RadiSys' Revenues Grow by 21% to $202.8 Million

2/7/2005 - RadiSys Corporation (Nasdaq: RSYS), a leading supplier of advanced embedded systems, reported revenues of $62.7 million for the quarter ended December 31, 2004, a 13% increase from the same period last year. Net income for the quarter was $2.8 million, or $.13 per diluted share, versus net income of $1.5 million, or $.08 per diluted share, a year ago, an 87% increase in net income from the same period last year. For the year ended December 31, 2004, revenues were $245.8 million, an increase of 21% from revenues of $202.8 million for the year ended December 31, 2003. Net income for the year ended December 31, 2004 was $13.0 million, or $.60 per diluted share, compared to net income of $1.3 million, or $.07 per diluted share for the year ended December 31, 2003.

In addition, the Company announced that it expects to deliver its industry leading Promentum-6000 ATCA system to a number of tier one customers during the first quarter of 2005. RadiSys’ ATCA systems are designed to provide customers higher capacity, greater scalability, and higher density solutions that are more manageable than prior generation products. The Promentum-6000 will provide customers a highly reliable managed platform on which to build their new voice and data offerings and enables them to do this faster, and at a lower total cost than previous proprietary solutions. “Our Promentum-6000 system deliveries this quarter will mark a critical milestone in advancing the Company’s strategy of providing integrated platform solutions to a broad set of communications equipment makers,” said Scott Grout, President and CEO. RadiSys’ ATCA solutions are primarily directed at the Service Provider market, and the Company’s revenues in that market experienced 40% revenue growth in 2004.

Furthermore, in the first quarter the Company plans to announce a new series of modular computing solutions for its Commercial markets. These new modular products are in development now and will provide a family of high density, flexible solutions that will enable Commercial customers to achieve more rapid time to market with cost effective designs. The Company’s revenues in the Commercial market realized growth of 19% year over year.

In 2004 the Company also made significant progress in its strategy to increase its global presence and operations. The Company successfully established and grew its Asia-based supply chain capability and increased its overall global outsourced supply from 30% to 65%. In addition, in the year the Company launched, staffed and began product development in its new Shanghai R&D center. This new design center, combined with the new Asia-based supply-chain, positions the Company well to grow its sales into this dynamic and growing region. For the year, Asia Pacific revenues increased 61% over 2003 and total international revenues grew from 51% to 61% of sales as the Company continued to execute its global expansion strategies.

As previously disclosed, the results for the fourth quarter also included a $1.4 million end of life component inventory sale at cost as well as a $1.4 million net restructuring charge. The restructuring charge consisted primarily of severance and related expenses for 61 employees, driven in part by the Company’s shift in skills toward developing and marketing platform products and, in part, by the Company’s continued progress in global manufacturing outsourcing.

“We continue to make excellent progress on expanding our strengths in developing and delivering new turn-key platforms like ATCA, and on expanding our global operations and presence,” stated Scott Grout, CEO. “We closed out a strong 2004 from a financial, customer and strategic standpoint and I’m very proud of what our team has accomplished.”

Business Outlook
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.

Commenting on the outlook, Scott Grout, CEO, said, “We have a strong and growing position with leading customers across our end markets. We believe that the markets we serve will continue to see growth in 2005 and that our position in these markets will continue to strengthen with our commitment to provide leading embedded solutions. We currently believe our combined addressable markets will experience mid to high single digit growth rates in 2005 and that we will grow faster than these markets for the year. We currently expect to see first quarter revenues in the range of $58 to $60 million and diluted earnings per share about equal to or slightly up from the fourth quarter.”

In closing, Mr. Grout stated, “We are making excellent progress on our new platforms and modular products and are excited to be delivering our first Promentum-6000 ATCA systems to a number of our most coveted customers over the next few weeks as we execute our strategy of enabling our customers to bring better products to market, faster and at a lower total cost.”

RadiSys will provide more details about the reported results and current outlook during a conference call scheduled for 5 PM Eastern Time today. The public is invited to participate in the conference call by either calling 1-800-362-0571, password is RadiSys, or listening via live audio webcast on the RadiSys web-site at www.radisys.com. Replays of the call will be available through March 10, 2005 at 1-888-566-0186 or via audio webcast at www.radisys.com.

RadiSys (Nasdaq: RSYS) is the leading provider of advanced embedded solutions for the commercial, enterprise, and service provider systems markets. Through intimate customer collaboration, and combining innovative technologies and industry leading architecture, RadiSys helps OEMs bring better products to market faster and more economically. RadiSys products include embedded boards, platforms and systems, which are used in today's complex computing, processing and network intensive applications.

For more information, contact RadiSys at info@radisys.com or www.radisys.com or call 800-950-0044 or 503-615-1100.

Promentum and RadiSys are registered trademarks.

This press release contains forward-looking statements, including (i) the statements about the Company’s guidance for the first quarter, particularly with respect to anticipated revenues and earnings, (ii) delivery of its Promentum-6000 ATCA systems product to a number of tier one customers during the first quarter of 2005, (iii) the expectation to announce a new modular computing product offering, and (iv) the Company’s expectation for growth of its combined addressable market in 2005 and its growth relative to this market . Actual results could differ materially from those projected in these forward-looking statements as a result of a number of risk factors, including the risks associated with the development of emerging technologies, such as AdvancedTCA, and the market acceptance of such technologies; global manufacturing outsourcing activities, including the disruption in the Company’s ability to timely deliver products to its customers as they continue to outsource products and incur unanticipated costs; the cyclical nature of its customers’ businesses; the Company's dependence on a few customers; schedule delays or cancellations in new products; the Company's dependence on a few suppliers; intense competition; execution of the development or production ramp for new products; political, economic and regulatory risks associated with international operations, including interest rate and currency exchange rate fluctuations; the inability to protect RadiSys' intellectual property or successfully defend against infringement claims by others; disruptions in the general economy and in the Company’s business, including disruptions of cash flow and the Company’s normal operations, that may result from terrorist attacks or armed conflict, particularly in the Middle East, and other risk factors listed from time to time in RadiSys’ SEC reports, including those listed under “Risk Factors” in RadiSys’ Annual Report on Form 10-K for the year ended December 31, 2003, and in the RadiSys Quarterly Reports on Form 10-Q filed with the SEC each fiscal quarter, and other filings with the SEC, copies of which may be obtained by contacting the Company’s investor relations department at 503-615-7797 or at the Company’s investor relations website at http://www.radisys.com. Although forward-looking statements help provide complete information about RadiSys, investors should keep in mind that forward-looking statements are inherently less reliable than historical information.

All information in this release is as of February 3, 2005. 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.

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