The non-GAAP financial measures contained herein are a supplement to the corresponding financial measures prepared in accordance with generally accepted accounting principles (GAAP). The non-GAAP financial measures presented exclude the items summarized in the above table. Management believes that adjustments for these items assist investors in making comparisons of period-to-period operating results and that these items are not indicative of the company’s on-going core operating performance.
The company has presented non-GAAP net income and non-GAAP net income per diluted share, on a basis consistent with its historical presentation, to assist investors in understanding the company’s core net income and core net income per diluted share on an on-going basis. These non-GAAP financial measures may also assist investors in making 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 non-GAAP net income and non-GAAP net income per diluted share are important measures in the evaluation of the company’s profitability. These non-GAAP financial measures exclude the adjustments described in the above table, and thus provide an overall measure of the company’s on-going net profitability and related profitability on a per diluted share basis.
Management uses non-GAAP net income and non-GAAP net income per diluted share in its evaluation of the company’s core after-tax results of operations and trends between fiscal periods and believes that these measures are important components 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 these non-GAAP financial measures. Management believes that providing these non-GAAP financial measures allows investors to view the company’s financial results in the way that management views the financial results.
The non-GAAP financial measures 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 financial 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 financial measures presented by the company may be different from the non-GAAP financial measures used by other companies.
For additional information on the items excluded from the non-GAAP financial measures and why the company believes that these non-GAAP financial measures provide useful supplemental information to investors, the company refers you to the Form 8-K regarding this release filed today with the Securities and Exchange Commission.
A summary of the non-GAAP adjustments presented in the table above by the financial statement line impacted is as follows:
| (unaudited – in thousands) | Three Months Ended | ||||||||||||||||
|
July 3,
2016 |
June 28,
2015 |
||||||||||||||||
| Non-GAAP Adjustments: | |||||||||||||||||
| Cost of revenues: | |||||||||||||||||
| Stock-based compensation | $ | 268 | $ | 250 | |||||||||||||
| Amortization of acquisition-related intangible assets | 4,159 | 3,467 | |||||||||||||||
| Amortization of license fee | 657 | 617 | |||||||||||||||
| Total cost of revenue adjustments | 5,084 | 4,334 | |||||||||||||||
| Operating expenses: | |||||||||||||||||
| Engineering and development: | |||||||||||||||||
| Stock-based compensation | 2,691 | 3,274 | |||||||||||||||
| Sales and marketing: | |||||||||||||||||
| Stock-based compensation | 1,195 | 1,201 | |||||||||||||||
| Amortization of acquisition-related intangible assets | 169 | 169 | |||||||||||||||
| General and administrative: | |||||||||||||||||
| Stock-based compensation | 1,071 | 1,262 | |||||||||||||||
| Transactions costs | 2,716 | — | |||||||||||||||
| Special charges | (624 | ) | 1,079 | ||||||||||||||
| Total operating expense adjustments | 7,218 | 6,985 | |||||||||||||||
| Interest and other income, net: | |||||||||||||||||
| Gains recognized on previously impaired investment securities | (1,373 | ) | — | ||||||||||||||
| Total non-GAAP adjustments before income taxes | 10,929 | 11,319 | |||||||||||||||
| Income tax adjustments | (4,333 | ) | 2,642 | ||||||||||||||
| Total non-GAAP adjustments | $ | 6,596 | $ | 13,961 | |||||||||||||
|
QLOGIC CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited — in thousands) |
|||||||||||||||||
|
July 3,
2016 |
April 3,
2016 |
||||||||||||||||
| ASSETS | |||||||||||||||||
| Current assets: | |||||||||||||||||
| Cash and cash equivalents | $ | 119,618 | $ | 125,408 | |||||||||||||
| Marketable securities | 245,657 | 229,439 | |||||||||||||||
| Total cash and marketable securities | 365,275 | 354,847 | |||||||||||||||
| Accounts receivable, net | 74,090 | 55,546 | |||||||||||||||
| Inventories | 36,574 | 39,745 | |||||||||||||||
| Other current assets | 13,617 | 13,268 | |||||||||||||||
| Total current assets | 489,556 | 463,406 | |||||||||||||||
| Property and equipment, net | 76,961 | 71,738 | |||||||||||||||
| Goodwill | 167,232 | 167,232 | |||||||||||||||
| Purchased intangible assets, net | 58,555 | 62,998 | |||||||||||||||
| Deferred tax assets | 41,897 | 41,003 | |||||||||||||||
| Other assets | 16,747 | 17,491 | |||||||||||||||
| $ | 850,948 | $ | 823,868 | ||||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||
| Current liabilities: | |||||||||||||||||
| Accounts payable | $ | 39,294 | $ | 29,576 | |||||||||||||
| Accrued compensation | 16,615 | 19,389 | |||||||||||||||
| Accrued taxes | 905 | 955 | |||||||||||||||
| Other current liabilities | 10,751 | 11,156 | |||||||||||||||
| Total current liabilities | 67,565 | 61,076 | |||||||||||||||
| Accrued taxes | 8,474 | 9,510 | |||||||||||||||
| Other liabilities | 5,526 | 5,904 | |||||||||||||||
| Total liabilities | 81,565 | 76,490 | |||||||||||||||
| Stockholders’ equity: | |||||||||||||||||
| Common stock | 219 | 218 | |||||||||||||||
| Additional paid-in capital | 1,019,339 | 1,015,666 | |||||||||||||||
| Retained earnings | 1,787,413 | 1,769,130 | |||||||||||||||
| Accumulated other comprehensive loss | (286 | ) | (334 | ) | |||||||||||||
| Treasury stock | (2,037,302 | ) | (2,037,302 | ) | |||||||||||||
| Total stockholders’ equity | 769,383 | 747,378 | |||||||||||||||
| $ | 850,948 | $ | 823,868 | ||||||||||||||
|
QLOGIC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited — in thousands) |
||||||||||||||||||
| Three Months Ended | ||||||||||||||||||
|
July 3,
2016 |
June 28,
2015 |
|||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||
| Net income | $ | 18,283 | $ | 2,556 | ||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||
| Depreciation and amortization | 10,010 | 10,616 | ||||||||||||||||
| Stock-based compensation | 5,225 | 5,987 | ||||||||||||||||
| Deferred income taxes | (940 | ) | 3,400 | |||||||||||||||
| Other non-cash items, net | (1,042 | ) | 539 | |||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||
| Accounts receivable | (18,885 | ) | 2,517 | |||||||||||||||
| Inventories | 3,171 | (8,671 | ) | |||||||||||||||
| Other assets | (235 | ) | (134 | ) | ||||||||||||||
| Accounts payable | 6,793 | 2,218 | ||||||||||||||||
| Accrued compensation | (2,774 | ) | (4,913 | ) | ||||||||||||||
| Accrued taxes, net | (1,128 | ) | (3,081 | ) | ||||||||||||||
| Other liabilities | (783 | ) | (1,567 | ) | ||||||||||||||
| Net cash provided by operating activities | 17,695 | 9,467 | ||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||
| Purchases of available-for-sale securities | (61,661 | ) | (50,639 | ) | ||||||||||||||
| Proceeds from sales and maturities of available-for-sale securities | 45,679 | 34,209 | ||||||||||||||||
| Purchases of property and equipment | (7,842 | ) | (10,782 | ) | ||||||||||||||
| Other investing activities | 1,373 | — | ||||||||||||||||
| Net cash used in investing activities | (22,451 | ) | (27,212 | ) | ||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||
| Proceeds from issuance of common stock under stock-based awards | 2,575 | 16,497 | ||||||||||||||||
| Minimum tax withholding paid on behalf of employees for restricted stock units | (4,126 | ) | (5,062 | ) | ||||||||||||||
| Purchases of treasury stock | — | (17,856 | ) | |||||||||||||||
| Other financing activities | 517 | 1,124 | ||||||||||||||||
| Net cash used in financing activities | (1,034 | ) | (5,297 | ) | ||||||||||||||
| Net decrease in cash and cash equivalents | (5,790 | ) | (23,042 | ) | ||||||||||||||
| Cash and cash equivalents at beginning of period | 125,408 | 115,241 | ||||||||||||||||
| Cash and cash equivalents at end of period | $ | 119,618 | $ | 92,199 | ||||||||||||||
QLOGIC CORPORATION
