News and Events
Industry Events
Media/Analyst Coverage
News Releases
Investor Relations
Overview
Corporate Governance
Investor FAQ
SEC Filings
Historical Financial Information
Annual Reports
Electronic Delivery Enrollment
E-mail Alerts
Investor Events
Analyst Coverage
Contact Investor Relations

Jess Page
Corporate Communications Manager
949-542-1455
jess.page@qlogic.com


 
News Release


RSS Feeds RSS Feeds | E-mail Alerts E-mail Alerts | Financial Tear Sheet Investor Fact Sheet | Investor FAQ | FY15 Annual Report | 2015 Conflict Minerals Report

<< Back
QLogic Reports Fourth Quarter and Fiscal Year 2010 Results

ALISO VIEJO, Calif., Apr 29, 2010 (BUSINESS WIRE) --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 www.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://www.qlogic.comfor twelve months following the conference call. A replay of the conference call will be available via webcast at www.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. 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,

2010

March 29,

2009

March 28,

2010

March 29,

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,

2010

March 29,

2009

March 28,

2010

March 29,

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:

(unaudited - in thousands)

Three Months Ended

Year Ended
March 28,

2010

March 29,

2009

March 28,

2010

March 29,

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,

2010

March 29,

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,

2010

March 29,

2009

March 28,

2010

March 29,

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,

2010

March 29,

2009

March 28,

2010

March 29,

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

SOURCE: QLogic Corp.

Media Contact:
Sonal Dave, 949-389-6000
sonal.dave@qlogic.com
or
Investor Contact:
Doug Naylor, 949-389-7525
doug.naylor@qlogic.com