-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L/6AqS1dS+l2ZhAcNoQt+cFtasrVRkF/Sh4EJOzUCTBqrJ2RNE8YtG37e97XFvc/ GbZnbWvYxo+c7uQNz1fYPQ== 0001157523-05-000371.txt : 20050120 0001157523-05-000371.hdr.sgml : 20050120 20050120080030 ACCESSION NUMBER: 0001157523-05-000371 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050120 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050120 DATE AS OF CHANGE: 20050120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AVOCENT CORP CENTRAL INDEX KEY: 0001109808 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 912032368 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-30575 FILM NUMBER: 05537611 BUSINESS ADDRESS: STREET 1: 4991 CORPORATE DRIVE CITY: HUNTSVILLIE STATE: AL ZIP: 35805 BUSINESS PHONE: 2564304000 MAIL ADDRESS: STREET 1: 4991 CORPORATE DRIVE CITY: HMTSVILLE STATE: AL ZIP: 35805 FORMER COMPANY: FORMER CONFORMED NAME: AEGEAN SEA INC DATE OF NAME CHANGE: 20000323 8-K 1 a4803797.txt AVOCENT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) January 20, 2005 ------------------------------------------------------------------ AVOCENT CORPORATION - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 000-30575 91-2032368 - ------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 4991 CORPORATE DRIVE HUNTSVILLE, AL 35805 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (256) 430-4000 ---------------------------- n/a - ------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. On January 20, 2005, Avocent Corporation publicly disseminated a press release announcing the financial results for its fourth quarter and year ended December 31, 2004. The information contained in the press release is incorporated herein by reference and filed as Exhibit 99.1 hereto. Item 9.01 Financial Statements and Exhibits. (c) Exhibits. Exhibit Number Description of Exhibit -------------- ---------------------- 99.1 Press release issued January 20, 2005 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AVOCENT CORPORATION Date: January 20, 2005 By: /s/ Douglas E. Pritchett ------------------------------- Douglas E. Pritchett Senior Vice President of Finance, Chief Financial Officer and Treasurer EXHIBIT INDEX Exhibit Description - ------- ----------- 99.1 Press Release dated January 20, 2005 EX-99.1 2 a4803797ex991.txt PRESS RELEASE Exhibit 99.1 Avocent Reports Record Sales of $100 Million for Fourth Quarter HUNTSVILLE, Ala.--(BUSINESS WIRE)--Jan. 20, 2005--Avocent Corporation (NASDAQ:AVCT) today reported record sales and improved net income for the fourth quarter and year ended December 31, 2004. "Avocent's revenues rose 16.4% to just over $100.0 million in the fourth quarter, our first quarter to reach $100 million in sales," stated John R. Cooper, president and chief executive officer of Avocent Corporation. "Our record sales were due to increased demand across product lines and geographic boundaries. Sales to OEMs were particularly strong in the fourth quarter as a result of growth in sales of our digital products and the contribution of IPMI and embedded solutions. "Net income, on a GAAP basis, rose to $12.1 million, or $0.23 per diluted share, an increase of 26.3% compared with the fourth quarter of last year. Our margins rose to 59.0% in the fourth quarter, over three percentage points higher than the fourth quarter of last year. Our margin improvement reflects higher sales of digital products, contribution from IPMI and embedded solutions and continued enhancements in product design to lower our manufacturing costs. "We have made significant investments in R&D over the past several quarters in new products and product enhancements. These investments are paying off in terms of strengthening our KVM products, building on our digital suite of products and broadening our markets to include software, IPMI and embedded solutions. Our sales team and operations staff deserve significant credit in translating our R&D investments into record results for Avocent," continued Mr. Cooper. Fourth Quarter Results Income prior to intangible amortization, merger-related expenses and impairment charges related to certain investments in private companies rose 18.5% to a record $20.6 million, or $0.40 per diluted share (including a net decrease of $0.02 per share attributable to OSA), compared with income prior to intangible amortization and merger-related expenses of $17.4 million, or $0.36 per diluted share, in the fourth quarter of 2003. (See "Use of Non-GAAP Financial Measures" discussion below.) Net adjustments to reconcile to GAAP net income were $8.6 million in the fourth quarter of 2004, including $6.6 million in intangible amortization and $3.4 million in impairment charges related to certain investments in private companies. In addition, the adjustments included a $3.0 million tax benefit. Net adjustments to reconcile to GAAP net income were $7.9 million in the fourth quarter of 2003, including $4.8 million in amortization of intangible assets, $3.9 million in acquired in-process R&D expenses and a $1.8 million tax benefit. GAAP net income for the fourth quarter of 2004 was $12.1 million, or $0.23 per diluted share. This compares with a GAAP net income of $9.6 million, or $0.20 per diluted share, in the fourth quarter of 2003. Net sales for the fourth quarter rose 16.4% to just over $100.0 million compared with sales of $86.0 million in the fourth quarter of 2003. Branded sales rose 15.1% from the fourth quarter of 2003 and accounted for 51.4% of sales. OEM sales rose 17.7% from the fourth quarter of 2003 and accounted for 48.6% of total fourth quarter 2004 sales. OEM sales were strong in the fourth quarter due to increased sales of our digital product family and higher revenues from our IPMI and embedded solutions. U.S. sales increased 21.0% to $56.6 million and international sales rose 10.8% to $43.4 million compared with the fourth quarter of 2003. "Our sales growth benefited from increased demand for our digital products that represented 51.8% of fourth quarter sales," continued Mr. Cooper. "This was the first quarter that digital products represented over half our revenues. Our traditional KVM products also showed solid growth and benefited from increased demand for newer products, including AMX and SwitchView." Gross profit for the fourth quarter of 2004 rose 23.0% to $59.0 million with a gross margin of 59.0%. This compared with gross profit of $48.0 million and a gross margin of 55.8% in the fourth quarter of 2003. The increase in gross profit was due to higher sales and improved product mix, including higher sales of digital, embedded products and IPMI-enabled products. Research and development expenses increased 57.2% to $12.9 million, or 12.9% of sales, compared with $8.2 million, or 9.6% of sales, in the fourth quarter of 2003. This increase was due primarily to increased investment in new product development as well as the additional engineering teams added from the acquisitions of Soronti, Crystal Link, OSA and Sonic Mobility. "Avocent's commitment to our research and development remains a key part in expanding our pipeline of new products," stated Mr. Cooper. "In the last three weeks, we made significant product announcements that provide the framework for expanding Avocent's support of servers and related appliances in the data center. We are very excited about the new products and the opportunities the new technologies have for broadening our markets beyond our traditional KVM appliances. "Our recently introduced DSView3 software is an all new management platform that has been in development for over a year. DSView3 incorporates browser-based controls that allow network administrators to control servers and related appliances anywhere-anytime. Administrators have more control, enhanced backup capabilities and improved disaster recovery through our proprietary hub and spoke architecture. "We also just announced our new DSI 5100, Avocent's first branded product that incorporates OSA technology. DSI 5100 is an IPMI proxy appliance that fully integrates with the new DSView3 software and allows network administrators to monitor and manage IPMI embedded functions on various OEMs' servers," continued Mr. Cooper. "Furthermore, yesterday we announced three new serial over IP appliances which provide secure remote access and management to a wide range of devices, such as network hubs, routers, switches and other critical network devices," concluded Mr. Cooper. Selling, general and administrative expenses rose 13.1% to $21.2 million compared with $18.8 million in the fourth quarter of 2003. The increase was due to higher costs related to the addition of the Soronti, Crystal Link, OSA and Sonic Mobility sales and marketing teams, the expansion of certain sales and marketing programs, legal fees and other costs related to protecting our intellectual property rights, and Sarbanes-Oxley Act compliance costs. Avocent's balance sheet and cash position remained strong as of December 31, 2004. The Company's cash flow from operations was approximately $25 million for the fourth quarter of 2004 with over $331 million in cash, cash equivalents and investments at the quarter's end. Avocent had no long-term debt as of December 31, 2004. Use of Non-GAAP Financial Measures Income prior to intangible amortization, merger-related expenses and impairment charges related to certain investments in private companies, 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 fourth quarter results conference call to be held January 20, 2005. The live broadcast will be available on-line at www.avocent.com as well as www.vcall.com beginning at 9:00 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, the future effect of past acquisitions (including expected revenues and market opportunities), 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 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 December 31, 2004 Operational Adjustments(1) GAAP ----------- ----------- ----------- Net sales $100,049 $100,049 Cost of sales 41,021 41,021 ----------- ----------- ----------- Gross profit 59,028 59,028 Research and development expenses 12,248 $677 12,925 Selling, general and administrative expenses 20,381 864 21,245 Amortization of intangible assets -- 6,623 6,623 ----------- ----------- ----------- Operating income 26,399 (8,164) 18,235 Other income (expense), net 1,613 (3,464) (1,851) ----------- ----------- ----------- Income before income taxes 28,012 (11,628) 16,384 Provision for income taxes 7,363 (3,046) 4,317 ----------- ----------- ----------- Net income $20,649 $(8,582) $12,067 =========== =========== =========== Earnings per share: Basic $0.41 $0.24 Diluted $0.40 $0.23 Weighted average shares and common equivalents outstanding: Basic 49,874 -- 49,874 Diluted 51,553 (78) 51,475 For the Quarter Ended December 31, 2003 Operational Adjustments(1) GAAP ----------- ----------- ----------- Net sales $85,982 $85,982 Cost of sales 37,916 $95 38,011 ----------- ----------- ----------- Gross profit 48,066 (95) 47,971 Research and development expenses 8,038 186 8,224 Acquired in-process research and development expense -- 3,940 3,940 Selling, general and administrative expenses 18,155 622 18,777 Amortization of intangible assets -- 4,754 4,754 ----------- ----------- ----------- Operating income 21,873 (9,597) 12,276 Other income (expense), net 1,196 (115) 1,081 ----------- ----------- ----------- Income before income taxes 23,069 (9,712) 13,357 Provision for income taxes 5,642 (1,844) 3,798 ----------- ----------- ----------- Net income $17,427 $(7,868) $9,559 =========== =========== =========== Earnings per share: Basic $0.37 $0.20 Diluted $0.36 $0.20 Weighted average shares and common equivalents outstanding: Basic 47,020 -- 47,020 Diluted 48,910 (47) 48,863 (1) Note: Adjustments relate to acquired in-process research and development expense from the Soronti 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 and the acquisitions of Equinox, 2C, Soronti, Crystal Link, OSA and Sonic Mobility. Adjustments in 2004 include a write-down of investments in two privately held companies. 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 Year Ended December 31, 2004 Operational Adjustments(1) GAAP ----------- ----------- ----------- Net sales $365,255 $365,255 Cost of sales 152,210 $190 152,400 ----------- ----------- ----------- Gross profit 213,045 (190) 212,855 Research and development expenses 42,898 2,455 45,353 Acquired in-process research and development expense -- 29,260 29,260 Selling, general and administrative expenses 81,171 3,652 84,823 Amortization of intangible assets -- 24,279 24,279 ----------- ----------- ----------- Operating income 88,976 (59,836) 29,140 Other income (expense), net 4,862 (3,510) 1,352 ----------- ----------- ----------- Income before income taxes 93,838 (63,346) 30,492 Provision for income taxes 24,541 (12,089) 12,452 ----------- ----------- ----------- Net income $69,297 $(51,257) $18,040 =========== =========== =========== Earnings per share: Basic $1.42 $0.37 Diluted $1.37 $0.36 Weighted average shares and common equivalents outstanding: Basic 48,964 -- 48,964 Diluted 50,658 (128) 50,530 For the Year Ended December 31, 2003 Operational Adjustments(1) GAAP ----------- ----------- ----------- Net sales $304,238 $304,238 Cost of sales 131,788 $624 132,412 ----------- ----------- ----------- Gross profit 172,450 (624) 171,826 Research and development expenses 28,636 1,157 29,793 Acquired in-process research and development expense -- 3,940 3,940 Selling, general and administrative expenses 66,732 3,666 70,398 Amortization of intangible assets -- 21,805 21,805 ----------- ----------- ----------- Operating income 77,082 (31,192) 45,890 Other income (expense), net 4,143 3,013 7,156 ----------- ----------- ----------- Income before income taxes 81,225 (28,179) 53,046 Provision for income taxes 21,862 (7,363) 14,499 ----------- ----------- ----------- Net income $59,363 $(20,816) $38,547 =========== =========== =========== Earnings per share: Basic $1.29 $0.83 Diluted $1.24 $0.81 Weighted average shares and common equivalents outstanding: Basic 46,194 -- 46,194 Diluted 47,814 (121) 47,693 (1) Note: Adjustments relate to acquired in-process research and development expense from the Soronti, Crystal Link Technologies, OSA Technologies, and Sonic Mobility acquisitions. Adjustments also include the 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 and the acquisitions of Equinox, 2C, Soronti, Crystal Link, OSA and Sonic Mobility. Adjustments in 2004 include a write-down of investments in two privately held companies. Adjustments in 2003 include a realized gain on the disposal of an equity security investment which had been written down in the fourth quarter of 2001. 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) December 31, December 31, 2004 2003 (Unaudited) ----------- ----------- Cash, cash equivalents and short-term investments $239,799 $223,392 Accounts receivable, net 60,948 45,011 Current and deferred income tax receivable 7,095 5,031 Other receivables, net 566 225 Inventories, net 21,232 21,324 Other current assets 4,982 4,251 ----------- ----------- Total current assets 334,622 299,234 Investments 91,547 84,410 Property and equipment, net 39,896 38,473 Goodwill, net 269,892 206,037 Intangible assets, net 33,981 31,889 Other assets 843 720 ----------- ----------- Total assets $770,781 $660,763 =========== =========== Accounts payable and other accrued expenses $21,368 $19,154 Income tax payable 8,494 6,702 Other current liabilities 17,726 16,866 ----------- ----------- Total current liabilities 47,588 42,722 Non-current liabilities 9,896 10,884 Total stockholders' equity 713,297 607,157 ----------- ----------- Total liabilities and stockholders' equity $770,781 $660,763 =========== =========== CONTACT: Avocent Corporation Dusty Pritchett, 256-217-1300 -----END PRIVACY-ENHANCED MESSAGE-----