QLogic Reports Fourth Quarter and Fiscal Year 2006 Results; Record Revenue from Continuing Operations

ALISO VIEJO, Calif.—(BUSINESS WIRE)—May 3, 2006— QLogic Corporation (Nasdaq: QLGC), the leader in Fibre Channel host bus adapters (HBAs), stackable switches and blade server switches today announced its financial results for the fourth quarter and fiscal year ended April 2, 2006.

Net revenue from continuing operations for the fourth quarter of fiscal 2006 was a record $130.5 million and increased 17% from $111.7 million in the comparable quarter last year. During the fourth quarter of fiscal 2006, revenue from SAN Infrastructure Products, which are comprised of HBAs, switches and silicon, was $121.8 million, an increase of 19% from the comparable quarter last year and 1% sequentially.

Income from continuing operations on a GAAP basis for the fourth quarter of fiscal 2006 was $31.4 million, or $0.19 per share on a diluted basis, an increase of 1% from the fourth quarter of last year and a decrease of 1% sequentially.

Net revenue from continuing operations for fiscal 2006 was $494.1 million, up 15% from $428.7 million for fiscal 2005. Income from continuing operations on a GAAP basis for fiscal 2006 was $121.8 million, or $0.70 per share on a diluted basis, an increase of 9% from $111.4 million, or $0.59 per share on a diluted basis, for fiscal 2005.

Net income on a GAAP basis for the fourth quarter of fiscal 2006, including the results from discontinued operations, was $32.5 million, or $0.20 per share on a diluted basis. Net income on a GAAP basis for fiscal 2006, including the results from discontinued operations, was $283.6 million, or $1.63 per share on a diluted basis.

The Company generated $132.5 million in cash from continuing operations during fiscal 2006. The Company's balance sheet at the end of fiscal 2006 was highlighted by $665.6 million of cash and short-term investments.

"I am very pleased with QLogic's fiscal year 2006 performance," said H.K. Desai, the Company's chief executive officer and president. "With annual revenue growth for HBAs in excess of 20% and switches in excess of 35%, we are confident that the continued execution of our strategies will support our ongoing growth expectations."

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 income from continuing operations for the fourth quarter of fiscal 2006 was $34.5 million, or $0.21 per share on a diluted basis, an increase of 10% sequentially. During fiscal 2006, the Company's non-GAAP income from continuing operations was $124.7 million, or $0.72 per share on a diluted basis, an increase of 6% from fiscal 2005.

QLogic's fourth quarter and fiscal 2006 conference call is scheduled for today at 2:30 p.m. Pacific Time (5:30 p.m. Eastern Time). H.K. Desai, chief executive officer and president, and Tony Massetti, senior vice president and chief financial officer, will host the conference call. The call is being webcast live via the Internet at www.qlogic.com and via CCBN. Phone access to participate in the conference call is available at (719) 457-2654, pass code: 7044570.

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 17, 2006 at (719) 457-0820 or (888) 203-1112, pass code: 7044570.

Effects of 2006 Stock Split

All share numbers and per share amounts set forth in this release and the accompanying financial schedules have been adjusted to reflect the Company's two-for-one stock split effected March 2, 2006 through the payment of a stock dividend to the holders of record of common stock on February 16, 2006.

About QLogic

QLogic is a leading supplier of high performance storage networking solutions including Fibre Channel host bus adapters (HBAs), blade server embedded Fibre Channel switches, Fibre Channel stackable switches, iSCSI HBAs, iSCSI routers and storage services platforms for enabling advanced storage management applications. The Company is also a leading supplier of server networking products including InfiniBand host channel adapters that accelerate cluster performance. QLogic products are delivered to small-to-medium business and large enterprises around the world via its channel partner community. QLogic's products are also powering solutions from leading companies like Cisco, Dell, EMC, Hitachi Data Systems, HP, IBM, NEC, Network Appliance and Sun Microsystems. QLogic is a member of the S&P 500 Index. For more information go to 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: potential fluctuations in operating results; gross margins that may vary over time; revenues may be affected by changes in IT spending levels; the stock price of the Company may be volatile; the Company's dependence on the storage area network market; the ability to maintain and gain market or industry acceptance of the Company's products; the Company's dependence on a limited number of customers; seasonal fluctuations and uneven sales patterns in orders from customers; the Company's ability to compete effectively with other companies; declining average unit sales prices of comparable products; a reduction in sales efforts by current distributors; reliance on third party licenses; dependence on sole source and limited source suppliers; the Company's dependence on relationships with certain silicon chip suppliers; the complexity of the Company's products; sales fluctuations arising from customer transitions to new products; the uncertainty associated with SOX 404 compliance; environmental compliance costs; terrorist activities and resulting military actions; international, economic, regulatory, political and other risks; uncertain benefits from strategic business combinations; the ability to maintain or expand upon strategic alliances; the strain on resources caused by growth and expansion; the ability to attract and retain key personnel; the decreased effectiveness of equity compensation; difficulties in transitioning to smaller geometry process technologies; the ability to protect proprietary rights; the ability to satisfactorily resolve any infringement claims; changes in tax laws or adverse tax audit results; computer viruses and other tampering with the Company's computer systems; charter documents and stockholder rights plan that may discourage a business combination; and facilities of the Company and its suppliers and customers are located in areas subject to natural disasters.

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.

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
                    ----------------------------- --------------------
                    April 2,   Jan. 1,  April 3,  April 2,   April 3,
                                         2006            2006            2005            2006              2005
                                        ---------  ---------  ---------  ---------  ----------

Net  revenues                $130,450    $129,185    $111,727    $494,077      $428,719
Cost  of  revenues            38,358        36,900        30,687      144,246        121,074
                                        ---------  ---------  ---------  ---------  ----------
    Gross  profit                92,092        92,285        81,040      349,831        307,645
                                        ---------  ---------  ---------  ---------  ----------

Operating  expenses:
    Engineering  and
      development                25,180        22,797        20,766        89,753          82,791
    Sales  and
      marketing                    17,466        16,100        14,602        64,416          54,582
    General  and
      administrative            4,851          4,362          3,916        17,295          16,659
    Purchased  in-
      process  research
      and  development        10,510                  -                  -        10,510                    -
                                        ---------  ---------  ---------  ---------  ----------
        Total  operating
          expenses                  58,007        43,259        39,284      181,974        154,032
                                        ---------  ---------  ---------  ---------  ----------

Operating  income            34,085        49,026        41,756      167,857        153,613

Interest  and  other
  income                              15,246          5,151          5,539        32,627          17,873
                                        ---------  ---------  ---------  ---------  ----------

Income  from
  continuing
  operations  before
  income  taxes                  49,331        54,177        47,295      200,484        171,486

Income  taxes                    17,957        22,496        16,177        78,653          60,071
                                        ---------  ---------  ---------  ---------  ----------

Income  from
  continuing
  operations                      31,374        31,681        31,118      121,831        111,415

Income  from
  discontinued
  operations,  net  of
  income  taxes                    1,175      134,557        15,037      161,757          46,181
                                        ---------  ---------  ---------  ---------  ----------

Net  income                      $32,549    $166,238      $46,155    $283,588      $157,596
                                        =========  =========  =========  =========  ==========

Income  from
  continuing
  operations  per
  share:
        Basic                            $0.19          $0.20          $0.17          $0.71            $0.60
        Diluted                        $0.19          $0.19          $0.17          $0.70            $0.59

Income  from
  discontinued
  operations  per
  share:
        Basic                            $0.01          $0.83          $0.08          $0.95            $0.25
        Diluted                        $0.01          $0.83          $0.08          $0.93            $0.25

Net  income  per
  share:
    Basic                                $0.20          $1.03          $0.25          $1.66            $0.85
    Diluted                            $0.20          $1.02          $0.25          $1.63            $0.84

Number  of  shares
  used  in  per  share
  calculations:
    Basic                            161,722      161,317      184,186      171,250        185,024
    Diluted                        164,378      163,093      187,699      173,467        187,315



                                                    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
                                                --------------------------  -------------------
                                                April  2,  Jan.  1,    April  3,  April  2,    April  3,
                                                    2006          2006          2005          2006            2005
                                                --------  --------  --------  ---------  ---------

GAAP  income  from
  continuing  operations    $31,374    $31,681    $31,118    $121,831    $111,415
Items  excluded  from
  GAAP  income  from
  continuing  operations:
    Amortization  of
      acquisition  related
      intangible  assets
      included  in  cost  of
      revenues                                  201                -                -              201                  -
    Acquisition  related
      non-cash
      compensation  charges
      included  in:
            Engineering  and
              development
              expenses                          256            170            511              426          5,892
            Sales  and
              marketing
              expenses                            62              42                -              104                  -
    Insurance  recovery
      included  in  general
      and  administrative
      expenses                                      -          (700)              -            (700)                -
    Purchased  in-process
      research  and
      development                      10,510                -                -        10,510                  -
    Gain  on  sale  of
      shares  acquired  in
      the  sale  of
      discontinued
      operations  included
      in  interest  and
      other  income                    (8,463)              -                -        (8,463)                -
    Income  tax  effect                  578            194                -              772                  -
                                                --------  --------  --------  ---------  ---------
Non-GAAP  income  from
  continuing  operations    $34,518    $31,387    $31,629    $124,681    $117,307
                                                ========  ========  ========  =========  =========

Diluted  income  from
  continuing  operations
  per  share:
    GAAP  income  from
      continuing
      operations                          $0.19        $0.19        $0.17          $0.70          $0.59
    Adjustments                            0.02                -                -            0.02            0.04
                                                --------  --------  --------  ---------  ---------
    Non-GAAP  income  from
      continuing
      operations                          $0.21        $0.19        $0.17          $0.72          $0.63
                                                ========  ========  ========  =========  =========

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  for  fiscal  2006  excludes  amortization
of  acquisition  related  intangible  assets,  acquisition  related  non-cash
compensation  charges,  purchased  in-process  research  and  development,
an  insurance  recovery  received,  the  gain  on  sale  of  shares  received  as
consideration  in  the  sale  of  the  hard  disk  drive  and  tape  drive
controller  business  and  the  related  income  tax  effect  of  these  items.
The  non-GAAP  financial  information  presented  for  fiscal  2005  excludes
acquisition  related  non-cash  compensation  charges.  Management  believes
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  diluted  income  from  continuing  operations  per  share,  on  a
basis  consistent  with  its  historical  presentation,  to  assist  investors
in  understanding  the  Company's  core  income  from  continuing  operations
and  non-GAAP  diluted  income  from  continuing  operations  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  income  from  continuing  operations  and  diluted  income  from
continuing  operations  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  income  from  continuing  operations  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  2,      April  3,
                                                                                                      2006                2005
                                                                                                  ---------  -----------
                                          ASSETS
Current  assets:
    Cash  and  cash  equivalents                                            $125,192        $165,644
    Short-term  investments                                                    540,448          646,694
    Accounts  receivable,  net                                                  67,571            54,245
    Inventories                                                                            39,440            22,661
    Other  current  assets                                                          46,441            32,699
    Current  assets  related  to  discontinued
      operations                                                                                      -            17,576
                                                                                                  ---------  -----------
        Total  current  assets                                                    819,092          939,519

Property  and  equipment,  net                                                82,630            71,322
Goodwill  and  other  intangible  assets                              32,679              8,518
Other  assets                                                                                3,306                  527
Long-term  assets  related  to  discontinued
  operations                                                                                          -              6,454
                                                                                                  ---------  -----------

                                                                                                  $937,707    $1,026,340
                                                                                                  =========  ===========

LIABILITIES  AND  STOCKHOLDERS'  EQUITY
Current  liabilities:
    Accounts  payable                                                                $32,160          $19,975
    Accrued  compensation                                                          22,990            19,629
    Income  taxes  payable                                                          12,920            17,999
    Other  current  liabilities                                                10,283              7,444
    Current  liabilities  related  to  discontinued
      operations                                                                                      -              3,774
                                                                                                  ---------  -----------
        Total  current  liabilities                                            78,353            68,821

Deferred  tax  liabilities                                                                -              1,336
                                                                                                  ---------  -----------
        Total  liabilities                                                            78,353            70,157
                                                                                                  ---------  -----------

Stockholders'  equity:
    Common  stock                                                                                195                  193
    Additional  paid-in  capital                                            537,648          504,663
    Retained  earnings                                                              883,310          599,722
    Accumulated  other  comprehensive  loss                          (1,799)          (3,394)
    Treasury  stock                                                                  (560,000)      (145,001)
                                                                                                  ---------  -----------
        Total  stockholders'  equity                                        859,354          956,183
                                                                                                  ---------  -----------

                                                                                                  $937,707    $1,026,340
                                                                                                  =========  ===========



                                                    QLOGIC  CORPORATION

                        CONDENSED  CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS

                                            (unaudited  --  in  thousands)


                                                                                                              Year  Ended
                                                                                                    --------------------
                                                                                                      April  2,      April  3,
                                                                                                          2006              2005
                                                                                                    ----------  ---------

Cash  flows  from  operating  activities:
    Net  income                                                                              $283,588    $157,596
      Income  from  discontinued  operations,  net  of
        income  taxes                                                                      (161,757)    (46,181)
                                                                                                    ----------  ---------
    Income  from  continuing  operations                                  121,831      111,415
    Adjustments  to  reconcile  income  from  continuing
      operations  to  net  cash  provided  by  operating
      activities:
        Depreciation  and  amortization                                        17,898        15,059
        Purchased  in-process  research  and  development        10,510                  -
        Deferred  income  taxes                                                        (4,480)          (158)
        Tax  benefit  from  issuance  of  stock  under
          stock  plans                                                                            5,055          2,441
        Stock-based  compensation                                                        175              578
        Provision  for  losses  on  accounts  receivable                (366)              90
        Loss  on  disposal  of  property  and  equipment                    168              187
        Changes  in  operating  assets  and  liabilities,
          net  of  acquisition:
            Accounts  receivable                                                      (12,513)      (3,297)
            Inventories                                                                      (16,230)      (2,671)
            Other  assets                                                                      (5,840)      (3,572)
            Accounts  payable                                                              11,877          3,840
            Accrued  compensation                                                        3,263          3,528
            Income  taxes  payable                                                      (1,205)        4,094
            Other  liabilities                                                              2,405          1,593
                                                                                                    ----------  ---------
                Net  cash  provided  by  operating  activities      132,548      133,127
                                                                                                    ----------  ---------

Cash  flows  from  investing  activities:
    Purchases  of  marketable  securities                              (946,087)  (672,418)
    Sales  and  maturities  of  marketable  securities      1,101,680      694,140
    Additions  to  property  and  equipment                              (28,295)    (22,299)
    Acquisition  of  business,  net  of  cash  acquired          (35,210)                -
    Restricted  cash  placed  in  escrow                                    (12,000)                -
    Purchase  of  other  assets                                                                -        (4,000)
                                                                                                    ----------  ---------
      Net  cash  provided  by  (used  in)  investing
        activities                                                                              80,088        (4,577)
                                                                                                    ----------  ---------

Cash  flows  from  financing  activities:
    Proceeds  from  issuance  of  stock  under  stock
      plans                                                                                          27,757        13,735
    Purchase  of  treasury  stock                                              (414,999)    (85,009)
                                                                                                    ----------  ---------
      Net  cash  used  in  financing  activities                      (387,242)    (71,274)
                                                                                                    ----------  ---------

Cash  provided  by  (used  in)  continuing  operations      (174,606)      57,276
                                                                                                    ----------  ---------

Cash  flows  from  discontinued  operations:
    Net  cash  provided  by  (used  in)  operating
      activities                                                                              (47,182)      48,815
    Net  cash  provided  by  (used  in)  investing
      activities,  including  proceeds  from  sale                  181,336        (3,358)
                                                                                                    ----------  ---------
Cash  provided  by  discontinued  operations                        134,154        45,457
                                                                                                    ----------  ---------

Net  increase  (decrease)  in  cash  and  cash
  equivalents                                                                                (40,452)    102,733

Cash  and  cash  equivalents  at  beginning  of  period        165,644        62,911
                                                                                                    ----------  ---------

Cash  and  cash  equivalents  at  end  of  period                  $125,192    $165,644
                                                                                                    ==========  =========


                                                    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
                                          -----------------------------  -------------------
                                            April  2,    Jan.  1,      April  3,    April  2,    April  3,
                                                2006          2006              2005            2006            2005
                                          ---------  ---------  ---------  ---------  ---------

    SAN  Infrastructure
      Products                    $121,845    $120,402    $101,985    $460,050    $387,922
    Management
      Controllers                    7,130          6,050          7,971        27,136        37,003
    Other                                  1,475          2,733          1,771          6,891          3,794
                                          ---------  ---------  ---------  ---------  ---------
                                          $130,450    $129,185    $111,727    $494,077    $428,719
                                          =========  =========  =========  =========  =========


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
                                          -----------------------------  -------------------
                                            April  2,    Jan.  1,      April  3,    April  2,    April  3,
                                                2006          2006              2005            2006            2005
                                          ---------  ---------  ---------  ---------  ---------

    United  States              $72,875      $68,394      $60,847    $271,937    $227,771
    International                57,575        60,791        50,880      222,140      200,948
                                          ---------  ---------  ---------  ---------  ---------
                                          $130,450    $129,185    $111,727    $494,077    $428,719
                                          =========  =========  =========  =========  =========
 


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