McDATA Announces First Quarter Fiscal Year 2006 Financial Results.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 first quarter (Q1 06) ended April 30, 2006. Net revenues for Q1 06 totaled $168.3 million, a 70 percent increase over the $98.9 million reported in the first quarter of fiscal year 2005 (Q1 05). This compares to $181.8 million reported in the fourth quarter of fiscal year 2005 (Q4 05). The net loss for Q1 06 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 ($9.5) million, or ($0.06) per basic and 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 net loss of ($2.9) million, or ($0.02) per basic and diluted share in Q1 05, and GAAP net income of $5.3 million, or $0.03 per basic and diluted share in Q4 05. Non-GAAP net income for Q1 06 totaled $6.1 million, or $0.04 per diluted share, compared to non-GAAP net income of $3.0 million, or $0.03 per diluted share, reported in Q1 05, and non-GAAP net income of $12.6 million, or $0.08 per diluted share in Q4 05. McDATA's Q1 06 non-GAAP net income excludes charges related to the 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. , certain 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, amortization of debt discount, a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. RoHS inventory accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. , and the impact of stock compensation expense following the adoption of FAS 123R. Q1 05 non-GAAP net income excludes charges related to the amortization of deferred compensation and amortization of purchased intangible assets. Q4 05 non-GAAP net income excludes charges related to the amortization of deferred compensation, amortization of purchased intangible assets, certain restructuring and severance 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. "McDATA's first quarter results were solid by any measure," said John Kelley
Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. with the Intrepid 10000. I believe the results this quarter demonstrate that our business model is well leveraged to drive earnings growth, and I am optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that our understanding of our customers' needs, coupled with our unique ability to provide integrated solutions, will pave PAVE Cardiology A clinical trial–Post AV Node Ablation Evaluation the way to revenue acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. in 2006." Q1 06 Financial Highlights --Total revenue increased more than 70 percent to $168.3 million, compared to $98.9 million in Q1 05 --Software revenue increased 21 percent to $19 million, compared to $15.7 million in Q1 05 --Services revenue increased more than 400 percent to $33 million, compared to $6.6 million in Q1 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 43 percent of revenue versus 51 percent one year ago --Non-GAAP operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: increased to 4.7 percent versus 3.3 percent one year ago --Non-GAAP net income increased more than 100 percent to $6.1 million, compared to $3.0 million in Q1 05 --Non-GAAP EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. increased more than 33 percent to $0.04, compared to $0.03 in Q1 05 Q1 06 Business Highlights --Introduced "McDATA ROC" - a total solution for Remote Office Consolidation enabling consolidation, optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. and protection of remote corporate data assets without slowing the pace of 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. global business --Enhanced an already strong partnership with 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 partner 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. by adding EMC's Rainfinity centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. file virtualization See storage virtualization. and management capabilities to McDATA's ROC offering --Introduced increased data movement speeds for Intrepid(R) Directors with the release of the non-disruptive and seamlessly upgradeable 4Gb/s QPM QPM QOS Policy Manager (Cisco) QPM Quality Protein Maize QPM Queen's Police Medal (UK) QPM Quantitative Project Management QPM Quasi-Phase Matching QPM Quantitative Process Management 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 Intrepid 6140 Directors --Achieved milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. of more than 25,000 directors sold worldwide, reaching a 65 percent lifetime product share in the fibre channel director space --Intrepid 10000 Director received the highest-ranking "Gold Award" for networking equipment as part of SearchStorage's "Best Storage Products" of 2005 Conference Call and Webcast McDATA will host a conference call to discuss Q1 06 financial results today, May 30, 2006, at 3 p.m. MDT MDT abbr. Mountain Daylight Time MDT (in the US and Canada) Mountain Daylight Time MDT n abbr (US) (= mountain daylight time) → . The conference call will be webcast live 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 only data infrastructure solutions provider that can deliver a Global Enterprise Data Center- a globally connected, centrally managed and highly optimized data network. With more than 20 years of storage networking experience, McDATA is trusted in the world's largest data centers, connecting more than two-thirds of all networked data and enabling information access anytime, anywhere. 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, our relationships with EMC, 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 HDS (Hitachi Data Systems, Santa Clara, CA, www.hds.com) A leading provider of high-end storage hardware, software and services. Part of the Information Systems & Telecommunications Division of Hitachi Ltd. and the level of their orders, aggressive price competition by numerous other SAN and IP switch suppliers, OEM qualification of our new products, 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)]. , our ability to integrate CNT's operations with our operations 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 our filings with the Securities and Exchange Commission. These cautionary statements by us should not be construed as exhaustive or as any admission regarding the adequacy of disclosures made by us. All cautionary statements should be read as being applicable to all forward-looking statements wherever they appear. We do 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
(in thousands, except per share data)
(unaudited)
Three Months Ended
April 30, April 30,
2005 2006
------ ------
Revenue $98,868 $168,312
Cost of revenue 45,440 90,728
----------------------
Gross profit 53,428 77,584
Operating expenses:
Research and development 20,932 26,457
Selling and marketing 24,048 36,796
General and administrative 5,583 11,200
Amortization of acquired intangible assets 5,570 11,060
Restructuring costs - 576
Amortization of deferred compensation 703 -
----------------------
Operating expenses 56,836 86,089
Loss from operations (3,408) (8,505)
Interest and other income, net 967 625
----------------------
Loss before income taxes (2,441) (7,880)
Income tax expense 416 1,663
----------------------
Loss before equity in net loss of affiliated
company (2,857) (9,543)
Equity in net loss of affiliated company - -
----------------------
Net loss $(2,857) $(9,543)
======================
Basic and diluted net loss per share $(0.02) $(0.06)
======================
Shares used in computing basic and diluted net
loss per share 115,474 153,702
======================
McDATA CORPORATION
CONDENSED NON-GAAP CONSOLIDATED INCOME STATEMENTS (Note 1)
(in thousands, except per share data)
(unaudited)
Three Months Ended
April 30, April 30,
2005 2006
------ ------
Revenue $98,868 $168,312
Cost of revenue 45,419 88,486
----------------------
Gross profit 53,449 79,826
Operating expenses:
Research and development 20,632 26,132
Selling and marketing 24,009 36,157
General and administrative 5,579 9,590
Acquired in-process research and development - -
Restructuring costs - -
Amortization of deferred compensation - -
----------------------
Operating expenses 50,220 71,879
Income from operations 3,229 7,947
Interest and other income, net 967 1,445
----------------------
Income before income taxes 4,196 9,392
Income tax expense 1,175 3,287
----------------------
Income before equity in net loss of affiliated
company 3,021 6,105
Equity in net loss of affiliated company - -
----------------------
Net income $3,021 $6,105
======================
Basic net income per share $0.03 $0.04
======================
Shares used in computing basic net income per
share 115,474 153,702
======================
Diluted net income per share $0.03 $0.04
======================
Shares used in computing diluted net income per
share 116,185 155,103
======================
McDATA CORPORATION
RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME (LOSS) (Note 1)
(in thousands, except per share data)
(unaudited)
Three Months Ended
April 30, April 30,
2005 2006
------ ------
GAAP net loss $(2,857) $(9,543)
Adjustments:
Amortization of deferred compensation and
acquisition-related compensation 1,067
Amortization of intangible assets 5,570 11,059
FAS 123R stock based compensation 2,625
RoHS inventory reserve 1,873
Amortization of discount on convertible debt 820
Restructuring 576
Severence 319
Income tax expense (759) (1,624)
----------------------
Non-GAAP net income $3,021 $6,105
GAAP net loss per share - basic and diluted $(0.02) $(0.06)
Non-GAAP net income per share - basic and
diluted $0.03 $0.04
Shares used in non-GAAP per share calculation -
diluted 116,185 155,103
Note (1) - 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 Ended
Non-GAAP Adjustments April 30, April 30,
2005 2006
------ ------
Cost of revenue:
Severence $21 $15
Inventory reserve - RoHS 1,873
FAS 123R stock based compensation 354
----------------------
Operating expenses subtotal 21 2,242
----------------------
Operating expenses:
Research and development:
Acquisition-related compensation 300
FAS 123R stock based compensation 326
Selling and marketing:
Acquisition-related compensation 39
FAS 123R stock based compensation 639
General and administrative:
Acquisition-related compensation 4
FAS 123R stock based compensation 1,306
Restructuring costs - 576
Amortization of intangible assets 5,570 11,059
Severence 304
Amortization of deferred compensation 703
----------------------
Operating expenses subtotal 6,637 16,452
----------------------
Amortization of discount on convertible debt - 820
----------------------
Total non-GAAP Adjustments 6,637 17,272
----------------------
Income tax expense 759 1,624
----------------------
After-tax impact of non-GAAP adjustments $5,878 $15,648
======================
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
January 31, April 30,
2006 2006
------ ------
Assets
Cash, cash equivalents and short term
investments $310,193 $330,060
Securities lending collateral 62,555 73,137
Accounts receivable, net 126,106 112,979
Inventories, net 33,100 34,658
Other current assets 13,423 16,622
------------------------
Total current assets 545,377 567,456
Property and equipment, net 109,118 109,973
Long-term investments 31,884 19,703
Goodwill 266,141 266,929
Intangible assets, net 123,694 112,644
Other assets, net 70,495 75,656
------------------------
Total assets $1,146,709 $1,152,361
========================
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities $137,514 $132,139
Securities lending collateral 62,555 73,137
Current portion of deferred revenue 61,242 61,866
Current portion of subordinate
debt - 120,841
Current of capital leases 2,977 2,583
------------------------
Total current liabilities 264,288 390,566
Capital leases, less current portion 3,532 3,164
Deferred revenue, less current portion 31,380 30,960
Convertible subordinate debt 285,889 165,275
Other long-term liabilities 1,844 15,834
------------------------
Total liabilities 594,486 605,799
Stockholders' equity 552,223 546,562
------------------------
Total liabilities and
stockholders' equity $1,146,709 $1,152,361
========================
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
April 30, April 30,
2005 2006
------ ------
Net cash provided by operating activities $8,105 $14,358
======================
Cash flows from investing activities:
Purchases of property and equipment $(2,301) $(3,919)
Net purchases and sales of investments 3,531 (24,833)
----------------------
Net cash provided (used) by investing activities $1,230 $(28,752)
======================
Cash flows from financing activities:
Payments on notes payable and capital
leases $(277) $(755)
Proceeds from the issuance of common
stock 64 820
----------------------
Net cash provided (used) by financing activities $(213) $65
======================
Effect of exchange rate changes on cash $(151)
Net increase (decrease) in cash and cash
equivalents $9,122 $(14,480)
======================
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