Adaptive Biotechnologies (NASDAQ:ADPT)
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Adaptec Reports Better Than Anticipated Second Quarter Results
- Q2 Revenues: $109.2 million - Q2 Earnings per Share: $0.00 GAAP; $0.03 Pro
Forma - Q2 Operating Cash Flow: $23.2 million
MILPITAS, Calif., Oct. 27 /PRNewswire-FirstCall/ -- Adaptec, Inc. , a global
leader in storage solutions, today reported its second quarter results for the
period ended September 30, 2003.
Net revenues for the second quarter of fiscal 2004 were $109.2 million, compared
with $85.7 million for the second quarter of fiscal 2003 and $107.3 for the
first quarter of fiscal 2004.
Net income for the second quarter of fiscal 2004, on a generally accepted
accounting principles (GAAP) basis, was $0.3 million or $0.00 per share,
compared with a net loss of $10.8 million or $0.10 per share for the second
quarter of fiscal 2003 and net income of $40.8 million or $0.33 per share for
the first quarter of fiscal 2004. Fiscal 2004 first quarter results include an
after tax gain of $49.3 million from the May 2003 settlement with the former
president of Distributed Processing Technology Corp. (DPT), a company Adaptec
acquired in 1999. The first and second quarters of fiscal 2004 include the
results from Eurologic Systems, acquired April 2, 2003, and the second quarter
of fiscal 2004 includes a full quarter of the results of ICP vortex
Computersysteme GmbH (ICP vortex) acquired June 5, 2003.
Pro forma net income for the second quarter of fiscal 2004 was $3.7 million or
$0.03 per share, compared with $0.6 million or $0.01 per share for the second
quarter of fiscal 2003 and $3.6 million or $0.03 per share for the first quarter
of fiscal 2004. Reconciliation between net income/loss on a GAAP basis and pro
forma net income is provided in the attached tables.
"We are pleased with our financial results and improved efficiency for the
second quarter," said Robert N. Stephens, Adaptec's president and chief
executive officer. "We have made solid progress in Serial ATA, Serial Attached
SCSI, IP storage networking and external storage and are linking these
technologies into a comprehensive spectrum of scalable product offerings for our
customers."
Net revenues for the first six months of fiscal 2004 were $216.5 million,
compared with $193.6 million for the first six months of fiscal 2003.
Net income for the first six months of fiscal 2004, on a GAAP basis, was $41.1
million or $0.35 per share, compared with a net loss of $8.3 million or $0.08
per share for the first six months of fiscal 2003. Pro forma net income for the
first six months of fiscal 2004 was $7.3 million or $0.07 per share, compared
with $9.0 million or $0.08 per share for the first six months of fiscal 2003.
Financial Highlights
-- Operating cash flows for the second quarter of fiscal 2004 were
$23.2 million, compared with $11.6 million for the second quarter of
fiscal 2003 and $38.2 million for the first quarter of fiscal 2004.
Operating cash flows for the second quarter of fiscal 2004 included an
$11.4 million tax refund and operating cash flows for the first quarter
of fiscal 2004 included $31.0 million associated with claims settled
against the former president of DPT.
-- Cash, cash equivalents and investments as of September 30, 2003, were
$683.4 million, compared with $663.6 million at June 30, 2003 and
$742.3 million at March 31, 2003.
-- Days sales outstanding (DSO) in accounts receivable as of September 30,
2003 were 48 days, compared with 49 days at June 30, 2003, and 45 days
at March 31, 2003.
-- Annualized inventory turns were 7.0 in the second quarter of fiscal
2004, compared with 9.1 in the first quarter of fiscal 2004, and 5.3 in
the second quarter of fiscal 2003.
-- Adaptec completed the acquisitions of Eurologic Systems and ICP vortex
on April 2 and June 5, respectively. Eurologic contributed
$12.6 million of revenue in the second quarter and $13.2 million of
revenue in the first quarter of fiscal 2004, respectively. ICP vortex
contributed $4.9 million of revenue in the second quarter and
$0.9 million of revenue in the first quarter of fiscal 2004,
respectively.
-- The Company incurred $1.5 million of restructuring charges during the
second quarter primarily related to reductions in headcount.
Business Highlights
-- Adaptec demonstrated the first prototype Serial Attached SCSI chip at
3-gigabit-per-second protocol transmission speeds in collaboration with
HP, Intel, Seagate and Maxtor. As this chip is architected to run at
6-gigabits per second, it offers customers investment protection as
faster technologies come to market. The Adaptec chip is a prototype
that supports both Serial Attached SCSI and Serial ATA disk drives.
-- Adaptec announced availability of a new network accelerator card with
enhanced software to increase the performance of servers used in
high-performance computing applications. The Adaptec network
accelerator offloads all TCP/IP processing from the host to make more
CPU processing power available for networked applications and reduce
latency.
-- Adaptec certified its iSCSI host bus adapters as "ca smart" with
Computer Associates International, Inc.'s Brightstor ARCserve Backup,
enabling storage area network-based backup solutions built on low-cost,
simple-to-deploy IP storage networks.
-- Adaptec showcased interoperable end-to-end storage solutions -- from
ASICs for direct-attached storage connectivity and data protection to
plug-and-play solutions for storage area networks -- at the Intel
Developer Forum.
-- Adaptec and Network Appliance announced the availability of an IP
storage area network (SAN) solution that enables small and midsize
businesses to deploy cost-effective, easy-to-manage SANs for
enterprise-level applications such as online transaction processing,
email and enterprise resource planning.
Conference Call
Adaptec's fiscal 2004 second-quarter earnings conference call is scheduled for
1:45 p.m. PST on October 27, 2003. The dial-in number for the conference call
is 212-346-6401. Individuals may also participate free via Webcast by visiting
http://www.adaptec.com/ 15 minutes prior to the call. A telephone replay will
be made accessible through November 3, 2003, at 800-633-8284, access code
21096605. A Webcast replay will also be available via Adaptec's web site.
About Adaptec
Adaptec Inc. provides end-to-end storage solutions that reliably move, manage
and protect critical data and digital content. Adaptec provides software and
hardware solutions for storage connectivity and data protection, storage
networking and networked storage subsystems to leading OEMs and distribution
channel partners. Adaptec is an S&P Small Cap 600 Index member. More
information is available at http://www.adaptec.com/.
Safe Harbor Statement
This news release includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities and Exchange Act of 1934, as amended. Forward-looking statements
include statements regarding future events or the future performance of Adaptec
including, but not limited to, statements regarding our progress with respect to
product development and operating expense reductions, the growth of our product
portfolio, customer acceptance of our products, improved customer relationships,
establishing new partnerships, stability in the market for our products,
continued success with product design and performance levels, timely
introduction of new technologies, successful business acquisitions and the
successful integration of Eurologic Systems. These forward-looking statements
are based on current expectations, forecasts and assumptions and involve a
number of risks and uncertainties that could cause actual results to differ
materially from those anticipated by these forward-looking statements. These
risks include: difficulty in forecasting the volume and timing of customer
orders, reduced demand in the server, network storage and desktop computer
markets, our target markets' failure to accept, or delay in accepting, network
storage and other advanced storage solutions, decline in consumer acceptance of
products based on the SCSI standard, the markets' failure to accept our new
products, including our Ultra 320 line of products, the adverse effects of the
intense competition we face in our business, and the continued effects of the
current economic slowdown in the technology sector. For a more complete
discussion of risks related to our business, reference is made to the section
titled "Risk Factors" included in our Form 10-K for the year ended March 31,
2003, on file with the Securities and Exchange Commission. Adaptec assumes no
obligation to update this information or the Risk Factors included in its Form
10-K for the year ended March 31, 2003.
Editorial Contact: Investor Contact:
Caroline Yu Marshall Mohr
Adaptec, Inc. Adaptec, Inc.
408-957-2324 408-957-6773
Adaptec, Inc.
GAAP Condensed Consolidated Statements of Operations and
Reconciliation of GAAP to Pro forma Operating Results (*)
(unaudited)
Three-Month Period Ended
September 30, 2003 September 30, 2002
Pro Pro
GAAP Adjustments forma GAAP Adjustments forma
(in thousands, except per share amounts)
Net revenues $109,192 $-- $109,192 $85,709 $-- $85,709
Cost of
revenues 62,746 -- 62,746 39,519 -- 39,519
Gross profit 46,446 -- 46,446 46,190 -- 46,190
Operating
expenses:
Research and
development 24,975 (1,116)(a) 23,859 29,403 (2,736)(a) 26,667
Selling,
marketing and
administrative 19,223 (36)(a) 19,187 23,238 (1,088)(a) 22,150
Amortization
of acquisition
-related
intangible
assets 4,713 (4,713)(b) -- 3,743 (3,743)(b) --
Restructuring
and other
charges 1,478 (1,478)(c) -- 7,667 (7,667)(d) --
Total operating '
expenses 50,389 (7,343) 43,046 64,051 (15,234) 48,817
Income (loss)
from operations (3,943) 7,343 3,400 (17,861) 15,234 (2,627)
Interest and
other income 4,252 -- 4,252 9,633 (2,197)(e) 7,436
Interest expense (2,490) -- (2,490) (4,011) -- (4,011)
Income from
operations
before provision
for (benefit
from) income
taxes (2,181) 7,343 5,162 (12,239) 13,037 798
Provision for
(benefit from)
income taxes (2,442) 3,887(f) 1,445 (1,419) 1,642(f) 223
Net income (loss) $261 $3,456 $3,717 $(10,820)$11,395 $575
Net income (loss)
per share:
Basic $0.00 $0.03 $(0.10) $0.01
Diluted $0.00 $0.03 $(0.10) $0.01
Shares used in
computing net
income (loss)
per share:
Basic 108,411 -- 108,411 106,550 -- 106,550
Diluted 110,219 -- 110,219 106,550 1,596(g) 108,146
Adaptec, Inc.
GAAP Condensed Consolidated Statements of Operations and
Reconciliation of GAAP to Pro forma Operating Results (*)
(unaudited)
Six-Month Period Ended
September 30, 2003 September 30, 2002
Pro Pro
GAAP Adjustments forma GAAP Adjustments forma
(in thousands, except per share amounts)
Net revenues $216,485 $-- 216,485 $193,555 $-- $193,555
Cost of
revenues 124,177 -- 124,177 86,803 -- 86,803
Gross profit 92,308 -- 92,308 106,752 -- 106,752
Operating
expenses:
Research and
development 50,932 (2,342)(a) 48,590 60,619 (5,522)(a) 55,097
Selling,
marketing and
administra-
tive 39,576 (180)(a) 39,396 47,291 (2,177)(a) 45,114
Amortization
of acquisition
-related
intangible
assets 9,537 (9,537)(b) -- 7,487 (7,487)(b) --
Write-off of
acquired
in-process
technology 3,649 (3,649)(h) -- -- -- --
Restructuring
and other
charges 1,826 (1,826)(c) -- 7,667 (7,667)(d) --
Total
operating
expenses 105,520 (17,534) 87,986 123,064 (22,853) 100,211
Income (loss)
from
operations (13,212) 17,534 4,322 (16,312) 22,853 6,541
Interest and
other income 60,311 (48,790)(i) 11,521 18,468 (3,297)(e) 15,171
Interest
expense (5,688) -- (5,688) (9,185) -- (9,185)
Income (loss)
from operations
before
provision
for income
taxes 41,411 (31,256) 10,155 (7,029) 19,556 12,527
Provision for
income taxes 348 2,495(f) 2,843 1,237 2,270(f) 3,507
Net income
(loss) $41,063 $(33,751) $7,312 $(8,266)$17,286 $9,020
Net income
(loss) per
share:
Basic $0.38 $0.07 $(0.08) $0.08
Diluted $0.35 $0.07 $(0.08) $0.08
Shares used in
computing net
income (loss)
per share:
Basic 108,183 -- 108,183 106,264 -- 106,264
Diluted 126,400 (16,328)(j) 110,072 106,264 1,897(g) 108,161
(a) Deferred compensation expense associated with the Platys acquisition.
(b) Amortization of acquisition-related intangible assets related to the
acquisitions of DPT, Platys, Eurologic and ICP vortex.
(c) Restructuring charges.
(d) Restructuring charges of $7.2 million and write-off of a minority
investment of $0.5 million.
(e) Gain on early extinguishment of 4 3/4 % Convertible Subordinated
Notes.
(f) Incremental income taxes associated with certain pro forma
adjustments.
(g) Dilutive effect of employee stock options.
(h) Write-off of acquired in-process technology associated with the
Eurologic acquisition.
(i) Gain of $49.3 million related to the settlement with the former
president of DPT, loss of $0.8 million on redemption of 4 3/4%
Convertible Subordinated Notes, and gain distributions of $0.3
million on investments.
(j) Anti-dilutive effect of 3% Convertible Subordinated Notes.
(k) Anti-dilutive effect of 3% and 4 3/4% Convertible Subordinated Notes.
(*) To supplement our consolidated financial statements presented in
accordance with generally accepted accounting principles (GAAP), we
use pro forma measures of operating results, net income/(loss) and
earnings per share, which are adjusted from results based on GAAP to
exclude certain expenses, gains and losses. These pro forma measures
are provided to enhance the user's overall understanding of our
current financial performance and our prospects for the future.
Specifically, we believe the pro forma results provide useful
information to both management and investors by excluding certain
expenses, gains and losses that we believe are not indicative of our
core operating results. In addition, since we have historically
reported pro forma results to the investment community, we believe
the inclusion of pro forma numbers provides consistency in our
financial reporting. Further, these pro forma results are one of the
primary indicators management uses for planning and forecasting of
future periods. The pro forma information is presented using
consistent methodology from quarter-to-quarter and year-to-year.
These measures should be considered in addition to results prepared
in accordance with GAAP, but should not be considered a substitute
for or superior to GAAP results.
Adaptec, Inc.
Summary Balance Sheet and Cash Flow Data
(unaudited)
(in thousands)
Balance Sheet Data As of
Sept. 30, March 31, Sept. 30,
2003 2003 2002
Cash, cash equivalents and
marketable securities $683,425 $742,302 $707,149
Accounts receivable, net 57,369 50,137 47,474
Inventories 40,738 23,496 32,419
Goodwill and other intangible
assets 110,540 101,249 110,601
Other assets 157,518 185,795 185,335
Total assets $1,049,590 $1,102,979 $1,082,978
Current liabilities $142,637 $247,606 $145,828
Convertible subordinated
notes and other long-term
obligations 255,888 252,596 335,200
Stockholders' equity 651,065 602,777 601,950
Total liabilities and
stockholders' equity $1,049,590 $1,102,979 $1,082,978
Cash Flow Data Three-Month Period Ended
Sept. 30, June 30, Sept. 30,
2003 2003 2002
Net income (loss) $261 $40,802 $(10,820)
Adjustments to reconcile net
income (loss) to net cash
provided by operations:
Non-cash P&L items:
Non-cash restructuring charges 66 -- 1,851
Write-off of acquired
in-process technology -- 3,649 --
Stock-based compensation
related to Platys 1,081 1,271 2,775
Loss (gain) on extinguishment
of debt -- 790 (2,197)
Non-cash portion of DPT
settlement gain -- (18,256) --
Depreciation and
amortization 14,184 12,665 11,645
Deferred income taxes (3,100) (2,435) (455)
Other items 156 89 1,000
Changes in assets and
liabilities 10,516 (408) 7,833
Net cash provided by operating
activities $23,164 $38,167 $11,632
Other significant cash flow
activities:
Payments for business
acquisitions, net of
cash acquired (61) 29,945 --
Payment of general holdback
in connection with
acquisition of Platys 159 -- 10,640
Repurchase of 4 3/4%
convertible notes -- 83,010 70,374
Adaptec, Inc.
GAAP Condensed Consolidated Statements of Operations and
Reconciliation of GAAP to Pro forma Operating Results (*)
(unaudited)
Three-Month Period Ended
June 30, 2003
GAAP Adjustments Pro forma
(in thousands, except per share amounts)
Net revenues $107,293 $-- $107,293
Cost of revenues 61,431 -- 61,431
Gross profit 45,862 -- 45,862
Operating expenses:
Research and development 25,957 (1,226)(a) 24,731
Selling, marketing and
administrative 20,353 (144)(a) 20,209
Amortization of acquisition
-related intangible assets 4,824 (4,824)(b) --
Write-off of acquired
in-process technology 3,649 (3,649)(h) --
Restructuring charges 348 (348) --
Total operating expenses 55,131 (10,191) 44,940
Income (loss) from operations (9,269) 10,191 922
Interest and other income 56,059 (48,790)(i) 7,269
Interest expense (3,198) -- (3,198)
Income from operations before
provision for income taxes 43,592 (38,599) 4,993
Provision for income taxes 2,790 (1,392)(e) 1,398
Net income $40,802 $(37,207) $3,595
Net income per share:
Basic $0.38 $0.03
Diluted $0.33 $0.03
Shares used in computing
net income per share:
Basic 107,956 -- 107,956
Diluted 127,901 (17,975)(k) 109,926
Please see the footnotes accompanying the Condensed Consolidated Statement of
Operations for the three- and six- month periods ended September 30, 2003 and
2002 for an explanation of the footnotes referred to in the table above.
DATASOURCE: Adaptec, Inc.
CONTACT: media, Caroline Yu, +1-408-957-2324, or
, or investors, Marshall Mohr, +1-408-957-6773, or
, both of Adaptec, Inc.
Web site: http://www.adaptec.com/