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Technology Stocks : Advanced Digital Information Corp. (ADIC) -- Ignore unavailable to you. Want to Upgrade?

To: John O'Neill who wrote (1941)	5/16/2000 5:23:00 PM
From: Jim Oravetz	Read Replies (1) \| Respond to of 2283

ADIC earnings include a pre-tax gain of $74.4 million on the sale of approximately 20 percent of the Crossroads Systems, Inc. (Nasdaq:CRDS) shares owned by the Company. Excluding the effect of this asset sale, earnings were $7.6 million with diluted earnings per share up 56 percent to 14 cents per share versus 9 cents per share the same period a year ago. Revenues were $64.9 million, an increase of 20 percent from the same period last year. "We are very pleased to once again report a record quarter and look forward to what we expect will be accelerating growth in the second half of 2000," said Chairman and Chief Executive Officer Peter van Oppen. "The sale of 512,739 shares of Crossroads stock at an average price of $147 per share provides additional liquidity for us to aggressively pursue our rapidly growing opportunities," he said. "Revenue and gross margin were positively affected by excellent growth in our core U.S. markets and improving gross margin as a percent of sales, which exceeded 36 percent," according to van Oppen. Sluggish sales growth in Europe and a worldwide reduction in sales of our largest libraries partially offset U.S. growth, the Company said. ADIC said revenue growth is expected to accelerate during the second half of fiscal 2000 as a result of continued strong growth in core domestic markets, market acceptance of the Scalar 100 which began shipping during April, commencement of sales to IBM and identified large library business. Significant new channel partners may increase growth in Europe, although weakness in the Euro currency could temper demand for imported products. "Second quarter 2000 was an extraordinarily important period for the Company," according to Chuck Stonecipher, President and Chief Operating Officer. "During the quarter we launched two of the most significant new products in our history, Scalar 100 and StorNext. Both products exemplify our strategy of offering intelligent storage solutions differentiated by proprietary software and functionality. Scalar 100 has begun shipping and is receiving rave reviews from customers while StorNext is in beta test and is expected to begin shipping in the third quarter," according to Stonecipher. "Our CentraVision SAN file management system was also recognized by key customers and publications during the second quarter as an industry standard for real-time file sharing in a SAN environment," he said. The Company noted that over 50 percent of its R & D expenditures are focused on software that may be incorporated into intelligent peripherals or sold separately. Selling and administrative expenses increased 40 percent from the same period a year ago to $12.6 million, while research and development expenses were $4.1 million, an increase of 27 percent over the second quarter of fiscal 1999. "We are very focused on delivering current earnings while continually investing in the development of new products and sales channels," commented Chief Financial Officer Jon Gacek. "The rate of increase in R&D slowed somewhat during the second quarter while we ramped up sales and marketing to support product launches, an expanded sales team and anticipated growth in the second half. An increase in other income and a lower tax rate during the period allowed us to make these investments while maintaining our performance on the bottom line," he noted. "From time-to-time, we may continue to use non-operating income to maintain profit performance while absorbing operating expenses which may be increased to take advantage of market opportunities," according to Gacek. The Company also noted that OEM sales represented approximately 22 percent of revenue for the period. Balance sheet accounts changed significantly during the quarter as cash and marketable equity securities, excluding remaining Crossroads shares, now total nearly $221 million. At Crossroads' April 30, 2000 closing share price of $70 5/8 per share, ADIC's remaining 2,095,957 shares of Crossroads are valued at an additional $96 million, net of deferred taxes. Inventory and receivable increases totaled approximately $16 million during the quarter, primarily as a result of the timing of production and sales of Scalar 100 products. Approximately $26 million in marketable equity securities were acquired during the quarter as part of the Company's ongoing strategic investment and acquisition activities. About ADIC With more than 60,000 automated tape libraries installed ....snip....