Adaptec Reports Third Quarter Profits of $58 Million; Revenue at $211 million; EPS at $0.52.Business Editors/Technology Writers MILPITAS, Calif.--(BUSINESS WIRE)--Jan. 20, 2000 Adaptec, Inc. (Nasdaq:ADPT ADPT Automated Data Processing/Telecommunications ADPT Adaptec Corporation (stock symbol) ADPT Adaptive Prediction ADPT Auger Depth Profiling Technique ADPT Automated Data Processing Telecommunications ADPT Adapter ) today announced financial results for its third quarter of fiscal 2000 which ended December 31, 1999. Revenues were $211 million. Net income excluding goodwill amortization, acquisition-related charges and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and other charges was $58 million, or $0.52 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 . Effective with this earnings release, the consolidated statement of operations See Income statement. will be shown on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma and an actual basis. The pro forma statement Pro forma statement A financial statement showing the forecast or projected operating results and balance sheet, as in pro forma income statements, balance sheets, and statements of cash flows. does not include goodwill, amortization and other acquisition-related charges, restructuring and other charges, gains on non-operating items, and results of operations from divested business lines. Pro forma results for the third quarter of fiscal 2000 and comparative quarters were: -- Net revenues of $211 million, up from net revenues of $160 million in the third quarter of fiscal 1999 and up sequentially from net revenues of $194 million in the second quarter of fiscal 2000. -- Net income of $58 million, up from net income of $30 million in the third quarter of fiscal 1999 and up sequentially from net income of $49 million in the second quarter of fiscal 2000. -- Diluted earnings per share of $0.52, up from 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. earnings per share of $0.27 in the corresponding quarter last fiscal year, and up sequentially from diluted earnings per share of $0.45 in the second quarter of fiscal 2000. &uot;We are pleased with our financial performance in the third quarter and our fundamentals are strong,&uot; said Bob Stephens, president and chief executive officer of Adaptec. &uot;We have a healthy sense of urgency surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. the integration of DPT with our current RAID business. We are also moving swiftly to ramp our Fibre Channel business.&uot; Business Update On the SCSI SCSI in full Small Computer System Interface Once common standard for connecting peripheral devices (disks, modems, printers, etc.) to small and medium-sized computers. SCSI has given way to faster standards, such as Firewire and USB. front, Adaptec extended its market lead in Ultra160 SCSI by becoming the first company to ship Ultra160 SCSI host adapters The controlling electronics for SCSI contained on a printed circuit board that plugs into the computer's motherboard. A SCSI host adapter is often called a "SCSI controller." See SCSI. to the distribution channel. The new solutions are ideal for the transaction-heavy environments generated by emerging e-business applications as well as traditional storage applications. The Ultra160 SCSI products use the same accessories as Ultra2 SCSI See Ultra SCSI. , eliminating the need for new LVD See LVDS. LVD - Low Voltage Differential SCSI cables or terminators. In addition, new software management features provide greater data integrity preservation at higher transfer rates. Adaptec recently entered into an exclusive agreement with Agilent to bring Fibre Channel technology to the PC server market. This agreement combined with the recent close of the DPT acquisition gives Adaptec the ability to provide storage area networks -- SANs -- for NT environments. Adaptec is now in a unique position to offer customers end-to-end Fibre Channel host, RAID, and external RAID solutions. The terms of the four-year partnership with Agilent include the co-development and marketing of Fibre Channel products to optimize optimize - optimisation performance and compatibility. Adaptec will focus on adding software value to Agilent's high-performance Tachyon tachyon (tăk`ēŏn'), hypothetical elementary particle that travels only at speeds exceeding that of light. According to the theory of relativity, the speed of light is the limiting velocity for all ordinary material particles. silicon to increase interoperability The capability of two or more hardware devices or two or more software routines to work harmoniously together. For example, in an Ethernet network, display adapters, hubs, switches and routers from different vendors must conform to the Ethernet standard and interoperate with each other. , performance and security in order to create a market preference for the Adaptec-Agilent co-branded solutions. Adaptec expects to make available Fibre Channel products to its worldwide distribution channel and to PC 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 in its first fiscal quarter of year 2001 (second calendar quarter of year 2000). In connection with the partnership, Adaptec issued Agilent a warrant to purchase 1,160,000 shares of Adaptec common stock at a price of $62.25 per share. In RAID, Adaptec acquired Distributed Processing The first term used to describe the distribution of multiple computers throughout an organization in contrast to a centralized system. It started with the first minicomputers. Today, distributed processing is called "distributed computing." See also client/server. Technology (DPT) during the quarter for $238 million. RAID provides high performance and enhanced data protection for storage. The acquisition strengthens Adaptec's efforts to broaden its entry level, external RAID, and high-end SAN solutions. The combination of Adaptec and DPT is also expected to secure Adaptec as a leading RAID supplier in the distribution channel. ReZOOM debuted during the quarter, and is the industry's first software program that instantly reboots, repairs, and restores valuable data from a secondary backup drive in the event of a system failure. ReZOOM eliminates critical PC downtime The time during which a computer is not functioning due to hardware, operating system or application program failure. and protects user productivity by allowing the user to reboot To reload the operating system, which restarts the computer. See boot. (operating system) reboot - (From boot) A boot with the implication that the computer has not been down for long, or that the boot is a bounce intended to clear some state of wedgitude. See warm boot. and resume work after a system crash with just one keystroke key·stroke n. A stroke of a key, as on a word processor. key  stroke .In the CD recording software arena, Adaptec entered into an agreement with RealNetworks to provide CD recording functionality for RealJukebox, the Internet's most popular digital music system. This agreement will give more than 21 million RealJukebox users the freedom to make CDs from their custom playlists and listen to them whenever they like on any standard audio CD player. For Adaptec, the RealNetworks relationship represents a marketing milestone as a key player in the movement, editing, and storage of digital content such as audio, video, MP3, and data files. Other Non-operating Developments Adaptec has reached a tentative tentative, adj not final or definite, such as an experimental or clinical finding that has not been validated. agreement with another party for a patent cross-license. Under the proposed agreement, each party will be granted a license for specified patents of the other party covering the period January 1, 1990 through June 30, 2004. The portion of the liability allocated to revenues from periods prior to December 31, 1999 of $9.6 million was written-off and is included in &uot;Restructuring and other charges&uot; in the Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Consolidated Statements of Operations. In November 1998, Adaptec sold certain assets related to its Fibre Channel product line to JNI (Java Native Interface) A programming interface (API) in Sun's Java Virtual Machine used for calling native platform elements such as GUI routines. RNI (Raw Native Interface) is the JNI counterpart in Microsoft's Java Virtual Machine. JNI - Java Native Interface Corporation in exchange for an ownership interest in JNI and warrants to purchase additional shares which were contingent upon Adj. 1. contingent upon - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent on, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent successful completion of various milestones by JNI. On September 30, 1999, Adaptec and JNI amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. the agreement resulting in Adaptec acquiring warrants to purchase 840,000 shares of JNI common stock. The resolution of this contingency contingency n. an event that might not occur. resulted in a gain of $10.9 million. The remaining warrants expired upon JNI's public offering in October 1999. Adaptec intends to revise its earnings for the second quarter of fiscal 2000 ending September 30, 1999 to reflect the non-operating gain of $10.9 million. As a result of this revision, net income for the second quarter of fiscal 2000 will increase $6.6 million, net of income taxes, and diluted earnings per share will increase $0.06. Adaptec will amend its report on Form 10-Q Form 10-Q See 10-Q. for the second quarter of fiscal 2000. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement This press 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. regarding future events or the future performance of the company including, but not limited to, statements regarding future revenue, expected product introductions, growth rate of certain product areas, anticipated market opportunities and overall corporate performance. Actual events could, of course, differ materially. Various factors could adversely affect future results of operations including, but not limited to, customers' migration to Ultra160, product introductions and market acceptance of Fibre Channel and RAID products, changes in product mix, rapidly changing customer requirements, uncertainties related to business partnerships, dependence on key customers, competitive pricing pressures, dependence on the high-performance PC, server and software markets, risks associated with acquisitions of other companies or businesses, risks associated with integrating acquired business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets , dependence on key personnel, risks associated with intellectual property and general economic conditions. For a more complete discussion of these and other factors, please refer to the business section of 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 fiscal year ended March 31, 1999 and the company's other public filings made from time to time. Conference Call Replays A Webcast replay will be available until January 25, 2000 by logging on to Adaptec's home page at http://www.adaptec.com. A telephone replay will also be available until January 25, 2000 by calling 800/633-8284 and referencing reservation No. 13875879. About Adaptec Adaptec makes products and solutions that move, transfer, manage, and protect valuable data that is the heart of Internet and e-business computing computing - computer . Adaptec's hardware and software products are found in high-performance servers and workstations from the world's leading manufacturers, and are sold through distribution channels to enterprises, medium and small businesses, and consumers. With a range of host I/O (Input/Output) The transfer of data between the CPU and a peripheral device. Every transfer is an output from one device and an input to another. See PC input/output. I/O - Input/Output , RAID, and CD recording software products, Adaptec is a market leader in storage and digital content solutions, and a powerful enabler of today's information age. Adaptec is an S& 500 and NASDAQ 100 member. More information is available at http://www.adaptec.com.
Adaptec, Inc
Condensed Consolidated Statements of Operations - Pro Forma
(unaudited)
Three Month Period Ended
December 31, December 31,
1999 1998
(in thousands, except per share data)
Net revenues $ 211,446 $ 159,606
Cost of revenues 69,529 56,752
Gross profit 141,917 102,854
------- -------
Operating expenses:
Research and development 25,804 27,267
Sales, marketing and
administrative 41,496 39,492
Total operating expenses 67,300 66,759
------- -------
Income from operations 74,617 36,095
Interest and other income 8,119 7,916
Interest expense (2,811) (2,992)
Income from operations before provision
for income taxes 79,925 41,019
Provision for income taxes 22,379 11,486
Net income $ 57,546 $ 29,533
------- -------
Net income per common share:
Basic $ 0.56 $ 0.27
Net income per common share:
Diluted $ 0.52 $ 0.27
Shares used in computing net income
per share:
Basic 103,267 108,040
Shares used in computing net income
per share:
Diluted 114,876 110,881
Pro forma operating results for the three month period ended
December 31, 1999 and 1998 exclude the following: revenue and expenses
related to the PTS business lines sold in the third and fourth
quarters of fiscal 1999, amortization of goodwill and other
intangibles, write-off of acquired in-process technology,
restructuring and other charges, gains on non-operating items and the
related income tax effect associated with each of these items.
Adaptec, Inc.
Condensed Consolidated Statements of Operations - Actual
(unaudited)
Three Month Period Ended
December 31, December 31,
1999 1998
(in thousands, except per share data)
Net revenues $ 211,446 $ 183,872
Cost of revenues 69,529 74,719
Gross profit 141,917 109,153
------- -------
Operating expenses:
Research and development 25,804 35,156
Sales, marketing and administrative 41,496 42,493
Amortization of goodwill and other
intangibles 3,094 1,031
Write-off of acquired in-process
technology 16,739 --
Restructuring and other charges 9,599 --
Total operating expenses 96,732 78,680
------- -------
Income from operations 45,185 30,473
Interest and other income 8,119 7,916
Interest expense (2,811) (2,992)
Income from operations before provision
for income taxes 50,493 35,397
Provision for income taxes 18,825 10,385
Net income $ 31,668 $ 25,012
------- -------
Net income per common share:
Basic $ 0.31 $ 0.23
Net income per common share:
Diluted $ 0.29 $ 0.23
Shares used in computing net income
per share:
Basic 103,267 108,040
Shares used in computing net income
per share:
Diluted 110,424 110,881
Adaptec, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
December 31, March 31,
1999 1999
(in thousands)
ASSETS
Current assets
Cash and marketable securities (a) $ 718,100 $ 743,912
Accounts receivable, net 75,823 67,158
Inventories 71,939 50,838
Prepaid expenses and other current assets 54,484 148,109
Total current assets 920,346 1,010,017
Property and equipment, net 134,252 126,734
Goodwill and other intangibles 233,732 2,238
Other long-term assets 40,923 34,079
$1,329,253 $1,173,068
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 39,818 $ 39,487
Accrued liabilities 180,145 112,879
Total current liabilities 219,963 152,366
4 3/4% convertible subordinated notes 229,800 230,000
Other long-term liabilities 10,800 --
Stockholders' equity
Common stock 104 106
Additional paid-in capital 94,745 194,521
Retained earnings 730,447 596,075
Accumulated other comprehensive income 43,394 --
Total stockholders' equity 868,690 790,702
$1,329,253 $1,173,068
(a) 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 balance as of December 31, 1999 includes investments in JNI Corporation with a fair market value of $74.8 million. |
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