ADIC Earns Three Cents Per Share in First Quarter on 15 Percent Sales Growth from Fourth Quarter to Record $97.1 Million; Reports Operating Income as Gross Profit Margin, Cash Climb.Business Editors REDMOND, Wash.--(BUSINESS WIRE)--Feb. 13, 2003 Advanced Digital Information Corporation (Nasdaq: ADIC) today announced sales for its first quarter ended January 31 were an all-time record for any quarter at $97.1 million, up slightly over first quarter last year and up 15 percent from the sequentially preceding fourth quarter of fiscal 2002. Net income for the period was $1.7 million, or three cents per fully 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. Gross profit as a percentage of sales reached 30.7 percent for the period, up from 29.4 percent in the preceding quarter and 24.6 percent in the first quarter last year. 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. was $436,000 versus an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $3.6 million in the fourth quarter and operating profit of $663,000 in the same quarter a year ago. 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. , primarily sales, marketing and R&D, increased about $1 million from the previous quarter and were up more than $6 million, or 27 percent, versus a year ago. Total net 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 were approximately $188 million, or $3.00 per fully diluted share, at the end of the period. "We are delighted to report a second, successive quarter demonstrating that our strategy of increasing investment in sales, marketing and R&D during the economic downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. will result in growing sales, improved profits and, we believe, escalating benefits for both our customers and shareholders," 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. Chairman and Chief Executive Officer Peter van Oppen. "Our business is increasingly based on storage solutions that integrate ADIC-owned connectivity and software technologies applicable in either or both tape and disk storage environments. The result is that our products are further differentiated from our competition, are gaining wide acceptance and are yielding higher gross profit in a highly competitive environment," he said. Sales of Intelligent Storage(TM) solutions (ISS ISS See Institutional Shareholder Services (ISS). ), which include elements of ADIC connectivity and software technology and are sold through both branded and 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 channels, represented 41 percent of sales in the first quarter, an increase from 36 percent in the preceding fourth quarter and 22 percent in the first quarter of fiscal 2002. OEM shipments to partners, including Dell, 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, were 48 percent of total sales in this reporting period versus 42 percent in the fourth quarter and 50 percent in the first quarter last year. The Company noted that its gross profit percentage grew 610 basis points during the past 12 months, primarily as a result of an improved product mix. Mix was also the main factor in a 130 basis point improvement over the preceding quarter's gross margin, which was partially offset by a sequential increase in the proportion of OEM business. OEM sales typically yield a lower gross margin than when a comparable product is sold through an ADIC-branded channel, although sales, marketing and service costs are generally lower than on ADIC-branded sales. In December of 2001, the Company confirmed it would maintain heavy investment in product development, sales and service channels as well as infrastructure at the expense of optimizing short-term profits during the economic downturn. Between the first quarters of fiscal 2002 and 2003, quarterly R&D expenditures grew from an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. rate of approximately $27 million to an annualized rate in excess of $41 million, an increase of more than 50 percent. Sales and marketing expenses grew approximately 20 percent while general and administrative expenses grew about 10 percent during the same 12-month period. Despite this expense growth and a decline in revenues during 2002, ADIC reported positive net income for the full fiscal year 2002 and has reported operating profitability in first quarter 2003. The Company generated $1.3 million in cash from operations during the first quarter, largely from net income, depreciation and accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. but which were substantially offset by growth in receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed and inventory. As reported previously, ADIC's interest in a private company was converted into 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. public equity securities during the quarter with a combined value at conversion of approximately $8.5 million. These proceeds are included in the total of cash and marketable securities, net of all debt, which equaled $188 million at the end of the quarter. Marketable securities categorized cat·e·go·rize tr.v. cat·e·go·rized, cat·e·go·riz·ing, cat·e·go·riz·es To put into a category or categories; classify. cat as long-term are primarily investment grade financial instruments which are consistent with the Company's investment policy and have maturities in excess of one-year and less than 18 months. As part of an ongoing share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program, the Company purchased a total of 112,500 shares during the current quarter at an aggregate cost of $697,000, or $6.19 per share. Since inception of the program in September 2001, cumulative share repurchases total 1,436,900 shares at a cost of $8.9 million, or $6.16 per share. 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 networks(Note A). The Company's storage management software and storage networking appliances 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, Fujitsu-Siemens, HP, IBM and Sun. Further information about ADIC is available at www.adic.com. Conference Call There will be a conference call to discuss first quarter 2003 results as well as estimates for second quarter fiscal 2003 at 1:30 p.m. PT (4:30 p.m. ET) on February 13, 2003. The call can be accessed live on our website at www.adic.com/ir. Note A: IDC 2001 worldwide revenue and unit market share data for all automated systems using 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. , SDLT (Super DLT) See DLT. , LTO (Linear Tape Open) A family of open magnetic tape standards developed by HP, IBM and Quantum (formerly the Certance subsidiary of Seagate) that are licensed to third-party vendors. LTO cartridges contain a memory that stores historical usage data. , 8mm or AIT drive, and Gartner Dataquest, 2002 Market Shares and Forecasts for Tape Automation Systems, F. Yale, August 2002. 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. 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, 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, 2002 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 is a registered trademark and Intelligent Storage is a trademark of Advanced Digital Information Corporation. All other product or company names should be considered the property of their owners.
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share amounts)
Three months ended
January 31,
2003 2002
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Net sales $ 97,096 $ 96,723
Cost of sales 67,240 72,921
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Gross profit 29,856 23,802
Sales and marketing 13,141 10,926
General and administrative 5,975 5,412
Research and development 10,304 6,801
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Operating profit 436 663
Other income, net 2,179 2,943
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Income before provision for income taxes 2,615 3,606
Provision for income taxes 929 1,224
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Net income $ 1,686 $ 2,382
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Basic net income per share $ 0.03 $ 0.04
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Diluted net income per share $ 0.03 $ 0.04
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Shares used in computing basic
net income per share 61,874 62,079
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Shares used in computing diluted
net income per share 62,691 64,099
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ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
January 31, October 31,
2003 2002
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ASSETS
Current assets:
Cash and cash equivalents $ 156,518 $ 150,741
Accounts receivable, net 76,288 71,383
Inventories, net 33,790 32,296
Marketable securities 29,020 24,878
Other current assets 20,953 21,800
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Total current assets 316,569 301,098
Property, plant and equipment, net 49,310 48,722
Service parts for maintenance, net 23,831 22,936
Marketable securities 6,173 7,221
Investments 3,228 10,928
Other non-current assets 8,039 8,232
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$ 407,150 $ 399,137
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 73,962 $ 69,419
Long-term debt 993 984
Shareholders' equity 332,195 328,734
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$ 407,150 $ 399,137
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