RadiSys Corp. (RSYS, Financial) filed Quarterly Report for the period ended 2010-06-30.
Radisys Corp. has a market cap of $220.2 million; its shares were traded at around $9.15 with a P/E ratio of 27.8 and P/S ratio of 0.8. RSYS is in the portfolios of David Nierenberg of D3 Family of Funds, David Nierenberg of D3 Family of Funds, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.
For the three months ended June 30, 2010, net income was $590,000 compared to a net loss of $2.1 million for the three months ended June 30, 2009. For the three months ended June 30, 2010, net income per share was $0.02 while our net loss per share was $0.09 for the three months ended June 30, 2009. The Company changed from a net loss to net income primarily due to a reduction in restructuring expenses, which totaled $3.0 million for the three months ended June 30, 2009, as compared to reversals of $176,000 for the three months ended June 30, 2010. Net loss was $458,000 and $42.2 million for the six months ended June 30, 2010 and 2009, respectively. For the six months ended June 30, 2010 and 2009 net loss per share was $0.02 and $1.81, respectively. The decrease in net loss for the six months ended June 30, 2010, as compared to the same period in 2009, was primarily due to a reduction in income tax expense, which totaled $39.7 million for the six months ended June 30, 2009, as compared to an income tax benefit of $36,000 for the six months ended June 30, 2010. The establishment of a valuation allowance for our U.S. deferred tax assets during the three months ended March 31, 2009 was the cause of the significant increase in income tax expense between the two periods. Absent the charge associated with our valuation allowance in 2009, our net loss decreased by $2.1 million during the six months ended June 30, 2010 as compared to the same period in 2009. The reduction in net loss of $2.1 million was due to lower overall operating expenses partially offset by lower gross margins on reduced revenues. Operating
Cash and cash equivalents amounted to $122.0 million and $100.7 million at June 30, 2010 and December 31, 2009, respectively. The increase in cash and cash equivalents during the six months ended June 30, 2010, was primarily driven by cash generated from our investing activities totaling $29.0 million along with cash from operating activities in the amount of $15.3 million. Cash flows from investing activities were the result of the exercise of our settlement right with UBS along with proceeds from calls of our auction rate securities ("ARS"), which collectively totaled $62.2 million. These proceeds were offset by restricted cash in the amount $25.8 million, held as collateral against the Company's UBS line of credit which totaled $17.3 million at June 30, 2010. The line of credit was paid in full on July 1, 2010 thus removing all restrictions on cash. Cash generated by investing activities was offset by the purchase of the assets of Pactolus for $3.4 million during the six months ended June 30, 2010. Offsetting these increases were cash flows used in financing activities of $22.7 million largely due to a net pay down on our UBS line of credit which totaled $24.0 million.
Revenues in the communications networks product group decreased by $10.2 million, or 15.6%, to $55.1 million for the three months ended June 30, 2010, from $65.3 million for the three months ended June 30, 2009. For the six months ended June 30, 2010, revenues in the communications networks product group decreased by $21.6 million, or 16.9%, to $105.7 million from $127.3 million for the same period in 2009. The decrease was driven by the maturity of our legacy/traditional communications networks products, which resulted in a decline in revenue of $12.0 million or 31.2% and $28.9 million or 38.3% for the three and six months ended June 30, 2010, respectively, as compared with the same periods in 2009. Partially offsetting the decline in revenues from our legacy/traditional products is the transition to next-generation communications networks products by some of these customers. Revenues from our next-generation communications networks products increased by $1.8 million or 6.8%, in the three months ended June 30, 2010, compared to the same period in 2009. For the six months ended June 30, 2010, revenues from our next-generation communications networks product group increased by $7.3 million or 14.1%, as compared to the same period in 2009. Increased revenues from our next-generation communications networks products were primarily driven by increased deployments along with increased ramping of new products.
SG&A expenses decreased by $369,000 or 1.6%, to $22.8 million for the six months ended June 30, 2010 from $23.2 million for the six months ended June 30, 2009. The decrease in SG&A costs for the six months ended June 30, 2010, as compared to the same period in 2009 was driven by lower costs related to incentive compensation, stock compensation and sales commissions, which collectively decreased by $1.3 million, or 20.2%, to $5.0 million for six months ended June 30, 2010 from $6.2 million for the six months ended June 30, 2009. Decreases in incentive compensation were driven by a lower projected payout factor based on a lower level of projected target operating income attainment while decreased sales commissions were directly related to the reduction in revenues, as compared to the same period in 2009. This decrease was further driven by lower payroll and payroll related costs which decreased by $326,000 or 3.0% to $10.4 million for the six months ended June 30, 2010 from $10.7, as compared to the same period in 2009. Lower payroll related costs are the result of restructuring activities undertaken over the past year. Offsetting these declines were increased costs for travel of $473,000 along with increases in professional service and marketing costs of $425,000 and $188,000, respectively. Additionally, for the six months ended June 30, 2010 SG&A includes the allocation of costs associated with unused manufacturing space, as described above, in the amount of $500,000 which was previously charged to cost of goods sold.
Stock-based Compensation Expense. Stock-based compensation expense consists of amortization of stock-based compensation associated with stock options, restricted shares and shares issued to employees as a result of the employee stock purchase plan (“ESPP”). Stock-based compensation expense decreased by $346,000 or 18.0%, to $1.6 million for the three months ended June 30, 2010 from $1.9 million for the three months ended June 30, 2009. Stock-based compensation expense decreased by $1.3 million or 27.1%, to $3.4 million for the six months ended June 30, 2010 from $4.7 million for the six months ended June 30, 2009. One of the primary reasons for the decrease in stock-based compensation expense was our restructuring activities that have occurred over the past year. As a result of our restructuring activities many awards have been forfeited and there has been a decrease in the participation in our ESPP. During the three and six months ended June 30, 2010 stock-based compensation related to our ESPP decreased by $239,000 and $825,000, respectively, as compared to the same periods in 2009. This decline in ESPP expense was also due to a liquidity discount applied to the stock-based compensation calculation to reflect a one year holding period that was added to the plan at the end of 2009. The liquidity discount accounted for $63,000 and $197,000 of the decrease in ESPP related stock-based compensation between the three and six months ended June 30, 2010 compared to the same periods in 2009. Partially offsetting these declines was $481,000 and $940,000 in additional stock-based compensation during the three and six months ended June 30, 2010, associated with shares granted from our long-term incentive plan in the fourth quarter of 2009. Another partial offset was related to $234,000 in incremental stock-based compensation for the three months ended March 31, 2009 that resulted from the modification of equity awards for certain employees involved in our restructuring activities.
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Radisys Corp. has a market cap of $220.2 million; its shares were traded at around $9.15 with a P/E ratio of 27.8 and P/S ratio of 0.8. RSYS is in the portfolios of David Nierenberg of D3 Family of Funds, David Nierenberg of D3 Family of Funds, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.
Highlight of Business Operations:
Total revenue was $75.0 million and $78.1 million for the three months ended June 30, 2010 and 2009, respectively. Total revenue was $142.3 million and $155.7 million for the six months ended June 30, 2010 and 2009, respectively. Backlog was approximately $44.3 million and $51.4 million at June 30, 2010 and December 31, 2009, respectively. Backlog includes all purchase orders scheduled for delivery within 12 months. The decrease in revenues for the three and six months ended June 30, 2010 compared to the same periods in 2009 was due to decreased revenues from our legacy/traditional communications networks products. Our legacy/traditional communications networks revenues decreased by $12.0 million or 31.2%, to $26.5 million in the three months ended June 30, 2010 from $38.5 million in the three months ended June 30, 2009. During the six months ended June 30, 2010 legacy/traditional communications networks revenues decreased by $28.9 million or 38.3% to $46.5 million from $75.4 million for the six months ended June 30, 2009. Partially offsetting these declines were increased revenues from our next-generation communications networks products, which increased by $1.8 million or 6.8%, to $28.6 million in the three months ended June 30, 2010 from $26.8 million in the three months ended June 30, 2009. For the six months ended June 30, 2010, next-generation communications network product revenues increased by $7.3 million or 14.1% to $59.2 million from $51.9 million for the same period in the prior year. Further offsetting declines in overall legacy communications revenues were increased revenues from commercial products, which increased $7.1 million or 55.5%, to $19.9 million for the three months ended June 30, 2010 from $12.8 million for the three months ended June 30, 2009. For the six months ended June 30, 2010, revenues from commercial products increased by $8.2 million or 28.9% to $36.6 million from $28.4 million for the same period in the prior year.For the three months ended June 30, 2010, net income was $590,000 compared to a net loss of $2.1 million for the three months ended June 30, 2009. For the three months ended June 30, 2010, net income per share was $0.02 while our net loss per share was $0.09 for the three months ended June 30, 2009. The Company changed from a net loss to net income primarily due to a reduction in restructuring expenses, which totaled $3.0 million for the three months ended June 30, 2009, as compared to reversals of $176,000 for the three months ended June 30, 2010. Net loss was $458,000 and $42.2 million for the six months ended June 30, 2010 and 2009, respectively. For the six months ended June 30, 2010 and 2009 net loss per share was $0.02 and $1.81, respectively. The decrease in net loss for the six months ended June 30, 2010, as compared to the same period in 2009, was primarily due to a reduction in income tax expense, which totaled $39.7 million for the six months ended June 30, 2009, as compared to an income tax benefit of $36,000 for the six months ended June 30, 2010. The establishment of a valuation allowance for our U.S. deferred tax assets during the three months ended March 31, 2009 was the cause of the significant increase in income tax expense between the two periods. Absent the charge associated with our valuation allowance in 2009, our net loss decreased by $2.1 million during the six months ended June 30, 2010 as compared to the same period in 2009. The reduction in net loss of $2.1 million was due to lower overall operating expenses partially offset by lower gross margins on reduced revenues. Operating
Cash and cash equivalents amounted to $122.0 million and $100.7 million at June 30, 2010 and December 31, 2009, respectively. The increase in cash and cash equivalents during the six months ended June 30, 2010, was primarily driven by cash generated from our investing activities totaling $29.0 million along with cash from operating activities in the amount of $15.3 million. Cash flows from investing activities were the result of the exercise of our settlement right with UBS along with proceeds from calls of our auction rate securities ("ARS"), which collectively totaled $62.2 million. These proceeds were offset by restricted cash in the amount $25.8 million, held as collateral against the Company's UBS line of credit which totaled $17.3 million at June 30, 2010. The line of credit was paid in full on July 1, 2010 thus removing all restrictions on cash. Cash generated by investing activities was offset by the purchase of the assets of Pactolus for $3.4 million during the six months ended June 30, 2010. Offsetting these increases were cash flows used in financing activities of $22.7 million largely due to a net pay down on our UBS line of credit which totaled $24.0 million.
Revenues in the communications networks product group decreased by $10.2 million, or 15.6%, to $55.1 million for the three months ended June 30, 2010, from $65.3 million for the three months ended June 30, 2009. For the six months ended June 30, 2010, revenues in the communications networks product group decreased by $21.6 million, or 16.9%, to $105.7 million from $127.3 million for the same period in 2009. The decrease was driven by the maturity of our legacy/traditional communications networks products, which resulted in a decline in revenue of $12.0 million or 31.2% and $28.9 million or 38.3% for the three and six months ended June 30, 2010, respectively, as compared with the same periods in 2009. Partially offsetting the decline in revenues from our legacy/traditional products is the transition to next-generation communications networks products by some of these customers. Revenues from our next-generation communications networks products increased by $1.8 million or 6.8%, in the three months ended June 30, 2010, compared to the same period in 2009. For the six months ended June 30, 2010, revenues from our next-generation communications networks product group increased by $7.3 million or 14.1%, as compared to the same period in 2009. Increased revenues from our next-generation communications networks products were primarily driven by increased deployments along with increased ramping of new products.
SG&A expenses decreased by $369,000 or 1.6%, to $22.8 million for the six months ended June 30, 2010 from $23.2 million for the six months ended June 30, 2009. The decrease in SG&A costs for the six months ended June 30, 2010, as compared to the same period in 2009 was driven by lower costs related to incentive compensation, stock compensation and sales commissions, which collectively decreased by $1.3 million, or 20.2%, to $5.0 million for six months ended June 30, 2010 from $6.2 million for the six months ended June 30, 2009. Decreases in incentive compensation were driven by a lower projected payout factor based on a lower level of projected target operating income attainment while decreased sales commissions were directly related to the reduction in revenues, as compared to the same period in 2009. This decrease was further driven by lower payroll and payroll related costs which decreased by $326,000 or 3.0% to $10.4 million for the six months ended June 30, 2010 from $10.7, as compared to the same period in 2009. Lower payroll related costs are the result of restructuring activities undertaken over the past year. Offsetting these declines were increased costs for travel of $473,000 along with increases in professional service and marketing costs of $425,000 and $188,000, respectively. Additionally, for the six months ended June 30, 2010 SG&A includes the allocation of costs associated with unused manufacturing space, as described above, in the amount of $500,000 which was previously charged to cost of goods sold.
Stock-based Compensation Expense. Stock-based compensation expense consists of amortization of stock-based compensation associated with stock options, restricted shares and shares issued to employees as a result of the employee stock purchase plan (“ESPP”). Stock-based compensation expense decreased by $346,000 or 18.0%, to $1.6 million for the three months ended June 30, 2010 from $1.9 million for the three months ended June 30, 2009. Stock-based compensation expense decreased by $1.3 million or 27.1%, to $3.4 million for the six months ended June 30, 2010 from $4.7 million for the six months ended June 30, 2009. One of the primary reasons for the decrease in stock-based compensation expense was our restructuring activities that have occurred over the past year. As a result of our restructuring activities many awards have been forfeited and there has been a decrease in the participation in our ESPP. During the three and six months ended June 30, 2010 stock-based compensation related to our ESPP decreased by $239,000 and $825,000, respectively, as compared to the same periods in 2009. This decline in ESPP expense was also due to a liquidity discount applied to the stock-based compensation calculation to reflect a one year holding period that was added to the plan at the end of 2009. The liquidity discount accounted for $63,000 and $197,000 of the decrease in ESPP related stock-based compensation between the three and six months ended June 30, 2010 compared to the same periods in 2009. Partially offsetting these declines was $481,000 and $940,000 in additional stock-based compensation during the three and six months ended June 30, 2010, associated with shares granted from our long-term incentive plan in the fourth quarter of 2009. Another partial offset was related to $234,000 in incremental stock-based compensation for the three months ended March 31, 2009 that resulted from the modification of equity awards for certain employees involved in our restructuring activities.
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