Print Page | Close Window
News Release
QLogic Reports Fourth Quarter and Fiscal Year 2013 Results

ALISO VIEJO, Calif.--(BUSINESS WIRE)--May. 2, 2013-- 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 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 (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 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
Sales and marketing:
Stock-based compensation 1,636 1,501 6,853 6,667
General and administrative:
Stock-based compensation   1,759     2,005     7,554     8,316  
Total operating expense adjustments   6,535     6,757     27,991     29,182  
 
Total non-GAAP adjustments before income taxes   7,311     7,583     31,336     32,662  
 
Income taxes:
Special income tax benefits (19,338 ) (19,338 )
Other income tax effects   (1,978 )   (2,433 )   (9,422 )   (9,787 )
Total income tax adjustments   (21,316 )   (2,433 )   (28,760 )   (9,787 )
 
Total non-GAAP adjustments $ (14,005 ) $ 5,150   $ 2,576   $ 22,875  
 
QLOGIC CORPORATION
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 

(unaudited — in thousands)

 
March 31,

2013

April 1,

2012

ASSETS
Current assets:
Cash and cash equivalents $ 95,532 $ 164,516
Marketable securities   359,974     373,439  
Total cash and marketable securities 455,506 537,955
Accounts receivable, net 66,135 76,588
Inventories 20,160 19,724
Deferred tax assets 13,036 16,780
Other current assets   24,381     35,842  
Total current assets 579,218 686,889
 
Property and equipment, net 96,336 78,010
Goodwill 110,976 110,976
Purchased intangible assets, net 4,054 5,277
Deferred tax assets 31,992 30,558
Other assets   2,587     1,708  
 
$ 825,163   $ 913,418  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 29,668 $ 34,198
Accrued compensation 27,453 28,326
Accrued taxes 4,559 2,799
Deferred revenue 4,676 6,504
Other current liabilities   7,651     9,390  
Total current liabilities 74,007 81,217
 
Accrued taxes 10,772 64,853
Other liabilities   6,107     7,505  
Total liabilities   90,886     153,575  
 
Stockholders’ equity:
Common stock 212 211
Additional paid-in capital 932,557 901,734
Retained earnings 1,690,337 1,617,201
Accumulated other comprehensive income 1,887 1,033
Treasury stock   (1,890,716 )   (1,760,336 )
Total stockholders’ equity   734,277     759,843  
 
$ 825,163   $ 913,418  
 
QLOGIC CORPORATION
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 

(unaudited — in thousands)

 
Year Ended

 

March 31,

2013

  April 1,

2012

 
Cash flows from operating activities:
Net income $ 73,136 $ 229,436
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 28,630 31,641
Stock-based compensation 30,363 32,592
Deferred income taxes (110 ) (4,813 )
Gain on sale of business (103,509 )
Other non-cash items 3,954 5,946
Changes in operating assets and liabilities:

Accounts receivable

10,635 (6,533 )
Inventories (436 ) (843 )
Other assets (3,346 ) 361
Accounts payable (3,555 ) (4,908 )
Accrued compensation (873 ) 2,468
Accrued taxes, net (37,314 ) (16,265 )
Other liabilities   (3,919 )   590  
Net cash provided by operating activities   97,165     166,163  
 
Cash flows from investing activities:
Purchases of available-for-sale securities (298,621 ) (573,635 )
Proceeds from sales and maturities of available-for-sale securities 308,947 433,644
Purchases of property and equipment (46,765 ) (32,731 )
Proceeds from sale of business       124,969  
Net cash used in investing activities   (36,439 )   (47,753 )
 
Cash flows from financing activities:
Payments for debt issuance costs (1,076 )
Proceeds from issuance of common stock under stock-based awards 8,250 29,961
Excess tax benefits from stock-based awards 177 708
Minimum tax withholding paid on behalf of employees for restricted stock units (5,635 ) (5,473 )
Purchases of treasury stock   (131,426 )   (126,870 )
Net cash used in financing activities   (129,710 )   (101,674 )
 
Net increase (decrease) in cash and cash equivalents (68,984 ) 16,736
 
Cash and cash equivalents at beginning of year   164,516     147,780  
 
Cash and cash equivalents at end of year $ 95,532   $ 164,516  
 
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 31,

2013

  April 1,

2012

March 31,

2013

  April 1,

2012

 
Host Products $ 89,552 $ 105,612 $ 369,919 $ 429,820
Network Products 18,215 16,343 75,381 72,541
Silicon Products   9,147   13,118   39,238   56,247
$ 116,914 $ 135,073 $ 484,538 $ 558,608
 

Source: QLogic Corp.

QLogic Corporation
Media Contact:
Steve Sturgeon, 858.472.5669
steve.sturgeon@qlogic.com
or
Investor Contact:
Jean Hu, 949.389.7579
jean.hu@qlogic.com