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Proc-Type: 2001,MIC-CLEAR
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 8-K
CURRENT REPORT
Date of Report (Date of earliest event reported):
October 31, 2007
Adaptec, Inc.
691 S. Milpitas Blvd.
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
(Exact name of registrant as specified in its charter)
Milpitas, California 95035
(Address of principal executive offices including zip code)
(408) 945-8600
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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o 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 October 31, 2007, Adaptec, Inc. announced its financial results for the quarter ended September 30, 2007. A copy
of Adaptec's press release announcing these financial results is attached as Exhibit 99.1 to this Current Report on Form 8-K. To supplement its condensed consolidated financial statements in accordance with generally accepted
accounting principles (GAAP), the Company's earnings release contains non-GAAP financial measures that exclude certain expenses,
gains and losses. The Company believes that the use of non-GAAP financial measures provides useful information to investors to gain
an overall understanding of its current financial performance and its prospects for the future. Specifically, the Company believes the
non-GAAP results provide useful information to both management and investors by excluding certain expenses, gains and losses that
the Company believes are not indicative of its core operating results. In addition, non-GAAP financial measures are used by
management for budgeting and forecasting as well as subsequently measuring the Company's performance, and the Company
believes that it is providing investors with financial measures that most closely align to its internal measurement processes. The
Company also believes, based on feedback provided to the Company during its earnings calls' Q&A sessions and discussions with
the investment community, that the non-GAAP financial measures it provides are necessary to allow the investment community to
construct their valuation models to better align its results and projections with its competitors and market sector, as there is significant
variability and unpredictability across companies with respect to certain expenses, gains and losses. The non-GAAP financial information is presented using consistent methodology from quarter-to-quarter and
year-to-year. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be
considered a substitute for or superior to GAAP results. The non-GAAP financial measures presented by the Company may be different
than the non-GAAP financial measures presented by other companies. In addition, these non-GAAP financial measures are not based
on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP financial measures have limitations
in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with
GAAP and that these measures should only be used to evaluate the Company's results of operations in conjunction with the
corresponding GAAP financial measures. The Company excludes the following expenses, gains and losses from its non-GAAP financial measures, when
applicable: Stock-based compensation expense: Stock-based
compensation expense consists of expenses recorded under SFAS 123(R), "Share-Based Payment," in connection with
stock awards such as stock options, restricted stock awards and restricted stock units granted under the Company's equity incentive
plans and shares issued pursuant to the Company's employee stock purchase plan. The Company excludes stock-based compensation expense
from non-GAAP financial measures because it is a non-cash measurement that does not reflect the Company's
ongoing business; the Company believes that the provision of non-GAAP information that excludes stock-based compensation improves
the ability of investors to compare its period-over-period operating results, as there is significant variability and unpredictability across
companies with respect to this expense. Management incentive program: The Company excludes expenses associated with the
management incentive program, which were limited cash payments made to selected members of management of an acquired
company, as these payments were instituted as a component of the acquisition process and do not reflect the Company's ongoing
business. Amortization of acquisition-related intangible assets: Amortization of acquisition-related
intangible assets primarily relate to core and existing technologies, patents, a trade name and customer relationships that were acquired
from prior acquisitions. The Company excludes the amortization of acquisition-related intangible assets because it does not reflect the
Company's ongoing business and it does not have a direct correlation to the operation of the Company's business. In addition, in
accordance with GAAP, the Company generally recognizes expenses for internally-developed intangible assets as they are incurred,
notwithstanding the potential future benefit such assets may provide. Unlike internally-developed intangible assets, however, and also
in accordance with GAAP, the Company generally capitalizes the cost of acquired intangible assets and recognizes that cost as an
expense over the useful lives of the assets acquired (other than goodwill, which is not amortized, and acquired in-process technology,
which is expensed immediately, as required under GAAP). As a result of their GAAP treatment, there is an inherent lack of
comparability between the financial performance of internally-developed intangible assets and acquired intangible assets. Accordingly,
the Company believes it is useful to provide, as a supplement to its GAAP operating results, a non-GAAP financial measure that
excludes the amortization of acquired intangible assets in order to enhance the period-over-period comparison of its operating results, as
there is significant variability and unpredictability across companies with respect to this expense. Restructuring charges and other charges (gains): Restructuring charges
primarily relate to activities engaged in by the Company's management to simplify its infrastructure. Other charges (gains) primarily relate to
the impairment of acquisition-related intangible assets from prior acquisitions and sale of long-lived assets. Restructuring charges
and other charges (gains) are excluded from non-GAAP financial measures because they are not considered
core operating activities and the occurrence of such costs is infrequent. Although the Company has engaged in various restructuring
activities over the past several years, each has been a discrete, extraordinary event based on a unique set of business objectives. The
Company does not engage in restructuring activities on a regular basis or in the ordinary course of business. As such, the Company
believes it is appropriate to exclude restructuring charges from its non-GAAP financial measures, as it enhances the ability of investors
to compare the Company's period-over-period operating results. Income taxes: Incremental income taxes associated with certain non-GAAP items.
The information in this report shall not be treated as "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934, except as expressly stated by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
The exhibit listed below is furnished pursuant to Item 2.02 hereof and shall not be deemed "filed" under the Securities Exchange Act of 1934.
|
Press release issued by Adaptec, Inc. on October 31, 2007. |
2
SIGNATURE
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.
Adaptec, Inc.
By: /s/ CHRISTOPHER G. O'MEARA
Christopher G. O'Meara Vice President and Chief Financial Officer |
October 31, 2007
3
EXHIBIT INDEX
|
Description of Exhibit |
|
Press release issued by Adaptec, Inc. on October 31, 2007. Also provided in PDF format as a courtesy. |
__________
* This exhibit is intended to be furnished and shall not be deemed "filed" for purposes of the Securities Exchange Act of 1934.
4
Exhibit 99.1 FOR IMMEDIATE RELEASE Editorial Contact Investor Contact Adaptec Reports Second Quarter Fiscal 2008 Results Q2 Net Revenue: $44.0 million MILPITAS, CA, Oct 31, 2007 -- Adaptec, Inc. (NASDAQ: ADPT), a global leader in storage solutions, today reported its
financial results for the second quarter of fiscal 2008, which ended on September 30, 2007. Net revenue for the company's second quarter of fiscal 2008 was $44.0 million, compared with $73.6 million for the second quarter
of fiscal 2007. Loss from continuing operations, net of taxes, computed on a generally accepted accounting principles (GAAP) basis, for the
second quarter of fiscal 2008 was ($7.5) million, or ($0.06) per share, compared with income of $48.8 million, or $0.36 per share, for the
second quarter of fiscal 2007. GAAP net loss for the second quarter of fiscal 2008 was ($7.6) million, or ($0.06) per share, compared
with a net income of $51.1 million, or $0.38 per share, for the second quarter of fiscal 2007. Included in our GAAP results for the
second quarter of fiscal 2007 was a one-time tax benefit of $49.1 million, which was the result of dispute settlements with the United States
and Singapore taxing authorities. The U.S. portion of these settlements brought to closure our fiscal 1997 U.S. Tax Court litigation. "While our top line results were above the company's expectations, we continue to face difficult market conditions," explained S.
"Sundi" Sundaresh, president and CEO of Adaptec. "Despite these challenges, the company has made significant progress during the
quarter in several key areas: our restructuring plan announced last quarter is on track to fully realize the expected savings by the end
of the fiscal year; our Data Protection and Storage Solutions groups have each released new products and the early indicators of
customer reaction are positive; and we reached an agreement with Steel Partners, and together, I expect, we will pursue a course designed to
maximize value for all of our stockholders." Non-GAAP loss from continuing operations, net of taxes, for the second quarter of fiscal 2008 was ($2.4) million, or ($0.02) per
share, compared with non-GAAP income from continuing operations, net of taxes, of $5.2 million, or $0.04 per share, for the second
quarter of fiscal 2007. The non-GAAP results for the second quarter of fiscal 2008, as defined below in the section "Use of Non-GAAP
Financial Measures," differ from results measured under GAAP as they exclude stock-based compensation expense, amortization of
acquisition-related intangible assets, restructuring costs, other charges or gains, and
tax differences due to GAAP versus non-GAAP measurements. A complete reconciliation between GAAP and non-GAAP information
referred to in this release is provided in the attached tables at the end of this press release. Conference Call The Adaptec second quarter fiscal 2008 earnings conference call is scheduled for 1:45 p.m. Pacific Time on October 31, 2007.
Individuals may participate via webcast by visiting www.adaptec.com/investor
15 minutes prior to the call. A telephone replay of the
teleconference will be available through November 15, 2007 by calling (888) 203-1112 in the U.S. or (719) 457-0820 internationally and
referencing reservation number 9047128. About Adaptec Adaptec, Inc. (NASDAQ: ADPT) provides trusted storage solutions that reliably move, manage, and protect critical
data and digital content. Adaptec's software and hardware-based solutions are delivered through leading original equipment
manufacturers (OEMs) and channel partners to provide storage connectivity, data protection, and networked storage to enterprises,
government organizations, medium and small businesses worldwide. More information is available at
www.adaptec.com. Safe Harbor Statement This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Forward-looking statements are statements
regarding future events or the future performance of Adaptec, and include statements regarding our expectation of fully realizing the expected
savings from our restructuring plan announced last quarter by the end of the fiscal year, anticipated positive customer reaction to the new products
released by our Data Protection and Storage Solutions groups and the ability of Adaptec and Steel Partners to work together to maximize value for all
of our stockholders. These forward-looking statements are based on current expectations, forecasts and assumptions and involve a number of risks
and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. These
risks include: if we do not meet our restructuring objectives, we may have to continue to implement additional plans in order to reduce
our operating costs; achieving necessary support from the contract manufacturers to whom we have outsourced manufacturing,
assembly and packaging of our products; retaining key management; Adaptec's ability to launch new software products; difficulty in
forecasting the volume and timing of customer orders; reduced demand in the server, network storage and desktop computer markets;
our target markets' failure to accept, or delay in accepting, network storage and other advanced storage solutions, including our SAS,
SATA and iSCSI lines of products; decline in consumer acceptance of our current products; the timing and volume of orders by OEM
customers for storage products; our ability to control and manage costs associated with the delivery of new products; and the adverse
effects of the intense competition we face in our business. For a more complete discussion of risks related to our business, reference is
made to the section titled "Risk Factors" included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 on file with
the Securities and Exchange Commission. Adaptec assumes no obligation to update any forward-looking information that is included in
this release. Adaptec is a registered trademark in the United States and other countries. Other product and company names are trademarks or
registered trademarks of their respective owners. ###
Adaptec, Inc.
To supplement its condensed consolidated financial statements in accordance with generally accepted
accounting principles (GAAP), the Company's earnings release contains non-GAAP financial measures that exclude certain expenses,
gains and losses. The Company believes that the use of non-GAAP financial measures provides useful information to investors to gain
an overall understanding of its current financial performance and its prospects for the future. Specifically, the Company believes the
non-GAAP results provide useful information to both management and investors by excluding certain expenses, gains and losses that
the Company believes are not indicative of its core operating results. In addition, non-GAAP financial measures are used by
management for budgeting and forecasting as well as subsequently measuring the Company's performance, and the Company
believes that it is providing investors with financial measures that most closely align to its internal measurement processes. The
Company also believes, based on feedback provided to the Company during its earnings calls' Q&A sessions and discussions with
the investment community, that the non-GAAP financial measures it provides are necessary to allow the investment community to
construct their valuation models to better align its results and projections with its competitors and market sector, as there is significant
variability and unpredictability across companies with respect to certain expenses, gains and losses. The non-GAAP financial information is presented using consistent methodology from quarter-to-quarter and
year-to-year. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be
considered a substitute for or superior to GAAP results. The non-GAAP financial measures presented by the Company may be different
than the non-GAAP financial measures presented by other companies. In addition, these non-GAAP financial measures are not based
on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP financial measures have limitations
in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with
GAAP and that these measures should only be used to evaluate the Company's results of operations in conjunction with the
corresponding GAAP financial measures. The Company excludes the following expenses, gains and losses from its non-GAAP financial measures, when
applicable: Stock-based compensation expense: Stock-based compensation expense consists of expenses
recorded under SFAS 123(R), "Share-Based Payment," in connection with stock awards such as stock options,
restricted stock awards and restricted stock units granted under the Company's equity incentive plans and shares issued pursuant to
the Company's employee stock purchase plan. The Company excludes stock-based compensation expense from non-GAAP financial
measures because it is a non-cash measurement that does not reflect the Company's ongoing business; the Company believes that the
provision of non-GAAP information that excludes stock-based compensation improves the ability of investors to compare its
period-over-period operating results, as there is significant variability and unpredictability across companies with respect to this expense. Management incentive program: The Company excludes expenses associated with the
management incentive program, which were limited cash payments made to selected members of management of an acquired
company, as these payments were instituted as a component of the acquisition process and do not reflect the Company's ongoing
business. Amortization of acquisition-related intangible assets: Amortization of acquisition-related intangible
assets primarily relate to core and existing technologies, patents, a trade name and customer relationships that were acquired from
prior acquisitions. The Company excludes the amortization of acquisition-related intangible assets because it does not reflect the
Company's ongoing business and it does not have a direct correlation to the operation of the Company's business. In addition, in
accordance with GAAP, the Company generally recognizes expenses for internally-developed intangible assets as they are incurred,
notwithstanding the potential future benefit such assets may provide. Unlike internally-developed intangible assets, however, and also
in accordance with GAAP, the Company generally capitalizes the cost of acquired intangible assets and recognizes that cost as an
expense over the useful lives of the assets acquired (other than goodwill, which is not amortized, and acquired in-process technology,
which is expensed immediately, as required under GAAP). As a result of their GAAP treatment, there is an inherent lack of
comparability between the financial performance of internally-developed intangible assets and acquired intangible assets. Accordingly,
the Company believes it is useful to provide, as a supplement to its GAAP operating results, a non-GAAP financial measure that
excludes the amortization of acquired intangible assets in order to enhance the period-over-period comparison of its operating results,
as there is significant variability and unpredictability across companies with respect to this expense. Restructuring charges and other charges (gains): Restructuring charges primarily relate to activities engaged in
by the Company's management to simplify its infrastructure. Other charges (gains) primarily relate to the impairment of acquisition-related
intangible assets from prior acquisitions and sale of long-lived assets. Restructuring charges and other charges (gains) are excluded
from non-GAAP financial measures because they are not considered core operating activities and the occurrence of such costs is
infrequent. Although the Company has engaged in various restructuring activities over the past several years, each has been a
discrete, extraordinary event based on a unique set of business objectives. The Company does not engage in restructuring activities on
a regular basis or in the ordinary course of business. As such, the Company believes it is appropriate to exclude restructuring charges
from its non-GAAP financial measures, as it enhances the ability of investors to compare the Company's period-over-period operating
results. Income taxes: Incremental income taxes associated with certain non-GAAP
items.
Adaptec, Inc.
Adaptec, Inc.
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Adaptec, Inc.
(408) 957-2393
NMN Advisors
(510) 451-2952
GAAP Condensed Consolidated Statements of Operations
(unaudited)
Three-Month Period Ended Six-Month Period Ended
---------------------------------------------------- ----------------------------------
September 30, June 30, September 30, September 30, September 30,
2007 2007 2006 2007 2006
---------------- ---------------- ---------------- ---------------- ----------------
(in thousands, except per share amounts)
Net revenues $ 43,974 $ 42,387 $ 73,553 $ 86,361 $ 142,624
Cost of revenues 28,596 28,390 47,010 56,986 93,811
---------------- ---------------- ---------------- ---------------- ----------------
Gross profit 15,378 13,997 26,543 29,375 48,813
---------------- ---------------- ---------------- ---------------- ----------------
Operating expenses:
Research and development 10,858 11,790 13,560 22,648 30,854
Selling, marketing
and administrative 14,297 14,989 15,693 29,286 31,087
Amortization of acquisition-
related intangible assets 720 733 1,470 1,453 3,056
Restructuring charges 3,428 1,526 1,085 4,954 4,096
Other charges (gains) 115 (5,914) -- (5,799) 13,942
---------------- ---------------- ---------------- ---------------- ----------------
Total operating expenses 29,418 23,124 31,808 52,542 83,035
---------------- ---------------- ---------------- ---------------- ----------------
Loss from operations (14,040) (9,127) (5,265) (23,167) (34,222)
Interest and other income 7,797 6,721 5,825 14,518 11,728
Interest expense (955) (1,014) (883) (1,969) (1,759)
---------------- ---------------- ---------------- ---------------- ----------------
Loss from continuing operations
before income taxes (7,198) (3,420) (323) (10,618) (24,253)
Provision for (benefit
from) income taxes 290 215 (49,080) 505 (48,186)
---------------- ---------------- ---------------- ---------------- ----------------
Income (loss) from
continuing operations,
net of taxes (7,488) (3,635) 48,757 (11,123) 23,933
---------------- ---------------- ---------------- ---------------- ----------------
Discontinued operations:
Income (loss) from discontinued
operations, net of taxes -- -- (132) -- 132
Income (loss) from disposal of
discontinued operations,
net of taxes (144) -- 2,440 (144) 3,730
---------------- ---------------- ---------------- ---------------- ----------------
Income (loss) from discontinued
operations, net of taxes (144) -- 2,308 (144) 3,862
---------------- ---------------- ---------------- ---------------- ----------------
Net income (loss) $ (7,632) $ (3,635) $ 51,065 $ (11,267) $ 27,795
================ ================ ================ ================ ================
Income (loss) per common share:
Basic
Continuing operations $ (0.06) $ (0.03) $ 0.42 $ (0.09) $ 0.21
Discontinued operations $ (0.00) $ -- $ 0.02 $ (0.00) $ 0.03
Net income (loss) $ (0.06) $ (0.03) $ 0.44 $ (0.10) $ 0.24
Diluted
Continuing operations $ (0.06) $ (0.03) $ 0.36 $ (0.09) $ 0.19
Discontinued operations $ (0.00) $ -- $ 0.02 $ (0.00) $ 0.03
Net income (loss) $ (0.06) $ (0.03) $ 0.38 $ (0.10) $ 0.22
Shares used in computing
income (loss) per share:
Basic 118,405 117,897 116,325 118,151 115,967
Diluted 118,405 117,897 136,735 118,151 135,991
Reconciliation of GAAP to Non-GAAP Operating Results
(unaudited)
Three-Month Period Ended Six-Month Period Ended
---------------------------------------------------- ----------------------------------
September 30, June 30, September 30, September 30, September 30,
2007 2007 2006 2007 2006
---------------- ---------------- ---------------- ---------------- ----------------
(in thousands)
GAAP income (loss) from continuing
operations, net of taxes $ (7,488) $ (3,635) $ 48,757 $ (11,123) $ 23,933
Stock-based compensation expense 1,056 1,556 2,023 2,612 4,566
Management incentive program -- -- 187 -- 799
Amortization of acquisition-
related intangible assets 720 733 1,470 1,453 3,056
Restructuring charges 3,428 1,526 1,085 4,954 4,096
Other charges (gains) 115 (5,914) -- (5,799) 13,942
Income taxes (190) (159) (48,297) (349) (48,511)
---------------- ---------------- ---------------- ---------------- ----------------
Non-GAAP income (loss) from continuing
operations, net of taxes $ (2,359) $ (5,893) $ 5,225 $ (8,252) $ 1,881
---------------- ---------------- ---------------- ---------------- ----------------
Shares used in computing
income (loss) per share:
Basic - GAAP and Non-GAAP 118,405 117,897 116,325 118,151 115,967
Diluted - GAAP 118,405 117,897 136,735 118,151 135,991
3/4% convertible notes -- -- -- -- (19,224)
3% convertible notes -- -- (695) -- --
---------------- ---------------- ---------------- ---------------- ----------------
Diluted - Non-GAAP 118,405 117,897 136,040 118,151 116,767
---------------- ---------------- ---------------- ---------------- ----------------
Summary Balance Sheet and Cash Flow Data
(unaudited)
As of
--------------------------------------------------------------
Balance Sheet Data September 30, 2007 March 31, 2007 September 30, 2006
- --------------------------------------------------------------- ------------------ ------------------ ------------------
(in thousands)
Cash, cash equivalents and marketable securities $ 597,598 $ 572,423 $ 555,472
Accounts receivable, net 26,672 34,127 41,393
Inventories 19,751 28,717 36,459
Other intangible assets 3,867 7,011 13,108
Other assets 52,084 73,124 76,923
------------------ ------------------ ------------------
Total assets $ 699,972 $ 715,402 $ 723,355
================== ================== ==================
Current liabilities $ 52,282 $ 65,235 $ 85,605
Convertible notes and other long-term obligations 231,416 228,009 228,048
Stockholders' equity 416,274 422,158 409,702
------------------ ------------------ ------------------
Total liabilities and stockholders' equity $ 699,972 $ 715,402 $ 723,355
================== ================== ==================
Three-Month Period Ended
--------------------------------------------------------------
Cash Flow Data September 30, 2007 June 30, 2007 September 30, 2006
- --------------------------------------------------------------- ------------------ ------------------ ------------------
(in thousands)
Net income (loss) $ (7,632) $ (3,635) $ 51,065
Less: Income (loss) from discontinued operations, net of taxes (144) -- 2,308
------------------ ------------------ ------------------
Income (loss) from continuing operations, net of taxes (7,488) (3,635) 48,757
Adjustments to reconcile income (loss) from continuing
operations, net of taxes, to net cash provided by
(used in) operating activites:
Non-cash P&L items:
Gain on sale of long lived assets -- (6,735) --
Non-cash effect of tax settlement -- -- (45,955)
Stock-based compensation 1,056 1,556 2,023
Depreciation and amortization 1,783 3,114 4,286
Inventory-related charges 2,761 2,096 1,894
Other items 195 72 237
Changes in assets and liabilities 2,733 (901) (16,313)
------------------ ------------------ ------------------
Net cash provided by (used in) operating activities
of continuing operations 1,040 (4,433) (5,071)
Net cash provided by (used in) operating activities
of discontinued operations (144) 2,390 1,010
------------------ ------------------ ------------------
Net cash provided by (used in) operating activities $ 896 $ (2,043) $ (4,061)
================== ================== ==================
Other significant cash flow activities:
Proceeds from issuance of common stock 1,935 636 2,704
Proceeds from sale of long-lived assets -- 19,881 --
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