LSI Reports Fourth Quarter and Full-Year 2009 Results
MILPITAS, Calif., Jan. 27 /PRNewswire-FirstCall/ -- LSI Corporation (NYSE: LSI) today reported results for its fourth quarter and full year ended December 31, 2009.
Fourth Quarter and Full-Year 2009 News Release Summary
- Fourth quarter 2009 revenues of $638 million
- Fourth quarter 2009 GAAP* net income of 10 cents per diluted share
- Fourth quarter 2009 non-GAAP** net income of 18 cents per diluted share
- Fourth quarter operating cash flows of $77 million
- Full-year 2009 revenues of $2.2 billion
First Quarter 2010 Business Outlook
- Projected revenues of $590 million to $620 million
- GAAP* net (loss)/income in the range of ($0.06) to $0.03 cents per share
- Non-GAAP** net income in the range of $0.04 to $0.10 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.
Fourth quarter 2009 revenues were $638 million, a 5% increase year-over-year compared to $610 million reported in the fourth quarter of 2008, and up 10% sequentially compared to $578 million reported in the third quarter of 2009.
Fourth quarter 2009 GAAP* net income was $65 million or 10 cents per diluted share, compared to fourth quarter 2008 GAAP net loss of $606 million or 94 cents per share. Fourth quarter GAAP results included a $31 million tax benefit, or 5 cents per diluted share, primarily related to the settlement of a multi-year foreign tax audit. Fourth quarter 2009 GAAP results compare to third quarter 2009 GAAP net income of $52 million or 8 cents per diluted share. Fourth quarter 2009 GAAP net income included a net charge of $59 million from special items, consisting primarily of $43 million of amortization of acquisition-related items, $14 million of stock-based compensation expense, and $2 million in net restructuring and other items.
Fourth quarter 2009 non-GAAP** net income was $124 million or 18 cents per diluted share, compared to fourth quarter 2008 non-GAAP net income of $41 million or 6 cents per diluted share. Third quarter 2009 non-GAAP net income was $119 million or 18 cents per diluted share.
Cash and short-term investments totaled approximately $962 million at quarter end.
"With increasing signs in the fourth quarter that an early-stage recovery of enterprise IT spending is now underway, LSI achieved double-digit sequential revenue growth, with revenues coming in at the high end of our guidance range," said Abhi Talwalkar, LSI president and chief executive officer. "With more than 80% of our revenues tied to enterprise technology spending, we are well positioned to benefit as this recovery gains strength going forward."
LSI recorded full-year 2009 revenues of $2.22 billion, a 17% decrease compared to $2.68 billion in 2008. The company reported 2009 GAAP net loss of $48 million or 7 cents per share. Full-year 2009 GAAP results compare to full-year 2008 GAAP net loss of $622 million or 96 cents per share. Full-year 2009 GAAP results included an $83 million tax benefit, or 13 cents per share, primarily related to the settlement of multi-year foreign tax audits. Full-year 2009 GAAP net loss included a net charge of $280 million from special items, consisting primarily of $172 million in the amortization of acquisition-related items, $64 million of stock-based compensation expense, and $38 million of restructuring costs.
Non-GAAP net income for 2009 was $232 million or 35 cents per diluted share compared to 2008 non-GAAP net income of $283 million or 44 cents per diluted share.
Bryon Look, LSI CFO and chief administrative officer, said, "We demonstrated strong fourth quarter performance, with significant improvements in revenues, gross margin, operating income and cash flows. Our storage systems business achieved record quarterly revenues, growing 24% sequentially and contributing to a second-half consisting of two consecutive quarters of double-digit revenue growth. We ended the year with nearly $1 billion in cash and short-term investments while our net cash position increased to $612 million."
LSI First Quarter 2010 Business Outlook
GAAP* Special Items Non-GAAP**
----- ------------- ----------
Revenue $590 million to $590 million to
------- $620 million $620 million
------------ ------------
Gross Margin 39% – $25 million to 45% –
------------ 43% $35 million 47%
-- ----------- ----
Operating Expenses $238 million to $20 million to $218 million to
------------------ $258 million $30 million $228 million
------------ ----------- ------------
Net Other
(Loss)/Income ($1 million) ($1 million)
-------------- ------------ ------------
Tax Approximately Approximately
--- $8 million $8 million
---------- ----------
Net (Loss)/Income
Per Share ($0.06) to ($0.07) to $0.04 to
----------------- $0.03 ($0.10) $0.10
--------- ---------- ---------
Diluted Share Count 658 million 667 million
------------------- ----------- -----------
Capital spending is projected to be around $15 million in the first quarter and approximately $55 million in total for 2010.
Depreciation and software amortization is projected to be around $25 million in the first quarter and approximately $100 million in total for 2010.
LSI Conference Call Information
LSI will hold a conference call today at 2 p.m. PST to discuss fourth quarter financial results and the first 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)
December 31, October 4, December 31,
Assets 2009 2009 2008
------ ---- ---- ----
Current assets:
Cash and short-term investments $962.1 $907.1 $1,119.1
Accounts receivable, net 339.0 307.2 304.0
Inventories 169.3 155.5 220.5
Prepaid expenses and other
current assets 115.1 140.3 155.9
----- ----- -----
Total current assets 1,585.5 1,510.1 1,799.5
Property and equipment, net 219.0 215.9 236.0
Goodwill and identified intangible
assets, net 927.9 970.7 1,065.6
Other assets 235.5 228.5 243.1
----- ----- -----
Total assets $2,967.9 $2,925.2 $3,344.2
-------- -------- --------
Liabilities and Stockholders' Equity
------------------------------------
Current
liabilities:
Current portion of long-term debt $350.0 $350.0 $245.1
Other current liabilities 504.4 484.6 552.4
----- ----- -----
Total current liabilities 854.4 834.6 797.5
Long-term debt, net of current
portion - - 350.0
Pension, tax and other liabilities 652.4 690.6 755.8
----- ----- -----
Total liabilities 1,506.8 1,525.2 1,903.3
------- ------- -------
Stockholders' equity:
Common stock and additional
paid-in capital 6,149.2 6,129.6 6,065.3
Accumulated deficit (4,408.5) (4,473.3) (4,360.8)
Accumulated other
comprehensive loss (279.6) (256.3) (263.6)
------ ------ ------
Total stockholders' equity 1,461.1 1,400.0 1,440.9
------- ------- -------
Total liabilities and
stockholders' equity $2,967.9 $2,925.2 $3,344.2
-------- -------- --------
LSI CORPORATION
Consolidated Statements of Operations (GAAP)
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
------------------
December 31, October 4, December 31,
2009 2009 2008
---- ---- ----
Revenues $637,796 $578,419 $609,959
Cost of revenues 335,792 315,067 334,398
Purchase accounting effect
on inventory 56 1,892 -
Amortization of acquisition
related intangibles 33,448 34,177 46,074
Stock-based compensation
expense 1,650 1,697 2,384
----- ----- -----
Total cost of revenues 370,946 352,833 382,856
------- ------- -------
Gross profit 266,850 225,586 227,103
------- ------- -------
Research and development 146,526 144,661 155,899
Stock-based compensation
expense 6,536 6,386 7,229
----- ----- -----
Total research and
development 153,062 151,047 163,128
------- ------- -------
Selling, general and
administrative 63,239 66,323 76,211
Amortization of acquisition
related intangibles 9,123 9,123 15,019
Stock-based compensation
expense 5,993 6,729 8,378
----- ----- -----
Total selling, general and
administrative 78,355 82,175 99,608
------ ------ ------
Restructuring of operations
and other items, net 2,286 4,745 16,848
Goodwill and identified
intangible asset
impairment charges - - 541,586
--- --- -------
Income/(loss) from operations 33,147 (12,381) (594,067)
Interest expense (3,932) (3,899) (8,013)
Interest income and other,
net 4,530 3,535 5,231
----- ----- -----
Income/(loss) before
income taxes 33,745 (12,745) (596,849)
(Benefit)/provision for
income taxes (31,081) (65,230) 9,500
------- ------- -----
Net income/(loss) $64,826 $52,485 $(606,349)
------- ------- ---------
Net income/(loss) per share:
Basic $0.10 $0.08 $(0.94)
----- ----- ------
Diluted $0.10 $0.08 $(0.94)
----- ----- ------
Shares used in computing
per share amounts:
Basic 654,560 651,865 646,315
------- ------- -------
Diluted 663,237 658,963 646,315
------- ------- -------
Year Ended
----------
December 31, December 31,
2009 2008
---- ----
Revenues $2,219,159 $2,677,077
Cost of revenues 1,228,776 1,420,905
Purchase accounting effect on
inventory 4,498 -
Amortization of acquisition
related intangibles 135,102 177,934
Stock-based compensation expense 7,382 9,269
----- -----
Total cost of revenues 1,375,758 1,608,108
--------- ---------
Gross profit 843,401 1,068,969
--------- ---------
Research and development 580,333 643,297
Stock-based compensation
expense 27,979 29,214
------ ------
Total research and
development 608,312 672,511
------- -------
Selling, general and
administrative 260,900 315,112
Amortization of acquisition
related intangibles 36,492 57,963
Stock-based compensation
expense 28,622 33,800
------ ------
Total selling, general and
administrative 326,014 406,875
------- -------
Restructuring of operations
and other items, net 38,246 43,717
Goodwill and identified
intangible asset impairment
charges - 541,586
--- -------
Income/(loss) from operations (129,171) (595,720)
Interest expense (21,931) (34,943)
Interest income and other,
net 20,272 36,110
------ ------
Income/(loss) before income
taxes (130,830) (594,553)
(Benefit)/provision for
income taxes (83,111) 27,700
------- ------
Net income/(loss) $(47,719) $(622,253)
-------- ---------
Net income/(loss) per share:
Basic $(0.07) $(0.96)
------ ------
Diluted $(0.07) $(0.96)
------ ------
Shares used in computing per
share amounts:
Basic 651,238 647,953
------- -------
Diluted 651,238 647,953
------- -------
A reconciliation of net income/(loss) on the GAAP basis to non-GAAP
net income is included below.
Reconciliation of
GAAP net income/ Three Months Ended
(loss) to ------------------
non-GAAP net December 31, October 4, December 31,
income: 2009 2009 2008
------------ ---- ---- ----
GAAP net income/
(loss) $64,826 $52,485 $(606,349)
------- ------- ---------
Special items:
a) Stock-based compensation
expense - cost
of revenues 1,650 1,697 2,384
b) Stock-based compensation
expense - R&D 6,536 6,386 7,229
c) Stock-based
compensation
expense - SG&A 5,993 6,729 8,378
d) Amortization
of acquisition
related intangibles -
cost of revenues 33,448 34,177 46,074
e) Amortization
of acquisition related
intangibles - SG&A 9,123 9,123 15,019
f) Purchase
accounting effect
on inventory 56 1,892 -
g) Restructuring
of operations and
other items, net 2,286 4,745 16,848
h) Goodwill and
identified intangible asset
impairment charges - - 541,586
i) Write-down of debt and
equity securities - 1,650 10,773
j) Gain on repurchase of
convertible subordinated
notes - - (3,178)
k) Income tax effect of above
items - - 2,529
--- --- -----
Total special items 59,092 66,399 647,642
------ ------ -------
Non-GAAP net income $123,918 $118,884 $41,293
-------- -------- -------
Non-GAAP net income per share:
Basic $0.19 $0.18 $0.06
----- ----- -----
Diluted * $0.18 $0.18 $0.06
----- ----- -----
Shares used in computing
non-GAAP per share amounts:
Basic 654,560 651,865 646,315
------- ------- -------
Diluted 689,317 685,043 646,512
------- ------- -------
Year Ended
----------
Reconciliation of GAAP net income/
(loss) to December 31, December 31,
non-GAAP net income: 2009 2008
-------------------- ---- ----
GAAP net income/(loss) $(47,719) $(622,253)
-------- ---------
Special items:
a) Stock-based compensation expense - cost
of revenues 7,382 9,269
b) Stock-based compensation expense - R&D 27,979 29,214
c) Stock-based compensation expense - SG&A 28,622 33,800
d) Amortization of acquisition related
intangibles - cost of revenues 135,102 177,934
e) Amortization of acquisition related
intangibles - SG&A 36,492 57,963
f) Purchase accounting effect on inventory 4,498 -
g) Restructuring of operations and
other items, net 38,246 43,717
h) Goodwill and identified intangible
asset impairment charges - 541,586
i) Write-down of debt and equity securities 1,650 15,273
j) Gain on repurchase of convertible
subordinated notes - (3,178)
k) Income tax effect of above items - (292)
--- ----
Total special items 279,971 905,286
------- -------
Non-GAAP net income $232,252 $283,033
-------- --------
Non-GAAP net income per share:
Basic $0.36 $0.44
----- -----
Diluted * $0.35 $0.44
----- -----
Shares used in computing non-GAAP
per share amounts:
Basic 651,238 647,953
------- -------
Diluted 658,679 649,176
------- -------
* In computing non-GAAP diluted earnings per share for three months
ended December 31 and October 4, 2009, 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
to non-GAAP shares
used in the Three Months Ended
calculation ------------------
of diluted per share December 31, October 4, December 31,
amounts: 2009 2009 2008
-------------------- ---- ---- ----
Diluted shares used in
per-share computation
- GAAP 663,237 658,963 646,315
Dilutive stock awards - - 197
Effect of $350 million
convertible notes
considered dilutive 26,080 26,080 -
------ ------ ---
Diluted shares used in
per-share computation
- non-GAAP 689,317 685,043 646,512
------- ------- -------
Reconciliation of
GAAP to non-GAAP
shares used in the Year Ended
calculation ----------
of diluted per share December 31, December 31,
amounts: 2009 2008
-------------------- ---- ----
Diluted shares used
in per-share
computation - GAAP 651,238 647,953
Dilutive stock awards 7,441 1,223
Effect of $350
million convertible
notes considered
dilutive - -
--- ---
Diluted shares used
in per-share
computation - non-
GAAP 658,679 649,176
------- -------
LSI CORPORATION
Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
------------------
December 31, October 4, December 31,
2009 2009 2008
---- ---- ----
Operating activities:
Net income/(loss) $64,826 $52,485 $(606,349)
Adjustments:
Depreciation and amortization * 69,244 67,600 84,278
Stock-based compensation
expense 14,179 14,812 17,991
Non-cash restructuring of
operations and other items, net - 699 (1,052)
Goodwill and identified
intangible asset impairment
charges - - 541,586
Gain on redemption/repurchase
of convertible subordinated
notes - - (3,178)
Write-down of debt and equity
securities, net of gain on sale
of equity securities - 1,529 10,773
Loss/(gain) on sale of property
and equipment 75 (337) (137)
Non-cash foreign exchange loss 986 8,431 18,481
Deferred taxes 3,316 (242) 5,630
Changes in assets and
liabilities, net of assets
acquired and liabilities
assumed in business
combinations:
Accounts receivable, net (31,769) (39,271) 97,149
Inventories (13,814) 4,824 (10,577)
Prepaid expenses and other
assets 20,197 4,814 42,832
Accounts payable 15,001 46,807 (37,806)
Accrued and other liabilities (65,490) (93,493) (61,434)
------- ------- -------
Net cash provided by operating
activities 76,751 68,658 98,187
------ ------ ------
Investing activities:
Purchases of debt securities
available-for-sale - - (31,947)
Proceeds from maturities and
sales of debt securities
available-for-sale 12,932 13,695 108,438
Purchases of equity securities (4,625) (4,534) -
Proceeds from sales of equity
securities 165
Purchases of property, equipment
and software (21,266) (20,137) (39,584)
Proceeds from sale of property
and equipment 24 2,637 2,274
Acquisition of business and
companies, net of cash acquired - (26,141) -
Decrease/(increase) in non-
current assets and deposits - - -
Proceeds from maturity of notes
receivable associated with sale
of semiconductor operations in
Thailand - 10,000 20,000
Proceeds received from the
resolution of a pre-
acquisition income tax
contingency - - -
------- ------- ------
Net cash (used in)/provided by
investing activities (12,935) (24,315) 59,181
------- ------- ------
Financing activities:
Redemption/repurchase of
convertible subordinated notes - - (116,636)
Issuance of common stock 8,707 3,367 6,558
Purchase of minority interest in
subsidiary (70)
Purchase of common stock under
repurchase programs - - -
--- --- ---
Net cash provided by/(used in)
financing activities 8,707 3,367 (110,148)
----- ----- --------
Effect of exchange rate changes
on cash and cash equivalents 383 2,721 (2,829)
--- ----- ------
Increase/(decrease) in cash and
cash equivalents 72,906 50,431 44,391
Cash and cash equivalents at
beginning of period 705,385 654,954 784,910
------- ------- -------
Cash and cash equivalents at end
of period $778,291 $705,385 $829,301
======== ======== ========
Year Ended
----------
December 31, December 31,
2009 2008
---- ----
Operating activities:
Net income/(loss) $(47,719) $(622,253)
Adjustments:
Depreciation and amortization* 268,162 324,223
Stock-based compensation expense 63,983 72,283
Non-cash restructuring of operations and
other items, net 690 (4,215)
Goodwill and identified intangible asset
impairment charges - 541,586
Gain on redemption/repurchase of convertible
subordinated notes (149) (3,178)
Write-down of debt and equity securities, net of
gain on sale of equity securities 1,529 15,273
Loss/(gain) on sale of property and equipment (145) (123)
Non-cash foreign exchange loss 1,301 25,469
Deferred taxes 3,063 10,027
Changes in assets and liabilities, net of assets
acquired and liabilities assumed in
business combinations:
Accounts receivable, net (34,986) 102,386
Inventories 64,592 20,307
Prepaid expenses and other assets 68,469 52,024
Accounts payable 8,420 (130,129)
Accrued and other liabilities (192,736) (125,628)
-------- --------
Net cash provided by operating activities 204,474 278,052
------- -------
Investing activities:
Purchases of debt securities available-for-sale (10) (190,548)
Proceeds from maturities and sales of
debt securities available-for-sale 90,572 240,157
Purchases of equity securities (14,159) (8,500)
Proceeds from sales of equity securities 165 -
Purchases of property, equipment and software (90,004) (134,589)
Proceeds from sale of property and equipment 2,773 13,674
Acquisition of business and companies, net
of cash acquired (46,981) (95,137)
Decrease/(increase) in non-current assets
and deposits 13,501 (13,300)
Proceeds from maturity of notes receivable
associated with sale of semiconductor
operations in Thailand 10,000 20,000
Proceeds received from the resolution of a
pre-acquisition income tax contingency - 4,821
------- --------
Net cash (used in)/provided by investing
activities (34,143) (163,422)
------- --------
Financing activities:
Redemption/repurchase of convertible
subordinated notes (244,047) (116,636)
Issuance of common stock 18,747 42,928
Purchase of minority interest in subsidiary - (70)
Purchase of common stock under
repurchase programs - (229,231)
--- --------
Net cash provided by/(used in)
financing activities (225,300) (303,009)
-------- --------
Effect of exchange rate
changes on cash and cash equivalents 3,959 (3,889)
----- ------
Increase/(decrease) in cash and cash equivalents (51,010) (192,268)
Cash and cash equivalents at beginning of period 829,301 1,021,569
------- ---------
Cash and cash equivalents at end of period $778,291 $829,301
======== ========
* 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
------------------
December 31, October 4, December 31,
2009 2009 2008
---- ---- ----
Semiconductor revenues $380.8 $371.8 $373.8
Storage Systems revenues $257.0 $206.6 $236.2
Total revenues $637.8 $578.4 $610.0
Percentage change in
revenues-qtr./qtr. ( a ) 10.3% 11.1% -14.6%
Percentage change in
revenues-yr./yr. ( b ) 4.6% -19.0% -17.7%
Days sales outstanding 48 48 45
Days of inventory 41 40 52
Current ratio 1.9 1.8 2.3
Quick ratio 1.5 1.5 1.8
Gross margin as a
percentage of revenues 41.8% 39.0% 37.2%
R&D as a percentage of
revenues 24.0% 26.1% 26.7%
SG&A as a percentage of
revenues 12.3% 14.2% 16.3%
Employees ( c ) 5,397 5,318 5,488
Revenues per employee (in
thousands) ( d ) $472.7 $435.1 $444.6
Selected Cash Flow
Information:
------------------
Purchases of property and
equipment ( e ) $14.1 $11.4 $17.1
Depreciation and
amortization ( f ) $26.2 $23.9 $23.1
( 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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