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Adept Technology Inc. Reports Operating Results (10-Q)

February 10, 2009 | About:

Adept Technology Inc. (ADEP) filed Quarterly Report for the period ended 2008-12-27.

Adept Technology Inc. designs manufactures and markets robotic systems motion control and machine vision technology for global markets including automotive consumer electronics consumer goods disk drive food industrial tooling medical devices and pharmaceutical. Adept robots controllers and software are used for small parts assembly material handling and packaging. Adept intelligent automation product lines include industrial robots configurable linear modules machine controllers for robot mechanisms and other flexible automation equipment machine vision and systems and applications software. Adept Technology Inc. has a market cap of $24.39 million; its shares were traded at around $2.2 with a P/E ratio of 10.1 and P/S ratio of 0.4.

Highlight of Business Operations:

In response to economic uncertainty and the more cautious outlook of our customers, beginning in the second quarter of fiscal 2009 we implemented a comprehensive restructuring program as part of an overall initiative to focus on generating cash flow while maintaining investment in our target markets. Restructuring actions include the phase out of discontinued remanufactured robots in our services business and an associated write off of inventory; a reduction in headcount of approximately 9%; the consolidation of facilities and certain operating functions; and additional outsourcing of non-core activities. Additionally, beginning in the third quarter of fiscal 2009 we implemented a 10% pay reduction for all employees and a 20% pay reduction for our president and CEO, John Dulchinos. We expect that the benefit of these actions will be fully recognized in the third quarter of fiscal 2009 and we also expect that they will result in a $700,000 to $1.0 million reduction in our quarterly operating expense run rate going forward.

Robotics segment revenues, which result from the sale of our intelligent robotics systems, vision-guidance technology and/or third party robot mechanisms, were $8.5 million for the three months ended December 27, 2008, down 25% from $11.4 million for the three months ended December 29, 2007. For the six months ended December 27, 2008, robotics revenues were $19.4 million, down 8% from $21.1 million for the six months ended December 29, 2007. Lower robotics revenues were primarily the result of weaker demand from the automotive/industrial market in Germany, which has been historically stable for Adept, and from the disk drive market in Asia and elsewhere. Demand from the worldwide solar market remained weak in the second quarter while demand from Adept’s customers in the packaging market in France and the U.S. remained stable. Seasonally, revenues during the first half of our fiscal year are lower than the second half, due in part to holiday shutdowns in Europe.

Services and Support revenues, which result from the sale of robotics services and support as well as remanufactured robot systems, were $2.5 million for the three months ended December 27, 2008, down 18% from $3.0 million for the three months ended December 29, 2007. Services and support revenues were $5.9 million for the six months ended December 27, 2008, a decrease of 15% from $7.0 million for the six months ended December 29, 2007. The decrease in both periods was primarily due to lower demand for remanufactured robotics from the automotive market in Germany and from disk drive and consumer electronics manufacturers in the U.S. Seasonally, revenues during the first half of our fiscal year are lower than the second half, due in part to holiday shutdowns in Europe.

Total international sales were $6.8 million in the three months ended December 27, 2008, down 34% compared to $10.3 million in the three months ended December 29, 2007. For the six months ended December 27, 2008, total international sales were $17.0 million, down 9% from $18.6 million in the six months ended December 29, 2007. The decrease in both periods was driven by lower sales in the second quarter of fiscal 2009, both in Europe, where we experienced lower demand from the automotive/industrial markets in Germany, and in Asia and elsewhere, where demand from the disk drive market further decreased. Demand from the European solar market remained weak in the second quarter while demand from the packaging market in France remained stable. Higher Asian revenue in the six months ended December 27, 2008 compared with the previous year was the result of a large order for new robotic systems for the disk drive industry which we received in the first quarter of fiscal 2009. Based on current economic trends, we do not expect to receive similar orders from the disk drive industry for the foreseeable future.

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