Avocent Reports Higher Sales and Net Income for Third 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 for the third quarter ended September September: see month. 30, 2005. 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 third quarter increased 5.9% to $96.7 million compared with sales of $91.3 million in the third quarter of 2004. "Avocent's sales, gross margin and net income rose in the third quarter and benefited from increased demand for our digital and embedded Inserted into. See embedded system. products," stated John R. Cooper Cooper may refer to:
"Sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen , we were pleased to experience 8% growth in revenues from the second quarter of 2005," continued Mr. Cooper. "Branded sales particularly demonstrated strength, with a sequential One after the other in some consecutive order such as by name or number. increase of 14%." Income prior to intangible amortization and merger-related expenses was $18.0 million, or $0.36 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 income prior to intangible amortization and merger-related expenses of $17.2 million, or $0.34 per diluted share, in the third quarter of 2004. (See "Use of Non-GAAP Financial Measures" discussion below.) Net adjustments to reconcile to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income were $1.7 million in the third quarter of 2005, including $2.7 million in intangible amortization and a $1.8 million tax benefit. Net adjustments to reconcile to GAAP net income were $6.4 million in the third quarter of 2004, including $6.5 million in intangible amortization, a $1.1 million charge for acquired in-process research and development expense related to Sonic Mobility and a $2.8 million tax benefit. GAAP net income for the third quarter of 2005 was $16.4 million, or $0.33 per diluted share. This compares with GAAP net income of $10.8 million, or $0.21 per diluted share, in the third quarter of 2004. Branded sales increased 6.2% from the third quarter of 2004 and accounted for 54.0% of total 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 5.5% from the third quarter of 2004 and accounted for 46.0% of total third quarter 2005 sales. U.S. sales increased 3.6% to $58.0 million and international sales rose 9.6% to $38.7 million compared with the third quarter of 2004. "Sales were up in all major geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. regions and were particularly strong in Asia in the third quarter," continued Mr. Cooper. "We have increased our sales and marketing staff in Asia during the past two years. As a result, branded and OEM sales in Asia were up 21% compared with the third quarter of last year." Gross profit for the third quarter of 2005 increased 7.9% to $57.3 million with a gross margin of 59.3%. This compared with gross profit of $53.1 million and a gross margin of 58.2% in the third quarter of 2004. The increase in gross profit was due to higher sales of digital products and higher royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. income. Research and development expenses increased 24.3% to $14.6 million, or 15.1% of sales, compared with $11.8 million, or 12.9% of sales, in the third quarter of 2004. This increase was due primarily to additional engineering teams added from the acquisition of Sonic Mobility and engineering staff added to support embedded products and other key development projects. Selling, general and administrative expenses declined 2.1% to $20.8 million compared with $21.2 million in the third quarter of 2004. The decline in SG&A expenses was due primarily to lower legal fees and lower Sarbanes-Oxley compliance costs, although these savings were partially offset by increased investments in marketing programs. Avocent's balance sheet and cash position remained strong as of September 30, 2005. 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. $21 million for the third quarter of 2005 with approximately $333 million in cash, cash equivalents and investments at the quarter's end. Avocent 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 September 30, 2005. Use of Non-GAAP Financial Measures Income prior to intangible amortization and merger-related 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 mergers and acquisitions, and significant and unusual non-recurring gains and losses on sales or impairments of investments made by Avocent. 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. Web-cast and rebroadcast of its third quarter results conference call to be held October October: see month. 20, 2005. 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, service providers and financial institutions worldwide. Branded products include switching, 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 ), remote access and video display 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 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 our combined 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 and IPMI solutions), and engineering and design activities. 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 14, 2005. 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
September 30, 2005
Operational Adjustments GAAP
(a)
----------- ----------- --------
Net sales $96,708 $96,708
Cost of sales 39,388 39,388
----------- ----------- --------
Gross profit 57,320 - 57,320
Research and development expenses 14,350 290 14,640
Selling, general and administrative
expenses 20,394 370 20,764
Amortization of intangible assets - 2,731 2,731
----------- ----------- --------
Operating income 22,576 (3,391) 19,185
Other income (expense), net 2,082 (15) 2,067
----------- ----------- --------
Income before income taxes 24,658 (3,406) 21,252
Provision for income taxes 6,639 (1,752) 4,887
----------- ----------- --------
Net income $18,019 $(1,654) $16,365
=========== =========== ========
Earnings per share:
Basic $0.37 $0.33
Diluted $0.36 $0.33
Weighted average shares and common
equivalents outstanding:
Basic 48,966 - 48,966
Diluted 49,904 (25) 49,879
For the Quarter Ended
October 1, 2004
Operational Adjustments GAAP
(a)
----------- ----------- --------
Net sales $91,325 $91,325
Cost of sales 38,201 38,201
----------- ----------- --------
Gross profit 53,124 - 53,124
Research and development expenses 11,059 $715 11,774
Acquired in-process research and
development expense - 1,050 1,050
Selling, general and administrative
expenses 20,344 863 21,207
Amortization of intangible assets - 6,482 6,482
----------- ----------- --------
Operating income 21,721 (9,110) 12,611
Other income (expense), net 1,238 (15) 1,223
----------- ----------- --------
Income before income taxes 22,959 (9,125) 13,834
Provision for income taxes 5,786 (2,774) 3,012
----------- ----------- --------
Net income $17,173 $(6,351) $10,822
=========== =========== ========
Earnings per share:
Basic $0.35 $0.22
Diluted $0.34 $0.21
Weighted average shares and common
equivalents outstanding:
Basic 49,323 - 49,323
Diluted 50,644 (142) 50,502
(a) Note: Adjustments relate to acquired in-process research and
development expense from the Sonic Mobility Inc. acquisition and
amortization of deferred compensation (from the capitalization of
the value of stock options assumed) and intangibles recorded as
the result of the merger of Apex and Cybex, the acquisitions of
Equinox, 2C, Soronti, Crystal Link, OSA and Sonic Mobility. 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.
AVOCENT CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
For the Nine Months Ended
September 30, 2005
Operational Adjustments GAAP
(b)
----------- ----------- ---------
Net sales $263,051 $263,051
Cost of sales 109,322 109,322
----------- ----------- ---------
Gross profit 153,729 - 153,729
Research and development expenses 42,624 871 43,495
Selling, general and administrative
expenses 65,946 1,123 67,069
Amortization of intangible assets - 15,976 15,976
----------- ----------- ---------
Operating income 45,159 (17,970) 27,189
Income from settlement of lawsuit 5,000 5,000
Other income (expense), net 5,991 (45) 5,946
----------- ----------- ---------
Income before income taxes 56,150 (18,015) 38,135
Provision for income taxes 14,925 (6,087) 8,838
----------- ----------- ---------
Net income $41,225 $(11,928) $29,297
=========== =========== =========
Earnings per share:
Basic $0.83 $0.59
Diluted $0.82 $0.58
Weighted average shares and common
equivalents outstanding:
Basic 49,550 - 49,550
Diluted 50,563 (39) 50,524
For the Nine Months Ended
October 1, 2004
Operational Adjustments GAAP
(b)
----------- ----------- ---------
Net sales $265,206 $265,206
Cost of sales 111,190 $190 111,380
----------- ----------- ---------
Gross profit 154,016 (190) 153,826
Research and development expenses 30,650 1,778 32,428
Acquired in-process research and
development expense - 29,260 29,260
Selling, general and administrative
expenses 60,788 2,790 63,578
Amortization of intangible assets 17,656 17,656
----------- ----------- ---------
Operating income 62,578 (51,674) 10,904
Other income (expense), net 3,249 (45) 3,204
----------- ----------- ---------
Income before income taxes 65,827 (51,719) 14,108
Provision for income taxes 17,179 (9,044) 8,135
----------- ----------- ---------
Net income $48,648 $(42,675) $5,973
=========== =========== =========
Earnings per share:
Basic $1.00 $0.12
Diluted $0.97 $0.12
Weighted average shares and common
equivalents outstanding:
Basic 48,663 - 48,663
Diluted 50,353 (70) 50,283
(b) Note: Adjustments relate to acquired in-process research and
development expense from the OSA Technologies Inc. and Sonic
Mobility Inc. acquisitions and amortization of deferred
compensation (from the capitalization of the value of stock
options assumed) and intangibles recorded as the result of the
merger of Apex and Cybex, the acquisitions of Equinox, 2C,
Soronti, Crystal Link, OSA and Sonic Mobility. 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.
AVOCENT CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
September 30, December 31,
2005 2004
------------- -------------
Cash, cash equivalents
and short-term investments $264,186 $239,799
Accounts receivable, net 57,890 60,948
Inventories, net 21,495 21,232
Other current assets 8,361 5,923
Deferred income tax 4,173 6,720
------------- -------------
Total current assets 356,105 334,622
Investments 68,403 91,547
Property and equipment, net 38,367 39,896
Goodwill, net 269,992 269,892
Intangible assets, net 18,290 33,981
Other assets 894 843
------------- -------------
Total assets $752,051 $770,781
============= =============
Accounts payable and other accrued expenses $17,105 $21,368
Income tax payable 11,697 8,494
Other current liabilities 22,147 16,767
------------- -------------
Total current liabilities 50,949 46,629
Non-current liabilities 1,724 10,855
Total stockholders' equity 699,378 713,297
------------- -------------
Total liabilities and stockholders'
equity $752,051 $770,781
============= =============
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