ADIC Reports One Cent EPS in Q2; Continued Margin Improvement; Branded Sales up Nine Percent; Million Shares Repurchased.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. -- Advanced Digital Information Corporation (Nasdaq:ADIC) today announced second quarter earnings of $733,000, or one cent per share, on sales of $106 million versus a loss of $1.3 million, or two 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. , on sales of $111 million during the same quarter last year. The Company had a loss of $270,000 during the immediately preceding quarter on sales of nearly $111 million. For the six months ended April 30, 2005, the Company earned $463,000, or one cent per share, compared to earnings of $3.4 million, or five cents per share, during the first six months of fiscal 2004. Gross profit as a percentage of sales was 30.8 percent during the second quarter, up from 28.2 percent a year ago and 29.6 percent in the preceding first quarter. An improved mix of product sales, including a higher proportion of ADIC(R) branded sales, contributed to a higher gross profit percentage despite slightly lower overall sales volume. Overall second quarter sales declined approximately four percent from both the same quarter last year and the immediately preceding quarter. Branded sales were up approximately nine percent from the same period last year and flat sequentially while 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 were down 19 percent and ten percent from last year and the preceding quarter, respectively. Improved gross profit, albeit on lower total sales, allowed the company to report an 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. of $41,000 in the second quarter versus operating losses 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 $1.4 million reported for both second quarter 2004 and the preceding first quarter of fiscal 2005. 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. during the just completed second quarter included approximately $500,000 in severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. costs associated with the previously announced closure of development facilities in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). as well as costs associated with reorganization among the Company's European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. operations. "We are particularly pleased with the progress in our branded product and services business, although expected declines in OEM sales are obscuring some of that success," 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. "Enterprise tape library products, including our 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. 10K and i2000, each showed annual growth in double digits Double Digits was a pricing game on the American television game show, The Price Is Right. Played from April 20, 1973 through May 18, 1973's show, it was played for a car and used small prizes. while our new disk-based backup products, the Pathlight PVX PVX Potato Virus X series, experienced sequential One after the other in some consecutive order such as by name or number. growth in excess of 50 percent," he said. "These trends make us optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about continued branded growth, which should be reflected in total sales as our OEM business stabilizes. Additionally, we have previously said we expect to begin shipping new OEM products before the end of the fiscal year," van Oppen said. "Gross profit percentage, particularly on lower sales volume, is an encouraging sign about the health of our underlying business and competitive position. We have reported improving gross margin in several recent quarters and 30.8 percent is our best percentage result since we reported 31.0 percent margin on $118 million in sales during the fourth quarter of 2003," he noted. Second quarter 2005 is the second period for which the Company has disclosed sales and margin numbers separately for product and service revenues. Total product revenues for the quarter, which include both branded and OEM product sales, are down 7.8 percent and 5.7 percent on an annual and sequential basis, respectively. The bulk of these declines result from reduced OEM product sales while branded product sales are up 4.6 percent over the second quarter last year and down 1.7 percent from first quarter 2005. Service revenues, which are included in total branded revenues but not included in branded product revenues, are up 25.7 percent over the year ago period and 7.1 percent over the immediately preceding quarter. Combined branded revenues, including both products and service, reached 60 percent of total revenues for the first time in several years during the quarter compared with 53 percent during the same period last year and 58 percent in the preceding quarter. OEM revenues equaled approximately 40 percent of total revenues during the period. Net cash provided by operating activities for the six months ending April 30 was $21.9 million. Subtracting reported cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses through January January: see month. 31 indicates second quarter cash flow from operations was $6.6 million. Total 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 $240 million at the end of the period. The Company repurchased slightly over one million shares of stock during the second quarter at an average price of $8.35 per share, for a total cost of $8.5 million. Total repurchases during the past year are now over two million shares. Yesterday, the Company's board replenished existing authorizations to provide authority for future repurchases of up to five million shares. 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.(a) 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, OEMs and partnerships, including Apple, 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 (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. , 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. (a) 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 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, production problems and the Company's ability to complete announced restructurings on schedule. 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 October: see month. 31, 2004 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 second quarter results as well as estimates for the third quarter of fiscal 2005, including a third-quarter gain related to the disposition of an existing facility in Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). , at 1:30 p.m. PT (4:30 p.m. ET) on May 19, 2005. 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 Six Months Ended
April 30, April 30,
2005 2004 2005 2004
-------- -------- -------- --------
Revenue:
Product $ 92,047 $ 99,828 $189,677 $207,762
Service 14,124 11,239 27,314 21,610
-------- -------- -------- --------
Total revenue 106,171 111,067 216,991 229,372
Cost of revenue:
Product 63,268 70,999 131,803 146,453
Service 10,167 8,743 19,659 17,275
-------- -------- -------- --------
Total cost of revenue 73,435 79,742 151,462 163,728
Gross profit 32,736 31,325 65,529 65,644
Sales and marketing 16,227 17,345 32,909 31,417
General and administrative 6,418 6,080 12,691 12,284
Research and development 10,050 9,320 21,307 18,700
-------- -------- -------- --------
Operating profit (loss) 41 (1,420) (1,378) 3,243
Other income (loss), net 807 (561) 1,894 1,430
-------- -------- -------- --------
Income (loss) before provision
(benefit) for income taxes 848 (1,981) 516 4,673
Provision (benefit) for income
taxes 115 (661) 53 1,225
-------- -------- -------- --------
Net income (loss) $ 733 $ (1,320) $ 463 $ 3,448
======== ======== ======== ========
Basic net income (loss) per
share $ 0.01 $ (0.02) $ 0.01 $ 0.05
======== ======== ======== ========
Diluted net income (loss) per
share $ 0.01 $ (0.02) $ 0.01 $ 0.05
======== ======== ======== ========
Shares used in computing basic
net income (loss) per share 63,313 64,360 63,556 64,084
======== ======== ======== ========
Shares used in computing
diluted net income (loss)
per share 63,560 64,360 63,892 65,240
======== ======== ======== ========
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
April 30, Oct. 31,
ASSETS 2005 2004
--------- ---------
Current assets:
Cash and cash equivalents $ 47,705 $ 94,695
Accounts receivable, net 85,029 93,025
Inventories, net 30,462 38,728
Marketable securities 192,729 138,238
Assets held for sale 1,364 --
Other current assets 15,359 13,602
-------- --------
Total current assets 372,648 378,288
Property, plant and equipment, net 44,228 45,913
Service parts for maintenance, net 29,309 29,993
Investments 3,196 2,769
Other non-current assets 17,733 18,067
-------- --------
$467,114 $475,030
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Deferred revenue - current $ 33,618 $ 31,727
Other current liabilities 59,741 65,200
-------- --------
Total current liabilities 93,359 96,927
Deferred revenue - long-term 15,546 13,605
Other long-term liabilities 400 600
Shareholders' equity 357,809 363,898
-------- --------
$467,114 $475,030
======== ========
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
April 30,
-------------------
2005 2004
--------- --------
Cash flows from operating activities:
Net income $ 463 $ 3,448
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 12,901 12,108
Bad debt expense 454 39
Inventory obsolescence 924 1,473
(Gain) loss on securities and investment
transactions 2 (636)
Deferred income taxes 185 (83)
Tax benefit from exercise of stock options 72 1,693
Other 32 39
Change in assets and liabilities:
Accounts receivable 8,257 4,940
Inventories 7,364 (5,934)
Other current assets (2,028) (228)
Service parts for maintenance (4,326) (5,886)
Current liabilities (6,144) (6,629)
Deferred revenue 3,757 7,158
--------- --------
Net cash provided by operating activities 21,913 11,502
--------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment (7,057) (8,950)
Proceeds from assets held for sale -- 15,117
Purchase of marketable securities (163,022) (78,268)
Proceeds from securities transactions 108,525 60,703
Purchase of other investments (429) (364)
Return of investment on other investments -- 71
--------- --------
Net cash used in investing activities (61,983) (11,691)
--------- --------
Cash flows from financing activities:
Repayment of short-term and long-term debt -- (103)
Repurchase of common stock (8,516) --
Proceeds from issuance of common stock for
stock options and Stock Purchase Plan 1,784 5,893
--------- --------
Net cash provided by (used in) financing
activities (6,732) 5,790
--------- --------
Effect of exchange rate changes on cash (188) 247
--------- --------
Net increase (decrease) in cash and cash
equivalents (46,990) 5,848
Cash and cash equivalents at beginning of period 94,695 91,451
--------- --------
Cash and cash equivalents at end of period $ 47,705 $ 97,299
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