Avocent Reports Higher Sales and Net Income for First Quarter.HUNTSVILLE Huntsville, town, Canada Huntsville, town (1991 pop. 14,997), SE Ont., Canada, on the Muskoka River. It has lumber mills and a woodworking plant, but it is sustained mainly by its year-round tourist trade. , Ala ALA aminolevulinic acid. Ala alanine. ala (a´lah) pl. a´lae [L.] a winglike process. . -- Avocent Avocent Corporation (NASDAQ: AVCT) is an information technology products manufacturer headquartered in Huntsville, Alabama. Avocent was formed in 2000 from the merger of the world’s two largest KVM (keyboard, video and mouse) switch manufacturers: Apex and Cybex 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 :AVCT AVCT Advanced Vehicles Concept Team ) today reported higher sales and net income for the first quarter ended March 31, 2006. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the first quarter increased 23.1% to $94.5 million, in line with the guidance released on April 10, 2006, compared with sales of $76.8 million in the first quarter of 2005. "Our significant jump in earnings was due to higher sales, growth in margins and improved expense controls compared with the first quarter of last year. At the end of the first quarter, we completed the acquisition of Cyclades Cyclades (sī`klədēz), Gr. Kikládhes [Gr.,=circular], island group (1991 pop. 94,005), c.1,000 sq mi (2,590 sq km), SE Greece, a part of the Greek archipelago, in the Aegean Sea stretching SE from Attica. which we expect to have a positive effect on our revenues in future quarters. The acquisition accelerated our penetration The successful unauthorized breach of a security perimeter. See penetration test. of the serial-management market, including the management of Linux Linux Nonproprietary operating system (OS) for digital computers. In 1991 Linus Torvalds of Finland began asking for volunteer programmers over the Internet to collaborate on the development of a UNIX-like OS for personal computers; the “1. servers, and we expect to add further value by integrating our respective product lines," noted Mr. Cooper Cooper may refer to:
"First quarter sales increased across all major product lines and in all major markets compared with the first quarter of last year," stated John R. Cooper, chairman and chief executive officer of Avocent Corporation. "Digital products accounted for 53.6% of first quarter revenues and continue to be an important factor in our sales and earnings growth. First Quarter Results First quarter 2006 operational income, which is prior to intangible amortization, stock compensation expenses and acquired in-process R&D expenses, was $17.4 million, or $0.35 per 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, compared with $7.3 million, or $0.14 per diluted share, prior to intangible amortization and stock compensation expenses in the first quarter of 2005. (See "Use of Non-GAAP Financial Measures" discussion below.) Net adjustments to reconcile operational income to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income were $4.5 million in the first quarter of 2006, including $2.4 million in intangible amortization, $2.1 million in acquired in-process R&D expenses and $841,000 in stock option expenses. Net adjustments to reconcile to GAAP net income were $5.5 million in the first quarter of 2005, including $6.6 million in intangible amortization. GAAP net income for the first quarter of 2006 increased to $12.9 million, or $0.26 per diluted share. This compares with GAAP net income of $1.8 million, or $0.04 per diluted share, in the first quarter of 2005. Weighted average shares outstanding declined 2.6% over the prior year to 50.1 million in the first quarter of 2006 due to Avocent's repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of shares under its previously announced stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program. Branded sales increased 30.6% from the first quarter of 2005 and accounted for 50.7% of total first quarter 2006 sales. 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 increased 16.2% from the first quarter of 2005 and accounted for 49.3% of total first quarter 2006 sales. U.S. sales increased 31.2% to $52.4 million and international sales rose 14.3% to $42.1 million compared with the first quarter of 2005. Gross profit for the first quarter of 2006 increased 28.4% to $56.0 million with a gross margin of 59.2%. This compared with gross profit of $43.6 million and a gross margin of 56.7% in the first quarter of 2005. The increase in gross profit was due to higher sales and improved product mix, including increased sales of digital products and higher embedded Inserted into. See embedded system. product revenues. Research and development expenses declined 8.7% to $13.2 million, or 14.0% of sales, compared with $14.5 million, or 18.8% of sales, in the first quarter of 2005. "Since last year, we have focused our R&D expenses on expanding our digital product offerings and other growth potential product areas to boost the fastest-growing parts of our business. We also plan to continue investing in product enhancements and redesigns to improve our product benefits and improve manufacturing efficiencies," continued Mr. Cooper. Selling, general and administrative expenses increased 5.0% to $23.4 million compared with $22.3 million in the first quarter of 2005. The increase in SG&A expenses was due primarily to higher selling expenses related to the increase in sales and additional marketing expenditures for recently introduced products. Avocent's balance sheet and cash position remained strong as of March 31, 2006. The Company's 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 was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $17 million for the first quarter of 2006. At the end of the first quarter, Avocent's cash, cash equivalents and investments totaled approximately $284 million. Avocent funded the Cyclades acquisition with over $90 million in cash-on-hand and had no long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. as of March 31, 2006. First Quarter Division Results Revenues from the Management Systems division advanced to $84.4 million in the first quarter of 2006 from $69.8 million in the first quarter of 2005, while operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. from this division increased to $24.7 million in the first quarter of 2006 from $14.4 million in the first quarter of 2005, primarily as a result of the increase in revenues from the digital product line. Revenues for the Embedded Software Instructions that permanently reside in a ROM or flash memory chip. Embedded software may be immediately available to the CPU or, for faster execution, may be transferred to RAM first and then executed. and Solutions division grew to $6.1 million in the first quarter of 2006 from $3.8 million in the first quarter of 2005, while operating income increased to $1.5 million in the first quarter of 2006 from 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 $565,000 in the first quarter of 2005, primarily as a result of the increased revenue contribution of the embedded KVM (K Virtual Machine) A version of the Java Virtual Machine for small devices with limited memory. See J2ME. See also KVM switch. KVM - Keyboard Video Mouse solutions as adoption of these platforms by our OEM customers increases. Revenues from the three emerging businesses totaled $3.0 million in the first quarter of 2006 compared with $3.2 million in the first quarter of 2005, while operating losses from these divisions increased to $3.7 million in the first quarter of 2006 from $3.3 million in the first quarter of 2005, primarily as these divisions continue to focus on research and development efforts for new products with high growth potential. Use of Non-GAAP Financial Measures Income prior to intangible amortization, stock compensation and in-process research and development expenses, or operational income as used in the attached financial statement schedules, is not a measure of financial performance under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP) and should not be considered a substitute for or superior to GAAP. Avocent's management uses operational income as a financial measure to evaluate performance and allocate To reserve a resource such as memory or disk. See memory allocation. resources within the Company. Management believes this measure presents the Company's results on a more comparable operational basis by excluding non-cash amortization expenses, non-operational expenses associated with acquisitions, and non-cash stock-based compensation expense. Avocent believes that operational income is a measure of performance used by some investment banks The following is a list of investment banks Financial conglomerates Large financial-services conglomerates combine commercial banking and investment banking, and sometimes insurance. , analysts, investors and others to make informed investment decisions. Other companies may calculate operational income in a different manner so this measure may not be comparable to similar measures presented by other companies. A reconciliation of Avocent's results using operational measures and GAAP is set forth 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 con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements of operations included in this press release. Conference Call Information Avocent will provide an on-line, real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. webcast and rebroadcast of its first quarter results conference call to be held April 27, 2006. The live broadcast will be available on-line at www.avocent.com as well as www.investorcalendar.com beginning at 10:00 a.m. central time. The on-line replay will follow immediately and continue for 30 days. About Avocent Corporation Avocent Corporation is the leading supplier of connectivity A generic term for connecting devices to each other in order to transfer data back and forth. It often refers to network connections, which embraces bridges, routers, switches and gateways as well as backbone networks. solutions for enterprise data centers, branch offices, and small to medium size businesses worldwide. Branded and OEM products include remote and local access solutions for switching, serial console (1) The physical control panel on a computer or electronic device. (2) A terminal or desktop computer used to monitor and control a network. (3) Any display terminal. , power extension, intelligent platform management interface The Intelligent Platform Management Interface (IPMI) specification defines a set of common interfaces to computer hardware and firmware which system administrators can use to monitor system health and manage the system. Several dozen companies support IPMI. (IPMI (Intelligent Platform Management Interface) A protocol for monitoring server hardware for temperature, voltage, chassis intrusion, etc. Introduced in 1998 by Intel, HP, NEC and Dell, IPMI defines a standard set of messages for the characteristics of hardware ), mobile and video display management solutions. Additional information is available at: www.avocent.com. 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. This press release contains statements that are forward-looking statements as defined within the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These include statements regarding future revenue resulting from our acquisition of Cyclades, the development, introduction, features, and benefits of new products and technologies, the size and growth of the current and future markets for these products and technologies (including those for the Linux server market), engineering and design activities, and the integration and operation of Cyclades. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made, including the risks associated with general economic conditions, risks attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to future product demand, sales, and expenses, risks associated with reliance on a limited number of customers, component suppliers, and single source components, risks associated with acquisitions, risks associated with product design efforts and the introduction of new products and technologies, and risks associated with obtaining and protecting intellectual property rights. Other factors that could cause operating and financial results to differ are described in Avocent'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. filed with the Securities and Exchange Commission on March 6, 2006. Other risks may be detailed from time to time in reports to be filed with the SEC. Avocent does not undertake any obligation to publicly update its forward-looking statements based on 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 hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" .
AVOCENT CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
For the Quarter Ended March 31, 2006
Operational Stock Compensation (a)
--------------- ----------------------
Net sales $ 94,512
Cost of sales 38,505 $ 50
-------------- ---------------------
Gross profit 56,007 (50)
Research and development
expenses 12,908 301
Acquired in-process research
and development expenses - -
Selling, general and
administrative expenses 22,743 490
Amortization of intangible
assets -
--------------- ---------------------
Operating income 20,356 (841)
Other income (expense), net 3,016
-------------- ----------------------
Income before provision for
income taxes 23,372 (841)
Provision for income taxes 5,951 (261)
-------------- ---------------------
Net income $ 17,421 $ (580)
============== =====================
Earnings per share:
Basic $ 0.35
Diluted $ 0.35
Weighted average shares and
common equivalents
outstanding:
Basic 49,095 -
Diluted 50,109 -
Adjustments (b) GAAP
---------------- ----------------------
Net sales $ 94,512
Cost of sales 38,555
--------------- ---------------------
Gross profit 55,957
Research and development
expenses 13,209
Acquired in-process research
and development expenses $ 2,100 2,100
Selling, general and
administrative expenses 151 23,384
Amortization of intangible
assets 2,351 2,351
-------------- ---------------------
Operating income (4,602) 14,913
Other income (expense), net - 3,016
-------------- ---------------------
Income before provision for
income taxes (4,602) 17,929
Provision for income taxes (694) 4,996
-------------- ---------------------
Net income $ (3,908) $ 12,933
============== =====================
Earnings per share:
Basic $ 0.26
Diluted $ 0.26
Weighted average shares and
common equivalents
outstanding:
Basic - 49,095
Diluted - 50,109
For the Quarter Ended April 1, 2005
Operational Stock Compensation (a)
--------------- ----------------------
Net sales $ 76,805
Cost of sales 33,223
--------------- ----------------------
Gross profit 43,582
Research and development
expenses 14,176 $ 291
Selling, general and
administrative expenses 21,903 219
Amortization of intangible
assets -
--------------- ----------------------
Operating income 7,503 (510)
Other income (expense), net 1,955
--------------- ----------------------
Income before provision for
income taxes 9,458 (510)
Provision for income taxes 2,137 (204)
--------------- ----------------------
Net income $ 7,321 $ (306)
=============== ======================
Earnings per share:
Basic $ 0.15
Diluted $ 0.14
Weighted average shares and
common equivalents
outstanding:
Basic 50,208 0
Diluted 51,510 (58)
Adjustments (b) GAAP
---------------- ----------------------
Net sales $ 76,805
Cost of sales 33,223
--------------- ---------------------
Gross profit 43,582
Research and development
expenses 14,467
Selling, general and
administrative expenses $ 158 22,280
Amortization of intangible
assets 6,622 6,622
-------------- ---------------------
Operating income (6,780) 213
Other income (expense), net (15) 1,940
-------------- ---------------------
Income before provision for
income taxes (6,795) 2,153
Provision for income taxes (1,614) 319
-------------- ---------------------
Net income $ (5,181) $ 1,834
============== =====================
Earnings per share:
Basic $ 0.04
Diluted $ 0.04
Weighted average shares and
common equivalents
outstanding:
Basic - 50,208
Diluted - 51,452
(a) Stock Compensation relates to expensing of stock options and
amortization of deferred compensation (from the capitalization for
the value of stock options assumed). Avocent adopted SFAS 123R
effective January 1, 2006 and began recording expense related to
outstanding unvested stock options on that date.
(b) Adjustments relate to acquired in-process research and development
expense from the Cyclades acquisition and intangibles recorded as the
result of acquisitions. The calculation of weighted average shares
and common equivalents outstanding differs due to excluding the
average unamortized deferred compensation expense in calculating the
operational diluted shares outstanding in 2005.
AVOCENT CORPORATION
Division Net Sales and Operating Income
(Unaudited, in thousands, except per share data)
Embedded
Software Other Corporate
Management and Business & Consolidated
Systems Solutions Units Unallocated Total
---------- --------- --------- ----------- ------------
First quarter
ended March
31, 2006
-------------
Net sales $ 84,365 $ 6,133 $ 3,021 $ 993 $ 94,512
Operating
income
(loss) 24,734 1,536 (3,714) (2,200) 20,356
First quarter
ended April
1, 2005
-------------
Net sales $ 69,840 $ 3,780 $ 3,185 $ - $ 76,805
Operating
income
(loss) 14,377 (565) (3,331) (2,978) 7,503
AVOCENT CORPORATION
Condensed Consolidated Balance Sheets
(Dollars in thousands)
March 31, 2006 December 31, 2005
(Unaudited) (Unaudited)
--------------- ------------------
Cash, cash equivalents
and short-term investments $ 225,151 $ 293,903
Accounts receivable, net 71,445 68,712
Inventories, net 30,289 21,178
Other current assets 12,446 10,524
Deferred income tax 5,504 4,054
--------- -------------
Total current assets 344,835 398,371
Investments 58,714 51,939
Property and equipment, net 38,722 36,801
Goodwill 55,108 269,992
Intangible assets, net 331,914 15,763
Other assets 11,472 885
--------- -------------
Total assets $ 840,765 $ 773,751
========= =============
Accounts payable and other accrued
expenses $ 44,160 $ 23,569
Income tax payable 10,934 11,270
Other current liabilities 28,165 18,908
--------- -------------
Total current liabilities 83,259 53,747
Non-current liabilities 32,386 4,682
Total stockholders' equity 725,120 715,322
--------------- ------------------
Total liabilities and stockholders'
equity $ 840,765 $ 773,751
========= =============
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