Acquistions (Notes)

12 Months Ended

Dec. 31, 2012

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

Acquisitions

Acquisition of Continuous Computing

On July 8, 2011, the Company acquired 100% of the outstanding shares of Continuous Computing Corporation ("Continuous Computing"), a developer of communications systems consisting of highly integrated ATCA platforms and Trillium protocol software. The Company expects the acquisition to accelerate the Company's strategy to deliver more differentiated platforms and solutions. Continuous Computing also brings expansion into high growth markets with many new customers, creating meaningful customer diversification.

Under the terms of the acquisition agreement, the Company paid approximately $81.5 million in cash and 2,321,016 in shares of the Company's common stock. The aggregate cash amount consisted of $73.0 million plus an $8.5 million working capital adjustment. The Company also deposited an additional 1,344,444 shares of its common stock into an escrow account and subject to any indemnification claims, one-half of the shares held therein were released one year after the closing of the acquisition with the remainder to be released six months thereafter. During 2012, the Company released one-half of the escrow shares as expected. The common stock issued to former shareholders of Continuous Computing had a fair value of $30.8 million, based on the closing price of the Company's common stock on July 8, 2011 of $8.39 per share.

In addition, the Company has agreed to make certain earn-out payments based on the amount of product royalty revenues generated by a specified set of contracts associated with certain of Continuous Computing's products over a period of 36 months after closing. Earn-out payments will be made in cash in three installments following the 18, 24 and 36-month anniversaries of the closing date, and in each case will equal the amount of such royalty revenues during the immediately preceding 18-month, six-month or 12-month period, as applicable, except that, in lieu of making any and all earn-out payments, the Company may elect at any time prior to the fifth business day following the 18-month anniversary of the closing date to make a one-time payment in cash and/or issuance of common stock with a combined aggregate value of $15 million. The estimated fair value of this contingent consideration at December 31, 2012 was $2.5 million of which $0.8 million is included in other accrued liabilities and $1.7 million is included in other long-term liabilities in the Consolidated Balance Sheet. See Note 5 - Fair Value of Financial Instruments for additional information regarding the valuation of the contingent consideration liability.

In connection with the acquisition, the Company assumed Continuous Computing's stock incentive plan as to stock options held by continuing employees of Continuous Computing that were not vested on or prior to June 30, 2011, which were converted into options to acquire approximately 319,000 shares of the Company's common stock. See Note 18 - Employee Benefit Plans for additional information regarding the valuation of the assumed options.

The total acquisition consideration is as follows (in thousands):

Cash paid for initial consideration	$	73,009
Working capital adjustment	8,504
Fair value of contingent consideration (earn-out payments)	7,400
Share consideration payable upon closing:
3.7 million Radisys common shares	30,753
Fair value of stock options	65
Total preliminary purchase price	$	119,731

Purchase Price Allocation

The purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill. During the year ended December 31, 2012, the Company revised the purchase price allocation for the acquisition of Continuous Computing as a result of final measurement period adjustments. This revision is the result of finalizing the accounting for certain tax matters, which was completed during the three months ended March 31, 2012. These adjustments resulted in an additional release of the Company's valuation allowance provided against its U.S. net deferred tax assets, which resulted in additional deferred tax benefit reported in third-quarter 2011 financial information of approximately $2.7 million. As required by ASC 805-10, the Company's statements of operations and cash flows for the period ending December 31, 2011, as well as the balance sheet at December 31, 2011, have been revised to reflect the impact of these measurement period adjustments. The Company filed a Form 8-K on September 10, 2012 to provide revised consolidated financial statements as of and for the year ended December 31, 2011.

The final allocation of the total purchase price is as follows (in thousands):

Total preliminary purchase price				$	119,731
Fair value of net tangible assets acquired and liabilities assumed:
Cash and cash equivalents	$	2,214
Accounts receivable	13,434
Inventories	4,036
Prepaid expenses and other current assets	3,316
Fixed assets	2,469
Other assets	614
Accounts payable	(5,368		)
Accrued expenses	(6,891		)
Deferred revenue	(1,825		)
Other long-term liabilities	(1,226		)
				10,773
Fair value of identifiable intangible assets acquired				89,240
Net deferred tax liability				(9,870		)
Goodwill				$	29,588

The goodwill created by the transaction of $29.6 million is not deductible for tax purposes. Key factors that make up the goodwill created by the transaction include expected synergies from the combination of operations and the knowledge and experience of the acquired workforce and infrastructure.

Valuation of Intangible Assets Acquired

The following table summarizes the intangible assets acquired in connection with the acquisition (in thousands):

	Fair Value		Estimated Life (yrs)
Developed technology:
ATCA developed technology	$	33,600	7
Trillium developed technology	18,500		7
Software developed technology	1,850		7
Legacy developed technology	1,300		2
Total developed technology	55,250
Customer relationships	25,500		6
Trade name	7,900		10
Backlog	590		0.5
Total intangible assets subject to amortization	$	89,240

The Company is amortizing purchased technology and backlog to amortization of purchased technology in the Consolidated Statements of Operations over the respective estimated life of each intangible asset.  Customer relationships and trade name are being amortized to intangible assets amortization in the Consolidated Statements of Operations over the respective estimated life of each intangible asset.