Emulex (ELX) 8-K Results of Operations and Financial Condition

Exhibit 99.01

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

EMULEX ANNOUNCES THIRD QUARTER FISCAL 2010 RESULTS

Exceeding High End of Earnings Guidance with Revenue Growth of 30 Percent
Year-Over-Year

COSTA MESA, Calif., April 26, 2010— Emulex Corporation (NYSE:ELX) today announced results for its third fiscal quarter ended March 28, 2010.

Third Quarter Financial Highlights

• Total net revenues of $102.2 million

• Host Server Products (HSP) net revenues were $69.7 million, or 68% of net revenues, an increase of 18% year-over-year

• 8Gb/s net revenues increased 323% year-over-year, accounting for 28% of HSP net revenues during the quarter

• Embedded Storage Products (ESP) net revenues increased 23% sequentially to $32.3 million, or 32% of net revenues

• GAAP gross margin of 63% and non-GAAP gross margins of 68%

• GAAP operating income of $5.5 million, or 5% of total net revenues, and non-GAAP operating income of $18.6 million, or 18% of total net revenues

• GAAP diluted earnings per share of $0.16, compared to guidance of $0.05-$0.07

• Non-GAAP diluted earnings per share of $0.30, exceeding the high end of guidance of $0.16-$0.18

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April 26, 2010
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• Certain discrete tax items added $0.11 to GAAP diluted earnings per share and $0.12 to non-GAAP diluted earnings per share

• Cash, cash equivalents and investments at the end of the quarter were $287 million

Business Highlights

• HP offers Emulex OneConnect™ 10Gb/s Ethernet and Fibre Channel over Ethernet (FCoE) Universal Converged Network Adapters (UCNAs) for HP ProLiant rack, tower and blade servers

• IBM selects OneConnect 10Gb/s Ethernet UCNAs for eight IBM System x and BladeCenter server platforms

• EMC qualifies Emulex OneConnect 10Gb/s iSCSI and FCoE UCNAs across EMC Network Storage Systems

• NetApp adopts Emulex OneConnect FCoE UCNAs for use with its Ethernet storage solutions

• Hitachi Data Systems offers Emulex OneConnect FCoE UCNAs for its Universal Storage Platform and Adaptable Modular Storage Systems

• Compellent selects Emulex 8Gb/s LightPulse® Fibre Channel Host Bus Adapters (HBAs) for use with its Storage Center SAN solutions

• Emulex LightPulse Fibre Channel HBAs and OneConnect UCNAs are optimized for use with the new Intel Xeon processor 5600 series (formerly codenamed Westmere—EP) and the new Intel Xeon processor 7500 series (formerly codenamed Nehalem—EX)

• Emulex announces VMware vSphere 4 certification of its OneConnect 10Gb/s Ethernet UCNAs

• Dell’Oro Group reports that Emulex grew faster than the industry and captured four points of Fibre Channel market share in the fourth quarter of 2009

• Emulex named FCoE Converged Network Adapter (CNA) market share leader for 2009 according to Infonetics

• Network Computing magazine names Emulex OneConnect UCNAs 2010 New Product of the Year and Network Infrastructure Product of the Year

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Financial Results

Third quarter total net revenues were $102.2 million, an increase of 30% from the comparable quarter of last year and a decrease of 6% sequentially. Third quarter GAAP net income was $13.3 million, or $0.16 per diluted share, compared to GAAP net loss of $6.0 million, or $0.07 per diluted share, reported in Q3 of fiscal 2009 and GAAP net income of $8.9 million or $0.11 per diluted share, in Q2 of fiscal 2010. Non-GAAP net income for the third quarter was $24.3 million, or $0.30 per diluted share. Non-GAAP net income increased 70% from $14.3 million reported in Q2 of fiscal 2010 and increased 452% from $4.4 million reported in Q3 of fiscal 2009. Reconciliations between GAAP and non-GAAP results are included in the accompanying financial data. Additionally, GAAP and non-GAAP diluted earnings per share results for the quarter benefited by $0.11 and $0.12, respectively, from certain discrete tax items.

President and CEO Jim McCluney commented, “I’m pleased with the results that the team delivered during the March quarter, coming in at the high end of our revenue and earnings guidance.” McCluney continued, “During the quarter we also announced significant design wins covering multiple platforms for our award winning OneConnect UCNAs with marquee server and storage OEMs including EMC, HP, Hitachi Data Systems, IBM and NetApp.

“With our expanding number of both announced and unannounced design wins, Emulex continues to deliver on our commitment to growth and leadership in the emerging network convergence market,” concluded McCluney.

Business Outlook

Although actual results may vary depending on a variety of factors, many of which are outside our control, including the current economic downturn and uncertainty resulting from recent disruptions in global credit and equity markets, Emulex is providing guidance for its fourth fiscal quarter ending June 27, 2010. For the fourth quarter fiscal 2010, Emulex is forecasting total net revenues in the range of $100-$103 million. We expect non-GAAP earnings per diluted share could amount to $0.16-$0.18 in the fourth quarter. On a GAAP basis, Emulex expects earnings per diluted share of $0.05-$0.07 in the fourth quarter. GAAP estimates for the fourth quarter reflect approximately $0.11 per diluted share in expected charges arising primarily from amortization of intangibles and stock-based compensation.

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About Emulex

Emulex is the leader in converged networking solutions for the data center. Our Connectivity Continuum architecture provides intelligent networking services that transition today’s infrastructure into tomorrow’s unified network ecosystem. Emulex provides a single framework that intelligently connects every server, network and storage device within the data center. Through strategic collaboration and integrated partner solutions, Emulex provides its customers with industry leading business value, operational flexibility and strategic advantage. Emulex is listed on the New York Stock Exchange (NYSE:ELX) and has corporate headquarters in Costa Mesa, California. News releases and other information about Emulex Corporation are available athttp://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:

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 believes 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.

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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.

Severance and associated costs. We have incurred severance and certain related costs in connection with the change in employment status of certain employees, including terminations resulting from elimination of certain positions. We believe that the exclusion of such severance and related costs from the relevant non-GAAP financial measures enables management and investors to more effectively evaluate historical performance and projected costs. While severance and associated costs are generally infrequent in nature, we may incur severance or associated costs in response to changing economic conditions or in connection with any future acquisitions.

Broadcom’s unsolicited takeover proposal and related litigation costs. We believe that exclusion of charges related to Broadcom’s unsolicited takeover proposal and related litigation costs 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. Such costs are generally unrelated to our core business and, while such costs will continue until our outstanding litigation with Broadcom has been resolved, we believe that such costs are infrequent in nature.

Tax impact associated with the option exchange. During the first quarter of fiscal 2010 we completed a shareholder approved exchange of options for restricted stock which resulted in a tax benefit. We believe the exclusion of the tax benefit related to this option exchange 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 charges of this type are infrequent in nature.

Timing difference due to using an actual interim effective tax rate versus an annualized effective tax rate. Although we are using an actual interim effective tax rate instead of an annualized effective tax rate in calculating GAAP net income, we believe that eliminating the tax impact associated with this timing difference 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 a similar adjustment may recur in future periods when the use of an annualized effective tax rate would be distortive.

“Safe Harbor’’ Statement under the Private Securities Litigation Reform Act of 1995: With the exception of historical information, the statements set forth above, including, without limitation, those contained in the discussion of “Business Outlook” above, and the reconciliation of forward-looking diluted earnings per share below, contain forward-looking statements that involve risk and uncertainties. We expressly disclaim any obligation or undertaking to release

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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. The fact that the economy generally, and the technology and storage 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. Recent disruptions in world credit and equity markets and the resulting economic uncertainty for our customers and the storage networking market as a whole has resulted in a downturn in information technology spending that has and could continue to adversely affect our revenues and results of operations. Furthermore, the effect of any actual or potential unsolicited offers to acquire us may have an adverse effect on our operations. As a result of this uncertainty, we are unable to predict with any accuracy what future results might be. Other factors affecting these forward-looking statements include, but are not limited to, the following: slower than expected growth of the storage 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, or decrease or delays in orders by any such customers, or the failure of such customers to make payments; the emergence of new or stronger competitors as a result of consolidation movements in the market; the timing and market acceptance of our or our OEM customers’ new or enhanced products; the variability in the level of our backlog and the variable and seasonal procurement patterns of our customers; impairment charges, including but not limited to goodwill and intangible assets; changes in tax rates or legislation; the effects of terrorist activities, natural disasters and resulting political or economic instability; the highly competitive nature of the markets for tour products as well as pricing pressures that may result from such competitive conditions; the effect of rapid migration of customers towards newer, lower cost product platforms; possible transitions from board or box level to application specific computer chip solutions for selected applications; a shift in unit product mix from higher-end to lower-end mezzanine card products; a 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; any inadequacy of our intellectual property protection or the potential for third-party claims of infringement; our ability to attract and retain key technical personnel; our ability to benefit from research and development activities; our dependence on international sales and internationally produced products; the effect of acquisitions; changes in accounting standards; and the potential effects of global warming 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 its 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.

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EMULEX CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	March 28,			March 29,			March 28,			March 29,
	2010			2009			2010			2009
Net revenues	$	102,204		$	78,568		$	296,021		$	298,925
Cost of sales		37,784			31,766			112,711			116,186
Gross profit		64,420			46,802			183,310			182,739
Operating expenses:
Engineering and development		31,338			33,409			94,417			99,293
Selling and marketing		13,743			13,775			42,415			41,561
General and administrative		12,099			7,324			36,274			26,288
Amortization of other intangible assets		1,698			699			5,094			4,637
Total operating expenses		58,878			55,207			178,200			171,779
Operating income (loss)		5,542			(8,405	)		5,110			10,960
Nonoperating income (loss):
Interest income		1			613			213			3,686
Interest expense		(1	)		7			(5	)		(29	)
Other income (expense), net		(166	)		168			(68	)		365
Total nonoperating income (loss)		(166	)		788			140			4,022
Income (loss) before income taxes		5,376			(7,617	)		5,250			14,982
Income tax provision (benefit)		(7,933	)		(1,652	)		(20,839	)		2,929
Net income (loss)	$	13,309		$	(5,965	)	$	26,089		$	12,053
Net income (loss) per share:
Basic	$	0.16		$	(0.07	)	$	0.32		$	0.15
Diluted	$	0.16		$	(0.07	)	$	0.32		$	0.14
Number of shares used in per share computations:
Basic		80,156			80,547			79,960			80,723
Diluted		81,535			80,547			81,076			81,244

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EMULEX CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited, in thousands)

	March 28,		June 28,
	2010		2009
Assets
Current assets:
Cash and cash equivalents	$	253,169	$	294,136
Investments		34,297		8,289
Accounts and other receivables, net		63,100		51,566
Inventories		16,780		10,665
Prepaid income taxes		17,563		17,083
Prepaid expenses and other current assets		7,726		8,021
Deferred income taxes		19,428		16,793
Total current assets		412,063		406,553
Property and equipment, net		64,461		74,794
Intangible assets, net		131,560		130,830
Deferred income taxes		25,381		16,002
Other assets		49,391		30,739
	$	682,856	$	658,918
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	32,032	$	28,786
Accrued liabilities		28,637		23,454
Total current liabilities		60,669		52,240
Other liabilities		4,414		5,826
Accrued taxes		29,990		31,408
Total liabilities		95,073		89,474
Total stockholders’ equity		587,783		569,444
	$	682,856	$	658,918

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EMULEX CORPORATION AND SUBSIDIARIES
Supplemental Information

Historical Net Revenues by Channel and Territory:

	Q3 FY					Q3 FY
	2010		% Total			2009			% Total
($000s)	Revenues		Revenues			Revenues			Revenues			% Change
Revenues from OEM customers	$	86,017		84	%	$	67,741			86	%		27	%
Revenues from distribution		16,011		16	%		10,885			14	%		47	%
Other		176	nm				(58	)	nm				403	%
Total net revenues	$	102,204		100	%	$	78,568			100	%		30	%
United States	$	35,582		35	%	$	28,304			36	%		26	%
Europe, Middle East and Africa		32,309		32	%		23,698			30	%		36	%
Asia-Pacific		33,517		33	%		25,561			33	%		31	%
Rest of world		796	nm				1,005			1	%		-21	%
Total net revenues	$	102,204		100	%	$	78,568			100	%		30	%

nm — not meaningful

Summary of Stock-based Compensation:

	Three Months Ended				Nine Months Ended
	March 28,		March 29,		March 28,		March 29,
($000s)	2010		2009		2010		2009
Cost of sales	$	284	$	400	$	949	$	1,110
Engineering & development		1,703		2,390		5,415		8,172
Selling & marketing		1,230		1,028		2,593		2,999
General & administrative		1,429		1,598		4,253		5,654
Total stock-based compensation	$	4,646	$	5,416	$	13,210	$	17,935

Reconciliation of GAAP gross margin to non-GAAP gross margin:

	Three Months Ended						Nine Months Ended
	March 28,			March 29,			March 28,			March 29,
	2010			2009			2010			2009
GAAP gross margin		63.0	%		59.6	%		61.9	%		61.1	%
Items excluded from GAAP gross margin to calculate non-GAAP gross margin:
Stock-based compensation		0.3	%		0.5	%		0.3	%		0.4	%
Amortization of intangibles		4.6	%		6.0	%		4.8	%		4.7	%
Severance and associated costs		—			0.1	%		—			0.1	%
Non-GAAP gross margin		67.9	%		66.2	%		67.0	%		66.3	%

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Reconciliation of GAAP operating expenses to non-GAAP operating expenses:

	Three Months Ended						Nine Months Ended
	March 28,			March 29,			March 28,			March 29,
($000s)	2010			2009			2010			2009
GAAP operating expenses, as presented above	$	58,878		$	55,207		$	178,200		$	171,779
Items excluded from GAAP operating expenses to calculate non-GAAP operating expenses
Stock-based compensation		(4,362	)		(5,016	)		(12,261	)		(16,825	)
Amortization of other intangibles		(1,698	)		(699	)		(5,094	)		(4,637	)
Severance and associated costs		—			(1,341	)		(964	)		(3,997	)
Net charges associated with Broadcom’s unsolicited takeover proposal and related litigation costs		(2,000	)		—			(6,094	)		—
Impact on operating income		(8,060	)		(7,056	)		(24,413	)		(25,459	)
Non-GAAP operating expenses	$	50,818		$	48,151		$	153,787		$	146,320

Reconciliation of GAAP operating income (loss) to non-GAAP operating income:

	Three Months Ended					Nine Months Ended
	March 28,		March 29,			March 28,		March 29,
($000s)	2010		2009			2010		2009
GAAP operating income (loss) as presented above	$	5,542	$	(8,405	)	$	5,110	$	10,960
Items excluded from GAAP operating income to calculate non-GAAP operating income:
Stock-based compensation		4,646		5,416			13,210		17,935
Amortization of intangibles		6,424		5,428			19,272		18,828
Severance and associated costs		—		1,387			964		4,248
Net charges associated with Broadcom’s unsolicited takeover proposal and related litigation costs		2,000		—			6,094		—
Impact on operating income (loss)		13,070		12,231			39,540		41,011
Non-GAAP operating income	$	18,612	$	3,826		$	44,650	$	51,971

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Reconciliation of GAAP net income (loss) to non-GAAP net income:

	Three Months Ended						Nine Months Ended
	March 28,			March 29,			March 28,			March 29,
($000s)	2010			2009			2010			2009
GAAP net income (loss), as presented above	$	13,309		$	(5,965	)	$	26,089		$	12,053
Items excluded from GAAP net income (loss) to calculate non-GAAP net income:
Stock-based compensation		4,646			5,416			13,210			17,935
Amortization of intangibles		6,424			5,428			19,272			18,828
Severance and associated costs		—			1,387			964			4,248
Net charges associated with Broadcom’s unsolicited takeover proposal and related litigation costs		2,000			—			6,094			—
Income tax effect of above items		(4,822	)		(1,856	)		(14,654	)		(11,525	)
Tax impact associated with the option exchange		—			—			(3,982	)		—
Timing difference due to using an actual interim effective tax rate versus an annualized effective tax rate		2,780			—			(1,415	)		—
Impact on net income (loss)		11,028			10,375			19,489			29,486
Non-GAAP net income	$	24,337		$	4,410		$	45,578		$	41,539

Reconciliation of GAAP diluted earnings (loss) per share to non-GAAP diluted earnings per share:

	Three Months Ended					Nine Months Ended
	March 28,		March 29,			March 28,			March 29,
(Shares in 000s)	2010		2009			2010			2009
GAAP diluted earnings (loss) per share, as presented above	$	0.16	$	(0.07	)	$	0.32		$	0.14
Items excluded from GAAP diluted earnings (loss) per share to calculate non-GAAP diluted earnings per share, net of tax effect:
Stock-based compensation		0.04		0.07			0.10			0.19
Amortization of intangibles		0.05		0.04			0.15			0.14
Severance and associated costs		—		0.01			0.00			0.03
Net charges associated with Broadcom’s unsolicited takeover proposal and related litigation costs		0.02		—			0.05			—
Tax impact associated with the option exchange		—		—			(0.05	)		—
Timing difference due to using an actual interim effective tax rate versus an annualized effective tax rate		0.03		—			(0.02	)		—
Impact on diluted earnings (loss) per share		0.14		0.12			0.23			0.36
Non-GAAP diluted earnings per share	$	0.30	$	0.05		$	0.55		$	0.50
Diluted shares used in non-GAAP per share computations		81,535		80,862			81,076			81,244

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Forward-Looking Diluted Earnings per Share Reconciliation:

	Guidance for
	Three Months
	Ending
	June 27, 2010
Non-GAAP diluted earnings per share guidance		$0.16-$0.18
Items excluded, net of tax, from non-GAAP diluted earnings per share to calculate GAAP diluted earnings per share guidance:
Amortization of intangibles		0.05
Stock-based compensation		0.04
Other charges associated with Broadcom’s unsolicited takeover proposal and related litigation costs		0.01
Timing difference due to using an actual interim effective tax rate versus an annualized effective tax rate		0.01
GAAP diluted earnings per share guidance	$0.05-$0.07