7/3...EMLX Reports Record Fourth Quarter Results
Acceleration in Fibre Channel Orders Generates Operating Income Expansion of More Than 350%
COSTA MESA, Calif.--(BUSINESS WIRE)--Aug. 3, 2000--Emulex Corp. (Nasdaq:EMLX - news), the world's largest supplier of fibre channel adapters, Thursday announced results for its fourth fiscal quarter ended July 2, 2000.
Revenues expanded to a record $40.8 million, up 99% from the $20.5 million reported for the same quarter a year ago. Net income for the fourth quarter of fiscal 2000 rose to a record $9.6 million, or $0.25 per diluted share, compared with net income of $3.0 million, or $0.10 per diluted share, for the same quarter a year ago.
Net income for the fourth quarter of the prior fiscal year benefited from a nominal effective tax rate(1), while the recorded effective tax rate for the fourth quarter of fiscal 2000 amounted to 35%. Assuming a 35% tax rate for both fiscal years, net income for the fourth quarter of fiscal 2000 expanded more than 380% from net income of $2.0 million, or $0.06 per diluted share, for the same quarter a year ago.
Fibre Channel order momentum accelerated during the quarter, generating a 26% sequential increase in Fibre Channel host bus adapter (HBA) revenues and a 42% sequential increase in total Fibre Channel backlog.
Paul F. Folino, president and chief executive officer, stated: ``Three major sources of strength are driving demand for Emulex Fibre Channel products, which grew to 94% of fourth quarter revenue. First, growth in Windows solutions has been expanding, fueled by a new round of key OEM design wins, including Emulex's most recent qualification from Compaq to provide Fibre Channel connectivity for Compaq's ProLiant servers. Secondly, the Network Attached Storage (NAS) market is now providing strong incremental growth, as high-end NAS solutions deploy Emulex Fibre Channel adapters for back-end connectivity to SAN resources.''
In June, Emulex announced EMC had selected the LightPulse(TM) LP8000DC dual channel Fibre Channel host adapter to provide Fibre Channel connectivity for its Celerra NAS system. Folino continued: ``Third, Emulex's unique ability among Fibre Channel HBA suppliers to support the FICON protocol is gaining in significance as major storage vendors prepare to launch native FICON storage solutions for the mainframe environment in the second half of the calendar year.''
According to IDC, 25% of all SAN Storage system revenue in 2001 will be comprised of ESCON/FICON interconnected systems. ``Fueled by these multiple sources of demand, fourth quarter unit shipments of Emulex HBAs expanded 44% sequentially from the third fiscal quarter, led by expanding demand for our new-generation LP8000 adapter,'' concluded Folino.
``With the accelerating deployment of storage area networks (SANs) and the emergence of storage virtualization, we believe requirements for heterogeneous Fibre Channel connectivity are escalating,'' noted Folino. ``Emulex's unmatched breadth of support for both SBus and PCI interfaces; FCP, IP, VI and FICON protocols; and a wide variety of standard platform and customized operating systems continue to form the foundation for the most comprehensive heterogeneous connectivity offering in the Fibre Channel host bus adapter market.''
Emulex's traditional networking product sector, which is comprised of network access products and printer servers, continued to mature and collectively declined 55% sequentially from the third quarter to 6% of revenue. Driven by an increasing mix of Fibre Channel revenue and efficiencies of scale, both operating margin and operating income expanded sequentially in the fourth quarter to a record 29% and $11.9 million, respectively, compared with 26% and $9.4 million in the third quarter of fiscal 2000.
For the year ended July 2, 2000, Emulex's revenues totaled $139.8 million, up 104% compared with the $68.5 million reported a year ago. Net income for fiscal 2000 expanded to $32.8 million or $0.86 per diluted share, compared with $5.3 million or $0.19 per diluted share for the same period a year ago.
Excluding consolidation related charges in the prior year and assuming a 35% tax rate for both fiscal years(2), net income for the year ended July 2, 2000, would have amounted to $28.5 million, or $0.75 per diluted share, an expansion of more than 650% compared with the $3.8 million, or $0.13 per diluted share, reported for the prior year.
Emulex is a leading designer, developer and supplier of a broad line of Fibre Channel host adapters, hubs, ASICs and software products that provide connectivity solutions for Fibre Channel storage area networks (SANs), network attached storage (NAS) and RAID. The company's products are based on internally developed ASIC technology, and are deployable across a variety of SAN configurations and operating systems, enhancing data flow between computers and peripherals.
Emulex's products offer customers the unique combination of critical reliability, scalability and high performance, and can be customized for mission-critical server and storage system applications. Emulex products have been selected by the world's leading server and storage providers, including Compaq, EMC, Fujitsu-Siemens, Groupe Bull, Hewlett-Packard, Hitachi Data Systems, IBM, NEC and Unisys. In addition, Emulex includes industry leaders Brocade, Intel, McData, Microsoft, Legato and VERITAS among its strategic partners.
Emulex markets to OEMs and end users through its own worldwide selling organization, as well as two-tier distribution partners. Corporate headquarters are located in Costa Mesa. News releases and other information about Emulex are available via the Internet at www.emulex.com.
EMULEX -- the fibre channel company
``Safe Harbor'' Statement under the Private Securities Litigation Reform Act of 1995: With the exception of historical information, the statements set forth above include forward-looking statements that involve risk and uncertainties. The company wishes to caution readers that a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Those factors include the following: the fact that the company's markets are characterized by rapidly changing technology, evolving industry standards and frequent introductions of new products and enhancements, and the company's ability to respond to such changes; maturation in the network access server and printer server products; the fact that the fibre channel market is at an early stage of development; the highly competitive nature of the markets for the company's products; the company's ability to attract and retain skilled personnel; the company's reliance on third party suppliers for components used in the company's products and on manufacturing subcontractors that assemble and distribute the company's products; the company's reliance on certain OEMs, distributors and key customers; and potential fluctuations in the company's future effective tax rate. These and other factors which could cause actual results to differ materially from those in the forward-looking statements are also discussed in the company's filings with the Securities and Exchange Commission, including its recent filings on Form 10-K and Form 10-Q.
Note to Editors: This news release refers to various products and companies by their trade names. In most, if not all, cases these designations are claimed as trademarks or registered trademarks by their respective companies.
EMULEX CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
Three Months Ended
July 2, June 27,
2000 1999
Net revenues $40,755 $20,453
Cost of sales 20,288 11,366
Gross profit 20,467 9,087
Operating expenses:
Engineering and development 3,992 3,385
Selling, general and administrative 4,609 3,066
Total operating expenses 8,601 6,451
Operating income 11,866 2,636
Nonoperating income 2,855 413
Income before income taxes 14,721 3,049
Income tax provision(1) 5,152 1
Net income $ 9,569 $ 3,048
Net income per share:
Basic $ 0.26 $ 0.11
Diluted $ 0.25 $ 0.10
Number of shares used in per share computations:
Basic 36,143 27,712
Diluted 38,315 31,163
(1) During the fourth quarter of fiscal 2000, Emulex recorded a
tax rate of 35 percent. Emulex recorded a nominal effective tax rate
in the fourth quarter of the prior fiscal year primarily as a result
of utilization of net operating loss carryforwards, which were held
net of a valuation allowance.
EMULEX CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
Year Ended
July 2, June 27,
2000 1999
Net revenues $139,772 $ 68,485
Cost of sales 73,346 40,138
Cost of sales -- inventory
charges related to consolidation - 1,304
Total cost of sales 73,346 41,442
Gross Profit 66,426 27,043
Operating expenses:
Engineering and development 14,727 11,766
Selling, general and administrative 17,000 11,232
Consolidation charges, net - (987)
Total operating expenses 31,727 22,011
Operating income 34,699 5,032
Nonoperating income 9,131 480
Income before income taxes 43,830 5,512
Income tax provision(2) 11,016 247
Net income $ 32,814 $ 5,265
Net income per share:
Basic $ 0.93 $ 0.21
Diluted $ 0.86 $ 0.19
Number of shares used in per share computations:
Basic 35,412 25,370
Diluted 38,226 28,262
(2) The annualized effective tax rate of 25 percent recorded for
the year ended July 2, 2000 is due to a reduction in a portion of the
company's deferred tax valuation allowance recorded in the first two
quarters of fiscal 2000. Emulex recorded a lower effective tax rate of
4.5 percent for the year ended June 27, 1999 primarily as a result of
utilization of net operating loss carryforwards, which were held net
of a valuation allowance.
EMULEX CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
July 2, June 27,
2000 1999
Assets
Current assets:
Cash and cash equivalents $ 23,471 $ 22,284
Investments 128,234 83,164
Accounts and other receivables, net 24,332 17,088
Inventories, net 12,635 11,083
Prepaid expenses and other
current assets 1,474 719
Total current assets 190,146 134,338
Property and equipment, net 6,927 3,168
Long-term investments 29,293 32,216
Deferred income taxes and other assets 3,629 269
$ 229,995 $ 169,991
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 17,869 $ 11,395
Accrued liabilities 6,355 4,291
Income taxes payable and other
current liabilities 320 358
Total current liabilities 24,544 16,044
Deferred income taxes - 2,054
Total stockholders' equity 205,451 151,893
$ 229,995 $ 169,991
--------------------------------------------------------------------------------
Contact:
Emulex Corp., Costa Mesa
Michael J. Rockenbach, 714/513-8213
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