Radisys Corporation (NASDAQ: RSYS), a global leader of open
telecom solutions, today announced financial results for the third
quarter ended September 30, 2017.
Third Quarter Summary
- Consolidated revenue of $28.8 million,
above the midpoint of the Company’s prior guidance range of $26 to
$30 million;
- GAAP loss per share was $0.39, and
non-GAAP loss per share was $0.28. Included in both GAAP and
non-GAAP loss per share was an expected inventory charge of
approximately $7.0 million associated largely with legacy embedded
products, which increased the loss by $0.18 per share;
- Awarded first commercial win for
FlowEngine TDE-2000 with a strategic channel partner for initial
deployment with a European service provider beginning in the fourth
quarter;
- Secured two new Tier 1 service provider
wins in the U.S. and India through channel partners for multi-year
VoLTE deployments; and
- Closed agreement with global contract
manufacturer to streamline supply chain and drive meaningful cost
synergies beginning in 2018.
“Our third quarter results were in-line with the expectations we
outlined in early August, with both revenue and operating results
being at or above the midpoint of our expectations,” said Brian
Bronson, Radisys President and Chief Executive Officer.
“Importantly, we made tangible progress in the third quarter
towards converting proof-of-concepts into commercial wins as
evidenced by the two new MediaEngine VoLTE wins as well as our
first commercial award for deployment of our new FlowEngine
appliance, the TDE-2000. Further, within MobilityEngine we continue
to advance forward towards trials with two Tier 1 service providers
tied to initial CORD deployments.
“As we navigate limited visibility for sizable DCEngine
commercial orders, we are implementing a revised go-to-market
strategy that will allow us to refine our cost structure while
ensuring our ability to support our ongoing engagements with
prospective customers. Importantly, outside of DCEngine the new
wins we secured during the third quarter demonstrate tangible
evidence of our ability to commercialize the pipeline of
engagements across our Software-Systems offerings. Acknowledging
the timing of incremental commercial wins is difficult to predict,
our focus remains on advancing our funnel of prospective and
existing customer opportunities, maximizing our cash resources, and
taking the necessary actions to return the Company to non-GAAP
profitability and positive operating cash flow.”
Software-Systems Results
For the third quarter of 2017, Software-Systems revenue was
$11.3 million, compared to $11.5 million in the prior quarter and
$10.4 million in the third quarter of 2016. The sequential decline
was the result of timing of professional services programs, which
we expect to benefit from in the fourth quarter of 2017.
Gross margin was 47.9%, compared to 54.3% in the prior quarter
and 59.6% in the third quarter of 2016. Operating loss was $2.4
million, compared to an operating loss of $1.9 million in the prior
quarter and an operating loss of $2.2 million in the third quarter
of 2016.
Hardware Solutions Results
For the third quarter of 2017, Hardware Solutions revenue was
$17.5 million, compared to $23.6 million in the prior quarter and
$45.0 million in the third quarter of 2016. The sequential decline
reflects an expected discontinuance in new DCEngine orders from the
Company’s tier one U.S. customer.
Gross margin was (13.2)%, compared to 24.3% in the prior quarter
and 22.4% in the third quarter of 2016. Operating loss was $7.9
million, compared to operating income of $0.2 million in the prior
quarter and operating income of $4.9 million in the third quarter
of 2016.
Consolidated Results
For the third quarter of 2017, consolidated revenue was $28.8
million, compared to $35.1 million in the prior quarter and $55.4
million in the third quarter of 2016.
On a GAAP basis, gross margin in the third quarter of 2017 was
4.2%, compared to 28.5% in the prior quarter and 25.7% in the third
quarter of 2016. Third quarter GAAP gross margin includes an
inventory write-down of $7.0 million predominantly associated with
end-of-life product transitions within the Company’s legacy
embedded products portfolio. Third quarter 2017 GAAP research and
development and selling, general, and administrative expenses were
$13.5 million, compared to $14.2 million in the prior quarter and
$14.4 million in the third quarter of 2016. The decline in
operating expenses over the comparable periods was the result of
planned reductions associated with the Company’s Hardware Solutions
business.
On a non-GAAP basis, third quarter 2017 gross margin was 10.8%,
compared to 34.1% in the prior quarter and 29.4% in the third
quarter of 2016. The impact of the $7.0 million inventory charge
reduced reported gross margin by approximately 24.5% in the third
quarter. Third quarter 2017 research and development and selling,
general and administrative expenses on a non-GAAP basis were $13.4
million, compared to $13.7 million in the prior quarter and $13.6
million in the third quarter of 2016.
For the third quarter of 2017, the Company recorded a GAAP net
loss of $15.4 million, or $0.39 per share, compared to a GAAP net
loss of $7.6 million, or $0.19 per share, in the prior quarter and
a GAAP net loss of $2.6 million, or $0.07 per share, in the third
quarter of 2016. On a non-GAAP basis, the Company recorded a net
loss of $11.0 million, or $0.28 per share, in the third quarter of
2017, compared to a net loss of $2.2 million, or $0.06 per share,
in the prior quarter and net income of $2.6 million, or $0.07 per
diluted share, in the third quarter of 2016. Included in both GAAP
and non-GAAP loss per share was an expected inventory charge of
approximately $7.0 million or $0.18 per share.
Fourth Quarter 2017 Financial Guidance
- Revenue is expected between $29 to $33
million. The guidance range contemplates potential variability in
the timing of certain MediaEngine orders as well as the Company’s
ongoing contract manufacturer transition.
- GAAP gross margin is expected to
approximate 31% and GAAP R&D and SG&A expenses are expected
to be approximately $13.5 million. Non-GAAP gross margin is
expected between 36% and 39% of sales and non-GAAP R&D and
SG&A expenses are expected to approximate $13.0 million.
- GAAP loss is expected to range from
$0.19 to $0.13 per share. Non-GAAP loss is expected to range from
$0.08 to $0.02 per share.
Conference Call and Webcast Information
The Company will host a conference call to discuss third quarter
2017 results on November 7, 2017, at 5:00 p.m. ET. To participate
in the live conference call, dial 888-333-0027 in the U.S. and
Canada or 706-634-4990 for all other countries and reference
conference ID # 1922507. 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 November 21, 2017.
To access the replay, dial 855-859-2056 or 404-537-3406 and
reference conference ID# 1922507. 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/.
About Radisys
Radisys (NASDAQ: RSYS), a global leader in open telecom
solutions, enables service providers to drive disruption with new
open architecture business models. Radisys’ innovative
disaggregated and virtualized enabling technology solutions
leverage open reference architectures and standards, combined with
open software and hardware to power business transformation for the
telecom industry, while its world-class services organization
delivers systems integration expertise necessary to solve
communications and content providers’ complex deployment
challenges. For more information, visit www.Radisys.com.
Forward-Looking Statements
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
fourth quarter of 2017, 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) increased Tier 1 commercial
deployments across multiple product lines, (b) continued
implementation of the Company’s next-generation products, (c)
customer implementation of traffic management solutions, (d) the
outcome of product trials, (e) the market success of customers'
products and solutions, (f) the development and transition of new
products and solutions, including our FlowEngine appliance,
MobilityEngine 5G RAN technology and our strategic MediaEngine
channel agreement, (g) the enhancement of existing products and
solutions to meet customer needs and respond to emerging
technological trends, (h) the Company’s ability to raise additional
growth capital, (i) the Company's dependence on certain customers
and high degree of customer concentration, (j) 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, (k) matters affecting the software
and embedded product industry, including changes in industry
standards, changes in customer requirements and new product
introductions, (l) actions by regulatory authorities or other third
parties, (m) cash generation, (n) changes in tariff and trade
policies and other risks associated with foreign operations, (o)
fluctuations in currency exchange rates, (p) the ability of the
Company to successfully complete any restructuring, acquisition or
divestiture activities, (q) risks relating to fluctuations in the
Company's operating results, the uncertainty of revenues and
profitability and the potential need to raise additional funding
and (r) 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, 2016, 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 November 7, 2017. 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, and (e)
loss (gain) on the liquidation of foreign subsidiaries. The Company
believes that the use of non-GAAP financial measures provides
useful information to investors to gain an overall understanding of
its current financial performance and its prospects for the future.
Specifically, the Company believes the non-GAAP results provide
useful information to both management and investors by excluding
certain expenses, gains and losses that the Company believes are
not indicative of its core operating results. In addition, non-GAAP
financial measures are used by management for budgeting and
forecasting as well as subsequently measuring the Company's
performance, and the Company believes that it is providing
investors with financial measures that most closely align to its
internal measurement processes. These non-GAAP measures are
considered to be reflective of the Company's core operating results
as they more closely reflect the essential revenue-generating
activities of the Company and direct operating expenses (resulting
in cash expenditures) needed to perform these revenue-generating
activities. The Company also believes, based on feedback provided
to the Company during its earnings calls' Q&A sessions and
discussions with the investment community, that the non-GAAP
financial measures it provides are necessary to allow the
investment community to construct their valuation models to better
align its results and projections with its competitors and market
sector, as there is significant variability and unpredictability
across companies with respect to certain expenses, gains and
losses.
The non-GAAP financial information is presented using a
consistent methodology from quarter-to-quarter and year-to-year.
These measures should be considered in addition to results prepared
in accordance with GAAP. In addition, these non-GAAP financial
measures are not based on any comprehensive set of accounting rules
or principles. The Company believes that non-GAAP financial
measures have limitations in that they do not reflect all of the
amounts associated with the Company's results of operations as
determined in accordance with GAAP and that these measures should
only be used to evaluate the Company's results of operations in
conjunction with the corresponding GAAP financial measures.
A reconciliation of non-GAAP information to GAAP information is
included in the tables below. The non-GAAP financial measures
disclosed by the Company should not be considered a substitute for
or superior to financial measures calculated in accordance with
GAAP, and reconciliations between GAAP and non-GAAP financial
measures included in this earnings release should be carefully
evaluated. The non-GAAP financial measures used by the Company may
be calculated differently from, and therefore may not be comparable
to, similarly titled measures used by other companies.
Radisys® is a registered trademark of
Radisys
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except per share
amounts, unaudited) Three Months Ended Nine
Months Ended September 30, September 30,
2017 2016 2017
2016 Revenues Product $ 20,641 $ 46,175 $ 75,680 $ 145,122
Service 8,132 9,222 25,796
26,709 Total revenues 28,773
55,397 101,476 171,831
Cost of sales: Product 20,361 33,997 60,450 107,937 Service 5,291
5,228 15,821 15,639 Amortization of purchased technology
1,926 1,926 5,780 5,780
Total cost of sales 27,578 41,151
82,051 129,356 Gross margin
1,195 14,246 19,425 42,475 Operating expenses: Research and
development 5,639 6,093 18,113 18,044 Selling, general and
administrative 7,849 8,321 25,445 24,514 Intangible assets
amortization 289 1,260 2,809 3,780 Restructuring and other charges,
net 1,344 655 2,814
1,602 Loss from operations (13,926 ) (2,083 ) (29,756
) (5,465 ) Interest expense (431 ) (116 ) (927 ) (392 ) Other
income (expense), net (116 ) 255 (543 )
1,463 Loss before income tax expense (14,473 ) (1,944
) (31,226 ) (4,394 ) Income tax expense 938
694 1,747 1,800 Net loss $
(15,411 ) $ (2,638 ) $ (32,973 ) $ (6,194 ) Net loss per
share: Basic $ (0.39 ) $ (0.07 ) $ (0.85 ) $ (0.17 ) Diluted $
(0.39 ) $ (0.07 ) $ (0.85 ) $ (0.17 ) Weighted average shares
outstanding Basic 39,087 38,056
38,922 37,402 Diluted 39,087
38,056 38,922 37,402
CONDENSED CONSOLIDATED
BALANCE SHEETS (In thousands, unaudited)
September 30, 2017 December 31, 2016
ASSETS Current assets: Cash and cash equivalents $ 12,682 $
33,087 Accounts receivable, net 33,854 38,378 Inventories, net
11,055 20,021 Other current assets 6,347 7,151
Total current assets 63,938 98,637 Property and equipment,
net 7,131 6,713 Intangible assets, net 8,986 17,575 Other assets,
net 2,872 5,260 Total assets $ 82,927
$ 128,185
LIABILITIES AND SHAREHOLDERS'
EQUITY Current liabilities: Accounts payable $ 20,565 $ 20,805
Deferred revenue 5,556 5,715 Other accrued liabilities 11,157
14,143 Line of credit 15,000 25,000
Total current liabilities 52,278 65,663 Other long-term liabilities
5,481 5,966 Total liabilities
57,759 71,629 Shareholders' equity: Common
stock 341,780 339,715 Accumulated deficit (316,551 ) (281,600 )
Accumulated other comprehensive income (61 ) (1,559 )
Total shareholders’ equity 25,168 56,556
Total liabilities and shareholders’ equity $ 82,927 $
128,185
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (In thousands, unaudited)
Three Months Ended Nine
Months Ended September 30, September 30,
2017 2016 2017
2016 Cash flows from operating activities: Net loss $
(15,411 ) $ (2,638 ) $ (32,973 ) $ (6,194 ) Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities: Depreciation and amortization 3,551 4,182 12,396 12,775
Stock-based compensation expense 124 987 1,816 2,867 Inventory
valuation allowance 7,041 1,281 7,900 2,670 Other 885 920 1,056
(269 ) Changes in operating assets and liabilities: Accounts
receivable 9,737 (13,572 ) 4,530 4,357 Inventories and deferred
cost of sales (2,071 ) 2,657 2,732 7,760 Other receivables 39 656
(44 ) 7,663 Accounts payable (3,181 ) 7,439 (26 ) (11,265 )
Deferred revenue (3,067 ) 2,621 (1,157 ) (14,738 ) Other operating
assets and liabilities (48 ) (2,516 ) (2,813 )
(2,986 ) Net cash provided by (used in) operating activities
(2,401 ) 2,017 (6,583 ) 2,640
Cash flows from investing activities: Capital
expenditures (1,386 ) (2,290 ) (4,544 )
(3,420 ) Net cash used in investing activities (1,386 )
(2,290 ) (4,544 ) (3,420 )
Cash flows from
financing activities: Borrowings on line of credit, net (30,000
) — (10,000 ) 10,000 Other financing activities, net 209
(3,200 ) 295 (2,721 ) Net cash
provided by (used in) financing activities (29,791 )
(3,200 ) (9,705 ) 7,279 Effect of exchange
rate changes on cash and cash equivalents 12
26 427 216 Net increase
(decrease) in cash and cash equivalents (33,566 ) (3,447 ) (20,405
) 6,715 Cash and cash equivalents, beginning of period
46,248 30,926 33,087
20,764 Cash and cash equivalents, end of period $ 12,682
$ 27,479 $ 12,682 $ 27,479
REVENUES, GROSS MARGIN AND INCOME (LOSS) FROM
OPERATIONS BY OPERATING SEGMENT (In thousands,
unaudited) Three Months Ended Nine Months
Ended September 30, September 30, 2017
2016 2017 2016 Revenue
Software-Systems $ 11,306 $ 10,441 $ 32,943 $ 39,101 Hardware
Solutions 17,467 44,956 68,533
132,730 Total revenues $ 28,773 $
55,397 $ 101,476 $ 171,831
Three Months Ended Nine Months Ended September
30, September 30, 2017 2016 2017
2016 Gross margin Software-Systems $ 5,420 $ 6,226 $ 17,128
$ 24,186 Hardware Solutions (2,302 ) 10,070 8,211 24,370 Corporate
and other (1,923 ) (2,050 ) (5,914 )
(6,081 ) Total gross margin $ 1,195 $ 14,246 $ 19,425
$ 42,475
Three Months Ended
Nine Months Ended September 30, September 30,
2017 2016 2017 2016 Income (loss) from
operations Software-Systems $ (2,358 ) $ (2,201 ) $ (7,574 ) $
(1,390 ) Hardware Solutions (7,885 ) 4,946 (8,963 ) 9,954 Corporate
and other (3,683 ) (4,828 ) (13,219 )
(14,029 ) Total loss from operations $ (13,926 ) $ (2,083 ) $
(29,756 ) $ (5,465 )
REVENUES BY GEOGRAPHY (In thousands, unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, 2017
2016 2017 2016 North America $
11,492 39.9 % $ 34,541 62.4 % $ 49,854 49.1 %
$ 116,698 67.9 % Asia Pacific 5,703 19.8 7,946 14.3 17,819
17.6 22,025 12.8 Europe, the Middle East and Africa 11,578
40.3 12,910 23.3 33,803
33.3 33,108 19.3 Total $ 28,773
100.0 % $ 55,397 100.0 % $ 101,476 100.0 % $
171,831 100.0 %
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES AND AS A
PERCENT OF REVENUES (In thousands, except per share amounts,
unaudited) Three Months Ended Nine Months
Ended September 30, September
30, 2017 2016 2017
2016 GROSS MARGIN:
GAAP gross margin $ 1,195 4.2 % $ 14,246
25.7 % $ 19,425 19.1 % $ 42,475
24.7 % (a) Amortization of acquired intangible assets 1,926 1,926
5,780 5,780 (b) Stock-based compensation (3 )
124 134
301 Non-GAAP gross margin $ 3,118
10.8 % $ 16,296 29.4 % $ 25,339
25.0 % $ 48,556 28.3 %
RESEARCH AND
DEVELOPMENT: GAAP research and development $ 5,639
19.6 % $ 6,093 11.0 % $ 18,113
17.8 % $ 18,044 10.5 % (b) Stock-based compensation
23 238
366 676
Non-GAAP research and development $ 5,616 19.5 % $
5,855 10.6 % $ 17,747 17.5 % $ 17,368
10.1 %
SELLING, GENERAL AND
ADMINISTRATIVE: GAAP selling, general and administrative $
7,849 27.3 % $ 8,321 15.0 % $ 25,445
25.1 % $ 24,514 14.3 % (b) Stock-based
compensation 105 625
1,317 1,890
Non-GAAP selling, general and administrative $ 7,744
26.9 % $ 7,696 13.9 % $ 24,128
23.8 % $ 22,624 13.2 %
INCOME (LOSS)
FROM OPERATIONS: GAAP loss from operations $ (13,926 )
(48.4 )% $ (2,083 ) (3.8 )% $ (29,756 ) (29.3 )% $
(5,465 ) (3.2 )% (a) Amortization of acquired intangible
assets 2,214 3,186 8,588 9,560 (b) Stock-based compensation 125 987
1,817 2,867 (c) Restructuring and other charges, net 1,344
655 2,814
1,602 Non-GAAP
income (loss) from operations $ (10,243 ) (35.6 )% $ 2,745
5.0 % $ (16,537 ) (16.3 )% $ 8,564
5.0 %
NET INCOME (LOSS): GAAP net loss $
(15,411 ) (53.6 )% $ (2,638 ) (4.8 )% $ (32,973 )
(32.5 )% $ (6,194 ) (3.6 )% (a) Amortization of
acquired intangible assets 2,214 3,186 8,588 9,560 (b) Stock-based
compensation 125 987 1,817 2,867 (c) Restructuring and other
charges, net 1,344 655 2,814 1,602 (d) Income taxes 460 404 693 682
(e) Loss (gain) on the liquidation of foreign subsidiaries $ 313
$ — $ 313
$ (421 ) Non-GAAP net income (loss) $ (10,955
) (38.1 )% $ 2,594 4.7 % $ (18,748 )
(18.5 )% $ 8,096 4.7 % GAAP weighted average
diluted shares 39,087 38,056 38,922 37,402 Dilutive equity awards
included in non-GAAP earnings per share —
1,313 —
1,164 Non-GAAP weighted average
diluted shares 39,087 39,369
38,922
38,566 GAAP net loss per share (diluted) $
(0.39 ) $ (0.07 ) $ (0.85 ) $ (0.17 ) Non-GAAP adjustments detailed
above 0.11 0.14
0.37 0.38
Non-GAAP net income (loss) per share (diluted) $ (0.28 )
$ 0.07 $ (0.48 ) $
0.21
RECONCILIATION OF
GAAP TO NON-GAAP GUIDANCE NET LOSS PER SHARE (In
millions, except per share amounts, unaudited) Three
Months Ended December 31, 2017 Low End
High End GAAP net loss (7.5 ) (5.2 ) (a) Amortization
of acquired intangible assets 2.1 2.1 (b) Stock-based compensation
0.5 0.5 (c) Restructuring and acquisition-related charges, net 1.5
1.5 (f) Income taxes 0.2 0.2 Total adjustments
4.3 4.3 Non-GAAP net loss
(3.2
) (0.9 ) GAAP weighted average shares
39,200 39,200 Non-GAAP adjustments — — Non-GAAP
weighted average shares
39,200 39,200
GAAP net loss per share (0.19 ) (0.13 ) Non-GAAP adjustments
detailed above 0.11 0.11 Non-GAAP net loss per share
(0.08 ) (0.02 )
RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE GROSS
MARGIN (unaudited)
Estimates at themidpoint of
theguidance range
Three Months Ended December 31, 2017 GAAP
31.2
% (a) Amortization of acquired intangible assets 6.2 (b)
Stock-based compensation 0.1 Non-GAAP
37.5
RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE
RESEARCH AND DEVELOPMENT EXPENSE AND SELLING, GENERAL AND
ADMINISTRATIVE EXPENSE (In millions, unaudited)
Estimates at themidpoint of
theguidance range
Three Months Ended December 31, 2017 GAAP
$
13.5 (b) Stock-based compensation 0.5 Non-GAAP
$ 13.0
Non-GAAP financial measures includes the performance of
Software-Systems and Embedded Products and Hardware Services.
The Company excludes the following corporate and other expenses,
reversals, gains and losses from its non-GAAP financial measures,
when applicable:
(a) Amortization of acquired intangible assets:
Amortization of acquisition-related intangible assets primarily
relate to core and existing technologies, trade name and customer
relationships that were acquired with the acquisitions of
Continuous Computing and Pactolus. The Company excludes the
amortization of acquisition-related intangible assets because it
does not reflect the Company's ongoing business and it does not
have a direct correlation to the operation of the Company's
business. In addition, in accordance with GAAP, the Company
generally recognizes expenses for internally-developed intangible
assets as they are incurred, notwithstanding the potential future
benefit such assets may provide. Unlike internally-developed
intangible assets, however, and also in accordance with GAAP, the
Company generally capitalizes the cost of acquired intangible
assets and recognizes that cost as an expense over the useful lives
of the assets acquired. As a result of their GAAP treatment, there
is an inherent lack of comparability between the financial
performance of internally-developed intangible assets and acquired
intangible assets. Accordingly, the Company believes it is useful
to provide, as a supplement to its GAAP operating results, non-GAAP
financial measures that exclude the amortization of acquired
intangibles in order to enhance the period-over-period comparison
of its operating results, as there is significant variability and
unpredictability across companies with respect to this expense.
(b) Stock-based compensation: Stock-based compensation
consists of expenses recorded under GAAP, in connection with stock
awards such as stock options, restricted stock awards and
restricted stock units granted under the Company's equity incentive
plans and shares issued pursuant to the Company's employee stock
purchase plan. The Company excludes stock-based compensation from
non-GAAP financial measures because it is a non-cash measurement
that does not reflect the Company's ongoing business and because
the Company believes that investors want to understand the impact
on the Company of the adoption of the applicable GAAP surrounding
share based payments; the Company believes that the provision of
non-GAAP information that excludes stock-based compensation
improves the ability of investors to compare its period-over-period
operating results, as there is significant variability and
unpredictability across companies with respect to this expense.
(c) Restructuring and other charges, net: Restructuring
and other charges, net relates to costs associated with
non-recurring events. These include costs incurred for employee
severance, acquisition or divestiture activities, excess facility
costs, certain legal costs, asset related charges and other
expenses associated with business restructuring activities.
Restructuring and other charges are excluded from non-GAAP
financial measures because they are not considered core operating
activities. Although the Company has engaged in various
restructuring activities over the past several years, each has been
a discrete event based on a unique set of business objectives. The
Company does not engage in restructuring activities in the ordinary
course of business. As such, the Company believes it is appropriate
to exclude restructuring charges from its non-GAAP financial
measures because it enhances the ability of investors to compare
the Company's period-over-period operating results.
(d) Income taxes: Non-GAAP income tax expense is equal to
the Company's projected cash tax expense. Adjustments to GAAP
income tax expense are required to eliminate the recognition of tax
expense from profitable entities where we utilize deferred tax
assets to offset current period tax liabilities. We believe that
providing this non-GAAP figure is useful to our investors as it
more closely represents the true economic impact of our tax
positions.
(e) Loss (gain) on the liquidation of foreign
subsidiaries: On a non-recurring basis we have recorded a gain
or loss to reflect the realization of accumulated foreign currency
translation adjustments upon the liquidation of certain
international subsidiaries. This gain or loss represents the net
unrealized foreign currency translation gains or losses accumulated
from changes in exchange rates and the related effects from the
translation of assets and liabilities of these entities. The
liquidation of foreign subsidiaries occurs on an infrequent basis
and management does not view the impact of this non-cash charge as
indicative of the ongoing performance of the Company. As such, the
Company believes it is appropriate to exclude this gain from its
non-GAAP financial measures because it enhances the ability of
investors to compare the Company's period-over-period operating
results.
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version on businesswire.com: http://www.businesswire.com/news/home/20171107006716/en/
Company ContactRadisys CorporationJon Wilson,
503-615-1685Chief Financial
Officerjon.wilson@radisys.comorInvestor ContactShelton
GroupBrett L. Perry, 214-272-0070bperry@sheltongroup.com
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