EX-99.2 2 a06-17709_1ex99d2.htm EX-99

Exhibit 99.2

FOR IMMEDIATE RELEASE

Editorial Contact:

Investor Contact:

Debbie Clima

Mary Camarata

Adaptec, Inc.

Adaptec, Inc.

408-957-1762

408-957-1630

debbie_clima@adaptec.com

mary_camarata@adaptec.com

 

ADAPTEC NOTES A REDUCTION IN ITS FIRST QUARTER 2007 TAX PROVISION

MILPITAS, Calif. — August 8, 2006 — Adaptec, Inc. (NASDAQ: ADPT), a global leader in storage solutions, today reported a change in the tax provision for its first quarter of fiscal 2007 financial results which it reported on August 1. 2006.

The statement of operations and reconciliation of GAAP to non-GAAP operating results as previously reported contained a provision for income taxes of $1.7 million for the first quarter of fiscal 2007.  The Company has subsequently determined that the tax provision for the quarter should instead be a provision of $0.9 million, for a reduction of $0.8 million.

As a result of this adjustment to the tax provision, the loss from continuing operations, computed on a generally accepted accounting principles (GAAP) basis, for the first quarter of fiscal 2007 is now ($24.8) million, as compared to the previously reported loss from continuing operations of ($25.6) million and the net loss for the first fiscal quarter of fiscal 2007 is now ($23.3) million as compared to previously reported net loss of ($24.1) million.  There is no impact to the amounts reported for discontinued operations.

The net loss on a GAAP basis per share from continuing operations for the first quarter of fiscal 2007, for both basic and diluted EPS, is now ($0.21), as compared to the previously reported net loss per share from continuing operations of ($0.22).  The net loss per share for the first quarter of fiscal 2007, for both basic and diluted EPS, is now ($0.20), as compared to the previously reported net loss per share of ($0.21).

The tax provision presented as part of the non-GAAP Statement of Operations for the first quarter of fiscal 2007 is now $1.1 million, as compared to the previously reported provision of $1.3 million.  The



non-GAAP net loss from continuing operations is now ($3.3) million as compared to the reported net loss of ($3.5) million.  The non-GAAP net loss is now ($3.0) million, as compared to the reported net loss of ($3.2) million.  Other than the change in the adjustment to the provision for taxes as noted above, the reconciliations of GAAP to non-GAAP operating results have not been changed from those set forth in the prior release.

The Company has also reflected reclassifications in the cash flow data between continuing operations and discontinued operations for the first quarter of fiscal 2006, ended June 30, 2005 and the fourth quarter of fiscal 2006, ended March 31, 2006.  There is no impact to the net cash used for operating activities for these periods.

The attached financial statements reflect the changes described above.

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, and consumers worldwide. More information is available at www.adaptec.com.

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Adaptec, Inc.

GAAP Condensed Consolidated Statements of Operations and

Reconciliation of GAAP to Non-GAAP Operating Results (*)

(unaudited)

 

 

 

Three-Month Period Ended

 

 

 

June 30, 2006

 

June 30, 2005

 

 

 

GAAP

 

Adjustments

 

Non-GAAP

 

GAAP

 

Adjustments

 

Non-GAAP

 

 

 

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

$

69,071

 

$

—

 

$

69,071

 

$

83,813

 

$

—

 

$

83,813

 

Cost of revenues

 

46,801

 

(188)(a)

 

46,613

 

59,725

 

(181)(b)

 

59,544

 

Gross profit

 

22,270

 

188

 

22,458

 

24,088

 

181

 

24,269

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

17,294

 

(1,635)(c)

 

15,659

 

18,380

 

(434)(b)

 

17,946

 

Selling, marketing and administrative

 

15,394

 

(1,332)(c)

 

14,062

 

18,461

 

(945)(b)

 

17,516

 

Amortization of acquisition-related

 

 

 

 

 

 

 

 

 

 

 

 

 

intangible assets

 

1,586

 

(1,586)(d)

 

 

 

3,056

 

(3,056)(d)

 

—

 

Restructuring charges

 

3,011

 

(3,011)(e)

 

 

 

40

 

(40)(e)

 

—

 

Goodwill impairment

 

 

 

—

 

 

 

—

 

—

 

—

 

Other charges

 

13,942

 

(13,942)(f)

 

 

 

—

 

—

 

—

 

Total operating expenses

 

51,227

 

(21,506

)

29,721

 

39,937

 

(4,475

)

35,462

 

Loss from continuing operations

 

(28,957

)

21,694

 

(7,263

)

(15,849

)

4,656

 

(11,193

)

Interest and other income

 

5,903

 

—

 

5,903

 

3,608

 

3,694

 

 

 

Interest expense

 

(876

)

1

 

(875

)

(973

)

1

 

(972

)

Income (loss) from continuing operations before income taxes

 

(23,930

)

21,695

 

(2,235

)

(13,214

)

4,743

 

(8,471

)

Provision for (benefit from) income taxes

 

894

 

(405) (h)

 

1,108

 

846

 

822

(h)

1,668

 

Income (loss) from continuing operations

 

(24,824

)

22,100

 

(3,343

)

(14,060

)

3,921

 

(10,139

)

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued

 

 

 

 

 

 

 

 

 

 

 

 

 

operations, net of taxes

 

264

 

66

(i)

330

 

(21,913

)

17,768

(i)

(4,145

)

Income from disposal of discontinued operations, net of taxes

 

1,290

 

(1,290)(i)

 

—

 

—

 

—

 

—

 

Income (loss) from discontinued operations, net of taxes

 

1,554

 

(1,224

)

330

 

(21,913

)

17,768

 

(4,145

)

Net income (loss)

 

$

(23,270

)

$

20,876

 

$

(3,013

)

$

(35,973

)

$

21,689

 

$

(14,284

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.21

)

 

 

$

(0.03

)

$

(0.13

)

 

 

$

(0.09

)

Discontinued operations

 

$

0.01

 

 

 

$

0.00

 

$

(0.19

)

 

 

$

(0.04

)

Net income (loss)

 

$

(0.20

)

 

 

$

(0.03

)

$

(0.32

)

 

 

$

(0.13

)

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.21

)

 

 

$

(0.03

)

$

(0.13

)

 

 

$

(0.09

)

Discontinued operations

 

$

0.01

 

 

 

$

0.00

 

$

(0.19

)

 

 

$

(0.04

)

Net income (loss)

 

$

(0.20

)

 

 

$

(0.03

)

$

(0.32

)

 

 

$

(0.13

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

115,609

 

—

 

115,609

 

112,445

 

—

 

112,445

 

Diluted

 

115,609

 

—

 

115,609

 

112,445

 

—

 

112,445

 

 

The amounts for all periods reflect the reclassification out of discontinuing operations to continuing operations for our Snap Server systems business.



(*) To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), we use non-GAAP measures of operating results, net income/(loss) and earnings per share, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses.  These non-GAAP measures are provided to enhance the user’s overall understanding of our current financial performance and our prospects for the future.  Specifically, we believe the non-GAAP results provide useful information to both management and investors by excluding certain expenses, gains and losses that we believe are not indicative of our core operating results.  In addition, since we have historically reported non-GAAP results to the investment community, we believe the inclusion of non-GAAP numbers provides consistency in our financial reporting. Further, these non-GAAP results are one of the primary indicators management uses for assessing our performance, allocating resources and planning and forecasting future periods. The non-GAAP 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.

a) Charge for Fas 123R expense.

(b) Management incentive program of $0.6 million with the Snap Appliance acquisition (acquired in July 2004).

(c) Deferred compensation expense related to assumed stock options associated with the Platys acquisition.These assumed options were negotiated as part of the acquisition and represent compensation over and above the amounts that we provide to these acquired employees. Additional charge related to the Fas 123R entry.

(d) Amortization of acquisition-related intangible assets, primarily core and existing technologies, patents, trade name and supply agreement intangible assets, related to the acquisitions of Platys, Eurologic (acquired in April 2003), ICP vortex (acquired in June 2003), and Elipsan (acquired in February 2004).

(e) Restructuring expense primarily related to adjustments made to restructuring plans in the first quarter of fiscal 2007 to reduce headcount, consolidate facilities, consolidate engineering resources.

(f) Write off of the intangibles for Snap, which included existing and core technology along with trademarks and trade names.

(g) Loss on conversion of subordinated notes.

(h) Incremental income taxes associated with certain non-GAAP adjustments.

(i) Loss (income) from disposal of the IBM i/p Series RAID business and Systems business, impairment of the IBM i/p Series RAID long-lived assets,  impairment of the Systems long-lived assets, write-off of in-process research and development costs associated with the acquisitions of Snap Appliance and the IBM i/p Series RAID business, amortization of acquisition-related intangible assets related to the acquisitions of Platys, Eurologic, ICP vortex, Snap Appliance and the IBM i/p Series RAID business, management incentive program associated with the Snap Appliance acquisition, deferred compensation expense related to assumed stock options associated with the Snap Appliance acquisition, cash hire-on payments associated with the IBM i/p Series RAID business acquisition, and incremental income taxes associated with certain GAAP and non-GAAP adjustments.



 

Adaptec, Inc.

Summary Balance Sheet and Cash Flow Data

(unaudited)

 

Balance Sheet Data

 

As of

 

 

 

June 30, 2006

 

March 31, 2006

 

June 30, 2005

 

 

 

(in thousands)

 

Cash, cash equivalents and marketable securities

 

$

555,658

 

$

556,553

 

$

479,936

 

Accounts receivable, net

 

45,207

 

47,876

 

74,648

 

Inventories

 

35,149

 

28,259

 

46,451

 

Goodwill and other intangible assets

 

16,156

 

32,524

 

125,661

 

Other assets

 

69,152

 

72,187

 

80,233

 

Assets from discontinued operations

 

—

 

—

 

78,166

 

Total assets

 

$

721,322

 

$

737,399

 

$

885,095

 

 

 

 

 

 

 

 

 

Current liabilities

 

142,267

 

138,605

 

146,797

 

Liabilities from discontinued operations

 

—

 

—

 

20,133

 

Convertible notes and other long-term obligations

 

228,554

 

229,349

 

243,804

 

Stockholders’ equity

 

350,501

 

369,445

 

474,361

 

Total liabilities and stockholders’ equity

 

$

721,322

 

$

737,399

 

$

885,095

 

 

 

 

 

 

 

 

 

Cash Flow Data

 

Three-Month Period Ended

 

 

 

June 30, 2006

 

March 31, 2006

 

June 30, 2005

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

(24,824

)

$

(15,827

)

$

(14,060

)

Adjustments to reconcile net income (loss) to net cash

 

 

 

 

 

 

 

provided by (used for) operations:

 

 

 

 

 

 

 

Non-cash P&L items:

 

 

 

 

 

 

 

Loss (gain) on sale of long-lived assets

 

—

 

107

 

—

 

Impairment of long-lived assets

 

13,203

 

10,024

 

—

 

Stock-based compensation

 

2,544

 

127

 

274

 

Loss on repurchase of 3% convertible notes

 

 

 

(22

)

86

 

Depreciation and amortization

 

5,013

 

5,113

 

7,630

 

Other items

 

444

 

(1,804

)

133

 

Changes in assets and liabilities

 

(979

)

(13,933

)

(13,139

)

Net cash provided by (used for) operating activities of continuing operations

 

(4,599

)

(16,215

)

(19,076

)

Net cash provided by (used for) operating activities of discontinued operations

 

1,554

 

683

 

(3,939

)

Net cash provided by (used for) operating activities

 

$

(3,045

)

$

(15,532

)

$

(23,015

)

 

 

 

 

 

 

 

 

Other significant cash flow activities:

 

 

 

 

 

 

 

Proceeds from sale of business

 

 

 

35,490

 

 

 

Proceeds from issuance of common stock

 

1,567

 

6,059

 

121

 

Repurchase of 3% convertible notes

 

—

 

1,321

 

(18,645

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The amounts for all periods reflect the reclassification out of discontinuing operations to continuing operations for our Snap Server systems business.