Adaptec Reports First Quarter Fiscal 2008 Results

Adaptec, Inc. (NASDAQ: ADPT), a global leader in storage solutions, today reported its financial results for the first quarter of fiscal 2008, which ended on June 30, 2007, along with a restructuring plan to better align the company's costs with anticipated revenue levels.

Net revenue for the company's first quarter of fiscal 2008 was $42.4 million, compared with $69.1 million for the first quarter of fiscal 2007.

Loss from continuing operations, computed on a generally accepted accounting principles (GAAP) basis, for the first quarter of fiscal 2008 was ($3.6) million or ($0.03) per share, compared with a loss of ($24.8) million or ($0.21) per share for the first quarter of fiscal 2007. GAAP net loss for the first quarter of fiscal 2008 was ($3.6) million or ($0.03) per share, compared with a net loss of ($23.3) million or ($0.20) per share for the first quarter of fiscal 2007. Included in both the loss from continuing operations and the net loss for the first quarter of fiscal 2008 was a gain of $6.7 million on the sale of certain properties in Milpitas, California.

Non-GAAP loss from continuing operations for the first quarter of fiscal 2008 was ($5.9) million or ($0.05) per share, compared with a non-GAAP loss from continuing operations of ($3.3) million or ($0.03) per share for the first quarter of fiscal 2007. The non-GAAP results for the first quarter of fiscal 2008, as defined below in the section "Use of Non-GAAP Financial Measures," differ from results measured under GAAP as they exclude stock-based compensation expense, amortization of intangible assets, restructuring costs, other charges or gains (including the gain of sale of properties in the first quarter of fiscal 2008), a management incentive program related to an acquired business, and tax differences due to GAAP versus non-GAAP measurements. 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.

To better align the company's cost structure with its anticipated revenue base, Adaptec will implement a restructuring plan that will reduce headcount by approximately 20 percent. The reductions will be widespread throughout the company, but will be heavily centered on the DPS engineering and related functional organizations. The savings from the restructuring plan should start to benefit operating results in the third quarter of fiscal 2008, with a full impact expected by the fourth quarter of fiscal 2008. The company expects to incur a restructuring charge in the range of $3.0 million to $5.0 million.

While these actions will primarily affect staff levels focused on the company's future server OEM business, the company expects to continue to support its existing OEM customers with their current qualified platforms. Adaptec's channel-based RAID controller and storage systems businesses will not be impacted.

"Two years ago we began a process of improving our financial performance through divestitures, narrowing our focus to two business units, right-sizing our businesses, rationalizing our worldwide locations, and outsourcing. These actions have already resulted in a 40 percent overall reduction of our operating expenses," explained S. "Sundi" Sundaresh, president and CEO of Adaptec. "As our revenues have continued to decline, reflecting largely the challenges in our OEM business and the decline of our revenue based on parallel SCSI products, we have taken the proactive step of further restructuring our organization to better align costs with anticipated revenue levels. This quarter we will be reducing our headcount by an additional 20 percent."

Sundaresh added, "Previously, we had deliberately maintained an appropriate level of resources devoted to our OEM business so we could aggressively compete for a large OEM design opportunity that would have generated significant revenue in about 18 months. That design was not awarded to us due to a number of factors, especially the lack of either our own internally developed ASICs or a tight partnership with a major ASIC developer. Now that this opportunity is behind us, we must act decisively to ensure our operations are better aligned to our anticipated revenues. While these are difficult measures, it is imperative that we stay focused on achieving an adequate return on our investments and delivering shareholder value."

Conference Call

The Adaptec first quarter fiscal 2008 earnings conference call is scheduled for 1:45 p.m. Pacific Time on August 7, 2007. Individuals may participate via webcast by visiting www.adaptec.com/investor 15 minutes prior to the call. A telephone replay of the teleconference will be available through August 21, 2007 by calling (888) 203-1112 in the U.S. or (719) 457-0820 internationally and referencing reservation number 4766207.

About Adaptec

Adaptec, Inc. (NASDAQ: ADPT) provides trusted storage solutions that reliably move, manage, and protect critical data and digital content. Adaptec's software and hardware-based solutions are delivered through leading Original Equipment Manufacturers (OEMs) and channel partners to provide storage connectivity, data protection, and networked storage to enterprises, government organizations, medium and small businesses worldwide. More information is available at www.adaptec.com .