McDATA Announces Fourth Quarter and Fiscal Year 2004 Results; Fourth Quarter Revenue Increases 7 Percent Sequentially.BROOMFIELD Broomfield can be: In the United Kingdom:
MCDT Microsoft Certified Desktop Technician ) today reported results for the fourth quarter (Q4 04) and fiscal year 2004 (FY 04) ended January January: see month. 31, 2005. Net revenues for Q4 04 totaled $105.8 million, up seven percent from the third quarter fiscal year 2004 (Q3 04) and down seven percent from the fourth quarter fiscal year 2003 (Q4 03). Net revenues for FY 04 were $399.8 million, a decrease of five percent from $418.9 million reported in fiscal year 2003 (FY 03). "McDATA's fourth quarter results demonstrated solid sequential One after the other in some consecutive order such as by name or number. growth with reported revenue and non-GAAP earnings per share at the high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. of guidance," said John Kelley
GEDC Global Engineering Development Center ) initiative continues to resonate res·o·nate v. res·o·nat·ed, res·o·nat·ing, res·o·nates v.intr. 1. To exhibit or produce resonance or resonant effects. 2. strongly with partners and customers, and during our fourth quarter we significantly accelerated this strategy with the announcement of our intent to acquire CNT (Carbon NanoTube) See nanotube. , the availability of the Intrepid 10000 Backbone backbone: see spinal column. The part of a network that handles the major traffic. It employs the highest-speed transmission paths in the network and may also run the longest distances. Director through Hitachi Data Systems See HDS. , and the general availability and first customer sales of our third generation router router Portable electric power tool used in carpentry and furniture making that consists of an electric motor, a base, two handle knobs, and bits (cutting tools). A router can cut fancy edges for shelving, grooves for storm windows and weather stripping, circles and ovals , the Eclipse 2640 SAN Router." GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income for Q4 04 was 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 $(0.0) per share, compared to a GAAP net loss of $5.5 million, or $(0.05) reported in Q3 04, and a GAAP net loss of $7.5 million, or $(0.07) per share, reported in Q4 03. Non-GAAP net income for Q4 04 totaled $6.8 million, or $0.06 per share, compared to non-GAAP net income of $4.6 million, or $0.04 per share, reported in Q3 04 and non-GAAP net income of $3.3 million, or $0.03 per share, reported in Q4 03. McDATA's Q4 04 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 Q3 04 and Q4 03 non-GAAP net income exclude charges related to the amortization of deferred compensation, certain restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , amortization of purchased intangible assets, as well as the Company's share of the 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. associated with its investment in Aarohi Aarohi is the annual youth festival (Culfest) of Visvesvaraya National Institute of Technology, Nagpur, India. It is organised every year during winter in December-January. Students from undergraduate institutes in the city take part in many of the events organised. . McDATA's Q4 04 non-GAAP tax rate was two percent, and resulted in a benefit to non-GAAP net income of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2 million, or $0.02 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, primarily related to R&D tax credits and deductions for foreign sales on the Company's 2003 tax return, and a corresponding increase in the Company's estimates for these two beneficial items with respect to FY 04. McDATA's Q3 04 non-GAAP net income also included a tax benefit of approximately $0.03 per share, primarily related to R&D tax credits and deductions for foreign sales on the Company's 2003 tax return, and a corresponding increase in the Company's estimates for these two beneficial items with respect to FY 04. Q4 04 Financial Highlights Demonstrate Sequential Operational Performance Improvements: --Non-GAAP gross profit increased to 56.0% of sales in Q4 04 compared to 55.7% in Q3 04 --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. decreased to 51% of revenue in Q4 04 compared to 56% of revenue in Q3 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 4.9% of sales in Q4 04 from 0.1% in Q3 04 --Q4 04 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 $12.1 million compared to cash flow used in operations of ($5.6) million in Q3 04 --Days sales outstanding were 56 days in Q4 04 compared to 60 days in Q3 04 The non-GAAP results are a supplement to financial statements based on accounting principles generally accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, (GAAP). The non-GAAP results exclude certain expenses and income to provide what McDATA believes is a more complete understanding of our underlying operational results and trends. Non-GAAP results are one of the primary indicators management uses for planning and forecasting 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. Q4 04 Business Highlights Advance Global Enterprise Data Center Initiative: --Announced a definitive agreement to acquire Computer Network Technology Corporation (CNT), a leader in the WAN extension/networking space providing storage area networking products, data movement software, services and solutions, significantly accelerating the Global Enterprise Data Center (GEDC) strategy. McDATA believes the combination of McDATA and CNT will enable McDATA to deliver greater value to customers, OEMs and partners by offering a comprehensive portfolio of data infrastructure solutions across the Storage Area Network (SAN), Metro Area This article is about the music production team. For the article about population centers, see metropolitan area. Metro Area are a Brooklyn-based dance music production team composed of Morgan Geist and Darshan Jesrani. Network (MAN) and Wide Area Network (WAN). --Announced Hitachi Data Systems as the first 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 to sell and ship the Intrepid(R) 10000 Backbone Director. The Intrepid 10000 is the industry's first backbone director and the heart of a tiered storage A data storage system made up of two or more types of storage based on their access speed. For example, magnetic disk and tape or magnetic disk and optical disc are widely used in a tiered storage system. See HSM. network infrastructure for the Global Enterprise Data Center (GEDC). McDATA is first in the industry to deliver the backbone functionality required for a tiered storage network, including network consolidation, dynamic network partitioning To divide a resource or application into smaller pieces. See partition, application partitioning and PDQ. , 10 Gbit/s intelligent network services and carrier-class data availability Refers to the degree to which data can be instantly accessed. The term is mostly associated with service levels that are set up either by the internal IT organization or that may be guaranteed by a third party datacenter or storage provider. for the enterprise. --Announced McDATA availability of the Company's third generation router, the Eclipse(TM) 2640 SAN Router, and shipped units to customers during the fourth quarter. --Added Digital China, China's largest IT products distributor and systems integrator An individual or organization that builds systems from a variety of diverse components. With increasing complexity of technology, more customers want complete solutions to information problems, requiring hardware, software and networking expertise in a multivendor environment. , as a reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. of McDATA's full product suite, significantly expanding the Company's presence in China. --Announced Netherlands-based Bank Nederlandse Gemeenten (BNG BNG Bangladesh BNG Bloque Nacionalista Galego (Galician Nationalist Bloc, Spain) BNG Bank Nederlandse Gemeenten BNG Bump & Grind BNG Bob and George (webcomic) BNG Bermuda National Gallery ) deployed McDATA's Intrepid directors and Eclipse SAN routers. By implementing McDATA's directors and SAN routers, BNG is able to protect data over long-distances while achieving ultra ultra Member of the extreme right (ultraroyalist) wing of the royalist movement in the French Bourbon Restoration (1815–30). The ultras included large landowners, clericalists, and the former émigré nobility. high availability Also called "RAS" (reliability, availability, serviceability) or "fault resilient," it refers to a multiprocessing system that can quickly recover from a failure. There may be a minute or two of downtime while one system switches over to another, but processing will continue. . --Announced ManagedStorage International (MSI MSI: see integrated circuit. (1) (MicroSoft Installer) See Windows Installer. (2) (Medium Scale Integration) Between 100 and 3,000 transistors on a chip. See SSI, LSI, VLSI and ULSI. ), an enterprise storage networking services provider, implemented McDATA's SANavigator(R). As a result, MSI has converted administrative cost administrative cost Managed care A cost incurred by the 'business' end of a health care facility or university–eg, staffing and personnel costs, nursing home and hospital administration, insurance, and overhead expenses. Cf Indirect costs. labor hours to billable hours Billable Hours is a Canadian comedy series, which airs on Showcase. Set in the fictional Toronto law firm of Fagen & Harrison, the series focuses on three young lawyers struggling to balance their expectations in life with the difficult realities of building a career , enabling the company to keep pace with future customer acquisitions and increased the addressable Reachable. When something is addressable, it can be identified and manipulated independently of its surroundings. For example, screen pixels and RAM memory are addressable. Each of the screen's picture elements can be individually turned on and off, and each of the memory's bytes can be market of its customers through the implementation of the non-invasive Non-invasive A procedure that does not penetrate the body. Mentioned in: Multiple-Gated Acquisition Scan non-invasive 1. not penetrating the skin, e.g. a non-invasive test. 2. SANavigator management application. Conference Call McDATA's fiscal 2004 fourth quarter conference call is scheduled today, February February: see month. 24, 2005 at 3:00 p.m. Mountain Time (5:00 p.m. Eastern Time). John Kelley, chairman of the board, chief executive officer and president, and Ernest Er´nest n. 1. See Earnest. Sampias, chief financial officer, will host the conference call. The 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. A replay of the conference call will be available live via the Internet at www.mcdata.com for twelve months. About McDATA (www.mcdata.com) McDATA (Nasdaq: MCDTA/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 (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. , 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 (Note 1)
(in thousands, except per share data)
(unaudited)
Three Months Twelve Months
Ended Ended
------------------ ------------------
Jan. 31, Jan. 31, Jan. 31, Jan. 31,
2004 2005 2004 2005
------------------ ------------------
Revenue $114,008 $105,819 $418,860 $399,794
Cost of revenue 49,022 46,625 177,329 176,193
------------------ ------------------
Gross profit 64,986 59,194 241,531 223,601
Operating expenses:
Research and development 28,280 21,536 88,826 91,613
Selling and marketing 25,368 26,828 95,820 101,305
General and administrative 13,645 11,572 39,456 48,356
Acquired in-process research and
development - - 11,410 -
Restructuring costs 2,258 - 2,258 1,263
Amortization of deferred
compensation 3,349 725 11,969 5,522
------------------ ------------------
Operating expenses 72,900 60,661 249,739 248,059
Loss from operations (7,914) (1,467) (8,208) (24,458)
Interest and other income, net 979 1,687 4,471 5,306
------------------ ------------------
Income (loss) before income taxes (6,935) 220 (3,737) (19,152)
Income tax expense 202 322 38,412 362
------------------ ------------------
Loss before equity in net loss of
affiliated company (7,137) (102) (42,149) (19,514)
Equity in net loss of affiliated
company (393) - (984) (1,380)
------------------ ------------------
Net loss $(7,530) $(102) $(43,133)$(20,894)
================== ==================
Basic net loss per share $(0.07) $(0.00) $(0.38) $(0.18)
================== ==================
Shares used in computing basic
net loss per share 114,847 115,288 114,682 115,355
================== ==================
Diluted net loss per share $(0.07) $(0.00) $(0.38) $(0.18)
================== ==================
Shares used in computing diluted
net loss per share 114,847 115,288 114,682 115,355
================== ==================
McDATA CORPORATION
CONDENSED NON-GAAP CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
(unaudited)
Three Months Twelve Months
Ended Ended
------------------ ------------------
Jan. 31, Jan. 31, Jan. 31, Jan. 31,
2004 2005 2004 2005
------------------ ------------------
Revenue $114,008 $105,819 $418,860 $399,794
Cost of revenue 48,702 46,607 176,787 175,973
------------------ ------------------
Gross profit 65,306 59,212 242,073 223,821
Operating expenses:
Research and development 27,390 21,281 86,312 89,914
Selling and marketing 24,775 26,714 94,635 100,852
General and administrative 7,732 5,987 29,163 25,282
Acquired in-process research and
development - - - -
Restructuring costs - - - -
Amortization of deferred
compensation - - - -
------------------ ------------------
Operating expenses 59,897 53,982 210,110 216,048
Income from operations 5,409 5,230 31,963 7,773
Interest and other income, net 1,061 1,687 4,072 5,306
------------------ ------------------
Income before income taxes 6,470 6,917 36,035 13,079
Income tax expense (benefit) 3,124 108 11,761 (1,397)
------------------ ------------------
Income before equity in net loss
of affiliated company 3,346 6,809 24,274 14,476
Equity in net loss of affiliated
company - - - -
------------------ ------------------
Net income $3,346 $6,809 $24,274 $14,476
================== ==================
Basic net income per share $0.03 $0.06 $0.21 $0.13
================== ==================
Shares used in computing basic
net income per share 114,847 115,288 114,682 115,355
================== ==================
Diluted net income per share $0.03 $0.06 $0.21 $0.12
================== ==================
Shares used in computing diluted
net income per share 118,534 118,010 118,209 117,691
================== ==================
McDATA CORPORATION
RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME (LOSS) (Note 2)
(in thousands, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
Jan. 31, Jan. 31, Jan. 31, Jan. 31,
2004 2005 2004 2005
------------------ -------------------
GAAP net loss $(7,530) $(102) $(43,133)$(20,894)
Adjustments:
Inventory-related charges, net - - (460) -
Amortization of deferred
compensation and
acquisition-related
compensation 5,491 1,142 17,342 8,195
Amortization of intangible
assets 5,656 5,555 9,222 22,773
Restructuring costs 2,258 - 2,258 1,263
Acquired in-process research
& development - - 11,410 -
Income tax (expense) benefit (2,922) 214 26,651 1,759
Equity in net loss of
affiliated company 393 - 984 1,380
------------------ -------------------
Non-GAAP net income $3,346 $6,809 $24,274 $14,476
GAAP net loss per share - basic
and diluted $(0.07) $(0.00) $(0.38) $(0.18)
Non-GAAP net income per share -
diluted $0.03 $0.06 $0.21 $0.12
Shares used in non-GAAP per
share calculation - diluted 118,534 118,010 118,209 117,691
Note (1) - Certain prior period amounts have been reclassified to
conform to the fiscal 2004 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 Jan. 31, Jan. 31, Jan. 31, Jan. 31,
2004 2005 2004 2005
--------------------------------------------------- -----------------
Cost of revenue:
Inventory-related charges, net $- $- $(460) $-
Deferred compensation and
acquisition-related
compensation 320 18 1,002 220
----------------- -----------------
Cost of revenue subtotal 320 18 542 220
Operating expenses:
Research and development:
Acquisition-related
compensation 890 255 2,514 1,699
Selling and marketing
Acquisition-related
compensation 932 114 1,857 453
General and administrative
Acquisition-related
compensation - 30 - 301
Amortization of intangible
assets 5,656 5,555 9,222 22,773
Acquired in-process research &
development - - 11,410 -
Restructuring costs 2,258 - 2,258 1,263
Amortization of deferred
compensation 3,349 725 11,969 5,522
----------------- -----------------
Operating expenses subtotal 13,085 6,679 39,230 32,011
----------------- -----------------
Total non-GAAP Adjustments 13,405 6,697 39,772 32,231
Income tax expense (benefit) 2,922 (214) (26,651) (1,759)
Equity in net loss of affiliated
company 393 - 984 1,380
----------------- -----------------
After-tax impact of non-GAAP
adjustments $10,876 $6,911 $67,407 $35,370
================= =================
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
October 31, January 31,
2004 2005
--------------------------
Assets
Cash and short term investments $199,997 $209,766
Securities lending collateral 141,361 130,804
Accounts receivable, net 64,406 63,810
Inventories, net 16,386 13,689
Other current assets 6,764 7,190
--------------------------
Total current assets 428,914 425,259
Property and equipment, net 98,096 94,929
Long-term investments 98,385 95,589
Goodwill 78,693 78,693
Intangible assets, net 93,146 87,592
Other assets, net 32,807 35,927
--------------------------
Total assets $830,041 $817,989
==========================
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities $69,056 $63,231
Securities lending collateral 141,361 130,804
Current portion of deferred revenue 20,791 22,602
Current portion of notes payable and
capital leases 1,013 2,485
--------------------------
Total current liabilities 232,221 219,122
Notes payable and capital leases, less
current portion 388 256
Deferred revenue, less current portion 25,049 27,001
Convertible subordinate debt and related
interest rate swap 172,781 170,495
Other long-term liabilities 2,020 3,913
--------------------------
Total liabilities 432,459 420,787
Stockholders' equity 397,582 397,202
--------------------------
Total liabilities and stockholders'
equity $830,041 $817,989
==========================
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
Twelve Months Ended
January 31, January 31,
2004 2005
-------------------------
Net cash provided by operating activities $61,060 $22,082
=========================
Cash flows from investing activities:
Purchases of property and equipment $(17,999) $(17,581)
Acquisitions and equity investment (177,421) -
Net purchases and sales of investments (43,709) 16,902
-------------------------
Net cash used by investing activities $(239,129) $(679)
=========================
Cash flows from financing activities:
Net proceeds for issuance of convertible
subordinated debt $166,933 $-
Net purchase of share option transactions (20,510) -
Payments on notes payable (15,469) (1,479)
Cash restricted pursuant to interest rate
swap transaction (5,130) 83
Purchase of treasury stock (8,752) (10,287)
Payment of obligations under capital
leases (2,697) (1,088)
Proceeds from the issuance of common stock 5,827 5,574
-------------------------
Net cash provided (used) by financing
activities $120,202 $(7,197)
=========================
Net increase (decrease) in cash and cash
equivalents $(57,867) $14,206
=========================
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