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8-K - FORM 8-K - QLOGIC CORPd919125d8k.htm

Exhibit 99.1

Media Contact:

Steve Sturgeon

QLogic Corporation

858.472.5669

steve.sturgeon@qlogic.com

Investor Contact:

Doug Naylor

QLogic Corporation

949.542.1330

doug.naylor@qlogic.com

QLOGIC REPORTS FOURTH QUARTER

AND FISCAL YEAR 2015 RESULTS

Annual revenue grows 13%; Non-GAAP EPS up 17%

ALISO VIEJO, Calif., April 30, 2015QLogic Corp. (Nasdaq:QLGC), a leading supplier of high performance network infrastructure solutions, today announced its financial results for the fourth quarter and fiscal year ended March 29, 2015.

Fourth Quarter Highlights

 

    Net revenue: $133.0 million

 

    GAAP net income: $11.1 million or $0.13 per diluted share

 

    Non-GAAP net income: $24.9 million or $0.28 per diluted share

 

    Cash and marketable securities: $316.4 million as of March 29, 2015

 

    Cash generated from operations: $45.2 million

Fiscal Year Highlights

 

    Net revenue: $520.2 million

 

    GAAP net income: $50.6 million or $0.57 per diluted share

 

    Non-GAAP net income: $97.0 million or $1.10 per diluted share

 

    GAAP operating income: $54.4 million

 

    Non-GAAP operating income: $106.8 million

 

    Operating margin: 10.5% GAAP, 20.5% non-GAAP

Net revenue for the fourth quarter of fiscal 2015 was $133.0 million and increased 15% from $115.7 million in the same quarter last year. Revenue from Advanced Connectivity Platforms was $120.7 million during the fourth quarter of fiscal 2015 and increased 19% from $101.1 million in the same quarter last year.


Net income on a GAAP basis for the fourth quarter of fiscal 2015 increased to $11.1 million, or $0.13 per diluted share, from a net loss of $46.8 million, or $0.54 per diluted share, for the fourth quarter of fiscal 2014. Net income on a non-GAAP basis for the fourth quarter of fiscal 2015 increased 20% to $24.9 million, or $0.28 per diluted share, from $20.8 million, or $0.24 per diluted share, for the fourth quarter of fiscal 2014.

Net revenue for fiscal 2015 was $520.2 million and increased 13% from $460.9 million in fiscal 2014. Revenue from Advanced Connectivity Platforms was $465.0 million during fiscal 2015 and increased 20% from $386.7 million in fiscal 2014. Net income on a GAAP basis for fiscal 2015 increased to $50.6 million, or $0.57 per diluted share, from a net loss of $18.3 million, or $0.21 per diluted share, in fiscal 2014. Net income on a non-GAAP basis for fiscal 2015 increased to $97.0 million, or $1.10 per diluted share, from $82.8 million, or $0.94 per diluted share, in fiscal 2014.

“I am very pleased with our achievements during the fourth quarter and for the full year of fiscal 2015. We accomplished a great deal, including expansion of our market share position for both our Fibre Channel and Ethernet products1. In addition, during fiscal 2015, we were the first to sample the next generation 25/40/50/100Gb Ethernet controllers to customers that serve the enterprise and Cloud markets,” said Prasad Rampalli, president and chief executive officer, QLogic. “From a financial perspective, our revenue during fiscal 2015 increased by 13% over fiscal 2014 and our operating income and earnings per share expanded at even higher growth rates. Our focus on server and storage connectivity provides us excellent leverage from both a product development and customer engagement standpoint. I believe that as we continue to execute on our strategy, we are well positioned to deliver on our top and bottom line growth plans in the coming year.”

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 fourth quarter fiscal 2015 conference call is scheduled for today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). Prasad Rampalli, 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 will include certain prepared materials. Phone access to participate in the conference call is available at (800) 334-0872, passcode: 3610509.

The financial information and the prepared materials 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 webcast will be available at http://ir.qlogic.com for twelve months.

 

1  Based on calendar year 2014 reports from the Dell’Oro Group and Crehan Research


Follow QLogic @ twitter.com/qlogic

QLogic – the Ultimate in Performance

QLogic (Nasdaq:QLGC) is a global leader and technology innovator in high performance server and storage networking connectivity products. Leading OEMs and channel partners worldwide rely on QLogic for their server and storage 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, as well as our belief that our focus on server and storage connectivity provides us excellent leverage from both a product development and customer engagement standpoint, our belief that we will continue to execute on our strategy, and that, if we execute on our strategy, we are well positioned to deliver on our top and bottom line growth plans in the coming year) 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: potential fluctuations in operating results; gross margins that may vary over time; unfavorable economic conditions; 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; uncertain benefits from strategic business combinations, acquisitions and divestitures; the ability to attract and retain key personnel; 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; sales fluctuations arising from customer transitions to new products; seasonal fluctuations and uneven sales patterns in orders from customers; 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; a reduction in sales efforts by current distributors; 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; system security risks, data protection breaches and cyber-attacks; and the company’s ability to borrow under its credit agreement is subject to certain covenants.

More detailed information on these and additional factors that 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 OPERATIONS

(unaudited — in thousands, except per share amounts)

 

     Three Months Ended     Year Ended  
     March 29,
2015
     March 30,
2014
    March 29,
2015
     March 30,
2014
 

Net revenues

   $ 133,043       $ 115,720      $ 520,198       $ 460,907   

Cost of revenues

     55,497         39,422        214,146         150,800   
  

 

 

    

 

 

   

 

 

    

 

 

 

Gross profit

  77,546      76,298      306,052      310,107   
  

 

 

    

 

 

   

 

 

    

 

 

 

Operating expenses:

Engineering and development

  36,157      36,598      144,260      147,010   

Sales and marketing

  16,690      16,410      64,330      68,367   

General and administrative

  7,238      9,399      32,512      32,097   

Special charges

  5,648      56,524      10,520      74,853   
  

 

 

    

 

 

   

 

 

    

 

 

 

Total operating expenses

  65,733      118,931      251,622      322,327   
  

 

 

    

 

 

   

 

 

    

 

 

 

Operating income (loss)

  11,813      (42,633   54,430      (12,220

Interest and other income, net

  594      1,492      763      3,260   
  

 

 

    

 

 

   

 

 

    

 

 

 

Income (loss) before income taxes

  12,407      (41,141   55,193      (8,960

Income taxes

  1,259      5,638      4,600      9,306   
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income (loss)

$ 11,148    $ (46,779 $ 50,593    $ (18,266
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income (loss) per share:

Basic

$ 0.13    $ (0.54 $ 0.58    $ (0.21

Diluted

$ 0.13    $ (0.54 $ 0.57    $ (0.21

Number of shares used in per share calculations:

Basic

  87,298      87,017      87,584      87,612   

Diluted

  88,969      87,017      88,463      87,612   


QLOGIC CORPORATION

RECONCILIATION OF GAAP NET INCOME (LOSS) TO

NON-GAAP NET INCOME

(unaudited — in thousands, except per share amounts)

 

     Three Months Ended     Year Ended  
     March 29,
2015
    March 30,
2014
    March 29,
2015
    March 30,
2014
 

GAAP net income (loss)

   $ 11,148      $ (46,779   $ 50,593      $ (18,266

Items excluded from GAAP net income (loss):

        

Stock-based compensation

     5,367        4,591        20,545        22,638   

Amortization of acquisition-related intangible assets

     4,382        1,408        17,299        2,138   

Amortization of license fee

     718        133        2,828        133   

Acquisition-related charges

            1,517        1,226        1,517   

Special charges

     5,648        56,524        10,520        74,853   

Gains recognized on previously impaired investment securities

            (425            (425

Income tax effects

     (2,412     3,783        (6,024     219   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-GAAP adjustments

  13,703      67,531      46,394      101,073   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

$ 24,851    $ 20,752    $ 96,987    $ 82,807   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per diluted share:

GAAP net income (loss)

$ 0.13    $ (0.54 $ 0.57    $ (0.21

Adjustments

  0.15      0.78      0.53      1.15   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

$ 0.28    $ 0.24    $ 1.10    $ 0.94   
  

 

 

   

 

 

   

 

 

   

 

 

 

Number of shares used in non-GAAP per diluted share calculations

  88,969      87,819      88,463      88,111   
  

 

 

   

 

 

   

 

 

   

 

 

 

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 net income and non-GAAP net income per diluted share, on a basis consistent with its historical presentation, to assist investors in understanding the company’s core net income and core net income 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 net profitability with historical periods and comparisons of the company’s core net profitability with the corresponding results for competitors. Management believes that non-GAAP net income and non-GAAP net income 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 net profitability and related profitability on a per diluted share basis.

Management uses non-GAAP net income and non-GAAP net income 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     Year Ended  
     March 29,
2015
    March 30,
2014
    March 29,
2015
    March 30,
2014
 

Non-GAAP Adjustments:

        

Cost of revenues:

        

Stock-based compensation

   $ 178      $ 267      $ 1,049      $ 1,349   

Amortization of acquisition-related intangible assets

     4,213        1,408        16,596        2,138   

Amortization of license fee

     718        133        2,828        133   

Acquisition-related charges

            802        1,226        802   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue adjustments

  5,109      2,610      21,699      4,422   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

Engineering and development:

Stock-based compensation

  2,501      1,848      10,024      10,918   

Sales and marketing:

Stock-based compensation

  1,366      1,063      4,631      5,337   

Amortization of acquisition-related intangible assets

  169           703        

General and administrative:

Stock-based compensation

  1,322      1,413      4,841      5,034   

Acquisition-related charges

       715           715   

Special charges

  5,648      56,524      10,520      74,853   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expense adjustments

  11,006      61,563      30,719      96,857   
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest and other income:

Gains recognized on previously impaired investment securities

       (425        (425
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-GAAP adjustments before income taxes

  16,115      63,748      52,418      100,854   

Income tax effects

  (2,412   3,783      (6,024   219   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-GAAP adjustments

$ 13,703    $ 67,531    $ 46,394    $ 101,073   
  

 

 

   

 

 

   

 

 

   

 

 

 


QLOGIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited — in thousands)

 

     March 29,
2015
    March 30,
2014
 
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 115,241      $ 91,258   

Marketable securities

     201,174        186,783   
  

 

 

   

 

 

 

Total cash and marketable securities

  316,415      278,041   

Accounts receivable, net

  87,436      65,213   

Inventories

  29,978      18,036   

Deferred tax assets

  12,545      15,080   

Other current assets

  21,802      16,590   
  

 

 

   

 

 

 

Total current assets

  468,176      392,960   

Property and equipment, net

  78,501      86,527   

Goodwill

  167,232      167,232   

Purchased intangible assets, net

  77,659      95,163   

Deferred tax assets

  36,335      32,827   

Other assets

  20,752      23,554   
  

 

 

   

 

 

 
$ 848,655    $ 798,263   
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$ 40,497    $ 30,657   

Accrued compensation

  22,476      26,956   

Accrued taxes

  2,711      981   

Deferred revenue

  3,359      3,954   

Other current liabilities

  8,359      16,123   
  

 

 

   

 

 

 

Total current liabilities

  77,402      78,671   

Accrued taxes

  14,516      17,095   

Other liabilities

  9,721      9,071   
  

 

 

   

 

 

 

Total liabilities

  101,639      104,837   
  

 

 

   

 

 

 

Stockholders’ equity:

Common stock

  215      214   

Additional paid-in capital

  983,579      958,008   

Retained earnings

  1,722,664      1,672,071   

Accumulated other comprehensive income (loss)

  (99   435   

Treasury stock

  (1,959,343   (1,937,302
  

 

 

   

 

 

 

Total stockholders’ equity

  747,016      693,426   
  

 

 

   

 

 

 
$ 848,655    $ 798,263   
  

 

 

   

 

 

 


QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited — in thousands)

 

     Year Ended  
     March 29,
2015
    March 30,
2014
 

Cash flows from operating activities:

    

Net income (loss)

   $ 50,593      $ (18,266

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Depreciation and amortization

     47,119        32,523   

Stock-based compensation

     20,545        22,638   

Deferred income taxes

     (1,457     (3,637

Asset impairments

     3,697        8,022   

Other non-cash items

     1,136        2,729   

Changes in operating assets and liabilities, net of acquisitions:

    

Accounts receivable

     (22,337     899   

Inventories

     (11,942     6,660   

Other assets

     3,924        (19,013

Accounts payable

     3,487        4,376   

Accrued compensation

     (4,480     (1,511

Accrued taxes, net

     821        9,855   

Other liabilities

     (8,610     11,516   
  

 

 

   

 

 

 

Net cash provided by operating activities

  82,496      56,791   
  

 

 

   

 

 

 

Cash flows from investing activities:

Purchases of available-for-sale securities

  (189,707   (342,921

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

  173,403      510,816   

Purchases of property and equipment

  (26,118   (27,550

Acquisition of businesses

       (157,352
  

 

 

   

 

 

 

Net cash used in investing activities

  (42,422   (17,007
  

 

 

   

 

 

 

Cash flows from financing activities:

Proceeds from issuance of common stock under stock-based awards

  9,717      8,711   

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

  (4,690   (4,739

Purchases of treasury stock

  (21,140   (47,785

Other financing activities

  22      (245
  

 

 

   

 

 

 

Net cash used in financing activities

  (16,091   (44,058
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

  23,983      (4,274

Cash and cash equivalents at beginning of year

  91,258      95,532   
  

 

 

   

 

 

 

Cash and cash equivalents at end of year

$ 115,241    $ 91,258   
  

 

 

   

 

 

 


QLOGIC CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(unaudited — in thousands)

Net Revenues

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

 

     Three Months Ended      Year Ended  
     March 29,
2015
     March 30,
2014
     March 29,
2015
     March 30,
2014
 

Advanced Connectivity Platforms

   $ 120,718       $ 101,085       $ 465,000       $ 386,738   

Legacy Connectivity Products

     12,325         14,635         55,198         74,169   
  

 

 

    

 

 

    

 

 

    

 

 

 
$ 133,043    $ 115,720    $ 520,198    $ 460,907