RadiSys Reports Revenue of $57.5 Million and Earnings of $2.6 Million

5/2/2005 - RadiSys Corporation (Nasdaq: RSYS), a leading supplier of advanced embedded systems, reported revenues of $57.5 million for the quarter ended March 31, 2005, a 6% decrease from the same period last year. Revenues for the first quarter of last year included a $3.1 million end of life component inventory sale to one of our major customers. Net income for the quarter was $2.6 million, or $.12 per diluted share, versus net income of $2.8 million, or $.13 per diluted share, a year ago.

“We had approximately $1.7 million of product that was scheduled to ship on the last day of the first quarter but was delayed in shipping until after midnight, due to logistical challenges arising out of our Asia-Pacific operations,” stated Scott Grout, CEO. “As we continue with our outsourcing initiative, we will aggressively work to improve our processes to mitigate our risks around execution moving forward. Other than the one-day shipment delay, the results for the first quarter were in line with our previously announced expectations.”

The Company delivered Promentum-6000 ATCA systems to four customers on an evaluation basis during the first quarter. The Company is receiving positive feedback from these customers and is planning to deliver additional evaluation units to customers over the next several quarters. Also during the first quarter, the Company announced its new Procelerant line of modular computing solutions for Commercial applications. These new modular products will provide a family of high density, flexible solutions that will enable Commercial customers to achieve faster time to market with very cost effective designs.

Business Outlook
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. The Company assumes no obligation to update these statements.

Commenting on the current business outlook, Scott Grout, CEO, said, “As we mentioned in our last call, we are encouraged by our strong and growing position with leading customers across our end markets. We currently expect our combined addressable markets to experience mid to high single digit growth rates in 2005. We continue to believe that we will grow at a faster rate than these markets for the remainder of the year. For the second quarter, we are currently seeing strengthening demand from our Service Provider and Enterprise markets, specifically the Wireless and IP-PBX sub-markets, and expect to see revenues in the range of $64 to $66 million.”

The Company currently expects to incur restructuring charges over the next four quarters totaling $1 million to $1.5 million. The restructuring charges will consist of severance and related expenses for about 100 employees primarily within the Company’s manufacturing operations. These employee positions will be eliminated over the next four quarters in conjunction with continued outsourcing of production to the Company’s primary manufacturing partners - Celestica and Foxconn.

The Company currently expects diluted earnings per share in the range of $.14 to $.16 for the second quarter. The diluted earnings per share guidance does not include any restructuring charges as the Company is still determining the timing of these charges.

The Company’s Board of Directors has authorized the repurchase of the remaining $9 million of its subordinated convertible notes and up to $5 million of common stock. The Company will consider the purchase of notes and common stock on the open market or through privately negotiated transactions from time to time subject to market conditions.

In closing, Mr. Grout stated, “I’m encouraged by the strengthening in demand we are currently seeing in our end markets. We continue to make progress on our new platforms and modular products and are receiving positive feedback from our customers. We believe this feedback, coupled with our sales and marketing efforts, will translate into a growing sales funnel of opportunities over the coming quarters.”

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 1-888-333-0027, 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 June 9, 2005 at 1-800-642-1687 or via audio webcast at www.radisys.com.

This press release contains forward-looking statements, including (i) the statements about the Company’s guidance for the second quarter, particularly with respect to anticipated revenues and earnings and restructuring charges for the next four quarters, (ii) delivery of its Promentum-6000 ATCA systems product to a number of tier one customers during the next several quarters, and (iii) 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 our guidance in these forward-looking statements as a result of a number of risk factors, including:

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 press release is as of April 28, 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.

About RadiSys
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.

RadiSys is a premier member of the Intel® Communications Alliance (ICA). The Intel Communications Alliance is a member-based program comprised of communications and embedded developers and solution providers. Members are committed to providing a strategic supply of standards-based solutions to the communications and embedded market segments. For more information, please visit www.intel.com/go/ica.

Promentum and Procelerant are trademarks and RadiSys and EPC are registered trademarks of RadiSys Corporation.

For more information, contact RadiSys at info@radisys.com

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