QLogic Reports Fourth Quarter and Fiscal Year 2013 Results

QLogic Reports Fourth Quarter and Fiscal Year 2013 Results

ALISO VIEJO, Calif.--(BUSINESS WIRE)-- QLogic Corp. (NAS: QLGC) , a leading supplier of high performance network infrastructure solutions, today announced its financial results for the fourth quarter and fiscal year ended March 31, 2013.


Fourth Quarter Highlights

  • Net revenue: $116.9 million

  • GAAP income from continuing operations: $29.6 million or $0.33 per diluted share

  • Non-GAAP income from continuing operations: $15.6 million or $0.17 per diluted share

  • Cash and marketable securities: $455.5 million as of March 31, 2013

Fiscal Year Highlights

  • Net revenue: $484.5 million

  • GAAP income from continuing operations: $73.6 million or $0.78 per diluted share

  • Non-GAAP income from continuing operations: $76.1 million or $0.81 per diluted share

Financial Results

Net revenue for the fourth quarter of fiscal 2013 was $116.9 million compared to $135.1 million in the same quarter last year. Revenue from Host Products was $89.6 million during the fourth quarter of fiscal 2013 compared to $105.6 million in the same quarter last year. Revenue from Network Products was $18.2 million during the fourth quarter of fiscal 2013 and increased from $16.3 million in the same quarter last year. Revenue from Silicon Products was $9.1 million during the fourth quarter of fiscal 2013 compared to $13.1 million in the same quarter last year.

Income from continuing operations on a GAAP basis for the fourth quarter of fiscal 2013 was $29.6 million, or $0.33 per diluted share, compared to $29.5 million, or $0.29 per diluted share, for the fourth quarter of fiscal 2012. Income from continuing operations on a GAAP basis for the fourth quarter of fiscal 2013 includes special income tax benefits totaling $19.3 million associated with adjustments to certain tax positions previously subject to an IRS examination and the retroactive reinstatement of the federal research tax credit. Income from continuing operations on a non-GAAP basis for the fourth quarter of fiscal 2013 was $15.6 million, or $0.17 per diluted share, compared to $34.7 million, or $0.34 per diluted share, for the fourth quarter of fiscal 2012.

Net revenue for fiscal 2013 was $484.5 million compared to $558.6 million in fiscal 2012. Income from continuing operations on a GAAP basis for fiscal 2013 was $73.6 million, or $0.78 per diluted share, compared to $119.4 million, or $1.16 per diluted share for fiscal 2012. Income from continuing operations on a non-GAAP basis for fiscal 2013 was $76.1 million, or $0.81 per diluted share, compared to $142.3 million, or $1.39 per diluted share for fiscal 2012.

"We are very pleased with our financial performance in the March quarter. We delivered revenue of $116.9 million and non-GAAP income from continuing operations per diluted share of $0.17, both at the high end of our guidance range," said Simon Biddiscombe, president and chief executive officer, QLogic. "Despite a challenging enterprise data center spending environment, we continue to believe that the investments we have made over the last couple of years position us well to deliver future growth and shareholder value."

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 fourth quarter fiscal 2013 conference call is scheduled for today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). Simon Biddiscombe, president and chief executive officer, and Jean Hu, 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 (888) 283-6901, pass code: 5443989.

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

QLogic - the Ultimate in Performance

QLogic (NAS: QLGC) is a global leader and technology innovator in high performance networking, including adapters, switches and ASICs. Leading OEMs and channel partners worldwide rely on QLogic products for their data, storage and server networking solutions. For more information, visit www.qlogic.com.

Disclaimer - Forward-Looking Statements

This press release contains statements relating to future results of the company (including certain beliefs and projections regarding business and market trends and our belief that the investments we have made over the last couple of years position us well to deliver future growth and shareholder value) 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: unfavorable economic conditions; 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; 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; the company's ability to compete effectively with other companies; the complexity of the company's products; declining average unit sales prices of comparable products; 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; the ability to attract and retain key personnel; sales fluctuations arising from customer transitions to new products; seasonal fluctuations and uneven sales patterns in orders from customers; a reduction in sales efforts by current distributors; changes in the company's tax provisions or adverse outcomes resulting from examination of its income tax returns; international economic, currency, regulatory, political and other risks; facilities of the company and its suppliers and customers are located in areas subject to natural disasters; the ability to protect proprietary rights; the ability to satisfactorily resolve any infringement claims; uncertain benefits from strategic business combinations, acquisitions and divestitures; declines in the market value of the company's marketable securities; changes in and compliance with regulations; difficulties in transitioning to smaller geometry process technologies; the use of "open source" software in the company's products; and security system risks, data protection breaches and cyber-attacks.

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 31,

2013

April 1,

2012

March 31,

2013

April 1,

2012

Net revenues

$

116,914

$

135,073

$

484,538

$

558,608

Cost of revenues

37,798

43,725

159,180

177,704

Gross profit

79,116

91,348

325,358

380,904

Operating expenses:

Engineering and development

40,206

34,622

156,097

138,768

Sales and marketing

20,562

19,282

78,512

77,370

General and administrative

7,948

8,479

32,899

35,299

Total operating expenses

68,716

62,383

267,508

251,437

Operating income

10,400

28,965

57,850

129,467

Interest and other income, net

1,072

1,033

4,007

3,959

Income from continuing operations before income taxes

11,472

29,998

61,857

133,426

Income tax expense (benefit)

(18,163

)

479

(11,704

)

13,983

Income from continuing operations

29,635

29,519

73,561

119,443

Discontinued operations:

Income (loss) from operations, net of income taxes

(271

)

(425

)

910

Gain on sale, net of income taxes

109,083

109,083

Income (loss) from discontinued operations

108,812

(425

)

109,993

Net income

$

29,635

$

138,331

$

73,136

$

229,436

Income from continuing operations per share:

Basic

$

0.33

$

0.30

$

0.79

$

1.17

Diluted

$

0.33

$

0.29

$

0.78

$

1.16

Income (loss) from discontinued operations per share:

Basic

$

$

1.10

$

(0.01

)

$

1.08

Diluted

$

$

1.08

$

$

1.07

Net income per share:

Basic

$

0.33

$

1.40

$

0.78

$

2.25

Diluted

$

0.33

$

1.37

$

0.78

$

2.23

Number of shares used in per share calculations:

Basic

90,684

98,977

93,560

101,766

Diluted

91,105

100,826

93,998

102,711

QLOGIC CORPORATION

RECONCILIATION OF GAAP INCOME FROM CONTINUING OPERATIONS TO

NON-GAAP INCOME FROM CONTINUING OPERATIONS

(unaudited — in thousands, except per share amounts)

Three Months Ended

Year Ended

March 31,

2013

April 1,

2012

March 31,

2013

April 1,

2012

GAAP income from continuing operations

$

29,635

$

29,519

$

73,561

$

119,443

Items excluded from GAAP income from continuing operations:

Stock-based compensation

7,068

7,339

30,363

31,688

Amortization of acquisition-related intangible assets

243

244

973

974

Special income tax benefits (1)

(19,338

)

(19,338

)

Other income tax effects

(1,978

)

(2,433

)

(9,422

)

(9,787

)

Total non-GAAP adjustments

(14,005

)

5,150

2,576

22,875

Non-GAAP income from continuing operations

$

15,630

$

34,669

$

76,137

$

142,318

Income from continuing operations per diluted share:

GAAP income from continuing operations

$

0.33

$

0.29

$

0.78

$

1.16

Adjustments

(0.16

)

0.05

0.03

0.23

Non-GAAP income from continuing operations

$

0.17

$

0.34

$

0.81

$

1.39

(1) Comprised of benefits associated with adjustments to certain tax positions previously subject to an IRS examination and the retroactive reinstatement of the federal research tax credit.

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 income from continuing operations and non-GAAP income from continuing operations per diluted share, on a basis consistent with its historical presentation, to assist investors in understanding the company's core income from continuing operations and core income from continuing operations 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 profitability with historical periods and comparisons of the company's core profitability with the corresponding results for competitors. Management believes that non-GAAP income from continuing operations and non-GAAP income from continuing operations 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 profitability and related profitability on a per diluted share basis.

Management uses non-GAAP income from continuing operations and non-GAAP income from continuing operations 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:

(unaudited - in thousands)

Three Months Ended

Year Ended

March 31,

2013

April 1,

2012

March 31,

2013

April 1,

2012

Non-GAAP Adjustments:

Cost of revenues:

Stock-based compensation

$

533

$

582

$

2,372

$

2,506

Amortization of acquisition-related intangible assets

243

244

973

974

Total cost of revenue adjustments

776

826

3,345

3,480

Operating expenses:

Engineering and development:

Stock-based compensation

3,140

3,251

13,584

14,199