ADIC Grows 40 Percent in Fourth Quarter as Earnings Climb for Quarter, Year; Q4 Eps is Nine Cents as Margins Hit 31%; Annual Operating Income up $22.9 Million.Business Editors 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.--(BUSINESS WIRE)--Dec. 11, 2003 ADVANCED DIGITAL INFORMATION CORPORATION (Nasdaq:ADIC) today announced sales for its fourth quarter and fiscal year ended October October: see month. 31, 2003 reached all-time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal records of $118 million and $424 million, up approximately 40 percent and 26 percent from the previous fourth quarter and last fiscal year, respectively. Quarterly sales grew nine percent sequentially from the previous quarterly record of $108 million reported for the third quarter. It is the fourth consecutive quarter of record sales at ADIC. Net income was $5.8 million, or nine 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, for the fourth quarter and $12.5 million, or 20 cents per fully diluted share for the fiscal year. The Company lost $1.2 million, or a loss of two cents per fully diluted share, during the previous fourth quarter while earning $1.6 million, or two cents per fully diluted share, for all of fiscal 2002. "We are delighted to report robust quarterly and annual growth in both revenue and earnings," said Chairman and Chief Executive Officer Peter van Oppen. "We invested in growth during fiscal 2002 and we began to realize the fruits of that investment in 2003 as virtually all categories of business improved. Acceptance of our hardware and software products by end user 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 customers continues to validate To prove something to be sound or logical. Also to certify conformance to a standard. Contrast with "verify," which means to prove something to be correct. For example, data entry validity checking determines whether the data make sense (numbers fall within a range, numeric data our business strategy and we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that fiscal 2004 will bring continued revenue growth, improving gross margins and increasing levels of profitability." Gross profit as a percentage of sales, or gross margin, reached 31 percent for the quarter, up from 29.4 percent for the same period last year and 30.1 percent in the immediately preceding third quarter. Annual gross margin was up 390 basis points from 27.2 percent to 31.1 percent. As previously described, the Company believes gross margin as a percentage of sales generally correlates with the proportion of Intelligent Storage Solutions(TM) (ISS ISS See Institutional Shareholder Services (ISS). ) sold in the period and will increase over time. ISS products include elements of ADIC software and connectivity technology and are sold through both branded and OEM sales channels. ISS sales were 35 percent for the fourth quarter and 37 percent for fiscal 2003 versus approximately 30 percent in fiscal 2002. ADIC branded revenues were 51 percent of sales for the quarter and 52 percent of sales for the year while OEM revenues were 49 percent and 48 percent for the same periods. Branded revenues were 58 percent of sales in the fourth quarter of 2002 and 55 percent of sales for fiscal year 2002. The lower percentage of branded sales in 2003 results from rapid growth of the OEM business as customers and products were added during the fiscal year. Annual growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. of branded and OEM sales for the year were 18 percent and 35 percent. A higher percentage of OEM sales generally reduces overall gross margin as a percentage of sales because gross margins for OEM products are typically lower than for comparable branded products, reflecting lower required sales and product development costs. 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. grew less than 13 percent over fourth quarter 2002 and approximately 18 percent for the full year. Approximately 95 percent of the nearly $19 million in annual growth of operating expenses occurred in sales, marketing and R&D expenses, consistent with the Company's focus on developing differentiated technologies and broad sales and marketing capabilities. 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. moved from a loss of $3.6 million in the fourth quarter of 2002 to a profit of $4.5 million in the just completed fourth quarter, an improvement of $8.1 million. For the year, operating profit improved by $22.9 million to $9.5 million versus a loss of $13.4 million in fiscal 2002. Other income is principally the sum of foreign currency effects Foreign Currency Effects The extent to which the changes in a foreign currency affects the return on a foreign investment. Notes: Foreign investments are complicated by the currency fluctuation and conversion between countries. , interest income and investment gains. Lower investment gains and interest income account for most of the drop in other income from fiscal 2002 to 2003. Taxes for the quarter showed a benefit of $157,000 bringing fiscal year income tax expense to just over $3 million, or an average rate of approximately 19.5 percent. This relatively low tax rate is probably not sustainable as profitability increases and reflects various R&D tax credits as well as other elements of the Company's 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. . 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. 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 over $200 million as of October 31. Subsequent to the end of the period, the Company received $15.2 million in net cash through the sale of inventory and fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → , the majority of which were leasehold improvements Leasehold Improvement Improvements on a leased asset that increase the value of the asset. Notes: A leasehold improvement is classified as an asset that must be depreciated over time. , related to an outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. agreement announced during the period. About ADIC Advanced Digital Information Corporation (Nasdaq:ADIC) is a leading provider of Intelligent Storage Solutions(TM) 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.(1) 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 (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. Conference Call There will be a conference call to discuss fourth quarter and fiscal 2003 results as well as estimates for the first quarter of fiscal 2004 at 1:30 p.m. PT (4:30 p.m. ET) on December December: see month. 11, 2003. The call can be accessed live on our website at www.adic.com/ir. (1) 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 drives; 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. , 2002 Market Shares and Forecasts for Tape Automation Systems, F. Yale, August 2002; and, Gartner Dataquest, Tape Automation Systems Market Shares, 2002, F. Yale, April 2003. 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, 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 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 and Intelligent Storage Solutions are trademarks 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 Fiscal year
ended October 31, ended October 31,
2003 2002 2003 2002
--------- ------- --------- ---------
Net sales $ 118,001 $84,190 $ 423,998 $ 337,599
Cost of sales 81,470 59,426 292,121 245,832
--------- ------- --------- ---------
Gross profit 36,531 24,764 131,877 91,767
Sales and marketing 15,765 12,216 57,777 48,307
General and administrative 5,920 6,219 24,015 23,172
Research and development 10,352 9,964 40,609 32,230
Acquisition expenses -- -- -- 1,475
--------- ------- --------- ---------
Operating profit (loss) 4,494 (3,635) 9,476 (13,417)
Other income, net 1,100 157 6,035 11,864
--------- ------- --------- ---------
Income (loss) before provision
(benefit) for income taxes 5,594 (3,478) 15,511 (1,553)
Provision (benefit) for income
taxes (157) (2,264) 3,020 (3,113)
--------- ------- --------- ---------
Net income (loss) $ 5,751 $(1,214) $ 12,491 $ 1,560
========= ======= ========= =========
Basic net income (loss) per
share $ 0.09 $ (0.02) $ 0.20 $ 0.03
========= ======= ========= =========
Diluted net income (loss) per
share $ 0.09 $ (0.02) $ 0.20 $ 0.02
========= ======= ========= =========
Shares used in computing basic
net income (loss) per share 63,395 62,204 62,569 62,304
========= ======= ========= =========
Shares used in computing
diluted net income (loss)
per share 64,803 62,204 63,564 63,500
========= ======= ========= =========
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
October 31, October 31,
2003 2002
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 180,401 $ 150,741
Accounts receivable, net 100,391 71,383
Inventories, net 35,736 32,296
Marketable securities 20,788 24,878
Assets held for sale 12,384 --
Other current assets 21,514 21,800
-------------- --------------
Total current assets 371,214 301,098
Property, plant and equipment, net 45,505 48,722
Service parts for maintenance, net 28,427 22,936
Marketable securities -- 7,221
Investments 3,728 10,928
Other non-current assets 4,298 8,232
------------- --------------
$ 453,172 $ 399,137
============= ==============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities $ 94,852 $ 69,419
Deferred income taxes 2,507 --
Long-term debt 967 984
Shareholders' equity 354,846 328,734
------------- --------------
$ 453,172 $ 399,137
============= ==============
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Fiscal year ended
October 31,
------------------
2003 2002
------------------
Cash flows from operating activities:
Net income $12,491 $1,560
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 21,014 16,815
Allowance for doubtful accounts receivable 14 1,258
Inventory obsolescence 4,334 4,173
Gain on securities transactions (2,722) (7,482)
Acquired in-process research and development -- 1,200
Deferred income taxes 5,323 4,279
Tax benefit from exercise of stock options 3,844 2,607
Other 131 17
Change in assets and liabilities:
Accounts receivable (29,041) 9,807
Inventories (15,467) 6,585
Prepaid expenses and other assets (51) (436)
Service parts for maintenance (9,865) (10,210)
Accounts payable 9,282 683
Accrued liabilities 7,228 (1,369)
Income taxes receivable 848 3,306
Deferred revenue 8,656 7,234
------------------
Net cash provided by operating activities 16,019 40,027
------------------
Cash flows from investing activities:
Purchase of property, plant and equipment (14,296) (26,932)
Purchase of marketable securities (16,478) (52,812)
Proceeds from securities transactions 38,630 41,875
Purchase of other investments (500) (3,259)
------------------
Net cash provided by (used in) investing activities 7,356 (41,128)
------------------
Cash flows from financing activities:
Repayment of bank lines of credit and long-term
debt (3,373) (2,227)
Proceeds from short-term borrowings 781 --
Repurchase of common stock (697) (7,863)
Proceeds from issuance of common stock for stock
options and Stock Purchase Plan 8,356 6,544
------------------
Net cash provided by (used in) financing activities 5,067 (3,546)
------------------
Effect of exchange rate changes on cash 1,218 114
------------------
Net increase (decrease) in cash and cash equivalents 29,660 (4,533)
Cash and cash equivalents at beginning of period 150,741 155,274
------------------
Cash and cash equivalents at end of period $180,401 $150,741
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