Non-GAAP Financial Measures

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								Nine Months Ended
	December 28, 2014				December 29, 2013				December 28, 2014				December 29, 2013
Non-GAAP Adjustments:
Cost of revenues:
Stock-based compensation	$	258			$	259			$	871			$	1,082
Amortization of acquisition-related intangible assets		3,816				243				12,383				730
Amortization of license fee		716				—				2,110				—
Acquisition-related charges		192				—				1,226				—
Total cost of revenue adjustments		4,982				502				16,590				1,812
Operating expenses:
Engineering and development:
Stock-based compensation		2,243				2,462				7,523				9,070
Sales and marketing:
Stock-based compensation		1,182				1,251				3,265				4,274
Amortization of acquisition-related intangible assets		534				—				534				—
General and administrative:
Stock-based compensation		1,220				1,086				3,519				3,621
Special charges		69				1,947				4,872				18,329
Total operating expense adjustments		5,248				6,746				19,713				35,294
Total non-GAAP adjustments before income taxes		10,230				7,248				36,303				37,106
Income tax effects		(1,030	)			(2,237	)			(3,612	)			(3,564	)
Total non-GAAP adjustments	$	9,200			$	5,011			$	32,691			$	33,542

QLOGIC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited — in thousands)
	December 28, 2014				March 30, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	95,508			$	91,258
Marketable securities		192,424				186,783
Total cash and marketable securities		287,932				278,041
Accounts receivable, net		94,705				65,213
Inventories		30,939				18,036
Deferred tax assets		15,481				15,080
Other current assets		24,400				16,590
Total current assets		453,457				392,960
Property and equipment, net		74,841				84,912
Goodwill		167,232				194,107
Purchased intangible assets, net		82,091				69,903
Deferred tax assets		32,723				32,827
Other assets		21,157				23,554
	$	831,501			$	798,263
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	38,804			$	30,657
Accrued compensation		19,455				26,956
Accrued taxes		3,511				981
Deferred revenue		3,469				3,954
Other current liabilities		5,999				16,123
Total current liabilities		71,238				78,671
Accrued taxes		15,166				17,095
Other liabilities		8,282				9,071
Total liabilities		94,686				104,837
Stockholders’ equity:
Common stock		215				214
Additional paid-in capital		974,740				958,008
Retained earnings		1,711,516				1,672,071
Accumulated other comprehensive income (loss)		(520	)			435
Treasury stock		(1,949,136	)			(1,937,302	)
Total stockholders’ equity		736,815				693,426
	$	831,501			$	798,263

QLOGIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited — in thousands)
	Nine Months Ended
	December 28, 2014				December 29, 2013
Cash flows from operating activities:
Net income	$	39,445			$	28,513
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		35,511				23,620
Stock-based compensation		15,178				18,047
Deferred income taxes		(316	)			(5,355	)
Asset impairments		1,455				3,129
Other non-cash items		1,257				2,577
Changes in operating assets and liabilities:
Accounts receivable		(29,892	)			(5,088	)
Inventories		(12,903	)			6,116
Other assets		1,236				537
Accounts payable		4,121				(1,919	)
Accrued compensation		(7,501	)			(2,719	)
Accrued taxes, net		1,147				7,734
Other liabilities		(11,398	)			2,841
Net cash provided by operating activities		37,340				78,033
Cash flows from investing activities:
Purchases of available-for-sale securities		(123,431	)			(259,008	)
Proceeds from sales and maturities of available-for-sale securities		116,260				261,253
Purchases of property and equipment		(15,420	)			(21,043	)
Net cash used in investing activities		(22,591	)			(18,798	)
Cash flows from financing activities:
Proceeds from issuance of common stock under stock-based awards		5,144				6,756
Minimum tax withholding paid on behalf of employees for restricted stock units		(3,589	)			(4,584	)
Purchases of treasury stock		(11,834	)			(47,785	)
Other financing activities		(220	)			(156	)
Net cash used in financing activities		(10,499	)			(45,769	)
Net increase in cash and cash equivalents		4,250				13,466
Cash and cash equivalents at beginning of period		91,258				95,532
Cash and cash equivalents at end of period	$	95,508			$	108,998

QLOGIC CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
(unaudited — in thousands)
Net Revenues
A summary of the company’s revenue components is as follows:
	Three Months Ended						Nine Months Ended
	December 28, 2014			December 29, 2013			December 28, 2014			December 29, 2013
Advanced Connectivity Platforms	$	124,704		$	98,452		$	344,282		$	285,653
Legacy Connectivity Products		15,499			20,997			42,873			59,534
	$	140,203		$	119,449		$	387,155		$	345,187

« Previous Page 1 | 2 | 3 | 4  Next Page »