Oh MY Look at this...and so many said the sky was falling...
ADIC Grows 40 Percent in Fourth Quarter as Earnings Climb for Quarter, Year; Q4 Eps is Nine Cents as Margins Hit 31%; Annual Operating Income up $22.9 Million
REDMOND, Wash., Dec 11, 2003 (BUSINESS WIRE) -- ADVANCED DIGITAL INFORMATION
CORPORATION (Nasdaq: ADIC) today announced sales for its fourth quarter and
fiscal year ended October 31, 2003 reached all-time records of $118 million and
$424 million, up approximately 40 percent and 26 percent from the previous
fourth quarter and last fiscal year, respectively. Quarterly sales grew nine
percent sequentially from the previous quarterly record of $108 million reported
for the third quarter. It is the fourth consecutive quarter of record sales at
ADIC.
Net income was $5.8 million, or nine cents per fully diluted share, for the
fourth quarter and $12.5 million, or 20 cents per fully diluted share for the
fiscal year. The Company lost $1.2 million, or a loss of two cents per fully
diluted share, during the previous fourth quarter while earning $1.6 million, or
two cents per fully diluted share, for all of fiscal 2002.
"We are delighted to report robust quarterly and annual growth in both revenue
and earnings," said Chairman and Chief Executive Officer Peter van Oppen. "We
invested in growth during fiscal 2002 and we began to realize the fruits of that
investment in 2003 as virtually all categories of business improved. Acceptance
of our hardware and software products by end user and OEM customers continues to
validate our business strategy and we are optimistic that fiscal 2004 will bring
continued revenue growth, improving gross margins and increasing levels of
profitability."
Gross profit as a percentage of sales, or gross margin, reached 31 percent for
the quarter, up from 29.4 percent for the same period last year and 30.1 percent
in the immediately preceding third quarter. Annual gross margin was up 390 basis
points from 27.2 percent to 31.1 percent. As previously described, the Company
believes gross margin as a percentage of sales generally correlates with the
proportion of Intelligent Storage Solutions(TM) (ISS) sold in the period and
will increase over time. ISS products include elements of ADIC software and
connectivity technology and are sold through both branded and OEM sales
channels. ISS sales were 35 percent for the fourth quarter and 37 percent for
fiscal 2003 versus approximately 30 percent in fiscal 2002.
ADIC branded revenues were 51 percent of sales for the quarter and 52 percent of
sales for the year while OEM revenues were 49 percent and 48 percent for the
same periods. Branded revenues were 58 percent of sales in the fourth quarter of
2002 and 55 percent of sales for fiscal year 2002. The lower percentage of
branded sales in 2003 results from rapid growth of the OEM business as customers
and products were added during the fiscal year. Annual growth rates of branded
and OEM sales for the year were 18 percent and 35 percent. A higher percentage
of OEM sales generally reduces overall gross margin as a percentage of sales
because gross margins for OEM products are typically lower than for comparable
branded products, reflecting lower required sales and product development costs.
Operating expenses grew less than 13 percent over fourth quarter 2002 and
approximately 18 percent for the full year. Approximately 95 percent of the
nearly $19 million in annual growth of operating expenses occurred in sales,
marketing and R&D expenses, consistent with the Company's focus on developing
differentiated technologies and broad sales and marketing capabilities.
Operating profit moved from a loss of $3.6 million in the fourth quarter of 2002
to a profit of $4.5 million in the just completed fourth quarter, an improvement
of $8.1 million. For the year, operating profit improved by $22.9 million to
$9.5 million versus a loss of $13.4 million in fiscal 2002. Other income is
principally the sum of foreign currency effects, interest income and investment
gains. Lower investment gains and interest income account for most of the drop
in other income from fiscal 2002 to 2003. Taxes for the quarter showed a benefit
of $157,000 bringing fiscal year income tax expense to just over $3 million, or
an average rate of approximately 19.5 percent. This relatively low tax rate is
probably not sustainable as profitability increases and reflects various R&D tax
credits as well as other elements of the Company's tax planning. It is
reasonable to anticipate that the Company's long-term tax rate will be closer to
statutory rates.
Cash and marketable securities, net of debt, totaled over $200 million as of
October 31. Subsequent to the end of the period, the Company received $15.2
million in net cash through the sale of inventory and fixed assets, the majority
of which were leasehold improvements, related to an outsourcing agreement
announced during the period.
About ADIC
Advanced Digital Information Corporation (Nasdaq: ADIC) is a leading provider of
Intelligent Storage Solutions(TM) 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 storage management software and storage networking appliances 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, Fujitsu-Siemens, HP, IBM and Sun.
Further information about ADIC is available at www.adic.com.
Conference Call
There will be a conference call to discuss fourth quarter and fiscal 2003
results as well as estimates for the first quarter of fiscal 2004 at 1:30 p.m.
PT (4:30 p.m. ET) on December 11, 2003. The call can be accessed live on our
website at www.adic.com/ir.
(1) IDC 2001 worldwide revenue and unit market share data for all automated
systems using DLT, SDLT, LTO, 8mm or AIT drives; Gartner Dataquest, 2002 Market
Shares and Forecasts for Tape Automation Systems, F. Yale, August 2002; and,
Gartner Dataquest, Tape Automation Systems Market Shares, 2002, F. Yale, April
2003.
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, technical
competition or obsolescence, supply constraints, changes in market pricing and
production problems. Reference is made to the Company's Annual Report on Form
10-K for the year ended October 31, 2002 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.
ADIC and Scalar are registered trademarks and Intelligent Storage and
Intelligent Storage Solutions are trademarks of Advanced Digital Information
Corporation. All other product or company names should be considered the
property of their owners.
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share amounts)
Three months Fiscal year
ended October 31, ended October 31,
2003 2002 2003 2002
--------- ------- --------- ---------
Net sales $ 118,001 $84,190 $ 423,998 $ 337,599
Cost of sales 81,470 59,426 292,121 245,832
--------- ------- --------- ---------
Gross profit 36,531 24,764 131,877 91,767
Sales and marketing 15,765 12,216 57,777 48,307
General and administrative 5,920 6,219 24,015 23,172
Research and development 10,352 9,964 40,609 32,230
Acquisition expenses -- -- -- 1,475
--------- ------- --------- ---------
Operating profit (loss) 4,494 (3,635) 9,476 (13,417)
Other income, net 1,100 157 6,035 11,864
--------- ------- --------- ---------
Income (loss) before provision
(benefit) for income taxes 5,594 (3,478) 15,511 (1,553)
Provision (benefit) for income
taxes (157) (2,264) 3,020 (3,113)
--------- ------- --------- ---------
Net income (loss) $ 5,751 $(1,214) $ 12,491 $ 1,560
========= ======= ========= =========
Basic net income (loss) per
share $ 0.09 $ (0.02) $ 0.20 $ 0.03
========= ======= ========= =========
Diluted net income (loss) per
share $ 0.09 $ (0.02) $ 0.20 $ 0.02
========= ======= ========= =========
Shares used in computing basic
net income (loss) per share 63,395 62,204 62,569 62,304
========= ======= ========= =========
Shares used in computing
diluted net income (loss)
per share 64,803 62,204 63,564 63,500
========= ======= ========= =========
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
October 31, October 31,
2003 2002
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 180,401 $ 150,741
Accounts receivable, net 100,391 71,383
Inventories, net 35,736 32,296
Marketable securities 20,788 24,878
Assets held for sale 12,384 --
Other current assets 21,514 21,800
-------------- --------------
Total current assets 371,214 301,098
Property, plant and equipment, net 45,505 48,722
Service parts for maintenance, net 28,427 22,936
Marketable securities -- 7,221
Investments 3,728 10,928
Other non-current assets 4,298 8,232
------------- --------------
$ 453,172 $ 399,137
============= ==============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities $ 94,852 $ 69,419
Deferred income taxes 2,507 --
Long-term debt 967 984
Shareholders' equity 354,846 328,734
------------- --------------
$ 453,172 $ 399,137
============= ==============
ADVANCED DIGITAL INFORMATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Fiscal year ended
October 31,
------------------
2003 2002
------------------
Cash flows from operating activities:
Net income $12,491 $1,560
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 21,014 16,815
Allowance for doubtful accounts receivable 14 1,258
Inventory obsolescence 4,334 4,173
Gain on securities transactions (2,722) (7,482)
Acquired in-process research and development -- 1,200
Deferred income taxes 5,323 4,279
Tax benefit from exercise of stock options 3,844 2,607
Other 131 17
Change in assets and liabilities:
Accounts receivable (29,041) 9,807
Inventories (15,467) 6,585
Prepaid expenses and other assets (51) (436)
Service parts for maintenance (9,865) (10,210)
Accounts payable 9,282 683
Accrued liabilities 7,228 (1,369)
Income taxes receivable 848 3,306
Deferred revenue 8,656 7,234
------------------
Net cash provided by operating activities 16,019 40,027
------------------
Cash flows from investing activities:
Purchase of property, plant and equipment (14,296) (26,932)
Purchase of marketable securities (16,478) (52,812)
Proceeds from securities transactions 38,630 41,875
Purchase of other investments (500) (3,259)
------------------
Net cash provided by (used in) investing activities 7,356 (41,128)
------------------
Cash flows from financing activities:
Repayment of bank lines of credit and long-term
debt (3,373) (2,227)
Proceeds from short-term borrowings 781 --
Repurchase of common stock (697) (7,863)
Proceeds from issuance of common stock for stock
options and Stock Purchase Plan 8,356 6,544
------------------
Net cash provided by (used in) financing activities 5,067 (3,546)
------------------
Effect of exchange rate changes on cash 1,218 114
------------------
Net increase (decrease) in cash and cash equivalents 29,660 (4,533)
Cash and cash equivalents at beginning of period 150,741 155,274
------------------
Cash and cash equivalents at end of period $180,401 $150,741
==================
SOURCE: ADIC
CONTACT: ADIC
Jon Gacek, 425-881-8004
or
Investor Relations:
Stacie Timmermans, 425-881-8004
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