- Current report filing (8-K)
October 22 2008 - 4:48PM
Edgar (US Regulatory)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
October 22, 2008
LSI CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE
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1-10317
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94-2712976
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(State or other jurisdiction of
incorporation)
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(Commission File Number)
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(IRS Employer Identification
No.)
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1621 Barber Lane
Milpitas, California 95035
(Address of principal executive offices, including zip code)
(408) 433-8000
(Registrants telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 2.02 Results of Operation and Financial Condition.
On October 22, 2008, LSI Corporation issued a news release regarding its financial results for the
quarter ended September 28, 2008. A copy of the news release is furnished as Exhibit 99.1 to this
Form 8-K and is incorporated by reference herein.
The news release contains non-GAAP financial information. Management believes that the presentation
of non-GAAP net income (loss), non-GAAP gross margin, non-GAAP operating expenses, non-GAAP taxes,
and non-GAAP net income (loss) per basic and diluted share provides important supplemental
information to management and investors about financial and business trends relating to the
companys financial condition and results of operations. Management believes that the use of these
non-GAAP financial measures provides consistency and comparability with our past financial reports.
Management has historically used these non-GAAP measures when evaluating operating performance
because we believe that the inclusion or exclusion of the items described below provides an
additional measure of our core operating results and facilitates comparisons of our core operating
performance against prior periods and our business model objectives. We have chosen to provide this
information to investors to enable them to perform additional analyses of past, present and future
operating performance and as a supplemental means to evaluate our ongoing core operations.
Externally, we believe that these non-GAAP measures continue to be useful to investors in their
assessment of our operating performance and their valuation of the company.
Internally, these non-GAAP measures are significant measures used by management for purposes of:
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evaluating the core operating performance of the company;
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establishing internal budgets;
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calculating return on investment for development programs and growth initiatives;
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comparing performance with internal forecasts and targeted business models;
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strategic planning;
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evaluating and valuing potential acquisition candidates and how their operations
compare to the companys operations; and
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benchmarking performance externally against our competitors.
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The news release also presents information about our revenues for the third quarter of 2007,
excluding revenues from the Mobility business that we sold in late October 2007 and the Consumer
business that we sold in late July 2007. We believe that the presentation of revenues computed on
this basis may be useful to investors as it enables them to compare the revenue performance of the
businesses that we currently operate.
How we calculate our non-GAAP financial measures
Non-GAAP net income (loss), non-GAAP gross margin, non-GAAP operating expenses, non-GAAP taxes and
non-GAAP net income (loss) per basic and diluted share are important to the company for the reasons
noted above and exclude the following items:
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Stock-based compensation.
Stock-based compensation relates primarily
to LSI stock awards such as stock options and restricted stock units.
Stock-based compensation is a non-cash expense that varies in amount
from period to period and is dependent on market forces that are
difficult to predict. As a result of this unpredictability, management
excludes this item from its internal operating forecasts and models.
Management believes that non-GAAP measures adjusted for stock-based
compensation provide investors with a basis to measure the companys
core performance against the performance of other companies without
the variability created by stock-based compensation.
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Purchase accounting effect on inventory.
This is an
acquisition-related charge. It results from marking to fair value an
acquired companys inventory at the time of acquisition. This charge
is not factored into managements evaluation of potential acquisitions
or our performance after completion of acquisitions, because it is not
related to our core operating performance, and the frequency and
amount of this type of charge vary significantly based on the size and
timing of our acquisitions. Excluding this data provides investors
with a basis to compare the company against the performance of other
companies without this variability.
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Amortization of acquisition-related intangibles and acquired
in-process research and development.
These are acquisition-related
charges. Amortization of acquisition-related intangibles relates to
purchased technology in acquisitions such as existing technology,
patents and trademarks. In-process research and development relates to
projects in process as of the acquisition date that have not reached
technological feasibility and are immediately expensed. These charges
are not factored into managements evaluation of potential
acquisitions, or our performance after completion of acquisitions,
because they are not related to our core operating performance, and
the frequency and amount of these types of charges vary significantly
based on the size and timing of our acquisitions and the maturities of
the businesses being acquired. Excluding this data provides investors
with a basis to compare the company against the performance of other
companies without this variability.
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Restructuring of operations and other items, net.
This represents
charges/losses and gains that are not directly related to the
companys ongoing or core business results. Management regularly
excludes such items from internal operating forecasts and models
because they are not considered a core operating activity for the
company and because the frequency and variability in the nature of the
charges can vary significantly from period to period. Excluding this
data provides investors with a basis to compare the company against
the performance of other companies without this variability.
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Goodwill impairment charge.
This item reflects the write down of
goodwill to its fair value. Because of the infrequent nature of this
type of charge, management does not include this item in internal
operating forecasts and models. Excluding this data provides investors
with a basis to compare the companys core operating results in
different periods without this variability.
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Other charges and gains.
Other charges and gains consist of gains or
losses on equity investments and certain non-operating gains and
losses that occur on an infrequent basis and vary greatly in amount.
We do not regularly trade public equity securities nor do we typically
use these securities to fund our ongoing operations. Management
excludes these items because they do not affect our core operations.
Excluding this data provides investors with a basis to compare the
company against the performance of other companies without this
variability.
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Non-GAAP income tax expense/benefit.
This item represents the
additional amount of tax expense or benefit that the company would
accrue if it used non-GAAP results instead of GAAP results in the
calculation of its tax liability.
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We use non-GAAP net income computed as described above as the numerator in the calculation of
non-GAAP net income per basic and diluted share. We calculate the basic and diluted share amounts
used in the denominator in accordance with GAAP rules, using non-GAAP net income rather than GAAP
net income.
Limitations of relying on non-GAAP financial measures
Some of the limitations of relying on non-GAAP financial measures include:
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Stock-based compensation.
LSIs stock-based incentive plans are
important components of our employee incentive compensation
arrangements and are reflected in our GAAP results under Statement of
Financial Accounting Standards No. 123 (revised 2004), Share-Based
Payment. Stock-based compensation should be considered for a complete
view of the costs of our compensation arrangements.
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Purchase accounting effect on inventory.
Acquisitions have been an
important part of our business strategy and the corresponding
acquisition-related charges reflect the costs of choosing acquisitions
as a form of growth strategy.
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Amortization of acquisition-related intangibles and acquired
in-process research and development.
Acquisitions have been an
important part of our business strategy and the corresponding
acquisition-related charges reflect the costs of choosing acquisitions
as a form of growth strategy.
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Restructuring of operations and other items, net.
This item reflects
charges for severance, exit costs associated with leased facilities,
asset impairment charges and gains on sales of assets that are no
longer strategic. While no longer strategic to the future of the
company, such items reflect the costs of decisions made as part of
running a business and are critical to a complete view of our
historical results.
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Goodwill impairment charge.
This amount should be included for a
complete view of our historical performance including the impact of
declines of the value of our assets.
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Other charges and gains.
These amounts should be included for a
complete view of our historical performance even though they are not
related to our core operations.
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Non-GAAP income tax expense/benefit.
This item represents the
additional amount of tax expense or benefit that the company would
accrue if it used non-GAAP results instead of GAAP results in the
calculation of its tax liability. The limitation in it is that it does
not include the effect of all the items excluded from the non-GAAP
financial statements.
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Revenues excluding revenues from businesses sold.
Revenues from
businesses sold should be included in revenues for a complete view of
our historical performance even though we no longer own those
businesses.
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All supplemental non-GAAP financial measures should be read in conjunction with the comparable
information presented in accordance with generally accepted accounting principles in the United
States of America.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit No.
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Description
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99.1
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News Release issued October 22, 2008.*
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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LSI CORPORATION
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By:
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/s/ Bryon Look
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Bryon Look
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Executive Vice President and Chief Financial Officer
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Date: October 22, 2008
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EXHIBIT INDEX
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Exhibit No.
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Description
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99.1
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News Release issued October 22, 2008.*
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