EX-99.5 3 e17578ex99-5.txt PRESS RELEASE Exhibit 99.5 Avocent Reports 21% Increase in Sales for the First Quarter HUNTSVILLE, Ala., April 22 /PRNewswire-FirstCall/ -- Avocent Corporation (Nasdaq: AVCT) today reported higher sales and operating income for the first quarter ended April 2, 2004. "Avocent recorded strong sales across all markets, product lines and customer segments in the first quarter," stated John R. Cooper, president and chief executive officer of Avocent Corporation. "Sales rose 21% to $86.1 million and gross margin increased to 58.2%. Our sales and margin growth was due primarily to higher sales of branded and digital products compared with last year. "Our branded sales grew 14% sequentially from the fourth quarter of 2003. We experienced increased demand for our newer products, particularly our digital, Switchview and AMX products, highlighting the important contribution of our research and development efforts in improving our profitability and building our market share. "We are excited about extending our markets with the addition of products and technologies we recently acquired. We closed the acquisition of Crystal Link Technologies, Inc. early in the quarter and made excellent progress in integrating Crystal Link as well as Soronti, Inc., which we acquired in November 2003. In early April, we closed the acquisition of OSA Technologies. We believe these acquisitions provide Avocent with expanded market opportunities. Crystal Link adds wireless capabilities to our KVM products while the addition of Soronti and OSA strengthen our embedded technology solutions and provide Avocent with excellent growth opportunities beyond our traditional KVM products," continued Mr. Cooper. First Quarter Results Income prior to intangible amortization and merger-related expenses rose 17.3% to $16.1 million, or $0.33 per diluted share, compared with income prior to intangible amortization and merger-related expenses of $13.7 million, or $0.29 per diluted share, in the first quarter of 2003. (See "Use of Non-GAAP Financial Measures" discussion below.) Net adjustments to reconcile to GAAP income were $7.6 million in the first quarter of 2004, including $3.8 million in intangible amortization and merger-related expenses and a $3.8 million charge, net of a $2.7 million tax benefit, for acquired in-process research and development expense related to Crystal Link. Net adjustments to reconcile to GAAP income were $5.6 million in the first quarter of 2003, which consisted of intangible amortization and merger-related expenses. GAAP net income for the first quarter of 2004 was $8.5 million, or $0.17 per diluted share. This compares with a GAAP net income of $8.2 million, or $0.17 per share, in the first quarter of 2003. Net sales for the first quarter rose 21.0% to $86.1 million compared with sales of $71.2 million in the first quarter of 2003. Branded sales rose 33.5% from the first quarter of 2003 and accounted for 58.9% of sales. OEM sales rose 6.6% from the first quarter of 2003 and accounted for 41.1% of total first quarter 2004 sales. U.S. sales increased 21.0% to $51.2 million and international sales rose 21.0% to $34.9 million compared with the first quarter of 2003. Gross profit for the first quarter of 2004 rose 26.5% to $50.1 million with a gross margin of 58.2%. This compared with gross profit of $39.6 million and a gross margin of 55.6% in the first quarter of 2003. The increase in gross profit was due to higher sales and improved product mix compared with the first quarter of 2003. Research and development expenses increased 38.4% to $9.4 million, or 11.0% of sales, compared with $6.8 million, or 9.6% of sales, in the first quarter of 2003. The increase was due to higher expenses related to the development of embedded technologies and the addition of R&D teams from Soronti and Crystal Link. Selling, general and administrative expenses rose 22.1% to $20.3 million compared with $16.7 million in the first quarter of 2003. The increase was due to higher costs related to the expansion of certain sales and marketing programs, increased trade show activity, intellectual property defense costs and higher costs from the addition of the Soronti and Crystal Link sales and marketing teams. Avocent's balance sheet and cash position remained strong as of April 2, 2004. The Company's cash flow from operations was approximately $13 million for the first quarter of 2004 with almost $320 million in cash, cash equivalents and investments at the quarter's end. In early April, Avocent acquired OSA Technologies for approximately $100 million (plus the assumption of liabilities and stock options), of which approximately $52 million was paid in cash at closing. Avocent has no long-term debt. Use of Non-GAAP Financial Measures Income prior to intangible amortization, merger-related expenses and gain on sale of certain investment securities, 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 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 first quarter results conference call to be held April 22, 2004. The live broadcast will be available on-line at www.avocent.com and at www.firstcallevents.com/service/ajwz404484588gf12.html 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 potential markets for these products and technologies in the future, engineering and design activities, and manufacturing efficiencies in the future. 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 12, 2004. 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 April 2, 2004 Operational Adjustments * GAAP Net sales $86,085 $86,085 Cost of sales 35,888 $95 35,983 Gross profit 50,197 (95) 50,102 Research and development expenses 9,254 174 9,428 Acquired in-process research and development expense - 6,490 6,490 Selling, general and administrative expenses 19,725 610 20,335 Amortization of intangible assets 4,762 4,762 Operating income 21,218 (12,131) 9,087 Other income (expense), net 1,151 (14) 1,137 Income before provision for income taxes 22,369 (12,145) 10,224 Provision for income taxes 6,253 (4,572) 1,681 Net income $16,116 $(7,573) $8,543 Earnings per share: Basic $0.34 $0.18 Diluted $0.33 $0.17 Weighted average shares and common equivalents outstanding: Basic 47,650 - 47,650 Diluted 49,538 (25) 49,513 For the Quarter Ended March 28, 2003 Operational Adjustments * GAAP Net sales $71,162 $71,162 Cost of sales 31,332 $233 31,565 Gross profit 39,830 (233) 39,597 Research and development expenses 6,334 478 6,812 Selling, general and administrative expenses 15,571 1,088 16,659 Amortization of intangible assets - 6,156 6,156 Operating income 17,925 (7,955) 9,970 Other income (expense), net 848 (14) 834 Income before provision income taxes 18,773 (7,969) 10,804 Provision for income taxes 5,033 (2,396) 2,637 Net income $13,740 $(5,573) $8,167 Earnings per share: Basic $0.30 $0.18 Diluted $0.29 $0.17 Weighted average shares and common equivalents outstanding: Basic 45,413 - 45,413 Diluted 46,854 (163) 46,691 * Note: Adjustments relate to acquired in-process research and development expense from the Crystal Link 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 in July 2000, the acquisition of Equinox in January 2001, the acquisition of 2C in August 2002, the acquisition of Soronti in December 2003, and the acquisition of Crystal Link in January 2004. 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 (Dollars in thousands) April 2, December 31, 2004 2003 (Unaudited) Cash, cash equivalents and short-term investments $253,465 $223,392 Accounts receivable, net 49,215 45,011 Current and deferred income tax receivable 4,994 5,031 Other receivables, net 475 225 Inventories, net 22,640 21,324 Other current assets 3,639 4,251 Total current assets 334,428 299,234 Investments 66,362 84,410 Property and equipment, net 38,402 38,473 Goodwill 206,037 206,037 Intangible assets, net 29,396 31,889 Other assets 801 720 Total assets $675,426 $660,763 Accounts payable and other accrued expenses $15,016 $19,154 Income tax payable 10,844 6,702 Other current liabilities 15,224 16,866 Total current liabilities 41,084 42,722 Non-current liabilities 6,479 10,884 Total stockholders' equity 627,863 607,157 Total liabilities and stockholders' equity $675,426 $660,763 SOURCE Avocent Corporation -0- 04/22/2004 /CONTACT: Dusty Pritchett, Senior Vice President of Finance and Chief Financial Officer of Avocent Corporation, +1-256-217-1300/ /Web site: http://www.avocent.com / /Audio: www.firstcallevents.com/service/ajwz404484588gf12.html / (AVCT) CO: Avocent Corporation ST: Alabama IN: CPR TLS SU: ERN CCA MAV