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
http://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. DATASOURCE: LSI Corporation CONTACT: Investors, Sujal
Shah, +1-610-712-5471, , Media, Mitch Seigle, +1-408-954-3225, ,
both of LSI Corporation Web Site: http://www.lsi.com/
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