LSI Life Storage Inc

MILPITAS, Calif., April 29 /PRNewswire-FirstCall/ -- LSI Corporation (NYSE:LSI) today reported results for its first quarter ended April 5, 2009. First Quarter News Release Summary -- First quarter 2009 revenues of $482 million -- First quarter 2009 GAAP* net loss of ($0.16) per share -- First quarter 2009 non-GAAP** net loss of ($0.03) per share -- Cash and short-term investments of $1.1 billion Second Quarter 2009 Business Outlook -- Projected revenues of $470 million to $530 million -- GAAP* net loss in the range of ($0.09) to ($0.19) per share -- Non-GAAP** net income (loss) in the range of $0.01 to ($0.06) per share * Generally Accepted Accounting Principles. ** Excludes goodwill and other intangible asset impairment charges, stock- based compensation, amortization of acquisition-related intangibles, restructuring of operations and other items, net, loss on write-down of debt/equity securities, gain on repurchase of convertible subordinated notes and acquired in-process research and development. It also excludes the income tax effect associated with the above mentioned items. First quarter 2009 revenues were $482 million, a 27% decrease year-over-year compared to $661 million reported in the first quarter of 2008, and down 21% sequentially compared to $610 million reported in the fourth quarter of 2008. First quarter 2009 GAAP* net loss was $104 million or 16 cents per share, compared to first quarter 2008 GAAP net loss of $14 million or 2 cents per share. First quarter 2009 GAAP results compare to fourth quarter 2008 GAAP net loss of $606 million or 94 cents per share. First quarter 2009 GAAP net loss included a net charge of $86 million from special items, consisting primarily of $42.7 million of amortization of acquisition-related items, $25.2 million in net restructuring and other items and $18 million of stock-based compensation expense. First quarter 2009 non-GAAP** net loss was $18 million or 3 cents per share, compared to first quarter 2008 non-GAAP net income of $64 million or 10 cents per diluted share. Fourth quarter 2008 non-GAAP net income was $41 million or 6 cents per diluted share. Cash and short-term investments totaled approximately $1.1 billion at quarter end. "Despite continued macroeconomic uncertainty, our first quarter revenues were above the midpoint of our guidance range with our storage semiconductor and networking businesses demonstrating strength late in the quarter," said Abhi Talwalkar, LSI president and chief executive officer. "We have also significantly lowered our operating expenses while continuing to invest in key opportunities which position us to grow at above-market rates coming out of the downturn." Bryon Look, LSI CFO and chief administrative officer, said, "Through a combination of effective cost controls and streamlining actions, operating expenses for the quarter came in below our expected range. Inventory levels were also sequentially down and sharply lower on a year-over-year basis, contributing to our continued balance sheet strength." LSI Second Quarter 2009 Business Outlook GAAP* Special Items Non-GAAP** Revenue $470 million to $470 million to $530 million $530 million Gross Margin 33 - 37% $33 to $40 41 - 43% million Operating Expenses $245 million to $32 to $45 $213 million $268 million million to $223 million Net Other Income ($2) million ($2) million Tax Approximately Approximately $6 million $6 million Net (Loss)/ Income Per Share ($0.19) to ($0.10) to ($0.06) to ($0.09) ($0.13) $0.01 Diluted Share Count 650 million 650 million Capital spending is projected to be around $15 million in the second quarter and approximately $50 million in total for 2009. Depreciation and software amortization is projected to be around $20 million in the second quarter and approximately $90 million in total for 2009. 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 2009 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; our ability to successfully transition the operations of Agere Systems to our enterprise resource planning system; 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 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. LSI and the LSI logo design are trademarks or registered trademarks 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) April 5, December 31, March 30, Assets 2009 2008 2008 ------ ---- ---- ---- Current assets: Cash and short-term investments $1,073.8 $1,119.1 $1,236.8 Accounts receivable, net 273.3 304.0 332.1 Inventories 201.2 220.5 258.6 Prepaid expenses and other current assets 136.7 155.9 158.6 ----- ----- ----- Total current assets 1,685.0 1,799.5 1,986.1 Property and equipment, net 226.6 236.0 235.2 Goodwill and other intangible assets, net 1,022.9 1,065.6 1,665.9 Other assets 243.5 243.1 252.5 ----- ----- ----- Total assets $3,178.0 $3,344.2 $4,139.7 -------- -------- -------- Liabilities and Stockholders' Equity ------------------------------------ Current liabilities: Current portion of long-term debt $244.6 $245.1 $- Other current liabilities 490.0 552.4 729.0 ----- ----- ----- Total current liabilities 734.6 797.5 729.0 Long-term debt 350.0 350.0 717.2 Pension, tax and other liabilities 750.8 755.8 407.0 ----- ----- ----- Total liabilities 1,835.4 1,903.3 1,853.2 ------- ------- ------- Minority interest in subsidiary - - 0.3 --- --- --- Stockholders' equity: Common stock and additional paid-in capital 6,088.4 6,065.3 5,959.2 Accumulated deficit (4,464.3) (4,360.8) (3,752.1) Accumulated other comprehensive income/(loss) (281.5) (263.6) 79.1 ------ ------ ---- Total stockholders' equity 1,342.6 1,440.9 2,286.2 ------- ------- ------- Total liabilities and stockholders' equity $3,178.0 $3,344.2 $4,139.7 -------- -------- -------- LSI CORPORATION Consolidated Statements of Operations (GAAP) (In thousands, except per share amounts) (Unaudited) Three Months Ended ------------------ April 5, December 31, March 30, 2009 2008 2008 ---- ---- ---- Revenues $482,279 $609,959 $660,747 Cost of revenues 276,584 334,398 356,878 Amortization of acquisition related intangibles 33,610 46,074 42,255 Stock-based compensation expense 2,013 2,384 2,061 ----- ----- ----- Total cost of revenues 312,207 382,856 401,194 ------- ------- ------- Gross profit 170,072 227,103 259,553 ------- ------- ------- Research and development 147,422 155,899 161,894 Stock-based compensation expense 7,862 7,229 7,823 ----- ----- ----- Total research and development 155,284 163,128 169,717 ------- ------- ------- Selling, general and administrative 66,519 76,211 77,708 Amortization of acquisition related intangibles 9,123 15,019 13,434 Stock-based compensation expense 8,115 8,378 7,911 ----- ----- ----- Total selling, general and administrative 83,757 99,608 99,053 ------ ------ ------ Restructuring of operations and other items, net 25,205 16,848 4,564 Goodwill and intangible asset impairment charges - 541,586 - --- ------- --- Loss from operations (94,174) (594,067) (13,781) Interest expense (7,236) (8,013) (8,978) Interest income and other, net 5,863 5,231 14,631 ----- ----- ------ Loss before income taxes (95,547) (596,849) (8,128) Provision for income taxes 8,000 9,500 5,500 ----- ----- ----- Net loss $(103,547) $(606,349) $(13,628) --------- --------- -------- Net loss per share: Basic $(0.16) $(0.94) $(0.02) ------ ------ ------ Diluted $(0.16) $(0.94) $(0.02) ------ ------ ------ Shares used in computing per share amounts: Basic 648,459 646,315 661,984 ------- ------- ------- Diluted 648,459 646,315 661,984 ------- ------- ------- A reconciliation of net loss on the GAAP basis to non-GAAP net income or loss is included below. Three Months Ended ------------------ Reconciliation of GAAP net loss April 5, December 31, March 30, to non-GAAP net (loss)/income: 2009 2008 2008 ------------------------------------ ---- ---- ---- GAAP net loss $(103,547) $(606,349) $(13,628) --------- --------- -------- Special items: a) Stock-based compensation expense - cost of revenues 2,013 2,384 2,061 b) Stock-based compensation expense - R&D 7,862 7,229 7,823 c) Stock-based compensation expense - SG&A 8,115 8,378 7,911 d) Amortization of acquisition related intangibles - cost of revenues 33,610 46,074 42,255 e) Amortization of acquisition related intangibles - SG&A 9,123 15,019 13,434 f) Restructuring of operations and other items, net 25,205 16,848 4,564 g) Goodwill and intangible asset impairment charges - 541,586 - h) Write-down of debt and equity securities - 10,773 - i) Gain on repurchase of convertible subordinated notes - (3,178) - j) Income tax effect of above items - 2,529 (94) --- ----- --- Total special items 85,928 647,642 77,954 ------ ------- ------ Non-GAAP net income/(loss) $(17,619) $41,293 $64,326 -------- ------- ------- Non-GAAP net income/(loss) per share: Basic $(0.03) $0.06 $0.10 ------ ----- ----- Diluted $(0.03) $0.06 $0.10 ------ ----- ----- Shares used in computing non- GAAP per share amounts: Basic 648,459 646,315 661,984 ------- ------- ------- Diluted 648,459 646,512 662,485 ------- ------- ------- Three Months Ended ------------------ Reconciliation of GAAP to non-GAAP shares used in the calculation April 5, December 31, March 30, of diluted per share amounts: 2009 2008 2008 --------------------------------- ---- ---- ---- Diluted shares used in per- share computation - GAAP 648,459 646,315 661,984 Dilutive stock awards - 197 501 ------- ------- ------- Diluted shares used in per-share computation - non-GAAP 648,459 646,512 662,485 ------- ------- ------- LSI CORPORATION Consolidated Statement of Cash Flows (In thousands) (Unaudited) Three Months Ended ------------------ April 5, December 31, March 30, 2009 2008 2008 ---- ---- ---- Operating activities: Net loss $(103,547) $(606,349) $(13,628) Adjustments: Depreciation and amortization * 65,079 84,278 78,328 Stock-based compensation expense 17,990 17,991 17,795 Non-cash restructuring and other items (1) (1,052) (3,291) Goodwill and intangible asset impairment charges - 541,586 - Gain on repurchase of convertible subordinated notes - (3,178) - Write-down of debt and equity securities - 10,773 - Loss/(gain) on sale of property and equipment, including assets held-for- sale 100 (137) (12) Non-cash foreign exchange (gain)/loss (12,384) 18,481 12,918 Changes in deferred tax assets and liabilities 73 5,630 2,115 Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combinations: Accounts receivable, net 30,690 97,149 74,272 Inventories 19,340 (10,577) (17,719) Prepaid expenses and other assets 32,443 42,832 (4,317) Accounts payable (63,535) (37,806) (39,432) Accrued and other liabilities 3,905 (61,434) (10,828) ----- ------- ------- Net cash (used in)/provided by operating activities (9,847) 98,187 96,201 ------ ------ ------ Investing activities: Purchases of debt securities available-for- sale (10) (31,947) (44,151) Proceeds from maturities and sales of debt securities available-for- sale 35,882 108,438 50,904 Purchases of equity securities (5,000) - (3,500) Purchases of property, equipment and software (25,463) (39,584) (35,230) Proceeds from sale of property and equipment 7 2,274 6,333 Proceeds from maturity of notes receivable associated with sale of semiconductor operations in Thailand - 20,000 - Proceeds received from the resolution of a pre- acquisition income tax contingency - - 4,821 --- --- ----- Net cash provided by/(used in) investing activities 5,416 59,181 (20,823) ----- ------ ------- Financing activities: Repurchase of convertible subordinated notes - (116,636) - Issuance of common stock 1 6,558 346 Purchase of minority interest in subsidiary - (70) - Purchase of common stock under repurchase programs - - (229,231) --- --- -------- Net cash provided by/(used in) financing activities 1 (110,148) (228,885) --- -------- -------- ------ ------ ----- Effect of exchange rate changes on cash and cash equivalents (2,366) (2,829) 1,816 ------ ------ ----- (Decrease)/increase in cash and cash equivalents (6,796) 44,391 (151,691) Cash and cash equivalents at beginning of period 829,301 784,910 1,021,569 ------- ------- --------- Cash and cash equivalents at end of period $822,505 $829,301 $869,878 ======== ======== ======== * 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 ------------------ April 5, December 31, March 30, 2009 2008 2008 ---- ---- ---- Semiconductor revenues $325.0 $373.8 $458.8 Storage Systems revenues $157.3 $236.2 $201.9 Total revenues $482.3 $610.0 $660.7 Percentage change in revenues-qtr./ qtr. ( a ) -20.9% -14.6% -10.8% Percentage change in revenues-yr./ yr. ( b ) -27.0% -17.7% 42.0% Days sales outstanding 51 45 45 Days of inventory 58 52 58 Current ratio 2.3 2.3 2.7 Quick ratio 1.8 1.8 2.2 Gross margin as a percentage of revenues 35.3% 37.2% 39.3% R&D as a percentage of revenues 32.2% 26.7% 25.7% SG&A as a percentage of revenues 17.4% 16.3% 15.0% Employees ( c ) 5,310 5,488 5,351 Revenues per employee (in thousands) ( d ) $363.3 $444.6 $493.9 Selected Cash Flow Information: ------------------------------- Purchases of property and equipment ( e ) $10.2 $17.1 $21.1 Depreciation and amortization ( f ) $22.5 $23.1 $21.9 ( a ) Represents sequential quarterly change in revenues. ( b ) Represents 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. 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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