EX-99.1 2 a04756exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
 

Exhibit 99.1

FOR IMMEDIATE RELEASE

Editor’s Contact:
Gerry Ansel
QLogic Corporation
Phone: (949) 389-7664
gerry.ansel@qlogic.com

Investor’s Contact:
Tony Massetti
QLogic Corporation
Phone: (949) 389-7533
tony.massetti@qlogic.com

QLOGIC REPORTS THIRD QUARTER
RESULTS FOR FISCAL YEAR 2005
Revenues And Net Income Reach Record Levels

Aliso Viejo, Calif., January 19, 2005 – QLogic Corporation (Nasdaq:QLGC), the company that powers storage area networks (SANs), today announced its third quarter financial results for the period ended December 26, 2004.

Net revenues for the third quarter of fiscal 2005 were a record $150.3 million and increased 10% from the $137.1 million reported in the comparable quarter last year. Fibre Channel product revenues for the third quarter of fiscal 2005 were $116.9 million and represented 78% of the Company’s total revenue. Fibre Channel product revenues for the third quarter were up 11% from the comparable quarter last year. Net income on a GAAP basis for the third quarter of fiscal 2005 was a record $43.4 million, or $0.46 per share on a diluted basis, and increased 24% from the $35.0 million, or $0.36 per share on a diluted basis, reported in the third quarter of last year.

During the third quarter of fiscal 2005, net revenues increased 12% sequentially from the $134.6 million reported in the second quarter of fiscal 2005. Fibre Channel product revenues for the third quarter of fiscal 2005 were up 8% sequentially from the second quarter of fiscal 2005. Third quarter net income on a GAAP basis increased 21% from the $35.9 million, or $0.38 per share on a diluted basis, reported in the second quarter of fiscal 2005.

Net revenues for the first nine months of fiscal 2005 were $414.7 million, up 5% from the $395.6 million reported for the same period of fiscal year 2004. Net income on a GAAP basis for the first nine months of

 


 

fiscal 2005 was $111.4 million, or $1.19 per share on a diluted basis, an increase of 11% from the $100.8 million, or $1.05 per share on a diluted basis, reported for the same period last year.

The Company uses certain non-GAAP measures to supplement financial statements based on GAAP. A description of the purpose and benefit of such non-GAAP financial information is presented below and a reconciliation between the GAAP and non-GAAP measures is included in the accompanying financial schedules.

Non-GAAP net income for the third quarter of fiscal 2005 was $45.1 million, or $0.48 per share on a diluted basis, and increased 19% from the $37.9 million, or $0.39 per share on a diluted basis, reported in the third quarter of last year. Non-GAAP net income for the third quarter of fiscal 2005 increased 20% sequentially from the $37.7 million, or $0.40 per share on a diluted basis, reported for the second quarter of fiscal 2005.

During the first nine months of fiscal 2005, the Company’s non-GAAP net income was $116.8 million, or $1.25 per share on a diluted basis, an increase of 8% from the $107.7 million, or $1.12 per share on a diluted basis, reported last year.

“We are very pleased with our strong performance during the third quarter and the achievement of both record revenues and net income,” said H.K. Desai, the Company’s chairman, chief executive officer and president. “The growth in our revenues during the third quarter was primarily driven by double digit sequential growth for both HBAs and switches.”

The Company generated $118 million in cash from operations during the first nine months of fiscal 2005 and used $80 million in fiscal 2005 to purchase its common stock pursuant to the Company’s stock repurchase programs. The Company’s balance sheet at the end of the third quarter of fiscal 2005 was highlighted by $768 million of cash and short-term investments.

QLogic’s fiscal 2005 third 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 Tony Massetti, vice president and chief financial officer, will host the conference call. The call is being webcast live via the Internet at www.qlogic.com. Phone access to participate in the conference call is available at (719) 457-2658, pass code: 145765.

 


 

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 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. 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 February 2, 2005 by calling (719) 457-0820, pass code: 145765.

Non-GAAP Financial Measurements

The non-GAAP financial measurements contained herein are a supplement to the corresponding financial measurements computed in accordance with generally accepted accounting principles (GAAP). The non-GAAP financial information presented excludes non-cash merger related stock compensation charges and, in fiscal 2004, legal settlements and the related income tax effect. Management believes these charges are not indicative of the on-going costs of the Company’s basic core operating performance. These non-GAAP adjustments directly impact the Company’s engineering and development expenses, general and administrative expenses, total operating expenses, operating income, income before income taxes, income taxes, net income and net income per share amounts in comparison to the corresponding amounts included in the Company’s condensed consolidated statements of operations presented in accordance with GAAP. In order to present the impact of any items excluded from the non-GAAP financial information, the Company has presented a complete reconciliation of each of the non-GAAP measures to the most directly comparable measure calculated in accordance with GAAP in the accompanying financial schedules. The Company has provided these non-GAAP financial measures, on a basis consistent with its historical presentation, to assist investors to better understand the Company’s core operating performance on an on-going basis and to enhance comparisons of its core operating performance with historical periods and the core operating performance of its competitors. Items excluded from non-GAAP financial measurements are also excluded by management in its evaluation of the core operating performance of the Company and in its evaluation of trends between fiscal periods. Management uses each of the non-GAAP financial measures presented in its evaluation of the Company’s core operating performance and believes that such measures are an important element of its internal performance measurement process. In addition, the Company prepares and maintains its budgets and forecasts of future periods on a basis consistent with these non-GAAP financial measurements. Non-GAAP financial information presented herein has certain limitations in that it does 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 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 information presented by the Company may be different from the non-GAAP measures used by other companies.

 


 

Powered by QLogic

Since 1993, over 50 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, NEC, 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 named to the following during fiscal year 2004: (i) Fortune’s 100 Fastest Growing Companies list for the fourth consecutive year; (ii) Forbes’ Best 200 Small Companies for the fifth consecutive year; and (iii) Business Week’s list of 100 Hot Growth Companies. 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 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 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; seasonal fluctuations and uneven sales patterns in orders from customers; the ability to compete effectively with other companies; declining average unit sales prices of comparable products; 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; sales fluctuations arising from customer transitions to new products; terrorist activities and resulting military actions; international, economic, regulatory, political and other risks; changes in semiconductor foundry capacity; uncertain benefits from strategic business combinations; 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; the ability to protect proprietary rights or to satisfactorily resolve any infringement claims; changes in tax laws or adverse tax audit results; decreasing effectiveness of equity compensation in employee retention; charter documents and stockholder rights plan that may discourage a business combination; and facilities located in areas subject to earthquakes.

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

SUMMARY CONSOLIDATED RESULTS OF OPERATIONS

(unaudited — in thousands, except per share amounts)

Consolidated GAAP Results

                                         
    Three Months Ended     Nine Months Ended  
    Dec. 26,     Sep. 26,     Dec. 28,     Dec. 26,     Dec. 28,  
    2004     2004     2003     2004     2003  
Net revenues
  $ 150,252     $ 134,609     $ 137,064     $ 414,672     $ 395,566  
Gross profit
    104,804       93,436       94,183       288,096       268,317  
Operating income
    60,805       50,856       52,879       159,949       150,132  
Net income
    43,356       35,882       34,952       111,441       100,809  
Net income per share – diluted
    0.46       0.38       0.36       1.19       1.05  
 
                                       
Weighted average common shares outstanding – diluted
    93,484       93,222       96,823       93,604       96,395  

Consolidated Results Including Non-GAAP Adjustments (1)

                                         
    Three Months Ended     Nine Months Ended  
    Dec. 26,     Sep. 26,     Dec. 28,     Dec. 26,     Dec. 28,  
    2004     2004     2003     2004     2003  
Net revenues
  $ 150,252     $ 134,609     $ 137,064     $ 414,672     $ 395,566  
Gross profit
    104,804       93,436       94,183       288,096       268,317  
Operating income
    62,584       52,635       56,499       165,330       157,756  
Net income
    45,135       37,661       37,888       116,822       107,749  
Net income per share – diluted
    0.48       0.40       0.39       1.25       1.12  
 
                                       
Weighted average common shares outstanding – diluted
    93,484       93,222       96,823       93,604       96,395  


(1)   For a description of the limitations of relying on non-GAAP financial information, see “Non-GAAP Financial Measurements” above. A complete reconciliation of each of the non-GAAP financial measures to the most comparable GAAP financial measure is presented below.

 


 

QLOGIC CORPORATION

SUMMARY CONSOLIDATED RESULTS OF OPERATIONS (continued)

(unaudited — in thousands)

Description of Non-GAAP Adjustments

A summary of the non-GAAP adjustments is as follows:

                                         
    Three Months Ended     Nine Months Ended  
    Dec. 26,     Sep. 26,     Dec. 28,     Dec. 26,     Dec. 28,  
    2004     2004     2003     2004     2003  
Merger related stock compensation charges
  $ 1,779     $ 1,779     $ 1,870     $ 5,381     $ 5,874  
Legal settlements
                1,750             1,750  
 
                             
Pre-tax adjustments
    1,779       1,779       3,620       5,381       7,624  
Income tax effect
                (684 )           (684 )
 
                             
After-tax non-GAAP adjustments
  $ 1,779     $ 1,779     $ 2,936     $ 5,381     $ 6,940  
 
                             

Non-GAAP Financial Information

In addition to the results presented throughout this document in accordance with generally accepted accounting principles (GAAP), the Company has provided non-GAAP measurements, which present operating results on a basis including certain non-GAAP adjustments. Details of these adjustments are presented in the table above.

 


 

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited — in thousands, except per share amounts)

                                                 
    Three Months Ended December 26, 2004     Three Months Ended December 28, 2003  
    GAAP     Non-GAAP     Non-GAAP     GAAP     Non-GAAP     Non-GAAP  
    Results     Adjustments     Results (1)     Results     Adjustments     Results (1)  
Net revenues
  $ 150,252     $     $ 150,252     $ 137,064     $     $ 137,064  
Cost of revenues
    45,448             45,448       42,881             42,881  
 
                                   
Gross profit
    104,804             104,804       94,183             94,183  
 
                                               
Operating expenses:
                                               
Engineering and development
    24,331       (1,779 )     22,552       21,514       (1,870 )     19,644  
Sales and marketing
    15,166             15,166       13,846             13,846  
General and administrative
    4,502             4,502       5,944       (1,750 )     4,194  
 
                                   
Total operating expenses
    43,999       (1,779 )     42,220       41,304       (3,620 )     37,684  
 
                                   
 
                                               
Operating income
    60,805       1,779       62,584       52,879       3,620       56,499  
 
                                               
Interest and other income
    4,468             4,468       3,495             3,495  
 
                                   
 
                                               
Income before income taxes
    65,273       1,779       67,052       56,374       3,620       59,994  
 
                                               
Income taxes
    21,917             21,917       21,422       684       22,106  
 
                                   
 
                                               
Net income
  $ 43,356     $ 1,779     $ 45,135     $ 34,952     $ 2,936     $ 37,888  
 
                                   
 
                                               
Net income per share:
                                               
Basic
  $ 0.47     $ 0.02     $ 0.49     $ 0.37     $ 0.03     $ 0.40  
Diluted
  $ 0.46     $ 0.02     $ 0.48     $ 0.36     $ 0.03     $ 0.39  
 
                                               
Number of shares used in per share computations:
                                               
Basic
    92,157             92,157       94,458             94,458  
Diluted
    93,484             93,484       96,823             96,823  


(1)   For a description of the limitations of relying on non-GAAP financial information, see “Non-GAAP Financial Measurements” above.

 


 

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited — in thousands, except per share amounts)

                                                 
    Three Months Ended December 26, 2004     Three Months Ended September 26, 2004  
    GAAP     Non-GAAP     Non-GAAP     GAAP     Non-GAAP     Non-GAAP  
    Results     Adjustments     Results (1)     Results     Adjustments     Results (1)  
Net revenues
  $ 150,252     $     $ 150,252     $ 134,609     $     $ 134,609  
Cost of revenues
    45,448             45,448       41,173             41,173  
 
                                   
Gross profit
    104,804             104,804       93,436             93,436  
 
                                               
Operating expenses:
                                               
Engineering and development
    24,331       (1,779 )     22,552       24,146       (1,779 )     22,367  
Sales and marketing
    15,166             15,166       14,202             14,202  
General and administrative
    4,502             4,502       4,232             4,232  
 
                                   
Total operating expenses
    43,999       (1,779 )     42,220       42,580       (1,779 )     40,801  
 
                                   
 
                                               
Operating income
    60,805       1,779       62,584       50,856       1,779       52,635  
 
                                               
Interest and other income
    4,468             4,468       4,233             4,233  
 
                                   
 
                                               
Income before income taxes
    65,273       1,779       67,052       55,089       1,779       56,868  
 
                                               
Income taxes
    21,917             21,917       19,207             19,207  
 
                                   
 
                                               
Net income
  $ 43,356     $ 1,779     $ 45,135     $ 35,882     $ 1,779     $ 37,661  
 
                                   
 
                                               
Net income per share:
                                               
Basic
  $ 0.47     $ 0.02     $ 0.49     $ 0.39     $ 0.02     $ 0.41  
Diluted
  $ 0.46     $ 0.02     $ 0.48     $ 0.38     $ 0.02     $ 0.40  
 
                                               
Number of shares used in per share computations:
                                               
Basic
    92,157             92,157       92,485             92,485  
Diluted
    93,484             93,484       93,222             93,222  


(1)   For a description of the limitations of relying on non-GAAP financial information, see “Non-GAAP Financial Measurements” above.

 


 

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited — in thousands, except per share amounts)

                                                 
    Nine Months Ended December 26, 2004     Nine Months Ended December 28, 2003  
    GAAP     Non-GAAP     Non-GAAP     GAAP     Non-GAAP     Non-GAAP  
    Results     Adjustments     Results (1)     Results     Adjustments     Results (1)  
Net revenues
  $ 414,672     $     $ 414,672     $ 395,566     $     $ 395,566  
Cost of revenues
    126,576             126,576       127,249             127,249  
 
                                   
Gross profit
    288,096             288,096       268,317             268,317  
 
                                               
Operating expenses:
                                               
Engineering and development
    71,632       (5,381 )     66,251       65,731       (5,874 )     59,857  
Sales and marketing
    43,568             43,568       38,011             38,011  
General and administrative
    12,947             12,947       14,443       (1,750 )     12,693  
 
                                   
Total operating expenses
    128,147       (5,381 )     122,766       118,185       (7,624 )     110,561  
 
                                   
 
                                               
Operating income
    159,949       5,381       165,330       150,132       7,624       157,756  
 
                                               
Interest and other income
    12,334             12,334       12,463             12,463  
 
                                   
 
                                               
Income before income taxes
    172,283       5,381       177,664       162,595       7,624       170,219  
 
                                               
Income taxes
    60,842             60,842       61,786       684       62,470  
 
                                   
 
                                               
Net income
  $ 111,441     $ 5,381     $ 116,822     $ 100,809     $ 6,940     $ 107,749  
 
                                   
 
                                               
Net income per share:
                                               
Basic
  $ 1.20     $ 0.06     $ 1.26     $ 1.07     $ 0.07     $ 1.14  
Diluted
  $ 1.19     $ 0.06     $ 1.25     $ 1.05     $ 0.07     $ 1.12  
 
                                               
Number of shares used in per share computations:
                                               
Basic
    92,663             92,663       94,252             94,252  
Diluted
    93,604             93,604       96,395             96,395  


(1)   For a description of the limitations of relying on non-GAAP financial information, see “Non-GAAP Financial Measurements” above.

 


 

QLOGIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited — in thousands)

                 
    Dec. 26, 2004     Mar. 28, 2004  
ASSETS
               
 
               
Current assets:
               
Cash and cash equivalents
  $ 185,847     $ 156,593  
Short-term investments
    582,339       586,441  
Accounts receivable, net
    76,539       67,355  
Inventories
    24,309       20,935  
Other current assets
    29,155       22,256  
 
           
Total current assets
    898,189       853,580  
 
               
Property and equipment, net
    70,654       67,224  
Other assets
    10,689       7,711  
 
           
 
 
  $ 979,532     $ 928,515  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
 
               
Current liabilities:
               
Accounts payable
  $ 20,466     $ 18,570  
Accrued compensation
    19,612       18,849  
Income taxes payable
    21,527       10,691  
Other liabilities
    14,489       12,687  
 
           
Total current liabilities
    76,094       60,797  
 
               
Total stockholders’ equity
    903,438       867,718  
 
           
 
 
  $ 979,532     $ 928,515  
 
           

 


 

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited — in thousands)

                 
    Nine Months Ended  
    Dec. 26,     Dec. 28,  
    2004     2003  
Cash flows from operating activities:
               
Net income
  $ 111,441     $ 100,809  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    11,152       10,886  
Deferred income taxes
    (4,422 )     7,398  
Tax benefit from issuance of stock under stock plans
    1,358       9,620  
Amortization of deferred stock-based compensation
    472       963  
Provision for losses on accounts receivable
    414       141  
Loss on disposal of property and equipment
    245       638  
Changes in operating assets and liabilities:
               
Accounts receivable
    (9,598 )     (26,393 )
Inventories
    (3,374 )     1,506  
Other assets
    (5,454 )     1,532  
Accounts payable
    1,896       (146 )
Accrued compensation
    763       (1,930 )
Income taxes payable
    10,836       (1,344 )
Other liabilities
    1,802       9,406  
 
           
Net cash provided by operating activities
    117,531       113,086  
 
           
 
               
Cash flows from investing activities:
               
Purchases of marketable securities
    (462,442 )     (836,453 )
Sales and maturities of marketable securities
    461,379       761,030  
Additions to property and equipment
    (14,827 )     (15,434 )
 
           
Net cash used in investing activities
    (15,890 )     (90,857 )
 
           
 
               
Cash flows from financing activities:
               
Proceeds from issuance of stock under stock plans
    7,622       19,338  
Purchase of treasury stock
    (80,009 )     (19,545 )
 
           
Net cash used in financing activities
    (72,387 )     (207 )
 
           
 
               
Net increase in cash and cash equivalents
    29,254       22,022  
 
               
Cash and cash equivalents at beginning of period
    156,593       137,810  
 
           
 
               
Cash and cash equivalents at end of period
  $ 185,847     $ 159,832  
 
           

 


 

QLOGIC CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(unaudited — in thousands)

Net Revenues

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

                                         
    Three Months Ended     Nine Months Ended  
    Dec. 26,     Sep. 26,     Dec. 28,     Dec. 26,     Dec. 28,  
    2004     2004     2003     2004     2003  
Fibre Channel products
  $ 116,937     $ 108,414     $ 105,477     $ 330,143     $ 298,701  
SCSI products
    31,376       24,899       29,892       80,358       93,411  
Other
    1,939       1,296       1,695       4,171       3,454  
 
                             
 
  $ 150,252     $ 134,609     $ 137,064     $ 414,672     $ 395,566  
 
                             

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  
    Dec. 26,     Sep. 26,     Dec. 28,     Dec. 26,     Dec. 28,  
    2004     2004     2003     2004     2003  
United States
  $ 61,138     $ 54,633     $ 59,660     $ 169,287     $ 174,850  
International
    89,114       79,976       77,404       245,385       220,716  
 
                             
 
  $ 150,252     $ 134,609     $ 137,064     $ 414,672     $ 395,566