,265 59,479 Shareholders'
equity: Common stock 343,036 342,219 Accumulated deficit (347,261 )
(336,182 ) Accumulated other comprehensive income (1,113 )
513 Total shareholders’ equity (5,338 )
6,550 Total liabilities and shareholders’ equity $ 55,927
$ 66,029
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands, unaudited)
Three Months Ended Six Months
Ended June 30, June 30, 2018
2017 2018 2017 Cash flows from
operating activities: Net loss $ (4,634 ) $ (7,554 ) $ (11,079
) $ (17,562 ) Adjustments to reconcile net loss to net cash used in
operating activities: Depreciation and amortization 2,707 4,487
5,523 8,845 Amortization of debt discount and issuance costs 770 —
1,658 Stock-based compensation expense 363 538 707 1,692 Inventory
valuation allowance (42 ) — (374 ) 859 Change in fair value of
warranty liability 2,355 — 503 — Other (109 ) 318 293 171 Changes
in operating assets and liabilities: Accounts receivable (715 )
6,340 2,511 (5,207 ) Inventories and deferred cost of sales (852 )
(3,878 ) (1,846 ) 4,803 Other receivables 954 (824 ) 1,759 (83 )
Accounts payable (5,762 ) 10,193 (10,445 ) 3,155 Deferred revenue
(273 ) 332 1,572 1,910 Other operating assets and liabilities
498 377 250 (2,765
) Net cash used in operating activities (4,740 )
10,329 (8,968 ) (4,182 )
Cash flows from
investing activities: Capital expenditures (132 )
(1,355 ) (401 ) (3,158 ) Net cash used in investing
activities (132 ) (1,355 ) (401 )
(3,158 )
Cash flows from financing activities: Borrowings on
line of credit, net 3,629 5,000 (3,824 ) 20,000 Proceeds from
borrowings on senior notes — — 17,000 — Payments of debt issuance
costs (509 ) — (2,370 ) — Other financing activities, net 43
170 110 86 Net
cash provided by financing activities 3,163
5,170 10,916 20,086 Effect of
exchange rate changes on cash and cash equivalents (94 )
79 (72 ) 415
Net increase
(decrease) in cash and cash equivalents (1,803 )
14,223 1,475 13,161 Cash and
cash equivalents, beginning of period 7,402 32,025 8,124 33,087
Restricted cash and cash equivalents, beginning of period
4,000 — — —
Cash, cash equivalents, and restricted cash, beginning of
period 11,402 32,025 8,124
33,087 Cash and cash equivalents, end of
period 5,599 46,248 5,599 46,248 Restricted cash and cash
equivalents, end of period 4,000 —
4,000 —
Cash, cash equivalents, and
restricted cash, end of period $ 9,599 $ 46,248 $
9,599 $ 46,248
REVENUES, GROSS MARGIN AND INCOME (LOSS) FROM OPERATIONS BY
OPERATING SEGMENT (In thousands, unaudited)
Three Months Ended Six Months Ended June 30,
June 30, 2018 2017 2018
2017 Revenue Software-Systems $ 13,663 $ 11,488 $ 24,811 $
21,637 Hardware Solutions 10,750 23,605
25,792 51,066 Total revenues $ 24,413
$ 35,093 $ 50,603 $ 72,703
Three Months Ended Six Months Ended June 30,
June 30, 2018 2017
2018 2017 Gross margin
Software-Systems $ 8,823 $ 6,243 $ 14,309 $ 11,708 Hardware
Solutions 2,242 5,732 5,349 10,513 Corporate and other
(1,913 ) (1,967 ) (3,538 ) (3,991 ) Total
gross margin $ 9,152 $ 10,008 $ 16,120 $
18,230
Three Months Ended Six Months
Ended June 30, June 30, 2018
2017 2018
2017 Income (loss) from operations Software-Systems $
923 $ (1,943 ) $ (2,198 ) $ (5,216 ) Hardware Solutions 788 208
1,796 (1,078 ) Corporate and other (3,735 ) (4,960 )
(7,443 ) (9,536 ) Total loss from operations $ (2,024
) $ (6,695 ) $ (7,845 ) $ (15,830 )
REVENUES BY GEOGRAPHY (In thousands,
unaudited)
Three Months Ended Six Months Ended June 30,
June 30, 2018 2017 2018
2017 North America $ 10,508 43.0 % $ 15,191
43.3 % $ 19,281 38.1 % $ 38,362 52.7 % Asia Pacific
4,243 17.4 6,697 19.1 9,446 18.7 12,116 16.7 Europe, the Middle
East and Africa 9,662 39.6 13,205 37.6
21,876 43.2 22,225 30.6 Total $ 24,413
100.0 % $ 35,093 100.0 % $ 50,603 100.0 % $ 72,703 100.0 %
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES AND AS A PERCENT OF REVENUES (In
thousands, except per share amounts, unaudited) Three
Months Ended Six Months Ended June 30,
June 30, 2018 2017 2018
2017 GROSS MARGIN: GAAP
gross margin $ 9,152 37.5 % $ 10,008
28.5 % $ 16,120 31.9 % $ 18,230 25.1 %
(a) Amortization of acquired intangible assets 1,927 1,927 3,854
3,854 (b) Stock-based compensation 28 40 58 137 (e) Restructuring
inventory adjustment (42 ) —
$ (374 ) —
Non-GAAP gross margin $ 11,065 45.3 % $ 11,975
34.1 % $ 19,658 38.8 % $ 22,221
30.6 %
RESEARCH AND DEVELOPMENT: GAAP research and
development $ 3,235 13.3 % $ 5,994 17.1
% $ 6,921 13.7 % $ 12,474 17.2 % (b)
Stock-based compensation 59 113
120 343
Non-GAAP research and development $ 3,176
13.0 % $ 5,881 16.8 % $ 6,801
13.4 % $ 12,131 16.7 %
SELLING,
GENERAL AND ADMINISTRATIVE: GAAP selling, general and
administrative $ 6,454 26.4 % $ 8,214
23.4 % $ 13,788 27.2 % $ 17,596 24.2 %
(b) Stock-based compensation
276 385
529 1,212
Non-GAAP selling, general and administrative $ 6,178
25.3 % $ 7,829 22.3 % $ 13,259 26.2 % $
16,384 22.5 %
INCOME (LOSS) FROM
OPERATIONS: GAAP loss from operations $ (2,024 ) (8.3 )%
$ (6,695 ) (19.1 )% $ (7,845 ) (15.5 )% $ (15,830 )
(21.8 )% (a) Amortization of acquired intangible assets
2,125 3,187 4,250 6,374 (b) Stock-based compensation 363 538 707
1,692 (c) Restructuring and other charges, net 1,289 1,235 2,860
1,470 (e) Restructuring inventory adjustment (42 )
— (374 )
— Non-GAAP income (loss) from
operations $ 1,711 7.0 % $ (1,735 ) (4.9 )% $
(402 ) (0.8 )% $ (6,294 ) (8.7 )%
NET
INCOME (LOSS): GAAP net loss $ (4,634 ) (19.0 )% $
(7,554 ) (21.5 )% $ (11,079 ) (21.9 )% $ (17,562 )
(24.2 )% (a) Amortization of acquired intangible assets
2,125 3,187 4,250 6,374 (b) Stock-based compensation 363 538 707
1,692 (c) Restructuring and other charges, net 1,289 1,235 2,860
1,470 (d) Income taxes 33 347 479 233 (e) Restructuring Inventory
adjustment (42 ) — (374 ) — (f) Amortization of financing
activities 741 — 1,603 — (g) Change in fair value of warrants
2,355 —
503 —
Non-GAAP net income (loss) $ 2,230 9.1 % $ (2,247 )
(6.4 )% $ (1,051 ) (2.1 )% $ (7,793 ) (10.7 )%
GAAP weighted average diluted shares 39,493 38,966 39,424
38,840 Dilutive equity awards included in non-GAAP earnings per
share 201 —
— —
Non-GAAP weighted average diluted shares 39,694
38,966 39,424
38,840 GAAP net
loss per share (diluted) $ (0.12 ) $ (0.19 ) $ (0.28 ) $ (0.45 )
Non-GAAP adjustments detailed above 0.18
0.13 0.25
0.25 Non-GAAP net income (loss)
per share (diluted) $ 0.06 $ (0.06 )
$ (0.03 ) $ (0.20 )
Non-GAAP financial measures includes the performance of
Software-Systems and Embedded Products and Hardware Services. The
Company excludes the following corporate and other expenses,
reversals, gains and losses from its non-GAAP financial measures,
when applicable:
(a) Amortization of acquired intangible assets:
Amortization of acquisition-related intangible assets primarily
relate to core and existing technologies, trade name and customer
relationships that were acquired with the acquisitions of
Continuous Computing 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 and other charges, net: Restructuring
and other charges, net relates to costs associated with
non-recurring events. These include costs incurred for employee
severance, acquisition or divestiture activities, excess facility
costs, certain legal costs, asset related charges and other
expenses associated with business restructuring activities.
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.
(d) Income taxes: Non-GAAP income tax expense is equal to
the Company's projected cash tax expense. Adjustments to GAAP
income tax expense are required to eliminate the recognition of tax
expense from profitable entities where we utilize deferred tax
assets to offset current period tax liabilities. We believe that
providing this non-GAAP figure is useful to our investors as it
more closely represents the true economic impact of our tax
positions.
(e) Restructuring inventory adjustment: Includes
inventory write-downs and benefits associated with non-recurring
events, predominantly tied to the Company’s decision to end-of-life
or discontinue certain products for which the Company has no future
ongoing demand. During 2017, the Company recorded such charges tied
to discrete product decisions within its Hardware-Solutions segment
associated with its DCEngine and certain legacy embedded products.
Restructuring inventory write-downs and benefits are excluded from
non-GAAP financial measures because they are not considered core
operating activities. Although the Company has incurred various
inventory write-downs over the past several years, they have
generally been associated with ongoing business activities. As
such, the Company believes it is appropriate to exclude end-of-life
and product discontinuance inventory write-downs and benefits
related to those write-downs from its non-GAAP financial measures
because it enhances the ability of investors to compare the
Company's period-over-period operating results.
(f) Amortization of financing activities: Amortization of
financing activities consists of expenses recorded under GAAP
related to the amortization of debt issuance costs, the
amortization of warrant issuance costs, and terminations costs
related to previous unamortized debt issuance costs from terminated
financing agreements. The Company excludes amortization of
financing activities because they are not considered to reflect the
core cash-generating performance of the business and therefore is
excluded from our non-GAAP results.
(g) Change in fair value of warrants: Represents the
change to the current fair value of the warranty liability. The
Company excludes the change in fair value of warrants from non-GAAP
financial measures because it is a non-cash measurement that does
not reflect the Company's ongoing business. The Company believes
that the provision of non-GAAP information that excludes changes in
fair value of warrants improves the ability of investors to compare
its period-over-period operating results, as there is significant
variability and unpredictability based on the current fair value of
the underlying warrants.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180731005849/en/
Company ContactRadisys CorporationJon Wilson,
503-615-1685Chief Financial
Officerjon.wilson@radisys.comorInvestor ContactShelton
GroupBrett L. Perry, 214-272-0070bperry@sheltongroup.com
Radisys (NASDAQ:RSYS)
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