First Quarter 2008 Revenues Exceed Guidance MILPITAS, Calif., April
23 /PRNewswire-FirstCall/ -- LSI Corporation (NYSE:LSI) today
reported results for its first quarter ended March 30, 2008. First
Quarter News Release Summary -- First quarter 2008 revenues of $661
million, exceeding guidance -- First quarter 2008 GAAP* net loss of
2 cents per share -- First quarter 2008 non-GAAP** net income of 10
cents per diluted share, exceeding guidance -- First quarter
operating cash flows of $96 million -- Cash and short-term
investments of $1.2 billion Second Quarter 2008 Business Outlook --
Projected revenues of $650 million to $680 million -- GAAP* net
loss in the range of 0 to 8 cents per share -- 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 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 $650 million to $680 to $680 million million Gross Margin
37 - 40% $45 to $55 million 45 - 47% Operating $270 million $35 to
$45 million $235 million to $245 Expenses to $290 million million
Net Other Income $0 million $0 million Tax Approximately
Approximately 8% $8 million Net (Loss)/Income ($0.08) to ($0.12) to
($0.17) $0.08 to $0.12 Per Share ($0.00) 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 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: 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
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. 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) March 30, December 31, April 1, Assets 2008 2007 2007
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) 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 Reconciliation of GAAP net
(loss)/income to Non-GAAP net March 30, December 31, April 1,
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) 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) 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) 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% DATASOURCE:
LSI Corporation CONTACT: Investor Relations, Sujal Shah,
+1-610-712-5471, , or Media Relations, Mitch Seigle,
+1-408-954-3225, , both of LSI Web site: http://www.lsi.com/
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