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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) September 9, 1998
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ADAPTEC, INC.
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(Exact name of registrant as specified in charter)
DELAWARE 0-15071 94-2748530
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
691 S. MILPITAS DRIVE, MILPITAS, CALIFORNIA 95035
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 945-8600
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NOT APPLICABLE
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
On September 9, 1998, Adaptec, Inc. issued a press release describing
certain cost-cutting and corporate restructuring actions and, on September 17,
1998, it issued a press release describing the expected charges relating to
those actions. The information contained in said press releases is incorporated
herein by reference.
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EXHIBIT NUMBER DESCRIPTION
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99.1 PRESS RELEASE DATED SEPTEMBER 9, 1998.
99.2 PRESS RELEASE DATED SEPTEMBER 17, 1998
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SIGNATURES
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.
Date: September 24, 1998 ADAPTEC, INC.
/s/ Andrew J. Brown
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Andrew J. Brown,
Interim CFO
Vice-President, Corporate Controller
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EXHIBIT INDEX
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EXHIBIT NUMBER DESCRIPTION
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99.1 PRESS RELEASE DATED SEPTEMBER 9, 1998.
99.2 PRESS RELEASE DATED SEPTEMBER 17, 1998
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EXHIBIT 99.1
PRESS RELEASE DATED SEPTEMBER 9, 1998
Adaptec Continues Cost Cutting Actions
MILPITAS, Calif., - September 9, 1998 - Adaptec, Inc. today announced three
strategic alliances that the company says will "Leverage long-term technology
development and reduce operating expenses." Approximately 200 Adaptec jobs will
be affected by these actions, but about 30% of those are expected to move to the
newly created alliances.
Alliances will be formed with Jaycor Networks Inc. and Chaparral Technologies
Inc. Adaptec's Satellite Networking Group will be spun off to create an
independent company called BroadLogic, Inc.
"The actions taken today are designed to return us to increased profitability,"
said Larry Boucher, Interim CEO at Adaptec. "Focusing Adaptec's business is the
most important objective of the company right now, and these moves put us in
position to achieve that. We are committed to allocating resources to the
products and technologies that are expected to maximize shareholder value."
"What this means is a concentration on our traditional strengths, such as server
and workstation I/O, but also renewed energies directed at growth areas such as
CD-R software, RAID solutions and networking products," Boucher continued.
Employees principally affected by the layoffs are located in Adaptec's Fibre
Channel Products Group and External Storage Solutions Group. Since April,
Adaptec has reduced its workforce by approximately 25%.
Fibre Channel and External Storage Alliances
Adaptec has signed an LOI (letter of intent) to form a strategic alliance with
Jaycor Networks Inc., (JNI) a San Diego-based fibre channel company. Adaptec
will transfer certain technologies and assets to JNI in return for an equity
stake in JNI. Adaptec and JNI will enter into joint manufacturing and sales
relationships to support current customers and expand the market for fibre
channel products.
The company also announced signing an LOI to form a strategic alliance with
Chaparral Technologies Inc. (CTI), a private Longmont-based multimedia tape
storage solutions company. Adaptec will receive an equity stake in CTI in
exchange for the transfer of certain external storage technologies.
Financial terms of both agreements were not disclosed. The companies expect to
complete the transactions as early as October 1, 1998.
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Satellite Networking Spinoff BroadLogic Formed
In a separate news release issued today, Adaptec also announced it has completed
the BroadLogic Inc., satellite networking spinoff (see related Business Wire
release). BroadLogic will be based in Milpitas, and will receive certain Adaptec
products and technology for the emerging Satellite-PC communications
marketplace.
"Through the alliances with JNI and Chaparral Technologies, as well as the
BroadLogic spinoff, we are leveraging Adaptec's longer term emerging
technologies and businesses, such as fibre channel, external storage and
satellite networking, for success in the future," said Boucher.
"Shorter term, these actions will reduce operating expenses and increase
profitability, while maintaining a competitive position in technologies that may
have future revenue possibilities," said Boucher.
Adaptec Conference Call
The company will hold a conference call on September 17, 1998, at 2:00 pm
Pacific Daylight Time/5:00 pm Eastern Daylight Time, to discuss these actions
and the associated charges, as well as the company's business strategy. Please
call (800) 289-0579 and reference confirmation number 535227 to reserve a line.
Adaptec will issue a media advisory with further information on the call.
About Adaptec
Adaptec provides bandwidth management technologies for organizations building
the global information infrastructure. Its high performance I/O, connectivity,
and network products are incorporated into the systems and products of major
computer and peripheral manufacturers. Founded in 1981 and headquartered in
Milpitas, Calif., Adaptec (NASDAQ: ADPT) employs people worldwide in design,
manufacturing, sales, service and distribution. Adaptec's home page is
http://www.adaptec.com.
For further information, contact:
Adam Trunkey, Adaptec, Inc., (408) 957-6761
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EXHIBIT 99.2
PRESS RELEASE DATED SEPTEMBER 17, 1998
Adaptec CEO Reviews Cost Cuts, Outlines Future
Strategy; Announces One-time Charges
MILPITAS, Calif. - September 17, 1998 - In a shareholder/analyst teleconference
held this afternoon, Adaptec, Inc. Interim CEO Larry Boucher described recent
cost cutting and restructuring measures, reviewed the company's quarterly
performance to date, and outlined the company's future business strategy.
Cost cuts outlined
The company has eliminated approximately 850 jobs since April of this year.
Boucher noted that "On a run-rate basis, by Q3 of this year, we expect to have
reduced operating expenses approximately 20% since Q3 of our last fiscal year."
Interim CFO Andy Brown reiterated the company's goal to reduce operating
expenses to below 35% of revenue and stated that they were "striving to attain
operating profit levels in the mid-teens in the near future."
Mr. Boucher detailed the company's most recent cost-cutting moves, specifically
Adaptec's elimination of its satellite networking, external storage and Fibre
Channel businesses. "We built partnerships outside Adaptec to handle these
projects. This should enable us to leverage the work we've already accomplished
in those areas through minority investments. At the same time, by shifting the
work outside, we will reduce operating expenses and increase profitability."
Though Adaptec has achieved some success in all these arenas, the chief
executive said, "significant markets for these products do not exist as of
today, nor in my estimation, will they exist in even the near term." In Fibre
Channel specifically, Boucher explained his belief that the technology was
"still a long way into the future," due to its reliance on storage area
networks, NT 5.0, and clustering. In addition, he cited the extraordinary
challenges facing Fibre Channel due to interoperability issues and the
requirement for companies installing the technology to add infrastructure.
Quarterly performance
In a brief update of the current quarter, Andy Brown said that the company
believes earnings per share were expected to be "within current street
estimates, before one-time charges, tending toward the lower end of the range."
He said the company expected revenues to be "between $140 and $145 million."
The company estimated that one-time charges resulting from the reductions in
force and costs related to the aforementioned business strategy changes would be
in the range of $0.20 to $0.25 per share. Mr. Brown also noted the company had
reduced channel inventories. "We expect to exit Q2 with substantially reduced
distribution inventory levels."
Future strategy
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Focussing on future priorities, Boucher highlighted the company's RAID, SCSI,
and software initiatives. He began by describing RAID as a key to the company's
future. "We have a powerful product in the pipeline. We will invest whatever is
necessary to be a leader in this area."
On the future of SCSI, he was optimistic. "The next generation of internal disk
storage will be Ultra 160M SCSI and we are in a great position in that arena. I
believe no company is in a better position to exploit the expected growth [of
the server business] than Adaptec."
Adaptec is currently a market leader in CD recordable software, and the company
"has several products in the pipeline that should bring new, high-margin revenue
in the near future," according to Boucher.
Mr. Boucher concluded his prepared remarks by saying: "I returned [to Adaptec]
because I believe the potential of this company has just begun to be tapped.
...The Dataquest growth model for servers surpasses 15% and this is our turf.
The team at Adaptec is an extraordinary one. We have excellence and creativity
in our management. This is a group that has survived some real tests and they
are stronger for the experience. Adaptec has a great future in front of it."
Safe Harbor Language
This press release contains forward-looking statements regarding the company's
cost cutting and operating profits goals, expected one-time charges for the
current quarter, expected channel inventory reductions, revenue and earnings
expectations for the current fiscal quarter, and future market growth and
product revenue. Such statements are inherently subject to risks and
uncertainties, and actual events or results could differ materially from those
projected in such forward-looking statements due to a number of factors,
including the following: an inability by the company to bring costs into line
with rapidly fluctuating revenues; changes in demand in the markets served by
the company; fluctuations in economic conditions generally and in specific
regions; introductions of new products by competitors and changing technology
preferences among customers; and manufacturing problems that could be
encountered by the company.
About Adaptec
Adaptec provides bandwidth management technologies for organizations building
the global information infrastructure. Its high performance I/O, connectivity,
and network products are incorporated into the systems and products of major
computer and peripheral manufacturers. Founded in 1981 and headquartered in
Milpitas, Calif., Adaptec (NASDAQ: ADPT) employs people worldwide in design,
manufacturing, sales, service and distribution. Adaptec's home page is
http://www.adaptec.com.
Editorial contact:
Adam Trunkey (408) 957-6761 or [email protected]
