Adaptec Exceeds Expectations with Revenues of $109.2 Million

10/29/2003 - Adaptec, Inc. (NASDAQ:ADPT), a global leader in storage solutions, reported its second quarter results for the period ended September 30, 2003.

Net revenues for the second quarter of fiscal 2004 were $109.2 million, compared with $85.7 million for the second quarter of fiscal 2003 and $107.3 for the first quarter of fiscal 2004.

Net income for the second quarter of fiscal 2004, on a generally accepted accounting principles (GAAP) basis, was $0.3 million or $0.00 per share, compared with a net loss of $10.8 million or $0.10 per share for the second quarter of fiscal 2003 and net income of $40.8 million or $0.33 per share for the first quarter of fiscal 2004. Fiscal 2004 first quarter results include an after tax gain of $49.3 million from the May 2003 settlement with the former president of Distributed Processing Technology Corp. (DPT), a company Adaptec acquired in 1999. The first and second quarters of fiscal 2004 include the results from Eurologic Systems, acquired April 2, 2003, and the second quarter of fiscal 2004 includes a full quarter of the results of ICP vortex Computersysteme GmbH (ICP vortex) acquired June 5, 2003.

Pro forma net income for the second quarter of fiscal 2004 was $3.7 million or $0.03 per share, compared with $0.6 million or $0.01 per share for the second quarter of fiscal 2003 and $3.6 million or $0.03 per share for the first quarter of fiscal 2004. Reconciliation between net income/loss on a GAAP basis and pro forma net income is provided in the attached tables.

"We are pleased with our financial results and improved efficiency for the second quarter," said Robert N. Stephens, Adaptec's president and chief executive officer. "We have made solid progress in Serial ATA, Serial Attached SCSI, IP storage networking and external storage and are linking these technologies into a comprehensive spectrum of scalable product offerings for our customers."

Net revenues for the first six months of fiscal 2004 were $216.5 million, compared with $193.6 million for the first six months of fiscal 2003.

Net income for the first six months of fiscal 2004, on a GAAP basis, was $41.1 million or $0.35 per share, compared with a net loss of $8.3 million or $0.08 per share for the first six months of fiscal 2003. Pro forma net income for the first six months of fiscal 2004 was $7.3 million or $0.07 per share, compared with $9.0 million or $0.08 per share for the first six months of fiscal 2003.

Financial Highlights

Business Highlights

Conference Call
Adaptec's fiscal 2004 second-quarter earnings conference call is scheduled for 1:45 p.m. PST on October 27, 2003. The dial-in number for the conference call is (212) 346-6401. Individuals may also participate free via Webcast by visiting www.adaptec.com 15 minutes prior to the call. A telephone replay will be made accessible through November 3, 2003, at 800-633-8284, access code 21096605. A Webcast replay will also be available via Adaptec's web site.

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, but not limited to, statements regarding our progress with respect to product development and operating expense reductions, the growth of our product portfolio, customer acceptance of our products, improved customer relationships, establishing new partnerships, stability in the market for our products, continued success with product design and performance levels, timely introduction of new technologies, successful business acquisitions and the successful integration of Eurologic Systems. 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: 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, decline in consumer acceptance of products based on the SCSI standard, the markets' failure to accept our new products, including our Ultra 320 line of products, the adverse effects of the intense competition we face in our business, and the continued effects of the current economic slowdown in the technology sector. For a more complete discussion of risks related to our business, reference is made to the section titled "Risk Factors" included in our Form 10-K for the year ended March 31, 2003, on file with the Securities and Exchange Commission. Adaptec assumes no obligation to update this information or the Risk Factors included in its Form 10-K for the year ended March 31, 2003.

About Adaptec
Adaptec Inc. (NASDAQ:ADPT) provides end-to-end storage solutions that reliably move, manage and protect critical data and digital content. Adaptec provides software and hardware solutions for storage connectivity and data protection, storage networking and networked storage subsystems to leading OEM and distribution channel partners. Adaptec solutions are in use by enterprises, ISPs, medium and small businesses and consumers worldwide. Adaptec is an S&P Small Cap 600 Index member.

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