Adaptec: Fiscal 4Q09 Financial Results

(in US$ millions)	4Q08	4Q09	FY08	FY09
Revenues	35.6	23.4	145.5	114.8
*Growth*		-34%		*-21*%
Net income (loss)	0.5	(17.2)	(9.6)	(10.2)

Adaptec, Inc. reported its results for the fourth quarter and fiscal year ended March 31, 2009.

Financial Highlights for Fourth Quarter of Fiscal 2009

Total net revenues of $23.4 million
GAAP gross margins of 44%; non-GAAP gross margins of 48%
GAAP net loss per share of $(0.14), including a goodwill impairment charge of $16.9 million; non-GAAP net income per share of $0.01
Positive operating cash flows of $4.6 million

Financial Highlights for Fiscal Year 2009

Total net revenues of $114.8 million
GAAP gross margins of 43%; non-GAAP gross margins of 46%
GAAP net loss per share of $(0.09); non-GAAP net income per share of $0.08
Positive operating cash flows of $13.7 million
Ended the year with $376.6 million in combined cash, cash equivalents and marketable securities

Business Highlights for Fiscal Year 2009

Launched award-winning Unified Serial products, including the Company’s Series 1, 2 and 5. Adaptec now offers a complete low to high-end Unified Serial product line.
Launched Intelligent Power Management, the industry’s first and only RAID controller-based power management solution for SATA and SAS storage. Adaptec’s Power Management initiative is the first of a set of planned green features focused on the data center.
Acquired Aristos Logic Corporation, which provides the Company with OEM growth opportunities and a strategic technology base to build intelligence in the I/O path.
Integrated the Company’s RAID Storage Processor technology with IBM’s BladeCenter S product, creating the industry’s first fully redundant, shared blade storage systems.
Received awards and recognitions including, storage industry channel excellence from ChannelWeb and Business Solutions and solid product reviews for the Company’s Series 5 Unified Serial controller family from Tom’s Hardware and Maximum PC.
Streamlined the business with headcount reductions and continued cost control management.
Divested the Snap Server business to Overland Storage, Inc., which allowed the Company to focus on the core business and move the Company closer to profitability.
Extended the Company’s contract manufacturing relationship with Sanmina-SCI for three additional years.
Repurchased substantially all of the 3/4% Convertible Senior Subordinated Notes.
Repurchased 1,033,400 shares of common stock under the Company’s repurchase plan.

Financial Results
Net revenues for the Company’s fourth quarter of fiscal 2009 were $23.4 million, compared with $35.6 million for the fourth quarter of fiscal 2008. Gross margins, computed on a generally accepted accounting principles (GAAP) basis, were 44% for the fourth quarter of fiscal 2009, compared with 46% for the fourth quarter of fiscal 2008. Non-GAAP gross margins for the fourth quarter of fiscal 2009 were 48%, compared with 47% for the fourth quarter of fiscal 2008.

The Company’s GAAP loss from continuing operations, net of taxes, for the fourth quarter of fiscal 2009 was $(17.3) million, or $(0.14) per share, compared with an income from continuing operations, net of taxes, of $1.3 million, or $0.01 per share, for the fourth quarter of fiscal 2008. GAAP net loss for the fourth quarter of fiscal 2009 was $(17.2) million, or $(0.14) per share, compared with a net income of $0.5 million, or $0.00 per share, for the fourth quarter of fiscal 2008. GAAP loss from continuing operations, net of taxes, and net loss for the fourth quarter of fiscal 2009 included a goodwill impairment charge of $16.9 million, based on the Company’s annual review of goodwill, primarily due to a continued decline in the market value of its common stock.

Non-GAAP income from continuing operations, net of taxes, for the fourth quarter of fiscal 2009 was $1.4 million, or $0.01 per share, compared with $6.6 million, or $0.05 per share, for the fourth quarter of fiscal 2008. Non-GAAP net income for the fourth quarter of fiscal 2009 was $1.4 million, or $0.01 per share, compared with $5.7 million, or $0.05 per share, for the fourth quarter of fiscal 2008.

Net revenues for the Company’s fiscal year ended March 31, 2009 were $114.8 million, compared with $145.5 million for the fiscal year ended March 31, 2008. GAAP gross margins from continuing operations were 43% for the Company’s fiscal year ended March 31, 2009, compared with 39% for the fiscal year ended March 31, 2008. Non-GAAP gross margins for the fiscal year ended March 31, 2009 were 46%, compared with 39% for the fiscal year ended March 31, 2008.

The Company’s GAAP loss from continuing operations, net of taxes, for the fiscal year ended March 31, 2009 was $(14.0) million, or $(0.12) per share, compared with $(5.4) million, or $(0.05) per share, for the fiscal year ended March 31, 2008. GAAP net loss for the fiscal year ended March 31, 2009 was $(10.2) million, or $(0.09) per share, compared with $(9.6) million, or $(0.08) per share for the fiscal year ended March 31, 2008.

Non-GAAP income from continuing operations, net of taxes, for the fiscal year ended March 31, 2009 was $10.3 million, or $0.09 per share, compared with $5.6 million, or $0.05 per share, for the fiscal year ended March 31, 2008. Non-GAAP net income for the fiscal year ended March 31, 2009 was $9.6 million, or $0.08 per share, compared with $2.1 million, or $0.02 per share for the fiscal year ended March 31, 2008.

"Like most companies, Adaptec has been impacted by the macroeconomic climate. Despite these challenges, we have continued to execute on a number of fronts, including the development of our integrated product roadmap and our continued expense controls. As we head into fiscal 2010, we are focused on enabling our OEM and channel partners to deploy storage solutions optimized for performance and energy efficiency," said S. ‘Sundi’ Sundaresh, President and Chief Executive Officer of Adaptec.

Business Outlook
Actual results may vary depending on a number of factors including challenging economic conditions and timing of the Company’s revenue transitions. For the first quarter of fiscal 2010, net revenues are projected to be between $20 million and $23 million. GAAP loss per share is projected to be in the range of $(0.03) to $(0.05). Non-GAAP loss per share is projected to be in a range of $(0.01) to $(0.03). Operating cash flows are expected to be slightly negative.