McDATA Achieves Record Revenue for the Fourth Quarter and Fiscal Year 2005.BROOMFIELD Broomfield can be: In the United Kingdom:
McDATA Corporation (Nasdaq:MCDTA) (Nasdaq:MCDT MCDT Micro Credit Development Trust SACCO (Uganda microfinance) MCDT Microsoft Certified Desktop Technician ) today reported results for the fourth quarter (Q4 05) and fiscal year 2005 (FY 05) ended January January: see month. 31, 2006. Net revenues for Q4 05 totaled $181.8 million, compared to $168.5 million reported in the third quarter of fiscal year 2005 (Q3 05), and $105.7 million reported in the fourth quarter of fiscal year 2004 (Q4 04). Net revenues for FY 05 were $614.4 million, compared to $399.7 million reported in fiscal year 2004 (FY 04). Net income for Q4 05 on a 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 GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) basis was $5.3 million, or $0.03 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 to a GAAP net loss of $(7.5) million, or $(0.05) per basic and diluted share in Q3 05, and Q4 04 GAAP net income at breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations , or $0.00 per basic and diluted share. Non-GAAP net income for Q4 05 totaled $12.6 million, or $0.08 per diluted share, compared to non-GAAP net income of $3.6 million, or $0.02 per basic and diluted share, reported in Q3 05, and non-GAAP net income of $6.8 million, or $0.06 per basic and diluted share reported in Q4 04. McDATA's non-GAAP net income excludes charges related to the amortization of deferred compensation and amortization of purchased intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. . McDATA's Q4 05 and Q3 05 non-GAAP net income also excludes 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 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 costs and amortization of debt discount. Non-GAAP results are a supplement to GAAP financial statements and exclude certain expenses to provide what McDATA believes is a more complete understanding of our underlying operational trends. McDATA management uses non-GAAP results as one of the primary indicators for planning of future periods. Non-GAAP financial measures should be considered in addition to results prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP, but should not be considered a substitute for, or superior to, GAAP results. A reconciliation of GAAP and non-GAAP net income is provided in the financial statements attached to this news release. "We exited fiscal year 2005 achieving record revenue with record revenue contributions for the year from 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 Hitachi Data Systems See HDS. ," said John Kelley
A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. , strong operational performance and solid progress towards our targeted business model. Having successfully attained at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. full qualification and general availability of the Intrepid(R) 10000 from 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. , and with the recent addition of industry leading executives to the McDATA management team, we are very optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our opportunities in fiscal year 2006." Q4 05 financial highlights demonstrate continued execution towards operating targets: --Non-GAAP gross profit increased to 50.3 percent of sales in Q4 05 compared to 47.5 percent in Q3 05 --Non-GAAP 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. represented 40.3 percent of revenue in Q4 05 compared to 45.8 percent of revenue in Q3 05 and 51.0 percent of revenue in Q4 04 --Non-GAAP 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. increased to 10.0 percent of sales in Q4 05, up from 1.6 percent in Q3 05 and 5.0 percent in Q4 04 --Q4 05 non-GAAP net income was $12.6 million, an increase of 251 percent over $3.6 million reported in Q3 05 and an increase of 85 percent over $6.8 million reported in Q4 04 Q4 05 business highlights and customer wins: --McDATA's Intrepid 10000 Director was named "Best Director Switch" as part of InfoWorld's 2006 "Technology of the Year" awards and received the highest-ranking "Gold Award" for networking equipment as part of SearchStorage's "Best Storage Products" of 2005. --McDATA announced its new 10Gb/s Intrepid 6000 XPM The file extension used by an X Pixelmap image. See X Pixelmap. (file format) xpm - X11 Pixmap. A pixmap image file format for the X Window System. Blade One component in a system that is designed to accept some number of components (blades). Blades can be individual servers or clients that plug into a single cabinet or individual port cards that add connectivity to a switch. for the Intrepid 6000-series of Directors. --McDATA announced the appointment of Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs E. Despres as vice president of manufacturing. Despres joined McDATA from Sun Microsystems/StorageTek, where he was general manager of StorageTek's manufacturing facilities in Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. . --Strong customer adoption in the growing Asia Pacific region, combined with product and technology leadership, helped McDATA earn four industry awards. These include the IT168 "Merit Award" for its Intrepid 10000 Director; the Sphereon(TM) 4700 Fabric Switch won China Information World's (CIW (Certified Internet Webmaster) A program of certification from Prosoft Learning Corporation for professionals specializing in Internet technologies. CIW instructor-led training is offered by authorized training organizations and academic institutions. ) "Editors' Choice" award and C-Week's "2005 Hot 1 Award"; and its Enterprise Fabric 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. Manager won China Computer Education's "Product of the Year." --Huhtamaki Americas A·mer·i·cas , the See America. , one of the world's largest global packaging companies, replaced its Direct-Attached Storage Direct-attached storage (DAS) refers to a digital storage system directly attached to a server or workstation, without a storage network in between. It is a retronym, mainly used to differentiate non-networked storage from SAN and NAS. environments with a unified, Fibre-Channel SAN, based on McDATA's Intrepid 10000 Director. --The Los Angeles Department of Water and Power The Los Angeles Department of Water and Power (LADWP) is the largest municipal utility in the United States, serving 3.9 million residents in 2006. It was founded in 1902 to deliver water and electricity supplies to residents and businesses in Los Angeles. , the largest city-owned public utility in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , deployed six McDATA UltraNet Ultranet can refer to one of the following:
Conference Call and Webcast McDATA will host a conference call to discuss its fourth quarter and fiscal year 2005 financial results today, March 9, 2006, at 3:00 p.m. MST See micro systems technology. . The conference call is being webcast live via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.mcdata.com. An archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. of the webcast will be available for 12 months at www.mcdata.com. About McDATA (www.mcdata.com) McDATA (Nasdaq:MCDTA) (Nasdaq:MCDT) is the leading provider of storage networking solutions, helping customers build, globally connect, optimize optimize - optimisation and centrally manage data infrastructures across SAN, MAN and WAN environments. With nearly 25 years experience developing SAN products, services and solutions, McDATA is the trusted partner in the world's largest data centers, connecting more than two-thirds of all networked data. 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 about expected future events that are 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. and subject to risks and uncertainties. Readers are urged to consider statements that include the terms "believes," "belief," "expects," "plans," "objectives," "estimates," "anticipates," "intends," "targets," or the like to be uncertain and forward-looking. Factors that could cause actual results to differ and vary materially from expectations include, but are not limited to, McDATA's relationships with EMC, IBM and Hitachi Data Systems and the level of their orders, aggressive price competition by numerous other SAN and IP switch suppliers, 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 qualification of our new products -- such as the Intrepid 10000 Director, integration of CNT's sales and marketing functions, manufacturing 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)]. , constraints in obtaining third party product for resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. and other risk factors that are disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in McDATA's filings with the Securities and Exchange Commission. These cautionary statements by McDATA should not be construed as exhaustive or as any admission regarding the adequacy of disclosures made by McDATA. All cautionary statements should be read as being applicable to all forward-looking statements wherever they appear. McDATA does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
McDATA CORPORATION
CONDENSED REPORTED CONSOLIDATED INCOME STATEMENTS (Note 1)
(in thousands, except per share data)
(unaudited)
Three Months Twelve Months
Ended Ended
----------------- ------------------
January January January January
31, 31, 31, 31,
2005 2006 2005 2006
----------------- ------------------
Revenue:
Product $99,962 $153,452 $379,344 $523,440
Service 5,723 28,299 20,316 90,993
----------------- ------------------
Total revenue 105,685 181,751 399,660 614,433
Cost of revenue
Product 42,067 72,288 158,656 248,025
Service 4,526 18,242 17,505 59,874
Restructuring charges - 366 - 1,192
----------------- ------------------
Total cost of revenue 46,593 90,896 176,161 309,091
----------------- ------------------
Gross profit 59,092 90,855 223,499 305,342
Operating expenses:
Research and development 21,411 27,932 91,488 111,715
Selling and marketing 26,828 35,818 101,305 133,909
General and administrative 11,574 20,994 48,357 72,626
Amortization of deferred
compensation 725 1,059 5,522 5,908
Restructuring costs - 1,407 1,263 11,685
----------------- ------------------
Operating expenses 60,538 87,210 247,935 335,843
Income (loss) from operations (1,446) 3,645 (24,436) (30,501)
Interest and other income, net 1,688 (444) 5,306 331
----------------- ------------------
Income (loss) before income taxes
and equity in net loss of
affiliated company 242 3,201 (19,130) (30,170)
Income tax expense (benefit) 322 (2,057) 362 431
----------------- ------------------
Income (loss) before equity in net
loss of affiliated company (80) 5,258 (19,492) (30,601)
Equity in net loss of affiliated
company - - (1,380) -
----------------- ------------------
Net income (loss) $(80) $5,258 $(20,872)$(30,601)
================= ==================
Basic net income (loss) per share $(0.00) $0.03 $(0.18) $(0.22)
================= ==================
Shares used in computing basic net
income (loss) per share 115,288 152,853 115,355 140,331
================= ==================
Diluted net income (loss) per
share $(0.00) $0.03 $(0.18) $(0.22)
================= ==================
Shares used in computing diluted
net income (loss) per share 115,288 155,779 115,355 140,331
================= ==================
McDATA CORPORATION
CONDENSED NON-GAAP CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
(unaudited)
Three Months Twelve Months
Ended Ended
----------------- ------------------
January January January January
31, 31, 31, 31,
2005 2006 2005 2006
----------------- ------------------
Revenue:
Product $99,962 $153,452 $379,344 $523,440
Service 5,723 28,299 20,316 90,993
----------------- ------------------
Total revenue 105,685 181,751 399,660 614,433
Cost of revenue
Product 42,049 72,171 158,436 247,326
Service 4,526 18,242 17,505 59,874
Restructuring charges - - - -
----------------- ------------------
Total cost of revenue 46,575 90,413 175,941 307,200
----------------- ------------------
Gross profit 59,110 91,338 223,719 307,233
Operating expenses:
Research and development 21,156 27,682 89,789 110,602
Selling and marketing 26,714 35,544 100,852 133,486
General and administrative 5,989 9,947 25,283 34,029
Amortization of deferred
compensation - - - -
Restructuring costs - - - -
----------------- ------------------
Operating expenses 53,859 73,173 215,924 278,117
Income from operations 5,251 18,165 7,795 29,116
Interest and other income, net 1,688 376 5,306 2,518
----------------- ------------------
Income before income taxes 6,939 18,541 13,101 31,634
Income tax expense (benefit) 108 5,933 (1,397) 8,447
----------------- ------------------
Net income $6,831 $12,608 $14,498 $23,187
================= ==================
Basic net income per share $0.06 $0.08 $0.13 $0.17
================= ==================
Shares used in computing basic net
income per share 115,288 152,853 115,355 140,331
================= ==================
Diluted net income per share $0.06 $0.08 $0.12 $0.16
================= ==================
Shares used in computing diluted
net income per share 118,010 155,779 117,691 143,808
================= ==================
McDATA CORPORATION
RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME (LOSS) (Note 2)
(in thousands, except per share data)
(unaudited)
Three Months Twelve Months
Ended Ended
January January January January
31, 31, 31, 31,
2005 2006 2005 2006
---------------- ------------------
GAAP net income (loss) $(80) $5,258 $(20,872)$(30,601)
Adjustments:
Amortization of deferred
compensation and
acquisition-related
compensation 1,142 1,239 8,195 7,460
Amortization of intangible
assets 5,555 11,036 22,773 37,510
Other severance and retention - 472 - 1,770
Restructuring costs - 1,773 1,263 12,877
Interest expense - 820 - 2,187
Income tax (expense) benefit 214 (7,990) 1,759 (8,016)
Equity in net loss of affiliated
company - - 1,380 -
---------------- ------------------
Non-GAAP net income $6,831 $12,608 $14,498 $23,187
GAAP net income (loss) per share -
basic and diluted $(0.00) $0.03 $(0.18) $(0.22)
Non-GAAP net income per share -
diluted $0.06 $0.08 $0.12 $0.16
Shares used in non-GAAP per share
calculation - diluted 118,010 155,779 117,691 143,808
Note (1) - Certain prior period amounts have been reclassified to
conform to the fiscal 2005 presentation.
Note (2) - The condensed non-GAAP consolidated income statements for
all periods presented are for illustrative purposes only and are not
prepared in accordance with generally accepted accounting principles.
The following is provided as a supplement to the non-GAAP
reconciliation above:
Three Months Twelve Months
Ended Ended
-------------- ----------------
Non-GAAP Adjustments January January January January
31, 31, 31, 31,
2005 2006 2005 2006
----------------------------------------------------- ----------------
Cost of revenue:
Deferred compensation and
acquisition-related compensation $18 $99 $220 $335
Restructuring costs - 366 - 1,192
Other severance and retention - 18 - 364
-------------- ----------------
Total cost of revenue subtotal 18 483 220 1,891
-------------- ----------------
Operating expenses:
Research and development:
Acquisition-related compensation 255 64 1,699 892
Other severance and retention - 186 - 221
Selling and marketing
Acquisition-related compensation 114 6 453 155
Other severance and retention - 268 - 268
General and administrative
Acquisition-related compensation 30 11 301 170
Amortization of intangible
assets 5,555 11,036 22,773 37,510
Other severance and retention - - - 917
Restructuring costs - 1,407 1,263 11,685
Amortization of deferred
compensation 725 1,059 5,522 5,908
-------------- ----------------
Operating expenses subtotal 6,679 14,037 32,011 57,726
-------------- ----------------
Interest expense - 820 - 2,187
-------------- ----------------
Total non-GAAP Adjustments 6,697 15,340 32,231 61,804
Income tax expense (benefit) (214) 7,990 (1,759) 8,016
Equity in net loss of affiliated
company - - 1,380 -
-------------- ----------------
After-tax impact of non-GAAP
adjustments $6,911 $7,350 $35,370 $53,788
============== ================
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
January 31, January 31,
----------- -----------
2005 2006
---- ----
Assets
Cash, cash equivalents and short term
investments $209,766 $310,193
Securities lending collateral 130,804 62,555
Accounts receivable, net 63,810 126,106
Inventories, net 13,720 33,100
Other current assets 7,280 13,423
---------------------------
Total current assets 425,380 545,377
Property and equipment, net 94,929 109,118
Long-term investments 95,589 31,884
Goodwill 78,693 266,285
Intangible assets, net 87,592 123,694
Other assets, net 36,052 70,495
---------------------------
Total assets $818,235 $1,146,853
===========================
Liabilities and stockholders' equity
Accounts payable and accrued
liabilities $64,894 $137,658
Securities lending collateral 130,804 62,555
Current portion of deferred revenue 22,736 61,242
Current portion of notes payable and
capital leases 912 2,978
---------------------------
Total current liabilities 219,346 264,433
Notes payable and capital leases, less
current portion 256 3,532
Deferred revenue, less current portion 27,001 31,380
Convertible subordinate debt 172,500 293,442
Other long-term liabilities 1,908 1,843
---------------------------
Total liabilities 421,011 594,630
Stockholders' equity 397,224 552,223
---------------------------
Total liabilities and stockholders'
equity $818,235 $1,146,853
===========================
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