7/26/2002 - Adaptec, Inc. (NASDAQ:ADPT), the global leader in data storage access solutions, today announced revenues and earnings for the first fiscal quarter, ending June 30, 2002.
"Adaptec produced flat sequential net revenues of $107.8 million and diluted pro forma EPS of $0.08, consistent with the prior period," said David A. Young, chief financial officer. "These results, which are in line with investors' expectations, were achieved during a very difficult business and economic environment."
Pro Forma Results
Pro forma operating results for the first quarter of fiscal year 2003, the prior quarter and the same period last year were as follows:
Net revenues were $107.8 million, compared to net revenues of $108.1 million last quarter, and were 2.2% below the $110.2 million reported in the first quarter of fiscal year 2002. The gross margin improved to 56.2%, compared to 55.5% in the prior period and 48.6% for the same period last year. Operating expenses were $51.8 million, up from operating expenses of $50.4 million last quarter, due to the acquisition of the ServeRAID business from IBM. The operating expenses were 1.5% below the $52.6 million in the first quarter of fiscal year 2002. Net income was $8.4 million, compared with net income of $8.7 million last quarter and $6.1 million in the first quarter of fiscal year 2002. Diluted earnings per share were $0.08, compared with diluted earnings per share of $0.08 last quarter and diluted earnings per share of $0.06 in the first quarter of fiscal year 2002.
The reconciliation of GAAP results for the first quarter with pro forma shows GAAP net income of $2.6 million, or two cents per diluted share. The differentiating items in that reconciliation are primarily in operating expenses and reflect $3.9 million of deferred compensation expense related to the Platys acquisition, $3.7 million for the amortization of intangibles related to the DPT and Platys acquisitions and an other income pick-up of $1.1 million, representing a gain from the early retirement of $47.4 million of the 4 ¾% Convertible Subordinated Notes. Details are presented in the tables accompanying this press release.
Adaptec revenues generally mirrored the flat spending in the information technology sector in the first quarter. In the Storage Solutions Group, sales were essentially unchanged from the prior period. We initiated shipments of Ultra320 SCSI controller products, the highest performing and lowest power-consuming Ultra 320 SCSI controllers in the industry. The Durastor external storage product, which began shipping in volume this quarter, generated over one million dollars in revenues.
In the Desktop Solutions Group, revenues decreased 5% sequentially reflecting lower sales in Europe and Asia. DSG expanded its product offerings by introducing a new line of video solutions that convert home movies recorded on VHS and VHS-C tape to DVD and VCD. In the Storage Networking Group, revenues increased slightly due to higher sales of network interface cards. During the quarter, we announced a major iSCSI design win with IBM as the company selected Adaptec as its preferred vendor across all server and storage platforms.
Conference Call The dial-in number for Adaptec's FQ1 conference call, scheduled at 1:45 p.m. PST this afternoon, is: (212) 346-0485. Individuals may also participate via web cast by visiting Adaptec's web site, www.adaptec.com, 15 minutes prior to the call. A telephone replay of the call will be available until August 1, 2002 by calling 800-633-8284 and referencing reservation #20289418. A web cast replay will also be available during this period via www.adaptec.com
Safe Harbor Statement This news release includes 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 include statements regarding future events or the future performance of Adaptec, including statements regarding market acceptance of and demand for the company's products, the company's anticipated revenues, costs and financial performance and future market conditions. Actual events could differ materially from those anticipated in these forward-looking statements as a result of many factors including, but not limited to, cancellations or postponements of orders, shifts in the mix of our products and sales channels, changes in pricing policies by our suppliers, shortages of components or wafer fabrication capacity affecting us, our customers or our suppliers, market acceptance of new and enhanced versions of our products or those of our competitors, product obsolescence, shortage of skilled labor, future accounting pronouncements and changes in accounting policies, timing of acquisitions, integration of acquired businesses and any associated charges, restructuring actions or other involuntary terminations, general economic trends, international political instability and pending legal proceedings. The Company operates in an industry sector where securities values are highly volatile and may be influenced by economic and other factors beyond the company's control. In the context of forward-looking information provided in this news release, reference is made to the discussion of risk factors detailed in the company's filings from time to time with the Securities and Exchange Commission, including but not limited to filings made during the past 12 months.
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