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8-K - FORM 8-K - QLOGIC CORP | a58467e8vk.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Media Contact:
Sonal Dave
QLogic Corporation
949.533.1655
sonal.dave@qlogic.com
Sonal Dave
QLogic Corporation
949.533.1655
sonal.dave@qlogic.com
Investor Contact:
Doug Naylor
QLogic Corporation
949.389.7525
doug.naylor@qlogic.com
Doug Naylor
QLogic Corporation
949.389.7525
doug.naylor@qlogic.com
QLOGIC REPORTS THIRD QUARTER
RESULTS FOR FISCAL YEAR 2011
RESULTS FOR FISCAL YEAR 2011
ALISO VIEJO, Calif., January 27, 2011QLogic Corp. (Nasdaq:QLGC), a leading supplier of high
performance network infrastructure solutions, today announced its third quarter financial results
for the period ended December 26, 2010.
Third Quarter Highlights
| Net revenue: $155.8 million | ||
| GAAP net income: $50.3 million or $0.47 per diluted share | ||
| Non-GAAP net income: $57.2 million or $0.53 per diluted share | ||
| Operating margin: 26.0% GAAP, 32.2% non-GAAP | ||
| Cash generated from operations: $60.0 million | ||
| Cash and investment securities: $343.2 million as of December 26, 2010 |
Financial Results
Net revenue for the third quarter of fiscal 2011 was $155.8 million and increased 4% from $149.1
million in the same quarter last year. Revenue from Host Products was $113.5 million during the
third quarter of fiscal 2011 and increased 3% from $110.4 million in the same quarter last year.
Revenue from Network Products was $28.9 million during the third quarter of fiscal 2011 and
increased 6% from $27.4 million in the same quarter last year. Revenue from Silicon Products was
$10.6 million during the third quarter of fiscal 2011 and increased 23% from $8.7 million in the
same quarter last year.
Net income on a GAAP basis for the third quarter of fiscal 2011 increased to $50.3 million, or
$0.47 per diluted share, from $28.6 million, or $0.25 per diluted share, for the third quarter of
fiscal 2010. Net income on a non-GAAP basis for the third quarter of fiscal 2011 increased to $57.2 million, or
$0.53 per
diluted share, from $36.2 million, or $0.31 per diluted share, for the third quarter of
fiscal 2010. The GAAP and non-GAAP net income per diluted share amounts for the third quarter of
fiscal 2011 include the benefits associated with the retroactive reinstatement of the federal
research tax credit and other third-quarter specific income tax items, which contributed $0.13 to
net income per diluted share.
We are very pleased with our strong financial performance in the third quarter. We experienced
solid sequential revenue growth for both our Host and Network Products. In addition, we achieved
our highest quarterly operating income in the last two years as a result of our strong gross margin
performance and careful operating expense management, said Simon Biddiscombe, president and chief
executive officer, QLogic. Based on our accomplishments and execution against our strategies, we
believe we will capitalize on the significant incremental opportunities in the rapidly expanding
high performance data center connectivity market.
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.
QLogics fiscal 2011 third quarter 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 Doug
Naylor, vice president of finance and interim 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 (719)
457-2727, pass code: 4576589.
The financial information that the company intends to discuss during the conference call will be
available on the companys 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
About QLogic
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 trends) 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: the high performance data
center connectivity market may not expand as rapidly as we anticipate or we may not effectively
capitalize on expected incremental opportunities in the market; declines in information technology
spending levels; potential fluctuations in operating results; gross margins that may vary over
time; the stock price of the company may be volatile; the companys dependence on the networking
markets served; potential adverse effects of increased market acceptance of blade servers; the
ability to maintain and gain market or industry acceptance of the companys products; the companys
dependence on a small number of customers; seasonal fluctuations and uneven sales patterns in
orders from customers; the companys ability to compete effectively with other companies; declining
average unit sales prices of comparable products; a reduction in sales efforts by current
distributors; the companys dependence on sole source and limited source suppliers; the companys
dependence on relationships with certain third-party subcontractors and contract manufacturers;
declines in the market value of the companys investment securities; the complexity of the
companys products; sales fluctuations arising from customer transitions to new products; changes
in the companys tax provisions or adverse outcomes resulting from examination of its income tax
returns; environmental compliance costs; international economic, regulatory, political and other
risks; uncertain benefits from strategic business combinations; the ability to attract and retain
key personnel; difficulties in transitioning to smaller geometry process technologies; the ability
to protect proprietary rights; the ability to satisfactorily resolve any infringement claims; the
use of open source software in the companys products; changes in regulations or standards
regarding energy use of the companys products; computer viruses and other tampering with the
companys computer systems; and facilities of the company and its suppliers and customers are
located in areas subject to natural disasters.
More detailed information on these and additional factors which could affect the companys
operating and financial results are described in the companys 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 26, | December 27, | December 26, | December 27, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net revenues |
$ | 155,771 | $ | 149,122 | $ | 444,909 | $ | 403,354 | ||||||||
Cost of revenues |
53,000 | 53,020 | 153,112 | 145,258 | ||||||||||||
Gross profit |
102,771 | 96,102 | 291,797 | 258,096 | ||||||||||||
Operating expenses: |
||||||||||||||||
Engineering and development |
33,148 | 33,978 | 100,649 | 102,294 | ||||||||||||
Sales and marketing |
20,103 | 18,812 | 60,953 | 58,268 | ||||||||||||
General and administrative |
9,061 | 8,780 | 25,560 | 24,923 | ||||||||||||
Special charges |
| | 931 | 848 | ||||||||||||
Total operating expenses |
62,312 | 61,570 | 188,093 | 186,333 | ||||||||||||
Operating income |
40,459 | 34,532 | 103,704 | 71,763 | ||||||||||||
Interest and other income, net |
773 | 1,736 | 4,258 | 6,996 | ||||||||||||
Income before income taxes |
41,232 | 36,268 | 107,962 | 78,759 | ||||||||||||
Income taxes |
(9,107 | ) | 7,620 | 2,188 | 18,985 | |||||||||||
Net income |
$ | 50,339 | $ | 28,648 | $ | 105,774 | $ | 59,774 | ||||||||
Net income per share: |
||||||||||||||||
Basic |
$ | 0.48 | $ | 0.25 | $ | 0.97 | $ | 0.51 | ||||||||
Diluted |
$ | 0.47 | $ | 0.25 | $ | 0.96 | $ | 0.51 | ||||||||
Number of shares used in per
share calculations: |
||||||||||||||||
Basic |
105,830 | 114,695 | 108,492 | 116,935 | ||||||||||||
Diluted |
107,327 | 116,479 | 110,032 | 117,965 |
QLOGIC CORPORATION
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP NET INCOME
NON-GAAP NET INCOME
(unaudited in thousands, except per share amounts)
Three Months Ended | Nine Months Ended | |||||||||||||||
December 26, | December 27, | December 26, | December 27, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
GAAP net income |
$ | 50,339 | $ | 28,648 | $ | 105,774 | $ | 59,774 | ||||||||
Items excluded from GAAP net
income: |
||||||||||||||||
Stock-based compensation |
8,519 | 8,742 | 27,111 | 27,425 | ||||||||||||
Amortization of
acquisition-related
intangible assets |
1,156 | 1,893 | 3,467 | 6,719 | ||||||||||||
Special charges |
| | 931 | 848 | ||||||||||||
Gains recognized on
previously impaired
investment securities |
| | (312 | ) | (605 | ) | ||||||||||
Income tax effect |
(2,772 | ) | (3,084 | ) | (8,437 | ) | (8,947 | ) | ||||||||
Total non-GAAP adjustments |
6,903 | 7,551 | 22,760 | 25,440 | ||||||||||||
Non-GAAP net income |
$ | 57,242 | $ | 36,199 | $ | 128,534 | $ | 85,214 | ||||||||
Net income per diluted share: |
||||||||||||||||
GAAP net income |
$ | 0.47 | $ | 0.25 | $ | 0.96 | $ | 0.51 | ||||||||
Adjustments |
0.06 | 0.06 | 0.21 | 0.21 | ||||||||||||
Non-GAAP net income |
$ | 0.53 | $ | 0.31 | $ | 1.17 | $ | 0.72 | ||||||||
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 companys 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 companys
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 companys core net
profitability with historical periods and comparisons of the companys 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 companys
profitability. These non-GAAP financial measures exclude the adjustments described in the above
table, and thus provide an overall measure of the companys 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 companys 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 companys 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 companys 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 26, | December 27, | December 26, | December 27, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Non-GAAP Adjustments: |
||||||||||||||||
Cost of revenues: |
||||||||||||||||
Stock-based compensation |
$ | 599 | $ | 650 | $ | 1,962 | $ | 2,039 | ||||||||
Amortization of acquisition-related intangible
assets |
1,156 | 1,624 | 3,467 | 4,833 | ||||||||||||
Total cost of revenue adjustments |
1,755 | 2,274 | 5,429 | 6,872 | ||||||||||||
Operating expenses: |
||||||||||||||||
Engineering and development: |
||||||||||||||||
Stock-based compensation |
3,714 | 4,508 | 12,692 | 14,122 | ||||||||||||
Sales and marketing: |
||||||||||||||||
Stock-based compensation |
1,824 | 1,629 | 5,866 | 5,230 | ||||||||||||
Amortization of acquisition-related intangible
assets |
| 269 | | 1,886 | ||||||||||||
General and administrative: |
||||||||||||||||
Stock-based compensation |
2,382 | 1,955 | 6,591 | 6,034 | ||||||||||||
Special charges |
| | 931 | 848 | ||||||||||||
Total operating expense adjustments |
7,920 | 8,361 | 26,080 | 28,120 | ||||||||||||
Interest and other income: |
||||||||||||||||
Gains recognized on previously impaired investment
securities |
| | (312 | ) | (605 | ) | ||||||||||
Total non-GAAP adjustments before income taxes |
9,675 | 10,635 | 31,197 | 34,387 | ||||||||||||
Income tax effect |
(2,772 | ) | (3,084 | ) | (8,437 | ) | (8,947 | ) | ||||||||
Total non-GAAP adjustments |
$ | 6,903 | $ | 7,551 | $ | 22,760 | $ | 25,440 | ||||||||
QLOGIC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited in thousands)
December 26, 2010 | March 28, 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 106,292 | $ | 190,308 | ||||
Short-term investment securities |
236,882 | 185,365 | ||||||
Accounts receivable, net |
83,916 | 73,301 | ||||||
Inventories |
25,857 | 19,403 | ||||||
Deferred tax assets |
14,758 | 10,976 | ||||||
Other current assets |
22,950 | 9,845 | ||||||
Total current assets |
490,655 | 489,198 | ||||||
Property and equipment, net |
78,666 | 83,496 | ||||||
Goodwill |
119,748 | 119,748 | ||||||
Purchased intangible assets, net |
14,013 | 17,394 | ||||||
Deferred tax assets |
25,966 | 36,917 | ||||||
Other assets |
2,909 | 3,984 | ||||||
$ | 731,957 | $ | 750,737 | |||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 31,574 | $ | 36,766 | ||||
Accrued compensation |
22,558 | 22,727 | ||||||
Accrued taxes |
3,745 | 2,633 | ||||||
Deferred revenue |
10,424 | 9,240 | ||||||
Other current liabilities |
5,855 | 11,069 | ||||||
Total current liabilities |
74,156 | 82,435 | ||||||
Accrued taxes |
61,268 | 70,577 | ||||||
Deferred revenue |
5,532 | 7,401 | ||||||
Other liabilities |
6,132 | 6,985 | ||||||
Total liabilities |
147,088 | 167,398 | ||||||
Stockholders equity: |
||||||||
Common stock |
208 | 205 | ||||||
Additional paid-in capital |
830,251 | 778,853 | ||||||
Retained earnings |
1,354,449 | 1,248,675 | ||||||
Accumulated other comprehensive income |
448 | 1,206 | ||||||
Treasury stock |
(1,600,487 | ) | (1,445,600 | ) | ||||
Total stockholders equity |
584,869 | 583,339 | ||||||
$ | 731,957 | $ | 750,737 | |||||
QLOGIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited in thousands)
Nine Months Ended | ||||||||
December 26, | December 27, | |||||||
2010 | 2009 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 105,774 | $ | 59,774 | ||||
Adjustments to reconcile net income to net cash provided
by operating activities: |
||||||||
Depreciation and amortization |
22,612 | 23,912 | ||||||
Stock-based compensation |
27,111 | 27,425 | ||||||
Amortization of acquisition-related intangible assets |
3,467 | 6,719 | ||||||
Deferred income taxes |
6,810 | 4,554 | ||||||
Net gains on investment securities |
(2,021 | ) | (2,639 | ) | ||||
Other non-cash items |
1,435 | 1,169 | ||||||
Changes in operating assets and liabilities, net of acquisition: |
||||||||
Accounts receivable |
(10,769 | ) | (17,378 | ) | ||||
Inventories |
(6,454 | ) | 19,503 | |||||
Other assets |
841 | 148 | ||||||
Accounts payable |
(6,232 | ) | (2,446 | ) | ||||
Accrued compensation |
405 | (9,505 | ) | |||||
Accrued taxes |
(21,068 | ) | (19,359 | ) | ||||
Deferred revenue |
(685 | ) | 1,295 | |||||
Other liabilities |
(3,968 | ) | (695 | ) | ||||
Net cash provided by operating activities |
117,258 | 92,477 | ||||||
Cash flows from investing activities: |
||||||||
Purchases of available-for-sale securities |
(221,884 | ) | (213,704 | ) | ||||
Proceeds from sales and maturities of available-for-sale securities |
146,840 | 175,513 | ||||||
Proceeds from disposition of trading securities |
23,800 | 10,525 | ||||||
Distributions from other investment securities |
329 | 3,076 | ||||||
Purchases of property and equipment |
(17,881 | ) | (17,605 | ) | ||||
Acquisition of business, net of cash acquired |
| (14,931 | ) | |||||
Net cash used in investing activities |
(68,796 | ) | (57,126 | ) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from issuance of common stock under stock-based awards |
29,637 | 18,966 | ||||||
Excess tax benefits from stock-based awards |
1,610 | (154 | ) | |||||
Minimum tax withholding paid on behalf of employees for restricted stock units |
(6,739 | ) | (2,833 | ) | ||||
Purchases of treasury stock |
(156,986 | ) | (108,976 | ) | ||||
Payoff of line of credit assumed in acquisition |
| (934 | ) | |||||
Net cash used in financing activities |
(132,478 | ) | (93,931 | ) | ||||
Net decrease in cash and cash equivalents |
(84,016 | ) | (58,580 | ) | ||||
Cash and cash equivalents at beginning of period |
190,308 | 203,722 | ||||||
Cash and cash equivalents at end of period |
$ | 106,292 | $ | 145,142 | ||||
QLOGIC CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
(unaudited in thousands)
Net Revenues
A summary of the companys revenue components is as follows:
Three Months Ended | Nine Months Ended | |||||||||||||||
December 26, | December 27, | December 26, | December 27, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Host Products |
$ | 113,492 | $ | 110,446 | $ | 320,141 | $ | 292,801 | ||||||||
Network Products |
28,923 | 27,413 | 81,787 | 76,880 | ||||||||||||
Silicon Products |
10,628 | 8,660 | 34,927 | 25,653 | ||||||||||||
Service and other |
2,728 | 2,603 | 8,054 | 8,020 | ||||||||||||
$ | 155,771 | $ | 149,122 | $ | 444,909 | $ | 403,354 | |||||||||
Geographic Revenues
Revenues by geographic area are presented based upon the country of destination. Net revenues by
geographic area are as follows:
Three Months Ended | Nine Months Ended | |||||||||||||||
December 26, | December 27, | December 26, | December 27, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
United States |
$ | 65,718 | $ | 66,531 | $ | 198,234 | $ | 185,898 | ||||||||
Asia-Pacific and Japan |
43,426 | 37,625 | 120,806 | 100,352 | ||||||||||||
Europe, Middle East and Africa |
36,283 | 35,518 | 99,599 | 91,702 | ||||||||||||
Rest of world |
10,344 | 9,448 | 26,270 | 25,402 | ||||||||||||
$ | 155,771 | $ | 149,122 | $ | 444,909 | $ | 403,354 | |||||||||