Exhibit 99.4
Avocent Revises Fourth Quarter Results
Does Not Expect to Pay Contingent Consideration on LANdesk
Acquisition
HUNTSVILLE, Ala.--(BUSINESS WIRE)--March 1, 2007--Avocent
Corporation (NASDAQ: AVCT) announced today that it was revising
previously reported fourth quarter revenue for its LANDesk Division to
reduce revenue by $2.8 million and consolidated operational income by
$1.9 million. Together with a reduction in tax expense discussed
below, consolidated GAAP net income was reduced by $0.7 million.
Avocent also announced that it now does not expect to pay the
previously accrued contingent consideration of $27 million relating to
the LANDesk acquisition.
"We became aware that several previously recorded transactions did
not meet the stringent revenue recognition criteria for sales of
software and that certain royalties earned by LANDesk should have been
recorded prior to the closing date of the acquisition," stated Edward
H. Blankenship, Avocent's chief financial officer. "These revenue
adjustments were partially offset by lower management bonus accruals,
and we will continue to evaluate certain other costs, primarily
commissions, related to these transactions. We also determined that
certain tax benefits relating to Avocent stock options exercised in
2006, which were assumed in prior acquisitions, should be included in
the determination of net income instead of equity for GAAP purposes."
As revised, Avocent's fourth quarter consolidated revenue
increased 55% to $166.1 million in 2006 from $106.8 million in 2005
and fourth quarter operational income per diluted share increased to
$0.59 in 2006 from $0.49 in 2005. Revised consolidated revenue for the
year ended December 31, 2006 increased 41% to $520.9 million from
$369.9 million in 2005. Revised operational income per diluted share
increased to $1.96 in 2006 from $1.31 in 2005.
"We remain very excited and optimistic about the many
opportunities we have with LANDesk and the joint product development
activities we have underway," added John Cooper, Avocent's chairman
and chief executive officer. "Over the past few weeks I have talked
with several key channel partners and LANDesk sales force members, and
I am quite encouraged by the strength and depth of our relationships
with these key contributors and the pipeline of potential deals we
have to pursue."
A summary of the revised results for the fourth quarter of 2006
follows at the end of this release. More information on the 2006
results can be found in Avocent's Annual Report on Form 10-K filed
with the Securities and Exchange Commission today.
Use of Non-GAAP Financial Measures
Income prior to intangible amortization, stock compensation and
in-process research and development 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 acquisitions, and non-cash stock-based compensation expense.
Avocent believes that operational income is a measure of performance
used by many 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.
About Avocent Corporation
Avocent delivers IT operations and infrastructure management
solutions for enterprises worldwide, helping customers to reduce costs
and simplify complex IT environments via integrated, centralized
in-band and out-of-band hardware and software. Through LANDesk,
Avocent also is a leading provider of systems, security, and process
management 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 our opportunities and
joint product development activities with LANDesk, the pipeline for
future LANDesk deals, and the contingent consideration not earned or
payable to former LANDesk shareholders. 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 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 today. 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 Income
(Unaudited, in thousands, except per share data)
For the Quarter Ended December 31, 2006
Stock
Operational Compensation(a) Adjustment(b) GAAP
----------- ------------------------------- ---------
Net sales $166,070 $(1,206) $164,864
Cost of sales 56,292 $475 2,683 59,450
----------- ---------------- -------------- ---------
Gross profit 109,778 (475) (3,889) 105,414
Research and
development
expenses 18,203 2,130 - 20,333
Selling, general
and
administrative
expenses 49,955 3,823 151 53,929
Acquisition
integration
expenses 331 - - 331
Amortization of
intangible
assets - - 9,207 9,207
----------- ---------------- -------------- ---------
Operating
income 41,289 (6,428) (13,247) 21,614
Other income
(expense), net (1,283) - - (1,283)
----------- ---------------- -------------- ---------
Income before
income taxes 40,006 (6,428) (13,247) 20,331
Provision for
income taxes 9,404 (2,546) (2,995) 3,863
----------- ---------------- -------------- ---------
Net income $30,602 $(3,882) $(10,252) $16,468
=========== ================ ============== =========
Earnings per
share:
Basic $0.60 $0.32
Diluted $0.59 $0.32
Weighted average
shares and
common
equivalents
outstanding:
Basic 50,826 - - 50,826
Diluted 52,110 - - 52,110
For the Year Ended December 31, 2006
Stock
Operational Compensation(a) Adjustments(b) GAAP
----------- ------------------------------- ---------
Net sales $520,881 $(1,686) $519,195
Cost of sales 192,869 $977 3,577 197,423
----------- ---------------- -------------- ---------
Gross profit 328,012 (977) (5,263) 321,772
Research and
development
expenses 59,564 4,302 - 63,866
Acquired in-
process
research and
development
expenses - - 20,700 20,700
Selling, general
and
administrative
expenses 138,435 9,307 603 148,345
Acquisition
integration
expenses 3,904 - - 3,904
Amortization of
intangible
assets - - 23,049 23,049
----------- ---------------- -------------- ---------
Operating
income 126,109 (14,586) (49,615) 61,908
Other income
(expense), net 3,784 - - 3,784
----------- ---------------- -------------- ---------
Income before
income taxes 129,893 (14,586) (49,615) 65,692
Provision for
income taxes 32,748 (4,862) (7,726) 20,160
----------- ---------------- -------------- ---------
Net income $97,145 $(9,724) $(41,889) $45,532
=========== ================ ============== =========
Earnings per
share:
Basic $2.00 $0.94
Diluted $1.96 $0.92
Weighted average
shares and
common
equivalents
outstanding:
Basic 48,548 - - 48,548
Diluted 49,475 - - 49,475
(a) Stock Compensation relates to expensing of stock options,
restricted stock units and performance shares. Avocent adopted SFAS
123R effective January 1, 2006 and began recording expense related to
outstanding unvested stock options on that date as well as on
subsequent equity compensation grants.
(b) Adjustments related to acquired in-process research and
development expense from the Cyclades and LANDesk acquisitions,
depreciation and amortization of the purchase accounting adjustment
to deferred revenue and intangibles recorded as the result of
acquisitions.
AVOCENT CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
December 31, 2006 December 31, 2005
----------------- -----------------
Cash, cash equivalents and short-
term investments $107,165 $293,903
Accounts receivable, net 126,471 68,712
Inventories, net 41,765 21,178
Other current assets 17,269 10,524
Deferred income tax 7,355 4,054
----------------- -----------------
Total current assets 300,025 398,371
Investments 987 51,939
Property and equipment, net 38,004 36,801
Goodwill 607,488 269,992
Other intangible assets, net 209,674 15,763
Other assets 2,676 885
----------------- -----------------
Total assets $1,158,854 $773,751
================= =================
Accounts payable and other accrued
expenses $41,771 $23,569
Income tax payable 17,364 11,270
Deferred revenue 44,453 1,702
Other current liabilities 29,754 17,206
----------------- -----------------
Total current liabilities 133,342 53,747
Line of credit obligation 150,000 -
Deferred income taxes 30,377 2,564
Deferred revenue, net of current
portion 10,070 1,065
Other non-current liabilities 1,222 1,053
----------------- -----------------
Total liabilities 325,011 58,429
Total stockholders' equity 833,843 715,322
----------------- -----------------
Total liabilities and
stockholders' equity $1,158,854 $773,751
================= =================
Additional Financial Information
(Unaudited, in thousands)
Quarter Ended Year Ended
December 31, 2006 December 31, 2006
----------------- -----------------
Revenue by Distribution Channel
- ----------------------------------
Branded $108,050 $313,567
OEM 58,020 207,314
----------------- -----------------
Total $166,070 $520,881
================= =================
Revenue by Division
- ----------------------------------
Management Systems $124,259 $426,412
LANDesk 26,846 40,368
Embedded Software and Solutions 9,437 33,766
Other business units 4,704 16,658
Corporate and unallocated 824 3,677
----------------- -----------------
Total $166,070 $520,881
================= =================
LANDesk Division Revenues by Type
- ----------------------------------
Licenses and royalties $16,792 $27,049
Maintenance and services 10,054 13,319
----------------- -----------------
Total $26,846 $40,368
================= =================
Operating Profit (Loss) by
Division (Excludes stock-based
compensation expense)
- ----------------------------------
Management Systems $41,869 $129,906
LANDesk 1,993 7,897
Embedded Software and Solutions 4,018 12,816
Other business units (3,163) (13,240)
Corporate and unallocated (3,428) (11,270)
----------------- -----------------
Total $41,289 $126,109
================= =================
CONTACT: Avocent Corporation
Edward H. Blankenship, 256-217-1301
Senior Vice President of Finance and
Chief Financial Officer