Exhibit 99.14
Avocent Reports Higher Sales and Net Income for Third Quarter
HUNTSVILLE, Ala.--(BUSINESS WIRE)--Oct. 20, 2005--Avocent
Corporation (NASDAQ:AVCT) today reported higher sales for the third
quarter ended September 30, 2005. Net sales for the third quarter
increased 5.9% to $96.7 million compared with sales of $91.3 million
in the third quarter of 2004.
"Avocent's sales, gross margin and net income rose in the third
quarter and benefited from increased demand for our digital and
embedded products," stated John R. Cooper, chairman and chief
executive officer of Avocent Corporation. "Digital product sales
accounted for 53.2% of revenues in the third quarter, up from 48.7% in
the third quarter of 2004, on the strength of new products introduced
since last year, including DSView3. We also posted record revenues
from embedded products this quarter as project wins continue to
contribute to revenue growth.
"Sequentially, we were pleased to experience 8% growth in revenues
from the second quarter of 2005," continued Mr. Cooper. "Branded sales
particularly demonstrated strength, with a sequential increase of
14%."
Income prior to intangible amortization and merger-related
expenses was $18.0 million, or $0.36 per diluted share, compared with
income prior to intangible amortization and merger-related expenses of
$17.2 million, or $0.34 per diluted share, in the third quarter of
2004. (See "Use of Non-GAAP Financial Measures" discussion below.) Net
adjustments to reconcile to GAAP net income were $1.7 million in the
third quarter of 2005, including $2.7 million in intangible
amortization and a $1.8 million tax benefit. Net adjustments to
reconcile to GAAP net income were $6.4 million in the third quarter of
2004, including $6.5 million in intangible amortization, a $1.1
million charge for acquired in-process research and development
expense related to Sonic Mobility and a $2.8 million tax benefit.
GAAP net income for the third quarter of 2005 was $16.4 million,
or $0.33 per diluted share. This compares with GAAP net income of
$10.8 million, or $0.21 per diluted share, in the third quarter of
2004.
Branded sales increased 6.2% from the third quarter of 2004 and
accounted for 54.0% of total sales. OEM sales increased 5.5% from the
third quarter of 2004 and accounted for 46.0% of total third quarter
2005 sales. U.S. sales increased 3.6% to $58.0 million and
international sales rose 9.6% to $38.7 million compared with the third
quarter of 2004.
"Sales were up in all major geographic regions and were
particularly strong in Asia in the third quarter," continued Mr.
Cooper. "We have increased our sales and marketing staff in Asia
during the past two years. As a result, branded and OEM sales in Asia
were up 21% compared with the third quarter of last year."
Gross profit for the third quarter of 2005 increased 7.9% to $57.3
million with a gross margin of 59.3%. This compared with gross profit
of $53.1 million and a gross margin of 58.2% in the third quarter of
2004. The increase in gross profit was due to higher sales of digital
products and higher royalty income.
Research and development expenses increased 24.3% to $14.6
million, or 15.1% of sales, compared with $11.8 million, or 12.9% of
sales, in the third quarter of 2004. This increase was due primarily
to additional engineering teams added from the acquisition of Sonic
Mobility and engineering staff added to support embedded products and
other key development projects.
Selling, general and administrative expenses declined 2.1% to
$20.8 million compared with $21.2 million in the third quarter of
2004. The decline in SG&A expenses was due primarily to lower legal
fees and lower Sarbanes-Oxley compliance costs, although these savings
were partially offset by increased investments in marketing programs.
Avocent's balance sheet and cash position remained strong as of
September 30, 2005. The Company's cash flow from operations was
approximately $21 million for the third quarter of 2005 with
approximately $333 million in cash, cash equivalents and investments
at the quarter's end. Avocent had no long-term debt as of September
30, 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 third quarter results conference call to be held
October 20, 2005. The live broadcast will be available on-line at
www.avocent.com as well as www.investorcalendar.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
September 30, 2005
Operational Adjustments GAAP
(a)
----------- ----------- --------
Net sales $96,708 $96,708
Cost of sales 39,388 39,388
----------- ----------- --------
Gross profit 57,320 - 57,320
Research and development expenses 14,350 290 14,640
Selling, general and administrative
expenses 20,394 370 20,764
Amortization of intangible assets - 2,731 2,731
----------- ----------- --------
Operating income 22,576 (3,391) 19,185
Other income (expense), net 2,082 (15) 2,067
----------- ----------- --------
Income before income taxes 24,658 (3,406) 21,252
Provision for income taxes 6,639 (1,752) 4,887
----------- ----------- --------
Net income $18,019 $(1,654) $16,365
=========== =========== ========
Earnings per share:
Basic $0.37 $0.33
Diluted $0.36 $0.33
Weighted average shares and common
equivalents outstanding:
Basic 48,966 - 48,966
Diluted 49,904 (25) 49,879
For the Quarter Ended
October 1, 2004
Operational Adjustments GAAP
(a)
----------- ----------- --------
Net sales $91,325 $91,325
Cost of sales 38,201 38,201
----------- ----------- --------
Gross profit 53,124 - 53,124
Research and development expenses 11,059 $715 11,774
Acquired in-process research and
development expense - 1,050 1,050
Selling, general and administrative
expenses 20,344 863 21,207
Amortization of intangible assets - 6,482 6,482
----------- ----------- --------
Operating income 21,721 (9,110) 12,611
Other income (expense), net 1,238 (15) 1,223
----------- ----------- --------
Income before income taxes 22,959 (9,125) 13,834
Provision for income taxes 5,786 (2,774) 3,012
----------- ----------- --------
Net income $17,173 $(6,351) $10,822
=========== =========== ========
Earnings per share:
Basic $0.35 $0.22
Diluted $0.34 $0.21
Weighted average shares and common
equivalents outstanding:
Basic 49,323 - 49,323
Diluted 50,644 (142) 50,502
(a) Note: Adjustments relate to acquired in-process research and
development expense from the Sonic Mobility 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 Nine Months Ended
September 30, 2005
Operational Adjustments GAAP
(b)
----------- ----------- ---------
Net sales $263,051 $263,051
Cost of sales 109,322 109,322
----------- ----------- ---------
Gross profit 153,729 - 153,729
Research and development expenses 42,624 871 43,495
Selling, general and administrative
expenses 65,946 1,123 67,069
Amortization of intangible assets - 15,976 15,976
----------- ----------- ---------
Operating income 45,159 (17,970) 27,189
Income from settlement of lawsuit 5,000 5,000
Other income (expense), net 5,991 (45) 5,946
----------- ----------- ---------
Income before income taxes 56,150 (18,015) 38,135
Provision for income taxes 14,925 (6,087) 8,838
----------- ----------- ---------
Net income $41,225 $(11,928) $29,297
=========== =========== =========
Earnings per share:
Basic $0.83 $0.59
Diluted $0.82 $0.58
Weighted average shares and common
equivalents outstanding:
Basic 49,550 - 49,550
Diluted 50,563 (39) 50,524
For the Nine Months Ended
October 1, 2004
Operational Adjustments GAAP
(b)
----------- ----------- ---------
Net sales $265,206 $265,206
Cost of sales 111,190 $190 111,380
----------- ----------- ---------
Gross profit 154,016 (190) 153,826
Research and development expenses 30,650 1,778 32,428
Acquired in-process research and
development expense - 29,260 29,260
Selling, general and administrative
expenses 60,788 2,790 63,578
Amortization of intangible assets 17,656 17,656
----------- ----------- ---------
Operating income 62,578 (51,674) 10,904
Other income (expense), net 3,249 (45) 3,204
----------- ----------- ---------
Income before income taxes 65,827 (51,719) 14,108
Provision for income taxes 17,179 (9,044) 8,135
----------- ----------- ---------
Net income $48,648 $(42,675) $5,973
=========== =========== =========
Earnings per share:
Basic $1.00 $0.12
Diluted $0.97 $0.12
Weighted average shares and common
equivalents outstanding:
Basic 48,663 - 48,663
Diluted 50,353 (70) 50,283
(b) Note: Adjustments relate to acquired in-process research and
development expense from the OSA Technologies Inc. and Sonic
Mobility Inc. acquisitions 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)
September 30, December 31,
2005 2004
------------- -------------
Cash, cash equivalents
and short-term investments $264,186 $239,799
Accounts receivable, net 57,890 60,948
Inventories, net 21,495 21,232
Other current assets 8,361 5,923
Deferred income tax 4,173 6,720
------------- -------------
Total current assets 356,105 334,622
Investments 68,403 91,547
Property and equipment, net 38,367 39,896
Goodwill, net 269,992 269,892
Intangible assets, net 18,290 33,981
Other assets 894 843
------------- -------------
Total assets $752,051 $770,781
============= =============
Accounts payable and other accrued expenses $17,105 $21,368
Income tax payable 11,697 8,494
Other current liabilities 22,147 16,767
------------- -------------
Total current liabilities 50,949 46,629
Non-current liabilities 1,724 10,855
Total stockholders' equity 699,378 713,297
------------- -------------
Total liabilities and stockholders'
equity $752,051 $770,781
============= =============
CONTACT: Avocent Corporation
Edward H. Blankenship, 256-217-1301