8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 15, 2003

QLOGIC CORPORATION

(Exact name of registrant as specified in its charter)

Delaware
(State of incorporation) 0-23298
(Commission File Number) 33-0537669
(IRS Employer Identification No.)

26650 Aliso Viejo Parkway, Aliso Viejo, California
(Address of principal executive offices) 92656
(Zip Code)

Registrant’s telephone number, including area code: (949) 389-6000

TABLE OF CONTENTS

	Item 12. Results of Operations and Financial Condition.
SIGNATURES
EXHIBIT INDEX
EXHIBIT 99.1

Item 12. Results of Operations and Financial Condition.

     On October 15, 2003, the Registrant reported its financial results for its fiscal second quarter ended September 28, 2003. A copy of the press release issued by the Registrant concerning the foregoing results is furnished herewith as Exhibit 99.1 and is incorporated by reference.

     The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filings of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such filing. The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	QLOGIC CORPORATION
October 15, 2003	/s/ Frank A. Calderoni
	Frank A. Calderoni
	Senior Vice President and
	Chief Financial Officer

EXHIBIT INDEX

Exhibit
Number	Description of Document
99.1	Press Release, dated October 15, 2003, reporting the financial results of QLogic Corporation for its fiscal second quarter ended September 28, 2003.

EX-99.1 3 a93640exv99w1.htm EXHIBIT 99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Editor’s Contact:
Steve Sturgeon
QLogic Corporation
Phone: (949) 389-6268
steve.sturgeon@qlogic.com

Investor’s Contact:
Michael Roe
QLogic Corporation
Phone: (949) 389-6440
michael.roe@qlogic.com

QLOGIC REPORTS SECOND QUARTER
RESULTS FOR FISCAL YEAR 2004
Revenues and Net Income Reach Record Levels

Aliso Viejo, Calif., October 15, 2003 — QLogic Corporation (Nasdaq:QLGC), the company that powers storage area networks (SANs), today announced its second quarter financial results for the period ended September 28, 2003.

Net revenues on a GAAP basis for the second quarter of fiscal 2004 were a record $132.3 million, up 5% sequentially from the $126.2 million reported in the first quarter of fiscal 2004. Fibre Channel revenues for the second quarter were up 8% sequentially to a record $101.0 million and represented 76% of the Company’s total revenue. Net income on a GAAP basis for the second quarter of fiscal 2004 was a record $34.2 million, or $0.35 per share on a diluted basis. This was an increase of 8% sequentially from the $31.7 million, or $0.33 per share on a diluted basis, reported in the first quarter of fiscal 2004.

During the second quarter of fiscal 2004, net revenues increased 23% from the $107.1 million reported in the comparable quarter last year on a GAAP basis. Fibre Channel revenues for the second quarter were up 36% from the comparable quarter last year. Second quarter net income on a GAAP basis increased 49% from the $23.0 million, or $0.24 per share on a diluted basis, reported in the second quarter of last year.

Net revenues for the first six months of fiscal 2004 were $258.5 million, up 25% from the $206.1 million reported in the comparable period last year on a GAAP basis. Net income on a GAAP basis for the first six months of fiscal 2004 was $65.9 million, or $0.68 per share on a diluted basis. This was an increase

of 43% from the $46.1 million, or $0.48 per share on a diluted basis, reported in the comparable period last year.

Revenues on a pro forma basis of $132.3 million for the second quarter of fiscal 2004 and $126.2 million for the first quarter of fiscal 2004 were the same as net revenues reported on a GAAP basis. Pro forma net income for the second quarter of fiscal 2004 was a record $36.1 million, or $0.37 per share on a diluted basis, up 7% sequentially from the $33.8 million, or $0.35 per share on a diluted basis, for the first quarter of fiscal 2004.

During the second quarter of fiscal 2004, revenues on a pro forma basis increased 22% from the $108.5 million recorded in the comparable quarter last year. Fibre Channel revenues on a pro forma basis for the second quarter were up 34% from the $75.6 million recorded in the comparable quarter last year. Pro forma net income for the second quarter increased 31% from the $27.5 million, or $0.29 per share on a diluted basis, for the second quarter of last year.

Pro forma revenues for the first six months of fiscal 2004 were $258.5 million, up 24% from the $209.3 million recorded in the comparable period last year. Pro forma net income for the first six months of fiscal 2004 was $69.9 million, or $0.73 per share on a diluted basis. This was an increase of 31% from the $53.4 million, or $0.56 per share on a diluted basis, reported in the comparable period last year.

The pro forma non-GAAP results are a supplement to financial statements based on GAAP and these results include adjustments primarily for non-cash items associated with merger related stock compensation charges and, in fiscal 2003, Fibre Channel sales discounts for stock warrants and an impairment of an investment in a technology company. QLogic uses pro forma information to evaluate its on-going operating performance and believes this presentation provides investors with additional insight into its underlying operating results and business trends. A reconciliation between the GAAP and pro forma non-GAAP results is included in the accompanying financial data.

“We are very pleased with the company’s performance during the second quarter and the achievement of record revenues and net income. The continued growth in our pro forma revenues during the second quarter was the result of a significant increase in sales of our Fibre Channel products, which increased 8% sequentially and 34% over the comparable quarter last year,” said H.K. Desai, the Company’s chairman, chief executive officer and president. “We continue to improve our share in the Fibre Channel market driven by broad-based increases in demand from major original equipment manufacturers and channel partners.”

The Company’s balance sheet was again highlighted by an increase in cash and short-term investments, ending the quarter with $708.2 million, an increase of $65.0 million during the first six months of fiscal 2004.

QLogic’s fiscal 2004 second quarter conference call is scheduled today at 2:30 p.m. Pacific Time (5:30 p.m. Eastern Time). H.K. Desai, chairman of the board, chief executive officer and president, and Frank Calderoni, senior vice president and chief financial officer, will host the conference call. The call is being webcast live via the Internet at www.qlogic.com/company/investor_relations.asp or via CCBN. Phone access to participate in the conference call is available at (719) 867-0660, passcode: 135702.

The quarterly financial information that the Company intends to discuss during the conference call is included in this press release and will be available on the Company’s website at www.qlogic.com/company/investor_relations.asp for 12 months following the conference call. To listen to a webcast replay of the conference call, please visit the Investor Relations section of the Company’s website at www.qlogic.com/company/investor_relations.asp. The webcast replay will be available for 12 months following the conference call. An audio replay of the conference call will also be available through October 29, 2003 by calling (719) 457-0820, passcode: 135702.

Powered by QLogic

Since 1993, over 45 million QLogic products have shipped inside servers, workstations, RAID subsystems, tape libraries, disk and tape drives. These products were delivered to small, medium and large enterprises around the world. Powering solutions from leading companies like Cisco, Dell, EMC, Fujitsu, Hitachi, HP, IBM, Network Appliance, Quantum, StorageTek and Sun Microsystems, the broad line of QLogic controller chips, host bus adapters, network switches and management software move data from storage devices through the network fabric to servers. A member of the S&P 500 and NASDAQ 100, QLogic was recently named to Fortune’s 100 Fastest Growing Companies list for the fourth consecutive year and was named to Business Week’s list of 100 Hot Growth Companies for 2003. In addition, QLogic was named to Forbes’ Best 200 Small Companies for the fourth consecutive year during fiscal year 2003. For more information visit www.qlogic.com.

Note: All QLogic-issued press releases appear on the Company’s website (www.qlogic.com). Any announcement that does not appear on the QLogic website has not been issued by QLogic.

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 within 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 wishes to advise readers that these potential risks and uncertainties include, but are not limited to: the volatility of the Company’s stock price; fluctuations in operating results; the dependence on the storage area network market; the ability to maintain and gain market or industry acceptance of the Company’s products; the dependence on a limited number of customers and fluctuations or cancellations in orders from customers; the ability to compete effectively with other companies; a reduction in sales efforts by current distributors; the dependence on relationships with certain silicon chip suppliers and other subcontractors; the complexity of the Company’s products;

terrorist activities and resulting military actions; international, economic, regulatory, political and other risks; changes in semiconductor foundry capacity; the ability to maintain or expand upon strategic alliances; the strain on resources caused by rapid growth and expansion; the ability to attract and retain key personnel; and the ability to protect proprietary rights or to satisfactorily resolve any infringement claims.

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 many 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 undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

Trademarks and registered trademarks are the property of the companies with which they are associated.

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME — GAAP

(unaudited — in thousands, except per share amounts)

			Three Months Ended						Six Months Ended
			Sep. 28,		Jun. 29,		Sep. 29,		Sep. 28,		Sep. 29,
			2003		2003		2002		2003		2002
Gross revenues			$	132,267	$	126,235	$	108,525	$	258,502	$	209,305
Stock-based sales discounts				—		—		1,410		—		3,228
	Net revenues			132,267		126,235		107,115		258,502		206,077
Cost of revenues				42,366		42,002		40,200		84,368		77,307
	Gross profit			89,901		84,233		66,915		174,134		128,770
Operating expenses:
	Engineering and development			21,482		22,735		19,633		44,217		37,812
	Selling and marketing			12,436		11,729		11,435		24,165		22,053
	General and administrative			4,408		4,091		3,651		8,499		6,845
		Total operating expenses		38,326		38,555		34,719		76,881		66,710
Operating income				51,575		45,678		32,196		97,253		62,060
Interest and other income				3,556		5,412		2,167		8,968		6,779
Income before income taxes				55,131		51,090		34,363		106,221		68,839
Income taxes				20,950		19,414		11,348		40,364		22,768
Net income			$	34,181	$	31,676	$	23,015	$	65,857	$	46,071
Net income per share:
	Basic		$	0.36	$	0.34	$	0.25	$	0.70	$	0.49
	Diluted		$	0.35	$	0.33	$	0.24	$	0.68	$	0.48
Number of shares used in per share computations:
	Basic			94,282		94,017		93,377		94,150		93,277
	Diluted			96,360		96,002		95,189		96,181		95,384

QLOGIC CORPORATION

PRO FORMA NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited — in thousands, except per share amounts)

			Three Months Ended						Six Months Ended
			Sep. 28,		Jun. 29,		Sep. 29,		Sep. 28,		Sep. 29,
			2003		2003		2002		2003		2002
Net revenues			$	132,267	$	126,235	$	108,525	$	258,502	$	209,305
Cost of revenues				42,366		42,002		40,200		84,368		77,307
	Gross profit			89,901		84,233		68,325		174,134		131,998
Operating expenses:
	Engineering and development			19,590		20,623		18,065		40,213		34,677
	Selling and marketing			12,436		11,729		11,435		24,165		22,053
	General and administrative			4,408		4,091		3,651		8,499		6,845
		Total operating expenses		36,434		36,443		33,151		72,877		63,575
Operating income				53,467		47,790		35,174		101,257		68,423
Interest and other income				3,556		5,412		5,167		8,968		9,779
Income before income taxes				57,023		53,202		40,341		110,225		78,202
Income taxes				20,950		19,414		12,804		40,364		24,826
Net income			$	36,073	$	33,788	$	27,537	$	69,861	$	53,376
Net income per share:
	Basic		$	0.38	$	0.36	$	0.29	$	0.74	$	0.57
	Diluted		$	0.37	$	0.35	$	0.29	$	0.73	$	0.56
Number of shares used in per share computations:
	Basic			94,282		94,017		93,377		94,150		93,277
	Diluted			96,360		96,002		95,189		96,181		95,384

The above pro forma non-GAAP financial information is based on the Company’s unaudited condensed consolidated financial statements and excludes certain adjustments primarily for non-cash items associated with merger related stock compensation charges and, in fiscal 2003, Fibre Channel sales discounts for stock warrants and an impairment of an investment in a technology company. Prior to the first quarter of fiscal 2004, the Company’s pro forma income tax expense was based on the respective effective tax rate utilized for GAAP purposes applied to the pro forma pre-tax income. However in fiscal 2004, the pro forma tax effect is being calculated on a specific item basis as all of the Company’s pro forma adjustments in fiscal 2004 are not tax deductible. The pro forma income tax expense for all periods prior to fiscal 2004 reflect the income tax expense on a specific item basis consistent with fiscal 2004. The Company uses the pro forma information to evaluate its on-going operating performance and believes this presentation provides investors with additional insight into its underlying operating results and business trends. This presentation is not in accordance with, or an alternative for, GAAP and may be different from pro forma non-GAAP presentations used by other companies.

A reconciliation of the Company’s net income and the related net income per share amounts computed in accordance with generally accepted accounting principles to the corresponding amounts included above is presented in the following table.

QLOGIC CORPORATION

Reconciliation of GAAP Net Income to Pro Forma Non-GAAP Net Income

(unaudited — in thousands, except per share amounts)

			Three Months Ended							Six Months Ended
			Sep. 28,		Jun. 29,		Sep. 29,			Sep. 28,		Sep. 29,
			2003		2003		2002			2003		2002
GAAP net income			$	34,181	$	31,676	$	23,015		$	65,857	$	46,071
Items excluded from GAAP net income:
		Merger related stock compensation charges		1,892		2,112		1,568			4,004		3,135
		Sales discounts for stock warrants		—		—		1,410			—		3,228
		Technology company investment impairment		—		—		3,000			—		3,000
		Income tax effect		—		—		(1,456	)		—		(2,058	)
Pro forma net income			$	36,073	$	33,788	$	27,537		$	69,861	$	53,376
Basic net income per share:
	GAAP net income		$	0.36	$	0.34	$	0.25		$	0.70	$	0.49
	Adjustments			0.02		0.02		0.04			0.04		0.08
	Pro forma net income		$	0.38	$	0.36	$	0.29		$	0.74	$	0.57
Diluted net income per share:
	GAAP net income		$	0.35	$	0.33	$	0.24		$	0.68	$	0.48
	Adjustments			0.02		0.02		0.05			0.05		0.08
	Pro forma net income		$	0.37	$	0.35	$	0.29		$	0.73	$	0.56

QLOGIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited — in thousands)

			Sep. 28, 2003		Mar. 30, 2003
ASSETS
Current assets:
	Cash and cash equivalents		$	174,238	$	137,810
	Short-term investments			533,921		505,387
	Accounts receivable, net			64,897		49,694
	Inventories			19,317		19,365
	Deferred income taxes			27,651		31,914
	Prepaid expenses and other current assets			3,179		4,010
		Total current assets		823,203		748,180
Property and equipment, net				62,501		59,813
Other assets				5,836		9,426
			$	891,540	$	817,419
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable		$	17,430	$	15,301
	Accrued expenses			43,612		51,383
		Total current liabilities		61,042		66,684
Total stockholders’ equity				830,498		750,735
			$	891,540	$	817,419

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited — in thousands)

					Six Months Ended
					Sep. 28,			Sep. 29,
					2003			2002
Cash flows from operating activities:
	Net income				$	65,857		$	46,071
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization				7,128			6,575
		Deferred income taxes				7,539			6,678
		Stock-based sales discounts				—			3,228
		Other non-cash charges				7,080			9,034
		Changes in operating assets and liabilities				(19,652	)		4,985
				Net cash provided by operating activities		67,952			76,571
Cash flows from investing activities:
	Net purchases of marketable securities					(29,575	)		(22,440	)
	Additions to property and equipment					(9,920	)		(6,857	)
			Net cash used in investing activities			(39,495	)		(29,297	)
Cash flows from financing activities:
	Proceeds from issuance of stock under stock plans					8,969			4,833
	Purchase of treasury stock					(998	)		—
			Net cash provided by financing activities			7,971			4,833
Net increase in cash and cash equivalents						36,428			52,107
Cash and cash equivalents at beginning of period						137,810			76,124
Cash and cash equivalents at end of period					$	174,238		$	128,231

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