qlogic.com
QLogic Reports Third Quarter Results for Fiscal Year 2003
Revenues and Net Income Reach Record Levels
Aliso Viejo, Calif., January 15, 2003 - QLogic Corporation (Nasdaq:QLGC), the company that powers storage area networks (SANs), announced today its financial results for the third fiscal quarter ended December 29, 2002.
Revenues for the third quarter were a record $114.2 million, up 5% sequentially from $108.5 million in the September 2002 quarter on a pro forma basis. Fibre Channel revenues were up 7% sequentially to a record $80.6 million representing 71% of the Company's total revenue. Gross margin was 64.2% compared to 63.0% in the previous quarter. Third quarter pro forma net income increased 5% from the previous quarter to a record $28.5 million, or $0.30 per share on a diluted basis, compared to $27.0 million, or $0.28 per share on a diluted basis.
Revenues for the third quarter of $114.2 million increased 37% from the $83.6 million reported in the comparable quarter last year on a pro forma basis. Fibre Channel revenues grew 44% from the $56.1 million recorded in the December 2001 quarter. In addition, Fibre Channel revenues increased as a percentage of the Company's total revenue to 71% from 67% in the year ago comparable quarter. Third quarter pro forma net income of $28.5 million, or $0.30 per share on a diluted basis, increased 51% from $18.9 million, or $0.20 per share on a diluted basis, in the comparable quarter last year.
Revenues on a pro forma basis for the first nine months of fiscal year 2003 were $323.5 million, up 26% from the $257.4 million reported in the comparable period last year. Pro forma net income for the first nine months of fiscal year 2003 was $80.8 million, or $0.85 per diluted share, up 38% from the prior year. The pro forma results, which are a supplement to financial statements based on generally accepted accounting principles (GAAP), include adjustments primarily for non-cash items associated with sales discounts for stock warrants and merger related stock compensation charges. QLogic uses pro forma information to evaluate its operating performance and believes this presentation provides investors with additional insight into underlying operating results. A reconciliation between the pro forma and GAAP results is included in the accompanying financial data.
Net revenues on a GAAP basis for the third quarter of fiscal year 2003 were $114.2 million, and were up 38% from the net revenues of $82.6 million reported in the comparable quarter last year. The Company's third quarter net income recorded on a GAAP basis was up 62% to $27.5 million, or $0.29 per diluted share, from the $17.0 million, or $0.18 per diluted share, reported in the prior year.
The Company's net revenues on a GAAP basis for the first nine months of fiscal year 2003 were $320.2 million, up 26% from the $253.4 million reported in the comparable period last year. Net income on a GAAP basis increased 41% during the first nine months of fiscal year 2003 to $73.6 million, or $0.77 per diluted share, from $52.1 million, or $0.55 per diluted share, in the comparable period last year.
"We have continued to experience solid growth in our Fibre Channel business and continued moderate growth in our SCSI business," said H.K. Desai, the Company's chairman, CEO and president. "Fibre Channel revenues increased 7% sequentially, while SCSI revenues grew 2% driven by demand from a diverse range of customers. We are very pleased with our overall performance during the current quarter and throughout fiscal year 2003 in a difficult market."
The Company's balance sheet was again highlighted by an increase in cash and short-term investments, ending the quarter with $615.6 million, an increase of $43.7 million during the quarter.
QLogic's third quarter 2003 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 Frank Calderoni, senior vice president and chief financial officer, will conduct the conference call. The call is being webcast live via the Internet at www.qlogic.com or via CCBN. Phone access is available at (913) 981-5520, passcode: 795075.
A replay of the conference call will be available via webcast at www.qlogic.com or audio at (719) 457-0820, passcode: 795075. The webcast will be available for 90 days. The audio replay will be available through January 31, 2003.
Powered by QLogic
QLogic technology powers SAN solutions from the world's leading storage vendors including Cisco, Dell, EMC, Fujitsu, Hitachi, HP, IBM, Quantum, Sony, StorageTek and Sun. The industry depends on QLogic to simplify SANs with native Fibre Channel support designed into all major operating systems and to innovate new ways to network storage through new technologies like Virtual Interface (VI), Fibre Down™ and iSCSI.
About QLogic (www.qlogic.com)
QLogic Corporation (Nasdaq:QLGC) simplifies the process of networking storage for OEMs, resellers and system integrators with the only end-to-end infrastructure in the industry, consisting of award-winning controller chips, host bus adapters, network switches and management software to move data from the storage device through the fabric to the server. QLogic designs and produces solutions based on all storage network technologies including SCSI, iSCSI, InfiniBand and Fibre Channel. A member of the S&P 500 Index, QLogic was recently named to Forbes' Best 200 Small Companies for the fourth consecutive year and was named to Fortune's 100 Fastest Growing Companies list for the third consecutive year.
Note: All QLogic-issued press releases appear on the company's web site (www.qlogic.com). Any announcement that does not appear on the QLogic web site has not been issued by QLogic.
Disclaimer - Forward Looking Statements
With the exception of historical information, the statements set forth above include forward-looking statements as defined within 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. QLogic wishes to advise readers that these potential risks and uncertainties relate to, but are not limited to, in no particular order: the introduction of new and changing technologies in our industry and customer acceptance of those technologies; a change in semiconductor foundry capacity or conditions; fluctuations in the growth of I/O markets; fluctuations or cancellations in orders from OEM customers; QLogic's ability to compete effectively with other companies; cancellation of OEM products associated with design wins; and fluctuations in our operating results and our stock price.
More detailed information on these and additional factors which could affect QLogic's operating and financial results are described in QLogic's Forms 10-Q, 10-K and other reports, filed or to be filed with the Securities and Exchange Commission. QLogic urges all interested parties to read these reports to gain a better understanding of the many business and other risks that QLogic faces. Additionally, QLogic undertakes no obligation to publicly release the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.
Trademarks and registered trademarks are the property of the companies with which they are associated.
QLOGIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - PRO FORMA
(Unaudited)
(in thousands, except per share data)
Three Months Ended
Nine Months Ended
Dec. 29, 2002
Sep. 29, 2002
Dec. 30, 2001
Dec. 29, 2002
Dec. 30, 2001
Net revenues
$114,167
$108,525
$ 83,627
$323,472
$257,435
Cost of revenues
40,908
40,200
31,456
118,215
98,374
Gross margin
73,259
68,325
52,171
205,257
159,061
Operating expenses:
Engineering and development
19,973
18,065
16,046
54,650
47,106
Selling and marketing
10,955
11,435
8,927
33,008
28,147
General and administrative
3,530
3,651
3,693
10,375
10,670
Total operating expenses
34,458
33,151
28,666
98,033
85,923
Operating income
38,801
35,174
23,505
107,224
73,138
Interest and other income, net
5,417
5,167
4,652
15,196
14,420
Income before income taxes
44,218
40,341
28,157
122,420
87,558
Income taxes
15,765
13,321
9,303
41,623
29,020
Net income
$28,453
$27,020
$18,854
$80,797
$58,538
Net income per share:
Basic
$0.30
$0.29
$0.20
$0.87
$0.63
Diluted
$0.30
$0.28
$0.20
$0.85
$0.62
Number of shares used in per share computations:
Basic
93,553
93,377
92,708
93,369
92,547
Diluted
95,231
95,189
95,125
95,337
94,993
The above pro forma financial information is based on the Company’s unaudited condensed consolidated financial statements and excludes certain adjustments primarily for non-cash items associated with sales discounts for stock warrants, merger related stock compensation charges and an impairment of an investment in a technology company. The Company uses this pro forma information to evaluate its operating performance and believes this presentation provides investors with additional insight into its underlying operating results. This presentation is not in accordance with, or an alternative for, generally accepted accounting principles and may be different from the pro forma presentation used by other companies.
A reconciliation of the pro forma net income with the Company's net income determined under generally accepted accounting principles is presented in the following table.
QLOGIC CORPORATION
Reconciliation of Pro Forma Net Income to GAAP Net Income
(Unaudited)
(in thousands)
Three Months Ended
Nine Months Ended
Dec. 29, 2002
Dec. 30, 2001
Dec. 29, 2002
Dec. 30, 2001
Pro forma net income
$28,453
$18,854
$80,797
$58,538
Items excluded from pro forma net income:
Sales discounts for stock warrants
-
(1,040)
(3,228)
(4,068)
Acquired in process R&D charges
(274)
-
(803)
Merger related stock compensation charges
(1,567)
(1,131)
(4,702)
(3,233)
Technology company investment impairment
-
-
(3,000)
-
Amortization of goodwill and other intangibles
-
(281)
-
(1,612)
Impact on income before taxes
(1,567)
(2,726)
(10,930)
(9,716)
Income tax effect
627
900
3,717
3,248
Impact on net income
(940)
(1,826)
(7,213)
(6,468)
GAAP net income
$27,513
$17,028
$73,584
$52,070
QLOGIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME – GAAP
(Unaudited)
(in thousands, except per share data)
Three Months Ended
Nine Months Ended
Dec. 29, 2002
Dec. 30, 2001
Dec. 29, 2002
Dec. 30, 2001
Gross revenues
$114,167
$83,627
$323,472
$257,435
Stock-based sales discounts
-
1,040
3,228
4,068
Net revenues
114,167
82,587
320,244
253,367
Cost of revenues
40,908
31,456
118,215
98,374
Gross margin
73,259
51,131
202,029
154,993
Operating expenses:
Engineering and development
21,540
17,451
59,352
51,142
Selling and marketing
10,955
8,927
33,008
28,147
General and administrative
3,530
3,974
10,375
12,282
Total operating expenses
36,025
30,352
102,735
91,571
Operating income
37,234
20,779
99,294
63,422
Interest and other income, net
5,417
4,652
12,196
14,420
Income before income taxes
42,651
25,431
111,490
77,842
Income taxes
15,138
8,403
37,906
25,772
Net income
$27,513
$17,028
$73,584
$52,070
Net income per share:
Basic
$0.29
$0.18
$0.79
$0.56
Diluted
$0.29
$0.18
$0.77
$0.55
Number of shares used in per share computations:
Basic
93,553
92,708
93,369
92,547
Diluted
95,231
95,125
95,337
94,993
QLOGIC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
Dec. 29, 2002
Mar. 31, 2002
ASSETS
Current assets:
Cash and cash equivalents
$130,311
$76,124
Short-term investments
485,279
416,422
Accounts receivable, net
42,777
38,360
Inventories
21,355
24,758
Deferred income taxes
30,720
27,635
Prepaid expenses and other current assets
2,623
3,345
Total current assets
713,065
586,644
Property and equipment, net
60,388
60,293
Other assets
12,020
23,078
$785,473
$670,015
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$14,159
$15,025
Accrued expenses
55,478
36,007
Total current liabilities
69,637
51,032
Total stockholders’ equity
715,836
618,983
$785,473
$670,015 |
