EX-99.1 2 a55965exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
FOR IMMEDIATE RELEASE
Media Contact:
Steve Zivanic
QLogic Corporation
408.667.8039
steve.zivanic@qlogic.com
Investor Contact:
Simon Biddiscombe
QLogic Corporation
949.389.7533
simon.biddiscombe@qlogic.com
QLOGIC REPORTS FOURTH QUARTER
AND FISCAL YEAR 2010 RESULTS
ALISO VIEJO, Calif., April 29, 2010—QLogic 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 28, 2010.
Fourth Quarter Highlights
  •   Net revenue: $145.7 million.
 
  •   GAAP net loss: $4.8 million or $0.04 per diluted share.
 
  •   Non-GAAP net income: $32.4 million or $0.28 per diluted share.
 
  •   Cash generated from operations: $69.3 million.
 
  •   Cash and investment securities: $375.7 million as of March 28, 2010.
Fiscal Year Highlights
  •   Net revenue: $549.1 million.
 
  •   GAAP net income: $54.9 million or $0.47 per diluted share.
 
  •   Non-GAAP net income: $117.7 million or $1.00 per diluted share.
 
  •   Cash generated from operations: $161.8 million.
Financial Results
Net revenue for the fourth quarter of fiscal 2010 was $145.7 million and increased 12% from $130.5 million in the same quarter last year. Revenue from Host Products was $103.7 million during the fourth quarter of fiscal 2010 and increased 17% from $88.4 million in the same quarter last year. Revenue from Network Products was $22.6 million during the fourth quarter of fiscal 2010 compared to $25.1 million in the same quarter last year. Revenue from Silicon Products was $16.7 million during the fourth quarter of fiscal 2010 compared to $13.7 million in the same quarter last year.

 

 

Net loss on a GAAP basis for the fourth quarter of fiscal 2010 was $4.8 million, or $0.04 per diluted share, compared to net income of $19.2 million, or $0.16 per diluted share, for the fourth quarter of fiscal 2009. Net loss on a GAAP basis for the fourth quarter of fiscal 2010 included a special tax charge of $29.7 million described below. Net income on a non-GAAP basis for the fourth quarter of fiscal 2010 was $32.4 million, or $0.28 per diluted share, and increased from $24.5 million, or $0.20 per diluted share, for the fourth quarter of fiscal 2009.
Approximately five years ago, the Company implemented a globalization initiative to expand its worldwide footprint. As part of this initiative, certain intellectual property and other rights were licensed to an international subsidiary of the Company. The special tax charge of $29.7 million recorded in the fourth quarter of fiscal 2010 was primarily related to an amendment of the license agreement with this international subsidiary which resulted in a fully paid-up license.
Net revenue for fiscal 2010 was $549.1 million compared to $633.9 million in fiscal 2009. Net income on a GAAP basis for fiscal 2010 was $54.9 million, or $0.47 per diluted share, compared to $108.8 million, or $0.85 per diluted share for fiscal 2009. Non-GAAP net income for fiscal 2010 was $117.7 million, or $1.00 per diluted share, compared to $154.2 million, or $1.20 per diluted share for fiscal 2009.
“Despite a very challenging macroeconomic environment, we delivered solid financial performance during the fourth quarter and full fiscal year,” said H. K. Desai, chief executive officer, QLogic. “This performance was attributable to continued share gains within our traditional markets, the introduction and ramp of innovative new products that provide us incremental business opportunities in the converged networking and 10Gb Ethernet markets, and extremely careful operating expense management.”
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 fiscal 2010 fourth quarter conference call is scheduled for today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). H.K. Desai, chief executive officer, and Simon Biddiscombe, senior vice president and chief financial officer, will host the conference call. The call is being webcast live via the Internet at http://ir.qlogic.com and www.earnings.com. Phone access to participate in the conference call is available at (719) 457-2692, pass code: 6096494.
The financial information that the company intends to discuss during the conference call will be available on the company’s website at http://ir.qlogic.com for twelve months following the conference call. A replay of the conference call will be available via webcast at http://ir.qlogic.com for twelve months.
Follow QLogic @ twitter.com/qlogic

 

 

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. QLogic is a NASDAQ Global Select company and is included in the S&P 500. 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: 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 company’s dependence on the networking markets served; potential adverse effects of server virtualization technology on the company’s business; potential adverse effects of increased market acceptance of blade servers; 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; seasonal fluctuations and uneven sales patterns in orders from customers; the company’s ability to compete effectively with other companies; declining average unit sales prices of comparable products; a reduction in sales efforts by current distributors; 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; declines in the market value of the company’s investment securities; the complexity of the company’s products; sales fluctuations arising from customer transitions to new products; changes in the company’s 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; reliance on third party technology; the use of “open source” software in the company’s products; changes in regulations or standards regarding energy use of the company’s products; computer viruses and other tampering with the company’s 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 company’s operating and financial results are described in the company’s Forms 10-K, 10-Q and other reports filed, or to be filed, with the Securities and Exchange Commission. The company urges all interested parties to read these reports to gain a better understanding of the business and other risks that the company faces. The forward-looking statements contained in this press release are made only as of the date hereof, and the company does not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
QLogic and the QLogic logo are registered trademarks of QLogic Corporation. Other trademarks and registered trademarks are the property of the companies with which they are associated.

 

 

QLOGIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited — in thousands, except per share amounts)
                                 
    Three Months Ended     Year Ended  
    March 28,     March 29,     March 28,     March 29,  
    2010     2009     2010     2009  
Net revenues
   $ 145,716     $ 130,547     $ 549,070     $ 633,862  
Cost of revenues
     50,869       44,533       196,127       210,075  
 
                        
Gross profit
     94,847       86,014       352,943       423,787  
 
                        
 
                                
Operating expenses:
                                
Engineering and development
     34,537       32,687       136,831       133,252  
Sales and marketing
     19,333       19,064       77,601       86,959  
General and administrative
     9,319       7,747       34,242       32,639  
Special charges
     4,315       2,656       5,163       4,063  
 
                        
Total operating expenses
   67,504     62,154       253,837       256,913  
 
                        
 
                                
Operating income
     27,343       23,860       99,106       166,874  
 
                                
Interest and other income, net
     3,605       99       10,601       2,134  
 
                        
 
                                
Income before income taxes
     30,948       23,959       109,707       169,008  
 
                                
Income taxes
     35,774       4,762       54,759       60,219  
 
                        
 
                                
Net income (loss)
   $ (4,826 )   $ 19,197     $ 54,948     $ 108,789  
 
                        
Net income (loss) per share:
                                
Basic
   $ (0.04 )   $ 0.16     $ 0.47     $ 0.85  
Diluted
   $ (0.04 )   $ 0.16     $ 0.47     $ 0.85  
 
                                
Number of shares used in per share calculations:
                                
Basic
     113,343       120,957       116,037       127,776  
Diluted
     113,343       121,486       117,364       128,570  

 

 

QLOGIC CORPORATION
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP NET INCOME
(unaudited — in thousands, except per share amounts)
                                 
    Three Months Ended     Year Ended  
    March 28,     March 29,     March 28,     March 29,  
    2010     2009     2010     2009  
GAAP net income (loss)
   $ (4,826 )   $ 19,197     $ 54,948     $ 108,789  
Items excluded from GAAP net income (loss):
                                
Stock-based compensation
     8,210       6,502       35,232       28,646  
Amortization of acquisition-related intangible assets
     1,612       2,713       8,331       15,032  
Acquisition-related stock-based compensation
     59       (614 )     462       173  
Special charges
     4,315       2,656       5,163       4,063  
Gain on sales of previously impaired investment securities
     (1,681 )     (2,075 )     (2,286 )     (2,075 )
Impairment of investment securities
     —       4,405       —       16,407  
Net losses (gains) on trading securities
     (426 )     149       (426 )     (3,456 )
Income tax charges related to globalization initiative
     29,676       —       29,676       —  
Other income tax effects
     (4,501 )     (8,421 )     (13,448 )     (13,391 )
 
                        
Total non-GAAP adjustments
     37,264       5,315       62,704       45,399  
 
                        
Non-GAAP net income
   $ 32,438     $ 24,512     $ 117,652     $ 154,188  
 
                        
 
                                
Net income (loss) per diluted share:
                                
GAAP net income (loss)
   $ (0.04 )   $ 0.16     $ 0.47     $ 0.85  
Adjustments
     0.32       0.04       0.53       0.35  
 
                        
Non-GAAP net income
   $ 0.28     $ 0.20     $ 1.00     $ 1.20  
 
                        
 
                                
Number of shares used in non-GAAP per diluted share calculations
     115,561       121,486       117,364       128,570  
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:
                                 
  Three Months Ended     Year Ended  
    March 28,     March 29,     March 28,     March 29,  
(unaudited – in thousands)   2010     2009     2010     2009  
Non-GAAP Adjustments:
                                
Cost of revenues:
                                
Stock-based compensation
   $ 590     $ 481     $ 2,629     $ 2,058  
Amortization of acquisition-related intangible assets
     1,612       1,873       6,445       11,673  
 
                        
Total cost of revenue adjustments
     2,202       2,354       9,074       13,731  
 
                        
 
                                
Operating expenses:
                                
Engineering and development:
                                
Stock-based compensation
     4,056       3,391       17,775       14,991  
Amortization of acquisition-related intangible assets
     —       31       —       125  
Acquisition-related stock-based compensation
     59       (619 )     462       151  
Sales and marketing:
                                
Stock-based compensation
     1,688       1,242       6,918       5,545  
Amortization of acquisition-related intangible assets
     —       809       1,886       3,234  
Acquisition-related stock-based compensation
     —       5       —       22  
General and administrative:
                                
Stock-based compensation
     1,876       1,388       7,910       6,052  
Special charges
     4,315       2,656       5,163       4,063  
 
                        
Total operating expense adjustments
     11,994       8,903       40,114       34,183  
 
                        
 
                                
Interest and other income:
                                
Gain on sales of previously impaired investment securities
     (1,681 )     (2,075 )     (2,286 )     (2,075 )
Impairment of investment securities
     —       4,405       —       16,407  
Net losses (gains) on trading securities
     (426 )     149       (426 )     (3,456 )
 
                        
 
                                
Total interest and other income adjustments
     (2,107 )     2,479       (2,712 )     10,876  
 
                        
 
                                
Total non-GAAP adjustments before income taxes
     12,089       13,736       46,476       58,790  
 
                        
 
                                
Income taxes:
                                
Income tax charges related to globalization initiative
     29,676       —       29,676       —  
Other income tax effects
     (4,501 )     (8,421 )     (13,448 )     (13,391 )
 
                        
 
                                
Total income tax adjustments
     25,175       (8,421 )     16,228       (13,391 )
 
                        
 
                                
Total non-GAAP adjustments
   $ 37,264     $ 5,315     $ 62,704     $ 45,399  
 
                        

 

 

QLOGIC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited — in thousands)
                 
    March 28, 2010     March 29, 2009  
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 190,308     $ 203,722  
Short-term investment securities
     185,365       139,561  
Accounts receivable, net
     73,301       68,519  
Inventories
     19,403       40,293  
Deferred tax assets
     10,976       19,002  
Other current assets
     9,845       10,854  
 
            
Total current assets
     489,198       481,951  
 
                
Long-term investment securities
     —       34,986  
Property and equipment, net
     83,496       92,547  
Goodwill
     119,748       118,859  
Purchased intangible assets, net
     17,394       19,117  
Deferred tax assets
     36,917       28,785  
Other assets
     3,984       4,045  
 
            
 
                
 
   $ 750,737     $ 780,290  
 
            
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities:
                
Accounts payable
   $ 36,766     $ 36,874  
Accrued compensation
     22,727       28,702  
Accrued taxes
     2,633       13,499  
Deferred revenue
     9,240       7,470  
Other current liabilities
     11,069       6,728  
 
            
Total current liabilities
     82,435       93,273  
 
                
Accrued taxes
     70,577       47,116  
Deferred revenue
     7,401       8,559  
Other liabilities
     6,985       4,797  
 
            
Total liabilities
     167,398       153,745  
 
            
 
                
Stockholders’ equity:
                
Common stock
     205       202  
Additional paid-in capital
     778,853       712,064  
Retained earnings
     1,248,675       1,193,727  
Accumulated other comprehensive income
     1,206       634  
Treasury stock
     (1,445,600 )     (1,280,082 )
 
            
Total stockholders’ equity
     583,339       626,545  
 
            
 
   $ 750,737     $ 780,290  
 
            

 

 

QLOGIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited — in thousands)
                 
    Year Ended  
    March 28,     March 29,  
    2010     2009  
Cash flows from operating activities:
                
Net income
   $ 54,948     $ 108,789  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
     31,803       32,525  
Stock-based compensation
     35,694       28,819  
Amortization of acquisition-related intangible assets
     8,331       15,032  
Deferred income taxes
     5,999       16,660  
Net gains on investment securities
     (4,982 )     (7,095 )
Impairment of investment securities
     —       16,407  
Other non-cash charges
     1,090       680  
Changes in operating assets and liabilities, net of acquisition:
                
Accounts receivable
     (4,432 )     12,845  
Inventories
     21,920       (12,773 )
Other assets
     487       (2,126 )
Accounts payable
     240       707  
Accrued compensation
     (6,036 )     (884 )
Accrued taxes
     11,827       7,190  
Deferred revenue
     612       2,249  
Other liabilities
     4,271       688  
 
            
Net cash provided by operating activities
     161,772       219,713  
 
            
 
                
Cash flows from investing activities:
                
Purchases of available-for-sale securities
     (244,083 )     (122,437 )
Proceeds from sales and maturities of available-for-sale securities
     223,729       162,884  
Proceeds from disposition of trading securities
     11,425       4,550  
Reclassification from cash equivalents to other investment securities
     —       (57,209 )
Distributions from other investment securities
     5,464       48,855  
Purchases of property and equipment
     (24,528 )     (30,721 )
Acquisition of business, net of cash acquired
     (14,931 )     —  
 
            
Net cash provided by (used in) investing activities
     (42,924 )     5,922  
 
            
 
                
Cash flows from financing activities:
                
Proceeds from issuance of stock under stock plans
     34,375       25,522  
Excess tax benefits from stock-based compensation
     591       279  
Minimum tax withholding paid on behalf of employees for restricted stock units
     (2,875 )     (1,981 )
Purchases of treasury stock
     (163,419 )     (205,742 )
Payoff of line of credit assumed in acquisition
     (934 )     —  
 
            
Net cash used in financing activities
     (132,262 )     (181,922 )
 
            
 
                
Net increase (decrease) in cash and cash equivalents
     (13,414 )     43,713  
 
                
Cash and cash equivalents at beginning of year
     203,722       160,009  
 
            
 
                
Cash and cash equivalents at end of year
   $ 190,308     $ 203,722  
 
            

 

 

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 28,     March 29,     March 28,     March 29,  
    2010     2009     2010     2009  
Host Products
   $ 103,718     $ 88,364     $ 396,519     $ 440,862  
Network Products
     22,569       25,074       99,449       117,551  
Silicon Products
     16,715       13,719       42,368       61,426  
Royalty and Service
     2,714       3,390       10,734       14,023  
 
                        
 
   $ 145,716     $ 130,547     $ 549,070     $ 633,862  
 
                        
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     Year Ended  
    March 28,     March 29,     March 28,     March 29,  
    2010     2009     2010     2009  
United States
   $ 64,435     $ 63,644     $ 250,333     $ 303,729  
Asia-Pacific and Japan
     38,423       28,440       138,775       139,850  
Europe, Middle East and Africa
     35,264       31,056       126,966       154,463  
Rest of world
     7,594       7,407       32,996       35,820  
 
                        
 
   $ 145,716     $ 130,547     $ 549,070     $ 633,862