Emulex Announces Preliminary Third Quarter Results

              Emulex Announces Preliminary Third Quarter Results

PR Newswire

COSTA MESA, Calif., May 2, 2013

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

  oTotal net revenues of $116.8 million
  oNetwork Connectivity Products (NCP) net revenues of $85.2 million,
    representing approximately 73% of total net revenues
  oNetwork 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
  oStorage Connectivity Products (SCP) net revenues of $20.8 million,
    representing 18% of total net revenues
  oAdvanced Technology and other Products (ATP) net revenues of $5.9 million,
    representing 5% of total net revenues
  oNon-GAAP gross margins of 65% and GAAP gross margins of 58%
  oNon-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
  oGAAP loss per share of $0.08
  oCash, cash equivalents and investments at the end of the quarter of $91.6
    million

Third Quarter Business Highlights

  oCompleted acquisition of Endace Limited, expanding the Emulex portfolio of
    products to include industry leading network packet capture and network
    visibility software and appliances
  oGained 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
  oAnnounced the availability of Emulex 16Gb Fibre Channel (16GFC) Host Bus
    Adapters (HBAs) for the Fujitsu PRIMERGY server product line
  oEmulex 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
  oAnnounced 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
  oReceived 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
  oEnhanced the Emulex Connect™ Partner Program, including a new loyalty
    program, improved reseller training tools, and streamlined deal
    registration and web enablement
  oEmulex 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
  oAppointed 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 5,478     5,159    15,775    18,882
technology intangible assets
Patent litigation settlement and   1,426     477      3,376     865
royalties
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   1,488     1,603    4,376     4,967
assets
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     (7,396)   48,874
 activities
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.



                    Q3 FY    Q2 FY     Q1 FY     Q4 FY     Q3 FY     % Change
($000s)              2013    2013      2013      2012      2012      Q3 vs Q3
                              Revenues            Revenues  Revenues
                    Revenues            Revenues                      
Network
Connectivity        $ 85,166 $ 96,132 $ 96,733 $ 87,979 $ 91,127 (6)%
Products
Network Visibility  4,873     -         -         -         -         
Products                                                              na
Storage
Connectivity        20,833    22,670    18,769    32,797    27,855    (25)%
Products
Advanced Technology
and                 5,914     3,343     3,765     8,179     6,764     (13)%
 Other Products
Total net revenues  $116,786  $122,145  $119,267  $128,955  $125,746  (7)%
na – not applicable


                    % Total   % Total   % Total   % Total   % Total
                              Revenues            Revenues  Revenues
                    Revenues            Revenues
Network
Connectivity        73%       79%       81%       68%       73%
Products
Network Visibility  4%        -         -         -         -
Products
Storage
Connectivity        18%       18%       16%       26%       22%
Products
Advanced Technology
and                 5%        3%        3%        6%        5%
 Other Products
Total net revenues  100%      100%      100%      100%      100%





Historical Net Revenues by Channel and Territory:
                         Q3 FY             Q3 FY
($000s)                   2013   % Total   2012     % Total      % Change
                                  Revenues            Revenues
                         Revenues           Revenues
Revenues from OEM        $100,975 86%       $115,327  92%          (12)%
customers
Revenues from            13,985   12%       10,282    8%           36%
distribution
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  19,088   16%       17,919    14%          7%
Africa
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   1.2%      0.4%     0.9%      0.2%
fees and royalties
 Expenses related to the acquisition  0.6%      -        0.2%      -
ofEndace
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    $71,854   $66,681  $201,326  $201,856
above
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        (3,026)   (231)    (4,490)   (231)
theBroadcom patents
 Expenses related to the acquisition   (963)     -        (3,023)   -
ofEndace
 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          $ (3,614) $ 8,078 $ 7,456  $13,897
 presented above
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                                     1,426     477
 and royalties                                          3,376     865
 Mitigation expenses related to the    3,026     231      4,490     231
 Broadcom patents
 Expenses related to the acquisition   1,650     -        3,710     -
ofEndace
  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
                                         $ (6,970) $ 8,679 $ (730)  $16,514
above
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                                     1,426     477
 and royalties                                          3,376     865
 Mitigation expenses related to the    3,026     231      4,490     231
 Broadcom patents
 Expenses related to the acquisition   6,342     -        8,402     -
of Endace
 Income tax effect of above items      (4,799)   (3,521)  (10,236)  (8,081)
Valuation allowance for U.S. federal
                                         6,856     -        11,211    -
and/or state deferred tax assets
  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  $(0.08)   $0.10    $(0.01)   $0.19
as presented above
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   0.02      0.00     0.04      0.01
fees and royalties
 Mitigation expenses related to the   0.03      0.00     0.05      0.00
 Broadcom patents
 Expenses related to the acquisition  0.07      -        0.09      -
of Endace
 Tax impact of above items and U.S    0.02      (0.04)   0.01      (0.09)
 GAAP valuation allowance
  Impact on GAAP (loss) earnings  0.28      0.11     0.59      0.41
per share
Non-GAAP diluted earnings per share     $0.20     $0.21    $0.58     $0.60
Diluted shares used in non-GAAPper     92,240    88,518   91,894    88,369
share computations



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 (0.10)
and mitigation expenses
 Expense related to the acquisition of Endace       (0.01)
 Tax impact of above items and U.S. GAAP valuation  0.01
allowance
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

Website: http://www.emulex.com
 
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