Adaptec Reports Third Quarter Results for Fiscal 2010

MILPITAS, Calif., Jan 29, 2010 (BUSINESS WIRE) -- Adaptec, Inc. (NASDAQ:ADPT), today reported its results for the third quarter of fiscal 2010, which ended on January 1, 2010.

Financial Highlights for Third Quarter of Fiscal 2010

• Total net revenues of $16.9 million

• GAAP gross margins of 44%; non-GAAP gross margins of 51%

• GAAP net loss per share of $(0.06); non-GAAP net loss per share of $(0.01)

• Ended the quarter with $380.4 million in combined cash, cash equivalents and marketable securities

Financial Results

Net revenues for the Company's third quarter of fiscal 2010 were $16.9 million, compared with $28.2 million for the third quarter of fiscal 2009. Gross margins, computed on a generally accepted accounting principles (GAAP) basis, were 44% for the third quarter of fiscal 2010, compared with 40% for the third quarter of fiscal 2009. Non-GAAP gross margins for the third quarter of fiscal 2010 were 51%, compared with 44% for the third quarter of fiscal 2009.

The Company's GAAP loss from continuing operations, net of taxes, for the third quarter of fiscal 2010 was $(7.5) million, or $(0.06) per share, compared with GAAP income from continuing operations, net of taxes, of $0.1 million, or $0.00 per share, for the third quarter of fiscal 2009. GAAP net loss for the third quarter of fiscal 2010 was $(7.3) million, or $(0.06) per share, compared with $(1.3) million, or $(0.01) per share, for the third quarter of fiscal 2009. GAAP loss from continuing operations, net of taxes, and net loss for the third quarter of fiscal 2010 included the following:

• Guaranteed cash payments of $0.7 million in connection with the Separation Agreement and Consulting Service Agreement entered into with its former Chief Executive Officer;

• Additional costs of $0.5 million of professional fees related to our response to the consent solicitation and potential payment of a requested expense reimbursement of $0.7 million related to professional fees that Steel Partners, Steel Partners Holdings L.P., Steel Partners LLC, Steel Partners II GP LLC, Warren Lichtenstein, Jack L. Howard, and John J. Quicke incurred for the consent solicitation;

• Stock-based compensation expense of $2.9 million;

• Restructuring charges of $1.0 million related to a management approved plan to better align operating costs with the continued decline in net revenues; and,

• Other income included $0.9 million received from a class action settlement and $0.4 million gain from sale of an investment.

Non-GAAP loss from continuing operations, net of taxes, for the third quarter of fiscal 2010 was $(1.0) million, or $(0.01) per share, compared with non-GAAP income from continuing operations, net of taxes, of $0.1 million, or $0.00 per share, for the third quarter of fiscal 2009. Non-GAAP net loss for the third quarter of fiscal 2010 was $(1.0) million, or $(0.01) per share, compared with $(0.1) million, or $(0.00) per share, for the third quarter of fiscal 2009.

Non-GAAP Financial Information

The non-GAAP results for all periods presented differ from results measured under GAAP as they exclude stock-based compensation expense, expense associated with the management liquidation pool established in connection with the Aristos Logic Corporation transaction, amortization of acquisition-related intangible assets, restructuring charges (credits), gain on extinguishment of debt, tax differences due to GAAP versus non-GAAP measurements and certain items related to discontinued operations. A complete reconciliation between GAAP and non-GAAP information referred to in this release is provided in the attached tables at the end of this press release in the section "Use of Non-GAAP Financial Measures."

About Adaptec

Adaptec, Inc. (NASDAQ:ADPT) provides innovative data center I/O solutions that protect, accelerate, optimize, and condition data in today's most demanding data center environments. Adaptec products are used in IT environments ranging from traditional enterprise environments to fast growing, on-demand cloud computing data centers. The company's products enable data center managers, channel partners and OEMs to deploy best-in-class storage solutions to meet their customers' evolving IT and business requirements. Around the world, leading corporations, government organizations, and medium and small businesses trust Adaptec technology.