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8-K - FORM 8-K - QLOGIC CORPd472711d8k.htm

Exhibit 99.1

Media Contact:

Steve Sturgeon

QLogic Corporation

858.472.5669

steve.sturgeon@qlogic.com

Investor Contact:

Jean Hu

QLogic Corporation

949.389.7579

jean.hu@qlogic.com

QLOGIC REPORTS THIRD QUARTER

RESULTS FOR FISCAL YEAR 2013

ALISO VIEJO, Calif., January 24, 2013QLogic Corp. (Nasdaq:QLGC), a leading supplier of high performance network infrastructure solutions, today announced its third quarter financial results for the period ended December 30, 2012.

Third Quarter Highlights

 

   

Net revenue: $119.4 million

 

   

GAAP income from continuing operations: $13.7 million or $0.15 per diluted share

 

   

Non-GAAP income from continuing operations: $18.3 million or $0.20 per diluted share

 

   

Operating margin: 12.1% GAAP, 18.1% non-GAAP

 

   

Cash and marketable securities: $495.2 million as of December 30, 2012

 

   

Cash generated from operations: $32.7 million

Financial Results

Net revenue for the third quarter of fiscal 2013 was $119.4 million compared to $142.8 million in the same quarter last year. Revenue from Host Products was $89.8 million during the third quarter of fiscal 2013 compared to $111.8 million in the same quarter last year. Revenue from Network Products was $20.1 million during the third quarter of fiscal 2013 compared to $18.5 million in the same quarter last year. Revenue from Silicon Products was $9.6 million during the third quarter of fiscal 2013 compared to $12.4 million in the same quarter last year.

Income from continuing operations on a GAAP basis for the third quarter of fiscal 2013 was $13.7 million, or $0.15 per diluted share, compared to $29.2 million, or $0.29 per diluted share, for the third quarter of fiscal 2012. Income from continuing operations on a non-GAAP basis for the third quarter of fiscal 2013 was $18.3 million, or $0.20 per diluted share, compared to $34.5 million, or $0.34 per diluted share, for the third quarter of fiscal 2012.


“During the December quarter, we reported financial results that exceeded our expectations. We delivered revenue of $119.4 million and non-GAAP income from continuing operations per diluted share of $0.20, both above our original guidance range,” said Simon Biddiscombe, president and chief executive officer, QLogic. “We are seeing stabilization in our business and I believe our investments in innovative technologies for new market opportunities position us well to deliver future growth.”

QLogic uses certain non-GAAP financial measures to supplement financial statements based on GAAP. A summary of these non-GAAP financial measures and a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure, as well as a description of the reasons that management believes that these non-GAAP financial measures provide useful information to investors and the additional purposes for which management uses these non-GAAP financial measures, is presented in the accompanying financial schedules.

QLogic’s third quarter fiscal 2013 conference call is scheduled for today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). Simon Biddiscombe, president and chief executive officer, and Jean Hu, senior vice president and chief financial officer, will host the conference call. The call is being webcast live via the Internet at http://ir.qlogic.com and www.earnings.com. Phone access to participate in the conference call is available at (877) 675-4750, pass code: 2146165.

The financial information that the company intends to discuss during the conference call will be available on the company’s website at http://ir.qlogic.com for twelve months following the conference call. A replay of the conference call will be available via webcast at http://ir.qlogic.com for twelve months.

Follow QLogic @ twitter.com/qlogic

QLogic – the Ultimate in Performance

QLogic (Nasdaq:QLGC) is a global leader and technology innovator in high performance networking, including adapters, switches and ASICs. Leading OEMs and channel partners worldwide rely on QLogic products for their data, storage and server networking solutions. For more information, visit www.qlogic.com.

Disclaimer – Forward-Looking Statements

This press release contains statements relating to future results of the company (including certain beliefs and projections regarding business and market trends, the stabilization of the business, and investments for new market opportunities to deliver future growth) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied in the forward-looking statements. The company advises readers that these potential risks and uncertainties include, but are not limited to: unfavorable economic conditions; potential fluctuations in operating results; gross margins that may vary over time; the stock price of the company may be volatile; the company’s dependence on the networking markets served; the ability to maintain and gain market or industry acceptance of the company’s products; the company’s dependence on a small number of customers; the company’s ability to compete effectively with other companies; the complexity of the company’s products; declining average unit sales prices of comparable products; the company’s dependence on sole source and limited source suppliers; the company’s dependence on relationships with certain third-party subcontractors and contract manufacturers; the ability to attract and retain key personnel; sales fluctuations arising from customer transitions to new products; seasonal fluctuations and uneven sales patterns in orders from customers; a reduction in sales efforts by current distributors; changes in the company’s tax provisions or adverse outcomes resulting from examination of its income tax returns; international economic, currency, regulatory, political and other risks; facilities of the company and its suppliers and customers are located in areas subject to natural disasters; the ability to protect proprietary rights; the ability to satisfactorily resolve any infringement claims; uncertain benefits from strategic business combinations, acquisitions and divestitures; declines in the market value of the company’s marketable securities; changes in and compliance with regulations; difficulties in transitioning to smaller geometry process technologies; the use of “open source” software in the company’s products; and security system risks, data protection breaches and cyber-attacks.

More detailed information on these and additional factors which could affect the company’s operating and financial results are described in the company’s Forms 10-K, 10-Q and other reports filed, or to be filed, with the Securities and Exchange Commission. The company urges all interested parties to read these reports to gain a better understanding of the business and other risks that the company faces. The forward-looking statements contained in this press release are made only as of the date hereof, and the company does not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

QLogic and the QLogic logo are registered trademarks of QLogic Corporation. Other trademarks and registered trademarks are the property of the companies with which they are associated.


QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited — in thousands, except per share amounts)

 

     Three Months Ended      Nine Months Ended  
     December 30,
2012
    January 1,
2012
     December 30,
2012
    January 1,
2012
 

Net revenues

   $ 119,386      $ 142,779       $ 367,624      $ 423,535   

Cost of revenues

     39,089        45,766         121,382        133,979   
  

 

 

   

 

 

    

 

 

   

 

 

 

Gross profit

     80,297        97,013         246,242        289,556   
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating expenses:

         

Engineering and development

     38,409        34,229         115,891        104,146   

Sales and marketing

     19,325        19,858         57,950        58,088   

General and administrative

     8,139        8,803         24,951        26,820   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total operating expenses

     65,873        62,890         198,792        189,054   
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating income

     14,424        34,123         47,450        100,502   

Interest and other income, net

     903        798         2,935        2,926   
  

 

 

   

 

 

    

 

 

   

 

 

 

Income from continuing operations before income taxes

     15,327        34,921         50,385        103,428   

Income taxes

     1,622        5,700         6,459        13,504   
  

 

 

   

 

 

    

 

 

   

 

 

 

Income from continuing operations

     13,705        29,221         43,926        89,924   

Income (loss) from discontinued operations, net of income taxes

     (464     804         (425     1,181   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income

   $ 13,241      $ 30,025       $ 43,501      $ 91,105   
  

 

 

   

 

 

    

 

 

   

 

 

 

Income from continuing operations per share:

         

Basic

   $ 0.15      $ 0.29       $ 0.46      $ 0.88   

Diluted

   $ 0.15      $ 0.29       $ 0.46      $ 0.87   

Income (loss) from discontinued operations per share:

         

Basic

   $ (0.01   $ 0.01       $      $ 0.01   

Diluted

   $ (0.01   $ 0.01       $      $ 0.01   

Net income per share:

         

Basic

   $ 0.14      $ 0.30       $ 0.46      $ 0.89   

Diluted

   $ 0.14      $ 0.30       $ 0.46      $ 0.88   

Number of shares used in per share calculations:

         

Basic

     92,386        100,135         94,518        102,696   

Diluted

     92,570        100,668         94,963        103,340   


QLOGIC CORPORATION

RECONCILIATION OF GAAP INCOME FROM CONTINUING OPERATIONS TO

NON-GAAP INCOME FROM CONTINUING OPERATIONS

(unaudited — in thousands, except per share amounts)

 

     Three Months Ended     Nine Months Ended  
     December 30,
2012
    January 1,
2012
    December 30,
2012
    January 1,
2012
 

GAAP income from continuing operations

   $ 13,705      $ 29,221      $ 43,926      $ 89,924   

Items excluded from GAAP income from continuing operations:

        

Stock-based compensation

     6,973        7,620        23,295        24,349   

Amortization of acquisition-related intangible assets

     243        242        730        730   

Income tax effect

     (2,576     (2,567     (7,444     (7,354
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-GAAP adjustments

     4,640        5,295        16,581        17,725   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP income from continuing operations

   $ 18,345      $ 34,516      $ 60,507      $ 107,649   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations per diluted share:

        

GAAP income from continuing operations

   $ 0.15      $ 0.29      $ 0.46      $ 0.87   

Adjustments

     0.05        0.05        0.18        0.17   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP income from continuing operations

   $ 0.20      $ 0.34      $ 0.64      $ 1.04   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Financial Measures

The non-GAAP financial measures contained herein are a supplement to the corresponding financial measures prepared in accordance with generally accepted accounting principles (GAAP). The non-GAAP financial measures presented exclude the items summarized in the above table. Management believes that adjustments for these items assist investors in making comparisons of period-to-period operating results and that these items are not indicative of the company’s on-going core operating performance.

The company has presented non-GAAP income from continuing operations and non-GAAP income from continuing operations per diluted share, on a basis consistent with its historical presentation, to assist investors in understanding the company’s core income from continuing operations and core income from continuing operations per diluted share on an on-going basis. These non-GAAP financial measures may also assist investors in making comparisons of the company’s core profitability with historical periods and comparisons of the company’s core profitability with the corresponding results for competitors. Management believes that non-GAAP income from continuing operations and non-GAAP income from continuing operations per diluted share are important measures in the evaluation of the company’s profitability. These non-GAAP financial measures exclude the adjustments described in the above table, and thus provide an overall measure of the company’s on-going profitability and related profitability on a per diluted share basis.

Management uses non-GAAP income from continuing operations and non-GAAP income from continuing operations per diluted share in its evaluation of the company’s core after-tax results of operations and trends between fiscal periods and believes that these measures are important components of its internal performance measurement process. In addition, the company prepares and maintains its budgets and forecasts for future periods on a basis consistent with these non-GAAP financial measures. Management believes that providing these non-GAAP financial measures allows investors to view the company’s financial results in the way that management views the financial results.

The non-GAAP financial measures presented herein have certain limitations in that they do not reflect all of the costs associated with the operations of the company’s business as determined in accordance with GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. The non-GAAP financial measures presented by the company may be different from the non-GAAP financial measures used by other companies.


For additional information on the items excluded from the non-GAAP financial measures and why the company believes that these non-GAAP financial measures provide useful supplemental information to investors, the company refers you to the Form 8-K regarding this release filed today with the Securities and Exchange Commission.

A summary of the non-GAAP adjustments presented in the table above by the financial statement line impacted is as follows:

 

(unaudited – in thousands)    Three Months Ended     Nine Months Ended  
   December 30,
2012
    January 1,
2012
    December 30,
2012
    January 1,
2012
 

Non-GAAP Adjustments:

        

Cost of revenues:

        

Stock-based compensation

   $ 529      $ 590      $ 1,839      $ 1,924   

Amortization of acquisition-related intangible assets

     243        242        730        730   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue adjustments

     772        832        2,569        2,654   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Engineering and development:

        

Stock-based compensation

     3,030        3,256        10,444        10,948   

Sales and marketing:

        

Stock-based compensation

     1,619        1,783        5,217        5,166   

General and administrative:

        

Stock-based compensation

     1,795        1,991        5,795        6,311   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expense adjustments

     6,444        7,030        21,456        22,425   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-GAAP adjustments before income taxes

     7,216        7,862        24,025        25,079   

Income tax effect

     (2,576     (2,567     (7,444     (7,354
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-GAAP adjustments

   $ 4,640      $ 5,295      $ 16,581      $ 17,725   
  

 

 

   

 

 

   

 

 

   

 

 

 


QLOGIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited — in thousands)

 

     December 30,
2012
    April 1,
2012
 
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 99,856      $ 164,516   

Marketable securities

     395,327        373,439   
  

 

 

   

 

 

 

Total cash and marketable securities

     495,183        537,955   

Accounts receivable, net

     69,499        76,588   

Inventories

     23,035        19,724   

Deferred tax assets

     13,838        16,780   

Other current assets

     23,006        35,842   
  

 

 

   

 

 

 

Total current assets

     624,561        686,889   

Property and equipment, net

     88,393        78,010   

Goodwill

     110,976        110,976   

Purchased intangible assets, net

     4,360        5,277   

Deferred tax assets

     35,655        30,558   

Other assets

     1,553        1,708   
  

 

 

   

 

 

 
   $ 865,498      $ 913,418   
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Current liabilities:

    

Accounts payable

   $ 30,547      $ 34,198   

Accrued compensation

     25,941        28,326   

Accrued taxes

     2,452        2,799   

Deferred revenue

     5,711        6,504   

Other current liabilities

     11,080        9,390   
  

 

 

   

 

 

 

Total current liabilities

     75,731        81,217   

Accrued taxes

     66,953        64,853   

Other liabilities

     6,284        7,505   
  

 

 

   

 

 

 

Total liabilities

     148,968        153,575   
  

 

 

   

 

 

 

Stockholders’ equity:

    

Common stock

     212        211   

Additional paid-in capital

     924,604        901,734   

Retained earnings

     1,660,702        1,617,201   

Accumulated other comprehensive income

     1,883        1,033   

Treasury stock

     (1,870,871     (1,760,336
  

 

 

   

 

 

 

Total stockholders’ equity

     716,530        759,843   
  

 

 

   

 

 

 
   $ 865,498      $ 913,418   
  

 

 

   

 

 

 


QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited — in thousands)

 

     Nine Months Ended  
     December 30,
2012
    January 1,
2012
 

Cash flows from operating activities:

    

Net income

   $ 43,501      $ 91,105   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     21,071        24,514   

Stock-based compensation

     23,295        25,787   

Deferred income taxes

     (3,810     (4,334

Other non-cash items

     3,138        5,082   

Changes in operating assets and liabilities:

    

Accounts receivable

     7,179        (12,244

Inventories

     (3,311     (36

Other assets

     113        119   

Accounts payable

     (2,499     (2,333

Accrued compensation

     (2,385     2,382   

Accrued taxes

     14,367        4,531   

Deferred revenue

     (625     (1,412

Other liabilities

     1,495        936   
  

 

 

   

 

 

 

Net cash provided by operating activities

     101,529        134,097   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of available-for-sale securities

     (228,202     (336,005

Proceeds from sales and maturities of available-for-sale securities

     204,325        247,928   

Purchases of property and equipment

     (31,728     (23,480
  

 

 

   

 

 

 

Net cash used in investing activities

     (55,605     (111,557
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from issuance of common stock under stock-based awards

     6,571        12,674   

Excess tax benefits from stock-based awards

     129        529   

Minimum tax withholding paid on behalf of employees for restricted stock units

     (5,555     (5,425

Purchases of treasury stock

     (111,729     (103,900
  

 

 

   

 

 

 

Net cash used in financing activities

     (110,584     (96,122
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (64,660     (73,582

Cash and cash equivalents at beginning of period

     164,516        147,780   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 99,856      $ 74,198   
  

 

 

   

 

 

 


QLOGIC CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(unaudited — in thousands)

Net Revenues

A summary of the company’s revenue components is as follows:

 

     Three Months Ended      Nine Months Ended  
     December 30,
2012
     January 1,
2012
     December 30,
2012
     January 1,
2012
 

Host Products

   $ 89,763       $ 111,835       $ 280,367       $ 324,208   

Network Products

     20,051         18,501         57,166         56,198   

Silicon Products

     9,572         12,443         30,091         43,129   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 119,386       $ 142,779       $ 367,624       $ 423,535