SOURCE: Adaptec

October 30, 2006 16:25 ET

Adaptec Reports Results for the Second Quarter of Fiscal 2007

Q2 Net Revenue From Continuing Operations: $73.6 Million

MILPITAS, CA -- (MARKET WIRE) -- October 30, 2006 -- Adaptec, Inc. (NASDAQ: ADPT), a global leader in storage solutions, today reported financial results for the second quarter of its fiscal year 2007, which ended on September 30, 2006.

Net revenue for the Company's continuing operations for the second quarter of fiscal 2007 was $73.6 million, compared with $92.6 million for the second quarter of fiscal 2006.

Income from continuing operations, computed on a generally accepted accounting principles (GAAP) basis, for the second quarter of fiscal 2007 was $48.8 million or $0.36 per share, compared with a loss of ($99.9) million or ($0.88) per share for the second quarter of fiscal 2006. Included in our GAAP results for the second quarter of fiscal 2007 is a one-time tax benefit of $49.1 million, which is the result of dispute settlements with United States and Singapore taxing authorities. The U.S. portion of these settlements brings to closure the 1997 litigation.

GAAP net income for the second quarter of fiscal 2007 was $51.1 million or $0.38 per share, compared with a net loss of ($105.8) million or ($0.94) per share for the second quarter of fiscal 2006.

Non-GAAP income from continuing operations for the second quarter of fiscal 2007 was $5.2 million or $0.04 per share, compared with a non-GAAP loss from continuing operations of ($4.4) million or ($0.04) per share for the second quarter of fiscal 2006.

"I am very pleased with our performance and especially how the Adaptec Operations and Sanmina-SCI teams worked together to alleviate our supply issues from the first quarter," said S. "Sundi" Sundaresh, president and CEO of Adaptec. "Among much good news this quarter, Adaptec launched three new Snap Server systems products that have already won several independent awards worldwide. Clearly, Adaptec is carrying positive momentum and we expect further progress as we push forward with our strategic and operational initiatives."

A complete reconciliation between GAAP and non-GAAP information referred to in this release is provided in the attached tables. The Snap Server systems business, which had previously been classified as a discontinued operation, has been re-classified as part of Adaptec's continuing operations and is reflected as such in these results. For purposes of comparison, results from prior periods also reflect this reclassification.

Conference Call

The Adaptec second quarter fiscal 2007 earnings conference call is scheduled for 1:45 p.m. Pacific Time on October 30, 2006. 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 November 13, 2006 by calling (888) 203-1112 in the U.S. or (719) 457-0820 internationally and referencing reservation number 2497696.

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, and consumers worldwide. More information is available at www.adaptec.com

Safe Harbor Statement

This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Forward-looking statements include statements regarding future events or the future performance of Adaptec. These forward-looking statements are based on current expectations, forecasts and assumptions and involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. These risks include: the ability for Sanmina-SCI to consistently meet delivery commitments; identifying and retaining key management; market demand for RAID products; difficulty in forecasting the volume and timing of customer orders; reduced demand in the server, network storage and desktop computer markets; our target markets' failure to accept, or delay in accepting, network storage and other advanced storage solutions, including our SAS, SATA and iSCSI lines of products; decline in consumer acceptance of our current products; the timing and volume of orders by OEM customers for storage products; our ability to control and manage costs associated with the delivery of new products; and the adverse effects of the intense competition we face in our business. For a more complete discussion of risks related to our business, reference is made to the section titled "Risk Factors" included in our Quarterly Report on Form 10-Q for the Fiscal Quarter ended June 30, 2006, on file with the Securities and Exchange Commission. Adaptec assumes no obligation to update any forward-looking information that is included in this release.

                              Adaptec, Inc.
         GAAP Condensed Consolidated Statements of Operations and
         Reconciliation of GAAP to Non-GAAP Operating Results (*)
                                (unaudited)


                                              Three-Month Period Ended
                                          --------------------------------
                                                 September 30, 2006
                                          --------------------------------
                                            GAAP     Adjustments  Non-GAAP
                                          ---------  -----------  --------
                                                (in thousands, except
                                                  per share amounts)

Net revenues                              $  73,553  $      -     $ 73,553
Cost of revenues                             47,010      (186)(a)   46,824
                                          ---------  --------     --------
Gross profit                                 26,543       186       26,729
                                          ---------  --------     --------
Operating expenses:
   Research and development                  13,560      (925)(a)   12,635
   Selling, marketing and administrative     15,693    (1,099)(a)   14,594
   Amortization of acquisition-related
    intangible assets                         1,470    (1,470)(b)        -
   Restructuring charges                      1,085    (1,085)(d)        -
   Goodwill impairment                            -         -            -
                                          ---------  --------     --------
      Total operating expenses               31,808    (4,579)      27,229
                                          ---------  --------     --------
Loss from continuing operations              (5,265)    4,765         (500)
Interest and other income                     5,825         -        5,825
Interest expense                               (883)        -         (883)
                                          ---------  --------     --------
Income (loss) from continuing operations
 before income taxes                           (323)    4,765        4,442
Provision for (benefit from) income taxes   (49,080)   48,297 (g)     (783)
                                          ---------  --------     --------
Income (loss) from continuing operations     48,757   (43,532)       5,225
                                          ---------  --------     --------
Discontinued operations:
   Income (loss) from discontinued
    operations, net of taxes                   (132)      (49)(i)     (181)
   Income (loss) from disposal of
    discontinued operations, net of taxes     2,440    (2,440)(i)        -
                                          ---------  --------     --------
Income (loss) from discontinued
 operations                                   2,308    (2,489)        (181)
                                          ---------  --------     --------
Net income (loss)                         $  51,065  $(46,021)    $  5,044
                                          =========  ========     ========

Income (loss) per common share:
   Basic
      Continuing operations               $    0.42               $   0.04
      Discontinued operations             $    0.02               $  (0.00)
      Net income (loss)                   $    0.44               $   0.04
   Diluted
      Continuing operations               $    0.36               $   0.04
      Discontinued operations             $    0.02               $  (0.00)
      Net income (loss)                   $    0.38               $   0.04

Shares used in computing income (loss)
 per share:
   Basic                                    116,325         -      116,325
   Diluted                                  136,735      (695)(j)  136,040


                                              Three-Month Period Ended
                                                 September 30, 2005
                                          --------------------------------
                                            GAAP     Adjustments  Non-GAAP
                                          ---------  ------------ --------
                                          (in thousands, except per share
                                                      amounts)

Net revenues                              $  92,588  $      -     $ 92,588
Cost of revenues                             62,459       (15) (a)  62,444
                                          ---------  --------     --------
Gross profit                                 30,129        15       30,144
                                          ---------  --------     --------
Operating expenses:
   Research and development                  17,856       (32) (a)  17,824
   Selling, marketing and administrative     19,239    (1,910) (a)  17,329
   Amortization of acquisition-related
    intangible assets                         2,800    (2,800) (c)       -
   Restructuring charges                        478      (478) (d)       -
   Goodwill impairment                       90,602   (90,602) (e)       -
                                          ---------  --------     --------
      Total operating expenses              130,975   (95,822)      35,153
                                          ---------  --------     --------
Loss from continuing operations            (100,846)   95,837       (5,009)
Interest and other income                     4,523        15  (f)   4,538
Interest expense                               (867)       (1)        (868)
                                          ---------  --------     --------
Income (loss) from continuing operations
 before income taxes                        (97,190)   95,851       (1,339)
Provision for (benefit from) income taxes     2,672       367  (h)   3,039
                                          ---------  --------     --------
Income (loss) from continuing operations    (99,862)   95,484       (4,378)
                                          ---------  --------     --------
Discontinued operations:
   Income (loss) from discontinued
    operations, net of taxes                  1,032     1,808  (i)   2,840
   Income (loss) from disposal of
    discontinued operations, net of taxes    (6,976)    6,976  (i)       -
                                          ---------  --------     --------
Income (loss) from discontinued
 operations                                  (5,944)    8,784        2,840
                                          ---------  --------     --------
Net income (loss)                         $(105,806) $104,268     $ (1,538)
                                          =========  ========     ========

Income (loss) per common share:
   Basic
      Continuing operations               $   (0.88)              $  (0.04)
      Discontinued operations             $   (0.05)              $   0.03
      Net income (loss)                   $   (0.94)              $  (0.01)
   Diluted
      Continuing operations               $   (0.88)              $  (0.04)
      Discontinued operations             $   (0.05)              $   0.03
      Net income (loss)                   $   (0.94)              $  (0.01)

Shares used in computing income (loss)
 per share:
   Basic                                    112,965         -      112,965
   Diluted                                  112,965         -      112,965


The amounts for all periods presented reflect the reclassification of our
Snap Server systems business from discontinued operations to continuing
operations.





                              Adaptec, Inc.
         GAAP Condensed Consolidated Statements of Operations and
         Reconciliation of GAAP to Non-GAAP Operating Results (*)
                                (unaudited)


                                               Six-Month Period Ended
                                          --------------------------------
                                                 September 30, 2006
                                          --------------------------------
                                            GAAP     Adjustments  Non-GAAP
                                          ---------  -----------  --------
                                                (in thousands, except
                                                  per share amounts)

Net revenues                              $ 142,624  $      -     $142,624
Cost of revenues                             93,811      (374)(a)   93,437
                                          ---------  --------     --------
Gross profit                                 48,813       374       49,187
                                          ---------  --------     --------
Operating expenses:
   Research and development                  30,854    (2,560)(a)   28,294
   Selling, marketing and administrative     31,087    (2,431)(a)   28,656
   Amortization of acquisition-related
    intangible assets                         3,056    (3,056)(b)        -
   Restructuring charges                      4,096    (4,096)(d)        -
   Goodwill impairment                            -         -            -
   Other charges                             13,942   (13,942)(k)        -
                                          ---------  --------     --------
      Total operating expenses               83,035   (26,085)      56,950
                                          ---------  --------     --------
Loss from continuing operations             (34,222)   26,459       (7,763)
Interest and other income                    11,728         -       11,728
Interest expense                             (1,759)        -       (1,759)
                                          ---------  --------     --------
Income (loss) from continuing operations
 before income taxes                        (24,253)   26,459        2,206
Provision for (benefit from) income taxes   (48,186)   48,511 (g)      325
                                          ---------  --------     --------
Income (loss) from continuing operations     23,933   (22,052)       1,881
                                          ---------  --------     --------
Discontinued operations:
   Income (loss) from discontinued
    operations, net of taxes                    132        18 (i)      150
   Income (loss) from disposal of
    discontinued operations, net of taxes     3,730    (3,730)(i)        -
                                          ---------  --------     --------
Income (loss) from discontinued
 operations                                   3,862    (3,712)         150
                                          ---------  --------     --------
Net income (loss)                         $  27,795  $(25,764)    $  2,031
                                          =========  ========     ========

Income (loss) per common share:
   Basic
      Continuing operations               $    0.21               $   0.02
      Discontinued operations             $    0.03               $   0.00
      Net income (loss)                   $    0.24               $   0.02
   Diluted
      Continuing operations               $    0.19               $   0.02
      Discontinued operations             $    0.03               $   0.00
      Net income (loss)                   $    0.22               $   0.02

Shares used in computing income (loss)
 per share:
   Basic                                    115,967         -      115,967
   Diluted                                  135,991   (19,224)(l)  116,767





                                               Six-Month Period Ended
                                                 September 30, 2005
                                          --------------------------------
                                            GAAP     Adjustments  Non-GAAP
                                          ---------  -----------  --------
                                                (in thousands, except
                                                  per share amounts)

Net revenues                              $ 176,401  $      -     $176,401
Cost of revenues                            122,184      (196)(a)  121,988
                                          ---------  --------     --------
Gross profit                                 54,217       196       54,413
                                          ---------  --------     --------
Operating expenses:
   Research and development                  36,236      (466)(a)   35,770
   Selling, marketing and administrative     37,700    (2,855)(a)   34,845
   Amortization of acquisition-related
    intangible assets                         5,856    (5,856)(c)        -
   Restructuring charges                        518      (518)(d)        -
   Goodwill impairment                       90,602   (90,602)(e)        -
   Other charges                                  -         -            -
                                          ---------  --------     --------
      Total operating expenses              170,912  (100,297)      70,615
                                          ---------  --------     --------
Loss from continuing operations            (116,695)  100,493      (16,202)
Interest and other income                     8,131       101 (f)    8,232
Interest expense                             (1,840)        -       (1,840)
                                          ---------  --------     --------
Income (loss) from continuing operations
 before income taxes                       (110,404)  100,594       (9,810)
Provision for (benefit from) income taxes     3,518     1,189 (h)    4,707
                                          ---------  --------     --------
Income (loss) from continuing operations   (113,922)   99,405      (14,517)
                                          ---------  --------     --------
Discontinued operations:
   Income (loss) from discontinued
    operations, net of taxes                (20,881)   19,575 (i)   (1,306)
   Income (loss) from disposal of
    discontinued operations, net of taxes    (6,976)    6,976 (i)        -
                                          ---------  --------     --------
Income (loss) from discontinued
 operations                                 (27,857)   26,551       (1,306)
                                          ---------  --------     --------
Net income (loss)                         $(141,779) $125,956     $(15,823)
                                          =========  ========     ========

Income (loss) per common share:
   Basic
      Continuing operations               $   (1.01)              $  (0.13)
      Discontinued operations             $   (0.25)              $  (0.01)
      Net income (loss)                   $   (1.26)              $  (0.14)
   Diluted
      Continuing operations               $   (1.01)              $  (0.13)
      Discontinued operations             $   (0.25)              $  (0.01)
      Net income (loss)                   $   (1.26)              $  (0.14)

Shares used in computing income (loss)
 per share:
   Basic                                    112,705         -      112,705
   Diluted                                  112,705         -      112,705


The amounts for all periods presented reflect the reclassification of our
Snap Server systems business from discontinued operations to continuing
operations.





(*) To supplement our consolidated financial statements presented in
    accordance with generally accepted accounting principles (GAAP),
    we use non-GAAP measures of operating results, net income/(loss)
    and earnings per share, which are adjusted from results based on
    GAAP to exclude certain expenses, gains and losses.  These non-GAAP
    measures are provided to enhance the user’s overall understanding of
    our current financial performance and our prospects for the future.
    Specifically, we believe the non-GAAP results provide useful
    information to both management and investors by excluding certain
    expenses, gains and losses that we believe are not indicative of our
    core operating results.  In addition, since we have historically
    reported non-GAAP results to the investment community, we believe the
    inclusion of non-GAAP numbers provides consistency in our financial
    reporting. Further, these non-GAAP results are one of the primary
    indicators management uses for assessing our performance, allocating
    resources and planning and forecasting future periods. The non-GAAP
    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.

(a) Share-based compensation expense in accordance with FAS 123 (R),
    management incentive program associated with the Snap Appliance
    acquisition (acquired in July 2004) and deferred compensation expense
    related to assumed stock options associated with the Snap Appliance
    acquisition. These assumed options were negotiated as part of the
    acquisition and represent compensation over and above the amounts that
    we provided to these acquired employees. Amounts are summarized below:

                    Three-month Three-month Six-month Six-month Three-month
                       ended       ended      ended     ended      ended
                     September   September  September September    June
                     30, 2006    30, 2005   30, 2006  30, 2005   30, 2006
(in millions)

Stock-based
 compensation expense    $  2.0     $  ---    $  4.6    $  ---     $  2.6
Management
 incentive program          0.2        1.3       0.8       2.5        0.6
Deferred
 compensation expense       ---        0.6       ---       1.0        ---
    Total                $  2.2     $  1.9    $  5.4    $  3.5     $  3.2

(b) Amortization of acquisition-related intangible assets, primarily core
    and existing technologies, patents, tradename and customer
    relationships intangible assets, related to the acquisitions of Snap
    Appliance, the IBM i/p Series RAID business (acquired in June 2004),
    Elipsan (acquired in February 2004), ICP vortex (acquired in June 2003)
    and Eurologic (acquired in April 2003).

(c) Amortization of acquisition-related intangible assets, primarily core
    and existing technologies, patents, tradename and customer
    relationships intangible assets, related to the acquisitions of Snap
    Appliance, Elipsan, ICP vortex, Eurologic and Platys Communications
   (acquired in August 2001).

(d) Restructuring charges primarily related to (i) activities under the
    first and second quarters of fiscal 2007 restructuring plans to
    simplify our infrastructure and (ii) adjustments made to previous
    restructuring plans for all periods presented.

(e) Impairment of goodwill.

(f) Loss on repurchase of 3% convertible notes.

(g) Incremental income taxes associated with certain non-GAAP adjustments
    and a tax benefit from certain discrete tax events during the second
    quarter of fiscal 2007 related to the method and amount of settled tax
    disputes.

(h) Incremental income taxes associated with certain non-GAAP adjustments.

(i) Income (loss) from disposal of the IBM i/p Series RAID business,
    net of taxes, impairment of the IBM i/p Series RAID long-lived assets,
    amortization of acquisition-related intangible assets related to the
    acquisitions of the IBM i/p Series RAID business, ICP vortex, Eurologic
    and Platys Communications, management incentive program associated with
    the Snap Appliance acquisition, deferred compensation expense related
    to assumed stock options associated with the Snap Appliance
    acquisition, and incremental income taxes associated with certain GAAP
    and non-GAAP adjustments. Amounts are summarized below:

                    Three-month Three-month Six-month Six-month Three-month
                       ended       ended      ended     ended      ended
                     September   September  September September    June
                     30, 2006    30, 2005   30, 2006  30, 2005   30, 2006
(in millions)

Impairment of the
 IBM i/p Series RAID
 Business               $  ---     $  ---     $  ---    $ 15.5      $  ---
Acquisition-related
 intangible assets         ---        1.3        ---       3.2         ---
Management incentive
 program                   ---        0.7        ---       1.1         ---
Deferred compensation
 expense                   ---        0.5        ---       0.4         ---
Loss (income) from
 disposal of IBM
 i/p Series
   RAID, net of taxes     (2.4)       7.0       (3.8)      7.0        (1.4)
Income taxes              (0.1)      (0.7)       0.0      (0.6)        0.1
    Total               $ (2.5)    $  8.8     $ (3.8)   $ 26.6      $ (1.3)


(j) Dilutive effect of 3% convertible notes.

(k) Impairment of acquisition-related intangible assets of $13.2 million,
    which included core and existing technology and tradename, related to
    the Snap Appliance acquisition and $0.7 million related to legal and
    consulting fees incurred in connection with the effort that had been
    undertaken to sell the Snap Server portion of the systems business.

(l) Dilutive effect of 3/4% convertible notes.

(m) Amortization of acquisition-related intangible assets, primarily core
    and existing technologies, patents and customer relationships
    intangible assets, related to the acquisitions of the IBM i/p Series
    RAID business, Elipsan, ICP vortex and Eurologic.




                              Adaptec, Inc.
                 Summary Balance Sheet and Cash Flow Data
                                (unaudited)

         Balance Sheet Data                         As of
                                     -------------------------------------
                                      September     March       September
                                       30, 2006    31, 2006     30, 2005
                                     ===========  ===========  ===========
                                                 (in thousands)

Cash, cash equivalents and
 marketable securities               $   555,472  $   556,552  $   488,976
Accounts receivable, net                  41,393       47,876       74,121
Inventories                               36,459       28,259       42,461
Other intangible assets                   13,108       32,524       49,141
Other assets                              76,923       72,188       96,879
Assets from discontinued operations            -            -        3,365
                                     -----------  -----------  -----------
     Total assets                    $   723,355  $   737,399  $   754,943
                                     ===========  ===========  ===========

Current liabilities                       85,605      138,605      143,576
Liabilities from discontinued
 operations                                    -            -           54
Convertible notes and other
 long-term obligations                   228,048      229,349      240,684
Stockholders' equity                     409,702      369,445      370,629
                                     -----------  -----------  -----------
     Total liabilities and
      stockholders' equity           $   723,355  $   737,399  $   754,943
                                     ===========  ===========  ===========


           Cash Flow Data                   Three-Month Period Ended
                                     -------------------------------------
                                     September        June      September
                                      30, 2006      30, 2006    30, 2005
                                     ===========  ===========  ===========
                                                 (in thousands)

Net income (loss)                    $    51,065  $   (23,270) $  (105,806)
Less: Income (loss) from
 discontinued operations             $     2,308        1,554  $    (5,944)
                                     -----------  -----------  -----------
Income (loss) from continuing
 operations                               48,757      (24,824)     (99,862)
Adjustments to reconcile income
 (loss) from continuing operations
 to net cash provided by (used
 for) operations:
     Non-cash P&L items:
       Goodwill impairment                     -            -       90,602
       Impairment of long-lived
        assets                                 -       13,203            -
       Non-cash effect of tax
        Settlement                       (45,955)           -            -
       Stock-based compensation            2,023        2,544           77
       Depreciation and amortization       4,286        5,013        6,576
       Other items                           237          444         (246)
     Changes in assets and
      liabilities                        (14,419)        (979)       4,672
                                     -----------  -----------  -----------
Net cash provided by (used for)
 operating activities of continuing
 operations                               (5,071)      (4,599)       1,819
Net cash provided by operating
 activities of discontinued
 operations                                1,010        1,554        9,871
                                     -----------  -----------  -----------
Net cash provided by (used for)
 operating activities                $    (4,061) $    (3,045) $    11,690
                                     ===========  ===========  ===========

Other significant cash flow
 activities:
     Proceeds from issuance of
      common stock                         2,704        1,567        2,433
     Repurchase of 3% convertible
      notes                                    -            -       (4,343)


The amounts for all periods presented reflect the reclassification of our
Snap Server systems business from discontinued operations to continuing
operations.





                              Adaptec, Inc.
         GAAP Condensed Consolidated Statements of Operations and
         Reconciliation of GAAP to Non-GAAP Operating Results (*)
                                (unaudited)


                                             Three-Month Period Ended
                                        ----------------------------------
                                                  June 30, 2006
                                        ----------------------------------
                                          GAAP     Adjustments   Non-GAAP
                                        =========  ===========   =========
                                          (in thousands, except per share
                                                     amounts)

Net revenues                            $  69,071  $       -     $  69,071
Cost of revenues                           46,801       (188)(a)    46,613
                                        ---------  ---------     ---------
Gross profit                               22,270        188        22,458
                                        ---------  ---------     ---------
Operating expenses:
     Research and development              17,294     (1,635)(a)    15,659
     Selling, marketing and
      administrative                       15,394     (1,332)(a)    14,062
     Amortization of
      acquisition-related
          intangible assets                 1,586     (1,586)(m)         -
     Restructuring charges                  3,011     (3,011)(d)         -
     Other charges                         13,942    (13,942)(k)         -
                                        ---------  ---------     ---------
         Total operating expenses          51,227    (21,506)       29,721
                                        ---------  ---------     ---------
Loss from continuing operations           (28,957)    21,694        (7,263)
Interest and other income                   5,903          -         5,903
Interest expense                             (876)         -          (876)
                                        ---------  ---------     ---------
Loss from continuing operations before
 income taxes                             (23,930)    21,694        (2,236)
Provision for income taxes                    894        214 (h)     1,108
                                        ---------  ---------     ---------
Loss from continuing operations           (24,824)    21,480        (3,344)
                                        ---------  ---------     ---------
Discontinued operations:
     Income from discontinued
          operations, net of taxes            264         67 (i)       331
     Income from disposal of
      discontinued
          operations, net of taxes          1,290     (1,290)(i)         -
                                        ---------  ---------     ---------
Income from discontinued operations         1,554     (1,223)          331
                                        ---------  ---------     ---------
Net loss                                $ (23,270) $  20,257     $  (3,013)
                                        =========  =========     =========

Income (loss) per common share:
    Basic
        Continuing operations           $   (0.21)               $   (0.03)
        Discontinued operations         $    0.01                $    0.00
        Net loss                        $   (0.20)               $   (0.03)
    Diluted
        Continuing operations           $   (0.21)               $   (0.03)
        Discontinued operations         $    0.01                $    0.00
        Net loss                        $   (0.20)               $   (0.03)

Shares used in computing income (loss)
 per share:
    Basic                                 115,609          -       115,609
    Diluted                               115,609          -       115,609


The amounts for all periods presented reflect the reclassification of our
Snap Server systems business from discontinued operations to continuing
operations.