Published:
Adaptec Reports Fourth Quarter and Fiscal 2008 Results
Adaptec Reports Fourth Quarter and Fiscal 2008 Results
Company Continues to Improve Margins and Generate Cash
Adaptec, Inc. (NASDAQ: ADPT), a global leader
in storage solutions, today reported its financial results for the fourth
quarter and fiscal year ended March 31, 2008.
"I am pleased with Adaptec's execution on a number of fronts this quarter,"
said S. "Sundi" Sundaresh, president and CEO of Adaptec. "From a technology
innovation perspective, we have made considerable strides in our DPS
Business with the very successful global launch of our Series 5 Unified
Serial RAID controller family. From an operational perspective, we
continue to align expenses with our revenue while improving margins and
generating cash."
Net revenues for the Company's fourth quarter of fiscal 2008 were $39.9
million, compared with $51.9 million for the fourth quarter of fiscal 2007.
Gross margins were 42.5% for the fourth quarter of fiscal 2008, compared
with 33.8% for the fourth quarter of fiscal 2007.
The Company's loss from continuing operations, net of taxes, computed on a
generally accepted accounting principles (GAAP) basis, for the fourth
quarter of fiscal 2008 was $(0.1) million, or $(0.00) per share, compared
with a loss from continuing operations, net of taxes, of $(4.2) million, or
$(0.04) per share, for the fourth quarter of fiscal 2007. GAAP net income
for the fourth quarter of fiscal 2008 was $0.5 million, or $0.00 per share,
compared with a net loss of $(3.3) million, or $(0.03) per share, for the
fourth quarter of fiscal 2007.
Non-GAAP income from continuing operations, net of taxes, for the fourth
quarter of fiscal 2008 was $5.7 million, or $0.04 per diluted share,
compared with a non-GAAP loss from continuing operations, net of taxes, of
$(2.7) million, or $(0.02) per share, for the fourth quarter of fiscal
2007.
Net revenues for the Company's fiscal year ended March 31, 2008 were $167.4
million, compared with $255.2 million for the fiscal year ended March 31,
2007.
The Company's loss from continuing operations, net of taxes, computed on a
GAAP basis, for the fiscal year ended March 31, 2008 was $(10.1) million,
or $(0.09) per share, compared with income from continuing operations of
$24.8 million, or $0.20 per diluted share, for the fiscal year ended March
31, 2007.
GAAP net loss for the fiscal year ended March 31, 2008 was $(9.6) million,
or $(0.08) per share, compared with net income of $30.8 million, or $0.25
per diluted share for the fiscal year ended March 31, 2007, which included
$61.3 million of discrete tax benefits primarily related to settlements
with the IRS.
Non-GAAP income from continuing operations, net of taxes, for the fiscal
year ended March 31, 2008 was $2.1 million, or $0.02 per diluted share,
compared with non-GAAP loss from continuing operations of $(5.9) million,
or $(0.05) per share, for the fiscal year ended March 31, 2007.
The non-GAAP results for all the periods presented, including, but not
limited to, the fourth quarter of fiscal 2008 and the fiscal year ended
March 31, 2008, as defined below in the section "Use of Non-GAAP Financial
Measures," differ from results measured under GAAP as they exclude
stock-based compensation expense, expense associated with a management
incentive program, amortization of acquisition-related intangible assets,
restructuring costs, other charges or gains, and tax differences due to
GAAP versus non-GAAP measurements. A complete reconciliation between GAAP
and non-GAAP information referred to in this release is provided in the
attached tables at the end of this press release.
Conference Call
The Adaptec fourth quarter fiscal 2008 earnings conference call is
scheduled for 1:45 p.m. Pacific Time on May 8, 2008. Individuals may
participate via webcast by visiting www.adaptec.com/investor 15 minutes
prior to the call. A telephone replay of the teleconference will be
available through May 22, 2008 by calling (888) 203-1112 in the U.S. or
(719) 457-0820 internationally and referencing reservation number 7966641.
About Adaptec
Adaptec, Inc. (NASDAQ: ADPT) provides trusted storage solutions that
reliably move, manage, and protect critical data and digital content.
Adaptec's software and hardware-based solutions are delivered through
leading original equipment manufacturers (OEMs) and channel partners to
provide storage connectivity, data protection, and networked storage to
enterprises, government organizations, medium and small businesses
worldwide. More information is available at www.adaptec.com.
Safe Harbor Statement
This news release may include forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities and Exchange Act of 1934, as amended. Forward-looking
statements are statements regarding future events or the future performance
of Adaptec, and may be identified by words such as "expects,"
"anticipates," "will," "intends," "plans," "projects," "believes" and other
words or phrases expressing the possibility or potential for events to
occur in the future. These forward-looking statements are based on current
expectations, forecasts and assumptions and involve a number of risks and
uncertainties that could cause actual results to differ materially from
those anticipated by these forward-looking statements. These risks include:
if we do not meet our restructuring objectives, we may have to continue to
implement additional plans in order to reduce our operating costs;
achieving necessary support from the contract manufacturers to which we
have outsourced manufacturing, assembly and packaging of our products;
retaining key management; Adaptec's ability to launch new software
products; difficulty in forecasting the volume and timing of customer
orders; reduced demand in the server, network storage and desktop computer
markets; our target markets' failure to accept, or delay in accepting,
network storage and other advanced storage solutions, including our SAS,
SATA and iSCSI lines of products; decline in consumer acceptance of our
current products; the timing and volume of orders by OEM customers for
storage products; our ability to control and manage costs associated with
the delivery of new products; and the adverse effects of the intense
competition we face in our business. For a more complete discussion of
risks related to our business, reference is made to the section titled
"Risk Factors" included in our Quarterly Report on Form 10-Q for the
quarter ended December 31, 2007 on file with the Securities and Exchange
Commission. Adaptec assumes no obligation to update any forward-looking
information that is included in this release.
Adaptec is a registered trademark in the United States and other countries.
Other product and company names are trademarks or registered trademarks of
their respective owners.
Adaptec, Inc.
GAAP Condensed Consolidated Statements of Operations
(unaudited)
Twelve-Month
Three-Month Period Ended Period Ended
-----------------------------------------------------
March 31, December March 31, March 31, March 31,
2008 31, 2007 2007 2008 2007
--------- --------- --------- --------- ---------
(in thousands, except per share amounts)
Net revenues $ 39,877 $ 41,162 $ 51,934 $ 167,400 $ 255,208
Cost of revenues 22,948 24,993 34,356 104,927 173,974
--------- --------- --------- --------- ---------
Gross profit 16,929 16,169 17,578 62,473 81,234
--------- --------- --------- --------- ---------
Operating expenses:
Research and
development 8,332 8,824 12,788 39,804 56,573
Selling,
marketing and
administrative 13,950 14,115 14,892 57,351 61,325
Amortization of
acquisition-
related
intangible assets 720 720 1,470 2,893 5,996
Restructuring
charges 613 706 -- 6,273 3,711
Other charges
(gains) 2,428 -- 758 (3,371) 14,700
--------- --------- --------- --------- ---------
Total operating
expenses 26,043 24,365 29,908 102,950 142,305
--------- --------- --------- --------- ---------
Loss from continuing
operations (9,114) (8,196) (12,330) (40,477) (61,071)
Interest and other
income 7,979 8,838 7,290 31,335 25,618
Interest expense (872) (805) (856) (3,646) (3,405)
--------- --------- --------- --------- ---------
Loss from continuing
operations before
income taxes (2,007) (163) (5,896) (12,788) (38,858)
Benefit from income
taxes (1,928) (1,271) (1,732) (2,694) (63,704)
--------- --------- --------- --------- ---------
Income (loss) from
continuing
operations, net of
taxes (79) 1,108 (4,164) (10,094) 24,846
--------- --------- --------- --------- ---------
Discontinued
operations:
Loss from
discontinued
operations, net
of taxes -- -- (678) -- (546)
Income from
disposal of
discontinued
operations, net
of taxes 623 -- 1,512 479 6,543
--------- --------- --------- --------- ---------
Income from
discontinued
operations, net
of taxes 623 -- 834 479 5,997
--------- --------- --------- --------- ---------
Net income (loss) $ 544 $ 1,108 $ (3,330) $ (9,615) $ 30,843
========= ========= ========= ========= =========
Income (loss) per
common share:
Basic
Continuing
operations $ (0.00) $ 0.01 $ (0.04) $ (0.09) $ 0.21
Discontinued
operations $ 0.01 $ -- $ 0.01 $ 0.00 $ 0.05
Net income
(loss) $ 0.00 $ 0.01 $ (0.03) $ (0.08) $ 0.26
Diluted
Continuing
operations $ (0.00) $ 0.01 $ (0.04) $ (0.09) $ 0.20
Discontinued
operations $ 0.01 $ -- $ 0.01 $ 0.00 $ 0.04
Net income
(loss) $ 0.00 $ 0.01 $ (0.03) $ (0.08) $ 0.25
Shares used in
computing income
(loss) per share:
Basic 119,163 118,987 117,516 118,613 116,602
Diluted 119,163 119,622 117,516 118,613 136,690
To supplement its condensed consolidated financial statements in accordance
with generally accepted accounting principles (GAAP), the Company's
earnings release contains non-GAAP financial measures that exclude certain
expenses, gains and losses. The Company believes that the use of non-GAAP
financial measures provides useful information to investors to gain an
overall understanding of its current financial performance and its
prospects for the future. Specifically, the Company believes the non-GAAP
results provide useful information to both management and investors by
excluding certain expenses, gains and losses that the Company believes are
not indicative of its core operating results. In addition, non-GAAP
financial measures are used by management for budgeting and forecasting as
well as subsequently measuring the Company's performance, and the Company
believes that it is providing investors with financial measures that most
closely align to its internal measurement processes. The Company also
believes, based on feedback provided to the Company during its earnings
calls, Q&A sessions and discussions with the investment community, that the
non-GAAP financial measures it provides enhance the ability of the
investment community to review the Company's results and projections.
The non-GAAP financial information is presented using consistent
methodology from quarter-to-quarter and year-to-year. These measures should
be considered in addition to results prepared in accordance with GAAP, but
should not be considered a substitute for, or superior to, GAAP results.
The non-GAAP financial measures presented by the Company may be different
than the non-GAAP financial measures presented by other companies. In
addition, these non-GAAP financial measures are not based on any
comprehensive set of accounting rules or principles. The Company believes
that non-GAAP financial measures have limitations in that they do not
reflect all of the amounts associated with the Company's results of
operations as determined in accordance with GAAP and that these measures
should only be used to evaluate the Company's results of operations in
conjunction with the corresponding GAAP financial measures.
The Company excludes the following expenses, gains and losses from its
non-GAAP financial measures, when applicable:
Stock-based compensation expense: Stock-based compensation expense consists
of expenses recorded under SFAS 123(R), "Share-Based Payment," in
connection with stock awards such as stock options, restricted stock awards
and restricted stock units granted under the Company's equity incentive
plans and shares issued pursuant to the Company's employee stock purchase
plan. The Company excludes stock-based compensation expense from non-GAAP
financial measures because it is a non-cash measurement that does not
reflect the Company's ongoing business; the Company believes that the
provision of non-GAAP information that excludes stock-based compensation
improves the ability of investors to compare its period-over-period
operating results, as there is significant variability and unpredictability
across companies with respect to this expense.
Management incentive program: The Company excludes expenses associated with
the management incentive program, which were limited cash payments made to
selected members of management of an acquired company, as these payments
were instituted as a component of the acquisition process and do not
reflect the Company's ongoing business.
Amortization of acquisition-related intangible assets: Amortization of
acquisition-related intangible assets primarily relate to core and existing
technologies, patents, a trade name and customer relationships that were
acquired from prior acquisitions. The Company excludes the amortization of
acquisition-related intangible assets because it does not reflect the
Company's ongoing business and it does not have a direct correlation to the
operation of the Company's business. In addition, in accordance with GAAP,
the Company generally recognizes expenses for internally-developed
intangible assets as they are incurred, notwithstanding the potential
future benefit such assets may provide. Unlike internally-developed
intangible assets, however, and also in accordance with GAAP, the Company
generally capitalizes the cost of acquired intangible assets and recognizes
that cost as an expense over the useful lives of the assets acquired (other
than goodwill, which is not amortized, and acquired in-process technology,
which is expensed immediately, as required under GAAP). As a result of
their GAAP treatment, there is an inherent lack of comparability between
the financial performance of internally-developed intangible assets and
acquired intangible assets. Accordingly, the Company believes it is useful
to provide, as a supplement to its GAAP operating results, a non-GAAP
financial measure that excludes the amortization of acquired intangible
assets in order to enhance the period-over-period comparison of its
operating results, as there is significant variability and unpredictability
across companies with respect to this expense.
Restructuring charges and other charges (gains): Restructuring charges
primarily relate to activities engaged in by the Company's management to
simplify its infrastructure. Other charges (gains) primarily relate to the
impairment of acquisition-related intangible assets from prior acquisitions
and gain on sale of long-lived assets. Restructuring charges and other
charges (gains) are excluded from non-GAAP financial measures because they
are not considered core operating activities and the occurrence of such
costs is infrequent. Although the Company has engaged in various
restructuring activities over the past several years, each has been a
discrete, extraordinary event based on a unique set of business objectives.
The Company does not engage in restructuring activities on a regular basis
or in the ordinary course of business. As such, the Company believes it is
appropriate to exclude restructuring charges from its non-GAAP financial
measures, as it enhances the ability of investors to compare the Company's
period-over-period operating results.
Income taxes: Incremental income taxes associated with certain non-GAAP
items.
Adaptec, Inc.
Reconciliation of GAAP to Non-GAAP Operating Results
(unaudited)
Twelve-Month
Three-Month Period Ended Period Ended
-----------------------------------------------------
March 31, December March 31, March 31, March 31,
2008 31, 2007 2007 2008 2007
--------- --------- --------- --------- ---------
(in thousands)
GAAP income (loss)
from continuing
operations, net of
taxes $ (79) $ 1,108 $ (4,164) $ (10,094) $ 24,846
Stock-based
compensation
expense 2,034 1,982 1,667 6,628 8,473
Management
incentive
program -- -- -- -- 799
Amortization of
acquisition-
related
intangible assets 720 720 1,470 2,893 5,996
Restructuring
charges 613 706 -- 6,273 3,711
Other charges
(gains) 2,428 -- 758 (3,371) 14,700
Income taxes 23 52 (2,408) (274) (64,422)
--------- --------- --------- --------- ---------
Non-GAAP income
(loss) from
continuing
operations, net
of taxes $ 5,739 $ 4,568 $ (2,677) $ 2,055 $ (5,897)
========= ========= ========= ========= =========
Shares used in
computing income
(loss) per share:
Basic - GAAP and
Non-GAAP 119,163 118,987 117,516 118,613 116,602
Diluted - GAAP 119,163 119,622 117,516 118,613 136,690
Employee options 724 -- -- 696 (864)
3/4% convertible
notes 19,224 -- -- -- (19,224)
--------- --------- --------- --------- ---------
Diluted - Non-GAAP 139,111 119,622 117,516 119,309 116,602
========= ========= ========= ========= =========
Adaptec, Inc.
Summary Balance Sheet and Cash Flow Data
(unaudited)
As of
--------------------------------------------
March 31, December 31, March 31,
Balance Sheet Data 2008 2007 2007
-------------- -------------- --------------
(in thousands)
Cash, cash equivalents and
marketable securities $ 626,206 $ 597,756 $ 572,423
Accounts receivable, net 23,204 29,250 34,127
Inventories 9,926 14,363 28,717
Other intangible assets, net -- 3,148 7,011
Other assets 37,986 51,024 73,124
-------------- -------------- --------------
Total assets $ 697,322 $ 695,541 $ 715,402
============== ============== ==============
Current liabilities $ 32,669 $ 44,259 $ 65,235
Current portion of
convertible notes 225,321 225,241 --
Convertible notes, less
current portion and other
long-term obligations 15,236 5,894 228,009
Stockholders' equity 424,096 420,147 422,158
-------------- -------------- --------------
Total liabilities and
stockholders' equity $ 697,322 $ 695,541 $ 715,402
============== ============== ==============
Three-Month Period Ended
--------------------------------------------
March 31, December 31, March 31,
Cash Flow Data 2008 2007 2007
-------------- -------------- --------------
(in thousands)
Net income (loss) $ 544 $ 1,108 $ (3,330)
Less: Income (loss) from
discontinued operations, net
of taxes 623 -- 834
-------------- -------------- --------------
Income (loss) from continuing
operations, net of taxes (79) 1,108 (4,164)
Adjustments to reconcile
income (loss) from continuing
operations, net of taxes,
to net cash provided by
(used in) operating
activites:
Non-cash P&L items:
Non-cash charges
associated with other
charges -- -- 922
Non-cash effect of tax
settlement -- -- (1,389)
Stock-based
compensation 2,034 1,982 1,667
Depreciation and
amortization 1,824 1,533 4,070
Inventory-related
charges 1,149 910 2,378
Impairment of
long-lived assets 2,545 -- --
Other items 368 -- 118
Changes in assets and
liabilities 15,172 (7,105) 1,757
-------------- -------------- --------------
Net cash provided by (used in)
operating activities
of continuing operations 23,013 (1,572) 5,359
Net cash provided by operating
activities of discontinued
operations 2,500 -- 2,778
-------------- -------------- --------------
Net cash provided by (used in)
operating activities $ 25,513 $ (1,572)$ 8,137
============== ============== ==============
Other significant cash flow
activities:
Proceeds from issuance of
common stock 36 572 1,862
Repurchase of 3%
convertible notes -- -- (10,637)
Copyright © 2008, MarketWire
Copyright © 2008, NewsBlaze,
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