EX-99.1 2 a4825665ex991.txt ADVANCED DIGITAL INFORMATION EXHIBIT 99.1 Exhibit 99.1 ADIC Reports Breakeven First Quarter EPS As Mix, Margin Show Continued Strategic Improvement; Branded Sales Up 8%, OEM Sales Down 21%; $15+ Million Cash from Operations REDMOND, Wash.--(BUSINESS WIRE)--Feb. 17, 2005--ADVANCED DIGITAL INFORMATION CORPORATION (Nasdaq:ADIC) today announced a small net loss of $270,000, or zero cents per share, on sales of $110.8 million for the first quarter ended January 31, 2005. The Company earned $4.8 million, or seven cents per share, on sales of $118.3 million during the same period a year ago and $5.7 million, or nine cents per share, on sales of $115.4 million in the immediately preceding fourth quarter. Gross profit as a percentage of sales for the period was 29.6 percent, the highest in the past five quarters, versus 29.0 percent during first quarter 2004 and 29.4 percent in the preceding fourth quarter despite modestly lower total sales. Overall first quarter sales declined six percent and four percent from the year ago period and preceding period, respectively. ADIC branded sales grew eight percent versus the same quarter last year to nearly 58 percent of total revenues. Branded sales were just over 50 percent of total sales a year ago and 57 percent of sales in the fourth quarter ended October 31. OEM sales decreased to approximately 42 percent of sales in the quarter, down from nearly 50 percent in first quarter 2004, as an anticipated decline in OEM sales continued. The Company reported an operating loss of $1.4 million versus operating profits of $4.7 million during first quarter 2004 and $2.2 million in the preceding fourth quarter. Net cash provided by operating activities during the quarter totaled $15.3 million, leaving a quarter-ending balance of cash and marketable securities of over $245 million. "We never like reporting breakeven quarters but these results are about as expected and continue to bode well for our shift toward higher margins and branded business in a quarter that would typically be dominated by OEM sales," according to Chair and Chief Executive Officer Peter van Oppen. "It is always significant to report an improved margin percentage despite lower total volume. We expect continued volume increases in the branded portion of our business will bring further margin improvement and profitability." "On the product side, the enormously popular Scalar i2000 library grew more than 21 percent from the fourth quarter and was up approximately 62 percent from the same period last year as it benefited from new reseller channels and continued broad acceptance among enterprise-class customers," he said. "Operating expenses were slightly higher than expected for the quarter, particularly in R&D, as we incurred incremental expenses related to prototyping new products for both our branded and OEM channels," according to van Oppen. "Such costs are not likely to be repeated and we would expect R&D costs to be somewhat lower in the second quarter." Earlier this month, the Company announced the pending closure of two R&D facilities in Ithaca, New York and Santa Clara, California. The decision was made in an effort to optimize efficiency and customer service. Approximately 60 Team Members will be affected, the majority of whom are being offered relocation to another ADIC facility. Both closures are expected to be completed during the fourth quarter of fiscal 2005. This quarter is the first reporting period where ADIC has presented revenue and cost of revenue separately for products and services. Service revenue is derived from contracts for field support provided to our branded-product customers and not otherwise included in the base price of the product. Service does not include revenue or cost associated with basic warranty support on new branded or OEM products, but a significant amount of service revenue is directly associated with new product sales. The Company's deferred revenue balance reflects contracts for services to be performed in subsequent periods and has been growing rapidly with expansion of the installed base of enterprise-class products. Service margins are expected to further improve as utilization rates increase for the Company's global services personnel and parts infrastructure. About ADIC Advanced Digital Information Corporation (Nasdaq:ADIC) is a leading provider of Intelligent Storage(TM) solutions 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-based backup and restore 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) Market Share: Gartner Dataquest, Tape Automation Systems Market Shares, 2003, F. Yale, April 2004. ADIC, Pathlight, StorNext, 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, production problems and the Company's ability to complete announced restructurings on schedule. Reference is made to the Company's Annual Report on Form 10-K for the year ended October 31, 2004 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 first quarter results as well as estimates for the second quarter of fiscal 2005 at 1:30 p.m. PT (4:30 p.m. ET) on February 17, 2005. 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 January 31, 2005 2004 -------- -------- Revenue: Product $ 97,630 $107,934 Service 13,190 10,371 -------- -------- Total revenue 110,820 118,305 Cost of revenue: Product 68,535 75,454 Service 9,492 8,532 -------- -------- Total cost of revenue 78,027 83,986 Gross profit 32,793 34,319 Sales and marketing 16,682 14,072 General and administrative 6,273 6,204 Research and development 11,257 9,380 -------- -------- Operating profit (loss) (1,419) 4,663 Other income, net 1,087 1,991 -------- -------- Income (loss) before provision (benefit) for income taxes (332) 6,654 Provision (benefit) for income taxes (62) 1,886 -------- -------- Net income (loss) $ (270) $ 4,768 ======== ======== Basic net income (loss) per share $ 0.00 $ 0.07 ======== ======== Diluted net income (loss) per share $ 0.00 $ 0.07 ======== ======== Shares used in computing basic net income (loss) per share 63,791 63,815 ======== ======== Shares used in computing diluted net income (loss) per share 63,791 65,270 ======== ======== ADVANCED DIGITAL INFORMATION CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) January 31, October 31, 2005 2004 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $240,395 $226,890 Accounts receivable, net 84,319 93,025 Inventories, net 34,124 38,728 Marketable securities 5,024 6,043 Other current assets 14,497 13,602 -------- -------- Total current assets 378,359 378,288 Property, plant and equipment, net 45,121 45,913 Service parts for maintenance, net 30,085 29,993 Investments 3,232 2,769 Other non-current assets 18,639 18,067 -------- -------- $475,436 $475,030 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Deferred revenue - current $ 33,918 $ 31,727 Other current liabilities 61,903 65,200 -------- -------- Total current liabilities 95,821 96,927 Deferred revenue -- long-term 14,902 13,605 Other long-term liabilities 400 600 Shareholders' equity 364,313 363,898 -------- -------- $475,436 $475,030 ======== ======== ADVANCED DIGITAL INFORMATION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended January 31, ------------------- 2005 2004 -------- -------- Cash flows from operating activities: Net income (loss) $ (270) $ 4,768 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,262 6,164 Bad debt expense 260 72 Inventory obsolescence 876 884 Gain on securities and investment transactions (34) (661) Deferred income taxes 15 (93) Tax benefit from exercise of stock options 50 1,289 Other 21 -- Change in assets and liabilities: Accounts receivable 8,494 (4,546) Inventories 3,795 (3,889) Other current assets (1,839) 220 Service parts for maintenance (2,199) (2,623) Current liabilities (3,450) (407) Deferred revenue 3,306 2,754 -------- -------- Net cash provided by operating activities 15,287 3,932 -------- -------- Cash flows from investing activities: Purchase of property, plant and equipment (2,790) (2,498) Proceeds from assets held for sale -- 15,117 Purchase of marketable securities -- (4,005) Proceeds from securities transactions 1,017 16,064 Purchase of other investments (429) (364) Return of investment on other investments -- 71 -------- -------- Net cash provided by (used in) investing activities (2,202) 24,385 -------- -------- Cash flows from financing activities: Repayment of short-term and long-term debt -- (51) Proceeds from issuance of common stock for stock options 381 3,888 -------- -------- Net cash provided by financing activities 381 3,837 -------- -------- Effect of exchange rate changes on cash 39 647 -------- -------- Net increase in cash and cash equivalents 13,505 32,801 Cash and cash equivalents at beginning of period 226,890 180,401 -------- -------- Cash and cash equivalents at end of period $240,395 $213,202 ======== ======== CONTACT: ADIC Jon Gacek, Chief Financial Officer 425-881-8004 Stacie Timmermans, Investor Relations 425-881-8004