EX-99.1 2 a4701161ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 ADIC Reports Third Quarter Sales of $110.0 Million and Loss of $1.3 Million, or Two Cents Per Share REDMOND, Wash.--(BUSINESS WIRE)--Aug. 12, 2004-- Q3 Operating Cash Flow is $12.6 million; Stock Repurchase Totals $9.5 Million Advanced Digital Information Corporation (Nasdaq:ADIC) today announced sales for the third quarter ending July 31, 2004 grew just under two percent to $110.0 million versus $108.3 million in the third quarter of fiscal 2003. The Company also reported a loss of $1.3 million, or two cents per share, versus a profit of $2.6 million, or four cents per share, during the same period last year. Sequentially, sales were down one percent from $111.1 million reported in the immediately preceding quarter. These results were approximately in line with expectations described at the beginning of the third quarter and at the high end of the sales range announced on August 2. "Positive customer feedback regarding the acceptance of new products, potential growth in our newest sales channels and typical fourth quarter seasonal trends cause us to continue to expect full-year fiscal 2004 sales to grow at a rate in the high single digits," according to Chair and CEO Peter van Oppen. During the third quarter, ADIC and EMC Corporation jointly announced that EMC will resell ADIC Scalar(R) tape libraries to expand its industry-leading information lifecycle management portfolio, and ADIC will resell EMC CLARiiON(R) CX networked storage as part of its Pathlight VX(R) virtual tape solution. Products from ADIC and EMC related to this agreement are now shipping to end customers. "ADIC is continuing to build its global presence as a provider of enterprise-class storage solutions," van Oppen said. "We plan to do more than simply outperform our peers. We expect our new products, existing OEM partners and new EMC partnership will further establish us as a leader in providing innovative, enterprise-class hardware and data-management software products incorporating both disk and tape. This scale of ambition takes patience and long-term financial commitment, both of which we have." Although reporting a small loss for the third quarter, the Company noted nine-month cash flow from operations was $24.2 million. Subtracting previously reported six-month cash flow from operations indicates third quarter cash flow from operations was $12.6 million. Total cash and marketable securities, net of all debt, increased to $225.6 million from $224.3 million at the end of the second quarter. This increase occurred despite the previously announced repurchase of approximately one million shares during the quarter at an average price of $9.38 per share, according to the Company. Gross profit as a percentage of sales dropped to 27 percent compared with 30 percent in the third quarter last year and 28 percent in the immediately preceding quarter. The Company believes this decline is primarily a result of sales volumes being lower than originally planned, along with changes in product mix and shifts in sales channels. The causes of lower-than-anticipated sales volumes include customer decision-making cycles being lengthened due to an increase in the number of available software, disk or tape-based storage alternatives being evaluated, general economic uncertainties and customer resource constraints due to the interpretation of new regulatory compliance and internal financial control requirements. Sales of Intelligent Storage Solutions(TM) (ISS products), which include elements of ADIC connectivity and software technology and are sold through branded and OEM sales channels, grew to 40 percent of revenue from 33 percent in the third quarter last year and 38 percent in the preceding quarter. The Company believes that, at constant sales levels, an increasing proportion of ISS sales, whether sold on a branded or OEM basis, will typically increase gross margins as a percentage of sales. During each of the past two quarters, this effect has been more than offset by sequential declines in sales levels. OEM sales to partners, including Dell, Fujitsu-Siemens, HP, IBM and Sun, were approximately 48 percent of total sales versus 49 percent in the third quarter of fiscal 2003 and 47 percent in the second quarter of fiscal 2004. Operating expenses rose 8.7 percent from the same quarter last year and approximately one-half percent sequentially. All of the year-over-year expense growth is attributable to increases in sales and marketing expenses. Other income was $716 thousand for the quarter, primarily including interest on the Company's cash balances and foreign currency gains. The provision for income taxes for the quarter is a tax benefit of $1.3 million reflecting our reduced pre-tax income for the first nine-months and expectations for the fiscal year. Lower pre-tax income results in a lower anticipated effective tax rate as tax credits and non-taxable items represent a larger proportion of income. About ADIC Advanced Digital Information Corporation (Nasdaq:ADIC) is a leading provider of Intelligent Storage Solutions(TM) to the open systems marketplace. ADIC is the world's largest supplier of automated tape systems using the drive technologies most often employed for backing up open system, client-server networks.(1) The Company's data management software, storage networking appliances, and disk-to-tape data protection solutions provide IT managers innovative tools for storing, managing and protecting their most valuable digital assets in a variety of disk and tape environments. ADIC storage products are available through a worldwide sales force and a global network of resellers and OEMs, including Cray, Dell, EMC, Fujitsu-Siemens, HP, IBM and Sun. Further information about ADIC is available at www.adic.com. (1) IDC 2001 worldwide revenue and unit market share data for all automated systems using DLT, SDLT, LTO, 8mm or AIT drives, and Gartner Dataquest, Tape Automation Systems Market Shares, 2003, F. Yale, April 2004. ADIC and Scalar are registered trademarks and Intelligent Storage is a trademark of Advanced Digital Information Corporation. All other trade or service marks mentioned in this document should be considered the property of their respective owners. This release contains forward-looking statements relating to the Company's future products and services and future operating results that are subject to risks and uncertainties that could cause actual results to differ materially from those projected. The words "expect", "anticipate", and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Factors that could affect the Company's actual results include general economic trends, purchase deferrals by customers, acceptance of new products, success of new sales channels, technical competition or obsolescence, supply constraints, changes in market pricing and production problems. Reference is made to the Company's Annual Report on Form 10-K for the year ended October 31, 2003 for a more detailed description of factors that could affect the Company's actual results. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. Conference Call There will be a conference call to discuss third quarter results as well as estimates for the fourth quarter of fiscal 2004 and fiscal 2005 outlook at 1:30 p.m. PT (4:30 p.m. ET) on August 12, 2004. The call can be accessed live on our website at www.adic.com/ir. ADVANCED DIGITAL INFORMATION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except for per share amounts) (Unaudited) Three Months Ended Nine Months Ended July 31, July 31, 2004 2003 2004 2003 --------- --------- --------- --------- Net sales $110,034 $108,259 $339,406 $305,997 Cost of sales 80,387 75,683 244,115 210,651 --------- --------- --------- --------- Gross profit 29,647 32,576 95,291 95,346 Sales and marketing 17,522 14,355 48,939 42,012 General and administrative 5,823 5,948 18,107 18,095 Research and development 9,565 9,986 28,265 30,257 --------- --------- --------- --------- Operating profit (loss) (3,263) 2,287 (20) 4,982 Other income, net 716 1,330 2,381 4,935 --------- --------- --------- --------- Income (loss) before provision (benefit) for income taxes (2,547) 3,617 2,361 9,917 Provision (benefit) for income taxes (1,264) 982 44 3,177 --------- --------- --------- --------- Net income (loss) $(1,283) $2,635 $2,317 $6,740 ========= ========= ========= ========= Basic net income (loss) per share $(0.02) $0.04 $0.04 $0.11 ========= ========= ========= ========= Diluted net income (loss) per share $(0.02) $0.04 $0.04 $0.11 ========= ========= ========= ========= Shares used in computing basic net income (loss) per share 64,235 62,657 64,135 62,291 ========= ========= ========= ========= Shares used in computing diluted net income (loss) per share 64,235 63,681 65,040 63,148 ========= ========= ========= ========= ADVANCED DIGITAL INFORMATION CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) July 31, October 31, 2004 2003 ---------- ----------- ASSETS Current assets: Cash and cash equivalents $224,594 $180,401 Accounts receivable, net 86,917 100,391 Inventories, net 47,306 35,736 Marketable securities 1,000 20,788 Assets held for sale -- 12,384 Other current assets 24,797 21,514 ---------- ----------- Total current assets 384,614 371,214 Property, plant and equipment, net 47,391 45,505 Service parts for maintenance, net 28,165 28,427 Investments 4,161 3,728 Other non-current assets 4,029 4,298 ---------- ----------- $468,360 $453,172 ========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities $109,431 $94,852 Deferred income taxes 2,523 2,507 Long-term debt -- 967 Shareholders' equity 356,406 354,846 ---------- ----------- $468,360 $453,172 ========== =========== ADVANCED DIGITAL INFORMATION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months Ended July 31, ------------------- 2004 2003 --------- --------- Cash flows from operating activities: Net income $2,317 $6,740 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,235 16,625 Bad debt expense 46 507 Inventory obsolescence 2,442 4,298 Gain on securities transactions (871) (2,388) Deferred income taxes (36) (144) Tax benefit from exercise of stock options 1,777 1,376 Other 49 40 Change in assets and liabilities: Accounts receivable 13,135 (14,038) Inventories (15,020) (15,213) Other current assets (3,235) 9,339 Service parts for maintenance (7,959) (7,437) Current liabilities 13,270 22,559 --------- --------- Net cash provided by operating activities 24,150 22,264 --------- --------- Cash flows from investing activities: Purchase of property, plant and equipment (12,755) (11,219) Proceeds from assets held for sale 16,740 -- Purchase of marketable securities (4,004) (13,852) Proceeds from securities transactions 24,590 32,266 Purchase of other investments (504) (363) Purchase of intangible assets (200) -- Return of investment on other investments 71 -- --------- --------- Net cash provided by investing activities 23,938 6,832 --------- --------- Cash flows from financing activities: Repayment of bank lines of credit and long-term debt (1,221) (3,265) Proceeds from short-term borrowings -- 781 Repurchase of common stock (9,510) (697) Proceeds from issuance of common stock for stock options, stock warrants and Stock Purchase Plan 6,551 3,782 --------- --------- Net cash provided by (used in) financing activities (4,180) 601 --------- --------- Effect of exchange rate changes on cash 285 1,241 --------- --------- Net increase in cash and cash equivalents 44,193 30,938 Cash and cash equivalents at beginning of period 180,401 150,741 --------- --------- Cash and cash equivalents at end of period $224,594 $181,679 ========= ========= CONTACT: ADIC Jon Gacek, Chief Financial Officer, 425-881-8004 Stacie Timmermans, Investor Relations, 425-881-8004