NEWS:Emulex Reports Second Quarter Results
COSTA MESA, Calif.--(BUSINESS WIRE)--Jan. 22, 1998--Emulex Corp. (Nasdaq:EMLX), a leader in gigabit fibre channel and network access products, Thursday announced results for its second fiscal quarter ended Dec. 28, 1997.
Revenues totaled $15.5 million, compared with $16.1 million reported for the same quarter a year ago. Second quarter net income expanded 128% to $1.1 million, or $0.18 per share on a diluted basis, compared with $487,000, or $0.08 per share on a diluted basis, reported for the same quarter a year ago. In the second quarter of fiscal 1998, results included a $188,000 income tax benefit related to a recovery under a tax sharing agreement with a former subsidiary of the company. Excluding this non-recurring item, net income for the second quarter of fiscal 1998 would have been $920,000 or $0.15 per share on a diluted basis, an increase of more than 85% over the comparable quarter a year ago.
"The fibre channel sector continued to drive the improved profitability of the company during the second quarter," stated Paul F. Folino, president and chief executive officer. "Revenue from our flagship LightPulse(TM) fibre channel product line more than doubled from the same quarter last year."
Propelled by rising shipments of Emulex LightPulse fibre channel adapters, gross margin improved from 37% in the second quarter of last year to 44% in the December quarter just ended. The rise in gross margin, coupled with ongoing expense controls in the sales, general and administrative areas, enabled Emulex to record a 56% gain in operating margin, from 3.9% a year ago to 6.3% in the December 1997 period.
During the second quarter, the company increased its investment in engineering and development from 14% of revenue to 18% of revenue, reflecting a significant expansion in its fibre channel development effort as Emulex continued to add new fibre channel products and options to its LightPulse family. During the second quarter, the company announced the LP3000 host adapter, a low-cost Arbitrated Loop adapter that provides the gigabit performance of fibre channel at affordable SCSI prices, and added non-Open Fiber Control connectivity to its family of fibre channel products.
Emulex has also reached agreement with IBM Corp. on a new OEM relationship which will encompass providing fibre channel connectivity solutions for IBM operating groups. Early in the second quarter, Emulex had disclosed two additional fibre channel OEM agreements with Digital Equipment Corp. and Groupe Bull.
"Many of our OEMs are deploying Emulex's fibre channel adapter in demanding, high performance applications, leveraging its exceptional ability to support all fibre channel topologies and classes of services," noted Folino. "Furthermore, the embedded processor architecture design of Emulex LightPulse adapters enhances the overall performance of the fibre channel system."
Although many of the company's fibre channel OEM customers remain in the development stage, several are positioned to commence production shipments of fibre channel-based systems over the next several quarters.
For the six months ended December 1997, Emulex revenues totaled $30.5 million, compared with $32.0 million reported a year ago. The company recorded net income of $1.7 million, or $0.27 per share on a diluted basis in the first half of fiscal 1998, compared with a net loss of $454,000, or $0.08 per share on a diluted basis for the same period a year ago. Excluding the one-time items detailed separately in the attached financial statements, Emulex's net income rose over 900% from $142,000, or $0.02 per share on a diluted basis in the first half of fiscal 1997, to $1.5 million, or $0.24 per share on a diluted basis, in the comparable period in fiscal 1998.
Emulex is a leading designer and manufacturer of high-performance network connectivity products including fibre channel, printer server and network access products. The company's hardware and software-based networking solutions improve communication in computer networks and enhance data flow between computers and peripherals. Fibre channel is a high-performance ANSI standard interface that is supported by the 120+ worldwide member Fibre Channel Association that includes Sun, Hewlett-Packard and Seagate.
As a leading developer and supplier of fibre channel technology, Emulex's fibre channel devices support all implementations of the fibre channel standard, including arbitrated loop, switched fabric and point-to-point topologies. The company 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 Emulex's World Wide Web address at emulex.com . -0- In the quarter ended Dec. 28, 1997, the company adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share." All prior periods have been restated accordingly for basic and diluted earnings per share.
"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; difficulties which the company may experience in consolidating its operations; 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 the company's reliance on certain OEMs, distributors and key customers. 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.
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. -0- *T
EMULEX CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share data) (unaudited)
Three Months Ended
Dec. 28, Dec. 29, 1997 1996
Net revenues $ 15,493 $ 16,058 Cost of sales 8,618 10,112
Gross profit 6,875 5,946
Operating expenses: Engineering and development 2,803 2,201
Selling, general and administrative 3,101 3,124
Total operating expenses 5,904 5,325
Operating income 971 621
Nonoperating income (expense) 51 (80)
Income before income taxes 1,022 541
Income taxes provision (benefit) (86) 54
Net income $ 1,108 $ 487
Basic earnings per common share $ 0.18 $ 0.08
Diluted earnings per common and
common equivalent share $ 0.18 $ 0.08
Common shares used in the calculations of
basic earnings per share 6,118 6,030
Common and common equivalent shares used in the
calculations of diluted earnings
per share 6,330 6,300
NOTE: Net income for the three months ended Dec. 28, 1997, included an income tax benefit of $188 related to a recovery under a tax sharing agreement with QLogic Corp., a former subsidiary of the company. Excluding this non-recurring item, net income would have been $920, or $0.15 per share for both basic and diluted earnings per share.
-0- EMULEX CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share data) (unaudited)
Six Months Ended
Dec. 28, Dec. 29, 1997 1996
Net revenues $ 30,500 $ 32,010 Cost of sales 17,454 20,594
Gross profit 13,046 11,416 Operating expenses: Engineering and development 5,196 4,701
Selling, general and administrative 6,216 6,446
Consolidation charges -- 1,280
Total operating expenses 11,412 12,427
Operating income (loss) 1,634 (1,011) Nonoperating income 65 126
Income (loss) before income taxes 1,699 (885)
Income tax benefit (18) (431)
Net income (loss) $ 1,717 $ (454) Basic earnings (loss) per common share $ 0.28 $ (0.08)
Diluted earnings (loss) per common and
common equivalent share $ 0.27 $ (0.08) Common shares used in the calculations of
basic earnings (loss) per share 6,110 6,014
Common and common equivalent shares used in the
calculations of diluted
earnings (loss) per share 6,321 6,014
NOTE: Net income for the six months ended Dec. 28, 1997, included an income tax benefit of $188 related to a recovery under a tax sharing agreement with QLogic Corp., a former subsidiary of the company. Excluding this non-recurring item, net income would have been $1,529, or $0.25 and $0.24 per share for basic and diluted earnings per share, respectively. Net loss for the six months ended Dec. 29, 1996, included a charge of $1,280 related to the company's consolidation of operations in the first quarter of fiscal 1997, tax related interest income of $238 and a $342 income tax benefit related to a recovery under a tax sharing agreement with QLogic Corp., a former subsidiary of the company. Excluding these non-recurring items, net of tax, net income would have been $142, or $0.02 per share for both basic and diluted earnings per share.
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EMULEX CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands) (unaudited)
Dec. 28, June 29, 1997 1997
Assets
Current assets: Cash and cash equivalents $ 1,704 $ 484
Accounts and notes receivable, net 12,156 14,785
Inventories, net 14,852 12,713
Prepaid expenses and other current
assets 1,394 1,346
Total current assets 30,106 29,328
Property, plant and equipment, net 6,608 6,961 Other assets 797 886
$37,511 $37,175
Liabilities and Stockholders' Equity
Current liabilities: Accounts payable $ 4,072 $ 4,294
Accrued liabilities 4,981 6,120
Capitalized lease obligations 70 125
Deferred income taxes 139 320
Total current liabilities 9,262 10,859
Deferred income taxes and other liabilities 2,098 2,040
Total stockholders' equity 26,151 24,276
$37,511 $37,175
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CONTACT:
Emulex Corp., Costa Mesa
Paul Folino, President & CEO
714/513-8172 |
