UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 10, 2007
Adaptec, Inc.
(Exact name of registrant as specified in its charter)
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691 S. Milpitas Blvd.
Milpitas, California 95035
(408) 945-8600
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On May 10, 2007, Adaptec, Inc. announced its financial results for the quarter ended March 31, 2007. A copy
of Adaptec's press release announcing these financial results is attached as Exhibit 99.1 to this Current Report on Form 8-K. To supplement its condensed consolidated financial statements in accordance with generally accepted
accounting principles (GAAP), the Company's earnings release contains non-GAAP financial measures that exclude certain expenses,
gains and losses. The Company believes that the use of non-GAAP financial measures provides useful information to investors to gain
an overall understanding of its current financial performance and its prospects for the future. Specifically, the Company believes the
non-GAAP results provide useful information to both management and investors by excluding certain expenses, gains and losses that
the Company believes are not indicative of its core operating results. In addition, non-GAAP financial measures are used by
management for budgeting and forecasting as well as subsequently measuring the Company's performance, and the Company
believes that it is providing investors with financial measures that most closely align to its internal measurement processes. The
Company also believes, based on feedback provided to the Company during its earnings calls' Q&A sessions and discussions with
the investment community, that the non-GAAP financial measures it provides are necessary to allow the investment community to
construct their valuation models to better align its results and projections with its competitors and market sector, as there is significant
variability and unpredictability across companies with respect to certain expenses, gains and losses. The non-GAAP financial information is presented using consistent methodology from quarter-to-quarter and
year-to-year. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be
considered a substitute for or superior to GAAP results. The non-GAAP financial measures presented by the Company may be different
than the non-GAAP financial measures presented by other companies. In addition, these non-GAAP financial measures are not based
on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP financial measures have limitations
in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with
GAAP and that these measures should only be used to evaluate the Company's results of operations in conjunction with the
corresponding GAAP financial measures. The Company excludes the following expenses, gains and losses from its non-GAAP financial measures, when
applicable: Stock-based compensation expense, including deferred compensation expense: Stock-based
compensation expense consists of expenses recorded under SFAS 123(R), "Share-Based Payment," in connection with
stock awards such as stock options, restricted stock awards and restricted stock units granted under the Company's equity incentive
plans and shares issued pursuant to the Company's employee stock purchase plan. Deferred compensation expense consists of
expenses related to stock options assumed by the Company in connection with acquisitions that it completed prior to its adoption of
SFAS 123(R) in the first quarter of fiscal 2007. The Company excludes stock-based compensation expense, including deferred
compensation expense, from non-GAAP financial measures because it is a non-cash measurement that does not reflect the Company's
ongoing business and because the Company believes that investors want to understand the impact on the Company of the adoption of
SFAS 123(R); the Company believes that the provision of non-GAAP information that excludes stock-based compensation improves
the ability of investors to compare its period-over-period operating results, as there is significant variability and unpredictability across
companies with respect to this expense. Management incentive program: The Company excludes expenses associated with the
management incentive program, which were limited cash payments made to selected members of management of an acquired
company, as these payments were instituted as a component of the acquisition process and do not reflect the Company's ongoing
business. Amortization of acquisition-related intangible assets: Amortization of acquisition-related
intangible assets primarily relate to core and existing technologies, patents, trade name and customer relationships that were acquired
from prior acquisitions. The Company excludes the amortization of acquisition-related intangible assets because it does not reflect the
Company's ongoing business and it does not have a direct correlation to the operation of the Company's business. In addition, in
accordance with GAAP, the Company generally recognizes expenses for internally-developed intangible assets as they are incurred,
notwithstanding the potential future benefit such assets may provide. Unlike internally-developed intangible assets, however, and also
in accordance with GAAP, the Company generally capitalizes the cost of acquired intangible assets and recognizes that cost as an
expense over the useful lives of the assets acquired (other than goodwill, which is not amortized, and acquired in-process technology,
which is expensed immediately, as required under GAAP). As a result of their GAAP treatment, there is an inherent lack of
comparability between the financial performance of internally-developed intangible assets and acquired intangible assets. Accordingly,
the Company believes it is useful to provide, as a supplement to its GAAP operating results, a non-GAAP financial measure that
excludes the amortization of acquired intangibles in order to enhance the period-over-period comparison of its operating results, as
there is significant variability and unpredictability across companies with respect to this expense. Restructuring and other charges, including impairment of goodwill: Restructuring charges
primarily relate to activities engaged in by the Company's management to simplify its infrastructure. Other charges primarily relate to
the impairment of acquisition-related intangible assets from prior acquisitions long-lived assets from the sale of the Company's
Singapore manufacturing assets, buildings and improvements, and inventory, and a write-down of a minority investment. Restructuring
and other charges, including impairment of goodwill, are excluded from non-GAAP financial measures because they are not considered
core operating activities and the occurrence of such costs is infrequent. Although the Company has engaged in various restructuring
activities over the past several years, each has been a discrete, extraordinary event based on a unique set of business objectives. The
Company does not engage in restructuring activities on a regular basis or in the ordinary course of business. As such, the Company
believes it is appropriate to exclude restructuring charges from its non-GAAP financial measures, as it enhances the ability of investors
to compare the Company's period-over-period operating results. In addition, the Company excludes other charges, including the
impairment of goodwill, from non-GAAP financial measures because they are a non-cash measurement that does not reflect the
Company's ongoing business. Loss on 3% convertible notes: The loss on the Company's 3% convertible notes relates to
repurchases of these notes in the open market. This is excluded from non-GAAP financial measures because the occurrence of such
costs are infrequent, which would affect the ability of investors to compare the Company's period-over-period operating results, and
because the Company does not believe that this activity is reflective of gains and losses customarily incurred in the management of its
cash resources. Income taxes: Incremental income taxes associated with certain non-GAAP items.
The information in this report shall not be treated as "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934, except as expressly stated by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
The exhibit listed below is furnished pursuant to Item 2.02 hereof and shall not be deemed "filed" under the Securities Exchange Act of 1934.
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Press release issued by Adaptec, Inc. on May 10, 2007 |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Adaptec, Inc.
By: /s/ Christopher G. O'Meara
Christopher G. O'Meara Vice President and Chief Financial Officer |
May 10, 2007
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EXHIBIT INDEX
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Description of Exhibit |
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Press release issued by Adaptec, Inc. on May 10, 2007. Also provided in PDF format as a courtesy. |
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* This exhibit is intended to be furnished and shall not be deemed "filed" for purposes of the Securities Exchange Act of 1934.
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