Adaptec Announces Fourth Quarter and Year-End Earnings

Reports FY01 Fourth Quarter Profits of $6 Million; Revenue $149 Million;

EPS $0.06



Apr 26, 2001, 01:00 ET from Adaptec, Inc.

    MILPITAS, Calif., April 26 /PRNewswire/ -- Adaptec, Inc. (Nasdaq: ADPT),
 the global leader in data storage access, today announced the financial
 results for its fourth quarter and fiscal year 2001, which ended
 March 31, 2001.
     Pro forma operating results for the fourth fiscal quarter 2001 and
 comparative quarters were as follows:
 
     -- Net revenues of $149.0 million were down 20.0 percent sequentially from
        net revenues of $186.3 million in the third quarter of fiscal year
        2001, and down 30.1 percent from net revenues of $213.1 million in the
        fourth quarter of fiscal year 2000.
     -- Net income was $5.5 million, down from net income of $25.5 million in
        the third quarter of fiscal year 2001, and down from net income of
        $53.9 million in the fourth quarter of fiscal year 2000.
     -- Diluted earnings per share of $0.06 were down from diluted earnings per
        share of $0.26 in the third quarter of fiscal year 2001, and down from
        diluted earnings per share of $0.49 in the fourth quarter of fiscal
        2000.
 
     Pro forma operating results for the fiscal year 2001 were as follows:
 
     -- Net revenues of $704.1 million were down 13.2 percent from net revenues
        of $811.2 million in fiscal year 2000.
     -- Net income of $97.2 million was down 53.7 percent from net income of
        $210.0 million in fiscal year 2000.
     -- Diluted earnings per share of $0.96 were down 49.7 percent from diluted
        earnings per share of $1.91 in fiscal year 2000.
 
     "We took steps to restructure our operating expenses during the fourth
 quarter, consistent with the computer industry outlook.  The results of these
 actions will be realized in this new fiscal year," said Bob Stephens,
 president and CEO of Adaptec.  "Concurrently, we are continuing to invest in
 new product development that will fuel Adaptec's long-term, top-line growth,
 when the economic environment improves."
     Stephens added that on May 11, Adaptec will distribute shares of its
 software segment, Roxio, as a dividend to Adaptec stockholders of record on
 April 30.
 
     Business Update:
     During the fourth quarter, Adaptec was able to achieve some very positive
 milestones toward future business growth.
     Highlights for the quarter included customer wins with Epson Direct and
 Fujitsu, marking continued OEM penetration of our Ultra160 SCSI and SCSI RAID
 products respectively. New product launches included the DVpics video editing
 system, which is now the top-selling FireWire-based video editing brand at
 many retail stores.
     Adaptec also forged new relationships during the fourth quarter -- first
 with IBM to jointly test Ultra320 SCSI products, then with Seagate to drive
 Ultra160 SCSI technologies to more competitive price points.  The company also
 launched a new initiative to promote open-source driver development for
 Adaptec RAID and SCSI controllers.
     On the storage networking front, Adaptec made a great deal of progress in
 the fourth quarter.  As part of our restructuring, the company combined its
 storage solutions team and our direct attached storage group into a single
 business unit.  The new storage solutions group will focus on RAID and SCSI,
 but also develop external storage solutions that will bring these technologies
 to network storage applications.   In addition, the company's efforts to
 develop iSCSI technology and drive Fibre Channel into more mainstream markets,
 continued to progress.  Adaptec expects to ship its first iSCSI controller
 samples to OEMs during the first quarter of FY02.  And the industry's first
 2Gbit, 2-channel PCI-X Fibre Channel controller will begin shipping from
 Adaptec into the distribution channel later this month.
 
     Conference Call Replay:
 
     A telephone replay of Adaptec's Q4 conference call will be available until
 May 3, 2001 by calling 800-633-8284 and referencing reservation #17652858.  A
 webcast replay will also be available during this period via Adaptec's web
 site:  www.adaptec.com
 
     Safe Harbor Statement:
     This press release contains forward-looking statements regarding future
 events or the future performance of Adaptec including statements regarding
 market acceptance of and demand for the Company's products, creation of a
 separate company for the software group, the Company's anticipated financial
 performance, and future market conditions.  Actual events could, of course,
 differ materially as a result of many factors including the timing of product
 introductions by Adaptec and its competitors, the degree of market acceptance
 of Adaptec's products, the impact of component shortages on Adaptec's
 customers, changes in industry standards, changes in Adaptec's product mix,
 rapid or unexpected changes in customer requirements, purchasing decisions by
 key customers, competitive pricing pressures, overall conditions in the
 high-performance PC, server and software markets, and general economic
 conditions.  For a more complete discussion of these and other factors, please
 refer to the section entitled "Certain Factors Bearing Risk on Future
 Operating Results" in Part I, Item 2 of the company's Form 10-Q for the fiscal
 quarter ended December 31, 2000.
 
     About Adaptec:
     Adaptec Inc. provides broad-markets with highly-available storage access
 solutions that reliably move, manage and protect critical data and digital
 content.  Adaptec's storage solutions are found in high-performance networks,
 servers, workstations and desktops from the world's leading manufacturers, and
 are sold through distribution channels to ISPs, enterprises, medium and small
 businesses and consumers. Adaptec is an S&P 500 member. More information is
 available at www.adaptec.com.
 
 
                                 Adaptec, Inc.
          Condensed Consolidated Statements of Operations - Pro Forma*
                                (unaudited)
 
                                                    Three Month Period Ended
                                                    March 31,       March 31,
                                                       2001            2000
                                                        (in thousands, except
                                                         per share amounts)
     Net revenues                                    $148,987       $213,057
     Cost of revenues                                  67,814         75,089
     Gross profit                                      81,173        137,968
     Operating expenses:
      Research and development                         34,916         29,537
      Selling, marketing and administrative            46,154         38,248
       Total operating expenses                        81,070         67,785
     Income from operations                               103         70,183
     Interest and other income                         10,439          7,457
     Interest expense                                 (2,846)        (2,845)
     Income from operations before provision
      for income taxes                                  7,696         74,795
     Provision for income taxes                         2,155         20,943
     Net income                                        $5,541        $53,852
 
     Basic net income per common share                  $0.06          $0.52
     Diluted net income per common share                $0.06          $0.49
     Shares used in computing basic net income
      per share                                        98,830        103,775
     Shares used in computing diluted net income
      per share                                        99,058        114,521
 
     *On April 12, 2001, the Board of Directors of Adaptec, Inc. (the
 "Company") declared a special dividend whereby the Company will distribute the
 common stock of its wholly-owned subsidiary, Roxio, Inc. ("Roxio"), to the
 Company's stockholders of record.  The pro forma operating results shown above
 for the three month period ended March 31, 2001 include the operating results
 of Roxio, but exclude the general and administrative expenses incurred in
 connection with the spin-off of Roxio and the loss on the disposal of Roxio.
 The pro forma operating results also exclude the following:  adjustment to the
 patent settlement fee written off in fiscal 2000, amortization of deferred
 stock-based compensation, write-down to estimated net realizeable value of
 certain fixed assets transferred to assets held for sale, amortization of
 goodwill and other intangibles, restructuring charges, write-off of Chaparral
 Network Storage, Inc. common stock warrant, gain on the sale of property, and
 the related income tax effect associated with each of these items.
     Pro forma operating results for the three month period ended
 March 31, 2000 exclude the following:  accrued guaranteed royalty payments to
 Agilent Technologies, Inc. included in cost of revenues, amortization of
 goodwill and other intangibles, write-off of acquired in-process technology,
 gain on the receipt of a warrant to purchase Chaparral Network Storage, Inc.
 common stock and the related income tax effect associated with each of these
 items.
 
                                 Adaptec, Inc.
            Condensed Consolidated Statements of Operations - Actual
                 (Reflecting Roxio as Discontinued Operations)
                                (unaudited)
 
                                                    Three Month Period Ended
                                                     March 31,      March 31,
                                                       2001           2000
                                                        (in thousands, except
                                                          per share amounts)
     Net revenues                                    $110,649       $182,696
     Cost of revenues                                  59,776         74,834
     Patent settlement fee                            (3,626)             --
     Gross profit                                      54,499        107,862
     Operating expenses:
      Research and development                         30,355         25,157
      Selling, marketing and administrative            31,082         32,851
      Amortization of goodwill and other
       intangibles                                     13,580         15,225
      Restructuring charges                             9,904             --
       Total operating expenses                        84,921         73,233
     Income (loss) from operations                   (30,422)         34,629
     Interest and other income                         10,264          7,897
     Interest expense                                 (2,846)        (2,845)
     Income (loss) from continuing operations
      before provision (benefit) for income taxes    (23,004)         39,681
     Provision (benefit) for income taxes             (2,477)         12,592
     Net income (loss) from continuing operations    (20,527)         27,089
     Net income from discontinued operations            1,783          9,328
     Net loss on disposal of discontinued
      operations                                      (5,807)             --
     Net income (loss)                              $(24,551)        $36,417
 
     Basic net income (loss) per common share:
      Continuing operations                           $(0.21)          $0.26
      Discontinued operations                         $(0.04)          $0.09
     Diluted net income (loss) per common share:
      Continuing operations                           $(0.21)          $0.25
      Discontinued operations                         $(0.04)          $0.08
     Shares used in computing basic net income
      (loss) per share                                 98,830        103,775
     Shares used in computing diluted net income
      (loss) per share                                 98,830        110,072
 
 
                                   Adaptec, Inc.
            Condensed Consolidated Statements of Operations - Pro Forma*
                                    (unaudited)
 
                                               Twelve Month Period Ended
                                                March 31,      March 31,
                                                  2001           2000
                                                 (in thousands, except
                                                  per share amounts)
 
     Net revenues                               $704,146       $811,161
     Cost of revenues                            290,170        277,672
     Gross profit                                413,976        533,489
     Operating expenses:
      Research and development                   128,069        103,076
      Selling, marketing and administrative      173,181        159,354
       Total operating expenses                  301,250        262,430
     Income from operations                      112,726        271,059
     Interest and other income                    34,126         32,207
     Interest expense                           (11,852)       (11,577)
     Income from operations before
      provision for income taxes                 135,000        291,689
     Provision for income taxes                   37,801         81,673
     Net income                                  $97,199       $210,016
 
     Basic net income per common share             $0.98          $2.03
     Diluted net income per common share           $0.96          $1.91
     Shares used in computing basic
      net income per share                        99,403        103,427
     Shares used in computing diluted
      net income per share                       101,364        114,162
 
     *On April 12, 2001, the Board of Directors of Adaptec, Inc.
 (the "Company") declared a special dividend whereby the Company will
 distribute the common stock of its wholly-owned subsidiary, Roxio, Inc.
 ("Roxio"), to the Company's stockholders of record.  The pro forma operating
 results shown above for the twelve month period ended March 31, 2001 include
 the operating results of Roxio, but exclude the general and administrative
 expenses incurred in connection with the spin-off of Roxio and the loss on the
 disposal of Roxio.  The pro forma operating results also exclude the
 following:  accrued guaranteed royalty payments to Agilent Technologies, Inc.
 included in cost of revenues, adjustment to the patent settlement fee written
 off in fiscal 2000, amortization of deferred stock-based compensation,
 write-down to estimated net realizeable value of certain fixed assets
 transferred to assets held for sale, amortization of goodwill and other
 intangibles, restructuring and other charges, write-off of Chaparral Network
 Storage, Inc. common stock warrant, gain on the sale of property, gain on the
 sale of JNI Corporation common stock and the related income tax effect
 associated with each of these items.
     Pro forma operating results for the twelve month period ended
 March 31, 2000 exclude the following:  accrued guaranteed royalty payments to
 Agilent Technologies, Inc. included in cost of revenues, patent settlement
 fee, amortization of goodwill and other intangibles, write-off of acquired
 in-process technology, gain on the sale of land, gain on the receipt of
 warrants to purchase JNI Corporation and Chaparral Network Storage, Inc.
 common stock and the related income tax effect associated with each of these
 items.
 
 
                                   Adaptec, Inc.
              Condensed Consolidated Statements of Operations - Actual
                   (Reflecting Roxio as Discontinued Operations)
                                    (unaudited)
 
                                               Twelve Month Period Ended
                                                March 31,       March 31,
                                                  2001           2000
                                                (in thousands, except
                                                   per share amounts)
 
     Net revenues                               $582,047       $733,385
     Cost of revenues                            275,513        264,555
     Patent settlement fee                       (3,626)          9,325
     Gross profit                                310,160        459,505
     Operating expenses:
      Research and development                   110,582         88,948
      Selling, marketing and administrative      129,004        134,422
      Amortization of goodwill and
       other intangibles                          61,270         17,543
      Write-off of acquired in-process
       technology                                     --         16,739
      Restructuring and other charges             38,115             --
       Total operating expenses                  338,971        257,652
     Income (loss) from operations              (28,811)        201,853
     Interest and other income                   155,457         47,080
     Interest expense                           (11,852)       (11,577)
     Income from continuing operations
      before provision for income taxes          114,794        237,356
     Provision for income taxes                   72,237         73,075
     Net income from continuing operations        42,557        164,281
     Net income from discontinued operations       2,893          6,508
     Net loss on disposal of
      discontinued operations                    (5,807)             --
     Net income                                  $39,643       $170,789
 
     Basic net income (loss) per common share:
      Continuing operations                        $0.43          $1.59
      Discontinued operations                    $(0.03)          $0.06
     Diluted net income (loss) per common share:
      Continuing operations                        $0.42          $1.50
      Discontinued operations                    $(0.03)          $0.06
     Shares used in computing basic
      net income (loss) per share                 99,403        103,427
     Shares used in computing diluted
      net income (loss) per share                101,364        109,711
 
 
                                 Adaptec, Inc.
                     Condensed Consolidated Balance Sheets
                 (Reflecting Roxio as Discontinued Operations)
                                  (unaudited)
 
                                                     March 31,      March 31,
                                                       2001           2000
                                                          (in thousands)
     ASSETS
     Current assets
      Cash and cash equivalents                      $207,644       $180,519
      Marketable securities*                          443,685        482,172
      Accounts receivable, net                         41,805         75,730
      Inventories                                      72,781         67,558
      Other current assets                             93,966         72,409
       Total current assets                           859,881        878,388
     Property and equipment, net                      107,634        134,250
     Goodwill and other intangibles                   148,216        237,874
     Other long-term assets                            47,906         40,368
     Net assets of discontinued operations             44,153         51,317
                                                   $1,207,790     $1,342,197
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities
      Accounts payable                                $24,882        $31,749
      Accrued liabilities                             169,028        188,946
       Total current liabilities                      193,910        220,695
     4 3/4% Convertible Subordinated Notes            229,800        229,800
     Other long-term liability                          5,550         14,400
     Stockholders' equity
      Common stock                                         99            103
      Additional paid-in capital                       59,722         58,535
      Accumulated other comprehensive income            4,215         51,800
      Retained earnings                               714,494        766,864
       Total stockholders' equity                     778,530        877,302
                                                   $1,207,790     $1,342,197
 
     *As of March 31, 2000, the fair market value of the Company's investment
 in JNI Corporation ("JNI") common stock was $100.4 million.  The Company sold
 its remaining investment in JNI in the third quarter of fiscal 2001.
 
                     MAKE YOUR OPINION COUNT -  Click Here
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SOURCE Adaptec, Inc.
    MILPITAS, Calif., April 26 /PRNewswire/ -- Adaptec, Inc. (Nasdaq: ADPT),
 the global leader in data storage access, today announced the financial
 results for its fourth quarter and fiscal year 2001, which ended
 March 31, 2001.
     Pro forma operating results for the fourth fiscal quarter 2001 and
 comparative quarters were as follows:
 
     -- Net revenues of $149.0 million were down 20.0 percent sequentially from
        net revenues of $186.3 million in the third quarter of fiscal year
        2001, and down 30.1 percent from net revenues of $213.1 million in the
        fourth quarter of fiscal year 2000.
     -- Net income was $5.5 million, down from net income of $25.5 million in
        the third quarter of fiscal year 2001, and down from net income of
        $53.9 million in the fourth quarter of fiscal year 2000.
     -- Diluted earnings per share of $0.06 were down from diluted earnings per
        share of $0.26 in the third quarter of fiscal year 2001, and down from
        diluted earnings per share of $0.49 in the fourth quarter of fiscal
        2000.
 
     Pro forma operating results for the fiscal year 2001 were as follows:
 
     -- Net revenues of $704.1 million were down 13.2 percent from net revenues
        of $811.2 million in fiscal year 2000.
     -- Net income of $97.2 million was down 53.7 percent from net income of
        $210.0 million in fiscal year 2000.
     -- Diluted earnings per share of $0.96 were down 49.7 percent from diluted
        earnings per share of $1.91 in fiscal year 2000.
 
     "We took steps to restructure our operating expenses during the fourth
 quarter, consistent with the computer industry outlook.  The results of these
 actions will be realized in this new fiscal year," said Bob Stephens,
 president and CEO of Adaptec.  "Concurrently, we are continuing to invest in
 new product development that will fuel Adaptec's long-term, top-line growth,
 when the economic environment improves."
     Stephens added that on May 11, Adaptec will distribute shares of its
 software segment, Roxio, as a dividend to Adaptec stockholders of record on
 April 30.
 
     Business Update:
     During the fourth quarter, Adaptec was able to achieve some very positive
 milestones toward future business growth.
     Highlights for the quarter included customer wins with Epson Direct and
 Fujitsu, marking continued OEM penetration of our Ultra160 SCSI and SCSI RAID
 products respectively. New product launches included the DVpics video editing
 system, which is now the top-selling FireWire-based video editing brand at
 many retail stores.
     Adaptec also forged new relationships during the fourth quarter -- first
 with IBM to jointly test Ultra320 SCSI products, then with Seagate to drive
 Ultra160 SCSI technologies to more competitive price points.  The company also
 launched a new initiative to promote open-source driver development for
 Adaptec RAID and SCSI controllers.
     On the storage networking front, Adaptec made a great deal of progress in
 the fourth quarter.  As part of our restructuring, the company combined its
 storage solutions team and our direct attached storage group into a single
 business unit.  The new storage solutions group will focus on RAID and SCSI,
 but also develop external storage solutions that will bring these technologies
 to network storage applications.   In addition, the company's efforts to
 develop iSCSI technology and drive Fibre Channel into more mainstream markets,
 continued to progress.  Adaptec expects to ship its first iSCSI controller
 samples to OEMs during the first quarter of FY02.  And the industry's first
 2Gbit, 2-channel PCI-X Fibre Channel controller will begin shipping from
 Adaptec into the distribution channel later this month.
 
     Conference Call Replay:
 
     A telephone replay of Adaptec's Q4 conference call will be available until
 May 3, 2001 by calling 800-633-8284 and referencing reservation #17652858.  A
 webcast replay will also be available during this period via Adaptec's web
 site:  www.adaptec.com
 
     Safe Harbor Statement:
     This press release contains forward-looking statements regarding future
 events or the future performance of Adaptec including statements regarding
 market acceptance of and demand for the Company's products, creation of a
 separate company for the software group, the Company's anticipated financial
 performance, and future market conditions.  Actual events could, of course,
 differ materially as a result of many factors including the timing of product
 introductions by Adaptec and its competitors, the degree of market acceptance
 of Adaptec's products, the impact of component shortages on Adaptec's
 customers, changes in industry standards, changes in Adaptec's product mix,
 rapid or unexpected changes in customer requirements, purchasing decisions by
 key customers, competitive pricing pressures, overall conditions in the
 high-performance PC, server and software markets, and general economic
 conditions.  For a more complete discussion of these and other factors, please
 refer to the section entitled "Certain Factors Bearing Risk on Future
 Operating Results" in Part I, Item 2 of the company's Form 10-Q for the fiscal
 quarter ended December 31, 2000.
 
     About Adaptec:
     Adaptec Inc. provides broad-markets with highly-available storage access
 solutions that reliably move, manage and protect critical data and digital
 content.  Adaptec's storage solutions are found in high-performance networks,
 servers, workstations and desktops from the world's leading manufacturers, and
 are sold through distribution channels to ISPs, enterprises, medium and small
 businesses and consumers. Adaptec is an S&P 500 member. More information is
 available at www.adaptec.com.
 
 
                                 Adaptec, Inc.
          Condensed Consolidated Statements of Operations - Pro Forma*
                                (unaudited)
 
                                                    Three Month Period Ended
                                                    March 31,       March 31,
                                                       2001            2000
                                                        (in thousands, except
                                                         per share amounts)
     Net revenues                                    $148,987       $213,057
     Cost of revenues                                  67,814         75,089
     Gross profit                                      81,173        137,968
     Operating expenses:
      Research and development                         34,916         29,537
      Selling, marketing and administrative            46,154         38,248
       Total operating expenses                        81,070         67,785
     Income from operations                               103         70,183
     Interest and other income                         10,439          7,457
     Interest expense                                 (2,846)        (2,845)
     Income from operations before provision
      for income taxes                                  7,696         74,795
     Provision for income taxes                         2,155         20,943
     Net income                                        $5,541        $53,852
 
     Basic net income per common share                  $0.06          $0.52
     Diluted net income per common share                $0.06          $0.49
     Shares used in computing basic net income
      per share                                        98,830        103,775
     Shares used in computing diluted net income
      per share                                        99,058        114,521
 
     *On April 12, 2001, the Board of Directors of Adaptec, Inc. (the
 "Company") declared a special dividend whereby the Company will distribute the
 common stock of its wholly-owned subsidiary, Roxio, Inc. ("Roxio"), to the
 Company's stockholders of record.  The pro forma operating results shown above
 for the three month period ended March 31, 2001 include the operating results
 of Roxio, but exclude the general and administrative expenses incurred in
 connection with the spin-off of Roxio and the loss on the disposal of Roxio.
 The pro forma operating results also exclude the following:  adjustment to the
 patent settlement fee written off in fiscal 2000, amortization of deferred
 stock-based compensation, write-down to estimated net realizeable value of
 certain fixed assets transferred to assets held for sale, amortization of
 goodwill and other intangibles, restructuring charges, write-off of Chaparral
 Network Storage, Inc. common stock warrant, gain on the sale of property, and
 the related income tax effect associated with each of these items.
     Pro forma operating results for the three month period ended
 March 31, 2000 exclude the following:  accrued guaranteed royalty payments to
 Agilent Technologies, Inc. included in cost of revenues, amortization of
 goodwill and other intangibles, write-off of acquired in-process technology,
 gain on the receipt of a warrant to purchase Chaparral Network Storage, Inc.
 common stock and the related income tax effect associated with each of these
 items.
 
                                 Adaptec, Inc.
            Condensed Consolidated Statements of Operations - Actual
                 (Reflecting Roxio as Discontinued Operations)
                                (unaudited)
 
                                                    Three Month Period Ended
                                                     March 31,      March 31,
                                                       2001           2000
                                                        (in thousands, except
                                                          per share amounts)
     Net revenues                                    $110,649       $182,696
     Cost of revenues                                  59,776         74,834
     Patent settlement fee                            (3,626)             --
     Gross profit                                      54,499        107,862
     Operating expenses:
      Research and development                         30,355         25,157
      Selling, marketing and administrative            31,082         32,851
      Amortization of goodwill and other
       intangibles                                     13,580         15,225
      Restructuring charges                             9,904             --
       Total operating expenses                        84,921         73,233
     Income (loss) from operations                   (30,422)         34,629
     Interest and other income                         10,264          7,897
     Interest expense                                 (2,846)        (2,845)
     Income (loss) from continuing operations
      before provision (benefit) for income taxes    (23,004)         39,681
     Provision (benefit) for income taxes             (2,477)         12,592
     Net income (loss) from continuing operations    (20,527)         27,089
     Net income from discontinued operations            1,783          9,328
     Net loss on disposal of discontinued
      operations                                      (5,807)             --
     Net income (loss)                              $(24,551)        $36,417
 
     Basic net income (loss) per common share:
      Continuing operations                           $(0.21)          $0.26
      Discontinued operations                         $(0.04)          $0.09
     Diluted net income (loss) per common share:
      Continuing operations                           $(0.21)          $0.25
      Discontinued operations                         $(0.04)          $0.08
     Shares used in computing basic net income
      (loss) per share                                 98,830        103,775
     Shares used in computing diluted net income
      (loss) per share                                 98,830        110,072
 
 
                                   Adaptec, Inc.
            Condensed Consolidated Statements of Operations - Pro Forma*
                                    (unaudited)
 
                                               Twelve Month Period Ended
                                                March 31,      March 31,
                                                  2001           2000
                                                 (in thousands, except
                                                  per share amounts)
 
     Net revenues                               $704,146       $811,161
     Cost of revenues                            290,170        277,672
     Gross profit                                413,976        533,489
     Operating expenses:
      Research and development                   128,069        103,076
      Selling, marketing and administrative      173,181        159,354
       Total operating expenses                  301,250        262,430
     Income from operations                      112,726        271,059
     Interest and other income                    34,126         32,207
     Interest expense                           (11,852)       (11,577)
     Income from operations before
      provision for income taxes                 135,000        291,689
     Provision for income taxes                   37,801         81,673
     Net income                                  $97,199       $210,016
 
     Basic net income per common share             $0.98          $2.03
     Diluted net income per common share           $0.96          $1.91
     Shares used in computing basic
      net income per share                        99,403        103,427
     Shares used in computing diluted
      net income per share                       101,364        114,162
 
     *On April 12, 2001, the Board of Directors of Adaptec, Inc.
 (the "Company") declared a special dividend whereby the Company will
 distribute the common stock of its wholly-owned subsidiary, Roxio, Inc.
 ("Roxio"), to the Company's stockholders of record.  The pro forma operating
 results shown above for the twelve month period ended March 31, 2001 include
 the operating results of Roxio, but exclude the general and administrative
 expenses incurred in connection with the spin-off of Roxio and the loss on the
 disposal of Roxio.  The pro forma operating results also exclude the
 following:  accrued guaranteed royalty payments to Agilent Technologies, Inc.
 included in cost of revenues, adjustment to the patent settlement fee written
 off in fiscal 2000, amortization of deferred stock-based compensation,
 write-down to estimated net realizeable value of certain fixed assets
 transferred to assets held for sale, amortization of goodwill and other
 intangibles, restructuring and other charges, write-off of Chaparral Network
 Storage, Inc. common stock warrant, gain on the sale of property, gain on the
 sale of JNI Corporation common stock and the related income tax effect
 associated with each of these items.
     Pro forma operating results for the twelve month period ended
 March 31, 2000 exclude the following:  accrued guaranteed royalty payments to
 Agilent Technologies, Inc. included in cost of revenues, patent settlement
 fee, amortization of goodwill and other intangibles, write-off of acquired
 in-process technology, gain on the sale of land, gain on the receipt of
 warrants to purchase JNI Corporation and Chaparral Network Storage, Inc.
 common stock and the related income tax effect associated with each of these
 items.
 
 
                                   Adaptec, Inc.
              Condensed Consolidated Statements of Operations - Actual
                   (Reflecting Roxio as Discontinued Operations)
                                    (unaudited)
 
                                               Twelve Month Period Ended
                                                March 31,       March 31,
                                                  2001           2000
                                                (in thousands, except
                                                   per share amounts)
 
     Net revenues                               $582,047       $733,385
     Cost of revenues                            275,513        264,555
     Patent settlement fee                       (3,626)          9,325
     Gross profit                                310,160        459,505
     Operating expenses:
      Research and development                   110,582         88,948
      Selling, marketing and administrative      129,004        134,422
      Amortization of goodwill and
       other intangibles                          61,270         17,543
      Write-off of acquired in-process
       technology                                     --         16,739
      Restructuring and other charges             38,115             --
       Total operating expenses                  338,971        257,652
     Income (loss) from operations              (28,811)        201,853
     Interest and other income                   155,457         47,080
     Interest expense                           (11,852)       (11,577)
     Income from continuing operations
      before provision for income taxes          114,794        237,356
     Provision for income taxes                   72,237         73,075
     Net income from continuing operations        42,557        164,281
     Net income from discontinued operations       2,893          6,508
     Net loss on disposal of
      discontinued operations                    (5,807)             --
     Net income                                  $39,643       $170,789
 
     Basic net income (loss) per common share:
      Continuing operations                        $0.43          $1.59
      Discontinued operations                    $(0.03)          $0.06
     Diluted net income (loss) per common share:
      Continuing operations                        $0.42          $1.50
      Discontinued operations                    $(0.03)          $0.06
     Shares used in computing basic
      net income (loss) per share                 99,403        103,427
     Shares used in computing diluted
      net income (loss) per share                101,364        109,711
 
 
                                 Adaptec, Inc.
                     Condensed Consolidated Balance Sheets
                 (Reflecting Roxio as Discontinued Operations)
                                  (unaudited)
 
                                                     March 31,      March 31,
                                                       2001           2000
                                                          (in thousands)
     ASSETS
     Current assets
      Cash and cash equivalents                      $207,644       $180,519
      Marketable securities*                          443,685        482,172
      Accounts receivable, net                         41,805         75,730
      Inventories                                      72,781         67,558
      Other current assets                             93,966         72,409
       Total current assets                           859,881        878,388
     Property and equipment, net                      107,634        134,250
     Goodwill and other intangibles                   148,216        237,874
     Other long-term assets                            47,906         40,368
     Net assets of discontinued operations             44,153         51,317
                                                   $1,207,790     $1,342,197
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities
      Accounts payable                                $24,882        $31,749
      Accrued liabilities                             169,028        188,946
       Total current liabilities                      193,910        220,695
     4 3/4% Convertible Subordinated Notes            229,800        229,800
     Other long-term liability                          5,550         14,400
     Stockholders' equity
      Common stock                                         99            103
      Additional paid-in capital                       59,722         58,535
      Accumulated other comprehensive income            4,215         51,800
      Retained earnings                               714,494        766,864
       Total stockholders' equity                     778,530        877,302
                                                   $1,207,790     $1,342,197
 
     *As of March 31, 2000, the fair market value of the Company's investment
 in JNI Corporation ("JNI") common stock was $100.4 million.  The Company sold
 its remaining investment in JNI in the third quarter of fiscal 2001.
 
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 SOURCE  Adaptec, Inc.