Exhibit 99.1
ADIC Reports One Cent EPS in Q2; Continued Margin
Improvement; Branded Sales up Nine Percent; Million Shares Repurchased
REDMOND, Wash.--(BUSINESS WIRE)--May 19, 2005--Advanced Digital
Information Corporation (Nasdaq:ADIC) today announced second quarter
earnings of $733,000, or one cent per share, on sales of $106 million
versus a loss of $1.3 million, or two cents per share, on sales of
$111 million during the same quarter last year. The Company had a loss
of $270,000 during the immediately preceding quarter on sales of
nearly $111 million. For the six months ended April 30, 2005, the
Company earned $463,000, or one cent per share, compared to earnings
of $3.4 million, or five cents per share, during the first six months
of fiscal 2004.
Gross profit as a percentage of sales was 30.8 percent during the
second quarter, up from 28.2 percent a year ago and 29.6 percent in
the preceding first quarter. An improved mix of product sales,
including a higher proportion of ADIC(R) branded sales, contributed to
a higher gross profit percentage despite slightly lower overall sales
volume. Overall second quarter sales declined approximately four
percent from both the same quarter last year and the immediately
preceding quarter. Branded sales were up approximately nine percent
from the same period last year and flat sequentially while OEM sales
were down 19 percent and ten percent from last year and the preceding
quarter, respectively.
Improved gross profit, albeit on lower total sales, allowed the
company to report an operating profit of $41,000 in the second quarter
versus operating losses of $1.4 million reported for both second
quarter 2004 and the preceding first quarter of fiscal 2005. Operating
expenses during the just completed second quarter included
approximately $500,000 in severance and relocation costs associated
with the previously announced closure of development facilities in New
York and California as well as costs associated with reorganization
among the Company's European operations.
"We are particularly pleased with the progress in our branded
product and services business, although expected declines in OEM sales
are obscuring some of that success," according to Chair and Chief
Executive Officer Peter van Oppen. "Enterprise tape library products,
including our Scalar 10K and i2000, each showed annual growth in
double digits while our new disk-based backup products, the Pathlight
PVX series, experienced sequential growth in excess of 50 percent," he
said. "These trends make us optimistic about continued branded growth,
which should be reflected in total sales as our OEM business
stabilizes. Additionally, we have previously said we expect to begin
shipping new OEM products before the end of the fiscal year," van
Oppen said.
"Gross profit percentage, particularly on lower sales volume, is
an encouraging sign about the health of our underlying business and
competitive position. We have reported improving gross margin in
several recent quarters and 30.8 percent is our best percentage result
since we reported 31.0 percent margin on $118 million in sales during
the fourth quarter of 2003," he noted.
Second quarter 2005 is the second period for which the Company has
disclosed sales and margin numbers separately for product and service
revenues. Total product revenues for the quarter, which include both
branded and OEM product sales, are down 7.8 percent and 5.7 percent on
an annual and sequential basis, respectively. The bulk of these
declines result from reduced OEM product sales while branded product
sales are up 4.6 percent over the second quarter last year and down
1.7 percent from first quarter 2005. Service revenues, which are
included in total branded revenues but not included in branded product
revenues, are up 25.7 percent over the year ago period and 7.1 percent
over the immediately preceding quarter.
Combined branded revenues, including both products and service,
reached 60 percent of total revenues for the first time in several
years during the quarter compared with 53 percent during the same
period last year and 58 percent in the preceding quarter. OEM revenues
equaled approximately 40 percent of total revenues during the period.
Net cash provided by operating activities for the six months
ending April 30 was $21.9 million. Subtracting reported cash flow from
operations through January 31 indicates second quarter cash flow from
operations was $6.6 million. Total cash and marketable securities were
$240 million at the end of the period.
The Company repurchased slightly over one million shares of stock
during the second quarter at an average price of $8.35 per share, for
a total cost of $8.5 million. Total repurchases during the past year
are now over two million shares. Yesterday, the Company's board
replenished existing authorizations to provide authority for future
repurchases of up to five million shares.
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.(a) 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, OEMs and partnerships, including Apple, Cray, Dell, EMC,
Fujitsu-Siemens, HP, IBM and Sun. Further information about ADIC is
available at www.adic.com.
(a) 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 second quarter results
as well as estimates for the third quarter of fiscal 2005, including a
third-quarter gain related to the disposition of an existing facility
in Germany, at 1:30 p.m. PT (4:30 p.m. ET) on May 19, 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 Six Months Ended
April 30, April 30,
2005 2004 2005 2004
-------- -------- -------- --------
Revenue:
Product $ 92,047 $ 99,828 $189,677 $207,762
Service 14,124 11,239 27,314 21,610
-------- -------- -------- --------
Total revenue 106,171 111,067 216,991 229,372
Cost of revenue:
Product 63,268 70,999 131,803 146,453
Service 10,167 8,743 19,659 17,275
-------- -------- -------- --------
Total cost of revenue 73,435 79,742 151,462 163,728
Gross profit 32,736 31,325 65,529 65,644
Sales and marketing 16,227 17,345 32,909 31,417
General and administrative 6,418 6,080 12,691 12,284
Research and development 10,050 9,320 21,307 18,700
-------- -------- -------- --------
Operating profit (loss) 41 (1,420) (1,378) 3,243
Other income (loss), net 807 (561) 1,894 1,430
-------- -------- -------- --------
Income (loss) before provision
(benefit) for income taxes 848 (1,981) 516 4,673
Provision (benefit) for income
taxes 115 (661) 53 1,225
-------- -------- -------- --------
Net income (loss) $ 733 $ (1,320) $ 463 $ 3,448
======== ======== ======== ========
Basic net income (loss) per
share $ 0.01 $ (0.02) $ 0.01 $ 0.05
======== ======== ======== ========
Diluted net income (loss) per
share $ 0.01 $ (0.02) $ 0.01 $ 0.05
======== ======== ======== ========
Shares used in computing basic
net income (loss) per share 63,313 64,360 63,556 64,084
======== ======== ======== ========
Shares used in computing
diluted net income (loss)
per share 63,560 64,360 63,892 65,240
======== ======== ======== ========
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
April 30, Oct. 31,
ASSETS 2005 2004
--------- ---------
Current assets:
Cash and cash equivalents $ 47,705 $ 94,695
Accounts receivable, net 85,029 93,025
Inventories, net 30,462 38,728
Marketable securities 192,729 138,238
Assets held for sale 1,364 --
Other current assets 15,359 13,602
-------- --------
Total current assets 372,648 378,288
Property, plant and equipment, net 44,228 45,913
Service parts for maintenance, net 29,309 29,993
Investments 3,196 2,769
Other non-current assets 17,733 18,067
-------- --------
$467,114 $475,030
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Deferred revenue - current $ 33,618 $ 31,727
Other current liabilities 59,741 65,200
-------- --------
Total current liabilities 93,359 96,927
Deferred revenue - long-term 15,546 13,605
Other long-term liabilities 400 600
Shareholders' equity 357,809 363,898
-------- --------
$467,114 $475,030
======== ========
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
April 30,
-------------------
2005 2004
--------- --------
Cash flows from operating activities:
Net income $ 463 $ 3,448
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 12,901 12,108
Bad debt expense 454 39
Inventory obsolescence 924 1,473
(Gain) loss on securities and investment
transactions 2 (636)
Deferred income taxes 185 (83)
Tax benefit from exercise of stock options 72 1,693
Other 32 39
Change in assets and liabilities:
Accounts receivable 8,257 4,940
Inventories 7,364 (5,934)
Other current assets (2,028) (228)
Service parts for maintenance (4,326) (5,886)
Current liabilities (6,144) (6,629)
Deferred revenue 3,757 7,158
--------- --------
Net cash provided by operating activities 21,913 11,502
--------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment (7,057) (8,950)
Proceeds from assets held for sale -- 15,117
Purchase of marketable securities (163,022) (78,268)
Proceeds from securities transactions 108,525 60,703
Purchase of other investments (429) (364)
Return of investment on other investments -- 71
--------- --------
Net cash used in investing activities (61,983) (11,691)
--------- --------
Cash flows from financing activities:
Repayment of short-term and long-term debt -- (103)
Repurchase of common stock (8,516) --
Proceeds from issuance of common stock for
stock options and Stock Purchase Plan 1,784 5,893
--------- --------
Net cash provided by (used in) financing
activities (6,732) 5,790
--------- --------
Effect of exchange rate changes on cash (188) 247
--------- --------
Net increase (decrease) in cash and cash
equivalents (46,990) 5,848
Cash and cash equivalents at beginning of period 94,695 91,451
--------- --------
Cash and cash equivalents at end of period $ 47,705 $ 97,299
========= ========
CONTACT: ADIC
Jon Gacek or Stacie Timmermans, 425-881-8004