Adaptec Reports First Quarter Revenues of $107.3 Million

7/30/2003 - Adaptec, Inc. (NASDAQ:ADPT), a global leader in storage solutions, reported its first quarter results for the period ended June 30, 2003.

Net revenues for the first quarter of fiscal 2004 were $107.3 million, compared with $107.8 million for the first quarter of fiscal 2003 and $105.6 million for the fourth quarter of fiscal 2003.

Net income for the first quarter of fiscal 2004, on a generally accepted accounting principles (GAAP) basis, was $40.8 million or $0.33 per share, compared with $2.6 million or $0.02 per share for the first quarter of fiscal 2003 and a net loss of $3.7 million or $0.03 per share for the fourth quarter of fiscal 2003. Fiscal 2004 first quarter results include the results from Eurologic Systems, acquired April 2, 2003, and a one-time, after-tax gain of $49.3 million from the May 2003 settlement with the former president of Distributed Processing Technology Corp., a company Adaptec acquired in 1999.

Pro forma net income for the first quarter of fiscal 2004 was $3.6 million or $0.03 per share, compared with $8.4 million or $0.08 per share for the first quarter of fiscal 2003 and $5.4 million or $0.05 per share for the fourth quarter of fiscal 2003. Reconciliation between net income on a GAAP basis and pro forma net income is provided in the attached tables.

These reported results are consistent with the expected results that the company announced on July 2, 2003.

"Worldwide market conditions remain challenging," said Robert N. Stephens, Adaptec president and chief executive officer. "However, we are excited about Adaptec's growth opportunities in four key areas: Serial ATA, Serial Attached SCSI, iSCSI and external storage. These new technologies and products are designed to meet growing demand for cost-effective, easy-to-manage enterprise and mid-market storage solutions."

Financial Highlights

  • Operating cash flows for the first quarter were $38.2 million, compared with $17.7 million for the first quarter of fiscal 2003 and $23.6 million for the fourth quarter of fiscal 2003.
  • Cash, cash equivalents and investments as of June 30, 2003, were $663.6 million, compared to $742.3 million at March 31, 2003, and $774.7 million at June 30, 2002.
  • Adaptec redeemed the remaining $82.4 million of its 4 ¾ percent convertible notes with a maturity date of February 1, 2004.
  • Adaptec settled its claims against the former president of DPT. This settlement contributed $31.0 million to operating cash flows and resulted in a one-time, after-tax gain of $49.3 million.
  • Adaptec completed the acquisitions of Eurologic Systems and ICP vortex Computersysteme GmbH on April 2 and June 5, respectively. Eurologic contributed $13.2 million of revenue in the first quarter. ICP vortex revenues included in the first quarter were not significant. The Eurologic acquisition also resulted in a write-off of in-process technology of $3.6 million in the first quarter.
  • Days sales outstanding (DSO) in accounts receivable as of June 30, 2003 were 48.7 days, compared to 44.6 days as of March 31, 2003, and 43.9 days as of June 30, 2002.
  • Inventory turns were 9.1 in the first quarter of fiscal 2004, compared to 8.9 in the fourth quarter of fiscal 2003, and 6.6 in the first quarter of fiscal 2003.

Business Highlights

  • Adaptec completed the acquisition of Eurologic, a leading provider of external and networked storage solutions. The acquisition builds on Adaptec's leadership in direct-attached server storage by allowing the company to provide complete, end-to-end block- and file-based networked storage solutions.
  • Adaptec completed the acquisition of ICP vortex, a leading provider of data protection products for customers across Europe. Based in Germany, ICP vortex further extends Adaptec's strength in delivering end-to-end storage infrastructure - from core data-protection technology to turnkey networked storage solutions - to our customers worldwide.
  • Adaptec introduced a Serial ATA RAID controller featuring Adaptec's enterprise-class data protection capabilities, which is designed to maximize performance and data availability for high-end workstations and entry-level servers using Serial ATA disk drives.
  • Adaptec, HP and Seagate debuted the Serial Attached SCSI interface working with both Serial Attached SCSI and Serial ATA disk drives.
  • Adaptec announced an initiative with leading hard disk drive manufacturers Fujitsu, Hitachi, Maxtor and Seagate to deliver the industry's first Serial Attached SCSI solutions and drive market adoption through co-marketing.
  • Adaptec's IP storage networking solution won Network Computing's prestigious Editor's Choice award.
  • Adaptec debuted its TCP/IP offload network interface card working with Microsoft's new TCP/IP Offload Architecture.
  • Adaptec announced that its IP Storage ASIC technology has been integrated into the FCIP (Fibre Channel over IP) Port Adapter for the Cisco 7200 and Cisco 7400 Series routers.
  • Adaptec delivered its first ASIC-based IP storage networking solutions built on the company's groundbreaking iSCSI (Internet SCSI) technology.
  • Adaptec announced its new VideOh! DVD Media Center, a comprehensive solution that enables consumers to convert their existing home PC into a media center.
  • Adaptec introduced DuoConnect for Notebooks which combines FireWire/1394-USB 2.0 in a single card and lets consumers link multiple consumer-electronic devices to laptops simultaneously using one connection.

About Adaptec
Adaptec Inc. (NASDAQ:ADPT) provides end-to-end storage infrastructure 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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