EMULEX CORP /DE/ - FORM 8-K - EX-99.01 - EXHIBIT 99.01 - January 29, 2015

Attached files

file filename
8-K - 8-K - EMULEX CORP /DE/elxq2fy158-k.htm
Exhibit 99.01

                            
                    

EMULEX ANNOUNCES FISCAL 2015 SECOND QUARTER RESULTS


COSTA MESA, Calif., January 29, 2015 ─ Emulex Corporation (NYSE:ELX), a leader in network connectivity, monitoring and management, today announced earnings results for the second quarter of fiscal 2015 ending December 28, 2014.

Second Quarter Financial Highlights

•
Total revenue of $111 million, above the high end of the initial guidance range, aided by strong sequential and year-on-year growth in Gen 5 (16Gb) Fibre Channel products.
•
Non-GAAP diluted earnings of $0.24, up 14% year-on-year, and GAAP earnings of $0.06 as compared to a prior year loss of $0.05, both above their respective initial guidance range.
•
Non-GAAP operating margin of 18%, up 130 basis points year-on-year and 560 basis points sequentially, with GAAP operating income of $8 million as compared to an operating loss of $2 million in the prior year and operating income of $1 million in the prior quarter.
•
Cash, cash equivalents and investments at the end of the quarter of $185 million.

“The second quarter demonstrated continued progress with initiatives put in place at Emulex over the last 18 months, including the delivery of the broadest set of new Ethernet and Fibre Channel products in the Company’s history, increased focus on execution, and a greater emphasis on fiscal discipline,” commented Jeff Benck, president and CEO, Emulex. “Coupled with healthy demand for our Fibre Channel portfolio and share gains aided by accelerating adoption of our latest Gen 5 Fibre Channel products, we again exceeded the high end of our initial revenue and earnings guidance.”

“We look forward to building on this foundation with the broad slate of OEM wins for our latest 10Gb Ethernet products, designed for the new generation of x86 servers, that will ramp in the market over the next year,” Benck concluded.

FY’15 Q2 Earnings Results     
January 29, 2015
Page 2 of 13


Business Outlook

Although actual results may vary depending on a variety of factors, including those listed in the Safe Harbor Statement below and our filings with the SEC, Emulex is forecasting total net revenues in the range of $97 - $103 million for the third quarter. The Company expects third quarter non-GAAP earnings of $0.11 - $0.15 and a GAAP loss of $0.06 - $0.10 per share. GAAP estimates for the third quarter reflect approximately $0.21 per diluted share in expected charges arising primarily from amortization of intangibles, stock-based compensation, royalties, mitigation expenses and license fees associated with the Broadcom patent litigation, the accretion of debt discount on outstanding convertible senior notes, and the tax effects and the impact of our U.S. GAAP tax valuation allowance associated with these items. Reconciliation between GAAP and non-GAAP results is included in the accompanying financial data.

Second Quarter Business Highlights

•
Announced Emulex LightPulse® Gen 5 Fibre Channel target mode support for new DataCore SANsymphony-V10 software-defined storage platform
•
Announced new Emulex Virtual Fabric Adapter 5 (VFA5) technology for new Lenovo Flex System server family, based on the latest Intel Xeon processor E5-2600/1600 v3 product families
•
Network Visibility Products (NVP) Division unveiled NetPod™ application-aware network performance management (AA-NPM) solution based on a combination of Dynatrace Application Performance Management (APM) technology and Emulex Network Performance Management (NPM) capture technology
•
Introduced Emulex ExpressConfig™ for OpenStack to accelerate deployment time, lower operational costs and increase Service Level Agreement attainment


FY’15 Q2 Earnings Results     
January 29, 2015
Page 3 of 13


EMULEX CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
 (unaudited, in thousands, except per share data)
 
 
 
 
Three Months Ended
Six Months Ended
 
December 28,
 
December 29,
December 28,
 
December 29,
 
2014
 
2013
2014
 
2013
Net revenues
$
111,087

 
$
122,996

$
214,896

 
$
237,828

 
 
 
 
 
 
 
Cost of sales:
 
 
 
 
 
 
  Cost of goods sold
37,535

 
42,109

74,151

 
81,800

  Amortization of core and developed technology intangible assets
6,355

 
6,239

12,709

 
12,399

  Expenses related to the Broadcom patents
2,090

 
2,358

3,815

 
3,855

Cost of sales
45,980

 
50,706

90,675

 
98,054

   Gross profit
65,107

 
72,290

124,221

 
139,774

 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
   Engineering and development
33,680

 
42,020

67,320

 
82,431

   Selling and marketing
16,090

 
19,849

32,742

 
38,941

   General and administrative
6,456

 
10,407

13,545

 
20,036

   Amortization of other intangible assets
576

 
1,603

1,176

 
3,207

      Total operating expenses
56,802

 
73,879

114,783

 
144,615

      Operating income (loss)
8,305

 
(1,589
)
9,438

 
(4,841
)
 
 
 
 
 
 
 
Non-operating (expense) income, net:
 
 
 
 
 
 
   Interest income
2

 
16

3

 
20

   Interest expense
(2,409
)
 
(1,148
)
(4,793
)
 
(1,150
)
   Other (expense) income, net
(27
)
 
(135
)
(395
)
 
17

      Total non-operating (expense) income, net
(2,434
)
 
(1,267
)
(5,185
)
 
(1,113
)
 


 


 
 
 
Income (loss) before income taxes
5,871

 
(2,856
)
4,253

 
(5,954
)
 
 
 
 
 
 
 
Income tax provision
1,549

 
1,171

650

 
1,714

Net income (loss)
$
4,322

 
$
(4,027
)
$
3,603

 
$
(7,668
)
 
 
 
 
 
 
 
Net income (loss) per share:
 
 
 
 
 
 
   Basic
$
0.06

 
$
(0.05
)
$
0.05

 
$
(0.09
)
   Diluted
$
0.06

 
$
(0.05
)
$
0.05

 
$
(0.09
)
 
 
 
 
 
 
 
Number of shares used in per share computations:
 
 
 
 
 
 
   Basic
71,459

 
86,881

71,250

 
89,162

   Diluted
73,122

 
86,881

72,920

 
89,162


FY’15 Q2 Earnings Results     
January 29, 2015
Page 4 of 13



EMULEX CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
 
December 28,
June 29,
 
2014
2014
Assets
 
 
 
 
 
Current assets:
 
 
      Cash and cash equivalents
$
184,722

$
158,439

      Accounts receivable, net
77,235

76,974

      Inventories
23,822

25,831

      Prepaid income taxes
1,236

2,839

      Prepaid expenses and other current assets
15,873

17,190

      Deferred income taxes
223

223

      Total current assets
303,111

281,496

 
 
 
Property and equipment, net
58,604

59,908

Goodwill and intangible assets, net
342,641

356,526

Other assets
18,030

19,993

Total assets
$
722,386

$
717,923

 
 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
Current liabilities:
 
 
      Accounts payable
$
24,281

$
25,762

      Accrued and other current liabilities
40,907

42,183

      Total current liabilities
65,188

67,945

 
 
 
Convertible senior notes
149,374

146,478

Other liabilities
6,553

6,842

Deferred income taxes
12,543

15,550

Accrued taxes
26,462

26,462

  Total liabilities
260,120

263,277

 
 
 
Total stockholders’ equity
462,266

454,646

Total liabilities and equity
$
722,386

$
717,923


FY’15 Q2 Earnings Results     
January 29, 2015
Page 5 of 13



EMULEX CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Cash Flows
(unaudited, in thousands)
 
Six Months Ended
 
December 28,
December 29,
 
2014
2013
 
 
 
Cash flows from operations:
 
 
Net income (loss)
$
3,603

$
(7,668
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
     Depreciation and amortization
23,025

25,209

     Stock based compensation
6,555

8,316

Deferred income taxes
(3,007
)
—

     Other reconciling items
3,052

829

Changes in assets and liabilities
3,664

6,848

     Net cash provided by operating activities
36,892

33,534

 
 
 
Cash flows from investing activities:
 
 
   Investment in property and equipment, net
(9,183
)
(10,006
)
      Net cash used in investing activities
(9,183
)
(10,006
)
 
 
 
Cash flows from financing activities:
 
 
Issuance of convertible senior notes
—

175,000

Repurchase of common stock
(1,004
)
(100,000
)
Other
164

(5,649
)
Net cash (used in) provided by financing activities
(840
)
69,351

 
 
 
Effect of exchange rates on cash and cash equivalents
(586
)
163

 


 
Net increase in cash & cash equivalents
26,283

93,042

Opening cash balance
158,439

105,637

Ending cash balance
$
184,722

$
198,679








FY’15 Q2 Earnings Results     
January 29, 2015
Page 6 of 13


EMULEX CORPORATION AND SUBSIDIARIES
Supplemental Information
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income:
 
 
 
 
($000s)
Three Months Ended
Six Months Ended
 
December 29,
December 28,
December 29,
December 28,
 
2014
2013
2014
2013
GAAP net income (loss) as presented above
$
4,322

$
(4,027
)
$
3,603

$
(7,668
)
GAAP earnings (loss) per share as presented above
$
0.06

$
(0.05
)
$
0.05

$
(0.09
)
Shares used in GAAP earnings (loss) per share computations
71,459

86,881

71,250

89,162

 
 
 
 
 
Items excluded from GAAP net income (loss) to calculate non-GAAP net income:
 
 
 
 
   Amortization of intangibles:
 
 
 
 
     Cost of sales
$
6,355

$
6,239

$
12,709

$
12,399

     Amortization of intangibles (operating expense)
576

1,603

1,176

3,207

          Total amortization of intangibles
6,931

7,842

13,885

15,606

   Stock-based compensation:
 
 
 
 
     Cost of sales
72

147

188

236

     Engineering and development
1,246

1,132

2,886

3,036

     Selling and marketing
1,122

874

2,228

2,076

     General and administrative
584

1,591

1,253

2,968

          Total stock-based compensation
3,024

3,744

6,555

8,316

   Site closure and other restructuring costs:
 
 
 
 
     Cost of sales
53

277

89

277

     Engineering and development
(48
)
5,195

(141
)
5,195

     Selling and marketing
(419
)
652

(1,076
)
652

     General and administrative
(14
)
1,246

(33
)
1,246

          Total site closure and other restructuring costs
(428
)
7,370

(1,161
)
7,370

   Expenses related to the Broadcom patents:
 
 
 
 
     Cost of sales
2,090

2,358

3,815

3,855

     Engineering and development
9

806

51

2,322

     Selling and marketing
4

76

131

822

     General and administrative
(5
)
48

—

305

           Total expenses related to the Broadcom patents
2,098

3,288

3,997

7,304

   Expenses related to the acquisition of Endace:
 
 
 
 
     Selling and marketing
—

—

—

21

     General and administrative
—

—

—

352

 Total expenses related to the acquisition of Endace
—

—

—

373

   Expenses related to class action lawsuit:
 
 
 
 
     General and administrative
164

—

343

—

          Total expenses related to class action lawsuit
164

—

343

—

Expense related to IRS NOPA:
 
 
 
 
General and administrative
52

—

52

—

Total expenses related to IRS NOPA
52

—

52

—

Accretion of debt discount on convertible senior notes
1,640

765

3,253

765

Tax impact of above items and U.S. GAAP tax valuation allowance
26

(636
)
(2,236
)
(1,331
)
   Impact on GAAP net income (loss)
$
13,507

$
22,373

$
24,688

$
38,403

 
 
 
 
 
Non-GAAP net income
$
17,829

$
18,346

$
28,291

$
30,735

Non-GAAP diluted earnings per share
$
0.24

$
0.21

$
0.39

$
0.34

Diluted shares used in non-GAAP earnings per share computations
73,122

88,578

72,920

91,008



FY’15 Q2 Earnings Results     
January 29, 2015
Page 7 of 13


Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin:
 
 
 
Three Months Ended
Six Months Ended
($000s)
December 28,
December 29,
December 28,
December 29,
 
2014
2013
2014
2013
Revenue
$
111,087

$
122,996

$
214,896

$
237,828

 
 
 
 
 
GAAP gross margin
65,107

72,290

124,221

139,774

GAAP gross margin %
58.6
%
58.8
%
57.8
%
58.8
%
 
 
 
 
 
Items excluded from GAAP gross margin to calculate non-GAAP gross margin:
 
 
 
 
   Amortization of intangibles
6,355

6,239

12,709

12,399

   Stock-based compensation
72

147

188

236

   Site closure and other restructuring costs
53

277

89

277

   Expenses related to the Broadcom patents
2,090

2,358

3,815

3,855

Impact on gross margin
8,570

9,021

16,801

16,767

 
 
 
 
 
Non-GAAP gross margin
$
73,677

$
81,311

$
141,022

$
156,541

Non-GAAP gross margin %
66.3
%
66.1
%
65.6
%
65.8
%



Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses:
 
 
 
Three Months Ended
Six Months Ended
 
December 28,
December 29,
December 28,
December 29,
($000s)
2014
2013
2014
2013
GAAP operating expenses, as presented above
$
56,802

$
73,879

$
114,783

$
144,615

 
 
 
 
 
Items excluded from GAAP operating expenses to calculate non-GAAP operating expenses:
 
 
 
 
    Amortization of intangibles
(576
)
(1,603
)
(1,176
)
(3,207
)
    Stock-based compensation
(2,952
)
(3,597
)
(6,367
)
(8,080
)
    Site closure and other restructuring costs
481

(7,093
)
1,250

(7,093
)
    Expenses related to the Broadcom patents
(8
)
(930
)
(182
)
(3,449
)
    Expenses related to the acquisition of Endace
—

—

—

(373
)
    Expenses related to class action lawsuit
(164
)
—

(343
)
—

  Expenses related to IRS NOPA
(52
)
—

(52
)
—

         Impact on operating expenses
(3,271
)
(13,223
)
(6,870
)
(22,202
)
Non-GAAP operating expenses
$
53,531

$
60,656

$
107,913

$
122,413


FY’15 Q2 Earnings Results     
January 29, 2015
Page 8 of 13



Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Operating Income:
 
 
 
Three Months Ended
Six Months Ended
($000s)
December 28,
December 29,
December 28,
December 29,
 
2014
2013
2014
2013
GAAP operating income (loss) as presented above
$
8,305

$
(1,589
)
$
9,438

$
(4,841
)
 
 
 
 
 
Items excluded from GAAP operating income (loss) to calculate non-GAAP operating income:
 
 
 
 
   Amortization of intangibles
6,931

7,842

13,885

15,606

   Stock-based compensation
3,024

3,744

6,555

8,316

   Site closure and other restructuring costs
(428
)
7,370

(1,161
)
7,370

   Expenses related to the Broadcom patents
2,098

3,288

3,997

7,304

   Expenses related to the acquisition of Endace
—

—

—

373

   Expenses related to class action lawsuit
164

—

343

—

   Expenses related to IRS NOPA
52

—

52

—

   Impact on operating income (loss)
11,841

22,244

23,671

38,969

Non-GAAP operating income
$
20,146

$
20,655

$
33,109

$
34,128



 
Guidance for
Three Months Ending
March 29, 2015
 
 
 
 
Non-GAAP diluted earnings per share guidance
$0.11 - $0.15
 
 
Items excluded, net of tax, from non-GAAP diluted earnings per share to
calculate GAAP loss per share guidance:
 
      Amortization of intangibles
(0.10)
      Stock-based compensation
(0.06)
      Expenses related to the Broadcom patents
(0.03)
      Accretion of debt discount on convertible senior notes
(0.02)
      Tax impact of above items and U.S. GAAP tax valuation allowance
0.00
GAAP loss per share guidance
($0.06 - $0.10)

FY’15 Q2 Earnings Results     
January 29, 2015
Page 9 of 13


Net Revenue by Product Lines:
($000s)
 Q2 FY
2015
Revenues
% Total
Revenues
 
Q2 FY
2014
Revenues
% Total
Revenues
 
% Change
 
 
 
 
 
 
 
 
Network Connectivity Products
$
82,729

74
%
 
$
87,205

71
%
 
(5
)%
Storage Connectivity and Other Products
22,072

20
%
 
26,143

21
%
 
(16
)%
Emulex Connectivity Division
104,801

94
%
 
113,348

92
%
 
(8
)%
Network Visibility Products
6,286

6
%
 
9,648

8
%
 
(35
)%
Total net revenues
$
111,087

100
%
 
$
122,996

100
%
 
(10
)%

Net Revenues by Channel:
($000s)
 Q2 FY
2015
Revenues
% Total Revenues
 
Q2 FY
2014
Revenues
% Total Revenues
 
% Change
 
 
 
 
 
 
 
 
OEM
$
93,019

84
%
 
$
102,235

83
%
 
(9
)%
Distribution
15,070

13
%
 
16,424

13
%
 
(8
)%
End-user and other
2,998

3
%
 
4,337

4
%
 
(31
)%
Total net revenues
$
111,087

100
%
 
$
122,996

100
%
 
(10
)%

Net Revenues by Territory:
($000s)
 Q2 FY
2015
Revenues
% Total Revenues
 
Q2 FY
2014
Revenues
% Total Revenues
 
% Change
 
 
 
 
 
 
 
 
Asia Pacific
$
74,756

67
%
 
$
71,169

58
%
 
5
 %
United States
18,887

17
%
 
34,012

28
%
 
(44
)%
Europe, Middle East and Africa
16,441

15
%
 
17,176

14
%
 
(4
)%
Rest of world
1,003

1
%
 
639

nm

 
57
 %
Total net revenues
$
111,087

100
%
 
$
122,996

100
%
 
(10
)%


FY’15 Q2 Earnings Results     
January 29, 2015
Page 10 of 13


Note Regarding Non-GAAP Financial Information

To supplement the condensed consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), we have included the following non-GAAP financial measures in this press release or in the webcast to discuss our financial results for the second fiscal quarter which may be accessed via our website at www.emulex.com: (i) non-GAAP net income and diluted earnings per share, (ii) non-GAAP gross margin, (iii) non-GAAP operating expenses, (iv) non-GAAP operating income. These non-GAAP financial measures exclude certain expenses and reflect an additional way of viewing aspects of our operations that, when viewed with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of our results of operations and the factors and trends affecting our business. However, these non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. We use our non-GAAP financial measures internally to better understand and evaluate our business, prepare annual budgets, and in measuring performance for some forms of compensation.

Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects:

Amortization of intangibles. Amortization of intangibles generally represents costs incurred by an acquired company or other third party to build value prior to our acquisition of the intangible assets. As such, it is effectively part of the transaction costs of the acquisition rather than ongoing costs of operating our core business. As a result, we believe that exclusion of these costs in presenting non-GAAP financial measures provides management and investors a more effective means of evaluating its historical performance and projected costs and the potential for realizing cost efficiencies within our core business. Amortization of intangibles will recur in future periods.

Stock-based compensation. Although stock-based compensation represents an important part of incentive compensation offered to our key employees, we believe that exclusion of the impact of stock-based compensation assists management and investors in evaluating the period over period performance of our business operations and in comparing our performance with those of our competitors. Stock-based compensation expense will recur in future periods.

Site closure and other restructuring costs. We have recognized expenses related to an organizational restructure including closure and consolidation of certain facilities, as well as severance and related costs. We believe that exclusion of these expenses is useful to management and investors in evaluating the performance of our ongoing operations on a period-to-period basis and relative to our competitors. In this regard, we note that expenses of this type may be incurred in future periods but are generally infrequent in nature.

Patent litigation damages, license fees and royalties related to the Broadcom patents. We have incurred expenses in the form of damages, sunset period royalties and settlement costs as a result of a judgment in a patent litigation proceeding with Broadcom and the related partial settlement and worldwide license agreement executed on July 3, 2012 (the Release Agreement). We believe that exclusion of these costs of sales expenses related to the Broadcom patents is useful to management and investors in evaluating the performance of our ongoing operations on a period-to-period basis and relative to our competitors. In this regard, we note that expenses of this type are generally unrelated to our core business and/or infrequent in nature but will continue in future periods.

Dismissal Agreement and mitigation expenses related to the Broadcom patents. Effective March 30, 2014, we have entered into a Dismissal and Standstill Agreement (Dismissal Agreement) agreeing to pay Broadcom, a non-refundable, non-cancelable dismissal and standstill fee of $5 million. We have recognized mitigation expenses related to the Broadcom patents. We believe that exclusion of these operating expenses related to the Broadcom patents is useful to management and investors in evaluating the performance of our ongoing operations on a period-to-period basis and relative to our competitors. In this regard, we note that expenses of this type are generally unrelated to our core business and/or infrequent in nature but will continue in future periods.

Expenses related to the acquisition of Endace Limited. We have incurred various expenses in connection with our acquisition of Endace Limited including but not limited to legal fees, accounting fees, the mark-up on acquired

FY’15 Q2 Earnings Results     
January 29, 2015
Page 11 of 13


inventory, severance costs and realized translation loss. We believe that exclusion of these charges is useful to management and investors in evaluating the performance of our ongoing operations on a period-to-period basis and relative to our competitors, as these expenditures do not reflect a continuing cost of operating our current core business. In this regard, we note that expenses of this type relate to the acquisition of an operating business and, as such, are infrequent in nature but may occur in future periods in the event we make a material acquisition.

Expenses related to class action lawsuit. We have incurred expenses related to a class action lawsuit. We believe that exclusion of these expenses is useful to management and investors in evaluating the performance of our ongoing operations on a period-to-period basis and relative to our competitors. In this regard, we note that expenses of this type are infrequent in nature.

Expenses related to IRS NOPA. We have incurred various legal and accounting expenses related to the receipt and our response to the Notice of Proposed Adjustment (NOPA) received from the Internal Revenue Service in March of 2014. We disagree with the IRS’ proposed adjustments and the basis for its positions, and will administratively appeal to the IRS Appeals Office. We believe that exclusion of these expenses is useful to management and investors in evaluating the performance of our ongoing operations on a period-to-period basis and relative to our competitors. In this regard, we note that expenses of this type are infrequent in nature but will continue in future periods until these audits are resolved.

Accretion of debt discount on convertible senior notes. We have accreted debt discount in connection with the convertible senior notes. We believe that exclusion of this expense is useful to management and investors in evaluating the performance of our ongoing operations on a period-to-period basis and relative to our competitors. In this regard, we note that expenses of this type are generally unrelated to our core business but will continue in future periods until maturity of the convertible senior notes.

Valuation allowance for U.S. federal and state deferred tax assets. The Company has concluded that it is more likely than not that we will be unable to fully utilize the majority of our U.S. federal and state deferred tax assets. As a result, the Company has previously recorded a valuation allowance against those assets to the extent that they cannot be realized through net operating loss carrybacks to prior tax years.  We believe that eliminating the impact of a discrete adjustment of this nature and its continuing impact on our effective tax rate is useful to management and investors in evaluating the performance of the Company’s ongoing operations on a period-to-period basis and relative to the Company’s competitors.  In this regard, we note that adjustments of this type are generally infrequent in nature.

- - - - - - - - -


FY’15 Q2 Earnings Results     
January 29, 2015
Page 12 of 13


About Emulex
Emulex provides connectivity, monitoring and management solutions for high-performance networks, delivering provisioning, end-to-end application visibility, optimization and acceleration for the next generation of software-defined, telco and Web-scale data centers. The Company’s I/O connectivity portfolio, which has been designed into server and storage solutions from leading OEMs and ODMs worldwide, enables organizations to manage bandwidth, latency, security and virtualization. The Emulex network visibility portfolio enables global organizations to monitor and improve application and network performance management. Emulex is headquartered in Costa Mesa, Calif. For more information about Emulex (NYSE:ELX) please visit http://www.Emulex.com.

Investor Contact:
 
Press Contact:
Paul Mansky
 
Katherine Lane
Vice President, Corporate Development and Investor Relations
 
Senior Director, Corporate and Marketing Communications
+1 714 885-2888
 
+1 714 885-3828
paul.mansky@emulex.com
 
katherine.lane@emulex.com


“Safe Harbor” Statement
"Safe Harbor'' Statement under the Private Securities Litigation Reform Act of 1995: With the exception of historical information, the statements set forth above contain forward-looking statements that involve risk and uncertainties. We expressly disclaim any obligation or undertaking to release publicly any updates or changes to these forward-looking statements that may be made to reflect any future events or circumstances. We wish to caution readers that actual future results could differ materially from those described in the forward-looking statements as a result of a variety of factors, including those discussed in our filings with the Securities and Exchange Commission, including our recent filings on Forms 10-K and 10-Q, under the caption “Risk Factors.” Those factors and the factors listed below could cause actual results to differ materially from those in the forward-looking statements:
•
faster than anticipated declines in the demand for storage networking and fiber channel and slower than expected growth of the converged networking market or the failure of our Original Equipment Manufacturer (OEM) customers to successfully incorporate our products into their systems;
•
the highly competitive nature of the markets for our products as well as pricing pressures that may result from such competitive conditions and the emergence of new or stronger competitors as a result of consolidation movements in the market;
•
our dependence on a limited number of customers and the effects of the loss of, decrease in or delays of orders by any such customers or the failure of our OEM customers to successfully incorporate our products into their systems;
•
our reliance on a limited number of third-party suppliers and subcontractors for components and assembly, many of which are located outside of the United States;
•
the effect on our margins of rapid migration of technology and product substitution by customers, including transitions from application specific integrated circuit (ASIC) solutions to boards for selected applications and higher-end to lower-end products, mezzanine card products or modular Local Area Network (LAN) on Motherboard (LOMs);
•
the non-linearity and variability in the level of our revenue resulting from the variable and seasonal procurement patterns of our customers;
•
the possibility that our goodwill could become impaired in the near term which would result in a non-cash charge and could adversely affect our reported GAAP operating results;
•
any inadequacy of our intellectual property protection or our ability to obtain necessary licenses or other intellectual property rights on commercially reasonable terms;
•
our ability to attract and retain key technical personnel;
•
our ability to respond quickly to technological developments and to benefit from our research and development activities as well as government grants related thereto and delays in product development;

FY’15 Q2 Earnings Results     
January 29, 2015
Page 13 of 13


•
intellectual property and other litigation against us, with or without merit, that could result in substantial attorneys’ fees and costs, cause product shipment delays, loss of patent rights, monetary damages, costs associated with product or component redesigns and require us to indemnify customers or enter into royalty or licensing agreements, which may or may not be available;
•
our dependence on sales and product production outside of the United States so that our results could be affected by adverse economic, social, political and infrastructure conditions in those countries;
•
that we may fail to realize the anticipated benefits from the acquisition of Endace Limited (Endace) on a timely basis or at all which could result in an impairment of assets or be unable to complete the integration of Endace’s technology into our existing operations in a timely and efficient manner;
•
the effect of any actual or potential unsolicited offers to acquire us, proxy contests or the activities of activist investors;
•
weakness in domestic and worldwide macro-economic conditions, currency exchange rate fluctuations or potential disruptions in world credit and equity markets; terrorist activities, natural disasters, or general economic or political instability and any resulting disruption in our supply chain or customer purchasing patterns; and
•
changes in tax rates or legislation, accounting standards and other regulatory changes.

All trademarks, trade names, service marks, and logos referenced herein belong to their respective companies.


EMULEX CORP /DE/ Reports