Exhibit 99.1
ADIC Reports Breakeven First Quarter EPS As Mix, Margin Show Continued
Strategic Improvement; Branded Sales Up 8%, OEM Sales Down 21%;
$15+ Million Cash from Operations
REDMOND, Wash.--(BUSINESS WIRE)--Feb. 17, 2005--ADVANCED DIGITAL
INFORMATION CORPORATION (Nasdaq:ADIC) today announced a small net loss
of $270,000, or zero cents per share, on sales of $110.8 million for
the first quarter ended January 31, 2005. The Company earned $4.8
million, or seven cents per share, on sales of $118.3 million during
the same period a year ago and $5.7 million, or nine cents per share,
on sales of $115.4 million in the immediately preceding fourth
quarter.
Gross profit as a percentage of sales for the period was 29.6
percent, the highest in the past five quarters, versus 29.0 percent
during first quarter 2004 and 29.4 percent in the preceding fourth
quarter despite modestly lower total sales. Overall first quarter
sales declined six percent and four percent from the year ago period
and preceding period, respectively. ADIC branded sales grew eight
percent versus the same quarter last year to nearly 58 percent of
total revenues. Branded sales were just over 50 percent of total sales
a year ago and 57 percent of sales in the fourth quarter ended October
31. OEM sales decreased to approximately 42 percent of sales in the
quarter, down from nearly 50 percent in first quarter 2004, as an
anticipated decline in OEM sales continued.
The Company reported an operating loss of $1.4 million versus
operating profits of $4.7 million during first quarter 2004 and $2.2
million in the preceding fourth quarter. Net cash provided by
operating activities during the quarter totaled $15.3 million, leaving
a quarter-ending balance of cash and marketable securities of over
$245 million.
"We never like reporting breakeven quarters but these results are
about as expected and continue to bode well for our shift toward
higher margins and branded business in a quarter that would typically
be dominated by OEM sales," according to Chair and Chief Executive
Officer Peter van Oppen. "It is always significant to report an
improved margin percentage despite lower total volume. We expect
continued volume increases in the branded portion of our business will
bring further margin improvement and profitability."
"On the product side, the enormously popular Scalar i2000 library
grew more than 21 percent from the fourth quarter and was up
approximately 62 percent from the same period last year as it
benefited from new reseller channels and continued broad acceptance
among enterprise-class customers," he said.
"Operating expenses were slightly higher than expected for the
quarter, particularly in R&D, as we incurred incremental expenses
related to prototyping new products for both our branded and OEM
channels," according to van Oppen. "Such costs are not likely to be
repeated and we would expect R&D costs to be somewhat lower in the
second quarter."
Earlier this month, the Company announced the pending closure of
two R&D facilities in Ithaca, New York and Santa Clara, California.
The decision was made in an effort to optimize efficiency and customer
service. Approximately 60 Team Members will be affected, the majority
of whom are being offered relocation to another ADIC facility. Both
closures are expected to be completed during the fourth quarter of
fiscal 2005.
This quarter is the first reporting period where ADIC has
presented revenue and cost of revenue separately for products and
services. Service revenue is derived from contracts for field support
provided to our branded-product customers and not otherwise included
in the base price of the product. Service does not include revenue or
cost associated with basic warranty support on new branded or OEM
products, but a significant amount of service revenue is directly
associated with new product sales. The Company's deferred revenue
balance reflects contracts for services to be performed in subsequent
periods and has been growing rapidly with expansion of the installed
base of enterprise-class products. Service margins are expected to
further improve as utilization rates increase for the Company's global
services personnel and parts infrastructure.
About ADIC
Advanced Digital Information Corporation (Nasdaq:ADIC) is a
leading provider of Intelligent Storage(TM) solutions 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.(1) The Company's data
management software, storage networking appliances, and disk-based
backup and restore 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, EMC, Fujitsu-Siemens, HP,
IBM and Sun. Further information about ADIC is available at
www.adic.com.
(1) Market Share: Gartner Dataquest, Tape Automation Systems
Market Shares, 2003, F. Yale, April 2004. ADIC, Pathlight, StorNext,
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, acceptance of new products, success of new
sales channels, technical competition or obsolescence, supply
constraints, changes in market pricing, production problems and the
Company's ability to complete announced restructurings on schedule.
Reference is made to the Company's Annual Report on Form 10-K for the
year ended October 31, 2004 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 first quarter results
as well as estimates for the second quarter of fiscal 2005 at 1:30
p.m. PT (4:30 p.m. ET) on February 17, 2005. 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
January 31,
2005 2004
-------- --------
Revenue:
Product $ 97,630 $107,934
Service 13,190 10,371
-------- --------
Total revenue 110,820 118,305
Cost of revenue:
Product 68,535 75,454
Service 9,492 8,532
-------- --------
Total cost of revenue 78,027 83,986
Gross profit 32,793 34,319
Sales and marketing 16,682 14,072
General and administrative 6,273 6,204
Research and development 11,257 9,380
-------- --------
Operating profit (loss) (1,419) 4,663
Other income, net 1,087 1,991
-------- --------
Income (loss) before provision
(benefit) for income taxes (332) 6,654
Provision (benefit) for income taxes (62) 1,886
-------- --------
Net income (loss) $ (270) $ 4,768
======== ========
Basic net income (loss) per share $ 0.00 $ 0.07
======== ========
Diluted net income (loss) per share $ 0.00 $ 0.07
======== ========
Shares used in computing basic
net income (loss) per share 63,791 63,815
======== ========
Shares used in computing diluted
net income (loss) per share 63,791 65,270
======== ========
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
January 31, October 31,
2005 2004
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $240,395 $226,890
Accounts receivable, net 84,319 93,025
Inventories, net 34,124 38,728
Marketable securities 5,024 6,043
Other current assets 14,497 13,602
-------- --------
Total current assets 378,359 378,288
Property, plant and equipment, net 45,121 45,913
Service parts for maintenance, net 30,085 29,993
Investments 3,232 2,769
Other non-current assets 18,639 18,067
-------- --------
$475,436 $475,030
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Deferred revenue - current $ 33,918 $ 31,727
Other current liabilities 61,903 65,200
-------- --------
Total current liabilities 95,821 96,927
Deferred revenue -- long-term 14,902 13,605
Other long-term liabilities 400 600
Shareholders' equity 364,313 363,898
-------- --------
$475,436 $475,030
======== ========
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
January 31,
-------------------
2005 2004
-------- --------
Cash flows from operating activities:
Net income (loss) $ (270) $ 4,768
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,262 6,164
Bad debt expense 260 72
Inventory obsolescence 876 884
Gain on securities and investment transactions (34) (661)
Deferred income taxes 15 (93)
Tax benefit from exercise of stock options 50 1,289
Other 21 --
Change in assets and liabilities:
Accounts receivable 8,494 (4,546)
Inventories 3,795 (3,889)
Other current assets (1,839) 220
Service parts for maintenance (2,199) (2,623)
Current liabilities (3,450) (407)
Deferred revenue 3,306 2,754
-------- --------
Net cash provided by operating activities 15,287 3,932
-------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment (2,790) (2,498)
Proceeds from assets held for sale -- 15,117
Purchase of marketable securities -- (4,005)
Proceeds from securities transactions 1,017 16,064
Purchase of other investments (429) (364)
Return of investment on other investments -- 71
-------- --------
Net cash provided by (used in) investing activities (2,202) 24,385
-------- --------
Cash flows from financing activities:
Repayment of short-term and long-term debt -- (51)
Proceeds from issuance of common stock for stock
options 381 3,888
-------- --------
Net cash provided by financing activities 381 3,837
-------- --------
Effect of exchange rate changes on cash 39 647
-------- --------
Net increase in cash and cash equivalents 13,505 32,801
Cash and cash equivalents at beginning of period 226,890 180,401
-------- --------
Cash and cash equivalents at end of period $240,395 $213,202
======== ========
CONTACT: ADIC
Jon Gacek, Chief Financial Officer
425-881-8004
Stacie Timmermans, Investor Relations
425-881-8004