EX-99.1 2 a05-13479_1ex99d1.htm EX-99.1
EXHIBIT 99.1
 

 

For Immediate Release

 

American Power Conversion Reports Second Quarter 2005 Financial Results

Net Income Increases 56 Percent Year-over-Year

 

 

WEST KINGSTON, R.I. — July 25, 2005 — American Power Conversion Corporation (Nasdaq: APCC) (APC) today reported financial results for the second quarter 2005.

 

Revenue for the second quarter 2005 was $480.6 million, up 21 percent from $395.7 million in the second quarter 2004 and up 18 percent from $408.0 million in the first quarter 2005.    Net income for the second quarter 2005 was $41.9 million or $0.21 per diluted share, an increase of 56 percent from $26.8 million or $0.13 per diluted share in the second quarter 2004 and an increase of 16 percent from $36.0 million or $0.18 per diluted share in the first quarter 2005.

 

“As evidenced by our eighth consecutive quarter of double digit year-over-year revenue growth, and the highest year-over-year growth rate since the fourth quarter 1999, APC experienced very strong demand during the second quarter,” said Rodger B. Dowdell, Jr., APC’s chief executive officer.  “Demand was strong across all operating segments and can be attributed to what we believe is an attractive macro-economic environment for IT spending and the success of our continued strategic investments to establish APC as a global leader in the market for network-critical physical infrastructure (NCPI).   Against this strong top-line backdrop and normal pricing patterns, product mix issues and increased costs negatively impacted gross margins in the quarter.  With our strong revenue growth outpacing our continuing increased investment in product development and demand-generating activities, we are pleased with the overall progress we achieved in the second quarter.”

 

Segment and Geographic Review

 

For the second quarter 2005, APC experienced year-over-year growth in all segments and major geographic regions.  Large Systems segment revenue of $104.9 million, consisting primarily of 3-phase uninterruptible power supplies (UPSs), APC Global Services, precision cooling and ancillary products for data centers, facilities and communication applications, grew 35 percent year-over-year and 30 percent sequentially.  The Large Systems segment was 22 percent of the company’s second quarter revenue.  Customer demand for the company’s on-demand data center

 


 

architecture, InfraStruXure, drove the growth in the Large Systems segment performance.  Additionally, our engineered-to-order industrial systems were also a solid contributor to the segment’s year-over-year and sequential performance.

 

The Small Systems segment, which provides power protection, UPS and management products for the PC, server and networking markets, posted second quarter revenue growth of 18 percent year-over-year and 16 percent sequentially to $356.2 million.  As a percentage of APC quarterly product revenue, the Small Systems segment was 74 percent in the quarter.  Growth in the Small Systems segment benefited from healthy demand for APC’s desktop and networking UPS families, as well as from InfraStruXure related products.

 

Geographically, APC posted solid revenue growth across all major geographic regions.  The Americas region (North and Latin America) represented 54 percent of second quarter revenue and was up 22 percent year-over-year and 26 percent sequentially.  In Europe, the Middle East and Africa (EMEA), first quarter revenue represented 29 percent of total APC quarterly revenue.  The EMEA region increased 18 percent year-over-year and 20 percent sequentially.    Finally, second quarter revenue in Asia was 17 percent of total company revenue in the quarter.  Asia was up 26 percent year-over-year and down five percent sequentially.

 

Business Outlook

 

“It is clear that our investments in new products and sales and marketing programs are translating into revenue growth. Demand generation is healthy for both APC’s  InfraStruXure data center solutions as well as our core offerings,” continued Dowdell.  “To further capitalize on our progress thus far, we must continue to invest in these areas.  Our progress has been strong as we continue to establish a new way to design, build and operate data centers, thereby solving our customers NCPI needs.  We expect to continue to make the investments necessary to consolidate and expand our position in this exciting new market.”

 

Conference Call and Webcast

 

In conjunction with the second quarter 2005 earnings announcement, APC management is hosting a conference call to discuss the Company’s results as well as current expectations regarding future performance.  This conference call will be held today, July 25, at 5:00 PM Eastern time and will be available live and archived, in its entirety, to the public via the Company’s Web site at

 


 

investor.apcc.com or live by dialing 913-981-4910.  A replay will be accessible via telephone at approximately 8:00 PM on July 25 by dialing 719-457-0820 and entering the access code 4228083 and will continue through August 1 at midnight Eastern time.

 

Safe Harbor Provision

 

This press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  All statements in this press release that do not describe historical facts, such as statements concerning the Company’s future plans or prospects and those contained in the “Business Outlook” section of the press release, are forward-looking statements.  All forward-looking statements are not guarantees and are subject to risks and uncertainties that could cause actual results to differ from those projected.  The factors that could cause actual results to differ materially include the following: costs to maintain compliance with the provisions of the Sarbanes-Oxley Act of 2002 are greater than currently anticipated; the impact of increasing competition which could adversely affect the Company’s revenues and profitability; the impact of foreign currency exchange rate fluctuations; the impact on demand, component availability and pricing, and logistics, and the disruption of Asian manufacturing operations that result from labor disputes, war, acts of terrorism or political instability; ramp up, expansion and rationalization of global manufacturing capacity; the potential impact of complying with changing environmental regulations; impact on order management and fulfillment, financial reporting and supply chain management processes as a result of the Company’s reliance on a variety of computer systems, including Oracle 11i which is periodically upgraded; the discovery of a latent defect in any of the Company’s products; the Company’s ability to effectively align operating expenses and production capacity with the current demand environment; general worldwide economic conditions, and, in particular, the possibility that the PC and related markets decline; growth rates in the power protection industry and related industries, including but not limited to the PC, server, networking, telecommunications and enterprise hardware industries; competitive factors and pricing pressures; product mix changes and the potential negative impact on gross margins from such changes; changes in the seasonality of demand patterns; inventory risks due to shifts in market demand; component constraints, shortages, pricing and quality; risk of nonpayment of accounts receivable; the uncertainty of the litigation process including risk of an unexpected, unfavorable result of current or future litigation; and the risks described from time to time in the Company’s filings with the Securities and Exchange Commission. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made.  The Company disclaims any obligation to publicly update or revise any such statements to reflect any change in Company expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

 

About American Power Conversion

 

Founded in 1981, American Power Conversion (Nasdaq: APCC) is a leading provider of global, end-to-end infrastructure availability solutions.  APC’s comprehensive products and services for home and corporate environments improve the availability, manageability and performance of sensitive electronic, network, communication and industrial equipment of all sizes.  Headquartered

 


 

in West Kingston, Rhode Island, APC reported sales of $1.7 billion for the year ended December 31, 2004, and is a Fortune 1000, Nasdaq 100 and S&P 500 Company.  Additional information about APC and its global end-to-end solutions can be found at www.apc.com or by calling 800-877-4080.

 

#  #  #

 

For more information contact:

Investors:

Richard Thompson, chief financial officer, 401-789-5735, ext. 2325

Debbie Hancock, director, investor relations, 401-789-5735, ext. 2994, Debbie.hancock@apcc.com

 

Media:

Chet Lasell, APC director, public relations-North America, 800-788-2208 ext. 2693, chet.lasell@apcc.com

 


 

Supplemental Financial Information for American Power Conversion Corporation

 

Second Quarter 2005 Financial Summary

(In millions, except per share amounts)

 

 

 

Q2 2005

 

Q2 2004

 

YOY
Change

 

Q1 2005

 

QOQ
Change

 

Net Sales

 

$

480.6

 

$

395.7

 

21

%

$

408.0

 

18

%

Operating Income

 

$

49.9

 

$

33.4

 

49

%

$

43.6

 

14

%

Net Income

 

$

41.9

 

$

26.8

 

56

%

$

36.0

 

16

%

Diluted EPS

 

$

0.21

 

$

0.13

 

61

%

$

0.18

 

15

%

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter 2005 Segment Summary

 

 

 

 

 

 

 

 

 

 

 

Q2 2005

 

Q2 2004

 

YOY
Change

 

Q1 2005

 

QOQ
Change

 

Revenue (In millions)

 

 

 

 

 

 

 

 

 

 

 

Small Systems

 

$

356.2

 

$

301.2

 

18

%

$

307.5

 

16

%

% of revenue

 

74

%

77

%

 

 

76

%

 

 

Large Systems

 

$

104.9

 

$

77.9

 

35

%

$

80.7

 

30

%

% of revenue

 

22

%

20

%

 

 

20

%

 

 

Other

 

$

16.4

 

$

13.7

 

19

%

$

17.3

 

(6

)%

% of revenue

 

3

%

3

%

 

 

4

%

 

 

Shipping and Handling

 

$

3.1

 

$

2.9

 

 

 

$

2.5

 

 

 

Net Sales

 

$

480.6

 

$

395.7

 

21

%

$

408.0

 

18

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2 2005

 

Q2 2004

 

YOY Basis
Point Change

 

Q1 2005

 

QOQ Basis
Point Change

 

Gross Margin Percentage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small Systems

 

45.2

%

45.8

%

(60

)

47.7

%

(250

)

Large Systems

 

18.3

%

15.7

%

260

 

21.6

%

(330

)

Other

 

56.5

%

59.1

%

(260

)

59.2

%

(270

)

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter 2005 Geographic Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2 2005

 

Q2 2004

 

YOY
Change

 

Q1 2005

 

QOQ
Change

 

Revenue (In millions)

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

257.8

 

$

211.1

 

22

%

$

204.2

 

26

%

% of revenue

 

54

%

53

%

 

 

50

%

 

 

EMEA

 

$

140.2

 

$

119.2

 

18

%

$

116.7

 

20

%

% of revenue

 

29

%

30

%

 

 

29

%

 

 

Asia

 

$

82.6

 

$

65.4

 

26

%

$

87.1

 

(5

)%

% of revenue

 

17

%

17

%

 

 

21

%

 

 

Net Sales

 

$

480.6

 

$

395.7

 

21

%

$

408.0

 

18

%

 

Note:         YOY = year-over-year

QOQ = quarter-over-quarter

 


 

AMERICAN POWER CONVERSION CORPORATION & SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

IN THOUSANDS

(UNAUDITED)

 

 

 

JUNE 26, 2005

 

DECEMBER 31, 2004

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

CASH AND CASH EQUIVALENTS

 

$

122,119

 

$

72,721

 

SHORT TERM INVESTMENTS

 

638,950

 

642,853

 

ACCOUNTS RECEIVABLE, NET

 

358,209

 

327,547

 

INVENTORIES

 

470,556

 

465,927

 

PREPAID EXPENSES AND OTHER CURRENT ASSETS

 

47,765

 

39,294

 

DEFERRED INCOME TAXES

 

52,979

 

57,018

 

TOTAL CURRENT ASSETS

 

1,690,578

 

1,605,360

 

 

 

 

 

 

 

PROPERTY, PLANT & EQUIPMENT

 

431,677

 

420,102

 

LESS: ACCUMULATED DEPRECIATION AND AMORTIZATION

 

279,901

 

265,251

 

NET PROPERTY, PLANT & EQUIPMENT

 

151,776

 

154,851

 

 

 

 

 

 

 

LONG TERM INVESTMENTS

 

487

 

5,542

 

GOODWILL

 

7,179

 

7,179

 

OTHER INTANGIBLES, NET

 

33,700

 

39,627

 

DEFERRED INCOME TAXES

 

37,114

 

28,687

 

OTHER ASSETS

 

4,832

 

2,626

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

1,925,666

 

$

1,843,872

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

ACCOUNTS PAYABLE

 

135,500

 

$

132,213

 

ACCRUED EXPENSES

 

179,617

 

182,621

 

INCOME TAXES PAYABLE

 

14,779

 

11,330

 

TOTAL CURRENT LIABILITIES

 

329,896

 

326,164

 

 

 

 

 

 

 

DEFERRED TAX LIABILITY

 

15,408

 

15,449

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

345,304

 

341,613

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

COMMON STOCK

 

1,941

 

1,921

 

ADDITIONAL PAID-IN CAPITAL

 

99,770

 

60,081

 

RETAINED EARNINGS

 

1,476,990

 

1,437,691

 

ACCUMULATED OTHER COMPREHENSIVE INCOME

 

1,661

 

2,566

 

TOTAL SHAREHOLDERS’ EQUITY

 

1,580,362

 

1,502,259

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$

1,925,666

 

$

1,843,872

 

 

Note: The data reported above are based on an unaudited balance sheet, but include all adjustments that the Company considers necessary for a fair presentation of financial condition for this period.

 


 

AMERICAN POWER CONVERSION CORPORATION & SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

IN THOUSANDS EXCEPT PER SHARE AMOUNTS

(UNAUDITED)

 

 

 

FOR THE THREE MONTHS ENDED

 

 

 

JUNE 26, 2005

 

JUNE 27, 2004

 

 

 

 

 

 

 

NET SALES

 

$

480,606

 

$

395,663

 

 

 

 

 

 

 

COST OF GOODS SOLD

 

302,341

 

246,141

 

 

 

 

 

 

 

GROSS PROFIT

 

178,265

 

149,522

 

 

 

 

 

 

 

MARKETING, SELLING, GENERAL AND ADMINISTRATIVE

 

105,619

 

94,648

 

 

 

 

 

 

 

RESEARCH AND DEVELOPMENT

 

22,736

 

21,446

 

 

 

 

 

 

 

TOTAL OPERATING EXPENSES

 

128,355

 

116,094

 

 

 

 

 

 

 

OPERATING INCOME

 

49,910

 

33,428

 

 

 

 

 

 

 

OTHER INCOME, NET

 

5,189

 

2,256

 

 

 

 

 

 

 

EARNINGS BEFORE INCOME TAXES

 

55,099

 

35,684

 

 

 

 

 

 

 

INCOME TAXES

 

13,224

 

8,921

 

 

 

 

 

 

 

NET INCOME

 

$

41,875

 

$

26,763

 

 

 

 

 

 

 

DILUTED EARNINGS PER SHARE

 

$

0.21

 

$

0.13

 

 

 

 

 

 

 

DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING

 

199,742

 

204,992

 

 

Note: The data reported above are based on unaudited statements of income, but include all adjustments that the Company considers necessary for a fair presentation of results for these periods.

 


 

AMERICAN POWER CONVERSION CORPORATION & SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

IN THOUSANDS EXCEPT PER SHARE AMOUNTS

(UNAUDITED)

 

 

 

FOR THE SIX MONTHS ENDED

 

 

 

JUNE 26, 2005

 

JUNE 27, 2004

 

 

 

 

 

 

 

NET SALES

 

$

888,609

 

$

747,414

 

 

 

 

 

 

 

COST OF GOODS SOLD

 

545,893

 

448,800

 

 

 

 

 

 

 

GROSS PROFIT

 

342,716

 

298,614

 

 

 

 

 

 

 

MARKETING, SELLING, GENERAL AND ADMINISTRATIVE

 

206,198

 

180,832

 

 

 

 

 

 

 

RESEARCH AND DEVELOPMENT

 

42,975

 

39,849

 

 

 

 

 

 

 

TOTAL OPERATING EXPENSES

 

249,173

 

220,681

 

 

 

 

 

 

 

OPERATING INCOME

 

93,543

 

77,933

 

 

 

 

 

 

 

OTHER INCOME, NET

 

8,983

 

3,988

 

 

 

 

 

 

 

EARNINGS BEFORE INCOME TAXES

 

102,526

 

81,921

 

 

 

 

 

 

 

INCOME TAXES

 

24,606

 

20,480

 

 

 

 

 

 

 

NET INCOME

 

$

77,920

 

$

61,441

 

 

 

 

 

 

 

DILUTED EARNINGS PER SHARE

 

$

0.39

 

$

0.30

 

 

 

 

 

 

 

DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING

 

199,036

 

205,554

 

 

Note: The data reported above are based on unaudited statements of income, but include all adjustments that the Company considers necessary for a fair presentation of results for these periods.