QLogic Reports Second Quarter Results for Fiscal Year 2006; Record Revenue Level Achieved for Continuing Operations

ALISO VIEJO, Calif.—(BUSINESS WIRE)—Oct. 19, 2005— QLogic Corporation (Nasdaq: QLGC), the leader in Fibre Channel host bus adapters (HBAs), today announced its second quarter financial results for the period ended October 2, 2005.

As previously announced, the Company has entered into an agreement to sell its hard disk drive controller and tape drive controller business to Marvell Technology Group, Ltd. for $225 million. This transaction is expected to close by the middle of the third fiscal quarter. As a result of this transaction, the financial information for the hard disk drive controller and tape drive controller business has been presented as discontinued operations for all periods.

Net revenue from continuing operations for the second quarter of fiscal 2006 was a record $119.0 million and increased 16% from $102.3 million in the comparable quarter last year. During the second quarter of fiscal 2006, revenue from SAN Infrastructure Products, which are comprised of HBAs, switches and silicon, was $110.5 million, an increase of 21% from the comparable quarter last year and 3% sequentially.

Income from continuing operations on a GAAP basis for the second quarter of fiscal 2006 was $30.5 million, or $0.34 per share on a diluted basis, an increase of 20% from the second quarter of last year and 8% sequentially.

Net revenue from continuing operations for the first six months of fiscal 2006 was $234.4 million, up 17% from the same period of fiscal year 2005. Income from continuing operations on a GAAP basis for the first six months of fiscal 2006 was $58.8 million, or $0.64 per share on a diluted basis, an increase of 22% from the same period last year.

Net income on a GAAP basis, including the results from discontinued operations, for the second quarter of fiscal 2006 was $43.0 million, or $0.48 per share on a diluted basis. Net income on a GAAP basis for the first six months of fiscal 2006 was $84.8 million, or $0.93 per share on a diluted basis.

During the second quarter, the Company repurchased $247 million of its common stock on the open market. In October, the Company repurchased an additional $103 million of common stock, thereby completing the current $350 million stock repurchase plan announced in August 2005. Since fiscal year 2003, the Company has repurchased a total of $550 million of the Company's common stock under programs authorized by the Company's Board of Directors.

The Company generated $68 million in cash from continuing operations during the first six months of fiscal 2006. The Company's balance sheet at the end of the second quarter of fiscal 2006 was highlighted by $634 million of cash and short-term investments.

"We are pleased with our record revenue performance from continuing operations, which was driven by a 21% growth in our SAN Infrastructure Products from the prior year quarter," said H.K. Desai, the Company's chief executive officer and president. "The second quarter was also highlighted by our execution against our $350 million stock repurchase program, which was completed in October."

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. There is no difference between GAAP and non-GAAP results for any period of fiscal 2006.

Non-GAAP income from continuing operations for the second quarter of fiscal 2006 was $30.5 million, or $0.34 per share on a diluted basis, an increase of 12% from the second quarter of last year. During the first six months of fiscal 2006, the Company's non-GAAP income from continuing operations was $58.8 million, or $0.64 per share on a diluted basis, and increased 13% from the same period last year.

QLogic's fiscal 2006 second quarter 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. Phone access to participate in the conference call is available at 719-457-2681, passcode: 9154830.

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 November 2, 2005 by calling 719-457-0820, passcode: 9154830.

About QLogic

QLogic is the leading supplier of Fibre Channel host bus adapters (HBAs), blade server embedded Fibre Channel switches and Fibre Channel stackable switches. The Company is also a leading supplier of iSCSI HBAs. QLogic products are delivered to small, medium and large enterprises around the world, powering solutions from leading companies like Cisco, Dell, EMC, HP, IBM, NEC, Network Appliance and Sun Microsystems. 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: 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 system; charter documents and stockholder rights plan that may discourage a business combination; and facilities located in areas subject to earthquakes and other 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          Six  Months  Ended
                                                  Oct.  2,    July  3,  Sept.  26,    Oct.  2,  Sept.  26,
                                                    2005          2005          2004            2005          2004

Net  revenues                        $119,012  $115,430  $102,281    $234,442  $200,951
Cost  of  revenues                    34,995      33,993      29,270        68,988      57,425
  Gross  profit                          84,017      81,437      73,011      165,454    143,526

Operating  expenses:
  Engineering  and
    development                          21,417      20,359      21,013        41,776      40,966
  Sales  and  marketing            15,617      15,233      12,982        30,850      26,090
  General  and
    administrative                      4,190        3,892        4,219          8,082        8,424
      Total  operating
        expenses                            41,224      39,484      38,214        80,708      75,480

Operating  income                    42,793      41,953      34,797        84,746      68,046

Interest  and  other
  income                                        6,111        6,119        4,233        12,230        7,866

Income  from  continuing
  operations  before
  income  taxes                          48,904      48,072      39,030        96,976      75,912

Income  taxes                            18,414      19,786      13,630        38,200      27,657

Income  from  continuing
  operations                              30,490      28,286      25,400        58,776      48,255

Income  from  discontinued
  operations,  net  of
  income  taxes                          12,534      13,491      10,482        26,025      19,830

Net  income                              $43,024    $41,777    $35,882      $84,801    $68,085

Income  from  continuing
  operations  per  share:
  Basic                                          $0.34        $0.31        $0.27          $0.65        $0.52
  Diluted                                      $0.34        $0.31        $0.27          $0.64        $0.52

Income  from  discontinued
  operations  per  share
  Basic                                          $0.14        $0.15        $0.11          $0.29        $0.21
  Diluted                                      $0.14        $0.15        $0.11          $0.28        $0.21

Net  income  per  share:
  Basic                                          $0.48        $0.46        $0.39          $0.94        $0.73
  Diluted                                      $0.48        $0.45        $0.38          $0.93        $0.73

Number  of  shares  used  in
  per  share  computations:
  Basic                                        89,447      91,533      92,485        90,490      92,915
  Diluted                                    90,526      92,672      93,222        91,599      93,664


                                                    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          Six  Months  Ended
                                                  Oct.  2,    July  3,  Sept.  26,    Oct.  2,  Sept.  26,
                                                    2005          2005          2004            2005          2004

GAAP  income  from  
  continuing  operations      $30,490    $28,286    $25,400      $58,776    $48,255
Items  excluded  from  GAAP
  income  from  continuing
  operations:
  Merger  related  stock
    compensation  charges
    included  in  engineering
    and  development  expenses          -                -        1,779                  -        3,602
Non-GAAP  income  from
  continuing  operations      $30,490    $28,286    $27,179      $58,776    $51,857

Diluted  income  from
  continuing  operations  per
  share:
  GAAP  income  from
    continuing  operations        $0.34        $0.31        $0.27          $0.64        $0.52
  Adjustments                                      -                -          0.02                  -          0.03
  Non-GAAP  income  from
    continuing  operations        $0.34        $0.31        $0.29          $0.64        $0.55

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,  which  relate  to  the  Company's
acquisition  of  Little  Mountain  Group,  Inc.  in  January  2001.  Such
non-cash  charges  ended  during  the  fourth  quarter  of  fiscal  2005.
Management  believes  this  item  is  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  adjustment  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)

                                                                                  Oct.  2,  2005      April  3,  2005
ASSETS
Current  assets:
    Cash  and  cash  equivalents                                      $51,003                $165,644
    Short-term  investments                                            583,112                  646,694
    Accounts  receivable,  net                                          64,383                    54,245
    Inventories                                                                    25,222                    22,661
    Current  assets  of  discontinued
      operations                                                                    22,558                    21,570
    Other  current  assets                                                  24,279                    28,705
          Total  current  assets                                          770,557                  939,519

Property  and  equipment,  net                                        75,556                    71,322
Long-term  assets  of  discontinued
  operations                                                                          6,935                      6,454
Other  assets                                                                        8,522                      9,120

                                                                                          $861,570            $1,026,415

LIABILITIES  AND  STOCKHOLDERS'  EQUITY
Current  liabilities:
    Accounts  payable                                                        $23,674                  $19,975
    Accrued  compensation                                                  15,318                    19,629
    Income  taxes  payable                                                  20,855                    14,125
    Accrued  purchases  of  treasury  stock                    33,946                              -
    Current  liabilities  of  discontinued
      operations                                                                      8,631                      7,648
    Other  liabilities                                                          8,108                      7,444
          Total  current  liabilities                                110,532                    68,821

Deferred  tax  liabilities                                                    630                              -
Long-term  liabilities  of  discontinued
  operations                                                                          1,648                      1,411

Stockholders'  equity:
    Common  stock                                                                          97                            96
    Additional  paid-in  capital                                    514,222                  504,760
    Retained  earnings                                                      684,523                  599,722
    Accumulated  other  comprehensive  loss                  (2,882)                  (3,394)
    Treasury  stock                                                          (447,200)              (145,001)
          Total  stockholders'  equity                              748,760                  956,183

                                                                                          $861,570            $1,026,415

                                                    
                                                    QLOGIC  CORPORATION
                        CONDENSED  CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
                                            (unaudited  --  in  thousands)

                                                                                                        Six  Months  Ended
                                                                                                      Oct.  2,      Sept.  26,
                                                                                                          2005                2004

Cash  flows  from  operating  activities:
  Income  from  continuing  operations                                $58,776          $48,255
  Adjustments  to  reconcile  income  from
    continuing  operations  to  net  cash  provided  
    by  operating  activities:
      Depreciation  and  amortization                                        8,547              7,173
      Deferred  income  taxes                                                        1,975            (3,115)
      Tax  benefit  from  issuance  of  stock  under
        stock  plans                                                                          1,288                  487
      Stock-based  compensation                                                      175                  329
      Provision  for  losses  on  accounts  receivable                  72                  424
      Loss  on  disposal  of  property  and  equipment                  103                      7
      Changes  in  operating  assets  and  liabilities:
        Accounts  receivable                                                      (10,210)            2,303
        Inventories                                                                        (2,561)            1,615
        Other  assets                                                                        3,162                  (41)
        Accounts  payable                                                                3,699                    (1)
        Accrued  compensation                                                      (4,311)          (4,213)
        Income  taxes  payable                                                        6,730              3,283
        Other  liabilities                                                                  664                  616
            Net  cash  provided  by  operating  
              activities                                                                    68,109            57,122

Cash  flows  from  investing  activities:
  Purchases  of  marketable  securities                            (370,635)      (347,240)
  Sales  and  maturities  of  marketable
    securities                                                                            434,713          337,672
  Additions  to  property  and  equipment                            (12,351)          (6,941)
            Net  cash  provided  by  (used  in)
              investing  activities                                                51,727          (16,509)

Cash  flows  from  financing  activities:
  Proceeds  from  issuance  of  stock  under  stock
    plans                                                                                          8,000              3,596
  Purchase  of  treasury  stock                                            (268,253)        (50,008)
            Net  cash  used  in  financing
              activities                                                                (260,253)        (46,412)

Net  cash  provided  by  discontinued  operations              25,776            11,858

Net  increase  (decrease)  in  cash  and  cash
  equivalents                                                                          (114,641)            6,059

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

Cash  and  cash  equivalents  at  end  of  period                $51,003          $68,970


                                                    QLOGIC  CORPORATION
                                    SUPPLEMENTAL  FINANCIAL  INFORMATION
                                            (unaudited  --  in  thousands)

Net  Revenues

A  summary  of  the  Company's  revenue  components  is  as  follows:

                                                        Three  Months  Ended              Six  Months  Ended
                                                  Oct.  2,    July  3,  Sept.  26,    Oct.  2,  Sept.  26,
                                                    2005          2005          2004            2005          2004

SAN  Infrastructure
  Products                              $110,480  $107,323    $91,073    $217,803  $180,352
Management  Controllers          7,048        6,908      10,469        13,956      19,758
Other                                            1,484        1,199            739          2,683            841
                                                $119,012  $115,430  $102,281    $234,442  $200,951

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              Six  Months  Ended
                                                  Oct.  2,    July  3,  Sept.  26,    Oct.  2,  Sept.  26,
                                                    2005          2005          2004            2005          2004

United  States                        $65,466    $65,202    $54,155    $130,668  $106,267
International                          53,546      50,228      48,126      103,774      94,684
                                                $119,012  $115,430  $102,281    $234,442  $200,951
 


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