Exhibit 99.2
Avocent Reports Record Sales and Higher Net Income for Fourth Quarter
HUNTSVILLE, Ala., Feb. 3 /PRNewswire-FirstCall/ -- Avocent Corporation
(Nasdaq: AVCT) today reported record sales and higher net income for the fourth
quarter ended December 31, 2003.
"Avocent's sales and operating earnings accelerated in the fourth quarter
due to strong demand across most product lines, distribution channels and
geographic markets," stated John R. Cooper, president and chief executive
officer of Avocent Corporation. "Sales increased 21% to $86.0 million and income
prior to intangible amortization and merger-related expenses (see "Use of
Non-GAAP Financial Measures" discussion below) was a record $17.4 million, or
$0.36 per diluted share, up 36% compared with the fourth quarter of 2002."
GAAP net income for the fourth quarter of 2003 was $9.6 million, or $0.20
per diluted share. This compares with a GAAP net income of $7.2 million, or
$0.16 per share, in the fourth quarter of 2002.
"Sales of branded products remained strong in the fourth quarter with
excellent growth from our proprietary digital, AMX and Switchview products. OEM
sales increased sequentially 24% from the third quarter of 2003. We also
introduced the industry's first wireless KVM switch late in the fourth quarter,
further extending our branded product line. Avocent's sales were up across all
domestic and international customer segments. International sales were up 22% to
$39.2 million compared with the fourth quarter of 2002. U.S. sales increased 21%
to $46.8 million compared with the fourth quarter of 2002. Our earnings
benefited from improved leverage of our higher sales base and increased gross
margins.
"We continue to invest in new technologies and product development to
maintain our leadership position in the industry," continued Mr. Cooper. "We
completed the acquisitions of Soronti, Inc. in November 2003 and Crystal Link
Technologies in early January 2004. Soronti enhanced our expertise in embedded
solutions for server management and Crystal Link added key technology related to
wireless devices. We also increased research and development expenses 19% to
$8.2 million, or 9.6% of sales, in the fourth quarter. Our R&D efforts remain
focused on developing new products, enhancing existing products and improving
our manufacturing efficiencies."
Fourth Quarter Results
Net sales for the fourth quarter rose 21% to $86.0 million compared with
sales of $71.0 million in the fourth quarter of 2002. Branded sales rose 25%
from the fourth quarter of 2002 and accounted for 52.0% of sales. OEM sales rose
17% from the fourth quarter of 2002 and accounted for 48.0% of total fourth
quarter 2003 sales.
Gross profit for the fourth quarter rose 31% to $48.0 million with a gross
margin of 55.8% compared with gross profit of $36.6 million and a gross margin
of 51.6% in the fourth quarter of 2002. Higher margins benefited from an
improved product mix, including higher sales of digital and branded products,
increased leverage of expenses and lower manufacturing costs for certain key
products.
Income prior to intangible amortization and merger-related expenses rose
to $17.4 million, or $0.36 per diluted share, compared with income prior to
intangible amortization and merger-related expenses of $12.8 million, or $0.28
per diluted share, in the fourth quarter of 2002. Net adjustments to reconcile
to GAAP income were $7.9 million in the fourth quarter of 2003, including $4.0
million in intangible amortization and merger-related expenses and a $3.9
million charge for in-process research and development expense acquired from
Soronti. Net adjustments to reconcile to GAAP income were $5.6 million in the
fourth quarter of 2002, including intangible amortization and merger-related
expenses.
Avocent's balance sheet and cash position remained strong as of December
31, 2003. The Company's cash flow from operations was approximately $28 million
for the fourth quarter of 2003 with $308 million in cash, cash equivalents and
investments at the quarter's end.
Year-End Results
Net sales for 2003 rose 17% to $304.2 million compared with sales of
$260.6 million in 2002. OEM sales rose 17% from 2002 and accounted for 45.9% of
total 2003 sales. Branded sales rose 17% from 2002 and accounted for 54.1% of
sales. Sales in the U.S. accounted for 59.9%, or $182.1 million, of 2003 sales.
International sales were $122.1 million, or 40.1%, of total 2003 sales.
Gross profit for 2003 was $171.8 million with a gross margin of 56.5%
compared with gross profit of $131.7 million and a gross margin of 50.5% in
2002.
Income prior to intangible amortization, merger-related expenses and a
gain on sale of certain investment securities rose to $59.4 million, or $1.24
per diluted share, compared with income prior to intangible amortization and
merger-related expenses of $42.3 million, or $0.92 per diluted share, in 2002.
Net adjustments to reconcile to GAAP income were $20.8 million in 2003,
including $18.9 million of intangible amortization and merger-related expenses,
and a $3.9 million one-time charge for in-process research and development
expenses related to Soronti, offset by a $2.1 million gain on sale of investment
securities. Net adjustments to reconcile to GAAP income were $31.6 million in
2002, including $25.6 million of intangible amortization and merger-related
expenses and a $6.0 million one-time charge for in-process research and
development expenses related to the acquisition of 2C Computing, Inc.
Cash flow from operations was over $82 million in 2003 compared with
approximately $71 million in 2002.
GAAP net income for 2003 was $38.5 million, or $0.81 per diluted share,
compared with $10.7 million, or $0.24 per share, in 2002.
Use of Non-GAAP Financial Measures
Income prior to intangible amortization, merger-related expenses and gain
on sale of certain investment securities, or operational income as used in the
attached financial statement schedules, is not a measure of financial
performance under generally accepted accounting principles (GAAP) and should not
be considered a substitute for or superior to GAAP. Avocent's management uses
operational income as a financial measure to evaluate performance and allocate
resources within the Company. Management believes this measure presents the
Company's results on a more comparable operational basis by excluding non-cash
amortization expenses, non-operational expenses associated with mergers and
acquisitions, and significant and unusual non-recurring gains and losses on
sales of investments made by Avocent. Avocent believes that operational income
is a measure of performance used by some investment banks, analysts, investors
and others to make informed investment decisions. Other companies may calculate
operational income in a different manner so this measure may not be comparable
to similar measures presented by other companies. A reconciliation of Avocent's
results using operational measures and GAAP is set forth in the condensed
consolidated statements of operations included in this press release.
Conference Call Information
Avocent will provide an on-line, real-time Web-cast and rebroadcast of its
fourth quarter results conference call to be held February 3, 2004. The live
broadcast will be available on-line at www.avocent.com and at
www.firstcallevents.com/service/ajwz397696227gf12.html beginning at 10:00 a.m.
central time. The on-line replay will follow immediately and continue for 30
days.
About Avocent Corporation
Avocent Corporation is the leading supplier of connectivity solutions for
enterprise data centers, service providers, and financial institutions
worldwide. Our products include switching, extension, remote access, and video
display solutions. Additional information is available at: www.avocent.com .
Forward-Looking Statements
This press release contains statements that are forward-looking statements
as defined within the Private Securities Litigation Reform Act of 1995. These
include statements regarding the development and introduction of new products
and technologies, the size and growth of the potential markets for these
products and technologies in the future, engineering and design activities, and
manufacturing efficiencies in the future. These forward-looking statements are
subject to risks and uncertainties that could cause actual results to differ
materially from the statements made, including the risks associated with general
economic conditions, risks attributable to future product demand, sales, and
expenses, risks associated with reliance on a limited number of customers,
component suppliers, and single source components, risks associated with product
design efforts and the introduction of new products and technologies, and risks
associated with obtaining and protecting intellectual property rights. Other
factors that could cause operating and financial results to differ are described
in Avocent's annual report on Form 10-K filed with the Securities and Exchange
Commission on March 27, 2003. Other risks may be detailed from time to time in
reports to be filed with the SEC. Avocent does not undertake any obligation to
publicly update its forward-looking statements based on events or circumstances
after the date hereof.
AVOCENT CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
For the Quarter Ended December 31, 2003
Operational Adjustments** GAAP
Net sales $85,982 $85,982
Cost of sales 37,916 $95 38,011
Gross profit 48,066 (95) 47,971
Research and development expenses 8,038 186 8,224
Acquired in-process research and
development expense -- 3,940 3,940
Selling, general and administrative
expenses 18,155 622 18,777
Amortization of intangible assets - 4,754 4,754
Operating income 21,873 (9,597) 12,276
Other income (expense), net 1,196 (115) 1,081
Income before income taxes 23,069 (9,712) 13,357
Provision for income taxes 5,642 (1,844) 3,798
Net income $17,427 $(7,868) $9,559
Earnings per share:
Basic $0.37 $0.20
Diluted $0.36 $0.20
Weighted average shares and common equivalents outstanding:
Basic 47,020 -- 47,020
Diluted 48,910 (47) 48,863
For the Quarter Ended December 31, 2002
Operational Adjustments** GAAP
Net sales $70,989 $70,989
Cost of sales 34,225 $154 34,379
Gross profit 36,764 (154) 36,610
Research and development expenses 6,573 364 6,937
Acquired in-process research and
development expense -- -- --
Selling, general and administrative
expenses 14,887 1,353 16,240
Amortization of intangible assets - 6,121 6,121
Operating income 15,304 (7,992) 7,312
Other income (expense), net 1,297 - 1,297
Income before income taxes 16,601 (7,992) 8,609
Provision for income taxes 3,811 (2,395) 1,416
Net income $12,790 $(5,597) $7,193
Earnings per share:
Basic $0.28 $0.16
Diluted $0.28 $0.16
Weighted average shares and common equivalents outstanding:
Basic 45,106 -- 45,106
Diluted 46,054 (244) 45,810
** Note: Adjustments relate to amortization of deferred compensation (from
the capitalization of the value of stock options assumed), intangibles
recorded as the result of the merger of Apex and Cybex in July 2000, the
acquisition of Equinox in January 2001, the acquisition of Soronti in
November 2003 and the acquisition of 2C in August 2002. The calculation of
weighted average shares and common equivalents outstanding differs due to
excluding the average unamortized deferred compensation expense in
calculating the operational diluted shares outstanding. Please see previous
discussion regarding the use of non-GAAP financial measures.
AVOCENT CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
For the Year Ended December 31, 2003
Operational Adjustments** GAAP
Net sales $304,238 $304,238
Cost of sales 131,788 $624 132,412
Gross profit 172,450 (624) 171,826
Research and development expenses 28,636 1,157 29,793
Acquired in-process research and
development expense - 3,940 3,940
Selling, general and administrative
expenses 66,732 3,666 70,398
Amortization of intangible assets - 21,805 21,805
Operating income 77,082 (31,192) 45,890
Other income (expense), net 4,143 3,013 7,156
Income before income taxes 81,225 (28,179) 53,046
Provision for income taxes 21,862 (7,363) 14,499
Net income $59,363 $(20,816) $38,547
Earnings per share:
Basic $1.29 $0.83
Diluted $1.24 $0.81
Weighted average shares and common equivalents outstanding:
Basic 46,194 - 46,194
Diluted 47,814 (121) 47,693
For the Year Ended December 31, 2002
Operational Adjustments** GAAP
Net sales $260,600 $260,600
Cost of sales 127,509 $1,364 128,873
Gross profit 133,091 (1,364) 131,727
Research and development expenses 24,006 2,516 26,522
Acquired in-process research and
development expense - 6,000 6,000
Selling, general and administrative
expenses 57,411 9,480 66,891
Amortization of intangible assets - 22,189 22,189
Operating income 51,674 (41,549) 10,125
Other income (expense), net 5,115 - 5,115
Income before income taxes 56,789 (41,549) 15,240
Provision for income taxes 14,450 (9,948) 4,502
Net income $42,339 $(31,601) $10,738
Earnings per share:
Basic $0.94 $0.24
Diluted $0.92 $0.24
Weighted average shares and common equivalents outstanding:
Basic 44,977 - 44,977
Diluted 45,932 (383) 45,549
** Note: Adjustments relate to amortization of deferred compensation (from
the capitalization of the value of stock options assumed), intangibles
recorded as the result of the merger of Apex and Cybex in July 2000, the
acquisition of Equinox in January 2001, the acquisition of Soronti, in
November 2003 and the acquisition of 2C in August 2002, and a realized gain
on the disposal of an equity security investment which had been written down
in the fourth quarter of 2001. The calculation of weighted average shares
and common equivalents outstanding differs due to excluding the average
unamortized deferred compensation expense in calculating the operational
diluted shares outstanding. Please see previous discussion regarding the use
of non-GAAP financial measures.
AVOCENT CORPORATION
Condensed Consolidated Balance Sheets
(Dollars in thousands)
December 31, December 31,
2003 2002
(Unaudited)
Cash, cash equivalents
and short-term investments $223,392 $169,318
Accounts receivable, net 45,011 36,313
Current and deferred income tax receivable 5,031 6,541
Other receivables, net 225 1,191
Inventories, net 21,324 24,422
Other current assets 4,251 3,256
Total current assets 299,234 241,041
Investments 84,410 46,572
Property and equipment, net 38,473 24,313
Goodwill, net 206,037 203,625
Other intangible assets, net 31,889 52,601
Other assets 720 455
Total assets $660,763 $568,607
Accounts payable and other accrued expenses $19,154 $14,159
Income tax payable 6,702 6,901
Other current liabilities 16,866 13,662
Total current liabilities 42,722 34,722
Non-current liabilities 10,884 16,213
Total stockholders' equity 607,157 517,672
Total liabilities and stockholders'
equity $660,763 $568,607
SOURCE Avocent Corporation
-0- 02/03/2004
/CONTACT: Dusty Pritchett, Senior Vice President of Finance and Chief
Financial Officer of Avocent Corporation, +1-256-217-1300/
/Web site: http://www.avocent.com
http://www.firstcallevents.com/service/ajwz397696227gf12.html/
(AVCT)
CO: Avocent Corporation
ST: Alabama
IN: CPR FIN TLS
SU: ERN CCA MAV