LSI CORP 
By SAN JOSE, Calif., April 23, 2014 /PRNewswire/ -- LSI Corporation (NASDAQ: LSI) today reported results for its first quarter ended March 30, 2014.
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On December 15, 2013, LSI entered into a definitive agreement with Avago Technologies Limited (NASDAQ: AVGO) under which Avago has agreed to acquire LSI for $11.15 per share in an all-cash transaction valued at approximately $6.6 billion. In anticipation of this transaction, which is expected to close in early May, LSI will not issue financial guidance for the upcoming quarter or conduct a first quarter results conference call. LSI has also discontinued its quarterly dividend and stock repurchases.
First Quarter 2014 Financial Highlights
-- First quarter 2014 revenues of $569 million
-- First quarter 2014 GAAP* net income of $0.06 per diluted share
-- First quarter 2014 non-GAAP** net income of $0.17 per diluted share
-- First quarter 2014 operating cash flows of $43 million
-- First quarter 2014 operating expenses of $266 million on a GAAP basis
and $223 million on a non-GAAP basis
First quarter 2014 revenues were $569 million, compared to $569 million in the first quarter of 2013 and $605 million in the fourth quarter of 2013.
First quarter 2014 GAAP net income was $33 million or $0.06 per diluted share, compared to first quarter 2013 GAAP net income of $18 million or $0.03 per diluted share. Fourth quarter 2013 GAAP net income was $45 million or $0.08 per diluted share.
First quarter 2014 GAAP net income included a net charge of $66.5 million from special items, consisting primarily of approximately $30 million of amortization of acquisition-related items, $21 million of stock-based compensation expense, and $15.5 million of net restructuring and other items, including merger-related costs.
First quarter 2014 non-GAAP net income was $100 million or $0.17 per diluted share, compared to first quarter 2013 non-GAAP net income of $94 million or $0.17 per diluted share. Fourth quarter 2013 non-GAAP net income was $113 million or $0.20 per diluted share.
Cash and short-term investments totaled approximately $883 million at quarter end. LSI did not repurchase any shares in the first quarter.
* 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.
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: the risk that the conditions to the closing of the merger of LSI and a subsidiary of Avago are not satisfied; litigation relating to the merger; uncertainties as to the ability of each of LSI and Avago to consummate the merger; risks that the proposed transaction disrupts the current plans and operations of LSI; the ability of LSI to retain and hire key personnel; competitive responses to the proposed merger; unexpected costs, charges or expenses resulting from the merger; the failure by Avago to obtain the necessary debt financing arrangements set forth in the commitment letters received in connection with the merger; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the merger; legislative, regulatory and economic developments; our ability to achieve anticipated synergies and to develop integrated new products following our acquisition of SandForce; 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 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 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 (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)
March 30, December 31, March 31,
Assets 2014 2013 2013
---- ---- ----
Current assets:
Cash and short-term
investments $883.3 $809.8 $658.5
Accounts receivable, net 251.2 270.8 223.2
Inventories 161.9 156.3 181.1
Prepaid expenses and other
current assets 85.1 71.7 70.0
---- ---- ----
Total current assets 1,381.5 1,308.6 1,132.8
Property and equipment, net 298.6 302.3 278.0
Goodwill and identified
intangible assets, net 592.5 622.6 711.5
Other assets 126.9 128.2 118.6
----- ----- -----
Total assets $2,399.5 $2,361.7 $2,240.9
-------- -------- --------
Liabilities and Stockholders'
Equity
Current liabilities $453.9 $483.0 $441.5
Pension, tax and other
liabilities 421.1 443.0 658.4
----- ----- -----
Total liabilities 875.0 926.0 1,099.9
----- ----- -------
Stockholders' equity:
Common stock and additional
paid-in capital 5,626.5 5,576.0 5,535.9
Accumulated deficit (3,715.8) (3,749.0) (3,822.4)
Accumulated other comprehensive
loss (386.2) (391.3) (572.5)
------ ------ ------
Total stockholders' equity 1,524.5 1,435.7 1,141.0
------- ------- -------
Total liabilities and
stockholders' equity $2,399.5 $2,361.7 $2,240.9
-------- -------- --------
LSI CORPORATION
Consolidated Statements of Operations (GAAP)
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
------------------
March 30, December 31, March 31,
2014 2013 2013
---- ---- ----
Revenues $569,066 $605,067 $568,636
Cost of revenues 254,618 272,284 256,511
Amortization of
acquisition-related
intangibles 20,865 19,746 19,746
Stock-based
compensation expense 2,458 2,203 2,875
----- ----- -----
Total cost of revenues 277,941 294,233 279,132
------- ------- -------
Gross profit 291,125 310,834 289,504
------- ------- -------
Research and
development 163,818 162,691 158,896
Stock-based
compensation expense 10,295 9,628 12,409
------ ----- ------
Total research and
development 174,113 172,319 171,305
------- ------- -------
Selling, general and
administrative 58,736 62,437 69,350
Amortization of
acquisition-related
intangibles 9,200 9,883 9,883
Stock-based
compensation expense 8,232 8,757 10,262
----- ----- ------
Total selling, general
and administrative 76,168 81,077 89,495
------ ------ ------
Restructuring of
operations and other
items, net 15,473 17,405 20,452
------ ------ ------
Income from operations 25,371 40,033 8,252
Interest income and
other, net 2,669 2,746 7,880
----- ----- -----
Income before income
taxes 28,040 42,779 16,132
Benefit from income
taxes (5,193) (2,264) (2,300)
------ ------ ------
Net income $33,233 $45,043 $18,432
------- ------- -------
Net income per share:
Basic $0.06 $0.08 $0.03
----- ----- -----
Diluted $0.06 $0.08 $0.03
----- ----- -----
Shares used in computing per share amounts:
Basic 558,490 547,347 550,227
------- ------- -------
Diluted 588,455 570,206 567,092
------- ------- -------
Reconciliations of certain GAAP measures to non-GAAP measures are
included below.
Three Months Ended
------------------
March 30, December 31, March 31,
Reconciliation of GAAP
net income to non-
GAAP net income: 2014 2013 2013
---------------------- ---- ---- ----
GAAP net income $33,233 $45,043 $18,432
------- ------- -------
Special items:
a) Stock-based
compensation expense -
cost of revenues 2,458 2,203 2,875
b) Stock-based
compensation expense -
R&D 10,295 9,628 12,409
c) Stock-based
compensation expense -
SG&A 8,232 8,757 10,262
d) Amortization of
acquisition-related
intangibles - cost of
revenues 20,865 19,746 19,746
e) Amortization of
acquisition-related
intangibles - SG&A 9,200 9,883 9,883
f) Restructuring of
operations and other
items, net 15,473 17,405 20,452
------ ------ ------
Total special items 66,523 67,622 75,627
------ ------ ------
Non-GAAP net income $99,756 $112,665 $94,059
------- -------- -------
Non-GAAP income per share:
Basic $0.18 $0.21 $0.17
----- ----- -----
Diluted $0.17 $0.20 $0.17
----- ----- -----
Shares used in computing non-GAAP per share amounts:
Basic 558,490 547,347 550,227
------- ------- -------
Diluted 588,455 570,206 567,092
------- ------- -------
Reconciliation of GAAP operating expenses to non-GAAP
operating expenses:
-----------------------------------------------------
Operating expenses-
GAAP $265,754 $270,801 $281,252
-------- -------- --------
Special items:
a) Stock-based
compensation expense -
R&D 10,295 9,628 12,409
b) Stock-based
compensation expense -
SG&A 8,232 8,757 10,262
c) Amortization of
acquisition-related
intangibles - SG&A 9,200 9,883 9,883
d) Restructuring of
operations and other
items, net 15,473 17,405 20,452
------ ------ ------
Operating expenses-
Non-GAAP $222,554 $225,128 $228,246
-------- -------- --------
LSI CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
------------------
March 30, December 31, March 31,
2014 2013 2013
---- ---- ----
Operating activities:
Net income $33,233 $45,043 $18,432
Adjustments:
Depreciation and
amortization 45,929 45,111 44,285
Stock-based compensation
expense 20,985 20,588 25,546
Non-cash restructuring of
operations and other
items, net 434 247 6,596
Gain on sale of property
and equipment - - (4)
Unrealized foreign exchange
loss 494 425 589
Deferred taxes (51) 22,783 (26)
Changes in assets and liabilities, net of assets
acquired and liabilities assumed in business
combination:
Accounts receivable 19,626 21,718 40,652
Inventories (5,616) 13,837 25,123
Prepaid expenses, assets
held for sale and other
assets (32,903) (13,956) (7,955)
Accounts payable 7,936 5,980 (33,054)
Accrued and other
liabilities (47,054) (27,560) (57,354)
Net cash provided by
operating activities 43,013 134,216 62,830
------ ------- ------
Investing activities:
Purchases of debt
securities available-for-
sale (26) (43,300) (53,345)
Proceeds from maturities
and sales of debt
securities available-for-
sale 25,601 40,732 24,117
Purchases of other
investments (232) (800) (750)
Purchases of property and
equipment (20,527) (21,521) (25,075)
Proceeds from sale of
property and equipment 12 155 27
Net cash provided by/(used
in) investing activities 4,828 (24,734) (55,026)
----- ------- -------
Financing activities:
Issuance of common stock 51,965 52,798 8,165
Payment of dividends to
stockholders - (16,478) -
Purchases of common stock
under repurchase program - - (60,765)
Net cash provided by/(used
in) financing activities 51,965 36,320 (52,600)
------ ------ -------
Effect of exchange rate
changes on cash and cash
equivalents 14 715 (1,507)
--- --- ------
Net change in cash and cash
equivalents 99,820 146,517 (46,303)
Cash and cash equivalents
at beginning of period 542,768 396,251 471,528
------- ------- -------
Cash and cash equivalents
at end of period $642,588 $542,768 $425,225
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SOURCE LSI Corporation
