COSTA MESA, Calif.,
May 2, 2013 /PRNewswire/ -- Emulex
Corporation (NYSE: ELX) today announced preliminary results for its
third quarter of fiscal 2013, which ended on March 31, 2013.
(Logo: http://photos.prnewswire.com/prnh/20120403/NE81278LOGO
)
Third Quarter Financial Highlights
- Total net revenues of $116.8
million
- Network Connectivity Products (NCP) net revenues of
$85.2 million, representing
approximately 73% of total net revenues
- Network Visibility Products (NVP), consisting of products from
the recent acquisition of Endace, net revenues of $4.9 million for the partial period since the
acquisition, representing 4% of total net revenues
- Storage Connectivity Products (SCP) net revenues of
$20.8 million, representing 18% of
total net revenues
- Advanced Technology and other Products (ATP) net revenues of
$5.9 million, representing 5% of
total net revenues
- Non-GAAP gross margins of 65% and GAAP gross margins of
58%
- Non-GAAP diluted earnings per share of $0.20 included a benefit of $0.06 from the retroactive reinstatement of the
Federal Research and Development tax credit
- GAAP loss per share of $0.08
- Cash, cash equivalents and investments at the end of the
quarter of $91.6 million
Third Quarter Business Highlights
- Completed acquisition of Endace Limited, expanding the Emulex
portfolio of products to include industry leading network packet
capture and network visibility software and appliances
- Gained four points in Fibre Channel revenue market share over
our nearest competitor during CY12, according to Dell'Oro Group's
Q4 2012 Fibre Channel Adapter Vendor Report
- Announced the availability of Emulex 16Gb Fibre Channel (16GFC)
Host Bus Adapters (HBAs) for the Fujitsu PRIMERGY server product
line
- Emulex LPe16000B 16GFC HBAs named DataCentre Networking Product
of the Year from DataCentre Solutions, as a finalist for the
Network Products Guide Best Products of the Year, and Network
Connectivity Brand of the Year by WatchStor Magazine in
China
- Announced broad partner adoption of Emulex LightPulse® 16GFC
HBAs, for joint virtualization, flash storage, and data archiving
and backup solutions with DataCore Software, GreenBytes, Pure
Storage, Quantum, and X-IO
- Received the Product Line Strategy Award for leadership in the
network recorder and traffic visibility market for the Endace range
of network recording and visibility tools from Frost &
Sullivan
- Enhanced the Emulex Connect™ Partner Program, including a new
loyalty program, improved reseller training tools, and streamlined
deal registration and web enablement
- Emulex named to CRN 2013 Partner Program Guide and awarded a
5-Star Partner rating for excellence
in its overall channel program for the third year in a row
- Appointed Gene Frantz and
Greg Clark to the Emulex Board of
Directors, adding expertise to the Board across the spectrum of
technology and telecom sectors
CEO Jim McCluney commented, "I'm
pleased to report we completed the acquisition of Endace, which
will form the core of our Network Visibility Product line. It's
still early days, but our Connect, Monitor and Manage strategy is
really resonating well with the end user community and I'm very
excited about the incremental opportunities the acquisition brings
to Emulex for the fourth quarter and beyond into fiscal 2014,"
continued McCluney.
"The team did an outstanding job of balancing the demands for
closing the transaction and beginning integration of the two
companies, and at the same time, once again achieving our revenue
and earnings guidance for the quarter. After completing the
acquisition, we exited the quarter with more than $90 million in available cash and investments,"
McCluney concluded.
Business Outlook
Although actual results may vary depending on a variety of
factors, many of which are outside the Company's control, including
uncertainty related to the macro IT spending environment, the
timing of new server launches by our customers, and the results and
related costs of ongoing patent litigation, Emulex is providing
guidance for its fourth fiscal quarter ending June 30, 2013. For the fourth quarter of fiscal
2013, Emulex is forecasting total net revenues in the range of
$118 - $122 million. The Company
expects non-GAAP earnings per diluted share of $0.11 - $0.13 in the fourth quarter. GAAP
estimates for the fourth quarter reflect approximately $0.25 per diluted share in expected charges
arising primarily from amortization of intangibles, stock-based
compensation, costs associated with the acquisition of Endace and
the royalties, mitigation expenses and license fees associated with
the Broadcom patent litigation, as well as the associated tax
impact and U.S. valuation allowance.
About Emulex
Emulex, the leader in network connectivity, monitoring and
management, provides hardware and software solutions for global
networks that support enterprise, cloud, government and
telecommunications. Emulex's products enable unrivaled end-to-end
application visibility, optimization and acceleration. The
Company's I/O connectivity offerings, including its line of ultra
high-performance Ethernet and Fibre Channel-based connectivity
products, have been designed into server and storage solutions from
leading OEMs, including Cisco, Dell, EMC, Fujitsu, Hitachi, HP,
Huawei, IBM, NetApp and Oracle, and can be found in the data
centers of nearly all of the Fortune 1000. Emulex's monitoring and
management solutions, including its portfolio of network visibility
and recording products, provide organizations with complete network
performance management at speeds up to 100Gb Ethernet. Emulex is
headquartered in Costa Mesa,
Calif., and has offices and research facilities in
North America, Asia and Europe. For more information about Emulex
(NYSE: ELX) please visit http://www.Emulex.com.
Note Regarding Non-GAAP Financial Information
To supplement the condensed consolidated financial statements
presented in accordance with U.S. generally accepted accounting
principles (GAAP), we have included the following non-GAAP
financial measures in this press release or in the webcast to
discuss our financial results for the third fiscal quarter which
may be accessed via our website at www.emulex.com: (i) non-GAAP
gross margin, (ii) non-GAAP operating expenses, (iii) non-GAAP
operating income, (iv) non-GAAP net income, and (v) non-GAAP
diluted earnings per share. These non-GAAP financial measures
exclude certain expenses and reflect an additional way of viewing
aspects of our operations that, when viewed with the GAAP results
and the reconciliations to corresponding GAAP financial measures,
provide a more complete understanding of our results of operations
and the factors and trends affecting our business. However,
these non-GAAP measures should be considered as a supplement to,
and not as a substitute for, or superior to, the corresponding
measures calculated in accordance with GAAP. We use our
non-GAAP financial measures internally to better understand and
evaluate our business, prepare annual budgets, and in measuring
performance for some forms of compensation.
Our non-GAAP financial measures reflect adjustments based on the
following items, as well as the related income tax effects:
Stock-based compensation. Although stock-based
compensation represents an important part of incentive compensation
offered to our key employees, we believe that exclusion of the
impact of stock-based compensation assists management and investors
in evaluating the period over period performance of our business
operations and in comparing our performance with those of our
competitors. Stock-based compensation expense will recur in
future periods.
Amortization of intangibles. Amortization of intangibles
generally represents costs incurred by an acquired company or other
third party to build value prior to our acquisition of the
intangible assets. As such, it is effectively part of the
transaction costs of the acquisition rather than ongoing costs of
operating our core business. As a result, we believe that
exclusion of these costs in presenting non-GAAP financial measures
provides management and investors a more effective means of
evaluating its historical performance and projected costs and the
potential for realizing cost efficiencies within our core
business. Amortization of intangibles will recur in future
periods.
Site closure related expenses. We have recognized expenses
related to closure and consolidation of certain facilities.
We believe that exclusion of these expenses is useful to management
and investors in evaluating the performance of our ongoing
operations on a period-to-period basis and relative to our
competitors. In this regard, we note that expenses of this
type are infrequent in nature.
Patent litigation damages, license fees and royalties. We have
incurred expenses in the form of damages, sunset period royalties
and settlement costs as a result of a judgment in a patent
litigation proceeding with Broadcom and the related partial
settlement and worldwide license agreement executed on July 3, 2012 (the Release Agreement). We
believe that exclusion of charges related to the Broadcom patent
damages, sunset period royalties and Release Agreement are useful
to management and investors in evaluating the performance of our
ongoing operations on a period-to-period basis and relative to our
competitors, as this amount relates to a judgment in litigation and
does not reflect a continuing cost of operating our core
business. In this regard, we note that expenses of this type
are generally unrelated to our core business and/or infrequent in
nature but will continue in future periods until affected products
are phased out.
Mitigation expenses related to the Broadcom patents. We
have recognized mitigation expenses related to the Broadcom
patents. We believe that exclusion of these redesign,
requalification and appeal expenses is useful to management and
investors in evaluating the performance of our ongoing operations
on a period-to-period basis and relative to our competitors.
In this regard, we note that expenses of this type are infrequent
in nature.
Expenses related to the acquisition of Endace Limited (LSE:
EDA). We have incurred various expenses during the
acquisition process including but not limited to legal fees,
accounting fees, the mark-up on acquired inventory, severance costs
and unrealized translation loss. We believe that exclusion of
these charges are useful to management and investors in evaluating
the performance of our ongoing operations on a period-to-period
basis and relative to our competitors, as these expenditures do not
reflect a continuing cost of operating our current core
business. In this regard, we note that expenses of this type
are infrequent in nature.
Valuation allowance for U.S. federal and state deferred tax
assets. The Company has concluded that it is more likely than
not that we will be unable to fully utilize the majority of our
U.S. federal and state deferred tax assets As a result, the
Company has previously recorded a valuation allowance against those
assets to the extent that they cannot be realized through net
operating loss carrybacks to prior tax years. We believe that
eliminating the impact of a discrete adjustment of this nature and
its continuing impact on our effective tax rate is useful to
management and investors in evaluating the performance of the
Company's ongoing operations on a period-to-period basis and
relative to the Company's competitors. In this regard, we
note that adjustments of this type are generally infrequent in
nature.
- - - - - - - - -
"Safe Harbor'' Statement under the Private Securities Litigation
Reform Act of 1995: With the exception of historical information,
the statements set forth above, contain forward-looking statements
that involve risk and uncertainties. We expressly disclaim any
obligation or undertaking to release publicly any updates or
changes to these forward-looking statements that may be made to
reflect any future events or circumstances. We wish to caution
readers that a number of important factors could cause actual
results to differ materially from those in the forward-looking
statements. These factors include the possibility that we may not
realize the anticipated benefits from the acquisition of Endace on
a timely basis or at all, and may be unable to integrate the
technology, operations and personnel of Endace into our existing
operations in a timely and efficient manner. In addition,
intellectual property claims, with or without merit, that could
result in costly litigation, cause product shipment delays, require
us to indemnify customers, or require us to enter into royalty or
licensing agreements, which may or may not be available.
Furthermore, we have in the past obtained, and may be required in
the future to obtain, licenses of technology owned by other
parties. We cannot be certain that the necessary licenses will be
available or that they can be obtained on commercially reasonable
terms. If we were to fail to obtain such royalty or licensing
agreements in a timely manner and on reasonable terms, our
business, results of operations and financial condition could be
materially adversely affected. Ongoing lawsuits, such as the action
brought by Broadcom Corporation (Broadcom), present inherent risks,
any of which could have a material adverse effect on our business,
financial condition, or results of operations. Such potential risks
include continuing expenses of litigation, risk of loss of patent
rights, risk of monetary damages, risk of injunction against the
sale of products incorporating the technology in question,
counterclaims, attorneys' fees, incremental costs associated with
product or component redesigns, potential liabilities to customers
under contractual indemnification provisions, and diversion of
management's attention from other business matters. With respect to
the continuing Broadcom litigation, such potential risks also
include the adequacy of any sunset period to make design changes,
the ability to implement any design changes, the availability of
customer resources to complete any re-qualification or re-testing
that may be needed, the ability to maintain favorable working
relationships with Emulex suppliers of serializer/deserializer
(SerDes) modules, and the ability to obtain a settlement which does
not put us at a competitive disadvantage. In addition, the fact
that the economy generally, and the technology and storage market
segments specifically, have been in a state of uncertainty makes it
difficult to determine if past experience is a good guide to the
future and makes it impossible to determine if markets will grow or
shrink in the short term. Continued weakness in domestic and
worldwide macro-economic conditions, related disruptions in world
credit and equity markets, and the resulting economic uncertainty
for our customers, as well as the storage and converged networking
market as a whole, has and could continue to adversely affect our
revenues and results of operations. As a result of these
uncertainties, we are unable to predict our future results with any
accuracy. Other factors affecting these forward-looking statements
include but are not limited to the following: faster than
anticipated declines in the storage networking market, slower than
expected growth of the converged networking market or the failure
of our Original Equipment Manufacturer (OEM) customers to
successfully incorporate our products into their systems; our
dependence on a limited number of customers and the effects of the
loss of, decrease in or delays of orders by any such customers, or
the failure of such customers to make timely payments; the
emergence of new or stronger competitors as a result of
consolidation movements in the market; the timing and market
acceptance of our products or our OEM customers' new or enhanced
products; costs associated with entry into new areas of the
network, server and storage technology markets; the variability in
the level of our backlog and the variable and seasonal procurement
patterns of our customers; any inadequacy of our intellectual
property protection and the costs of actual or potential
third-party claims of infringement and any related indemnity
obligations or adverse judgments; the effect of any actual or
potential unsolicited offers to acquire us; proxy contests or the
activities of activist investors; impairment charges, including but
not limited to goodwill and intangible assets; changes in tax rates
or legislation; the effects of acquisitions; the effects of
terrorist activities, natural disasters, and any resulting
disruption in our supply chain or customer purchasing patterns or
any other resulting economic or political instability; the highly
competitive nature of the markets for our products as well as
pricing pressures that may result from such competitive conditions;
the effects of changes in our business model to separately charge
for software; the effect of rapid migration of customers towards
newer, lower cost product platforms; transitions from board or box
level to application specific integrated circuit (ASIC) solutions
for selected applications; a shift in unit product mix from
higher-end to lower-end or mezzanine card products; a faster than
anticipated decrease in the average unit selling prices or an
increase in the manufactured cost of our products; delays in
product development; our reliance on third-party suppliers and
subcontractors for components and assembly; our ability to attract
and retain key technical personnel; our ability to benefit from our
research and development activities; our dependence on
international sales and internationally produced products; changes
in accounting standards; and any resulting regulatory changes on
our business. These and other factors could cause actual results to
differ materially from those in the forward-looking statements and
are discussed in our filings with the Securities and Exchange
Commission, including our recent filings on Forms 10-K and 10-Q,
under the caption "Risk Factors."
--------------------
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
CORPORATION AND SUBSIDIARIES
Condensed
Consolidated Statements of Operations
(unaudited, in thousands, except per share
data)
|
|
|
Three
Months Ended
|
Nine
Months Ended
|
|
March
31,
|
April
1,
|
March
31,
|
April
1,
|
|
2013
|
2012
|
2013
|
2012
|
Net
revenues
|
$116,786
|
$125,746
|
$358,198
|
$372,814
|
|
|
|
|
|
Cost of
sales:
|
|
|
|
|
Cost of
goods sold
|
41,642
|
45,351
|
130,265
|
137,314
|
Amortization of core and developed
technology intangible assets
|
5,478
|
5,159
|
15,775
|
18,882
|
Patent
litigation settlement and
royalties
|
1,426
|
477
|
3,376
|
865
|
Cost of
sales
|
48,546
|
50,987
|
149,416
|
157,061
|
Gross
profit
|
68,240
|
74,759
|
208,782
|
215,753
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Engineering and development
|
43,661
|
40,361
|
122,244
|
121,307
|
Selling
and marketing
|
17,179
|
15,897
|
45,685
|
45,774
|
General
and administrative
|
9,526
|
8,820
|
29,021
|
29,808
|
Amortization of other intangible
assets
|
1,488
|
1,603
|
4,376
|
4,967
|
Total
operating expenses
|
71,854
|
66,681
|
201,326
|
201,856
|
|
|
|
|
|
Operating
(loss) income
|
(3,614)
|
8,078
|
7,456
|
13,897
|
|
|
|
|
|
Non-operating (loss) income:
|
|
|
|
|
Interest
income
|
15
|
19
|
23
|
74
|
Interest
expense
|
(7)
|
(10)
|
(11)
|
(14)
|
Other
income (expense), net
|
(4,481)
|
(277)
|
(4,844)
|
265
|
Total
non-operating (loss) income
|
(4,473)
|
(268)
|
(4,832)
|
325
|
|
|
|
|
|
(Loss)
income before income taxes
|
(8,087)
|
7,810
|
2,624
|
14,222
|
|
|
|
|
|
Income tax
(benefit) provision
|
(1,117)
|
(869)
|
3,354
|
(2,292)
|
|
|
|
|
|
Net (loss)
income
|
$(6,970)
|
$8,679
|
$(730)
|
$16,514
|
|
|
|
|
|
Net (loss)
income per share:
|
|
|
|
|
Basic
|
$(0.08)
|
$0.10
|
$(0.01)
|
$0.19
|
Diluted
|
$(0.08)
|
$0.10
|
$(0.01)
|
$0.19
|
|
|
|
|
|
Number of
shares used in per share
computations:
|
|
|
|
|
Basic
|
90,590
|
86,495
|
90,000
|
86,421
|
Diluted
|
90,590
|
88,518
|
90,000
|
88,369
|
|
|
EMULEX
CORPORATION AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets
(unaudited, in thousands)
|
|
March
31,
|
July
1,
|
|
2013
|
2012
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$
91,071
|
$201,048
|
Investments
|
500
|
28,879
|
Accounts receivable,
net
|
85,598
|
84,106
|
Inventories
|
30,304
|
20,319
|
Prepaid income
taxes
|
3,361
|
10,784
|
Prepaid expenses and
other current assets
|
14,534
|
7,380
|
Deferred income
taxes
|
5,108
|
10,722
|
Total
current assets
|
230,476
|
363,238
|
|
|
|
Property
and equipment, net
|
62,971
|
60,118
|
Goodwill
and Intangible assets, net
|
392,886
|
282,292
|
Other
assets
|
23,771
|
7,311
|
|
$710,104
|
$712,959
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$
31,651
|
$
26,889
|
Accrued and other
current liabilities
|
39,916
|
75,700
|
Total
current liabilities
|
71,567
|
102,589
|
|
|
|
|
|
|
Other
liabilities
|
3,981
|
3,878
|
Deferred
income taxes
|
18,131
|
3,876
|
Accrued
taxes
|
30,471
|
27,513
|
Total liabilities
|
124,150
|
137,856
|
|
|
|
|
|
|
Total
stockholders' equity
|
585,954
|
575,103
|
|
$710,104
|
$712,959
|
EMULEX
CORPORATION AND SUBSIDIARIES
Condensed
Consolidated Statement of Cash Flows
(unaudited, in thousands)
|
|
Nine
Months Ended
|
|
March
31,
|
April
1,
|
|
2013
|
2012
|
|
|
|
Cash flows
from operations:
|
|
|
Net (loss)
income
|
$
(730)
|
$
16,514
|
Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating
activities:
|
|
|
Depreciation and
amortization
|
33,324
|
37,479
|
Stock based
compensation
|
16,267
|
18,436
|
Deferred income
taxes
|
(958)
|
(5,976)
|
Other reconciling
items
|
196
|
(163)
|
Changes in assets and
liabilities
|
(55,495)
|
(17,416)
|
Net
cash (used in) provided by operating
activities
|
(7,396)
|
48,874
|
|
|
|
Cash flows
from investing activities:
|
|
|
Investment in property and equipment,
net
|
(10,322)
|
(10,676)
|
Acquisitions, net of cash
acquired
|
(107,709)
|
-
|
Maturities of/(proceeds from)
investments, net
|
28,441
|
(6,625)
|
Net cash used in
investing activities
|
(89,590)
|
(17,301)
|
|
|
|
Cash flows
from financing activities:
|
|
|
Repurchase of common stock
|
-
|
(20,058)
|
Noncontrolling interest
|
(11,876)
|
-
|
Other
|
(1,275)
|
537
|
Net cash used in
financing activities
|
(13,151)
|
(19,521)
|
|
|
|
Effect of
exchange rates on cash and cash equivalents
|
160
|
(274)
|
|
|
|
Net
(decrease) increase in cash & cash equivalents
|
(109,977)
|
11,778
|
Opening
cash balance
|
201,048
|
131,160
|
Ending
cash balance
|
$
91,071
|
$142,938
|
EMULEX CORPORATION AND
SUBSIDIARIES
Supplemental Information
Historical Net Revenue by Product Lines:
Network Connectivity Products (NCP) primarily consist of Fibre
Channel LightPluse® and Ethernet OneConnect® standup HBAs,
mezzanine cards, I/O ASICs, ULOMs, and UCNAs to provide server
Input/Output (I/O) and target storage array connectivity to enable
servers to reliably and efficiently connect to Local Area Networks,
Storage Area Networks and Network Attached Storage by offloading
data communication processing tasks from the servers as information
is delivered and sent to the network.
Network Visibility Products (NVP) consists entirely of the
recently acquired Endace® family of network visibility and
intelligent network recording products, which consists of
EndaceProbe™ Intelligent Network Recorder appliances, the
EndaceVision™ browser-based network traffic search engine,
EndaceAccess™ network visibility headend systems and Data
Acquisition and Generation (DAG) network capture cards, providing
organizations with complete network performance management at
speeds up to 100Gb Ethernet.
Storage Connectivity Products (SCP) include our InSpeed®,
FibreSpy®, switch-on-a-chip (SOC), bridge and router products. SCP
are deployed inside storage arrays, tape libraries, and other
storage appliances to connect storage controllers to storage
capacity, delivering improved performance, reliability, and
connectivity.
Advanced Technology and Other Products (ATP) primarily consists
of our Integrated Baseboard Management Controllers (iBMC), our One
Command® Vision products, as well as some legacy and other products
and services.
($000s)
|
Q3
FY
2013
Revenues
|
Q2 FY
2013
Revenues
|
Q1 FY
2013
Revenues
|
Q4 FY
2012
Revenues
|
Q3 FY
2012
Revenues
|
%
Change
Q3 vs Q3
|
|
|
|
|
|
|
|
Network
Connectivity Products
|
$
85,166
|
$
96,132
|
$
96,733
|
$
87,979
|
$
91,127
|
(6)%
|
Network
Visibility Products
|
4,873
|
-
|
-
|
-
|
-
|
na
|
Storage
Connectivity Products
|
20,833
|
22,670
|
18,769
|
32,797
|
27,855
|
(25)%
|
Advanced
Technology and
Other Products
|
5,914
|
3,343
|
3,765
|
8,179
|
6,764
|
(13)%
|
Total net
revenues
|
$116,786
|
$122,145
|
$119,267
|
$128,955
|
$125,746
|
(7)%
|
na – not
applicable
|
|
|
|
|
|
|
|
%
Total
Revenues
|
%
Total
Revenues
|
%
Total
Revenues
|
%
Total
Revenues
|
%
Total
Revenues
|
|
|
|
|
|
|
|
|
Network
Connectivity Products
|
73%
|
79%
|
81%
|
68%
|
73%
|
|
Network
Visibility Products
|
4%
|
-
|
-
|
-
|
-
|
|
Storage
Connectivity Products
|
18%
|
18%
|
16%
|
26%
|
22%
|
|
Advanced
Technology and
Other Products
|
5%
|
3%
|
3%
|
6%
|
5%
|
|
Total net
revenues
|
100%
|
100%
|
100%
|
100%
|
100%
|
|
Historical
Net Revenues by Channel and Territory:
|
|
|
|
|
|
|
|
|
|
|
|
($000s)
|
Q3
FY
2013
Revenues
|
%
Total
Revenues
|
|
Q3 FY
2012
Revenues
|
%
Total
Revenues
|
|
%
Change
|
|
|
|
|
|
|
|
|
Revenues
from OEM customers
|
$100,975
|
86%
|
|
$115,327
|
92%
|
|
(12)%
|
Revenues
from distribution
|
13,985
|
12%
|
|
10,282
|
8%
|
|
36%
|
Other
|
1,826
|
2%
|
|
137
|
nm
|
|
nm
|
Total net
revenues
|
$116,786
|
100%
|
|
$125,746
|
100%
|
|
(7)%
|
|
|
|
|
|
|
|
|
Asia-Pacific
|
$65,285
|
56%
|
|
$
67,461
|
54%
|
|
(3)%
|
United
States
|
29,713
|
26%
|
|
40,100
|
32%
|
|
(26)%
|
Europe,
Middle East and Africa
|
19,088
|
16%
|
|
17,919
|
14%
|
|
7%
|
Rest of
world
|
2,700
|
2%
|
|
266
|
nm
|
|
nm
|
Total net
revenues
|
$116,786
|
100%
|
|
$125,746
|
100%
|
|
(7)%
|
nm – not
meaningful
|
Summary of
Stock-Based Compensation:
|
|
|
|
|
Three
Months Ended
|
Nine
Months Ended
|
|
March
31,
|
April
1,
|
March
31,
|
April
1,
|
($000s)
|
2013
|
2012
|
2013
|
2012
|
|
|
|
|
|
Cost of
sales
|
$
248
|
$
223
|
$
744
|
$
990
|
Engineering and development
|
2,606
|
2,547
|
7,518
|
7,831
|
Selling
and marketing
|
890
|
938
|
2,576
|
2,874
|
General
and administrative
|
1,594
|
2,149
|
5,429
|
6,741
|
Total
stock-based compensation
|
$5,338
|
$5,857
|
$16,267
|
$18,436
|
Reconciliation of GAAP Gross Margin to Non-GAAP Gross
Margin:
|
|
|
|
|
Three
Months Ended
|
Nine
Months Ended
|
|
March
31,
|
April
1,
|
March
31,
|
April
1,
|
|
2013
|
2012
|
2013
|
2012
|
|
|
|
|
|
GAAP gross
margin
|
58.4%
|
59.5%
|
58.3%
|
57.9%
|
|
|
|
|
|
Items
excluded from GAAP gross
margin to
calculate non-GAAP gross
margin:
|
|
|
|
|
Stock-based
compensation
|
0.2%
|
0.1%
|
0.2%
|
0.3%
|
Amortization of
intangibles
|
4.7%
|
4.1%
|
4.4%
|
5.1%
|
Site closure related
expenses
|
-
|
-
|
-
|
0.0%
|
Patent litigation damages, license
fees and royalties
|
1.2%
|
0.4%
|
0.9%
|
0.2%
|
Expenses related to the
acquisition of Endace
|
0.6%
|
-
|
0.2%
|
-
|
Non-GAAP
gross margin
|
65.1%
|
64.1%
|
64.0%
|
63.5%
|
Reconciliation of GAAP Operating Expenses to Non-GAAP
Operating Expenses:
|
|
|
|
|
Three
Months Ended
|
Nine
Months Ended
|
|
March
31,
|
April
1,
|
March
31,
|
April
1,
|
($000s)
|
2013
|
2012
|
2013
|
2012
|
|
|
|
|
|
GAAP
operating expenses, as presented above
|
$71,854
|
$66,681
|
$201,326
|
$201,856
|
|
|
|
|
|
Items
excluded from GAAP operating
expenses
to calculate non-GAAP
operating
expenses:
|
|
|
|
|
Stock-based compensation
|
(5,090)
|
(5,634)
|
(15,523)
|
(17,446)
|
Amortization of other
intangibles
|
(1,488)
|
(1,603)
|
(4,376)
|
(4,967)
|
Site closure related expenses
|
-
|
-
|
-
|
(1,039)
|
Mitigation expenses related to
the Broadcom patents
|
(3,026)
|
(231)
|
(4,490)
|
(231)
|
Expenses related to the acquisition
of Endace
|
(963)
|
-
|
(3,023)
|
-
|
Impact on
operating expenses
|
(10,567)
|
(7,468)
|
(27,412)
|
(23,683)
|
Non-GAAP
operating expenses
|
$61,287
|
$59,213
|
$173,914
|
$178,173
|
Reconciliation of GAAP Operating (Loss) Income to
Non-GAAP Operating Income:
|
|
|
|
|
Three
Months Ended
|
Nine
Months Ended
|
|
March
31,
|
April
1,
|
March
31,
|
April
1,
|
($000s)
|
2013
|
2012
|
2013
|
2012
|
|
|
|
|
|
GAAP
operating (loss) income as
presented above
|
$
(3,614)
|
$
8,078
|
$
7,456
|
$13,897
|
|
|
|
|
|
Items
excluded from GAAP operating
(loss)
income to calculate non-GAAP
operating
income:
|
|
|
|
|
Stock-based compensation
|
5,338
|
5,857
|
16,267
|
18,436
|
Amortization of intangibles
|
6,966
|
6,762
|
20,151
|
23,849
|
Site closure related expenses
|
-
|
-
|
-
|
1,142
|
Patent litigation damages, license
fees
and royalties
|
1,426
|
477
|
3,376
|
865
|
Mitigation expenses related to the
Broadcom patents
|
3,026
|
231
|
4,490
|
231
|
Expenses related to the acquisition
of Endace
|
1,650
|
-
|
3,710
|
-
|
Impact on
operating income
|
18,406
|
13,327
|
47,994
|
44,523
|
Non-GAAP
operating income
|
$14,792
|
$21,405
|
$55,450
|
$58,420
|
Reconciliation of GAAP Net (Loss) Income to Non-GAAP
Net Income:
|
|
|
|
|
Three
Months Ended
|
Nine
Months Ended
|
|
March
31,
|
April
1,
|
March
31,
|
April
1,
|
($000s)
|
2013
|
2012
|
2013
|
2012
|
|
|
|
|
|
GAAP net
(loss) income as presented
above
|
$
(6,970)
|
$
8,679
|
$
(730)
|
$16,514
|
|
|
|
|
|
Items
excluded from GAAP net (loss)
income to
calculate non-GAAP net income:
|
|
|
|
|
Stock-based compensation
|
5,338
|
5,857
|
16,267
|
18,436
|
Amortization of intangibles
|
6,966
|
6,762
|
20,151
|
23,849
|
Site closure related expenses
|
-
|
-
|
-
|
1,142
|
Patent litigation damages, license
fees
and royalties
|
1,426
|
477
|
3,376
|
865
|
Mitigation expenses related to the
Broadcom patents
|
3,026
|
231
|
4,490
|
231
|
Expenses related to the acquisition
of Endace
|
6,342
|
-
|
8,402
|
-
|
Income tax effect of above
items
|
(4,799)
|
(3,521)
|
(10,236)
|
(8,081)
|
Valuation
allowance for U.S. federal
and/or
state deferred tax assets
|
6,856
|
-
|
11,211
|
-
|
Impact on net
income
|
25,155
|
9,806
|
53,661
|
36,442
|
Non-GAAP
net income
|
$18,185
|
$18,485
|
$52,931
|
$52,956
|
Reconciliation of GAAP Diluted (Loss) Earnings Per
Share to Non-GAAP Diluted Earnings Per Share:
|
|
|
|
|
|
|
Three
Months Ended
|
Nine
Months Ended
|
|
|
March
31,
|
April
1,
|
March
31,
|
April
1,
|
|
(shares in
000s)
|
2013
|
2012
|
2013
|
2012
|
|
GAAP
diluted (loss) earnings per share
as presented above
|
$(0.08)
|
$0.10
|
$(0.01)
|
$0.19
|
|
|
|
|
|
|
|
Items
excluded from GAAP (loss) earnings
per share to calculate diluted non-GAAP
earnings per share, net of tax effect:
|
|
|
|
|
|
Stock-based compensation
|
0.06
|
0.07
|
0.18
|
0.21
|
|
Amortization of intangibles
|
0.08
|
0.08
|
0.22
|
0.27
|
|
Site closure related expenses
|
-
|
-
|
-
|
0.01
|
|
Patent litigation damages, license
fees and royalties
|
0.02
|
0.00
|
0.04
|
0.01
|
|
Mitigation expenses related to the
Broadcom patents
|
0.03
|
0.00
|
0.05
|
0.00
|
|
Expenses related to the acquisition of
Endace
|
0.07
|
-
|
0.09
|
-
|
|
Tax impact of above items and U.S
GAAP valuation allowance
|
0.02
|
(0.04)
|
0.01
|
(0.09)
|
|
Impact on GAAP
(loss) earnings per share
|
0.28
|
0.11
|
0.59
|
0.41
|
|
Non-GAAP
diluted earnings per share
|
$0.20
|
$0.21
|
$0.58
|
$0.60
|
|
Diluted
shares used in non-GAAP per share computations
|
92,240
|
88,518
|
91,894
|
88,369
|
|
|
|
|
|
|
|
|
Forward-Looking Diluted Earnings per Share
Reconciliation:
|
|
|
|
Guidance
for
Three
Months Ending
June 30,
2013
|
|
|
|
|
Non-GAAP
diluted earnings per share guidance
|
$0.11 -
$0.13
|
|
|
Items
excluded, net of tax, from non-GAAP diluted earnings per share
to
calculate GAAP diluted earnings per share guidance:
|
|
Stock-based compensation
|
(0.06)
|
Amortization of intangibles
|
(0.09)
|
Patent
litigation damages, license fees, royalties and mitigation
expenses
|
(0.10)
|
Expense
related to the acquisition of Endace
|
(0.01)
|
Tax impact
of above items and U.S. GAAP valuation allowance
|
0.01
|
|
|
GAAP loss
per share guidance
|
($0.12) –
($0.14)
|
Investor Contact:
|
Press
Contact:
|
Frank
Yoshino
|
Katherine
Lane
|
Vice
President, Finance
|
Director,
Corporate Communications
|
+1 714
885-3697
|
+1 714
885-3828
|
frank.yoshino@emulex.com
|
katherine.lane@emulex.com
|
SOURCE Emulex Corporation