ADIC Earns Seven Cents Per Share in Fourth Quarter on Sequential Sales Growth, Margin Increase and Tax Benefit.REDMOND Redmond, city (1990 pop. 35,800), King co., W Wash., a suburb of Seattle, on Lake Sammamish; inc. 1912. Its economy centers around computer software (Microsoft Corp. , Wash. -- BRANDED SALES GROW 14 PERCENT FROM Q3, NINE PERCENT FOR YEAR ADVANCED DIGITAL INFORMATION CORPORATION (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ADIC) today announced net earnings of $4.9 million, or seven 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. , and $7.2 million, or 11 cents per share, for the fourth quarter and fiscal year ending October October: see month. 31, 2004 on sales of $115 million and $455 million, respectively. Overall fourth quarter sales are down just over two percent from $118 million during the same period last year while annual sales are up over seven percent versus fiscal 2003. On a sequential One after the other in some consecutive order such as by name or number. basis, total sales are up about five percent from the preceding third quarter. ADIC branded sales grew nine percent in both the year and fourth quarter while rising 14 percent sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen to 57 percent of total sales for the quarter. 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 grew five percent for the full year but declined 14 percent from fourth quarter 2003 and five percent sequentially to 43 percent of total sales for the quarter. Gross profit as a percentage of sales for the fourth quarter was the highest in the past four quarters at 29.4 percent, up approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 250 basis points from 26.9 percent in the preceding third quarter but down from 31.0 percent in the fourth quarter a year ago. For the fiscal year, gross profit as a percent of sales was 28.4 percent, down from 31.1 percent in fiscal 2003. Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. improved $5.5 million sequentially to $2.2 million as a result of higher sales, improved gross profit percentage and a 3.7 percent sequential reduction in 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. . Operating profit was down by $2.2 million from the same period a year ago and down approximately 76 percent to $2.2 million for the fiscal year. "We are very pleased to report a resumption RESUMPTION. To reassume; to promise again; as, the resumption of payment of specie by the banks is general. It also signifies to take things back; as the government has resumed the possession of all the lands which have not been paid for according to the requisitions of the law, and the of growth and profitability in the fourth quarter as our branded business grew strongly during the period," 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. Chair and Chief Executive Officer Peter van Oppen. "Sales through new reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. channels as well as success of our disk-based backup and archive products helped drive branded sales growth during the period. Each of these trends bodes well for the future. We are also very gratified grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. by cash generated from operations of more than $32 million for the year. Operating expenses remain tightly controlled and our potential for operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. through branded sales growth was clearly demonstrated during the quarter," he said. "At the end of the third quarter, we announced a new reseller relationship with EMC (1) (EMC Corporation, Hopkinton, MA, www.emc.com) The leading supplier of storage products for midrange computers and mainframes. Founded in 1979 by Richard J. Egan and Roger Marino, EMC has developed advanced storage and retrieval technologies for the world's largest companies. and described good customer acceptance of innovative disk-based backup and archive products in our branded channels," van Oppen said. "We are pleased with the continued success of these initiatives and with our progress in establishing ADIC as a leader in emerging markets for enterprise-class hardware and data-management software solutions incorporating both disk and tape." Operating expenses were down slightly compared to the same quarter last year and down $1.2 million compared to the immediately preceding quarter. For the full fiscal year, an increase of $7.1 million in sales and marketing expenses was only partly offset by a $2.7 million decrease in R&D as annual operating expenses grew 3.8 percent to $127 million. The Company noted that the increase in sales and marketing costs was consistent with its overall strategy to sell more technically sophisticated branded solutions. Other income for the quarter includes primarily foreign exchange gains, interest income and a loss on equity investment reflecting a reduction in the value of investments related to the Company's $5 million fiscal 2000 commitment to participate in a private technology venture limited partnership. Net income benefited from income taxes in both the quarter and fiscal year as the Company realized R&D tax credits as well as other elements of tax planning Tax planning Devising strategies throughout the year in order to minimize tax liability, for example, by choosing a tax filing status that is most beneficial to the taxpayer. on a relatively low income base. In addition, the Company reduced its tax provision by $2.3 million primarily as a result of achieving successful tax audit results related to investment activity reported in fiscal 2000. It is reasonable to anticipate that the Company's long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. tax rate will be closer to statutory rates, although there may be some additional one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. benefits available in the near term. Cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has , net of debt, totaled nearly $233 million at the end of the fiscal year, up from just over $200 million at the end of fiscal 2003 and $226 million at the end of the preceding third quarter. During the fiscal year, the Company also repurchased $9.5 million in common stock. About ADIC Advanced Digital Information Corporation (NASDAQ: ADIC) is a leading provider of Intelligent Storage(TM) solutions to the open systems marketplace. ADIC is the world's largest supplier of 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 systems using the drive technologies most often employed for backing up open system, client-server (programming) client-server - A common form of distributed system in which software is split between server tasks and client tasks. A client sends requests to a server, according to some protocol, asking for information or action, and the server responds. networks.* The Company's data management software, storage networking appliances, and disk-based backup and restore solutions provide IT managers innovative tools for storing, managing and protecting their most valuable digital assets in a variety of disk and tape environments. ADIC storage products are available through a worldwide sales force and a global network of resellers and OEMs, including Cray (Cray, Inc., Seattle, WA, www.cray.com) A supercomputer manufacturer founded in 1972 as Cray Research, Inc., by Seymour Cray, a leading designer of large-scale computers at Control Data. In 1976, it shipped its first computer to Los Alamos National Laboratory. , Dell, EMC, Fujitsu-Siemens, HP, 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 Sun. Further information about ADIC is available at www.adic.com. *Market Share: Gartner (Gartner, Inc., Stamford, CT, www.gartner.com) The largest information technology consulting firm that specializes in research and analysis. Founded in 1979 by Gideon Gartner, it has grown through acquisitions, including Dataquest in 1995 and Techrepublic in 2000. Dataquest (Dataquest Inc., San Jose, CA, www.dataquest.com) A major market research and analysis firm in the information field. Dataquest offers market intelligence on more than 25 topics and provides conferences, annual subscriptions and custom research. , Tape Automation Systems Market Shares, 2003, F. Yale, April 2004. ADIC, Pathlight, StorNext, and 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. are registered trademarks, and Intelligent Storage is a trademark of Advanced Digital Information Corporation. All other trade or service marks mentioned in this document should be considered the property of their respective owners. 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 future products and services and future operating results that are subject to risks and uncertainties that could cause actual results to differ materially from those projected. The words "expect", "anticipate", and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. . 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, purchase deferrals by customers, acceptance of new products, success of new sales channels, 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. Reference is made to the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended October 31, 2003 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. Conference Call There will be a conference call to discuss fourth quarter results as well as estimates for the first quarter of fiscal 2005 at 1:30 p.m. PT (4:30 p.m. ET) on December December: see month. 9, 2004. The call can be accessed live on our website at www.adic.com/ir.
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share amounts)
(Unaudited)
Three Months Ended Fiscal Year Ended
October 31, October 31,
2004 2003 2004 2003
--------- --------- --------- ---------
Net sales $115,413 $118,001 $454,819 $423,998
Cost of sales 81,473 81,470 325,588 292,121
--------- --------- --------- ---------
Gross profit 33,940 36,531 129,231 131,877
Sales and marketing 15,897 15,765 64,836 57,777
General and administrative 6,135 5,920 24,242 24,015
Research and development 9,660 10,352 37,925 40,609
--------- --------- --------- ---------
Operating profit 2,248 4,494 2,228 9,476
Other income, net 203 1,100 2,584 6,035
--------- --------- --------- ---------
Income before provision
(benefit)
for income taxes 2,451 5,594 4,812 15,511
Provision (benefit) for income
taxes (2,459) (157) (2,415) 3,020
--------- --------- --------- ---------
Net income $4,910 $5,751 $7,227 $12,491
========= ========= ========= =========
Basic net income per share $0.07 $0.09 $0.11 $0.20
========= ========= ========= =========
Diluted net income per share $0.07 $0.09 $0.11 $0.20
========= ========= ========= =========
Shares used in computing basic
net income per share 63,690 63,395 64,023 62,569
========= ========= ========= =========
Shares used in computing
diluted
net income per share 64,057 64,803 64,794 63,564
========= ========= ========= =========
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Oct. 31, 2004 Oct. 31, 2003
------------- -------------
ASSETS
Current assets:
Cash and
cash
equivalents $226,890 $180,401
Accounts
receivable,
net 93,025 100,391
Inventories,
net 38,728 35,736
Marketable
securities 6,043 20,788
Assets held
for sale -- 12,384
Other
current
assets 12,921 16,179
-------------- --------------
Total
current
assets 377,607 365,879
Property, plant and equipment, net 45,913 45,505
Service parts for maintenance, net 29,993 28,427
Investments 2,769 3,728
Other non-current assets 18,748 7,126
-------------- --------------
$475,030 $450,665
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $96,927 $86,334
Long-term deferred revenue 13,605 8,518
Long-term debt -- 967
Other long-term liabilities 600 --
Shareholders' equity 363,898 354,846
-------------- --------------
$475,030 $450,665
============== ==============
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Fiscal Year Ended October 31,
---------------------------
2004 2003
------------ -------------
Cash flows from operating activities:
Net income $7,227 $12,491
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 24,538 21,014
Bad debt expense 211 14
Inventory obsolescence 3,335 4,334
Loss (gain) on securities transactions 708 (2,722)
Deferred income taxes (3,171) 5,323
Tax benefit from exercise of stock options 1,971 3,844
Other 81 131
Change in assets and liabilities:
Accounts receivable 6,616 (29,041)
Inventories (8,465) (15,467)
Other current assets (402) 797
Service parts for maintenance (11,032) (9,865)
Current liabilities (4,430) 16,510
Deferred revenue 14,692 8,656
Other long-term liabilities 600 --
------------ -------------
Net cash provided by operating activities 32,479 16,019
------------ -------------
Cash flows from investing activities:
Purchase of property, plant and equipment (14,644) (14,296)
Proceeds from assets held for sale 16,740 --
Purchase of marketable securities (9,054) (16,478)
Proceeds from securities transactions 24,590 38,630
Purchase of other investments (692) (500)
Purchase of intangible assets (1,000) --
Return of investment on other investments 71 --
------------ -------------
Net cash provided by investing activities 16,011 7,356
------------ -------------
Cash flows from financing activities:
Repayment of short-term and
long-term debt (1,221) (3,373)
Proceeds from short-term borrowings -- 781
Repurchase of common stock (9,510) (697)
Proceeds from issuance of common stock
for stock options, stock warrants and
Stock Purchase Plan 8,073 8,356
------------ -------------
Net cash provided by (used in)
financing activities (2,658) 5,067
------------ -------------
Effect of exchange rate changes on cash 657 1,218
------------ -------------
Net increase in cash and cash equivalents 46,489 29,660
Cash and cash equivalents at beginning
of period 180,401 150,741
------------ -------------
Cash and cash equivalents at end
of period $226,890 $180,401
============ =============
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