SAN JOSE, Calif., Oct. 23, 2013 /PRNewswire/ --LSI Corporation (NASDAQ: LSI) today reported results for its third quarter ended September 29, 2013.
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Third Quarter 2013 Highlights
-- Third quarter 2013 revenues of $607 million -- Third quarter 2013 GAAP* net income of $0.06 per diluted share -- Third quarter 2013 non-GAAP** net income of $0.17 per diluted share -- Third quarter 2013 operating cash flows of $63 million
Fourth Quarter 2013 Business Outlook
-- Projected revenues of $580 million to $620 million -- GAAP* net income in the range of $0.01 to $0.11 per share -- Non-GAAP** net income in the range of $0.13 to $0.19 per share -- Company to limit operating expenses until business model is attained
* Generally Accepted Accounting Principles. ** Excludes stock-based compensation, amortization of acquisition-related intangibles, purchase accounting effect on inventory, restructuring of operations and other items, net, gain on remeasurement of a pre- acquisition equity interest to fair value, and gain/loss on sale/ write-down of investments. It also excludes the income tax effect associated with the above-mentioned items.
"In a challenging macroeconomic environment we delivered solid third quarter results, with revenues growing sequentially from products for flash and networking as well as hard disk drives," said Abhi Talwalkar, LSI's President and CEO. "While our end markets are mixed, with near-term growth below earlier expectations, our outlook for future growth driven by the massive expansion in data and traffic in datacenters and mobile networks remains intact and we are well positioned to see growth as these markets improve."
Third quarter 2013 revenues were $607 million, in line with guidance, compared to $624 million in the third quarter of 2012, and compared to $590 million in the second quarter of 2013.
Third quarter 2013 GAAP* net income was $37 million or $0.06 per diluted share, compared to third quarter 2012 GAAP net income of $40 million or $0.07 per diluted share. Second quarter 2013 GAAP net income was $25 million or $0.04 per diluted share. Third quarter 2013 GAAP net income included a net charge of $57 million from special items, consisting primarily of approximately $30 million of amortization of acquisition-related items, $20 million of stock-based compensation expense and $7 million of net restructuring and other items.
Third quarter 2013 non-GAAP** net income was $93 million or $0.17 per diluted share, compared to third quarter 2012 non-GAAP net income of $99 million or $0.17 per diluted share. Second quarter 2013 non-GAAP net income was $84 million or $0.15 per diluted share.
Cash and short-term investments totaled approximately $665 million at quarter end. The company completed third-quarter purchases of approximately 5 million shares of its common stock for approximately $41 million.
"In the third quarter we significantly expanded operating margins quarter over quarter and continued to generate strong cash flow," said Bryon Look, LSI's CFO. "Going forward we expect to hold non-GAAP operating expenses flat as we drive to achieve our business model targets."
The company also announced it has declared a quarterly cash dividend of $0.03 per share. This dividend will be paid on December 20, 2013, to stockholders of record as of December 6, 2013.
LSI 4Q2013 Business Outlook
GAAP* Special Items Non-GAAP** ---- ------------- --------- Revenue $580 million to $620 million $580 million to $620 million ------- ---------------------------- ---------------------------- Gross Margin 49% to 53% $17 million to $27 million 53.5% to 55.5% ------------ --------- ---------------------- ------------- Operating Expenses $253 million to $273 million $28 million to $38 million $225 million to $235 million ------------------ ---------------------------- ---------------------- ---------------------------- Net Other Income $1 million $1 million ---------------- ---------- ---------- Tax Approximately $7 million Approximately $7 million --- ------------------------ ------------------------ Net (Loss)/Income Per Share $0.01 to $0.11 ($0.08) to ($0.12) $0.13 to $0.19 --------------------- -------------- ----------------- -------------- Diluted Share Count 565 million 565 million ------------------- ----------- -----------
Capital spending is projected to be around $20 million in the fourth quarter and approximately $85 million in total for 2013.
Depreciation and software amortization is projected to be around $16 million in the fourth quarter and approximately $62 million in total for 2013.
LSI Conference Call Information
LSI will hold a conference call today at 2 p.m. PDT to discuss third quarter 2013 financial results and the fourth quarter 2013 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 ability to achieve anticipated synergies and to develop integrated new products following our acquisition of SandForce; our ability to repurchase our common stock at prices we believe to be advantageous; 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; our ability to generate cash at levels sufficient to pay a dividend; our ability to maintain sufficient surplus out of which we can pay dividends; whether we determine that continuing to pay a dividend is in our stockholders' interest, and general industry and macro-economic 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 (NASDAQ: LSI) designs semiconductors and software that accelerate storage and networking in datacenters, mobile networks and client computing. Our technology is the intelligence critical to enhanced application performance, and is applied in solutions created in collaboration with our partners. More information is available at www.lsi.com.
LSI, the LSI & Design logo and Storage.Networking.Accelerated. are trademarks or registered trademarks of LSI Corporation in the United States and/or other countries.
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) September 29, June 30, December 31, Assets 2013 2013 2012 ---- ---- ---- Current assets: Cash and short-term investments $664.6 $673.4 $676.0 Accounts receivable, net 292.6 242.0 264.1 Inventories 170.1 173.6 206.3 Prepaid expenses and other current assets 66.7 68.6 80.4 ---- ---- ---- Total current assets 1,194.0 1,157.6 1,226.8 Property and equipment, net 286.9 281.5 269.7 Goodwill and identified intangible assets, net 652.2 681.9 741.1 Other assets 118.2 113.6 118.6 ----- ----- ----- Total assets $2,251.3 $2,234.6 $2,356.2 -------- -------- -------- Liabilities and Stockholders' Equity Current liabilities $460.1 $443.8 $516.9 Pension, tax and other liabilities 638.7 650.5 679.6 ----- ----- ----- Total liabilities 1,098.8 1,094.3 1,196.5 ------- ------- ------- Stockholders' equity: Common stock and additional paid- in capital 5,503.8 5,516.8 5,578.8 Accumulated deficit (3,777.5) (3,797.8) (3,840.8) Accumulated other comprehensive loss (573.8) (578.7) (578.3) ------ ------ ------ Total stockholders' equity 1,152.5 1,140.3 1,159.7 ------- ------- ------- Total liabilities and stockholders' equity $2,251.3 $2,234.6 $2,356.2 -------- -------- --------
LSI CORPORATION Consolidated Statements of Operations (GAAP) (In thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended ------------------ ----------------- September 29, June 30, September 30, September 29, September 30, 2013 2013 2012 2013 2012 ---- ---- ---- ---- ---- Revenues $606,943 $589,583 $623,962 $1,765,162 $1,905,959 Cost of revenues 272,458 268,341 287,390 797,310 886,876 Amortization of acquisition-related intangibles 19,746 19,746 21,348 59,238 64,086 Purchase accounting effect on inventory - - - - 14,458 Stock-based compensation expense 2,059 2,237 2,573 7,171 9,088 ----- ----- ----- ----- ----- Total cost of revenues 294,263 290,324 311,311 863,719 974,508 ------- ------- ------- ------- ------- Gross profit 312,680 299,259 312,651 901,443 931,451 ------- ------- ------- ------- ------- Research and development 163,486 166,829 156,318 489,211 477,472 Stock-based compensation expense 8,810 9,619 11,170 30,838 35,451 ----- ----- ------ ------ ------ Total research and development 172,296 176,448 167,488 520,049 512,923 ------- ------- ------- ------- ------- Selling, general and administrative 66,199 67,540 69,722 203,089 206,046 Amortization of acquisition-related intangibles 9,883 9,883 8,667 29,649 26,001 Stock-based compensation expense 9,340 10,009 13,643 29,611 38,999 ----- ------ ------ ------ ------ Total selling, general and administrative 85,422 87,432 92,032 262,349 271,046 ------ ------ ------ ------- ------- Restructuring of operations and other items, net 6,739 7,807 4,221 34,998 26,174 ----- ----- ----- ------ ------ Income from operations 48,223 27,572 48,910 84,047 121,308 Interest income and other, net 836 2,248 5,855 10,964 30,105 --- ----- ----- ------ ------ Income before income taxes 49,059 29,820 54,765 95,011 151,413 Provision for/(benefit from) income taxes 12,500 5,200 15,100 15,400 (22,162) ------ ----- ------ ------ ------- Net income $36,559 $24,620 $39,665 $79,611 $173,575 ------- ------- ------- ------- -------- Net income per share: Basic $0.07 $0.04 $0.07 $0.15 $0.31 ----- ----- ----- ----- ----- Diluted $0.06 $0.04 $0.07 $0.14 $0.30 ----- ----- ----- ----- ----- Shares used in computing per share amounts: Basic 545,451 548,282 555,197 547,978 561,708 ------- ------- ------- ------- ------- Diluted 563,621 561,801 572,022 565,570 582,296 ------- ------- ------- ------- ------- Reconciliations of certain GAAP measures to non-GAAP measures are included below. Three Months Ended Nine Months Ended ------------------ ----------------- September 29, 2013 June 30, 2013 September 30, 2012 September 29, 2013 September 30, 2012 Reconciliation of GAAP net income to non-GAAP net income: -------------------------------------- --- GAAP net income $36,559 $24,620 $39,665 $79,611 $173,575 ------- ------- ------- ------- -------- Special items: a) Stock-based compensation expense - cost of revenues 2,059 2,237 2,573 7,171 9,088 b) Stock-based compensation expense - R&D 8,810 9,619 11,170 30,838 35,451 c) Stock-based compensation expense - SG&A 9,340 10,009 13,643 29,611 38,999 d) Amortization of acquisition-related intangibles - cost of revenues 19,746 19,746 21,348 59,238 64,086 e) Amortization of acquisition-related intangibles - SG&A 9,883 9,883 8,667 29,649 26,001 f) Purchase accounting effect on inventory - - - - 14,458 g) Restructuring of operations and other items, net 6,739 7,807 4,221 34,998 26,174 h) Gain on sale of investments - - (2,550) - (2,550) i) Gain on re- measurement of a pre- acquisition equity interest to fair value - - - - (5,765) j) Income tax effect - - - - (43,198) --- --- --- --- ------- Total special items 56,577 59,301 59,072 191,505 162,744 ------ ------ ------ ------- ------- Non-GAAP net income $93,136 $83,921 $98,737 $271,116 $336,319 ------- ------- ------- -------- -------- Non-GAAP income per share: Basic $0.17 $0.15 $0.18 $0.49 $0.60 ----- ----- ----- ----- ----- Diluted $0.17 $0.15 $0.17 $0.48 $0.58 ----- ----- ----- ----- ----- Shares used in computing non-GAAP per share amounts: Basic 545,451 548,282 555,197 547,978 561,708 ------- ------- ------- ------- ------- Diluted 563,621 561,801 572,022 565,570 582,296 ------- ------- ------- ------- -------
LSI CORPORATION Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three Months Ended Nine Months Ended ------------------ ----------------- September 29, June 30, September 30, September 29, September 30, 2013 2013 2012 2013 2012 ---- ---- ---- ---- ---- Operating activities: Net income $36,559 $24,620 $39,665 $79,611 $173,575 Adjustments: Depreciation and amortization 46,335 45,547 45,671 136,167 136,318 Stock-based compensation expense 20,209 21,865 27,386 67,620 83,538 Non-cash restructuring of operations and other items, net 85 (266) 698 6,415 5,739 Gain on sale of investments - - (2,550) - (2,550) Gain on re- measurement of a pre-acquisition equity interest to fair value - - - - (5,765) (Gain)/loss on sale of property and equipment (54) - 2,644 (58) 2,574 Unrealized foreign exchange (gain)/loss (1,452) (2,843) 2,655 (3,706) (80) Deferred taxes (416) (25) (72) (467) (43,246) Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combination: Accounts receivable (50,605) (18,962) 40,348 (28,915) 931 Inventories 3,436 7,447 (5,091) 36,006 (4,864) Prepaid expenses, assets held for sale and other assets (1,398) (1,162) 1,110 (10,515) (720) Accounts payable (28,186) 22,453 (25,186) (38,787) 4,335 Accrued and other liabilities 38,416 (20,854) (15,471) (39,792) (70,481) Net cash provided by operating activities 62,929 77,820 111,807 203,579 279,304 ------ ------ ------- ------- ------- Investing activities: Purchases of debt securities available-for- sale (45,941) (63,833) (22,087) (163,119) (94,456) Proceeds from maturities and sales of debt securities available-for- sale 42,686 26,900 11,767 93,703 29,523 Purchases of other investments - - - (750) - Proceeds from sale of other investments - - 2,550 - 2,550 Purchases of property and equipment (21,697) (18,282) (25,667) (65,054) (103,285) Proceeds from sale of property and equipment 183 55 1,374 265 1,626 Increase in non- current assets (3,821) - - (3,821) - Acquisition of business, net of cash acquired - - - - (319,231) Net cash used in investing activities (28,590) (55,160) (32,063) (138,776) (483,273) ------- ------- ------- -------- -------- Financing activities: Issuance of common stock 9,416 23,724 8,515 41,305 90,643 Payment of dividends to stockholders (16,311) - - (16,311) - Purchases of common stock under repurchase program (41,207) (61,515) (50,062) (163,487) (226,247) Net cash used in financing activities (48,102) (37,791) (41,547) (138,493) (135,604) ------- ------- ------- -------- -------- Effect of exchange rate changes on cash and cash equivalents 443 (523) 166 (1,587) 269 --- ---- --- ------ --- Net change in cash and cash equivalents (13,320) (15,654) 38,363 (75,277) (339,304) Cash and cash equivalents at beginning of period 409,571 425,225 402,144 471,528 779,811 ------- ------- ------- ------- ------- Cash and cash equivalents at end of period $396,251 $409,571 $440,507 $396,251 $440,507 ======== ======== ======== ======== ========
SOURCE LSI Corporation