Adaptec: Fiscal 1Q10 Financial Results

Adaptec, Inc. reported its results for the first quarter of fiscal 2010, which ended on July 3, 2009.

Financial Highlights for First Quarter of Fiscal 2010:

• Total net revenues of $21.7 million
• GAAP gross margins of 46%; non-GAAP gross margins of 51%
• GAAP net income per share of $0.00; non-GAAP net income per share of $0.00
• Positive operating cash flows from continuing operations of $4.2 million
• Ended the quarter with $382.7 million in combined cash, cash equivalents and marketable securities

Business Highlights for First Quarter of Fiscal 2010:

• Launched the Company’s Series 5Z Unified Serial Controller Family, the industry’s first flash-based Zero-Maintenance Cache Protection module. Adaptec’s Series 5Z Unified Serial Controller Family provides a solid state solution that is maintenance-free by eliminating the need to monitor battery charge levels or shut down servers for battery replacement.
• Received 2009 Product Innovation Award for Adaptec’s Series 5 Unified Serial controller family from Network Products Guide.
• Partnered with VMware to support VMware vSphere, utilizing Adaptec’s Series 5 Unified Serial Controller Family.

Financial Results
Net revenues for the Company’s first quarter of fiscal 2010 were $21.7 million, compared with $31.5 million for the first quarter of fiscal 2009. Gross margins, computed on a generally accepted accounting principles (GAAP) basis, were 46% for the first quarter of fiscal 2010, compared with 47% for the first quarter of fiscal 2009. Non-GAAP gross margins for the first quarter of fiscal 2010 were 51%, compared with 47% for the first quarter of fiscal 2009.

The Company’s GAAP income from continuing operations, net of taxes, for the first quarter of fiscal 2010 was $0.2 million, or $0.00 per share, compared with a GAAP loss from continuing operations, net of taxes, of an amount less than $(0.1) million, or $(0.00) per share, for the first quarter of fiscal 2009. GAAP net income for the first quarter of fiscal 2010 was $0.6 million, or $0.00 per share, compared with $5.0 million, or $0.04 per share, for the first quarter of fiscal 2009.

Non-GAAP income from continuing operations, net of taxes, for the first quarter of fiscal 2010 was $0.5 million, or $0.00 per share, compared with $4.8 million, or $0.04 per share, for the first quarter of fiscal 2009. Non-GAAP net income for the first quarter of fiscal 2010 was $0.5 million, or $0.00 per share, compared with $4.3 million, or $0.04 per share, for the first quarter of fiscal 2009.

"While channel demand has stabilized, the economic climate remains challenging and we continue to face a decline in our legacy revenues. However, I am pleased that our team has continued to control costs, preserve cash and execute on new product launches. Our new Series 5Z products, with maintenance-free cache protection, demonstrate our commitment to innovation and our ability to execute our strategy to deliver intelligence in the I/O path for the next generation of green data centers," said S. "Sundi" Sundaresh, President and Chief Executive Officer of Adaptec.

Business Outlook
For the second quarter of fiscal 2010, net revenues are projected to be between $17 million and $19 million. GAAP net loss per share is projected to be in the range of $(0.05) and $(0.03). Non-GAAP net loss per share is projected to be in a range of $(0.03) and $(0.01). Actual results may vary depending on a number of factors including challenging economic conditions and timing of the Company’s revenue transactions.