ADIC Earns $56 Million, or $1.03 Per Share, in Second Quarter On Partial Sale of Shares in Crossroads Systems, Inc.Business/High Tech Editors REDMOND, Wash.--(BUSINESS WIRE)--May 16, 2000 Excluding Gain, Earnings Per Share Rise 56% to 14 Cents on 20% Revenue Increase Advanced Digital Information Corporation (Nasdaq:ADIC) today announced earnings of more than $55.9 million, or $1.03 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for the second quarter ending April 30, 2000. ADIC earnings include a pre-tax gain of $74.4 million on the sale of approximately 20 percent of the Crossroads Systems, Inc. (Nasdaq:CRDS CRDS Contribution pour Le Remboursement de la Dette Sociale (French: Social Debt Repayment Contribution) CRDS Cavity Ring-Down Spectroscopy CRDS Community Rehabilitation and Disability Studies ) shares owned by the Company. Excluding the effect of this asset sale, earnings were $7.6 million with diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of up 56 percent to 14 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. versus 9 cents per share the same period a year ago. Revenues were $64.9 million, an increase of 20 percent from the same period last year. "We are very pleased to once again report a record quarter and look forward to what we expect will be accelerating growth in the second half of 2000," said Chairman and Chief Executive Officer Peter van Oppen. "The sale of 512,739 shares of Crossroads stock at an average price of $147 per share provides additional liquidity for us to aggressively pursue our rapidly growing opportunities," he said. "Revenue and gross margin were positively affected by excellent growth in our core U.S. markets and improving gross margin as a percent of sales, which exceeded 36 percent," according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. van Oppen. Sluggish sales growth in Europe and a worldwide reduction in sales of our largest libraries partially offset U.S. growth, the Company said. ADIC said revenue growth is expected to accelerate during the second half of fiscal 2000 as a result of continued strong growth in core domestic markets, market acceptance of the Scalar scalar, quantity or number possessing only sign and magnitude, e.g., the real numbers (see number), in contrast to vectors and tensors; scalars obey the rules of elementary algebra. Many physical quantities have scalar values, e.g. 100 which began shipping during April, commencement of sales to IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) and identified large library business. Significant new channel partners may increase growth in Europe, although weakness in the Euro currency could temper tem·per n. 1. A state of mind or emotions; mood. 2. A tendency to become easily angry or irritable. 3. An outburst of rage. demand for imported products. "Second quarter 2000 was an extraordinarily important period for the Company," according to Chuck Stonecipher, President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "During the quarter we launched two of the most significant new products in our history, Scalar 100 and StorNext. Both products exemplify ex·em·pli·fy tr.v. ex·em·pli·fied, ex·em·pli·fy·ing, ex·em·pli·fies 1. a. To illustrate by example: exemplify an argument. b. our strategy of offering intelligent storage solutions differentiated by proprietary software and functionality. Scalar 100 has begun shipping and is receiving rave reviews from customers while StorNext is in beta test A test of new or revised hardware or software that is performed by users at their facilities under normal operating conditions. Beta testing follows alpha testing. Vendors of packaged software often offer their customers the opportunity of beta testing new releases or versions, and the and is expected to begin shipping in the third quarter," according to Stonecipher. "Our CentraVision SAN file management system was also recognized by key customers and publications during the second quarter as an industry standard for real-time file sharing Copying files from one computer to another. See peer-to-peer network, file sharing protocol and file and printer sharing. in a SAN environment," he said. The Company noted that over 50 percent of its R & D expenditures are focused on software that may be incorporated into intelligent peripherals or sold separately. Selling and administrative expenses increased 40 percent from the same period a year ago to $12.6 million, while research and development expenses were $4.1 million, an increase of 27 percent over the second quarter of fiscal 1999. "We are very focused on delivering current earnings while continually investing in the development of new products and sales channels," commented Chief Financial Officer Jon Gacek. "The rate of increase in R&D slowed somewhat during the second quarter while we ramped up sales and marketing to support product launches, an expanded sales team and anticipated growth in the second half. An increase in other income and a lower tax rate during the period allowed us to make these investments while maintaining our performance on the bottom line," he noted. "From time-to-time, we may continue to use non-operating income to maintain profit performance while absorbing operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. which may be increased to take advantage of market opportunities," according to Gacek. The Company also noted that OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and sales represented approximately 22 percent of revenue for the period. Balance sheet accounts changed significantly during the quarter as cash and marketable Marketable are securities that can be easily converted into cash. Such securities will generally have highly liquid markets allowing the security to be sold at a reasonable price very quickly. equity securities, excluding remaining Crossroads shares, now total nearly $221 million. At Crossroads' April 30, 2000 closing share price of $70 5/8 per share, ADIC's remaining 2,095,957 shares of Crossroads are valued at an additional $96 million, net of deferred taxes. Inventory and receivable increases totaled approximately $16 million during the quarter, primarily as a result of the timing of production and sales of Scalar 100 products. Approximately $26 million in marketable equity securities were acquired during the quarter as part of the Company's ongoing strategic investment and acquisition activities. In addition, it was noted that the overall tax rate was 34.1 percent for the quarter due to income generated from the sale of Crossroads shares. Excluding that income, the effect of tax loss carryforwards tax loss carryforward See carryforward. and other items combined to produce a tax rate that would have been 27.3 percent on the reduced level of income. The Company anticipates that, while some future tax benefits may accrue To increase; to augment; to come to by way of increase; to be added as an increase, profit, or damage. Acquired; falling due; made or executed; matured; occurred; received; vested; was created; was incurred. due to the recognition of deferred tax assets associated with acquired tax loss carryforwards, its longer-term tax rate will likely be in excess of 34 percent. About ADIC With more than 60,000 automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. tape libraries installed, innovative storage management software, Fibre Channel Storage Area Network (SAN) solutions, and Network Attach Storage (NAS (1) See network access server. (2) (Network Attached Storage) A specialized file server that connects to the network. A NAS device contains a slimmed-down operating system and a file system and processes only I/O requests by supporting the popular ) appliances, ADIC is the world's leading device-independent storage solutions provider to the open systems marketplace. The Company offers a broad range of products designed to help organizations stay more productive by making it easier for them to store, protect, manage and use their rapidly growing network data. ADIC's industry-leading line of automated storage products are available through a worldwide sales force and a global network of resellers and OEM partners, including Dell, IBM and Fujitsu Siemens (Fujitsu Siemens Computers, Inc. (USA), Milpitas, CA, www.fujitsu-siemens.com) Fujitsu Siemens Computers USA is a wholly owned research and development subsidiary of Fujitsu Siemens Computers. . Further information about ADIC is available at http://www.adic.com. Conference Call There will be a conference call to discuss the second quarter fiscal 2000 earnings at 8 am PST PST Paroxysmal supraventricular tachycardia, see there on May 17. The call can be accessed live on our website at www.adic.com/ir. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's existing and future products and services and future operating results that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words "believe", "expect", "intend", "anticipate", and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Factors that could affect the Company's actual results include general economic trends, technical competition or obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. , supply constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. , changes in market pricing and production problems. In addition, the market for technology stocks such as Crossroads is extremely volatile and there is no assurance that ADIC will realize the value currently reflected on its balance sheet when and if it liquidates its remaining investment in Crossroads. Reference is made to the Company's Prospectus dated September 23, 1999 and Annual Report Form on 10K for a more detailed description of factors that could affect the Company's actual results. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of this release or to reflect the occurrence of unanticipated events. ADIC, FastStor, Scalar, FileServ, CentraVision and AMASS (Archive Management And Storage System) Tape management software for Unix from Quantum Corporation, Colorado Springs, CO (www.quantum.com). Originally developed by ADIC, AMASS makes the tape library look like an infinite disk drive to the application. are trademarks of Advanced Digital Information Corporation. DLT (Digital Linear Tape) A magnetic tape technology originally developed by Digital for its VAX line. The technology was later sold to Quantum, which makes it available to other manufacturers. DLT uses half-inch, single-hub cartridges similar to IBM's 3480/3490/3590 line. is a trademark of Quantum Corporation. All other product or company names should be considered the property of their owners.
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except for per share amounts)
Three months ended Six months ended
April 30, April 30,
(Unaudited) (Unaudited)
2000 1999 2000 1999
--------- -------- ------- -------
Net sales $ 64,898 $ 54,044 $128,760 $103,189
Cost of sales 41,483 36,005 82,443 68,756
-------- -------- -------- --------
Gross profit 23,415 18,039 46,317 34,433
Selling and
administrative expenses 12,582 8,980 23,533 18,093
Research and
development
expenses 4,118 3,236 8,074 6,051
-------- -------- -------- --------
Operating profit 6,715 5,823 14,710 10,289
Gain on sale
of Crossroads 74,446 -- 74,446 --
Other income
(expense) 3,676 (49) 6,079 431
-------- -------- -------- --------
Income before
provision
for income taxes 84,837 5,774 95,235 10,720
Provision for
income taxes 28,894 2,066 32,106 3,840
Minority interest -- 163 18 283
-------- -------- -------- --------
Net income $ 55,943 $ 3,545 $ 63,111 $ 6,597
======== ======== ======== ========
Basic net
income per share $ 1.09 $ .09 $ 1.23 $ .17
======== ======== ======== ========
Diluted net
income per share $ 1.03 $ .09 $ 1.17 $ .16
======== ======== ======== ========
Shares used
in computing
basic net
income per share 51,524 39,336 51,334 39,213
======== ======== ======== ========
Shares used
in computing
diluted net
income per share 54,104 40,451 53,911 40,175
======== ======== ======== ========
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
April 30, 2000 October 31, 1999
(Unaudited)
ASSETS
Current assets:
Cash $194,940 $156,548
Accounts receivable, net 55,854 44,568
Inventories, net 46,623 33,317
Marketable equity
securities 25,798 2,222
Other current assets 6,223 5,727
-------- --------
Total current assets 329,438 242,382
Property, plant
and equipment, net 9,620 8,712
Investment in Crossroads
Systems, Inc. 148,027 185,544
Investments and
other assets 20,675 16,336
-------- --------
$507,760 $452,974
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 71,920 $ 48,017
Long-term debt 1,236 1,507
Deferred income tax 50,693 64,168
Minority interest -- 324
Shareholders' equity 383,911 338,958
-------- --------
$507,760 $452,974
======== ========
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