Exhibit 99.12 Avocent Reports Higher Sales and Net Income for Second Quarter HUNTSVILLE, Ala.--(BUSINESS WIRE)--July 21, 2005--Avocent Corporation (NASDAQ:AVCT) today reported higher sales for the second quarter ended July 1, 2005. "Our total sales rose to $89.5 million during the second quarter of 2005. We experienced a strong sequential rebound in sales in the second quarter, especially in our U.S. sales of branded products," stated John R. Cooper, chairman and chief executive officer of Avocent Corporation. "We also experienced excellent growth from international markets and our embedded solutions. "We stepped up certain marketing programs during the quarter to focus on new products, including the reintroduction of DSView3," continued Mr. Cooper. "The marketing programs had a positive impact on our second quarter sales as evidenced by the strong rebound in U.S. sales from the first quarter. "During the second quarter, we followed through on our commitment to narrow our research and development efforts by closing three satellite research and development offices and making other selected headcount reductions. In addition, we moved to realign our sales force slightly to better match our customers and markets. Our results for the quarter include approximately $1.3 million in severance costs related to these office closings and other headcount adjustments." Second Quarter Results Income prior to intangible amortization and merger-related expenses was $15.9 million, or $0.31 per diluted share, compared with income prior to intangible amortization and merger-related expenses of $15.3 million, or $0.30 per diluted share, in the second quarter of 2004. (See "Use of Non-GAAP Financial Measures" discussion below.) Net adjustments to reconcile to GAAP net income were $4.8 million in the second quarter of 2005, including $6.6 million in intangible amortization and a $2.5 million tax benefit. Net adjustments to reconcile to GAAP net income were $28.7 million in the second quarter of 2004, including $6.4 million in amortization of intangible amortization, a $21.7 million charge for acquired in-process research and development expense related to OSA and a $1.7 million tax benefit. GAAP net income for the second quarter of 2005 was $11.1 million, or $0.22 per diluted share. This compares with a GAAP net loss of $13.4 million, or $0.27 per diluted share, in the second quarter of 2004. Net sales for the second quarter increased 2.0% to $89.5 million compared with sales of $87.8 million in the second quarter of 2004. Sales rose 16.6% sequentially from the first quarter of 2005 on the strength of higher OEM, branded and OSA sales. Branded sales declined 8.4% from the second quarter of 2004 and accounted for 51.1% of total sales. OEM sales increased 15.7% from the second quarter of 2004 and accounted for 48.9% of total second quarter 2005 sales. U.S. sales declined 0.1% to $52.8 million and international sales rose 5.2% to $36.7 million compared with the second quarter of 2004. "Demand for digital products remains strong and was a key factor in our margin growth this quarter," continued Mr. Cooper. "Digital product sales represented approximately 53% of revenues this quarter, up from 47% of revenues in the second quarter of last year." Gross profit for the second quarter of 2005 increased 4.4% to $52.8 million with a gross margin of 59.0%. This compared with gross profit of $50.6 million and a gross margin of 57.6% in the second quarter of 2004. The increase in gross profit was due to higher sales of digital, embedded and IPMI-enabled products. Research and development expenses increased 28.2% to $14.4 million, or 16.1% of sales, compared with $11.2 million, or 12.8% of sales, in the second quarter of 2004. This increase was due primarily to additional engineering teams added from the acquisitions of OSA and Sonic Mobility. R&D expense for the second quarter of 2005 also included approximately $800,000 in severance costs related to the closed offices. Selling, general and administrative expenses rose 9.0% to $24.0 million compared with $22.0 million in the second quarter of 2004. The increase included an increase in marketing costs related to new products, higher legal fees from the Raritan lawsuit prior to reaching the settlement and approximately $500,000 in severance costs related to realigning our sales force. Avocent's balance sheet and cash position remained strong as of July 1, 2005. The Company's cash flow from operations was approximately $21 million for the second quarter of 2005 with approximately $317 million in cash, cash equivalents and investments at the quarter's end. Avocent had no long-term debt as of July 1, 2005. Use of Non-GAAP Financial Measures Income prior to intangible amortization and merger-related expenses, 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 or impairments 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 second quarter results conference call to be held July 21, 2005. The live broadcast will be available on-line at www.avocent.com as well as www.vcall.com 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 current and future markets for these products and technologies (including our combined embedded KVM and IPMI solutions), and engineering and design activities. 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 14, 2005. 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 July 1, 2005 Operational Adjustments(1) GAAP ----------- ----------- -------- Net sales $89,538 $89,538 Cost of sales 36,711 36,711 ----------- ----------- --------- Gross profit 52,827 - 52,827 Research and development expenses 14,097 291 14,388 Selling, general and administrative expenses 23,649 376 24,025 Amortization of intangible assets 6,623 6,623 ----------- ----------- --------- Operating income 15,081 (7,290) 7,791 Income from settlement of lawsuit 5,000 5,000 Other income (expense), net 1,954 (15) 1,939 ----------- ----------- --------- Income before income taxes 22,035 (7,305) 14,730 Provision for income taxes 6,148 (2,517) 3,631 ----------- ----------- --------- Net income $15,887 $(4,788) $11,099 =========== =========== ========= Earnings per share: Basic $0.32 $0.22 Diluted $0.31 $0.22 Weighted average shares and common equivalents outstanding: Basic 49,475 - 49,475 Diluted 50,460 (43) 50,417 For the Quarter Ended July 2, 2004 Operational Adjustments(1) GAAP ----------- ----------- -------- Net sales $87,796 $87,796 Cost of sales 37,101 $95 37,196 ----------- ----------- --------- Gross profit 50,695 (95) 50,600 Research and development expenses 10,337 889 11,226 Acquired in-process research and development expense - 21,720 21,720 Selling, general and administrative expenses 20,721 1,316 22,037 Amortization of intangible assets - 6,412 6,412 ----------- ----------- --------- Operating income (loss) 19,637 (30,432) (10,795) Other income (expense), net 859 (15) 844 ----------- ----------- --------- Income (loss) before income taxes 20,496 (30,447) (9,951) Provision for income taxes 5,158 (1,717) 3,441 ----------- ----------- --------- Net income (loss) $15,338 $(28,730) $(13,392) =========== =========== ========= Earnings (loss) per share: Basic $0.31 $(0.27) Diluted $0.30 $(0.27) Weighted average shares and common equivalents outstanding: Basic 49,065 - 49,065 Diluted 50,823 (1,758) 49,065 (1) Note: Adjustments relate to acquired in-process research and development expense from the OSA Technologies Inc. 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, the acquisitions of Equinox, 2C, Soronti, Crystal Link, OSA and Sonic Mobility. 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 Statements of Operations (Unaudited, in thousands, except per share data) For the Six Months Ended July 1, 2005 Operational Adjustments(1) GAAP ----------- ----------- -------- Net sales $166,343 $166,343 Cost of sales 69,934 69,934 ----------- ----------- --------- Gross profit 96,409 - 96,409 Research and development expenses 28,274 581 28,855 Selling, general and administrative expenses 45,552 753 46,305 Amortization of intangible assets 13,245 13,245 ----------- ----------- --------- Operating income 22,583 (14,579) 8,004 Income from settlement of lawsuit 5,000 5,000 Other income (expense), net 3,909 (30) 3,879 ----------- ----------- --------- Income before income taxes 31,492 (14,609) 16,883 Provision for income taxes 8,285 (4,335) 3,950 ----------- ----------- --------- Net income $23,207 $(10,274) $12,933 =========== =========== ========= Earnings per share: Basic $0.47 $0.26 Diluted $0.46 $0.25 Weighted average shares and common equivalents outstanding: Basic 49,859 - 49,859 Diluted 50,870 (51) 50,819 For the Six Months Ended July 2, 2004 Operational Adjustments(1) GAAP ----------- ----------- -------- Net sales $173,881 $173,881 Cost of sales 72,989 $190 73,179 ----------- ----------- --------- Gross profit 100,892 (190) 100,702 Research and development expenses 19,591 1,063 20,654 Acquired in-process research and development expense - 28,210 28,210 Selling, general and administrative expenses 40,446 1,926 42,372 Amortization of intangible assets 11,174 11,174 ----------- ----------- --------- Operating income (loss) 40,855 (42,563) (1,708) Other income (expense), net 2,011 (30) 1,981 ----------- ----------- --------- Income (loss) before income taxes 42,866 (42,593) 273 Provision for income taxes 11,412 (6,290) 5,122 ----------- ----------- --------- Net income (loss) $31,454 $(36,303) $(4,849) =========== =========== ========= Earnings (loss) per share: Basic $0.64 $(0.10) Diluted $0.62 $(0.10) Weighted average shares and common equivalents outstanding: Basic 48,958 - 48,958 Diluted 50,785 (1,827) 48,958 (1) Note: Adjustments relate to acquired in-process research and development expense from the OSA Technologies Inc. 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, the acquisitions of Equinox, 2C, Soronti, Crystal Link, OSA and Sonic Mobility. 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 (Unaudited, in thousands) July 1, Dec. 31, 2005 2004 ---------- ---------- Cash, cash equivalents and short-term investments $251,051 $239,799 Accounts receivable, net 53,083 60,948 Inventories, net 22,807 21,232 Other current assets 8,203 5,923 Deferred income tax 6,377 6,720 ---------- ---------- Total current assets 341,521 334,622 Investments 65,783 91,547 Property and equipment, net 39,221 39,896 Goodwill, net 269,992 269,892 Intangible assets, net 20,896 33,981 Other assets 893 843 ---------- ---------- Total assets $738,306 $770,781 ========== ========== Accounts payable and other accrued expenses $16,506 $21,368 Income tax payable 9,426 8,494 Other current liabilities 19,841 16,767 ---------- ---------- Total current liabilities 45,773 46,629 Non-current liabilities 5,377 10,855 Total stockholders' equity 687,156 713,297 ---------- ---------- Total liabilities and stockholders' equity $738,306 $770,781 ========== ========== AVOCENT CORPORATION Additional Financial Information (Unaudited, in thousands, except ratios and treasury share data) Revenue by Quarter Ended Six Months Ended Distribution Channel July 1, July 2, July 1, July 2, 2005 2004 2005 2004 ---------- -------- --------- --------- OEM $43,742 $37,806 $83,820 $73,182 Branded 45,796 49,990 82,523 100,699 ---------- -------- --------- --------- Total $89,538 $87,796 $166,343 $173,881 ========== ======== ========= ========= Revenue, Geographic Quarter Ended Six Months Ended Composition July 1, July 2, July 1, July 2, 2005 2004 2005 2004 ---------- -------- --------- --------- United States $52,786 $52,860 $92,750 $104,050 International 36,752 34,936 73,593 69,831 ---------- -------- --------- --------- Total $89,538 $87,796 $166,343 $173,881 ========== ======== ========= ========= Quarter Ended Six Months Ended Cash Flow Highlights July 1, July 2, July 1, July 2, 2005 2004 2005 2004 ---------- -------- --------- --------- Cash provided by operations $21,153 $19,159 $31,307 $32,542 Depreciation expense 1,702 1,399 3,278 2,993 Amortization of intangibles 6,622 6,412 13,245 11,174 Capital expenditures 1,595 2,320 2,603 3,690 Purchase of treasury shares 28,408 - 50,271 - As of As of July 1, July 2, Other Information 2005 2004 ---------- -------- Days of sales outstanding in accounts receivable 54.0 50.5 Inventory turns for the quarter 6.4 6.7 Number of treasury shares purchased to date 1,875,000 - CONTACT: Avocent Corporation Dusty Pritchett, 256-217-1300 or Teddy Blankenship, 256-217-1301