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MILPITAS, Calif., Oct. 28 /PRNewswire-FirstCall/ -- LSI Corporation (NYSE: LSI) today reported results for its third quarter ended October 4, 2009.
Third Quarter News Release Summary
-- Third quarter 2009 revenues of $578 million
-- Third quarter 2009 GAAP* net income of $0.08 per diluted share
-- Third quarter 2009 non-GAAP** net income of $0.18 per diluted share
-- Third quarter operating cash flows of $69 million
Fourth Quarter 2009 Business Outlook
-- Projected revenues of $605 million to $645 million
-- GAAP* net (loss)/income in the range of ($0.04) to $0.05 per share
-- Non-GAAP** net income in the range of $0.07 to $0.13 per share
* Generally Accepted Accounting Principles.
** Excludes goodwill and other intangible asset impairment, stock-based compensation, amortization of acquisition-related intangibles, purchase accounting effect on inventory, restructuring of operations and other items, net, and loss on write-down of debt/equity securities. It also excludes the income tax effect associated with the above mentioned items.
Third quarter 2009 revenues were $578 million, an 11% increase sequentially compared to $521 million reported in the second quarter of 2009. Third quarter 2009 revenues decreased 19% year over year compared to $714 million reported in the third quarter of 2008.
Third quarter 2009 GAAP* net income was $52 million or 8 cents per diluted share, compared to second quarter 2009 GAAP net loss of $61 million or 9 cents per share. Third quarter GAAP results included a $65 million tax benefit, or 10 cents per diluted share, primarily related to the settlement of a multi-year foreign tax audit. Third quarter 2009 GAAP results compare to third quarter 2008 GAAP net income of $11 million or 2 cents per diluted share. Third quarter 2009 GAAP net income included a net charge of $66 million from special items, consisting primarily of $43 million of amortization of acquisition-related items, $15 million of stock-based compensation expense, $6.6 million in net restructuring and other items, and $1.7 million in write-down of investments.
Third quarter 2009 non-GAAP** net income was $119 million or 18 cents per diluted share compared to second quarter 2009 non-GAAP net income of $7 million or 1 cent per diluted share. Third quarter non-GAAP results included earnings of 10 cents per diluted share reflecting the above-mentioned tax benefit. Third quarter non-GAAP net income compares to third quarter 2008 non-GAAP net income of $94 million or 14 cents per diluted share.
Cash and short-term investments totaled approximately $907 million at quarter end.
"With the economy demonstrating signs that a modest recovery is underway, our third quarter revenues exceeded our guidance range, supported by healthy sequential growth across our businesses overall," said Abhi Talwalkar, LSI president and chief executive officer. "As businesses resume spending on information technology, we are now poised to realize the benefits of the winning recipe we have worked to put in place over the last several years."
Bryon Look, LSI CFO and chief administrative officer, said, "We delivered a very solid third quarter, with improved profitability stemming from strong top-line growth, expanding gross margins across both our semiconductor and storage systems businesses, and continued focus on effectively managing our operating expenses. Operating cash flows were healthy at $69 million and our net cash position increased to $557 million."
LSI Fourth Quarter 2009 Business Outlook
GAAP* Special Items Non-GAAP**
---- ------------- ---------
Revenue $605 million $605 million
------- to $645 million to $645 million
--------------- ---------------
Gross Margin $30 million
------------ 39% - 43% to $40 million 45.5% - 47.5%
-------- -------------- -------------
Operating
Expenses $230 million $20 million $210 million
--------- to $250 million to $30 million to $220 million
--------------- -------------- ---------------
Net Other Income 0 0
---------------- --- ---
Tax Approximately Approximately
--- $8 million $8 million
---------- ----------
Net (Loss)/Income ($0.04) to ($0.08) to $0.07 to
Per Share $0.05 ($0.11) $0.13
----------------- ---------- ----------- --------
Diluted Share 663 663
Count million million
----------------- ------- -------
Capital spending is projected to be around $15 million in the fourth quarter and approximately $45 million in total for 2009.
Depreciation and software amortization is projected to be around $22 million in the fourth quarter and approximately $90 million in total for 2009.
LSI Conference Call Information
LSI will hold a conference call today at 2 p.m. PDT to discuss third quarter financial results and the fourth quarter 2009 business outlook. Internet users can access the conference call at http://www.lsi.com/webcast. Subsequent to the conference call, a replay will be available at the same web address.
Forward-Looking Statements: This news release contains forward-looking statements that are based on the current opinions and estimates of management. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could cause LSI's actual results to differ materially from those set forth in the forward-looking statements include, but are not limited to: our reliance on major customers and suppliers; our ability to keep up with rapid technological change; our ability to compete successfully in competitive markets; fluctuations in the timing and volumes of customer demand; the unavailability of appropriate levels of manufacturing capacity; and general industry and market conditions. For additional information, see the documents filed by LSI with the Securities and Exchange Commission, and specifically the risk factors set forth in the company's most recent reports on Form 10-K and 10-Q. LSI disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
About LSI
LSI Corporation (NYSE: LSI) is a leading provider of innovative silicon, systems and software technologies that enable products which seamlessly bring people, information and digital content together. The company offers a broad portfolio of capabilities and services including custom and standard product ICs, adapters, systems and software that are trusted by the world's best known brands to power leading solutions in the Storage and Networking markets. More information is available at www.lsi.com.
Editor's Notes:
1. All LSI news releases (financial, acquisitions, manufacturing, products,
technology, etc.) are issued exclusively by PR Newswire and are
immediately thereafter posted on the company's external website,
http://www.lsi.com.
2. LSI and the LSI & Design logo are trademarks or registered trademarks of
LSI Corporation.
3. All other brand or product names may be trademarks or registered
trademarks of their respective companies.
LSI CORPORATION
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)
October 4, July 5, December 31,
Assets 2009 2009 2008
------ ---- ---- ----
Current assets:
Cash and short-term investments $907.1 $873.6 $1,119.1
Accounts receivable, net 307.2 267.9 304.0
Inventories 155.5 158.7 220.5
Prepaid expenses and other current
assets 140.3 140.5 155.9
----- ----- -----
Total current assets 1,510.1 1,440.7 1,799.5
Property and equipment, net 215.9 217.5 236.0
Goodwill and identified intangible
assets, net 970.7 988.5 1,065.6
Other assets 228.5 235.6 243.1
----- ----- -----
Total assets $2,925.2 $2,882.3 $3,344.2
-------- -------- --------
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current portion of long-term debt $350.0 $350.0 $245.1
Other current liabilities 484.6 464.1 552.4
----- ----- -----
Total current liabilities 834.6 814.1 797.5
Long-term debt, net of current
portion - - 350.0
Pension, tax and other liabilities 690.6 750.8 755.8
----- ----- -----
Total liabilities 1,525.2 1,564.9 1,903.3
------- ------- -------
Stockholders' equity:
Common stock and additional paid-in
capital 6,129.6 6,111.7 6,065.3
Accumulated deficit (4,473.3) (4,525.8) (4,360.8)
Accumulated other comprehensive
loss (256.3) (268.5) (263.6)
------ ------ ------
Total stockholders' equity 1,400.0 1,317.4 1,440.9
------- ------- -------
Total liabilities and
stockholders' equity $2,925.2 $2,882.3 $3,344.2
-------- -------- --------
LSI CORPORATION
Consolidated Statements of Operations (GAAP)
(In thousands, except per share amounts)
(Unaudited)
Three Months Nine Months
Ended Ended
------------ -----------
October July September October September
4, 5, 28, 4, 28,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Revenues $578,419 $520,665 $714,308 $1,581,363 $2,067,118
Cost of
revenues 315,067 301,333 369,137 892,984 1,086,507
Purchase
accounting
effect on
inventory 1,892 2,550 - 4,442 -
Amortization
of
acquisition
related
intangibles 34,177 33,867 45,502 101,654 131,860
Stock-based
compensation
expense 1,697 2,022 2,252 5,732 6,885
----- ----- ----- ----- -----
Total cost
of revenues 352,833 339,772 416,891 1,004,812 1,225,252
------- ------- ------- --------- ---------
Gross profit 225,586 180,893 297,417 576,551 841,866
------- ------- ------- ------- -------
Research and
development 144,661 141,724 162,958 433,807 487,398
Stock-based
compensation
expense 6,386 7,195 6,593 21,443 21,985
----- ----- ----- ------ ------
Total research
and
development 151,047 148,919 169,551 455,250 509,383
------- ------- ------- ------- -------
Selling, general
and
administrative 66,323 64,819 80,720 197,661 238,901
Amortization
of
acquisition
related
intangibles 9,123 9,123 15,019 27,369 42,944
Stock-based
compensation
expense 6,729 7,785 8,005 22,629 25,422
----- ----- ----- ------ ------
Total selling,
general and
administrative 82,175 81,727 103,744 247,659 307,267
------ ------ ------- ------- -------
Restructuring
of operations
and other
items, net 4,745 6,010 1,586 35,960 26,869
----- ----- ----- ------ ------
(Loss)/income
from operations (12,381) (55,763) 22,536 (162,318) (1,653)
Interest
expense (3,899) (6,864) (8,993) (17,999) (26,930)
Interest income
and other, net 3,535 6,344 8,028 15,742 30,879
----- ----- ----- ------ ------
(Loss)/income
before income
taxes (12,745) (56,283) 21,571 (164,575) 2,296
(Benefit)/provision
for income taxes (65,230) 5,200 10,200 (52,030) 18,200
------- ----- ------ ------- ------
Net income/(loss) $52,485 $(61,483) $11,371 $(112,545) $(15,904)
------- -------- ------- --------- --------
Net income/(loss)
per share:
Basic $0.08 $(0.09) $0.02 $(0.17) $(0.02)
----- ------ ----- ------ ------
Diluted $0.08 $(0.09) $0.02 $(0.17) $(0.02)
----- ------ ----- ------ ------
Shares used in
computing per
share amounts:
Basic 651,865 650,300 643,849 650,183 648,519
------- ------- ------- ------- -------
Diluted 658,963 650,300 647,418 650,183 648,519
------- ------- ------- ------- -------
A reconciliation of net income/(loss) on the GAAP basis to non-GAAP net
income is included below.
Three Months Ended Nine Months Ended
------------------ -----------------
Reconciliation of
GAAP net
income/(loss) to October July September October September
non-GAAP net 4, 5, 28, 4, 28,
income: 2009 2009 2008 2009 2008
---------------- ---- ---- ---- ---- ----
GAAP net income/(loss) $52,485 $(61,483) $11,371 $(112,545) $(15,904)
------- -------- ------- --------- --------
Special items:
a) Stock-based
compensation
expense - cost
of revenues 1,697 2,022 2,252 5,732 6,885
b) Stock-based
compensation
expense - R&D 6,386 7,195 6,593 21,443 21,985
c) Stock-based
compensation
expense - SG&A 6,729 7,785 8,005 22,629 25,422
d) Amortization of
acquisition
related
intangibles -
cost of revenues 34,177 33,867 45,502 101,654 131,860
e) Amortization of
acquisition
related
intangibles -
SG&A 9,123 9,123 15,019 27,369 42,944
f) Purchase accounting
effect on inventory 1,892 2,550 - 4,442 -
g) Restructuring of
operations and
other items, net 4,745 6,010 1,586 35,960 26,869
h) Write-down of debt
and equity
securities 1,650 - 1,673 1,650 4,500
i) Income tax effect
of above items - - 2,024 - (2,821)
--- --- ----- --- ------
Total special
items 66,399 68,552 82,654 220,879 257,644
------ ------ ------ ------- -------
Non-GAAP net income $118,884 $7,069 $94,025 $108,334 $241,740
-------- ------ ------- -------- --------
Non-GAAP net
income per share:
Basic $0.18 $0.01 $0.15 $0.17 $0.37
----- ----- ----- ----- -----
Diluted * $0.18 $0.01 $0.14 $0.17 $0.37
----- ----- ----- ----- -----
Shares used in
computing non-
GAAP per share
amounts:
Basic 651,865 650,300 643,849 650,183 648,519
------- ------- ------- ------- -------
Diluted 685,043 652,389 673,498 655,460 652,208
------- ------- ------- ------- -------
-----------------------
* In computing non-GAAP diluted earnings per share for three months ended
October 4, 2009 and September 28, 2008, net income was increased by
$3,500 for interest, net of taxes, on the $350 million convertible notes
considered dilutive common stock.
Reconciliation of GAAP Three Months Ended Nine Months Ended
to non-GAAP shares ------------------ -----------------
used in the calculation October July September October September
of diluted per 4, 5, 28, 4, 28,
share amounts: 2009 2009 2008 2009 2008
------------------- ---- ---- ---- ---- ----
Diluted shares used
in per-share
computation - GAAP 658,963 650,300 647,418 650,183 648,519
Dilutive stock awards - 2,089 - 5,277 3,689
Effect of $350 million
convertible notes
considered dilutive 26,080 - 26,080 - -
------ --- ------ --- ---
Diluted shares used
in per-share
computation - non-GAAP 685,043 652,389 673,498 655,460 652,208
------- ------- ------- ------- -------
LSI CORPORATION
Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
Three Months Nine Months
Ended Ended
------------ -----------
October July September October September
4, 5, 28, 4, 28,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Operating activities:
Net income/(loss) $52,485 $(61,483) $11,371 $(112,545) $(15,904)
Adjustments:
Depreciation and
amortization * 67,600 66,239 82,327 198,918 239,945
Stock-based
compensation
expense 14,812 17,002 16,850 49,804 54,292
Non-cash
restructuring
of operations
and other
items, net 699 (8) 82 690 (3,163)
Gain on
redemption of
convertible
subordinated
notes - (149) - (149) -
Write-down of
debt and
equity
securities,
net of gain on
sale of equity
securities 1,529 - 1,673 1,529 4,500
(Gain)/loss on
sale of
property and
equipment (337) 17 37 (220) 14
Non-cash foreign
exchange loss 8,431 4,268 1,939 315 6,988
Deferred taxes (242) (84) 268 (253) 4,397
Changes in assets
and liabilities,
net of assets
acquired and
liabilities
assumed in business
combinations:
Accounts
receivable,
net (39,271) 5,364 (41,782) (3,217) 5,237
Inventories 4,824 54,242 30,983 78,406 30,884
Prepaid
expenses and
other assets 4,814 11,015 18,784 48,272 9,192
Accounts
payable 46,807 10,147 (41,515) (6,581) (92,323)
Accrued and
other
liabilities (93,493) (37,658) (24,604) (127,246) (64,194)
------- ------- ------- -------- -------
Net cash provided by
operating activities 68,658 68,912 56,413 127,723 179,865
------ ------ ------ ------- -------
Investing activities:
Purchases of
debt
securities
available-
for-sale - - (51,969) (10) (158,601)
Proceeds from
maturities and
sales of debt
securities
available-for
-sale 13,695 28,063 38,516 77,640 131,719
Purchases of
equity
securities (4,534) - (5,000) (9,534) (8,500)
Proceeds from
sales of
equity
securities 165 - - 165 -
Purchases of
property,
equipment and
software (20,137) (23,138) (27,150) (68,738) (95,005)
Proceeds from
sale of
property and
equipment 2,637 105 150 2,749 11,400
Acquisition
of business
and
companies,
net of cash
acquired (26,141) (20,840) - (46,981) (95,137)
Decrease/
(increase) in
non-current
assets and
deposits - 13,501 - 13,501 (13,300)
Proceeds from
maturity of
notes
receivable
associated with
sale of
semiconductor
operations in
Thailand 10,000 - - 10,000 -
Proceeds received
from the
resolution of a
pre-acquisition
income tax
contingency - - - - 4,821
--- --- --- --- -----
Net cash used in
investing activities (24,315) (2,309) (45,453) (21,208) (222,603)
------- ------ ------- ------- --------
Financing activities:
Redemption of
convertible
subordinated
notes - (244,047) - (244,047) -
Issuance of
common stock 3,367 6,672 6,821 10,040 36,370
Purchase of common
stock under
repurchase
programs - - - - (229,231)
--- --- --- --- --------
Net cash provided by/
(used in) financing
activities 3,367 (237,375) 6,821 (234,007) (192,861)
----- -------- ----- -------- --------
Effect of exchange
rate changes on cash
and cash equivalents 2,721 3,221 (1,932) 3,576 (1,060)
----- ----- ------ ----- ------
Increase/(decrease)
in cash and cash
equivalents 50,431 (167,551) 15,849 (123,916) (236,659)
Cash and cash
equivalents at
beginning of
period 654,954 822,505 769,061 829,301 1,021,569
------- ------- ------- ------- ---------
Cash and cash
equivalents at
end of period $705,385 $654,954 $784,910 $705,385 $784,910
======== ======== ======== ======== ========
* Depreciation of fixed assets and amortization of intangible assets,
software, capitalized intellectual property, premiums on short-term
investments, debt issuance costs, and accrued debt premium.
LSI CORPORATION
Selected Financial Information (GAAP)
(In millions)
(Unaudited)
Three Months Ended
------------------
Oct. 4, July 5, Sept. 28,
2009 2009 2008
---- ---- ----
Semiconductor revenues $371.8 $343.8 $500.4
Storage Systems revenues $206.6 $176.9 $213.9
Total revenues $578.4 $520.7 $714.3
Percentage change in revenues-qtr./qtr.
( a ) 11.1% 8.0% 3.2%
Percentage change in revenues-yr./yr.
( b ) -19.0% -24.8% -1.8%
Days sales outstanding 48 46 51
Days of inventory 40 42 45
Current ratio 1.8 1.8 3.1
Quick ratio 1.5 1.4 2.5
Gross margin as a percentage of revenues 39.0% 34.7% 41.6%
R&D as a percentage of revenues 26.1% 28.6% 23.7%
SG&A as a percentage of revenues 14.2% 15.7% 14.5%
Employees ( c ) 5,318 5,357 5,356
Revenues per employee (in thousands)
( d ) $435.1 $388.8 $533.5
Selected Cash Flow Information:
-------------------------------
Purchases of property and equipment ( e ) $11.4 $7.7 $14.1
Depreciation and amortization ( f ) $23.9 $23.2 $22.1
( a ) Represents a sequential quarterly change in revenues.
( b ) Represents a change in revenues in the quarter presented as
compared to the same quarter of the previous year.
( c ) Actual number of employees at the end of each period presented.
( d ) Revenues per employee is calculated by annualizing revenues for
each quarter presented and dividing it by the
number of employees.
( e ) Excludes purchases of software.
( f ) Represents depreciation of fixed assets and amortization of
software.
SOURCE LSI Corporation
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