Second Quarter 2008 Revenues Exceed Guidance
MILPITAS, Calif., July 23 /PRNewswire-FirstCall/ -- LSI Corporation (NYSE:LSI) today reported results for its second quarter ended June 29, 2008.
Second Quarter News Release Summary -- Second quarter 2008 revenues of $692 million, exceeding guidance
-- Second quarter 2008 GAAP* net loss of 2 cents per share
-- Second quarter 2008 non-GAAP** net income of 13 cents per diluted
share, exceeding guidance
-- Second quarter operating cash flows of $27 million
-- Cash and short-term investments of $1.1 billion
Third Quarter 2008 Business Outlook -- Projected revenues of $695 million to $725 million
-- GAAP* net (loss)/income in the range of ($0.03) to $0.04 per share
-- Non-GAAP** net income in the range of 11 to 15 cents per diluted share
* Generally Accepted Accounting Principles. ** Excludes goodwill impairment, stock-based compensation, amortization of
acquisition-related intangibles, restructuring of operations and other
items, net, purchase accounting effect on inventory, loss on write-down
of equity securities and acquired in-process research and development. It also excludes the income tax effect associated with the above
mentioned items.
DOUBLE-DIGIT SEQUENTIAL GROWTH IN STORAGE SYSTEMS AND NETWORKING DRIVES SOLID QUARTERLY RESULTS Second quarter 2008 revenues were $692 million, a 3% increase year-over-year compared to $670 million reported in the second quarter of 2007, and up 5% sequentially compared to $661 million reported in the first quarter of 2008. Adjusting for the sale of the consumer and mobility businesses, second quarter revenues increased 24% year-over-year compared to the second quarter of 2007.
Second quarter 2008 GAAP* net loss was $14 million or 2 cents per share, compared to second quarter 2007 GAAP net loss of $378 million or 50 cents per share. Second quarter 2008 GAAP results compare to first quarter 2008 GAAP net loss of $14 million or 2 cents per share. Second quarter 2008 GAAP net loss included a net charge of $97 million from special items, consisting primarily of $58.6 million of amortization of acquisition-related items, $20.7 million of restructuring costs and other items, and $19.6 million of stock-based compensation expense.
Second quarter 2008 non-GAAP** net income was $83 million or 13 cents per diluted share, compared to second quarter 2007 non-GAAP net loss of $14 million or 2 cents per share. First quarter 2008 non-GAAP net income was $64 million or 10 cents per diluted share.
Cash and short-term investments totaled approximately $1.1 billion at quarter end.
"Strong worldwide demand for our storage systems and networking products helped us deliver another quarter of solid results," said Abhi Talwalkar, LSI president and chief executive officer. "During the quarter, we also continued to build significant momentum for the future, introducing several new storage and networking products and securing additional silicon design wins with top- tier hard disk drive and server makers.
"Our business has demonstrated resilience through recent market uncertainty, and we expect this to continue as the positive effects of seasonal buying patterns materialize in the second half," added Talwalkar.
Bryon Look, LSI chief financial officer, said, "Our second quarter results reflect the ongoing benefit of the many strategic and operational steps we have taken over the past four quarters. Increases in net income compared to the year-ago period were significant, and we continue to focus on improving our top and bottom line results." LSI Third Quarter 2008 Business Outlook GAAP* Special Items Non-GAAP**
Revenue $695 million to $695 million to
$725 million $725 million
Gross Margin 39 - 41% $40 to 45.5 - 47.5%
$50 million
Operating Expenses $268 million to $30 to $238 million to
$288 million $40 million $248 million
Net Other Income $0 million $0 million
Tax Approximately Approximately 8%
$6 million
Net (Loss)/Income
Per Share ($0.03) to ($0.11) to $0.11 to
$0.04 ($0.14) $0.15
Diluted Share
Count 650 million 650 million
Capital spending is projected to be around $15 million in the third quarter and approximately $60 million in total for 2008.
Third quarter depreciation and software amortization is expected to be approximately $20 million.
LSI Conference Call Information LSI will hold a conference call today at 2 p.m. PDT to discuss second quarter financial results and the third quarter 2008 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; our ability to achieve anticipated synergies following our acquisition of Agere Systems; fluctuations in the timing and volumes of customer demand; the unavailability of appropriate levels of manufacturing capacity; our ability to successfully and timely transition our assembly and test operations to third parties; 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 logo design are trademarks or registered trademarks of
LSI Corporation or its subsidiaries. 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) June 29, March 30, December 31,
Assets 2008 2008 2007 Current assets:
Cash and short-term investments $1,147.2 $1,236.8 $1,397.6
Accounts receivable, net 359.3 332.1 406.4
Inventories 241.0 258.6 240.8
Prepaid expenses and other current
assets 179.1 158.6 147.8 Total current assets 1,926.6 1,986.1 2,192.6 Property and equipment, net 240.2 235.2 229.7
Goodwill and other intangible assets,
net 1,692.3 1,665.9 1,724.7
Other assets 268.8 252.5 249.4 Total assets $4,127.9 $4,139.7 $4,396.4
Liabilities and Stockholders' Equity Current liabilities $683.5 $729.0 $762.5 Long-term debt 716.4 717.2 718.0
Pension, tax and other liabilities 406.6 407.0 430.7 Total liabilities 1,806.5 1,853.2 1,911.2 Minority interest in subsidiary 0.3 0.3 0.2 Stockholders' equity:
Common stock and additional
paid-in capital 6,019.3 5,959.2 6,159.2
Accumulated deficit (3,765.8) (3,752.1) (3,738.5)
Accumulated other comprehensive
income 67.6 79.1 64.3 Total stockholders' equity 2,321.1 2,286.2 2,485.0 Total liabilities and
stockholders' equity $4,127.9 $4,139.7 $4,396.4 LSI CORPORATION
Consolidated Statements of Operations (GAAP)
(In thousands, except per share amounts)
(Unaudited) Three Months Ended Six Months Ended
June 29, March 30, July 1, June 29, July 1,
2008 2008 2007 2008 2007 Revenues $692,063 $660,747 $669,939 $1,352,810 $1,135,354 Cost of revenues 360,492 356,878 395,607 717,370 659,277
Purchase accounting
effect on
inventory - - 47,904 - 47,904
Amortization of
acquisition related
intangibles 44,103 42,255 71,310 86,358 76,595
Stock-based
compensation
expense 2,572 2,061 3,148 4,633 5,092
Total cost of
revenues 407,167 401,194 517,969 808,361 788,868 Gross profit 284,896 259,553 151,970 544,449 346,486 Research and
development 162,546 161,894 192,955 324,440 292,085
Stock-based
compensation
expense 7,569 7,823 8,978 15,392 13,695
Total research
and
development 170,115 169,717 201,933 339,832 305,780 Selling, general
and
administrative 80,473 77,708 97,440 158,181 154,527
Amortization of
acquisition
related
intangibles 14,491 13,434 6,676 27,925 6,676
Stock-based
compensation
expense 9,506 7,911 10,687 17,417 15,210
Total selling,
general and
administrative 104,470 99,053 114,803 203,523 176,413 Restructuring of
operations and
other items, net 20,719 4,564 25,920 25,283 17,840
Acquired in-process
research and
development - - 176,400 - 182,900 Loss from operations (10,408) (13,781) (367,086) (24,189) (336,447) Interest expense (8,959) (8,978) (9,049) (17,937) (12,939)
Interest income
and other, net 8,220 14,631 10,790 22,851 21,321 Loss before income
taxes (11,147) (8,128) (365,345) (19,275) (328,065)
Provision for income
taxes 2,500 5,500 12,500 8,000 19,956 Net loss $(13,647) $(13,628) $(377,845) $(27,275) $(348,021) Net loss per share:
Basic $(0.02) $(0.02) $(0.50) $(0.04) $(0.60) Diluted $(0.02) $(0.02) $(0.50) $(0.04) $(0.60) Shares used in
computing per
share amounts:
Basic 639,872 661,984 751,114 650,867 577,672 Diluted 639,872 661,984 751,114 650,867 577,672
A reconciliation of net loss on a GAAP basis to a non-GAAP net
income/(loss) is included below.
Reconciliation of GAAP Three Months Ended Six Months Ended
net loss to Non-GAAP June 29, March 30, July 1, June 29, July 1,
net income/(loss): 2008 2008 2007 2008 2007 GAAP net loss $(13,647) $(13,628) $(377,845) $(27,275) $(348,021) Special items:
a) Stock-based
compensation
expense - cost
of revenues 2,572 2,061 3,148 4,633 5,092
b) Stock-based
compensation
expense - R&D 7,569 7,823 8,978 15,392 13,695
c) Stock-based
compensation
expense - SG&A 9,506 7,911 10,687 17,417 15,210
d) Amortization of
acquisition related
intangibles - cost
of revenues 44,103 42,255 71,310 86,358 76,595
e) Amortization of
acquisition
related
intangibles - SG&A 14,491 13,434 6,676 27,925 6,676
f) Purchase
accounting effect
on inventory - - 47,904 - 47,904
g) Restructuring of
operations and
other items, net 20,719 4,564 25,920 25,283 17,840
h) Acquired in-
process research
and development - - 176,400 - 182,900
i) Write-down of
debt and equity
securities 2,827 - 2,396 2,827 2,396
j) Income tax effect (4,751) (94) 10,264 (4,845) 9,895 Total special
items 97,036 77,954 363,683 174,990 378,203 Non-GAAP net
income/(loss) $83,389 $64,326 $(14,162) $147,715 $30,182 Non-GAAP net
income/(loss) per
share:
Basic $0.13 $0.10 $(0.02) $0.23 $0.05 Diluted $0.13 $0.10 $(0.02) $0.23 $0.05 Shares used in
computing Non-GAAP
per share amounts:
Basic 639,872 661,984 751,114 650,867 577,672 Diluted 643,106 662,485 751,114 652,293 587,248 Reconciliation of GAAP
to Non-GAAP shares
used in the
calculation of Three Months Ended Six Months Ended
diluted per share June 29, March 30, July 1, June 29, July 1,
amounts: 2008 2008 2007 2008 2007 Diluted shares
used in per-share
calculation -
GAAP 639,872 661,984 751,114 650,867 577,672
Dilutive stock
awards 3,234 501 - 1,426 9,576
Diluted shares used
in per-share
calculation -
Non-GAAP 643,106 662,485 751,114 652,293 587,248 LSI CORPORATION
Consolidated Statement of Cash Flows
(In thousands, except where noted)
(Unaudited) Three Months Ended Six Months Ended
June 29, March 30, July 1, June 29, July 1,
2008 2008 2007 2008 2007
Operating
Activities:
Net loss $(13,647) $(13,628) $(377,845) $(27,275) $(348,021)
Adjustments:
Depreciation and
amortization * 79,290 78,328 101,599 157,618 120,175
Stock-based
compensation
expense 19,647 17,795 22,813 37,442 33,997
Non-cash
restructuring and
other items 46 (3,291) (29) (3,245) 199
Acquired in-
process research
and development - - 176,400 - 182,900
Write-down of debt
and equity
securities 2,827 - 2,396 2,827 2,396
(Gain)/loss on
sale of property
and equipment,
including assets
held- for-sale (11) (12) 160 (23) (9,502)
Non-cash foreign
exchange
(gain)/loss (7,869) 12,918 (4,277) 5,049 (3,888)
Changes in
deferred tax
assets and
liabilities 2,014 2,115 (5,501) 4,129 (5,470)
Changes in assets
and liabilities,
net of assets
acquired and
liabilities assumed
in business
combinations:
Accounts
receivable,
net (27,253) 74,272 104,715 47,019 150,165
Inventories 17,620 (17,719) 64,896 (99) 45,242
Prepaid
expenses and
other assets (5,275) (4,317) 9,299 (9,592) 33,864
Accounts
payable (11,376) (39,432) (94,585) (50,808) (131,054)
Accrued and
other
liabilities (28,762) (10,828) 29,840 (39,590) 14,860
Net cash provided by
operating activities 27,251 96,201 29,881 123,452 85,863 Investing
activities:
Purchases of debt
securities
available-for-
sale (62,481) (44,151) (61,606) (106,632) (122,236)
Proceeds from
maturities and
sales of debt
securities
available-for-
sale 42,299 50,904 199,740 93,203 374,132
Purchases of
equity securities - (3,500) (3,000) (3,500) (3,000)
Purchases of
property,
equipment and
software (32,625) (35,230) (20,211) (67,855) (40,714)
Proceeds from sale
of property and
equipment 4,917 6,333 1,274 11,250 13,785
Cash acquired from
acquisition of
Agere, net of
acquisition costs - - 517,712 - 517,712
Acquisitions of
other companies,
net of cash
acquired (95,137) - - (95,137) (52,079)
Increase in non-
current assets
and deposits (13,300) - - (13,300) -
Adjustment to
goodwill acquired
in a prior year
for resolution of
a pre-acquisition
income tax
contingency - 4,821 - 4,821 2,442
Net cash (used
in)/provided by
investing
activities (156,327) (20,823) 633,909 (177,150) 690,042 Financing activities:
Issuance of common
stock 29,203 346 16,246 29,549 21,917
Purchase of common
stock under
repurchase programs - (229,231) (400,355) (229,231) (400,355)
Net cash provided
by/(used in)
financing activities 29,203 (228,885) (384,109) (199,682) (378,438) Effect of exchange
rate changes on cash
and cash equivalents (944) 1,816 268 872 203 (Decrease)/increase
in cash and cash
equivalents (100,817) (151,691) 279,949 (252,508) 397,670 Cash and cash
equivalents at
beginning of period 869,878 1,021,569 445,521 1,021,569 327,800 Cash and cash
equivalents at end
of period $769,061 $869,878 $725,470 $769,061 $725,470
* Depreciation of fixed assets and amortization of intangible assets,
software, capitalized intellectual property, debt issuance costs and
accrued debt premium.
LSI CORPORATION
Selected Financial Information (GAAP)
(In millions, except where noted)
(Unaudited) Three Months Ended
June 29, March 30, July 1,
2008 2008 2007 Semiconductor revenues $462.0 $458.8 $484.8
Storage Systems revenues $230.1 $201.9 $185.1
Total revenues $692.1 $660.7 $669.9
Percentage change in revenues-
qtr./qtr. (a) 4.7% -10.8% 43.9%
Percentage change in revenues-
yr./yr. (b) 3.3% 42.0% 36.8% Days sales outstanding 47 45 57
Days of inventory 53 58 50
Current ratio 2.8 2.7 3.0
Quick ratio 2.2 2.2 2.3 Gross margin as a percentage of
revenues 41.2% 39.3% 22.7%
R&D as a percentage of revenues 24.6% 25.7% 30.1%
SG&A as a percentage of revenues 15.1% 15.0% 17.1% Employees (c) 5,378 5,351 9,138
Revenues per employee (in
thousands) (d) $514.7 $493.9 $293.3 Selected Cash Flow information:
Purchases of property and
equipment (e) $14.3 $21.1 $8.6
Depreciation and amortization (f) $20.6 $21.9 $21.0
(a) Represents sequential quarter growth in revenues. (b) Represents growth 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.
LSI CORPORATION
Reconciliations of Non-GAAP to GAAP measures
(In thousands)
(Unaudited) Three Months Ended
June 29, July 1,
2008 2007 Consolidated revenues $692,063 $669,939
Less:
Mobility revenues - 90,550
Consumer revenues - 20,998
Consolidated revenues excluding
Mobility & Consumer $692,063 $558,391
% change in revenues-yr./yr. 24%
DATASOURCE: LSI Corporation CONTACT: Investor Relations, Sujal Shah, +1-610-712-5471, , or Media Relations, Mitch Seigle, +1-408-954-3225, , both of LSI Corporation Web site: http://www.lsi.com/
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