MILPITAS, Calif., July 28 /PRNewswire-FirstCall/ -- LSI Corporation (NYSE: LSI) today reported results for its second quarter ended July 4, 2010.
Second Quarter 2010 News Release Summary
- Second quarter 2010 revenues of $639 million
- Second quarter 2010 GAAP* net income of 1 cent per diluted share
- Second quarter 2010 non-GAAP** net income of 11 cents per diluted share
- Second quarter operating cash flows of $68 million
Third Quarter 2010 Business Outlook
- Projected revenues of $625 million to $655 million
- GAAP* net (loss)/income in the range of ($0.03) to $0.06 cents per share
- Non-GAAP** net income in the range of $0.08 to $0.14 cents 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, write-down of debt and equity securities and gain on repurchase of convertible subordinated notes. It also excludes the income tax effect associated with the above mentioned items. | |
Second quarter 2010 revenues were $639 million, a 23% increase year-over-year compared to $521 million reported in the second quarter of 2009, and compares to $637 million reported in the first quarter of 2010.
Second quarter 2010 GAAP* net income was $7 million or 1 cent per diluted share, compared to second quarter 2009 GAAP net loss of $61 million or 9 cents per share. Second quarter 2010 GAAP results compare to first quarter 2010 GAAP net income of $23 million or 3 cents per diluted share. First quarter GAAP results included a net tax benefit of $19 million. Second quarter 2010 GAAP net income included a net charge of $64 million from special items, consisting primarily of $40 million of amortization of acquisition-related items, $18 million of stock-based compensation expense, and $5 million of net restructuring and other items.
Second quarter 2010 non-GAAP** net income was $71 million or 11 cents per diluted share, compared to second quarter 2009 non-GAAP net income of $7 million or 1 cent per diluted share. First quarter 2010 non-GAAP net income was $92 million or 14 cents per diluted share. First quarter non-GAAP results also included the aforementioned net tax benefit of $19 million.
Cash and short-term investments totaled approximately $670 million at quarter end. During the quarter, LSI repaid $350 million of outstanding convertible notes, becoming debt free. The company also completed second-quarter purchases of approximately 10 million shares of its common stock for approximately $55 million under its $250 million share repurchase program.
"Despite some isolated customer inventory adjustments late in the quarter that modestly affected our sequential revenue growth, tight operating expense control and higher gross margins enabled us to deliver a solid bottom-line performance," said Abhi Talwalkar, LSI president and chief executive officer. "While improving end market demand for enterprise IT products continues to bode well for us, our outlook for the third quarter is one of tempered optimism as macro-economic conditions appear to be somewhat fluid at the present time."
Bryon Look, LSI CFO and chief administrative officer, said, "We delivered sound financial results in the second quarter. First-half operating cash flows nearly tripled from the year-ago period while net cash improved by 28% on the same basis. We also repaid all our remaining debt and continued to purchase shares of the company's common stock through our previously announced share repurchase program."
LSI Third Quarter 2010 Business Outlook | ||||
GAAP* | Special Items | Non-GAAP** | ||
Revenue | $625 million to | $625 million to | ||
Gross Margin | 40% – 44% | $30 million to | 46.5% – 48.5% | |
Operating Expenses | $243 million to | $20 million to | $223 million to | |
Net Other (Loss)/Income | $3 million | $3 million | ||
Tax | Approximately | Approximately | ||
Net (Loss)/Income Per Share | ($0.03) to $0.06 | ($0.08) to ($0.11) | $0.08 to $0.14 | |
Diluted Share Count | 655 million | 655 million | ||
Capital spending is projected to be around $15 million in the third quarter and approximately $55 million in total for 2010.
Depreciation and software amortization is projected to be around $26 million in the third quarter and approximately $104 million in total for 2010.
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 2010 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:
- 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.
- LSI and the LSI & Design logo are trademarks or registered trademarks of LSI Corporation.
- 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) | |||||||
July 4, | April 4, | December 31, | |||||
Assets | 2010 | 2010 | 2009 | ||||
Current assets: | |||||||
Cash and short-term investments | $ 669.8 | $ 1,015.5 | $ 962.1 | ||||
Accounts receivable, net | 307.1 | 298.6 | 339.0 | ||||
Inventories | 191.6 | 185.8 | 169.3 | ||||
Prepaid expenses and other current assets | 110.5 | 124.4 | 115.1 | ||||
Total current assets | 1,279.0 | 1,624.3 | 1,585.5 | ||||
Property and equipment, net | 212.8 | 215.4 | 219.0 | ||||
Goodwill and identified intangible assets, net | 847.5 | 887.7 | 927.9 | ||||
Other assets | 224.8 | 223.1 | 235.5 | ||||
Total assets | $ 2,564.1 | $ 2,950.5 | $2,967.9 | ||||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ - | $ 350.0 | $ 350.0 | ||||
Other current liabilities | 489.6 | 509.4 | 504.4 | ||||
Total current liabilities | 489.6 | 859.4 | 854.4 | ||||
Pension, tax and other liabilities | 609.8 | 618.9 | 652.4 | ||||
Total liabilities | 1,099.4 | 1,478.3 | 1,506.8 | ||||
Stockholders' equity: | |||||||
Common stock and additional paid-in capital | 6,123.8 | 6,141.6 | 6,149.2 | ||||
Accumulated deficit | (4,378.5) | (4,386.0) | (4,408.5) | ||||
Accumulated other comprehensive loss | (280.6) | (283.4) | (279.6) | ||||
Total stockholders' equity | 1,464.7 | 1,472.2 | 1,461.1 | ||||
Total liabilities and stockholders' equity | $ 2,564.1 | $ 2,950.5 | $2,967.9 | ||||
LSI CORPORATION | ||||||||||
Consolidated Statements of Operations (GAAP) | ||||||||||
(In thousands, except per-share amounts) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
July 4, | April 4, | July 5, | July 4, | July 5, | ||||||
2010 | 2010 | 2009 | 2010 | 2009 | ||||||
Revenues | $ 639,405 | $ 637,182 | $ 520,665 | $ 1,276,587 | $ 1,002,944 | |||||
Cost of revenues | 330,194 | 332,937 | 301,333 | 663,131 | 577,917 | |||||
Purchase accounting effect on inventory | - | - | 2,550 | - | 2,550 | |||||
Amortization of acquisition-related intangibles | 31,288 | 31,288 | 33,867 | 62,576 | 67,477 | |||||
Stock-based compensation expense | 2,292 | 1,712 | 2,022 | 4,004 | 4,035 | |||||
Total cost of revenues | 363,774 | 365,937 | 339,772 | 729,711 | 651,979 | |||||
Gross profit | 275,631 | 271,245 | 180,893 | 546,876 | 350,965 | |||||
Research and development | 162,509 | 158,974 | 141,724 | 321,483 | 289,146 | |||||
Stock-based compensation expense | 8,644 | 7,898 | 7,195 | 16,542 | 15,057 | |||||
Total research and development | 171,153 | 166,872 | 148,919 | 338,025 | 304,203 | |||||
Selling, general and administrative | 69,304 | 70,563 | 64,819 | 139,867 | 131,338 | |||||
Amortization of acquisition-related intangibles | 8,948 | 8,948 | 9,123 | 17,896 | 18,246 | |||||
Stock-based compensation expense | 7,559 | 6,821 | 7,785 | 14,380 | 15,900 | |||||
Total selling, general and administrative | 85,811 | 86,332 | 81,727 | 172,143 | 165,484 | |||||
Restructuring of operations and other items, net | 5,067 | 1,620 | 6,010 | 6,687 | 31,215 | |||||
Income/(loss) from operations | 13,600 | 16,421 | (55,763) | 30,021 | (149,937) | |||||
Interest expense | (1,707) | (3,894) | (6,864) | (5,601) | (14,100) | |||||
Interest income and other, net | 4,639 | (8,807) | 6,344 | (4,168) | 12,207 | |||||
Income/(loss) before income taxes | 16,532 | 3,720 | (56,283) | 20,252 | (151,830) | |||||
Provision/(benefit) for income taxes | 9,100 | (18,800) | 5,200 | (9,700) | 13,200 | |||||
Net income/(loss) | $ 7,432 | $ 22,520 | $ (61,483) | $ 29,952 | $ (165,030) | |||||
Net income/(loss) per share: | ||||||||||
Basic | $ 0.01 | $ 0.03 | $ (0.09) | $ 0.05 | $ (0.25) | |||||
Diluted | $ 0.01 | $ 0.03 | $ (0.09) | $ 0.05 | $ (0.25) | |||||
Shares used in computing per-share amounts: | ||||||||||
Basic | 651,778 | 656,528 | 650,300 | 654,192 | 649,360 | |||||
Diluted | 661,540 | 664,315 | 650,300 | 663,857 | 649,360 | |||||
A reconciliation of net income/(loss) on the GAAP basis to non-GAAP net income/(loss) is included below. | ||||||||||
Three Months Ended | Six Months Ended | ||||||||||
Reconciliation of GAAP net income/(loss) to | July 4, | April 4, | July 5, | July 4, | July 5, | ||||||
non-GAAP net income/(loss): | 2010 | 2010 | 2009 | 2010 | 2009 | ||||||
GAAP net income/(loss) | $ 7,432 | $ 22,520 | $ (61,483) | $ 29,952 | $ (165,030) | ||||||
Special items: | |||||||||||
a) Stock-based compensation expense - cost of revenues | 2,292 | 1,712 | 2,022 | 4,004 | 4,035 | ||||||
b) Stock-based compensation expense - R&D | 8,644 | 7,898 | 7,195 | 16,542 | 15,057 | ||||||
c) Stock-based compensation expense - SG&A | 7,559 | 6,821 | 7,785 | 14,380 | 15,900 | ||||||
d) Amortization of acquisition-related intangibles - cost of revenues | 31,288 | 31,288 | 33,867 | 62,576 | 67,477 | ||||||
e) Amortization of acquisition-related intangibles - SG&A | 8,948 | 8,948 | 9,123 | 17,896 | 18,246 | ||||||
f) Purchase accounting effect on inventory | - | - | 2,550 | - | 2,550 | ||||||
g) Restructuring of operations and other items, net | 5,067 | 1,620 | 6,010 | 6,687 | 31,215 | ||||||
h) Write-down of equity securities | - | 11,600 | - | 11,600 | - | ||||||
Total special items | 63,798 | 69,887 | 68,552 | 133,685 | 154,480 | ||||||
Non-GAAP net income/(loss) | $ 71,230 | $ 92,407 | $ 7,069 | $ 163,637 | $ (10,550) | ||||||
Non-GAAP net income/(loss) per share: | |||||||||||
Basic | $ 0.11 | $ 0.14 | $ 0.01 | $ 0.25 | $ (0.02) | ||||||
Diluted * | $ 0.11 | $ 0.14 | $ 0.01 | $ 0.25 | $ (0.02) | ||||||
Shares used in computing non-GAAP per-share amounts: | |||||||||||
Basic | 651,778 | 656,528 | 650,300 | 654,192 | 649,360 | ||||||
Diluted | 661,540 | 690,395 | 652,389 | 663,857 | 649,360 | ||||||
* In computing non-GAAP diluted earnings per share for three months ended April 4, 2010, net income was increased by $3,500 for interest, net of taxes, on the $350 million convertible notes considered dilutive common stock. | |||||||||||
Three Months Ended | Six Months Ended | |||||||||
Reconciliation of GAAP to non-GAAP shares used in the calculation | July 4, | April 4, | July 5, | July 4, | July 5, | |||||
of diluted per-share amounts: | 2010 | 2010 | 2009 | 2010 | 2009 | |||||
Diluted shares used in per-share computation - GAAP | 661,540 | 664,315 | 650,300 | 663,857 | 649,360 | |||||
Dilutive stock awards | - | - | 2,089 | - | - | |||||
Effect of $350 million convertible notes considered dilutive | - | 26,080 | - | - | - | |||||
Diluted shares used in per-share computation - non-GAAP | 661,540 | 690,395 | 652,389 | 663,857 | 649,360 | |||||
LSI CORPORATION | ||||||||||
Consolidated Statement of Cash Flows | ||||||||||
(In thousands) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
July 4, | April 4, | July 5, | July 4, | July 5, | ||||||
2010 | 2010 | 2009 | 2010 | 2009 | ||||||
Operating activities: | ||||||||||
Net income/(loss) | $ 7,432 | $ 22,520 | $ (61,483) | $ 29,952 | $ (165,030) | |||||
Adjustments: | ||||||||||
Depreciation and amortization * | 66,251 | 67,017 | 66,239 | 133,268 | 131,318 | |||||
Stock-based compensation expense | 18,495 | 16,431 | 17,002 | 34,926 | 34,992 | |||||
Gain on redemption of convertible subordinated notes | - | - | (149) | - | (149) | |||||
Write-down of equity securities | - | 11,600 | - | 11,600 | - | |||||
Loss on sale of property and equipment | 265 | 3 | 17 | 268 | 117 | |||||
Unrealized foreign exchange loss/(gain) | 3,205 | (2,215) | 4,268 | 990 | (8,116) | |||||
Deferred taxes | 85 | 98 | (84) | 183 | (11) | |||||
Changes in assets and liabilities, net of assets acquired and liabilities | ||||||||||
assumed in business combinations: | ||||||||||
Accounts receivable, net | (8,509) | 40,396 | 5,364 | 31,887 | 36,054 | |||||
Inventories | (5,806) | (16,441) | 54,242 | (22,247) | 73,582 | |||||
Prepaid expenses and other assets | 14,438 | (8,095) | 11,015 | 6,343 | 43,458 | |||||
Accounts payable | (5,863) | (8,547) | 10,147 | (14,410) | (53,388) | |||||
Accrued and other liabilities | (22,376) | (16,989) | (37,666) | (39,365) | (33,762) | |||||
Net cash provided by operating activities | 67,617 | 105,778 | 68,912 | 173,395 | 59,065 | |||||
Investing activities: | ||||||||||
Purchases of debt securities available-for-sale | (1,189) | - | - | (1,189) | (10) | |||||
Proceeds from maturities and sales of debt securities available-for-sale | 10,271 | 11,254 | 28,063 | 21,525 | 63,945 | |||||
Purchases of equity securities | (316) | - | - | (316) | (5,000) | |||||
Purchases of property, equipment and software | (21,097) | (27,276) | (23,138) | (48,373) | (48,601) | |||||
Proceeds from sale of property and equipment | 177 | 22 | 105 | 199 | 112 | |||||
Acquisition of business and companies, net of cash acquired | - | - | (20,840) | - | (20,840) | |||||
Decrease in non-current assets and deposits | - | - | 13,501 | - | 13,501 | |||||
Net cash (used in)/provided by investing activities | (12,154) | (16,000) | (2,309) | (28,154) | 3,107 | |||||
Financing activities: | ||||||||||
Redemption of convertible subordinated notes | - | - | (244,047) | - | (244,047) | |||||
Repayment of debt obligations | (349,999) | - | - | (349,999) | - | |||||
Issuance of common stock | 17,953 | 3,635 | 6,672 | 21,588 | 6,673 | |||||
Purchase of common stock under repurchase programs | (54,524) | (26,208) | - | (80,732) | - | |||||
Net cash used in financing activities | (386,570) | (22,573) | (237,375) | (409,143) | (237,374) | |||||
Effect of exchange rate changes on cash and cash equivalents | (895) | (2,117) | 3,221 | (3,012) | 855 | |||||
Net change in cash and cash equivalents | (332,002) | 65,088 | (167,551) | (266,914) | (174,347) | |||||
Cash and cash equivalents at beginning of period | 843,379 | 778,291 | 822,505 | 778,291 | 829,301 | |||||
Cash and cash equivalents at end of period | $ 511,377 | $ 843,379 | $ 654,954 | $ 511,377 | $ 654,954 | |||||
* 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 | ||||||||
July 4, | April 4, | July 5, | ||||||
2010 | 2010 | 2009 | ||||||
Semiconductor revenues | $ 416.7 | $ 416.5 | $ 343.8 | |||||
Storage Systems revenues | $ 222.7 | $ 220.7 | $ 176.9 | |||||
Total revenues | $ 639.4 | $ 637.2 | $ 520.7 | |||||
Percentage change in revenues-qtr./qtr. ( a ) | 0.3% | -0.1% | 8.0% | |||||
Percentage change in revenues-yr./yr. ( b ) | 22.8% | 32.1% | -24.8% | |||||
Days sales outstanding | 43 | 42 | 46 | |||||
Days of inventory | 47 | 46 | 42 | |||||
Current ratio | 2.6 | 1.9 | 1.8 | |||||
Quick ratio | 2.0 | 1.5 | 1.4 | |||||
Gross margin as a percentage of revenues | 43.1% | 42.6% | 34.7% | |||||
R&D as a percentage of revenues | 26.8% | 26.2% | 28.6% | |||||
SG&A as a percentage of revenues | 13.4% | 13.5% | 15.7% | |||||
Employees ( c ) | 5,612 | 5,451 | 5,357 | |||||
Revenues per employee (in thousands) ( d ) | $ 455.7 | $ 467.6 | $ 388.8 | |||||
Selected Cash Flow Information: | ||||||||
Purchases of property and equipment ( e ) | $ 13.3 | $ 15.2 | $ 7.7 | |||||
Depreciation and amortization ( f ) | $ 25.8 | $ 26.3 | $ 23.2 | |||||
( a ) | Represents a sequential quarterly change in revenues. | |||||||
( b ) | Represents a change in revenues in the quarter presented as | |||||||
( c ) | Actual number of employees at the end of each period presented. | |||||||
( d ) | Revenues per employee is calculated by annualizing revenues | |||||||
( e ) | Excludes purchases of software. | |||||||
( f ) | Represents depreciation of fixed assets and amortization of | |||||||
SOURCE LSI Corporation
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