8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 28, 2015

RADISYS CORPORATION

(Exact name of registrant as specified in its charter)

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)

Registrant's telephone number, including area code: (503) 615-1100

No Change

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

The information in this Item 2.02 and the Exhibits attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or any proxy statement or report or other document we may file with the Securities Exchange Commission (“SEC”), regardless of any general incorporation language in any such filing, except as shall be expressly set forth by specific reference in such filing.

On February 3, 2015, the Radisys Corporation (the "Company") issued a press release announcing its results for the fiscal quarter ended December 31, 2014. A copy of this press release is attached hereto as Exhibit 99.1.

This press release contains forward-looking statements, including statements about the Company's business strategy, changes in reporting segments financial outlook and expectations for the first quarter and fiscal year of 2015 and statements related to investment in future growth, expense savings or reductions, operational and administrative efficiencies, revenue growth, margin improvement, financial performance and other attributes of the Company. These forward-looking statements are based on the Company's expectations and assumptions, as of the date such statements are made, regarding the Company's future operating performance and financial condition, the economy and other future events or circumstances. Actual results could differ materially from the outlook guidance and expectations in these forward-looking statements as a result of a number of risk factors, including, among others, (a) the Company's dependence on certain customers and high degree of customer concentration, (b) the Company's use of a single contract manufacturer for a significant portion of the production of our products, including the success of transitioning contract manufacturing partners, (c) the anticipated amount and timing of revenues from design wins due to the Company's customers' product development time, cancellations or delays, (d) matters affecting the embedded systems industry, including changes in industry standards, changes in customer requirements and new product introductions, (e) fluctuations in currency exchange rates, changes in tariff and trade policies and other risks associated with foreign operations, (f) actions by regulatory agencies and other third parties, (g) the ability of the Company to successfully complete any restructuring, acquisition or divestiture activities, (h) cash generation and (i) other factors listed in the Company's reports filed with the Securities and Exchange Commission (SEC), including those listed under “Risk Factors” in Radisys' Annual Report on Form 10-K for the year ended December 31, 2013, copies of which may be obtained by contacting the Company at 503-615-1100, from the Company's investor relations web site at http://investor.radisys.com/, or at the SEC's website at http://www.sec.gov. Although forward-looking statements help provide additional information about Radisys, investors should keep in mind that forward-looking statements are inherently less reliable than historical information. Should one or more of these risks or uncertainties materialize (or the other consequences of such a development worsen), or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. The Company believes its expectations and assumptions are reasonable, but there can be no assurance that the expectations reflected herein will be achieved. All information in this press release is as of February 3, 2015. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

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, and (e) gain on life insurance asset. 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.

Item 2.05 Costs associated with exit or disposal activity

On January 28, 2015, the Company’s Board of Directors approved a reorganization of the Company into two operating segments - 'Software-Systems' and 'Embedded Products and Hardware Services'. Inside the newly named Software-Systems segment will be the following product lines: FlowEngine, MediaEngine (previously referred to as Media Resource Function or MRF) and CellEngine (previously referred to as Trillium) products and professional services. The revenue in these three product lines is expected to grow and the majority of the Company’s future R&D investment will be targeted at this segment.

The Embedded Products and Hardware Services segment will contain the following product lines: ATCA, ComE/RMS and Other Products. The Company will be focusing its future Embedded Products and Hardware Services investments to specific product needs of the Software-Systems business as well as to those key strategic and profitable customers that value the capabilities and services Radisys provides.

In connection with these changes, the Company will restructure its research and development and sales and general administrative presence primarily within Asia and North America. The Company expects to record 2015 restructuring charges in the range of approximately $4.5 million to $5.5 million, substantially all of which will be for cash severance payments and other employee-related costs, The reductions are expected to result in approximately $15 million in annualized savings and will be completed by September 30, 2015.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On January 28, 2015, the Company announced that Mr. Keate Despain, a named executive officer of the Company, will be stepping down from his position as Vice President of Platforms and departing the Company on February 6, 2015. Upon his departure, and subject to certain conditions, Mr. Despain will receive an amount of severance and other benefits as provided for in his transition agreement dated January 28, 2015, filed as Exhibit 10.1 hereto and his severance agreement dated October 10, 2012, filed as Exhibit 10.2 hereto.

Item 9.01 Financial Statements and Exhibit.

(d) Exhibit

Exhibit Number	Description
10.1	Transition Agreement dated January 28, 2015 between the Company and Keate Despain.
10.2	Amended and Restated Executive Severance Agreement, dated October 10, 2012, between the Company and Keate Despain.
99.1	Fourth Quarter 2014 Earnings Release, dated February 3, 2015

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		RADISYS CORPORATION
Date:	February 3, 2015	By:	/s/ Allen Muhich
			Allen Muhich
			Chief Financial Officer and Vice President of Finance (Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit Number	Description
10.1	Transition Agreement dated January 28, 2015 between the Company and Keate Despain.
10.2	Amended and Restated Executive Severance Agreement, dated October 10, 2012, between the Company and Keate Despain.
99.1	Press Release, dated February 3, 2015.

EX-10.1

To:    Keate Despain

From: Brian Bronson

Date:    January 28, 2015

Re:    Transition Agreement

Keate,

We discussed that your current position with Radisys Corporation (“Radisys”) is being eliminated due to the organization changes with a termination date of February 6, 2015 (“Transition Date”). This letter addresses the details and terms of this transition.

Details and terms upon which this offer of severance is conditioned are as follows:

• Remain in your current role through the Transition Date.

• You agree to remain actively at work and perform your work satisfactorily with focus on the agreed to objectives to be defined between now and the Transition Date.

As provided in your Amended and Restated Executive Severance Agreement dated October 10, 2012 (the “Severance Agreement”), you will be provided with certain benefits in exchange for your execution of the Release of Claims provided to you, without revocation, and your compliance with the other terms and conditions set forth in your Severance Agreement. Before signing the Release of Claims, you are advised to consult an attorney. You may take 21 days from the last day of your active employment to consider whether you wish to sign the Release of Claims and receive your severance benefits. The “Effective Date” of your Release of Claims will be the eighth calendar day after you sign and return it (the “Effective Date”). Under your Severance Agreement, your severance benefits, if you elect to receive such benefits, will be as follows:

• Pursuant to Section 3.1(a) of your Severance Agreement, you will receive a severance amount equal to six (6) months of base salary. This amount is $136,500 (i.e. 6 times your monthly base salary of $22,750). This amount will be paid out in one lump sum (less tax and other applicable deductions). The severance check is to be delivered to you directly and not direct deposited and will be delivered within 5 days following the Effective Date of the Release of Claims.

• Pursuant to Section 3.1(b) of your Severance Agreement, Radisys will pay the COBRA premiums due for you and your currently enrolled dependents for an additional six (6) months beginning March 2015.

• You acknowledge that you will be forfeiting your rights to any 2015 variable pay amounts. Radisys’ variable pay plans state that you are required to be an active employee at the time of payout.

Additional details and terms upon which this offer of severance is conditioned are as follows:

• As outlined in your option agreements, you will have three months following the Transition Date to exercise any vested but unexercised stock options. At the end of the three-month period, you forfeit the ability to exercise vested stock options. Any unvested restricted stock units (RSU’s) will be forfeited and cancelled as of the Transition Date. You may at any time sell the shares of Radisys common stock received when the RSU’s vested. There is no term on shares received upon vesting of RSU’s and therefore no expiration date. Vested RSU’s shares can be sold at any time.

• If requested, you will enter into a consulting agreement pursuant to which Radisys will retain the services of your consulting business. Any such consulting agreement will (i) provide for payments not to exceed $38,500 for sixteen (16) weeks of consulting services (not to exceed 8 hours of services per week), (ii) specify certain objectives and deliverables (which may include managing the remaining Nokia hardware business that reports to Mac Lavier) and (iii) include such other terms and conditions as may be approved by the Radisys Board of Directors (or appropriate committee thereof).

• You are reminded that you have signed an Employee Agreement that is in effect for a period of one year from the Transition Date, which restricts employment with direct Radisys competitors. If you consider employment opportunities that may be considered a Radisys competitor, you must have agreement from Radisys prior to accepting employment.

• Radisys will reimburse you for the cost of up to $5,000 for eligible outplacement services upon presentation of acceptable documentation.

Please sign this agreement to acknowledge and agree to the above details and terms.

/s/ Keate Despain	January 28, 2015
Keate Despain	Date

EX-10.2

AMENDED AND RESTATED

EXECUTIVE SEVERANCE AGREEMENT

October 10, 2012

Keate Despain

Executive

Radisys Corporation, an Oregon corporation

5435 NE Dawson Creek Drive

Hillsboro, OR 97124                                    the Company

1.    Employment Relationship. Executive is currently employed by the Company as Vice President and General Manager of Platforms Business Group. Executive and the Company acknowledge that either party may terminate this employment relationship at any time and for any or no reason, provided that each party complies with the terms of this Agreement.

2.    Release of Claims. In consideration for and as a condition precedent to receiving the severance benefits outlined in this Agreement, Executive agrees to execute a Release of Claims in the form attached as Exhibit A ("Release of Claims"). Executive promises to execute and deliver the Release of Claims to the Company within 21 days (or, if required by applicable law, 45 days) from the last day of Executive's active employment. Executive shall forfeit the severance benefits outlined in this Agreement in the event that Executive fails to execute and deliver the Release of Claims to the Company in accordance with the timing and other provisions of the preceding sentence or revokes such Release of Claims prior to the "Effective Date" (as such term is defined in the Release of Claims) of the Release of Claims.

3.    Additional Compensation Upon Certain Termination Events.

3.1     In the event of a Termination of Executive's Employment (as defined in Section 5.1) and contingent upon the Executive's execution of the Release of Claims without revocation within the time period described in Section 2 above and compliance with Section 8 and Section 9, Executive shall be entitled to the following benefits:

(a)As severance pay and in lieu of any other compensation for periods subsequent to the date of termination, the Company shall pay Executive, in a lump sum, an amount equal to six (6) months of Executive's annual base pay at the rate in effect immediately prior to the date of termination. Severance pay that is payable under this Agreement shall be paid to Executive within 5 days following the Effective Date of the Release of Claims, and no later than two and one-half months following the last day of the calendar year of the Termination of Executive's Employment.

(b)As an additional severance benefit, the Company will provide Executive with up to six (6) months of continued coverage (100% paid by the Company) pursuant to COBRA under the Company's group health plan at the level of benefits (whether single or family coverage) previously elected by Executive immediately before the Termination of Executive's Employment and to the extent that Executive elects to continue coverage during such 6-month period. Each month for which the Company pays COBRA premiums directly reduces the total number of months of Executive’s COBRA continuation entitlement.

(c)The Company shall pay Executive his stock-based incentive compensation plan payout under the Radisys Corporation Long Term Incentive Plan pursuant to the terms of and within the periods specified in the Long Term Incentive Plan and shall pay Executive his stock-based incentive compensation plan payout under each other stock-based incentive compensation plan maintained by the Company pursuant to the terms of and within the periods specified in each such other stock-based incentive compensation plan that may then be applicable. The Company shall also pay Executive his cash-based incentive compensation plan payout earned but not yet received under each cash-based incentive compensation plan maintained by the Company, if any, for any performance period completed prior to the Termination of Executive's Employment. In addition, the Company shall pay Executive his cash-based incentive compensation plan payout for any then current performance period under each such cash-based incentive compensation plan, provided that such payout, if any, shall be based on actual performance results for the performance period, shall not exceed the payout at target performance, and shall be pro-rated through the date of the Termination of Executive's Employment. The amounts described in this Section (c), if any, shall be paid on the date Executive would otherwise have received each such payment if his employment had not been

terminated and, in any event, no later than two and one-half months following the last day of the calendar year for which the cash-based incentive compensation plan payout was earned.

4.    Withholding; Subsequent Employment.

4.1    Withholding. All payments provided for in this Agreement are subject to applicable withholding obligations imposed by federal, state and local laws and regulations.

4.2    Offset. The amount of any payment provided for in this Agreement shall not be reduced, offset or subject to recovery by the Company by reason of any compensation earned by Executive as the result of employment by another employer after termination.

5.    Definitions.

5.1    Termination of Executive's Employment. Termination of Executive's Employment means that (i) the Company has terminated Executive's employment with the Company (including any subsidiary of the Company) other than for Cause (as defined in Section 5.2), death or Disability (as defined in Section 5.3), or (ii) Executive, by written notice to the Company, has terminated his employment with the Company (including any subsidiary of the Company) for Good Reason (as defined below). For purposes of this Agreement, "Good Reason" means:

(a)    a material reduction by the Company in Executive's annual base salary, other than a salary reduction that is part of a general salary reduction affecting employees generally; or

(b)    a material change in the geographic location where Executive is based, provided that such change is more than 25 miles from where Executive's office was previously located, except for required travel on Company business to the extent substantially consistent with Executive's business travel obligations on behalf of the Company.

An event described above will not constitute Good Reason unless Executive provides written notice to the Company of Executive's intention to resign for Good Reason and specifying in reasonable detail the breach or action giving rise thereto within 90 days of its initial existence and the Company does not cure such breach or action within 30 days after the date of Executive's notice. In no instance will a resignation by Executive be deemed to be for Good Reason if it is made more than 24 months following the initial occurrence of any of the events that otherwise would constitute Good Reason hereunder. A Termination of Executive’s Employment is intended to mean a termination of employment which constitutes a "separation from service" under Code Section 409A. If any payments are to be made within a specified period of time or during a calendar year, the date of such payment shall be in the sole discretion of the Company and Executive shall not be permitted, directly or indirectly, to designate the taxable year of payment.

5.2    Cause. Termination of Executive's Employment for "Cause" shall mean termination upon (a) the willful and continued failure by Executive to perform substantially Executive's reasonably assigned duties with the Company (other than any such failure resulting from Executive's incapacity due to physical or mental illness) after a demand for substantial performance is delivered to Executive by the Chief Executive Officer or the President of the Company, which specifically identifies the manner in which the Chief Executive Officer or the President of the Company believes that Executive has not substantially performed Executive's duties or (b) the willful engaging by Executive in illegal conduct which is materially and demonstrably injurious to the Company. No act, or failure to act, on Executive's part shall be considered "willful" unless done, or omitted to be done, by Executive without reasonable belief that Executive's action or omission was in, or not opposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board of Directors shall be conclusively presumed to be done, or omitted to be done, by Executive in the best interests of the Company.

5.3    Disability. "Disability" means Executive's absence from Executive's full-time duties with the Company for 180 consecutive calendar days as a result of Executive's incapacity due to physical or mental illness, as determined by Executive’s attending physician and in accordance with the Company’s Medical Leave of Absence Policy, unless within 30 days after notice of termination by the Company following such absence Executive shall have returned to the full-time performance of Executive's duties. This Agreement does not apply if the Executive is terminated due to Disability.

6.    Successors; Binding Agreement. This Agreement shall be binding on and inure to the benefit of the Company and its successors and assigns. This Agreement shall inure to the benefit of and be enforceable by Executive and Executive's legal representatives, executors, administrators and heirs.

7.    Entire Agreement. The Company and Executive agree that the foregoing terms and conditions constitute the entire agreement between the parties relating to the matters covered by this Agreement, that this Agreement supersedes and replaces any prior agreements relating to the matters covered by this Agreement, and that there exist no other agreements between the parties, oral or written, express or implied, relating to any matters covered by this Agreement; provided, however, this Agreement does not supersede or replace the Amended and Restated Executive Change of Control Agreement by and between Executive and the Company dated, October 10, 2012.

8.    Resignation of Corporate Offices. Executive will resign Executive's office, if any, as a director, officer or trustee of the Company, its subsidiaries or affiliates and of any other corporation or trust of which Executive serves as such at the request of the Company, effective as of the date of termination of employment. Executive agrees to provide the Company such written resignation(s) upon request and that no severance pay or other benefits will be paid until after such resignation(s) are provided.

9.    No Disparagement. Executive agrees that from and after the date of termination of employment Executive will not disparage or make false or adverse statements (whether written or oral) about the Company and its predecessors and successors, affiliates, and all of each such entity’s officers, directors, employees, insurers, agents, attorneys or assigns, in their individual and representative capacities (the "Parties"). The Company may take actions consistent with breach of this Agreement should it determine that Executive has disparaged or made false or adverse statements (whether written or oral) about the Company or the Parties. Should the Company determine that Executive has disparaged or made false or adverse statements (whether written or oral) about the Company or the Parties, the Executive shall not be entitled to the severance pay or other benefits provided under this Agreement.

10.    Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Oregon, without regard to its conflicts of laws provisions.

11.    Amendment. No provision of this Agreement may be modified unless such modification is agreed to in writing signed by Executive and the Company.

12.    Severability. If any of the provisions or terms of this Agreement shall for any reason be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other terms of this Agreement, and this Agreement shall be construed as if such unenforceable term had never been contained in this Agreement.

13.    Code Section 409A. This Agreement and the severance pay and other benefits provided hereunder are intended to qualify for an exemption from Code Section 409A, provided, however, that if this Agreement and the severance pay and other benefits provided hereunder are not so exempt, they are intended to comply with Code Section 409A to the extent applicable thereto. Notwithstanding any provision of this Agreement to the contrary, this Agreement shall be interpreted and construed consistent with this intent, provided that the Company shall not be required to assume any increased economic burden in connection therewith. Although the Company intends to administer this Agreement so that it will comply with the requirements of Code Section 409A, the Company does not represent or warrant that this Agreement will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law. Neither the Company, its subsidiaries, nor their respective directors, officers, employees or advisers shall be liable to Executive (or any other individual claiming a benefit through Executive) for any tax, interest, or penalties Executive may owe as a result of compensation paid under this Agreement, and the Company and its subsidiaries shall have no obligation to indemnify or otherwise protect Executive from the obligation to pay any taxes pursuant to Code Section 409A. If any payment or reimbursement, or portion thereof, under this Agreement would be deemed to be a deferral of compensation not exempt from the provisions of Code Section 409A and would be considered a payment upon a separation from service for purposes of Code Section 409A, and Executive is determined to be a "specified employee" under Code Section 409A, then any such payment or reimbursement, or portion thereof, shall be delayed until the date that is the earlier to occur of (i) Executive's death or (ii) the date that is six months and one day following the date of the Termination of Executive's Employment (the "Delay Period"). Upon the expiration of the Delay Period, the payments delayed pursuant to this Section 13 shall be paid to Executive in a lump sum, and any remaining payments due under this Section 13 shall be payable in accordance with their original payment schedule.

RADISYS CORPORATION

By: /s/ Brian Bronson	/s/ Keate Despain
Brian Bronson, CEO and President	Keate Despain

EXHIBIT A

RELEASE OF CLAIMS

1. Parties.

The parties to Release of Claims (hereinafter "Release") are Keate Despain and Radisys Corporation, an Oregon corporation, as hereinafter defined.

1.1    Executive and Releasing Parties.

For the purposes of this Release, "Executive" means Keate Despain, and "Releasing Parties" means Executive and his attorneys, heirs, legatees, personal representatives, executors, administrators, assigns, and spouse.

1.2    The Company and the Released Parties.

For the purposes of this Release, the "Company" means Radisys Corporation, an Oregon corporation, and "Released Parties" means the Company and its predecessors and successors, affiliates, and all of each such entity’s officers, directors, employees, insurers, agents, attorneys or assigns, in their individual and representative capacities.

2. Background And Purpose.

Executive was employed by the Company. Executive's employment is ending effective ____________ under the conditions described in Section 3.1 of the Amended and Restated Executive Severance Agreement ("Agreement") by and between Executive and the Company dated October 10, 2012.

The purpose of this Release is to settle, and the parties hereby settle, fully and finally, any and all claims the Releasing Parties may have against the Released Parties, whether asserted or not, known or unknown, including, but not limited to, claims arising out of or related to Executive's employment, any claim for reemployment, or any other claims whether asserted or not, known or unknown, past or future, that relate to Executive's employment, reemployment, or application for reemployment (in each case except as set forth below).

3. Release.

In consideration for the payments and benefits set forth in Section 3.1 of the Agreement and other promises by the Company all of which constitute good and sufficient consideration, Executive, for and on behalf of the Releasing Parties, waives, acquits and forever discharges the Released Parties from any obligations the Released Parties have and all claims the Releasing Parties may have as of the Effective Date (as defined in Section 4 below) of this Release, including but not limited to, obligations and/or claims arising from the Agreement (other than any claim Executive may have against the Company after the date hereof with respect to nonperformance of the payment obligations of the Company set forth in Section 3.1 of the Agreement) or any other document or oral agreement relating to employment, compensation, benefits, severance or post-employment issues. Executive, for and on behalf of the Releasing Parties, hereby releases the Released Parties from any and all claims, demands, actions, or causes of action, whether known or unknown, arising from or related in any way to any employment of or past failure or refusal to employ Executive by the Company, or any other past claim that relates in any way to Executive's employment, compensation, benefits, reemployment, or application for employment, with the exception of any claim Executive may have against the Company for enforcement of the Agreement. The matters released include, but are not limited to, any claims under federal, state or local laws, including the Age Discrimination in Employment Act (“ADEA”) as amended by the Older Workers’ Benefit Protection Act (“OWBPA”), any common law tort, contract or statutory claims, and any claims for attorneys’ fees and costs. Further, Executive, for and on behalf of the Releasing Parties, waives and releases the Released Parties from any claims that this Release was procured by fraud or signed under duress or coercion so as to make the Release not binding. Executive is not relying upon any representations by the Company's legal counsel in deciding to enter into this Release. Executive understands and agrees that by signing this Release Executive, for and on behalf of the Releasing Parties, is giving up the right to pursue any legal claims that Executive or the Releasing Parties may have against the Released Parties with respect to the claims released hereby. Provided, nothing in this provision of this Release shall be construed to prohibit Executive from challenging the validity of the ADEA release in this Section of the Release or from filing a charge or complaint with the Equal Employment Opportunity Commission or any state agency or from participating in any investigation or proceeding conducted by the Equal Employment Opportunity Commission or state agency. However, the Released Parties will assert all such claims have been released in a final binding settlement.

Executive understands and agrees that this Release extinguishes all released claims, whether known or unknown, foreseen or unforeseen. Executive expressly waives any rights or benefits under Section 1542 of the California Civil Code, or any equivalent statute. California Civil Code Section 1542 provides as follows:

"A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor."

Executive fully understands that, if any fact with respect to any matter covered by this Release is found hereafter to be other than or different from the facts now believed by Executive to be true, Executive expressly accepts and assumes that this Release shall be and remain effective, notwithstanding such difference in the facts.

3.1IMPORTANT INFORMATION REGARDING ADEA RELEASE.

Executive understands and agrees that:

a. this Release is worded in an understandable way;

b. claims under ADEA that may arise after the date of this Release are not waived;

c. the rights and claims waived in this Release are in exchange for additional consideration over and above any consideration to which Executive was already undisputedly entitled;

d. Executive has been advised to consult with an attorney prior to executing this Release and has had sufficient time and opportunity to do so;

e. Executive has been given a period of time of 21 days (or, if required by applicable law, 45 days) (the "Statutory Period"), if desired, to consider this Release and understands that Executive may revoke his waiver and release of any ADEA claims covered by this Release within seven (7) days from the date Executive executes this Release. Notice of revocation must be in writing and received by Radisys Corporation, 5435 NE Dawson Creek Drive, Hillsboro, Oregon 97124 Attention: Vice President, Human Resources within seven (7) days after Executive signs this Release; and

f. any changes made to this Release, whether material or immaterial, will not restart the running of the Statutory Period.

3.2    Reservations Of Rights.

This Release shall not affect any rights which Executive may have under any medical insurance, disability plan, workers' compensation, unemployment compensation, indemnifications, applicable company stock incentive plan(s), or the 401(k) plan maintained by the Company.

3.3    No Admission Of Liability.

It is understood and agreed that the acts done and evidenced hereby and the release granted hereunder is not an admission of liability on the part of Executive or the Company or the Released Parties, by whom liability has been and is expressly denied.

4. Effective Date.

The "Effective Date" of this Release shall be the eighth calendar day after it is signed by Executive.

5. Confidentiality, Proprietary, Trade Secret And Related Information

Executive acknowledges the duty and agrees not to make unauthorized use or disclosure of any confidential, proprietary or trade secret information learned as an employee about the Company, its products, customers and suppliers, and covenants not to breach that duty. Moreover, Executive acknowledges that, subject to the enforcement limitations of applicable law, the Company reserves the right to enforce the terms of any offer letter, employment agreement, confidentially agreement, or any other agreement between Executive and the Company and any section(s) therein. Should Executive, Executive's attorney or agents be requested in any judicial, administrative, or other proceeding to disclose confidential, proprietary or trade secret information Executive learned as an employee of the Company, Executive shall promptly notify the Company of such request by the most expeditious means in order to enable the Company to take any reasonable and appropriate action to limit such disclosure.

6. Scope Of Release.

The provisions of this Release shall be deemed to obligate, extend to, and inure to the benefit of the parties; the Company's parents, subsidiaries, affiliates, successors, predecessors, assigns, directors, officers, and employees; and each party’s insurers, transferees, grantees, legatees, agents, personal representatives and heirs, including those who may assume any and all of the above-described capacities subsequent to the execution and Effective Date of this Release.

7. Entire Release.

This Release and the Agreement signed by Executive contain the entire agreement and understanding between the parties and, except as reserved in Sections 3 and 5 of this Release, supersede and replace all prior agreements, written or oral, prior negotiations and proposed agreements, written or oral. Executive and the Company acknowledge that no other party, nor agent nor attorney of any other party, has made any promise, representation, or warranty, express or implied, not contained in this Release concerning the subject matter of this Release to induce this Release, and Executive and the Company acknowledge that they have not executed this Release in reliance upon any such promise, representation, or warranty not contained in this Release.

8. Severability.

Every provision of this Release is intended to be severable. In the event any term or provision of this Release is declared to be illegal or invalid for any reason whatsoever by a court of competent jurisdiction or by final and unappealed order of an administrative agency of competent jurisdiction, such illegality or invalidity should not affect the balance of the terms and provisions of this Release, which terms and provisions shall remain binding and enforceable.

9. References.

The Company agrees to follow the applicable policy(ies) regarding release of employment reference information.

10. Parties May Enforce Release.

Nothing in this Release shall operate to release or discharge any parties to this Release or their successors, assigns, legatees, heirs, or personal representatives from any rights, claims, or causes of action arising out of, relating to, or connected with a breach of any obligation of any party contained in this Release.

11. Governing Law.

This Release shall be construed in accordance with and governed by the laws of the State of Oregon, without regard to its conflicts of laws provisions.

	Dated:
Keate Despain
STATE OF OREGON ) )
County of ______)

Personally appeared the above named Keate Despain and acknowledged the foregoing instrument to be his voluntary act and deed.

Before me: ______
	NOTARY PUBLIC - OREGON
	My Commission expires:_____

RADISYS CORPORATION
By: ___________________________________	Dated:	_________________________________
Its: ___________________________________
On Behalf of Radisys Corporation and "Company"

CHIDMS1/2572461.8

EX-99.1

Exhibit 99.1

    NEWS RELEASE

For more information, contact:

Allen Muhich

Chief Financial Officer

503-615-1616

allen.muhich@radisys.com

RADISYS ANNOUNCES FOURTH QUARTER RESULTS AND ENTRY INTO THE COMMUNICATION AND CONTENT PROVIDER TRAFFIC MANAGEMENT MARKET

HILLSBORO, OR - February 3, 2015 - Radisys Corporation (NASDAQ: RSYS), the services acceleration company, announced fourth quarter 2014 revenues of $48.2 million and a GAAP net loss of $4.5 million or $0.12 per diluted share. Fourth quarter non-GAAP profit was $0.4 million or $0.01 per diluted share.

Commenting on fourth quarter financial and business highlights, Brian Bronson, Radisys President and Chief Executive Officer stated, “Our fourth quarter financial and operational performance continues to set the stage for the acceleration of our strategy in 2015; specifically:

• We announced the TDE-1000, our first in a suite of products that will leverage our innovative FlowEngine software and is targeted at the communication and content provider traffic management market. The TDE-1000 enables wire-speed packet classification and load balancing in support of efficient Network Function Virtualized network deployments.

◦ During Q4, we delivered our first FlowEngine product to a large North American carrier.

• We have over 30 MediaEngine trials in support of both Voice over LTE (VoLTE) and WebRTC deployments that leverage our media processing platform. These trials continue to progress well with certain customers preparing for 2015 network deployments.

◦ We formally announced our relationship with Nokia Networks whereby Nokia’s OpenTAS will exclusively utilize our MediaEngine product line.

Given accelerating customer traction in our MediaEngine, FlowEngine and CellEngine products, we will be intensifying our focus on these growth opportunities. With the increased focus in these product lines, we will begin reporting the Company’s revenue and profitability in two segments: Software-Systems and Embedded Products and Hardware Services. We believe these new segments will enable investors to measure investment levels and resulting revenue growth in our high-margin Software-Systems business as well as the profitability we expect from our Embedded Products and Hardware Services segment. Our 2015 expectations for these two segments are:

• Software-Systems: Revenue growth of 10% to 20%, Gross Margins of 55% to 65% and an operating loss of $2 to $8 million. Growth will be enabled by our focus on VoLTE market opportunities with our MediaEngine products, providing wire-speed packet classification and load balancing for NFV telecom architectures with FlowEngine products and royalty growth resulting from our CellEngine software suite of products moving into small cell commercial deployments.

• Embedded Products and Hardware Services: Revenue decline of approximately 20%, gross margins of 25% to 30% and operating profit of $13 million to $17 million. We have successfully returned this business to profitability in 2014 as a result of our contract manufacturing transfer and site consolidation initiatives. Going forward, increasing profitability levels will be enabled by further focusing our embedded products investment to fulfill our organic needs inside the Software-Systems business as well as those key strategic and profitable customers that value the quality, technology and extended support Radisys provides.

When taken together, we expect Radisys total revenue to approximate $160 million to $180 million, non-GAAP gross margin to range from 33% to 37%, non-GAAP R&D and SG&A expenses will range from $50 million to $55 million and non-GAAP EPS will approximate $0.20 per share.”

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First Quarter Outlook

• First quarter revenue is expected between $44 million and $50 million.

• Non-GAAP gross margin in the first quarter is expected between 31% and 33% of sales and non-GAAP R&D and SG&A expenses are expected to approximate $14.5 million.

• First quarter non-GAAP earnings are expected to range from a loss of $0.04 to a profit of $0.06 per share.

• Cash, net of the February 15, 2015 $18 million convertible note repayment, is expected to increase approximately $4 million.

Mr. Bronson continued, “Over the last two years we have made incredible strategic progress in our core focus areas while simultaneously improving the operational execution of the company. This has positioned Radisys to enjoy meaningful growth opportunities in all of our Software-Systems product lines while at the same time benefiting from the stability and increasing levels of profitability within our Embedded Products business. We have the opportunity as we progress through 2015 to officially turn the corner as a Company.”

Conference Call and Webcast Information

Radisys will host a conference call on Tuesday, February 3, 2015 at 5:00 p.m. ET to discuss its fourth quarter 2014 results and financial outlook for 2015.

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 # 66989965. The live conference call will also be available via webcast on the Radisys investor relations website at http://investor.radisys.com/.

A replay of the conference call will be available two hours after the call is complete until 11:59 p.m. on February 17, 2015. To access the replay, dial 855-859-2056 or 404-537-3406 and reference conference ID# 66989965. A replay of the webcast will be available for an extended period of time on the Radisys investor relations website at http://investor.radisys.com/.

Forward-Looking Statements

This press release contains forward-looking statements, including statements about the Company's business strategy, changes in reporting segments, financial outlook and expectations for 2015 and for the first quarter 2015, and statements related to revenue and gross margins from our respective segments and product lines, investments in future growth, expense savings or reductions, increased profitability, product line focus, operational and administrative efficiencies, revenue growth, margin improvement, financial performance and other attributes of the Company. These forward-looking statements are based on the Company's expectations and assumptions, as of the date such statements are made, regarding the Company's future operating performance and financial condition, customer requirements, outcome of product trials, the economy and other future events or circumstances. Actual results could differ materially from the outlook guidance and expectations in these forward-looking statements as a result of a number of risk factors, including, among others, (a) customer implementation of traffic management solutions, (b) the outcome of product trials, (c) the market success of customers' products and solutions, (d) the development and transition of new products and solutions, (e) the enhancement of existing products and solutions to meet customer needs and respond to emerging technological trends, (f) the Company's dependence on certain customers and high degree of customer concentration, (g) the Company's use of one contract manufacturer for a significant portion of the production of its products, including the success of transitioning contract manufacturing partners, (h) the anticipated amount and timing of revenues from design wins due to the Company's customers' product development time, cancellations or delays, (i) matters affecting the software and embedded systems industry, including changes in industry standards, changes in customer requirements and new product introductions, (j) actions by regulatory authorities or other third parties, (k) cash generation, (l) changes in tariff and trade policies and other risks associated with foreign operations, (m) fluctuations in currency exchange rates, (n) the ability of the Company to successfully complete any restructuring, acquisition or divestiture activities, (o) risks relating to fluctuations in the Company's operating results, the uncertainty of revenues and profitability and the potential need to raise additional funding, (p) other factors listed in the Company's reports filed with the Securities and Exchange Commission (SEC), including those listed under “Risk Factors” in Radisys' Annual Report on Form 10-K for the year ended December 31, 2013, copies of which may be obtained by contacting the Company at 503-615-1100, from the Company's investor relations web site at http://investor.radisys.com/, or at the SEC's website at http://www.sec.gov. Although forward-looking statements help provide additional information about Radisys, investors should keep in mind that forward-looking statements are inherently less reliable than historical information. Should

2

one or more of these risks or uncertainties materialize (or the other consequences of such a development worsen), or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. The Company believes its expectations and assumptions are reasonable, but there can be no assurance that the expectations reflected herein will be achieved. All information in this press release is as of February 3, 2015. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

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) gain on life insurance asset and (f) gain on sale of land held for sale. 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.

About Radisys

Radisys helps communications and content providers, and their strategic partners, create new revenue streams and drive cost out of their services delivery infrastructure. Radisys’ service aware traffic distribution platforms, real-time media processing engines and wireless access technologies enable its customers to maximize, virtualize and monetize their networks. For more information about Radisys please visit www.radisys.com.

Radisys® and Trillium® are registered trademarks of Radisys.

3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts, unaudited)

	Three Months Ended						Year Ended
	December 31,						December 31,
	2014			2013			2014			2013
Revenues	$	48,174		$	50,138		$	192,742		$	237,863
Cost of sales:
Cost of sales	32,179			37,230			132,730			165,166
Amortization of purchased technology	2,045			2,055			8,210			8,559
Gross margin	13,950			10,853			51,802			64,138
Operating expenses:
Research and development	7,474			9,989			31,958			45,000
Selling, general and administrative	8,759			10,065			35,862			41,210
Intangible assets amortization	1,260			1,304			5,077			5,215
Restructuring and other charges, net	761			3,442			4,205			7,479
Loss from operations	(4,304		)	(13,947		)	(25,300		)	(34,766		)
Interest expense	(293		)	(307		)	(1,242		)	(1,220		)
Other income, net	654			964			1,453			1,537
Loss before income tax expense	(3,943		)	(13,290		)	(25,089		)	(34,449		)
Income tax expense	524			12,725			2,492			14,955
Net loss	$	(4,467	)	$	(26,015	)	$	(27,581	)	$	(49,404	)
Net loss per share:
Basic	$	(0.12	)	$	(0.89	)	$	(0.79	)	$	(1.72	)
Diluted	$	(0.12	)	$	(0.89	)	$	(0.79	)	$	(1.72	)
Weighted average shares outstanding
Basic	36,504			29,150			34,699			28,805
Diluted	36,504			29,150			34,699			28,805

4

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)

	December 31, 2014			December 31, 2013
ASSETS
Current assets:
Cash and cash equivalents	$	31,242		$	25,482
Accounts receivable, net	43,845			41,359
Inventories and inventory deposit, net	18,475			25,409
Other current assets	9,822			8,443
Total current assets	103,384			100,693
Property and equipment, net	9,786			14,854
Intangible assets, net	43,224			56,510
Other assets, net	4,326			4,128
Total assets	$	160,720		$	176,185
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	33,679		$	35,081
Deferred revenue	6,204			8,167
Other accrued liabilities	12,261			15,525
Line of credit	10,000			15,000
Convertible senior notes	18,000			—
Total current liabilities	80,144			73,773
Convertible senior notes	—			18,000
Other long-term liabilities	2,800			3,276
Total liabilities	82,944			95,049
Shareholders' equity:
Common stock	334,024			309,370
Accumulated deficit	(256,671		)	(229,090		)
Accumulated other comprehensive income	423			856
Total shareholders’ equity	77,776			81,136
Total liabilities and shareholders’ equity	$	160,720		$	176,185

5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited)
	Three Months Ended						For the Years Ended
	December 31,						December 31,
	2014			2013			2014			2013
Cash flows from operating activities:
Net loss	$	(4,467	)	$	(26,015	)	$	(27,581	)	$	(49,404	)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization	4,883			5,162			20,240			21,748
Stock-based compensation expense	738			1,537			4,097			5,298
Other	2,150			15,982			5,766			17,376
Changes in operating assets and liabilities:
Accounts receivable	(307		)	1,176			(5,951		)	11,119
Inventories	(1,778		)	(1,870		)	4,401			157
Accounts payable	1,857			(1,153		)	(1,534		)	(6,013		)
Deferred revenue	80			528			(1,963		)	(1,145		)
Other operating assets and liabilities	(2,981		)	(1,343		)	(4,272		)	(1,227		)
Net cash provided by (used in) operating activities	175			(5,996		)	(6,797		)	(2,091		)
Cash flows from investing activities:
Capital expenditures	(535		)	(1,704		)	(2,396		)	(6,047		)
Proceeds from sale of assets	200			1,445			200			2,552
Net cash used in investing activities	(335		)	(259		)	(2,196		)	(3,495		)
Cash flows from financing activities:
Repayment of debt, net	—			—			(5,000		)	(1,919		)
Proceeds from issuance of common stock	105			180			21,186			806
Other financing activities, net	(331		)	(138		)	(882		)	(921		)
Net cash provided by (used in) financing activities	(226		)	42			15,304			(2,034		)
Effect of exchange rate changes on cash and cash equivalents	(310		)	136			(551		)	(80		)
Net increase (decrease) in cash and cash equivalents	(696		)	(6,077		)	5,760			(7,700		)
Cash and cash equivalents, beginning of period	31,938			31,559			25,482			33,182
Cash and cash equivalents, end of period	$	31,242		$	25,482		$	31,242		$	25,482

6

REVENUES, GROSS MARGIN AND INCOME (LOSS) FROM OPERATIONS BY OPERATING SEGMENT

(In thousands, unaudited)

	Three Months Ended				For the Years Ended
	December 31,				December 31,
	2014		2013		2014		2013
Revenue
Software-Systems	$	10,420	$	11,110	$	40,281	$	44,934
Embedded Products and Hardware Services	37,754		39,028		152,461		192,929
Total revenues	$	48,174	$	50,138	$	192,742	$	237,863

	Three Months Ended						For the Years Ended
	December 31,						December 31,
	2014			2013			2014			2013
Gross margin(A)
Software-Systems	$	6,078		$	6,159		$	24,949		$	25,860
Embedded Products and Hardware Services	9,977			7,107			35,449			47,603
Corporate and other	(2,105		)	(2,413		)	(8,596		)	(9,325		)
Total gross margin	$	13,950		$	10,853		$	51,802		$	64,138

	Three Months Ended						For the Years Ended
	December 31,						December 31,
	2014			2013			2014			2013
Income (loss) from operations(A)
Software-Systems	$	(1,470	)	$	(2,248	)	$	(6,169	)	$	(7,974	)
Embedded Products and Hardware Services	1,969			(3,145		)	2,457			(25		)
Corporate and other	(4,803		)	(8,554		)	(21,588		)	(26,767		)
Total income (loss) from operations	$	(4,304	)	$	(13,947	)	$	(25,300	)	$	(34,766	)

The following table provides revenues, gross margin and income (loss) from operations by the Company's new operating segments for each quarter in 2014.

	Three Months Ended
	Dec 31, 2014		Sept 30, 2014		June 30, 2014		March 31, 2014
Revenue
Software-Systems	$	10,420	$	11,620	$	10,400	$	7,841
Embedded Products and Hardware Services	37,754		39,185		39,564		35,958
Total revenues	$	48,174	$	50,805	$	49,964	$	43,799

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	Three Months Ended
	Dec 31, 2014			Sept 30, 2014			June 30, 2014			March 31, 2014
Gross margin(A)
Software-Systems	$	6,078		$	7,857		$	5,816		$	5,198
Embedded Products and Hardware Services	9,977			8,940			8,397			8,135
Corporate and other	(2,105		)	(2,100		)	(2,206		)	(2,185		)
Total gross margin	$	13,950		$	14,697		$	12,007		$	11,148

	Three Months Ended
	Dec 31, 2014			Sept 30, 2014			June 30, 2014			March 31, 2014
Income (loss) from operations(A)
Software-Systems	$	(1,470	)	$	13		$	(1,848	)	$	(2,864	)
Embedded Products and Hardware Services	1,969			1,307			9			(828		)
Corporate and other	(4,803		)	(5,423		)	(5,590		)	(5,772		)
Total income (loss) from operations	$	(4,304	)	$	(4,103	)	$	(7,429	)	$	(9,464	)

^(A) Cost of sales, research and development and selling, general and administrative expenses are allocated to Software-Systems and Embedded Products and Hardware Services. Expenses, reversals, gains and losses not allocated to Software-Systems or Embedded Product and Hardware Services include amortization of acquired intangible assets, stock-based compensation, restructuring and other charges, and other one time non-recurring events. These items are allocated to corporate and other.

REVENUES BY PRODUCT GROUP

(In thousands, unaudited)

	Three Months Ended				For the Years Ended
	December 31,				December 31,
	2014		2013		2014		2013
ATCA	$	24,200	$	22,253	$	91,094	$	116,537
Software and Systems	10,420		11,110		40,281		44,934
COM Express and Rackmount Server	9,820		13,794		49,660		56,019
Other Products	3,734		2,981		11,707		20,373
Total revenues	$	48,174	$	50,138	$	192,742	$	237,863

REVENUES BY GEOGRAPHY

(In thousands, unaudited)

	Three Months Ended								For the Years Ended
	December 31,								December 31,
	2014				2013				2014				2013
North America	$	22,545	46.8	%	$	24,633	49.1	%	$	76,709	39.8	%	$	103,822	43.6	%
Asia Pacific	18,754		38.9		16,319		32.6		73,152		38.0		81,530		34.3
Europe, the Middle East and Africa	6,875		14.3		9,186		18.3		42,881		22.2		52,511		22.1
Total	$	48,174	100.0	%	$	50,138	100.0	%	$	192,742	100.0	%	$	237,863	100.0	%

8

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES AND AS A PERCENT OF REVENUES

(In thousands, except per share amounts, unaudited)

	Three Months Ended										Year Ended
	December 31,										December 31,
	2014					2013					2014					2013
GROSS MARGIN:
GAAP gross margin	$	13,950		29.0	%	$	10,853		21.6	%	$	51,802		26.9	%	$	64,138		27.0	%
(a) Amortization of acquired intangible assets	2,045					2,055					8,210					8,559
(b) Stock-based compensation	60					142					386					550
(c) Restructuring and other charges, net						217					—					217
Non-GAAP gross margin	$	16,055		33.3	%	$	13,267		26.5	%	$	60,398		31.3	%	$	73,464		30.9	%
RESEARCH AND DEVELOPMENT:
GAAP research and development	$	7,474		15.5	%	$	9,989		19.9	%	$	31,958		16.6	%	$	45,000		18.9	%
(b) Stock-based compensation	(135		)			(327		)			(818		)			(1,170		)
Non-GAAP research and development	$	7,339		15.2	%	$	9,662		19.3	%	$	31,140		16.2	%	$	43,830		18.4	%
SELLING, GENERAL AND ADMINISTRATIVE:
GAAP selling, general and administrative	$	8,759		18.2	%	$	10,065		20.1	%	$	35,862		18.6	%	$	41,210		17.3	%
(b) Stock-based compensation	(543		)			(1,068		)			(2,893		)			(3,578		)
Non-GAAP selling, general and administrative	$	8,216		17.1	%	$	8,997		17.9	%	$	32,969		17.1	%	$	37,632		15.8	%
INCOME (LOSS) FROM OPERATIONS:
GAAP loss from operations	$	(4,304	)	(8.9	)%	$	(13,947	)	(27.8	)%	$	(25,300	)	(13.1	)%	$	(34,766	)	(14.6	)%
(a) Amortization of acquired intangible assets	3,304					3,359					13,286					13,774
(b) Stock-based compensation	738					1,537					4,097					5,298
(c) Restructuring and other charges, net	761					3,659					4,205					7,696
Non-GAAP income (loss) from operations	$	499		1.0	%	$	(5,392	)	(10.8	)%	$	(3,712	)	(1.9	)%	$	(7,998	)	(3.4	)%
NET INCOME (LOSS):
GAAP net loss	$	(4,467	)	(9.3	)%	$	(26,015	)	(51.9	)%	$	(27,581	)	(14.3	)%	$	(49,404	)	(20.8	)%
(a) Amortization of acquired intangible assets	3,304					3,359					13,286					13,774
(b) Stock-based compensation	738					1,537					4,097					5,298
(c) Restructuring and other charges, net	761					3,659					4,205					7,696
(d) Income taxes	73					12,220					762					13,429
(e) Gain on life insurance asset	—					—					(361		)			—
(f) Gain of sale of land held for sale	—					(771		)			—					(771		)
Non-GAAP net income (loss)	$	409		0.8	%	$	(6,011	)	(12.0	)%	$	(5,592	)	(2.9	)%	$	(9,978	)	(4.2	)%
GAAP weighted average diluted shares	36,504					29,150					34,699					28,805
Escrow shares	—					—					—					—
Dilutive equity awards included in
non-GAAP earnings per share	270					—					—					—
Non-GAAP weighted average diluted shares	36,774					29,150					34,699					28,805
GAAP net loss per share (diluted)	$	(0.12	)			$	(0.89	)			$	(0.79	)			$	(1.72	)
Non-GAAP adjustments detailed above	0.13					0.68					0.63					1.37
Non-GAAP net income (loss) per share (diluted)	$	0.01				$	(0.21	)			$	(0.16	)			$	(0.35	)

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RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE

NET INCOME (LOSS) PER SHARE

(In millions, except per share amounts, unaudited)

	Three Months Ended						For the Year Ended
	March 31, 2015						December 31, 2015
	Low End			High End			Estimates at the midpoint of the guidance range
GAAP net loss	$	(8.9	)	$	(4.2	)	$	(14.8	)
(a) Amortization of acquired intangible assets	3.3			3.3			13.3
(b) Stock-based compensation	0.9			0.9			3.6
(c) Restructuring and other charges, net	3.0			2.0			4.5
(d) Income taxes	0.2			0.2			0.9
Total adjustments	7.4			6.4			22.3
Non-GAAP net income (loss)	$	(1.5	)	$	2.2		$	7.5
GAAP weighted average shares	36,900			37,200			37,300
Non-GAAP adjustments	—			—			—
Non-GAAP weighted average shares (diluted)	36,900			37,200			37,300
GAAP net loss per share	$	(0.24	)	$	(0.11	)	$	(0.40	)
Non-GAAP adjustments detailed above	0.20			0.17			0.60
Non-GAAP net income per share (diluted)	$	(0.04	)	$	0.06		$	0.20

RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE

GROSS MARGIN

(unaudited)

	Estimates at the midpoint of the guidance range		Estimates at the midpoint of the guidance range
	Three Months Ended		For the Year Ended
	March 31, 2015		December 31, 2015
GAAP	28.0	%	30.0	%
(a) Amortization of acquired intangible assets	4.0		5.0
Non-GAAP	32.0	%	35.0	%

RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE

RESEARCH AND DEVELOPMENT EXPENSE AND

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE

(In millions, unaudited)

	Estimates at the midpoint of the guidance range		Estimates at the midpoint of the guidance range
	Three Months Ended		For the Year Ended
	March 31, 2015		December 31, 2015
GAAP	$	15,325	$	55,800
(b) Stock-based compensation	825		3,300
Non-GAAP	$	14,500	$	52,500

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:

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(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)Gain on life insurance asset: Includes a death benefit received from life insurance assets which were a component of the Company's deferred compensation plan. This transaction is not part of the Company's ordinary course of business and therefore has been excluded from its non-GAAP financial measures because it enhances the ability of investors to compare the Company's period-over-period operating results.

(f) Sale of land: Gain realized when the Company sold a parcel of land that it owned during the three months ended December 31, 2013. This is excluded from non-GAAP results as the Company does not buy and sell land in the normal course of business. We believe this exclusion enhances the ability of investors to compare the Company's period-over-period operating results.

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