EX-99.1 2 d763135dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Media Contact:

Steve Sturgeon

QLogic Corporation

858.472.5669

steve.sturgeon@qlogic.com

Investor Contact:

Doug Naylor

QLogic Corporation

949.542.1330

doug.naylor@qlogic.com

QLOGIC REPORTS FIRST QUARTER

RESULTS FOR FISCAL YEAR 2015

ALISO VIEJO, Calif., July 24, 2014QLogic Corp. (Nasdaq:QLGC), a leading supplier of high performance network infrastructure solutions, today announced its first quarter financial results for the period ended June 29, 2014.

Net revenue for the first quarter of fiscal 2015 was $119.4 million and increased 6% from $113.1 million in the same quarter last year. Revenue from Advanced Connectivity Platforms was $104.7 million during the first quarter of fiscal 2015 and increased 12% from $93.2 million in the same quarter last year. Revenue from Legacy Connectivity Products was $14.7 million during the first quarter of fiscal 2015 compared to $19.9 million in the same quarter last year.

“Fiscal year 2015 is off to a solid start as we delivered both revenue and non-GAAP earnings per diluted share that exceeded the midpoint of our guidance ranges. Our strong revenue performance was driven by a 12% year-over–year increase in revenue from Advanced Connectivity Platforms,” said Prasad Rampalli, president and chief executive officer, QLogic. “Our team executed very well to further establish QLogic as a leader in data and storage networking connectivity products. We are making significant progress in the enterprise Ethernet market and our revenue from these products is an important contributor to our overall growth. We continue to believe that we are well positioned to experience revenue growth through expanded market opportunities.”

Net income on a GAAP basis for the first quarter of fiscal 2015 increased to $6.0 million, or $0.07 per diluted share, from a net loss of $3.1 million, or $0.03 per diluted share, for the first quarter of fiscal 2014. Net income on a non-GAAP basis for the first quarter of fiscal 2015 increased 13% to $18.5 million, or $0.21 per diluted share, from $16.4 million, or $0.18 per diluted share, for the first quarter of fiscal 2014.

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 first quarter fiscal 2015 conference call is scheduled for today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). Prasad Rampalli, 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. Phone access to participate in the conference call is available at (888) 278-8446, pass code: 7597692.

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 (Nasdaq:QLGC) is a global leader and technology innovator in high performance server and storage networking connectivity products. Leading OEMs and channel partners worldwide rely on QLogic for their server and storage 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, as well as our belief that we are making significant progress in the enterprise Ethernet market and that we are well positioned to experience revenue growth through expanded market opportunities) 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: potential fluctuations in operating results; gross margins that may vary over time; unfavorable economic conditions; 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; uncertain benefits from strategic business combinations, acquisitions and divestitures; the ability to attract and retain key personnel; 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; sales fluctuations arising from customer transitions to new products; seasonal fluctuations and uneven sales patterns in orders from customers; 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; a reduction in sales efforts by current distributors; 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; system security risks, data protection breaches and cyber-attacks; and the company’s ability to borrow under its credit agreement is subject to certain covenants.

More detailed information on these and additional factors that 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 OPERATIONS

(unaudited — in thousands, except per share amounts)

 

     Three Months Ended  
     June 29,
2014
    June 30,
2013
 

Net revenues

   $ 119,449      $ 113,116   

Cost of revenues

     48,754        36,619   
  

 

 

   

 

 

 

Gross profit

     70,695        76,497   
  

 

 

   

 

 

 

Operating expenses:

    

Engineering and development

     37,821        40,387   

Sales and marketing

     16,034        19,413   

General and administrative

     8,900        7,739   

Special charges

     2,544        12,033   
  

 

 

   

 

 

 

Total operating expenses

     65,299        79,572   
  

 

 

   

 

 

 

Operating income (loss)

     5,396        (3,075

Interest and other income, net

     142        773   
  

 

 

   

 

 

 

Income (loss) before income taxes

     5,538        (2,302

Income tax expense (benefit)

     (462     748   
  

 

 

   

 

 

 

Net income (loss)

   $ 6,000      $ (3,050
  

 

 

   

 

 

 

Net income (loss) per share:

    

Basic

   $ 0.07      $ (0.03

Diluted

   $ 0.07      $ (0.03

Number of shares used in per share calculations:

    

Basic

     87,395        89,146   

Diluted

     88,253        89,146   


QLOGIC CORPORATION

RECONCILIATION OF GAAP NET INCOME (LOSS) TO

NON-GAAP NET INCOME

(unaudited — in thousands, except per share amounts)

 

     Three Months Ended  
     June 29,
2014
    June 30,
2013
 

GAAP net income (loss)

   $ 6,000      $ (3,050

Items excluded from GAAP net income (loss):

    

Stock-based compensation

     5,540        8,171   

Amortization of acquisition-related intangible assets

     4,448        243   

Acquisition-related charges

     771          

Amortization of license fee

     699          

Special charges

     2,544        12,033   

Income tax effect

     (1,516     (981
  

 

 

   

 

 

 

Total non-GAAP adjustments

     12,486        19,466   
  

 

 

   

 

 

 

Non-GAAP net income

   $ 18,486      $ 16,416   
  

 

 

   

 

 

 

Net income (loss) per diluted share:

    

GAAP net income (loss)

   $ 0.07      $ (0.03

Adjustments

     0.14        0.21   
  

 

 

   

 

 

 

Non-GAAP net income

   $ 0.21      $ 0.18   
  

 

 

   

 

 

 

Number of shares used in non-GAAP per diluted share calculations

     88,253        89,770   

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:

 

(unaudited – in thousands)    Three Months Ended  
     June 29,
2014
    June 30,
2013
 

Non-GAAP Adjustments:

    

Cost of revenues:

    

Stock-based compensation

   $ 355      $ 584   

Amortization of acquisition-related intangible assets

     4,448        243   

Acquisition-related charges

     771          

Amortization of license fee

     699          
  

 

 

   

 

 

 

Total cost of revenue adjustments

     6,273        827   
  

 

 

   

 

 

 

Operating expenses:

    

Engineering and development:

    

Stock-based compensation

     2,971        4,351   

Sales and marketing:

    

Stock-based compensation

     1,010        1,793   

General and administrative:

    

Stock-based compensation

     1,204        1,443   

Special charges

     2,544        12,033   
  

 

 

   

 

 

 

Total operating expense adjustments

     7,729        19,620   
  

 

 

   

 

 

 

Total non-GAAP adjustments before income taxes

     14,002        20,447   

Income tax effect

     (1,516     (981
  

 

 

   

 

 

 

Total non-GAAP adjustments

   $ 12,486      $ 19,466   
  

 

 

   

 

 

 


QLOGIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited — in thousands)

 

     June 29,
2014
    March 30,
2014
 
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 60,882      $ 91,258   

Marketable securities

     189,532        186,783   
  

 

 

   

 

 

 

Total cash and marketable securities

     250,414        278,041   

Accounts receivable, net

     84,103        65,213   

Inventories

     25,715        18,036   

Deferred tax assets

     14,681        15,080   

Other current assets

     19,870        16,590   
  

 

 

   

 

 

 

Total current assets

     394,783        392,960   

Property and equipment, net

     86,304        84,912   

Goodwill

     193,294        194,107   

Purchased intangible assets, net

     65,400        69,903   

Deferred tax assets

     29,091        32,827   

Other assets

     22,796        23,554   
  

 

 

   

 

 

 
   $ 791,668      $ 798,263   
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Current liabilities:

    

Accounts payable

   $ 31,261      $ 30,657   

Accrued compensation

     19,721        26,956   

Accrued taxes

     1,530        981   

Deferred revenue

     4,040        3,954   

Other current liabilities

     8,502        16,123   
  

 

 

   

 

 

 

Total current liabilities

     65,054        78,671   

Accrued taxes

     13,871        17,095   

Other liabilities

     9,315        9,071   
  

 

 

   

 

 

 

Total liabilities

     88,240        104,837   
  

 

 

   

 

 

 

Stockholders’ equity:

    

Common stock

     214        214   

Additional paid-in capital

     961,690        958,008   

Retained earnings

     1,678,071        1,672,071   

Accumulated other comprehensive income

     755        435   

Treasury stock

     (1,937,302     (1,937,302
  

 

 

   

 

 

 

Total stockholders’ equity

     703,428        693,426   
  

 

 

   

 

 

 
   $ 791,668      $ 798,263   
  

 

 

   

 

 

 


QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited — in thousands)

 

     Three Months Ended  
     June 29,
2014
    June 30,
2013
 

Cash flows from operating activities:

    

Net income (loss)

   $ 6,000      $ (3,050

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

    

Depreciation and amortization

     12,180        7,806   

Stock-based compensation

     5,540        8,171   

Deferred income taxes

     4,076        5,403   

Asset impairments

     1,011        2,429   

Other non-cash items

     581        345   

Changes in operating assets and liabilities:

    

Accounts receivable

     (18,880     (3,169

Inventories

     (7,679     3,052   

Other assets

     77        (210

Accounts payable

     416        (289

Accrued compensation

     (7,235     (5,374

Accrued taxes, net

     (5,418     (5,366

Other liabilities

     (7,291     6,843   
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     (16,622     16,591   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of available-for-sale securities

     (51,759     (89,318

Proceeds from sales and maturities of available-for-sale securities

     48,932        108,609   

Purchases of property and equipment

     (8,989     (10,111
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (11,816     9,180   
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from issuance of common stock under stock-based awards

     1,440        1,963   

Minimum tax withholding paid on behalf of employees for restricted stock units

     (3,298     (4,280

Purchases of treasury stock

            (24,428

Other financing activities

     (80     (6
  

 

 

   

 

 

 

Net cash used in financing activities

     (1,938     (26,751
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (30,376     (980

Cash and cash equivalents at beginning of period

     91,258        95,532   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 60,882      $ 94,552   
  

 

 

   

 

 

 


QLOGIC CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(unaudited — in thousands)

Net Revenues

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

 

     Three Months Ended  
     June 29,
2014
     June 30,
2013
 

Advanced Connectivity Platforms

   $ 104,701       $ 93,190   

Legacy Connectivity Products

     14,748         19,926   
  

 

 

    

 

 

 
   $ 119,449       $ 113,116