Exhibit 99.1
FOR IMMEDIATE RELEASE | APRIL 23, 2008 | |
Investor Relations Contact: | Media Relations Contact: | |
Sujal Shah | Mitch Seigle | |
610-712-5471 | 408-954-3225 | |
sujal.shah@lsi.com | mitch.seigle@lsi.com |
cc08-29
LSI REPORTS FIRST QUARTER 2008 RESULTS
First Quarter 2008 Revenues Exceed Guidance
MILPITAS, Calif., April 23, 2008 –LSI Corporation (NYSE: LSI) today reported results for its first quarter ended March 30, 2008.
First Quarter News Release Summary
n | First quarter 2008 revenues of $661 million, exceeding guidance | |
n | First quarter 2008 GAAP* net loss of 2 cents per share | |
n | First quarter 2008 non-GAAP** net income of 10 cents per diluted share, exceeding guidance | |
n | First quarter operating cash flows of $96 million | |
n | Cash and short-term investments of $1.2 billion |
Second Quarter 2008 Business Outlook
n | Projected revenues of $650 million to $680 million | |
n | GAAP* net loss in the range of 0 to 8 cents per share | |
n | Non-GAAP** net income in the range of 8 to 12 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. |
STRENGTH IN STORAGE SEMICONDUCTORS DRIVES BETTER THAN
EXPECTED SEASONAL PERFORMANCE
EXPECTED SEASONAL PERFORMANCE
First quarter 2008 revenues were $661 million, a 42% increase year-over-year compared to $465 million reported in the first quarter of 2007, and down 11% sequentially compared to $741 million reported in the fourth quarter of 2007 [1]. Adjusting for the sale of the mobility business, first quarter revenues declined 7% sequentially compared to the fourth quarter of 2007. The first quarter revenue decline was less than expected on better than expected sales of semiconductors for storage applications.
First quarter 2008 GAAP* net loss was $14 million or 2 cents per share, compared to first quarter 2007 GAAP net income of $30 million or 7 cents per diluted share. First quarter 2008 GAAP results compare to fourth quarter 2007 GAAP net loss of $2 billion or $2.87 per share, which included a $2 billion non-cash charge for impairment of goodwill. First quarter 2008 GAAP net loss included a net charge of $78 million from special items, including $55.7 million of amortization of acquisition-related items, $4.6 million of restructuring costs, and $17.8 million of stock-based compensation expense.
First quarter 2008 non-GAAP** net income was $64 million or 10 cents per diluted share, compared to first quarter 2007 non-GAAP net income of $44 million or 11 cents per diluted share. Fourth quarter 2007 non-GAAP net income was $94 million or 13 cents per diluted share.
Cash and short-term investments totaled approximately $1.2 billion at quarter end. LSI also announced today that it has completed the purchase of approximately 147 million shares of its common stock for approximately $1 billion under two repurchase authorizations.
“Our first quarter results mark the third consecutive quarter of revenues that have exceeded expectations and reflect continuing strength in our core business,” said Abhi Talwalkar, LSI president and chief executive officer. “Stronger than expected sales of our SAS and SAN silicon partially offset the effects of normal seasonality while the longer-term benefits of our strategic steps and sharp focus on storage and networking continued to grow.”
“During the quarter we also won significant new silicon designs in the hard disk drive and server spaces and announced an innovative new family of single-chip, low-cost content inspection processors for security and networking applications which is receiving strong interest,” added Talwalkar.
Bryon Look, LSI chief financial officer, said, “In the first quarter we continued to generate strong operating cash flows and effectively managed our expenses, delivering a solid financial performance. Our balance sheet remains strong and despite continuing macro-economic uncertainty we remain confident in the health of our business.”
[1] The Company merged with Agere Systems on April 2, 2007.
LSI Second Quarter 2008 Business Outlook
GAAP* | Special Items | Non-GAAP** | ||||
Revenue | $650 million to $680 million | $650 million to $680 million | ||||
Gross Margin | 37 – 40% | $45 to $55 million | 45 – 47% | |||
Operating Expenses | $270 million to $290 million | $35 to $45 million | $235 million to $245 million | |||
Net Other Income | $0 million | $0 million | ||||
Tax | Approximately $8 million | Approximately 8% | ||||
Net (Loss)/Income Per Share | ($0.08) to ($0.00) | ($0.12) to ($0.17) | $0.08 to $0.12 | |||
Diluted Share Count | 640 million | 645 million |
Capital spending is projected to be around $15 million in the second quarter and approximately $60 million in total for 2008.
Second quarter depreciation and software amortization is expected to be approximately $25 million.
LSI Conference Call Information
LSI will hold a conference call today at 2 p.m. PDT to discuss first quarter financial results and the second quarter 2008 business outlook. Internet users can access the conference call athttp://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: timely completion of our planned acquisition of the hard disk drive semiconductor business of Infineon Technologies AG; 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 report on Form 10-K. 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. | The LSI logo design is a trademark 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)
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)
March 30, | December 31, | April 1, | ||||||||||
2008 | 2007 | 2007 | ||||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash and short-term investments | $ | 1,236.8 | $ | 1,397.6 | $ | 1,016.6 | ||||||
Accounts receivable, net | 332.1 | 406.4 | 303.4 | |||||||||
Inventories | 258.6 | 240.8 | 229.1 | |||||||||
Prepaid expenses and other current assets | 158.6 | 147.8 | 62.3 | |||||||||
Total current assets | 1,986.1 | 2,192.6 | 1,611.4 | |||||||||
Property and equipment, net | 235.2 | 229.7 | 89.2 | |||||||||
Goodwill and other intangible assets, net | 1,665.9 | 1,724.7 | 997.8 | |||||||||
Other assets | 252.5 | 249.4 | 103.4 | |||||||||
Total assets | $ | 4,139.7 | $ | 4,396.4 | $ | 2,801.8 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||||
Current liabilities | $ | 729.0 | $ | 762.5 | $ | 383.7 | ||||||
Long-term debt | 717.2 | 718.0 | 350.0 | |||||||||
Pension, tax and other liabilities | 407.0 | 430.7 | 131.5 | |||||||||
Total liabilities | 1,853.2 | 1,911.2 | 865.2 | |||||||||
Minority interest in subsidiary | 0.3 | 0.2 | 0.2 | |||||||||
Stockholders’ equity: | ||||||||||||
Common stock and additional paid-in capital | 5,959.2 | 6,159.2 | 3,121.0 | |||||||||
Accumulated deficit | (3,752.1 | ) | (3,738.5 | ) | (1,198.1 | ) | ||||||
Accumulated other comprehensive income | 79.1 | 64.3 | 13.5 | |||||||||
Total stockholders’ equity | 2,286.2 | 2,485.0 | 1,936.4 | |||||||||
Total liabilities and stockholders’ equity | $ | 4,139.7 | $ | 4,396.4 | $ | 2,801.8 | ||||||
LSI CORPORATION
Consolidated Statements of Operations (GAAP)
(In thousands, except per share amounts)
(Unaudited)
Consolidated Statements of Operations (GAAP)
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended | |||||||||||||
March 30, | December 31, | April 1, | |||||||||||
2008 | 2007 | 2007 | |||||||||||
Revenues | $ | 660,747 | $ | 740,874 | $ | 465,415 | |||||||
Cost of revenues | 356,878 | 394,730 | 263,670 | ||||||||||
Amortization of acquisition related intangibles | 42,255 | 33,842 | 5,285 | ||||||||||
Stock-based compensation expense | 2,061 | 2,795 | 1,944 | ||||||||||
Total cost of revenues | 401,194 | 431,367 | 270,899 | ||||||||||
Gross profit | 259,553 | 309,507 | 194,516 | ||||||||||
Research and development | 161,894 | 158,021 | 99,130 | ||||||||||
Stock-based compensation expense | 7,823 | 9,132 | 4,717 | ||||||||||
Total research and development | 169,717 | 167,153 | 103,847 | ||||||||||
Selling, general and administrative | 77,708 | 86,158 | 57,087 | ||||||||||
Amortization of acquisition related intangibles | 13,434 | 4,752 | — | ||||||||||
Stock-based compensation expense | 7,911 | 9,568 | 4,523 | ||||||||||
Total selling, general and administrative | 99,053 | 100,478 | 61,610 | ||||||||||
Restructuring of operations and other items, net | 4,564 | 29,050 | (8,080 | ) | |||||||||
Goodwill and intangible impairment charges* | — | 2,021,463 | — | ||||||||||
Acquired in-process research and development | — | 5,972 | 6,500 | ||||||||||
(Loss)/income from operations | (13,781 | ) | (2,014,609 | ) | 30,639 | ||||||||
Interest expense | (8,978 | ) | (9,048 | ) | (3,890 | ) | |||||||
Interest income and other, net | 14,631 | 13,629 | 10,531 | ||||||||||
(Loss)/income before income taxes | (8,128 | ) | (2,010,028 | ) | 37,280 | ||||||||
Provision/(benefit) for income taxes | 5,500 | (11,830 | ) | 7,456 | |||||||||
Net (loss)/income | $ | (13,628 | ) | $ | (1,998,198 | ) | $ | 29,824 | |||||
Net (loss)/income per share: | |||||||||||||
Basic | $ | (0.02 | ) | $ | (2.87 | ) | $ | 0.07 | |||||
Diluted | $ | (0.02 | ) | $ | (2.87 | ) | $ | 0.07 | |||||
Shares used in computing per share amounts: | |||||||||||||
Basic | 661,984 | 695,624 | 404,230 | ||||||||||
Diluted | 661,984 | 695,624 | 409,808 | ||||||||||
* | During the fourth quarter of 2007, the Company determined that based on the then market conditions in the semiconductor industry, the carrying amount of the Company’s goodwill was no longer recoverable. The Company recognized $2,019.9 million of a goodwill impairment charge and $1.6 million in charges for the impairment of certain amortizable intangible assets in the Semiconductor segment. |
A reconciliation of net (loss)/income on a GAAP basis to a non-GAAP net income is included below.
Three Months Ended | ||||||||||||
March 30, | December 31, | April 1, | ||||||||||
Reconciliation of GAAP net (loss)/income to Non-GAAP net income: | 2008 | 2007 | 2007 | |||||||||
GAAP net (loss)/income | $ | (13,628 | ) | $ | (1,998,198 | ) | $ | 29,824 | ||||
Special items: | ||||||||||||
a) Stock-based compensation expense — cost of revenues | 2,061 | 2,795 | 1,944 | |||||||||
b) Stock-based compensation expense — R&D | 7,823 | 9,132 | 4,717 | |||||||||
c) Stock-based compensation expense — SG&A | 7,911 | 9,568 | 4,523 | |||||||||
d) Amortization of acquisition related intangibles — cost of revenues | 42,255 | 33,842 | 5,285 | |||||||||
e) Amortization of acquisition related intangibles — SG&A | 13,434 | 4,752 | — | |||||||||
f) Restructuring of operations and other items, net | 4,564 | 29,050 | (8,080 | ) | ||||||||
g) Goodwill and intangible impairment charges* | — | 2,021,463 | — | |||||||||
h) Acquired in-process research and development | — | 5,972 | 6,500 | |||||||||
i) Income tax effect | (94 | ) | (24,158 | ) | (369 | ) | ||||||
Total special items | 77,954 | 2,092,416 | 14,520 | |||||||||
Non-GAAP net income | $ | 64,326 | $ | 94,218 | $ | 44,344 | ||||||
Non-GAAP net income per share: | ||||||||||||
Basic | $ | 0.10 | $ | 0.14 | $ | 0.11 | ||||||
Diluted** | $ | 0.10 | $ | 0.13 | $ | 0.11 | ||||||
Shares used in computing Non-GAAP per share amounts: | ||||||||||||
Basic | 661,984 | 695,624 | 404,230 | |||||||||
Diluted | 662,485 | 726,710 | 409,808 | |||||||||
** | In computing non-GAAP diluted earnings per share for the three month period ended December 31, 2007, net income was increased by $3,500 for interest, net of taxes, on the $350 million convertible notes considered dilutive common stock equivalents. |
Three Months Ended | ||||||||||||
Reconciliation of GAAP to Non-GAAP shares used in the calculation of | March 30, | December 31, | April 1, | |||||||||
diluted per share amounts: | 2008 | 2007 | 2007 | |||||||||
Diluted shares used in per-share calculation — GAAP | 661,984 | 695,624 | 409,808 | |||||||||
Dilutive stock awards | 501 | 5,006 | — | |||||||||
Effect of $350 million convertible notes considered dilutive | — | 26,080 | — | |||||||||
Diluted shares used in per-share calculation — Non-GAAP | 662,485 | 726,710 | 409,808 | |||||||||
LSI CORPORATION
Consolidated Statement of Cash Flows
(In thousands, except where noted)
(Unaudited)
Consolidated Statement of Cash Flows
(In thousands, except where noted)
(Unaudited)
Three Months Ended | ||||||||||||
March 30, | December 31, | April 1, | ||||||||||
2008 | 2007 | 2007 | ||||||||||
Operating Activities: | ||||||||||||
Net (loss)/income | $ | (13,628 | ) | $ | (1,998,198 | ) | $ | 29,824 | ||||
Adjustments: | ||||||||||||
Depreciation and amortization * | 78,328 | 61,822 | 18,576 | |||||||||
Stock-based compensation expense | 17,795 | 21,495 | 11,184 | |||||||||
Non-cash restructuring and other items | (3,291 | ) | 10,555 | 228 | ||||||||
Goodwill and intangible impairment charges ** | — | 2,021,463 | — | |||||||||
Acquired in-process research and development | — | 5,972 | 6,500 | |||||||||
(Gain)/loss on sale of property and equipment, including assets held-for-sale | (12 | ) | 114 | (9,662 | ) | |||||||
Non-cash foreign exchange loss | 12,918 | 986 | 389 | |||||||||
Changes in deferred tax assets and liabilities | 2,115 | 3,178 | 31 | |||||||||
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combinations: | ||||||||||||
Accounts receivable, net | 74,272 | 30,964 | 45,450 | |||||||||
Inventories | (17,719 | ) | (20,440 | ) | (19,654 | ) | ||||||
Prepaid expenses and other assets | (4,317 | ) | (13,504 | ) | 24,565 | |||||||
Accounts payable | (39,432 | ) | 95,459 | (36,469 | ) | |||||||
Accrued and other liabilities | (10,828 | ) | (109,543 | ) | (14,980 | ) | ||||||
Net cash provided by operating activities | 96,201 | 110,323 | 55,982 | |||||||||
Investing activities: | ||||||||||||
Purchases of debt securities available-for-sale | (44,151 | ) | (149,320 | ) | (60,630 | ) | ||||||
Proceeds from maturities and sales of debt securities available-for-sale | 50,904 | 123,195 | 174,392 | |||||||||
Purchases of equity securities | (3,500 | ) | — | — | ||||||||
Purchases of property, equipment and software | (35,230 | ) | (25,837 | ) | (20,503 | ) | ||||||
Proceeds from sale of property and equipment | 6,333 | 2,376 | 12,511 | |||||||||
Proceeds from sale of Mobility Products Group, net of transaction costs | — | 445,500 | — | |||||||||
Proceeds from sale of semiconductor operations in Thailand, net of transaction costs | — | 49,600 | — | |||||||||
Acquisitions of companies, net of cash acquired | — | (80,751 | ) | (52,079 | ) | |||||||
Adjustment to goodwill acquired in a prior year for resolution of a pre-acquisition income tax contingency | 4,821 | 788 | 2,442 | |||||||||
Net cash (used in)/provided by investing activities | (20,823 | ) | 365,551 | 56,133 | ||||||||
Financing activities: | ||||||||||||
Issuance of common stock | 346 | 17,286 | 5,671 | |||||||||
Purchase of common stock under repurchase programs | (229,231 | ) | (221,639 | ) | — | |||||||
Net cash (used in)/provided by financing activities | (228,885 | ) | (204,353 | ) | 5,671 | |||||||
Effect of exchange rate changes on cash and cash equivalents | 1,816 | 115 | (65 | ) | ||||||||
(Decrease)/increase in cash and cash equivalents | (151,691 | ) | 271,636 | 117,721 | ||||||||
Cash and cash equivalents at beginning of period | 1,021,569 | 749,933 | 327,800 | |||||||||
Cash and cash equivalents at end of period | $ | 869,878 | $ | 1,021,569 | $ | 445,521 | ||||||
* | Depreciation of fixed assets and amortization of intangible assets, software, capitalized intellectual property, debt issuance costs and accrued debt premium. | |
** | During the fourth quarter of 2007, the Company determined that based on the then market conditions in the semiconductor industry, the carrying amount of the Company’s goodwill was no longer recoverable. The Company recognized $2,019.9 million of a goodwill impairment charge and $1.6 million in charges for the impairment of certain amortizable intangible assets in the Semiconductor segment. |
LSI CORPORATION
Selected Financial Information (GAAP)
(In millions, except where noted)
(Unaudited)
Selected Financial Information (GAAP)
(In millions, except where noted)
(Unaudited)
Three Months Ended | ||||||||||||
March 30, | December 31, | April 1, | ||||||||||
2008 | 2007 | 2007 | ||||||||||
Semiconductor revenues | $ | 458.8 | $ | 491.7 | $ | 272.4 | ||||||
Storage Systems revenues | $ | 201.9 | $ | 249.2 | $ | 193.0 | ||||||
Total revenues | $ | 660.7 | $ | 740.9 | $ | 465.4 | ||||||
Percentage change in revenues-qtr./qtr. ( a ) | -10.8 | % | 1.9 | % | -11.1 | % | ||||||
Percentage change in revenues-yr./yr. ( b ) | 42.0 | % | 41.5 | % | -2.2 | % | ||||||
Days sales outstanding | 45 | 49 | 59 | |||||||||
Days of inventory | 58 | 50 | 76 | |||||||||
Current ratio | 2.7 | 2.9 | 4.2 | |||||||||
Quick ratio | 2.2 | 2.4 | 3.4 | |||||||||
Gross margin as a percentage of revenues | 39.3 | % | 41.8 | % | 41.8 | % | ||||||
R&D as a percentage of revenues | 25.7 | % | 22.6 | % | 22.3 | % | ||||||
SG&A as a percentage of revenues | 15.0 | % | 13.6 | % | 13.2 | % | ||||||
Employees ( c ) | 5,351 | 6,193 | 4,082 | |||||||||
Revenues per employee (in thousands) ( d ) | $ | 493.9 | $ | 478.5 | $ | 456.1 | ||||||
Selected Cash Flow information: | ||||||||||||
Purchases of property and equipment ( e ) | $ | 21.1 | $ | 13.6 | $ | 14.4 | ||||||
Depreciation and amortization ( f ) | $ | 21.9 | $ | 21.9 | $ | 11.0 |
( 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)
Reconciliations of Non-GAAP to GAAP measures
(In thousands)
(Unaudited)
Three Months Ended | ||||||||
March 30, 2008 | December 31, 2007 | |||||||
Consolidated revenues | $ | 660,747 | $ | 740,874 | ||||
Mobility revenues | — | 29,202 | ||||||
Consolidated revenues excluding Mobility | $ | 660,747 | $ | 711,672 | ||||
% change in revenues Qtr./Qtr. | -7 | % |