Oregon | 0-26844 | 93-0945232 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
5435 NE Dawson Creek Drive | |
Hillsboro, Oregon | 97124 |
(Address of Principal Executive Offices) | (Zip Code) |
Exhibit Number | Description | |
99.1 | Third Quarter 2014 Earnings Release, dated November 6, 2014 |
RADISYS CORPORATION | ||||
Date: | November 6, 2014 | By: | /s/ Allen Muhich | |
Allen Muhich | ||||
Chief Financial Officer and Vice President of Finance (Principal Financial and Accounting Officer) |
Exhibit Number | Description | |
99.1 | Press Release, dated November 6, 2014. |
• | Q3 Revenue increased sequentially with improvement in Software-Solutions revenue enabled primarily by Media Resource Function (MRF) deployments in support of Voice over LTE applications. |
• | During the quarter, we announced several next generation platforms products as well as our innovative FlowEngine software, which enables wire-speed packet classification and load balancing. Taken together, we are uniquely positioned to capitalize on telecom’s shift towards software defined networking and network function virtualization architectures. |
◦ | In October, a large North American carrier placed their first lab order for product that incorporates these advanced capabilities. We expect to ship these units in the first half of 2015. |
• | We have 30+ MRF trials in support of both Voice over LTE (VoLTE) and WebRTC deployments that leverage our media processing expertise with either our full media processing platform or our virtualized software-only MRF. These trials continue to progress well with certain customers preparing for 2014 and 2015 network deployments. |
• | GAAP R&D and SG&A expense was $16.2 million, with non-GAAP expense of $15.5 million at its lowest level in eight years. This lower spending level has been enabled by efficiency gains and continues to support the investment necessary to drive our long-term strategy. |
• | Our contract manufacturing transition, which in large part was completed at the end of September, is expected to result in approximately $6 million in annual cost of goods sold savings or approximately 3 gross margin points as we exit 2014. |
• | Inventory decreased sequentially by nearly $3.0 million to $17.0 million and represents over a 30% reduction from the end of 2013. We expect to further reduce inventory during the fourth quarter. |
• | Cash and cash equivalents were $31.9 million at the end of the third quarter.” |
• | Fourth quarter revenue is expected between $47 million and $53 million. |
• | Non-GAAP gross margin in the fourth quarter is expected between 36% and 39% of sales and non-GAAP R&D and SG&A expenses are expected to approximate $16 million. |
• | Fourth quarter non-GAAP earnings are expected to range from breakeven to a profit of $0.12 per share and our cash balance in the quarter is expected to remain relatively unchanged. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues | $ | 50,805 | $ | 54,109 | $ | 144,568 | $ | 187,725 | |||||||
Cost of sales: | |||||||||||||||
Cost of sales | 34,052 | 37,874 | 100,551 | 127,936 | |||||||||||
Amortization of purchased technology | 2,056 | 2,069 | 6,165 | 6,504 | |||||||||||
Gross margin | 14,697 | 14,166 | 37,852 | 53,285 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 7,657 | 11,456 | 24,484 | 35,011 | |||||||||||
Selling, general and administrative | 8,554 | 10,522 | 27,103 | 31,145 | |||||||||||
Intangible assets amortization | 1,260 | 1,303 | 3,817 | 3,911 | |||||||||||
Restructuring and other charges, net | 1,329 | 2,881 | 3,444 | 4,037 | |||||||||||
Loss from operations | (4,103 | ) | (11,996 | ) | (20,996 | ) | (20,819 | ) | |||||||
Interest expense | (317 | ) | (300 | ) | (949 | ) | (913 | ) | |||||||
Other income, net | 463 | 200 | 799 | 573 | |||||||||||
Loss before income tax expense | (3,957 | ) | (12,096 | ) | (21,146 | ) | (21,159 | ) | |||||||
Income tax expense | 512 | 624 | 1,968 | 2,230 | |||||||||||
Net loss | $ | (4,469 | ) | $ | (12,720 | ) | $ | (23,114 | ) | $ | (23,389 | ) | |||
Net loss per share: | |||||||||||||||
Basic | $ | (0.12 | ) | $ | (0.44 | ) | $ | (0.68 | ) | $ | (0.82 | ) | |||
Diluted | $ | (0.12 | ) | $ | (0.44 | ) | $ | (0.68 | ) | $ | (0.82 | ) | |||
Weighted average shares outstanding | |||||||||||||||
Basic | 36,332 | 28,931 | 34,097 | 28,692 | |||||||||||
Diluted | 36,332 | 28,931 | 34,097 | 28,692 |
September 30, 2014 | December 31, 2013 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 31,938 | $ | 25,482 | |||
Accounts receivable, net | 43,860 | 41,359 | |||||
Inventories and inventory deposit, net | 17,046 | 25,409 | |||||
Other current assets | 10,327 | 8,443 | |||||
Total current assets | 103,171 | 100,693 | |||||
Property and equipment, net | 10,597 | 14,854 | |||||
Intangible assets, net | 46,529 | 56,510 | |||||
Other assets, net | 3,541 | 4,128 | |||||
Total assets | $ | 163,838 | $ | 176,185 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 31,559 | $ | 35,081 | |||
Deferred revenue | 6,124 | 8,167 | |||||
Other accrued liabilities | 13,044 | 15,525 | |||||
Line of credit | 10,000 | 15,000 | |||||
Convertible senior notes | 18,000 | — | |||||
Total current liabilities | 78,727 | 73,773 | |||||
Convertible senior notes | — | 18,000 | |||||
Other long-term liabilities | 3,132 | 3,276 | |||||
Total liabilities | 81,859 | 95,049 | |||||
Shareholders' equity: | |||||||
Common stock | 333,281 | 309,370 | |||||
Accumulated deficit | (252,204 | ) | (229,090 | ) | |||
Accumulated other comprehensive income | 902 | 856 | |||||
Total shareholders’ equity | 81,979 | 81,136 | |||||
Total liabilities and shareholders’ equity | $ | 163,838 | $ | 176,185 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net loss | $ | (4,469 | ) | $ | (12,720 | ) | $ | (23,114 | ) | $ | (23,389 | ) | |||
Adjustments to reconcile net loss to net cash | |||||||||||||||
(used in) provided by operating activities: | |||||||||||||||
Depreciation and amortization | 5,021 | 5,480 | 15,357 | 16,586 | |||||||||||
Stock-based compensation expense | 778 | 1,639 | 3,359 | 3,761 | |||||||||||
Write-off of purchased computer software | — | — | — | 2,868 | |||||||||||
Net gain from sale of software assets | — | — | — | (1,532 | ) | ||||||||||
Other | 44 | (87 | ) | 3,614 | 58 | ||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | (1,767 | ) | 3,272 | (2,332 | ) | 9,943 | |||||||||
Inventories | 1,841 | (1,066 | ) | 6,179 | 2,027 | ||||||||||
Other receivables | 3,784 | 164 | (3,312 | ) | 395 | ||||||||||
Accounts payable | (3,071 | ) | 101 | (3,391 | ) | (4,860 | ) | ||||||||
Deferred revenue | (6,379 | ) | 1,070 | (2,043 | ) | (1,673 | ) | ||||||||
Other operating assets and liabilities | 2,568 | 952 | (1,289 | ) | (279 | ) | |||||||||
Net cash (used in) provided by operating activities | (1,650 | ) | (1,195 | ) | (6,972 | ) | 3,905 | ||||||||
Cash flows from investing activities: | |||||||||||||||
Capital expenditures | (584 | ) | (965 | ) | (1,861 | ) | (4,343 | ) | |||||||
Proceeds from sale of software assets | — | 25 | — | 1,107 | |||||||||||
Net cash used in investing activities | (584 | ) | (940 | ) | (1,861 | ) | (3,236 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Borrowings (payments) on line of credit | — | — | (5,000 | ) | 15,000 | ||||||||||
Repayment of convertible senior notes | — | — | — | (16,919 | ) | ||||||||||
Proceeds from issuance of common stock | 61 | 208 | 21,081 | 626 | |||||||||||
Other financing activities, net | (250 | ) | (370 | ) | (551 | ) | (783 | ) | |||||||
Net cash provided by (used in) financing activities | (189 | ) | (162 | ) | 15,530 | (2,076 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (245 | ) | (70 | ) | (241 | ) | (216 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | (2,668 | ) | (2,367 | ) | 6,456 | (1,623 | ) | ||||||||
Cash and cash equivalents, beginning of period | 34,606 | 33,926 | 25,482 | 33,182 | |||||||||||
Cash and cash equivalents, end of period | $ | 31,938 | $ | 31,559 | $ | 31,938 | $ | 31,559 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
North America | $ | 17,730 | 34.9 | % | $ | 21,975 | 40.6 | % | $ | 54,164 | 37.5 | % | $ | 79,189 | 42.2 | % | |||||||
Asia Pacific | 21,303 | 41.9 | 19,257 | 35.6 | 54,398 | 37.6 | 65,211 | 34.7 | |||||||||||||||
Europe, the Middle East and Africa | 11,772 | 23.2 | 12,877 | 23.8 | 36,006 | 24.9 | 43,325 | 23.1 | |||||||||||||||
Total | $ | 50,805 | 100.0 | % | $ | 54,109 | 100.0 | % | $ | 144,568 | 100.0 | % | $ | 187,725 | 100.0 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
ATCA Platforms | $ | 20,736 | 40.8 | % | $ | 27,744 | 51.3 | % | $ | 66,894 | 46.3 | % | $ | 94,284 | 50.2 | % | |||||||
Software-Solutions | 11,620 | 22.9 | 9,563 | 17.7 | 29,861 | 20.6 | 33,824 | 18.0 | |||||||||||||||
COM Express and Rackmount Server | 15,923 | 31.3 | 13,380 | 24.7 | 39,840 | 27.6 | 42,225 | 22.5 | |||||||||||||||
Other Products | 2,526 | 5.0 | 3,422 | 6.3 | 7,973 | 5.5 | 17,392 | 9.3 | |||||||||||||||
Total Revenues | $ | 50,805 | 100.0 | % | $ | 54,109 | 100.0 | % | $ | 144,568 | 100.0 | % | $ | 187,725 | 100.0 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30 | September 30 | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
GROSS MARGIN: | |||||||||||||||||||||||
GAAP gross margin | $ | 14,697 | 28.9 | % | $ | 14,166 | 26.2 | % | $ | 37,852 | 26.2 | % | $ | 53,285 | 28.4 | % | |||||||
(a) Amortization of acquired intangible assets | 2,056 | 2,069 | 6,165 | 6,504 | |||||||||||||||||||
(b) Stock-based compensation | 44 | 167 | 326 | 408 | |||||||||||||||||||
(c) Restructuring and other charges, net | — | — | — | — | |||||||||||||||||||
Non-GAAP gross margin | $ | 16,797 | 33.1 | % | $ | 16,402 | 30.3 | % | $ | 44,343 | 30.7 | % | $ | 60,197 | 32.1 | % | |||||||
RESEARCH AND DEVELOPMENT: | |||||||||||||||||||||||
GAAP research and development | $ | 7,657 | 15.1 | % | $ | 11,456 | 21.2 | % | $ | 24,484 | 16.9 | % | $ | 35,011 | 18.7 | % | |||||||
(b) Stock-based compensation | 131 | 361 | 684 | 844 | |||||||||||||||||||
Non-GAAP research and development | $ | 7,526 | 14.8 | % | $ | 11,095 | 20.5 | % | $ | 23,800 | 16.5 | % | $ | 34,167 | 18.2 | % | |||||||
SELLING, GENERAL AND ADMINISTRATIVE: | |||||||||||||||||||||||
GAAP selling, general and administrative | $ | 8,554 | 16.8 | % | $ | 10,522 | 19.4 | % | $ | 27,103 | 18.7 | % | $ | 31,145 | 16.6 | % | |||||||
(b) Stock-based compensation | 603 | 1,111 | 2,349 | 2,509 | |||||||||||||||||||
Non-GAAP selling, general and administrative | $ | 7,951 | 15.7 | % | $ | 9,411 | 17.4 | % | $ | 24,754 | 17.1 | % | $ | 28,636 | 15.3 | % | |||||||
INCOME (LOSS) FROM OPERATIONS: | |||||||||||||||||||||||
GAAP loss from operations | $ | (4,103 | ) | (8.1 | )% | $ | (11,996 | ) | (22.2 | )% | $ | (20,996 | ) | (14.5 | )% | $ | (20,819 | ) | (11.1 | )% | |||
(a) Amortization of acquired intangible assets | 3,316 | 3,372 | 9,982 | 10,415 | |||||||||||||||||||
(b) Stock-based compensation | 778 | 1,639 | 3,359 | 3,761 | |||||||||||||||||||
(c) Restructuring and acquisition-related charges, net | 1,329 | 2,881 | 3,444 | 4,037 | |||||||||||||||||||
Non-GAAP income (loss) from operations | $ | 1,320 | 2.6 | % | $ | (4,104 | ) | (7.6 | )% | $ | (4,211 | ) | (2.9 | )% | $ | (2,606 | ) | (1.4 | )% | ||||
NET INCOME (LOSS): | |||||||||||||||||||||||
GAAP net loss | $ | (4,469 | ) | (8.8 | )% | $ | (12,720 | ) | (23.5 | )% | $ | (23,114 | ) | (16.0 | )% | $ | (23,389 | ) | (12.5 | )% | |||
(a) Amortization of acquired intangible assets | 3,316 | 3,372 | 9,982 | 10,415 | |||||||||||||||||||
(b) Stock-based compensation | 778 | 1,639 | 3,359 | 3,761 | |||||||||||||||||||
(c) Restructuring and acquisition-related charges, net | 1,329 | 2,881 | 3,444 | 4,037 | |||||||||||||||||||
(d) Income taxes | 93 | 233 | 689 | 1,206 | |||||||||||||||||||
(e) Gain on life insurance asset | (361 | ) | — | (361 | ) | — | |||||||||||||||||
Non-GAAP net income (loss) | $ | 686 | 1.4 | % | $ | (4,595 | ) | (8.5 | )% | $ | (6,001 | ) | (4.2 | )% | $ | (3,970 | ) | (2.1 | )% | ||||
GAAP weighted average diluted shares | 36,332 | 28,931 | 34,097 | 28,692 | |||||||||||||||||||
Escrow shares | — | — | — | — | |||||||||||||||||||
Dilutive equity awards included in | |||||||||||||||||||||||
non-GAAP earnings per share | 524 | — | — | — | |||||||||||||||||||
Non-GAAP weighted average diluted shares | 36,856 | 28,931 | 34,097 | 28,692 | |||||||||||||||||||
GAAP net loss per share (diluted) | $ | (0.12 | ) | $ | (0.44 | ) | $ | (0.68 | ) | $ | (0.82 | ) | |||||||||||
Non-GAAP adjustments detailed above | 0.14 | 0.28 | 0.50 | 0.68 | |||||||||||||||||||
Non-GAAP net income (loss) per share (diluted) | $ | 0.02 | $ | (0.16 | ) | $ | (0.18 | ) | $ | (0.14 | ) |
Three Months Ended | |||||||
December 31, 2014 | |||||||
Low End | High End | ||||||
GAAP net loss | $ | (4.8 | ) | $ | (0.7 | ) | |
(a) Amortization of acquired intangible assets | 3.4 | 3.4 | |||||
(b) Stock-based compensation | 0.8 | 0.8 | |||||
(c) Restructuring and acquisition-related charges, net | 0.6 | 0.6 | |||||
(d) Income taxes | 0.2 | 0.2 | |||||
Total adjustments | 5.0 | 5.0 | |||||
Non-GAAP net income | $ | 0.2 | $ | 4.3 | |||
GAAP weighted average shares | 36,600 | 36,600 | |||||
Non-GAAP adjustments | 500 | 2,600 | |||||
Non-GAAP weighted average shares (diluted) (I) | 37,100 | 39,200 | |||||
GAAP net loss per share | $ | (0.13 | ) | $ | (0.02 | ) | |
Non-GAAP adjustments detailed above | 0.13 | 0.14 | |||||
Non-GAAP net income per share (diluted) (I) | $ | 0.00 | $ | 0.12 |
(I) | For the three months ended December 31, 2014 the diluted earnings per share calculation at the high end of the guidance range includes the effects of the Company’s 2015 convertible senior notes of 2.1 million shares and the add-back of associated interest expense of $0.2 million. |
Estimates at the midpoint of the guidance range | ||
Three Months Ended | ||
December 31, 2014 | ||
GAAP | 34.0 | % |
(a) Amortization of acquired intangible assets | 3.4 | |
(b) Stock-based compensation | 0.1 | |
Non-GAAP | 37.5 | % |
Estimates at the midpoint of the guidance range | |||
Three Months Ended | |||
December 31, 2014 | |||
GAAP | $ | 16.7 | |
(b) Stock-based compensation | (0.7 | ) | |
Non-GAAP | $ | 16.0 |
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