EXHIBIT 99.1
ADIC Posts Two Cent Per Share Loss on 10% Sales Growth To $111 Million
in Second Quarter; New Enterprise Product Acceptance Accelerates;
Sales and Marketing Costs Up; Share Buyback Expanded
REDMOND, Wash.--(BUSINESS WIRE)--May 13, 2004--Advanced Digital
Information Corporation (Nasdaq:ADIC) today announced a second quarter
loss of $1.3 million, or two cents per share, on sales of $111.1
million for the period ended April 30, 2004, versus a profit of $2.4
million, or four cents per share, on sales of $100.6 million during
the same period last year. Sales grew more than 10 percent from the
same period last year and declined just over six percent from the
record first quarter ended Jan. 31.
"We are disappointed at the end of our six quarters of sequential
sales growth and the resulting small operating loss this period," said
Chairman and CEO, Peter van Oppen. "But we remain convinced that our
continued investment in new products and channels is the right
strategy. ADIC(R) ramped up expenses during the second quarter,
especially in sales and marketing, in anticipation of even more rapid
sales growth which did not materialize," he said. "We did, however,
continue to make measurable progress in the acceptance of our newest
products as well as development of sales channels during the quarter
and we do not expect to significantly alter our existing levels of
spending."
Yesterday, the Company announced a worldwide reseller agreement
with HP covering ADIC's StorNext(TM) data management software. The
first joint customer is identified as NOB Cross-Media Facilities, a
supplier of digital archiving services for multiple public
broadcasters in the Netherlands. In mid-April, ADIC announced
StorNext(TM) interoperability with Apple Computer's new Xsan(TM) file
system. This exclusive compatibility allows end users to add Mac-based
server and storage resources to the list of platforms that can
transparently share data over a SAN.
Also during the quarter, both the i2000 Intelligent Library(TM)
and Pathlight VX(TM) disk-to-tape backup appliance grew at sequential
rates that would represent triple-digit growth on an annualized basis.
Pathlight VX(TM) users are able to achieve disk performance and RAID
reliability using serial ATA disk for primary backup and restore while
maintaining an integrated path to tape for extended data retention and
disaster recovery. The Company believes ADIC's own proven tape
emulation, disk file system, policy based data management tools and
tape library technology provide Pathlight VX(TM) unique performance
and scalability advantages for customers.
"ADIC is in the process of transforming our business from one that
has historically been heavily dependent on mid-range tape storage to
one that is becoming a leading player in creating innovative,
enterprise-class hardware and data management software products
incorporating both disk and tape," van Oppen said. "Our customers are
drowning in data and ADIC's products are a big part of the solution.
These new products, combined with additional enterprise sales
channels, are expected to help gradually improve overall sales growth
and result in improved financial results," he said.
During the second quarter, gross profit as a percentage of sales
dropped to 28.2 percent compared with 32.7 percent in the second
quarter last year and 29.0 percent in the immediately preceding
quarter. This decline is primarily a result of lower-than-anticipated
sales volumes and significant increases in service infrastructure
which offset increases in the proportion of higher margin Intelligent
Storage Solutions(TM) (ISS) sales and branded versus OEM business.
Sales of ISS products, which include elements of ADIC connectivity
and software technology and are sold through both branded and OEM
sales channels, represented approximately 38 percent of sales in the
second quarter, unchanged from a year ago and up from 35 percent in
the immediately preceding period. The Company believes that, at
constant sales levels, an increasing proportion of ISS sales, whether
sold on a branded or OEM basis, will typically increase gross margins
as a percentage of sales. A sequential decline in overall sales volume
this period obscured the positive margin effects of a sequential
improvement in the proportion of ISS sales, according to ADIC. ISS
sales were 17, 30 and 37 percent of total sales in fiscal years 2001,
2002 and 2003, respectively.
OEM sales to partners, including Dell, Fujitsu-Siemens, HP, IBM
and Sun, were approximately 47 percent of total sales versus 45
percent in the second quarter of fiscal 2003 and 50 percent in the
first quarter of fiscal 2004. A lower proportion of OEM sales
generally results in increasing gross margin as a percentage of sales
but the sequential decline this quarter was also obscured by the
effect of lower overall sales volumes during the period, according to
the Company.
Operating expenses rose 6.8 percent from the same quarter last
year and 10.4 percent sequentially. All of this expense growth is
attributable to increases in sales and marketing expenses, including
the addition of more than 50 sales and marketing Team Members over the
past six months. Other income was a net expense for the quarter as
interest income of $519,000 was more than offset by foreign currency
losses of $961,000. Total cash and marketable securities, net of all
debt, rose to approximately $224.3 million.
Separately, ADIC announced that Chuck Stonecipher will become
Executive Vice President for Product Development and Strategy,
relinquishing other responsibilities to spend full time on the
management of products, technology plans and competitive strategy for
which he has long had responsibility. Chief Financial Officer Jon
Gacek also becomes an Executive Vice President.
Share Repurchase Expanded
The Company also announced that its Board of Directors has
authorized the repurchase of up to five million total additional
shares under its previously announced stock repurchase program.
Approximately 1.4 million shares have been repurchased under the
existing program approved in May 2002. ADIC believes any such
purchases, which may be made from time to time, represent good value
for the Company and its shareholders.
About ADIC
Advanced Digital Information Corporation (Nasdaq:ADIC) is a
leading provider of Intelligent Storage Solutions(TM) to the open
systems marketplace. ADIC is the world's largest supplier of automated
tape systems using the drive technologies most often employed for
backing up open system, client-server networks.* The Company's data
management software, storage networking appliances, and disk-to-tape
data protection solutions provide IT managers innovative tools for
storing, managing and protecting their most valuable digital assets in
a variety of disk and tape environments. ADIC storage products are
available through a worldwide sales force and a global network of
resellers and OEMs, including Cray, Dell, Fujitsu-Siemens, HP, IBM and
Sun. Further information about ADIC is available at www.adic.com.
*IDC 2001 worldwide revenue and unit market share data for all
automated systems using DLT, SDLT, LTO, 8mm or AIT drives, and Gartner
Dataquest, Tape Automation Systems Market Shares, 2003, F. Yale, April
2004. ADIC and Scalar are registered trademarks and Intelligent
Storage is a trademark of Advanced Digital Information Corporation.
All other trade or service marks mentioned in this document should be
considered the property of their respective owners.
This release contains forward-looking statements relating to the
Company's future products and services and future operating results
that are subject to risks and uncertainties that could cause actual
results to differ materially from those projected. The words "expect",
"anticipate", and similar expressions identify forward-looking
statements, but their absence does not mean that the statement is not
forward-looking. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and
assumptions that are difficult to predict. Factors that could affect
the Company's actual results include general economic trends, purchase
deferrals by customers, technical competition or obsolescence, supply
constraints, changes in market pricing and production problems.
Reference is made to the Company's Annual Report on Form 10-K for the
year ended Oct. 31, 2003, for a more detailed description of factors
that could affect the Company's actual results. Readers are cautioned
not to place undue reliance on these forward-looking statements, which
speak only as of the date of this release. The Company undertakes no
obligation to update publicly any forward-looking statements to
reflect new information, events or circumstances after the date of
this release or to reflect the occurrence of unanticipated events.
Conference Call
There will be a conference call to discuss second quarter results
as well as estimates for the third quarter of fiscal 2004 at 1:30 p.m.
PT (4:30 p.m. ET) on May 13, 2004. The call can be accessed live on
our website at www.adic.com/ir.
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share amounts)
(Unaudited)
Three months ended Six months ended
April 30, April 30,
2004 2003 2004 2003
-------- -------- -------- --------
Net sales $111,067 $100,642 $229,372 $197,738
Cost of sales 79,742 67,728 163,728 134,968
-------- -------- -------- --------
Gross profit 31,325 32,914 65,644 62,770
Sales and marketing 17,345 14,516 31,417 27,657
General and administrative 6,080 6,172 12,284 12,147
Research and development 9,320 9,967 18,700 20,271
-------- -------- -------- --------
Operating profit (loss) (1,420) 2,259 3,243 2,695
Other income (expense), net (536) 1,426 1,665 3,605
-------- -------- -------- --------
Income (loss) before provision
(benefit) for income taxes (1,956) 3,685 4,908 6,300
Provision (benefit) for income
taxes (652) 1,266 1,308 2,195
-------- -------- -------- --------
Net income (loss) $ (1,304) $ 2,419 $ 3,600 $ 4,105
======== ======== ======== ========
Basic net income (loss) per
share $ (0.02) $ 0.04 $ 0.06 $ 0.07
======== ======== ======== ========
Diluted net income (loss) per
share $ (0.02) $ 0.04 $ 0.06 $ 0.07
======== ======== ======== ========
Shares used in computing basic
net income (loss) per share 64,360 62,343 64,084 62,105
======== ======== ======== ========
Shares used in computing
diluted net income (loss)
per share 64,360 63,073 65,240 62,878
======== ======== ======== ========
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
April 30, 2004 Oct. 31, 2003
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 219,899 $ 180,401
Accounts receivable, net 93,139 100,391
Inventories, net 39,150 35,736
Marketable securities 5,526 20,788
Assets held for sale -- 12,384
Other current assets 22,512 21,514
-------------- -------------
Total current assets 380,226 371,214
Property, plant and equipment, net 47,348 45,505
Service parts for maintenance, net 29,657 28,427
Investments 4,021 3,728
Other non-current assets 4,043 4,298
------------- -------------
$ 465,295 $ 453,172
============= =============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities $ 96,374 $ 94,852
Deferred income taxes 2,515 2,507
Long-term debt -- 967
Shareholders' equity 366,406 354,846
------------- -------------
$ 465,295 $ 453,172
============= =============
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six months ended
April 30,
-------------------
2004 2003
-------- --------
Cash flows from operating activities:
Net income $ 3,600 $ 4,105
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 12,108 10,096
Allowance for doubtful accounts receivable 39 494
Inventory obsolescence 1,473 2,962
Gain on securities transactions (871) (1,412)
Deferred income taxes (83) (54)
Tax benefit from exercise of stock options 1,693 587
Other 39 27
Change in assets and liabilities:
Accounts receivable 4,940 (17,013)
Inventories (5,934) (7,425)
Prepaid expenses and other assets (228) (544)
Income taxes receivable (704) 1,268
Service parts for maintenance (5,886) (3,548)
Accounts payable (1,559) 5,245
Accrued liabilities (4,283) 4,183
Deferred revenue 7,158 2,364
-------- --------
Net cash provided by operating activities 11,502 1,335
-------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment (8,950) (6,442)
Proceeds from assets held for sale 15,117 --
Purchase of marketable securities (4,004) (2,352)
Proceeds from securities transactions 20,089 13,352
Purchase of other investments (364) --
Return of investment on other investments 71 --
-------- --------
Net cash provided by investing activities 21,959 4,558
-------- --------
Cash flows from financing activities:
Repayment of bank lines of credit and long-term
debt (103) (1,510)
Proceeds from short-term borrowings -- 781
Repurchase of common stock -- (697)
Proceeds from issuance of common stock for stock
options and Stock Purchase Plan 5,893 2,861
-------- --------
Net cash provided by financing activities 5,790 1,435
-------- --------
Effect of exchange rate changes on cash 247 1,288
-------- --------
Net increase in cash and cash equivalents 39,498 8,616
Cash and cash equivalents at beginning of period 180,401 150,741
-------- --------
Cash and cash equivalents at end of period $219,899 $159,357
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CONTACT: ADIC
Jon Gacek or Stacie Timmermans, 425-881-8004