Exhibit 99.5
Avocent Reports 21% Increase in Sales for the First Quarter
HUNTSVILLE, Ala., April 22 /PRNewswire-FirstCall/ -- Avocent Corporation
(Nasdaq: AVCT) today reported higher sales and operating income for the first
quarter ended April 2, 2004.
"Avocent recorded strong sales across all markets, product lines and
customer segments in the first quarter," stated John R. Cooper, president and
chief executive officer of Avocent Corporation. "Sales rose 21% to
$86.1 million and gross margin increased to 58.2%. Our sales and margin
growth was due primarily to higher sales of branded and digital products
compared with last year.
"Our branded sales grew 14% sequentially from the fourth quarter of 2003.
We experienced increased demand for our newer products, particularly our
digital, Switchview and AMX products, highlighting the important contribution
of our research and development efforts in improving our profitability and
building our market share.
"We are excited about extending our markets with the addition of products
and technologies we recently acquired. We closed the acquisition of Crystal
Link Technologies, Inc. early in the quarter and made excellent progress in
integrating Crystal Link as well as Soronti, Inc., which we acquired in
November 2003. In early April, we closed the acquisition of OSA Technologies.
We believe these acquisitions provide Avocent with expanded market
opportunities. Crystal Link adds wireless capabilities to our KVM products
while the addition of Soronti and OSA strengthen our embedded technology
solutions and provide Avocent with excellent growth opportunities beyond our
traditional KVM products," continued Mr. Cooper.
First Quarter Results
Income prior to intangible amortization and merger-related expenses rose
17.3% to $16.1 million, or $0.33 per diluted share, compared with income prior
to intangible amortization and merger-related expenses of $13.7 million, or
$0.29 per diluted share, in the first quarter of 2003. (See "Use of Non-GAAP
Financial Measures" discussion below.) Net adjustments to reconcile to GAAP
income were $7.6 million in the first quarter of 2004, including $3.8 million
in intangible amortization and merger-related expenses and a $3.8 million
charge, net of a $2.7 million tax benefit, for acquired in-process research
and development expense related to Crystal Link. Net adjustments to reconcile
to GAAP income were $5.6 million in the first quarter of 2003, which consisted
of intangible amortization and merger-related expenses.
GAAP net income for the first quarter of 2004 was $8.5 million, or $0.17
per diluted share. This compares with a GAAP net income of $8.2 million, or
$0.17 per share, in the first quarter of 2003.
Net sales for the first quarter rose 21.0% to $86.1 million compared with
sales of $71.2 million in the first quarter of 2003. Branded sales rose 33.5%
from the first quarter of 2003 and accounted for 58.9% of sales. OEM sales
rose 6.6% from the first quarter of 2003 and accounted for 41.1% of total
first quarter 2004 sales. U.S. sales increased 21.0% to $51.2 million and
international sales rose 21.0% to $34.9 million compared with the first
quarter of 2003.
Gross profit for the first quarter of 2004 rose 26.5% to $50.1 million
with a gross margin of 58.2%. This compared with gross profit of
$39.6 million and a gross margin of 55.6% in the first quarter of 2003. The
increase in gross profit was due to higher sales and improved product mix
compared with the first quarter of 2003.
Research and development expenses increased 38.4% to $9.4 million, or
11.0% of sales, compared with $6.8 million, or 9.6% of sales, in the first
quarter of 2003. The increase was due to higher expenses related to the
development of embedded technologies and the addition of R&D teams from
Soronti and Crystal Link.
Selling, general and administrative expenses rose 22.1% to $20.3 million
compared with $16.7 million in the first quarter of 2003. The increase was
due to higher costs related to the expansion of certain sales and marketing
programs, increased trade show activity, intellectual property defense costs
and higher costs from the addition of the Soronti and Crystal Link sales and
marketing teams.
Avocent's balance sheet and cash position remained strong as of April 2,
2004. The Company's cash flow from operations was approximately $13 million
for the first quarter of 2004 with almost $320 million in cash, cash
equivalents and investments at the quarter's end. In early April, Avocent
acquired OSA Technologies for approximately $100 million (plus the assumption
of liabilities and stock options), of which approximately $52 million was paid
in cash at closing. Avocent has no long-term debt.
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
first quarter results conference call to be held April 22, 2004. The live
broadcast will be available on-line at www.avocent.com and
at www.firstcallevents.com/service/ajwz404484588gf12.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. Branded products include switching, extension, intelligent
platform management interface (IPMI), 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, introduction, features, and
benefits 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 acquisitions,
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 12, 2004.
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 April 2, 2004
Operational Adjustments * GAAP
Net sales $86,085 $86,085
Cost of sales 35,888 $95 35,983
Gross profit 50,197 (95) 50,102
Research and development expenses 9,254 174 9,428
Acquired in-process research and
development expense - 6,490 6,490
Selling, general and administrative
expenses 19,725 610 20,335
Amortization of intangible assets 4,762 4,762
Operating income 21,218 (12,131) 9,087
Other income (expense), net 1,151 (14) 1,137
Income before provision for income
taxes 22,369 (12,145) 10,224
Provision for income taxes 6,253 (4,572) 1,681
Net income $16,116 $(7,573) $8,543
Earnings per share:
Basic $0.34 $0.18
Diluted $0.33 $0.17
Weighted average shares and common
equivalents outstanding:
Basic 47,650 - 47,650
Diluted 49,538 (25) 49,513
For the Quarter Ended March 28, 2003
Operational Adjustments * GAAP
Net sales $71,162 $71,162
Cost of sales 31,332 $233 31,565
Gross profit 39,830 (233) 39,597
Research and development expenses 6,334 478 6,812
Selling, general and administrative
expenses 15,571 1,088 16,659
Amortization of intangible assets - 6,156 6,156
Operating income 17,925 (7,955) 9,970
Other income (expense), net 848 (14) 834
Income before provision income taxes 18,773 (7,969) 10,804
Provision for income taxes 5,033 (2,396) 2,637
Net income $13,740 $(5,573) $8,167
Earnings per share:
Basic $0.30 $0.18
Diluted $0.29 $0.17
Weighted average shares and common
equivalents outstanding:
Basic 45,413 - 45,413
Diluted 46,854 (163) 46,691
* Note: Adjustments relate to acquired in-process research and
development expense from the Crystal Link acquisition and amortization
of deferred compensation (from the capitalization of the value of stock
options assumed) and 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 2C in August 2002, the acquisition of Soronti
in December 2003, and the acquisition of Crystal Link in January 2004.
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.
AVOCENT CORPORATION
Condensed Consolidated Balance Sheets
(Dollars in thousands)
April 2, December 31,
2004 2003
(Unaudited)
Cash, cash equivalents
and short-term investments $253,465 $223,392
Accounts receivable, net 49,215 45,011
Current and deferred income tax receivable 4,994 5,031
Other receivables, net 475 225
Inventories, net 22,640 21,324
Other current assets 3,639 4,251
Total current assets 334,428 299,234
Investments 66,362 84,410
Property and equipment, net 38,402 38,473
Goodwill 206,037 206,037
Intangible assets, net 29,396 31,889
Other assets 801 720
Total assets $675,426 $660,763
Accounts payable and other accrued
expenses $15,016 $19,154
Income tax payable 10,844 6,702
Other current liabilities 15,224 16,866
Total current liabilities 41,084 42,722
Non-current liabilities 6,479 10,884
Total stockholders' equity 627,863 607,157
Total liabilities and stockholders' equity $675,426 $660,763
SOURCE Avocent Corporation
-0- 04/22/2004
/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 /
/Audio: www.firstcallevents.com/service/ajwz404484588gf12.html /
(AVCT)
CO: Avocent Corporation
ST: Alabama
IN: CPR TLS
SU: ERN CCA MAV