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QLogic Reports Fourth Quarter and Fiscal Year 2005 Results; Revenue and Net Income Reach Record Levels6 May 2005
QLogic Corporation (Nasdaq:QLGC), the company that powers storage area networks (SANs), today announced its financial results for the fourth quarter and fiscal year ended April 3, 2005.
Net revenue for the fourth quarter of fiscal 2005 was a record $157.2 million and increased 23% from the $128.3 million reported in the comparable quarter last year. Fibre Channel product revenue for the fourth quarter of fiscal 2005 was $118.2 million and represented 75% of the Company's total revenue. Fibre Channel product revenue for the fourth quarter was up 18% from the comparable quarter last year. Net income on a GAAP basis for the fourth quarter of fiscal 2005 was a record $46.2 million, or $0.49 per share on a diluted basis, an increase of 40% from the $32.9 million, or $0.34 per share on a diluted basis, reported in the fourth quarter of last year.
During the fourth quarter of fiscal 2005, net revenue increased 5% sequentially from the $150.3 million reported in the third quarter of fiscal 2005. Fibre Channel product revenue for the fourth quarter of fiscal 2005 was up 1% sequentially from the third quarter of fiscal 2005. Fourth quarter net income on a GAAP basis increased 6% from the $43.4 million, or $0.46 per share on a diluted basis, reported in the third quarter of fiscal 2005.
Net revenue for fiscal 2005 was $571.9 million, up 9% from the $523.9 million reported for fiscal 2004. Net income on a GAAP basis for fiscal 2005 was $157.6 million, or $1.68 per share on a diluted basis, an increase of 18% from the $133.7 million, or $1.39 per share on a diluted basis, reported for fiscal 2004.
"We are very pleased with our achievement of both record revenue and record net income for the fourth quarter and the full fiscal year 2005," said H.K. Desai, the Company's chairman, chief executive officer and president. "In addition to these significant achievements, QLogic attained the number one ranking for total Fibre Channel HBA revenue and port shipments for calendar year 2004, according to Dell'Oro Group's 2004 SAN Report."
The Company uses certain non-GAAP measures to supplement financial statements based on GAAP. A summary of these non-GAAP financial measures and a complete reconciliation of each non-GAAP measure to the most directly comparable GAAP 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.
Non-GAAP net income for the fourth quarter of fiscal 2005 was $46.7 million, or $0.50 per share on a diluted basis, and increased 34% from the $34.7 million, or $0.36 per share on a diluted basis, reported in the fourth quarter of last year. Non-GAAP net income for the fourth quarter of fiscal 2005 increased 3% sequentially from the $45.1 million, or $0.48 per share on a diluted basis, reported for the third quarter of fiscal 2005.
During fiscal 2005, the Company's non-GAAP net income was $163.5 million, or $1.75 per share on a diluted basis, an increase of 15% from the $142.5 million, or $1.48 per share on a diluted basis, reported last year.
During fiscal 2005, the Company generated $182 million in cash from operations and used $85 million to purchase its common stock pursuant to the Company's stock repurchase programs. The Company's balance sheet at the end of fiscal 2005 was highlighted by $812 million of cash and short-term investments and over $1 billion in total assets.
QLogic's fourth quarter and fiscal year 2005 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) 457-2654, pass code: 6559714.
The financial information that the Company intends to discuss during the conference call will be available on the Company's website at www.qlogic.com for 12 months following the conference call. A replay of the conference call will be available via webcast for 12 months on the Company's website at www.qlogic.com. An audio replay of the conference call will also be available through May 18, 2005 by calling (719) 457-0820, pass code: 6559714.
Powered by QLogic
Since 1993, over 50 million QLogic products have shipped inside servers, workstations, RAID subsystems, tape libraries, disk and tape drives. QLogic products are 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. QLogic is a member of the S&P 500 Index and NASDAQ 100 Index. 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited -- in thousands, except per share amounts)
Three Months Ended Year Ended
-------------------------------- -------------------
April 3, December 26, March 28, April 3, March 28,
2005 2004 2004 2005 2004
--------- ------------ --------- --------- ---------
Net revenues $157,231 $150,252 $128,294 $571,903 $523,860
Cost of revenues 48,248 45,448 39,045 174,824 166,294
--------- ------------ --------- --------- ---------
Gross profit 108,983 104,804 89,249 397,079 357,566
Operating
expenses:
Engineering and
development 24,232 24,331 22,024 95,864 87,755
Sales and
marketing 15,909 15,166 14,941 59,477 52,952
General and
administrative 4,305 4,502 3,659 17,252 18,102
--------- ------------ --------- --------- ---------
Total
operating
expenses 44,446 43,999 40,624 172,593 158,809
--------- ------------ --------- --------- ---------
Operating income 64,537 60,805 48,625 224,486 198,757
Interest and other
income 5,539 4,468 4,381 17,873 16,844
--------- ------------ --------- --------- ---------
Income before
income taxes 70,076 65,273 53,006 242,359 215,601
Income taxes 23,921 21,917 20,142 84,763 81,928
--------- ------------ --------- --------- ---------
Net income $46,155 $43,356 $32,864 $157,596 $133,673
========= ============ ========= ========= =========
Net income per
share:
Basic $0.50 $0.47 $0.35 $1.70 $1.42
Diluted $0.49 $0.46 $0.34 $1.68 $1.39
Number of shares
used in per share
computations:
Basic 92,093 92,157 94,367 92,512 94,281
Diluted 93,849 93,484 95,798 93,657 96,246
QLOGIC CORPORATION
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(unaudited -- in thousands, except per share amounts)
Three Months Ended Year Ended
-------------------------------- -------------------
April 3, December 26, March 28, April 3, March 28,
2005 2004 2004 2005 2004
--------- ------------ --------- --------- ---------
GAAP net income $46,155 $43,356 $32,864 $157,596 $133,673
Items excluded
from GAAP net
income:
Merger related
stock
compensation
charges
included in
engineering and
development
expenses 511 1,779 1,869 5,892 7,743
Legal
settlements
included in
general and
administrative
expenses - - - - 1,750
Income tax
effect - - - - (684)
--------- ------------ --------- --------- ---------
Non-GAAP net
income $46,666 $45,135 $34,733 $163,488 $142,482
========= ============ ========= ========= =========
Diluted net income
per share:
GAAP net income $0.49 $0.46 $0.34 $1.68 $1.39
Adjustments 0.01 0.02 0.02 0.07 0.09
--------- ------------ --------- --------- ---------
Non-GAAP net
income $0.50 $0.48 $0.36 $1.75 $1.48
========= ============ ========= ========= =========
Non-GAAP Financial Measurements
The non-GAAP financial measurements contained herein are a supplement to the corresponding financial measurements prepared 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. The non-cash stock compensation charges relate to the Company's acquisition of Little Mountain Group, Inc. in January 2001, and such non-cash charges ended during the fourth quarter of fiscal 2005. Management believes 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 diluted net income per share, on a basis consistent with its historical presentation, to assist investors in understanding the Company's core net income and non-GAAP diluted net income per share on an on-going basis. The non-GAAP presentation also enhances 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 on-going net income and diluted net income per share are important measures in the evaluation of the Company's profitability. These non-GAAP financial measures exclude the adjustments described above, and thus provide an overall measure of the Company's on-going net profitability and related profitability on a diluted per share basis.
Management uses non-GAAP net income in its evaluation of the Company's core after-tax results of operations and trends between fiscal periods and believes that this measure is an important component 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 this non-GAAP financial measurement.
The non-GAAP financial measurements 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 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.
QLOGIC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited -- in thousands)
April 3, 2005 March 28, 2004
------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $165,644 $62,911
Short-term investments 646,694 680,123
Accounts receivable, net 63,526 67,355
Inventories 29,626 20,935
Other current assets 34,029 19,867
------------- --------------
Total current assets 939,519 851,191
Property and equipment, net 77,464 67,224
Other assets 9,357 7,711
------------- --------------
$1,026,340 $926,126
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $20,186 $18,570
Accrued compensation 22,259 18,849
Income taxes payable 17,999 8,302
Other liabilities 8,377 12,687
------------- --------------
Total current liabilities 68,821 58,408
Deferred tax liabilities 1,336 -
Total stockholders' equity 956,183 867,718
------------- --------------
$1,026,340 $926,126
============= ==============
QLOGIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited -- in thousands)
Year Ended
---------------------
April 3, March 28,
2005 2004
--------- -----------
Cash flows from operating activities:
Net income $157,596 $133,673
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 15,586 14,829
Deferred income taxes (1,641) 15,433
Tax benefit from issuance of stock under
stock plans 2,441 10,640
Amortization of deferred stock-based
compensation 578 1,196
Provision for losses on accounts receivable 90 (450)
Loss on disposal of property and equipment 187 43
Changes in operating assets and liabilities:
Accounts receivable 3,739 (17,211)
Inventories (8,691) (1,570)
Other assets (4,902) (37)
Accounts payable 1,616 3,269
Accrued compensation 3,410 (3,148)
Income taxes payable 9,697 (8,523)
Other liabilities 2,236 9,048
--------- -----------
Net cash provided by operating
activities 181,942 157,192
--------- -----------
Cash flows from investing activities:
Purchases of marketable securities (672,418) (1,054,362)
Sales and maturities of marketable securities 694,140 899,122
Additions to property and equipment (25,657) (22,283)
Purchase of other assets (4,000) -
--------- -----------
Net cash used in investing activities (7,935) (177,523)
--------- -----------
Cash flows from financing activities:
Proceeds from issuance of stock under stock
plans 13,735 22,260
Purchase of treasury stock (85,009) (57,014)
--------- -----------
Net cash used in financing activities (71,274) (34,754)
--------- -----------
Net increase (decrease) in cash and cash
equivalents 102,733 (55,085)
Cash and cash equivalents at beginning of period 62,911 117,996
--------- -----------
Cash and cash equivalents at end of period $165,644 $62,911
========= ===========
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
----------------------------- -------------------
Apr. 3, Dec. 26, Mar. 28, Apr. 3, Mar. 28,
2005 2004 2004 2005 2004
--------- --------- --------- --------- ---------
Fibre Channel
products $118,238 $116,937 $100,597 $448,387 $399,298
SCSI products 35,986 31,376 25,323 116,344 118,735
Other 3,007 1,939 2,374 7,172 5,827
--------- --------- --------- --------- ---------
$157,231 $150,252 $128,294 $571,903 $523,860
========= ========= ========= ========= =========
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
----------------------------- -------------------
Apr. 3, Dec. 26, Mar. 28, Apr. 3, Mar. 28,
2005 2004 2004 2005 2004
--------- --------- --------- --------- ---------
United States $61,100 $61,138 $56,344 $230,387 $231,294
International 96,131 89,114 71,950 341,516 292,566
--------- --------- --------- --------- ---------
$157,231 $150,252 $128,294 $571,903 $523,860
========= ========= ========= ========= =========
Contacts
QLogic Corporation, Aliso Viejo
Frank Berry (Media), 949-389-6499
frank.berry@qlogic.com
or
Tony Massetti (Investors), 949-389-7533
tony.massetti@qlogic.com
Source: Business Wire
All trademarks and copyrighted information contained herein are the property of their respective owners.
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