LSI CORPORATION 
By MILPITAS, Calif., Jan. 25, 2012 /PRNewswire-FirstCall/ -- LSI Corporation (NYSE: LSI) today reported results for its fourth quarter and full year ended December 31, 2011.
Fourth Quarter and Full Year 2011 Highlights
-- Fourth quarter 2011 revenues from continuing operations* of $523 million
-- Fourth quarter 2011 GAAP** income from continuing operations of 2 cents
per diluted share
-- Fourth quarter 2011 non-GAAP*** income from continuing operations of 13
cents per diluted share
-- Fourth quarter operating cash flows of $55 million
-- Full-year 2011 revenues of $2.04 billion, up 9.3% year-over-year
First Quarter 2012 Business Outlook
-- Projected revenues from continuing operations* of $550 million to $590
million
-- GAAP** (loss)/income from continuing operations in the range of ($0.07)
to $0.03 per share
-- Non-GAAP*** income from continuing operations in the range of $0.09 to
$0.15 per share
* On May 6, 2011, LSI completed the sale of its external storage systems business. The financial results of the external storage systems business have been classified as discontinued operations in LSI's financial statements. Our ongoing business is referred to as "continuing operations."
** Generally Accepted Accounting Principles.
*** Excludes goodwill and other intangible asset impairment, stock-based compensation, amortization of acquisition-related intangibles, purchase accounting effect on inventory, restructuring of operations and other items, net, and gain/loss on sale/write-down of investments. It also excludes the income tax effect associated with the above-mentioned items. It also excludes, in the case of non-GAAP net income, gain from the sale of the external storage systems business.
"Our growth last year in a challenging macro environment and our guidance for the first quarter of 2012 demonstrate the results of our ongoing strategic focus on delivering semiconductors and software that accelerate storage and networking applications," said Abhi Talwalkar, LSI president and CEO. "We enter 2012 building on strong business momentum and are accelerating our revenue growth with share gains and new design wins at key customers and in critical markets such as mega datacenters, cloud computing, mobile networks and flash storage."
Fourth quarter 2011 revenues from continuing operations were $523 million, in line with guidance, compared to $471 million generated from continuing operations in the fourth quarter of 2010, and compared to $547 million generated from continuing operations in the third quarter of 2011.
Fourth quarter 2011 GAAP* income from continuing operations was $11 million or 2 cents per diluted share, compared to fourth quarter 2010 GAAP income from continuing operations of $5 million or 1 cent per diluted share. Third quarter 2011 GAAP income from continuing operations was $32 million or 5 cents per diluted share. Fourth quarter 2011 GAAP income from continuing operations included a net charge of $62 million from special items, consisting primarily of approximately $29 million of amortization of acquisition-related items, $12 million of stock-based compensation expense and $21 million of net restructuring and other items. Fourth quarter 2011 GAAP results from continuing operations also included a $9 million net tax benefit, or 2 cents per diluted share, primarily related to the expiration of statutes of limitations and other non-cash tax items.
Fourth quarter 2011 GAAP net loss was $2 million or 0 cents per diluted share, compared to fourth quarter 2010 GAAP net loss of $13 million or 2 cents per diluted share. Third quarter 2011 GAAP net income was $29 million or 5 cents per diluted share.
Fourth quarter 2011 non-GAAP** income from continuing operations was $73 million or 13 cents per diluted share, compared to fourth quarter 2010 non-GAAP income from continuing operations of $53 million or 8 cents per diluted share. Fourth quarter 2011 non-GAAP results included a $9 million net tax benefit, or 2 cents per diluted share, primarily related to the expiration of statutes of limitations and other non-cash tax items. Third quarter 2011 non-GAAP income from continuing operations was $83 million or 14 cents per diluted share.
Fourth quarter 2011 non-GAAP net income was $60 million or 10 cents per diluted share, compared to fourth quarter 2010 non-GAAP net income of $90 million or 14 cents per diluted share. Third quarter 2011 non-GAAP net income was $83 million or 14 cents per diluted share.
Cash and short-term investments totaled approximately $935 million at quarter end. The company completed fourth-quarter purchases of approximately 5 million shares of its common stock for approximately $27 million. In 2011, the company purchased approximately 72 million shares of its common stock for approximately $499 million under its $750 million share repurchase program.
LSI recorded full-year 2011 revenues from continuing operations of $2.04 billion, a 9.3% increase compared to $1.87 billion in 2010. The company reported 2011 GAAP net income of $331 million or 55 cents per diluted share. Full-year 2011 GAAP results compare to full-year 2010 GAAP net income of $40 million or 6 cents per share.
Full-year 2011 GAAP net income included a net charge of $191 million in special items from continuing operations, consisting primarily of $116 million in amortization of acquisition-related items, $51 million of stock-based compensation expense, and $24 million of restructuring costs and other items. Full-year 2011 GAAP net income also included $241 million of income from discontinued operations, net of taxes, which included a gain of $260 million related to the sale of the external storage systems business.
Non-GAAP net income for 2011 was $303 million or 50 cents per diluted share, compared to 2010 non-GAAP net income of $333 million or 52 cents per diluted share.
Bryon Look, LSI CFO and chief administrative officer, said, "We remain focused on driving improvements to operating margins. The combination of share gains, new product cycles and continued expense control is expected to drive increased profitability levels going forward."
LSI 1Q2012 Business Outlook for Continuing Operations
-----------------------------------------------------
GAAP* Special Items Non-GAAP**
----- ------------- ----------
Revenue $550 million to $590 million $550 million to $590 million
------- ---------------------------- ----------------------------
Gross
Margin 42% - 46% $35 million to $45 million 50% - 52%
------- --------- -------------------------- ---------
Operating
Expenses $250 million to $270 million $35 million to $45 million $215 million to $225 million
--------- ---------------------------- -------------------------- ----------------------------
Net
Other
Income $5 million $5 million
------- ---------- ----------
Approximately $9 Approximately $9
Tax million million
--- ----------------- -----------------
(Loss)/Income
from
Continuing
Operations
Per
Share ($0.07) to $0.03 ($0.12) to ($0.16) $0.09 to $0.15
------------- ---------------- ------------------ --------------
Diluted
Share
Count 575 million 575 million
------- ----------- -----------
Capital spending is projected to be around $20 million in the first quarter and approximately $65 million in total for 2012.
Depreciation and software amortization is projected to be around $18 million in the first quarter and approximately $70 million in total for 2012.
LSI Conference Call Information
LSI will hold a conference call today at 2 p.m. PST to discuss fourth quarter and full year 2011 financial results and the first quarter 2012 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 successfully integrate and manage the SandForce business and retain its key employees; our ability to achieve anticipated synergies and to develop integrated new products following our acquisition of SandForce; our ability to eliminate costs related to the external storage systems business that we sold in 2011; our ability to repurchase our common stock at prices we believe to be advantageous; the impact of the recent flooding in Thailand; 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 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) designs semiconductors and software that accelerate storage and networking in datacenters and mobile networks. 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 and the LSI & Design logo are trademarks or registered trademarks of LSI Corporation.
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)
December 31, October 2, December 31,
Assets 2011 2011 2010
---- ---- ----
Current
assets:
Cash and short-
term
investments $935.5 $878.9 $676.6
Accounts
receivable,
net 246.5 248.4 326.6
Inventories 180.0 210.4 186.8
Prepaid
expenses,
assets held for
sale
and other
current
assets 60.7 91.4 73.8
---- ---- ----
Total current
assets 1,422.7 1,429.1 1,263.8
Property and
equipment,
net 180.6 176.7 223.2
Goodwill and
identified
intangible
assets, net 506.2 534.8 749.8
Other assets 122.6 132.5 188.1
----- ----- -----
Total assets $2,232.1 $2,273.1 $2,424.9
-------- -------- --------
Liabilities and
Stockholders'
Equity
Current
liabilities $460.9 $464.4 $484.6
Pension, tax
and other
liabilities 712.2 533.7 622.8
----- ----- -----
Total
liabilities 1,173.1 998.1 1,107.4
------- ----- -------
Stockholders'
equity:
Common stock and
additional
paid-in
capital 5,629.2 5,629.6 6,004.3
Accumulated
deficit (4,037.0) (4,035.2) (4,368.5)
Accumulated
other
comprehensive
loss (533.2) (319.4) (318.3)
------ ------ ------
Total
stockholders'
equity 1,059.0 1,275.0 1,317.5
------- ------- -------
Total
liabilities and
stockholders'
equity $2,232.1 $2,273.1 $2,424.9
-------- -------- --------
LSI CORPORATION
Consolidated Statements of Operations (GAAP)
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Year Ended
------------------ ----------
December October December December December
31, 2, 31, 31, 31,
2011 2011 2010 2011 2010
---- ---- ---- ---- ----
Revenues $523,140 $546,910 $470,657 $2,043,958 $1,869,654
Cost of revenues 264,364 261,399 217,059 991,914 866,546
Amortization of
acquisition-related
intangibles 20,354 20,206 28,914 82,659 115,419
Stock-based
compensation expense 1,597 1,460 1,821 6,921 7,044
----- ----- ----- ----- -----
Total cost of revenues 286,315 283,065 247,794 1,081,494 989,009
------- ------- ------- --------- -------
Gross profit 236,825 263,845 222,863 962,464 880,645
------- ------- ------- ------- -------
Research and development 139,061 137,937 136,087 552,342 539,520
Stock-based
compensation expense 5,360 5,410 4,654 23,646 23,471
----- ----- ----- ------ ------
Total research and
development 144,421 143,347 140,741 575,988 562,991
------- ------- ------- ------- -------
Selling, general and
administrative 63,705 64,672 55,231 241,820 219,846
Amortization of
acquisition-related
intangibles 8,319 8,319 8,949 33,276 35,793
Stock-based
compensation expense 4,881 4,883 5,226 20,343 23,487
----- ----- ----- ------ ------
Total selling, general
and administrative 76,905 77,874 69,406 295,439 279,126
------ ------ ------ ------- -------
Restructuring of
operations and other
items, net 21,033 10,784 (1,043) 23,719 9,201
------ ------ ------ ------ -----
(Loss)/income from
operations (5,534) 31,840 13,759 67,318 29,327
Interest expense - - - - (5,601)
Interest income and
other, net 8,124 7,610 7,701 26,472 13,848
----- ----- ----- ------ ------
Income from continuing
operations before
income taxes 2,590 39,450 21,460 93,790 37,574
(Benefit from)/provision
for income taxes (8,818) 7,800 16,905 3,778 3,170
------ ----- ------ ----- -----
Income from continuing
operations 11,408 31,650 4,555 90,012 34,404
(Loss)/income from
discontinued
operations, net of
taxes (13,194) (2,311) (17,956) 241,479 5,568
------- ------ ------- ------- -----
Net (loss)/income $(1,786) $29,339 $(13,401) $331,491 $39,972
------- ------- -------- -------- -------
Basic (loss)/income per share:
Income from continuing
operations $0.02 $0.05 $0.01 $0.15 $0.05
----- ----- ----- ----- -----
(Loss)/income from
discontinued operations $(0.02) $0.00 $(0.03) $0.42 $0.01
------ ----- ------ ----- -----
Net (loss)/income $0.00 $0.05 $(0.02) $0.57 $0.06
----- ----- ------ ----- -----
Diluted (loss)/income per share:
Income/(loss) from
continuing operations $0.02 $0.05 $0.01 $0.15 $0.05
----- ----- ----- ----- -----
(Loss)/income from
discontinued operations $(0.02) $0.00 $(0.03) $0.40 $0.01
------ ----- ------ ----- -----
Net (loss)/income $0.00 $0.05 $(0.02) $0.55 $0.06
----- ----- ------ ----- -----
Shares used in computing per share
amounts:
Basic 563,721 567,790 616,809 585,704 638,998
------- ------- ------- ------- -------
Diluted 573,018 581,483 626,079 600,893 646,324
------- ------- ------- ------- -------
Reconciliations of certain GAAP measures to
non-GAAP measures are included below.
Three Months Ended Year Ended
------------------ ----------
December October December December December
31, 2, 31, 31, 31,
Reconciliation of GAAP
net (loss)/income to
non-GAAP net income: 2011 2011 2010 2011 2010
---------------------- ---- ---- ---- ---- ----
GAAP income from
continuing operations $11,408 $31,650 $4,555 $90,012 $34,404
------- ------- ------ ------- -------
Special items:
a) Stock-based
compensation expense -
cost of revenues 1,597 1,460 1,821 6,921 7,044
b) Stock-based
compensation expense -
R&D 5,360 5,410 4,654 23,646 23,471
c) Stock-based
compensation expense -
SG&A 4,881 4,883 5,226 20,343 23,487
d) Amortization of
acquisition-related
intangibles - cost of
revenues 20,354 20,206 - 28,914 82,659 115,419
e) Amortization of
acquisition-related
intangibles - SG&A 8,319 8,319 8,949 33,276 35,793
f) Restructuring of
operations and other
items, net 21,033 10,784 (1,043) 23,719 9,201
g) Write-down of
investments, net of
gain on sale - - - - 6,779
--- --- --- --- -----
Total special items from
continuing operations 61,544 51,062 48,521 190,564 221,194
------ ------ ------ ------- -------
Non-GAAP income from
continuing operations $72,952 $82,712 $53,076 $280,576 $255,598
------- ------- ------- -------- --------
Non-GAAP income from continuing
operations per share:
Basic $0.13 $0.15 $0.09 $0.48 $0.40
----- ----- ----- ----- -----
Diluted $0.13 $0.14 $0.08 $0.47 $0.40
----- ----- ----- ----- -----
GAAP net (loss)/income $(1,786) $29,339 $(13,401) $331,491 $39,972
------- ------- -------- -------- -------
Special items:
a) Total special items
from continuing
operations 61,544 51,062 48,521 190,564 221,194
b) Stock-based
compensation expense -
discontinued operations - (385) 2,856 (592) 12,439
c) Amortization of
acquisition-related
intangibles -
discontinued operations - - 2,453 886 9,812
d) Restructuring of
operations -
discontinued operations (67) 3,040 49,548 40,863 49,684
e) Gain on sale of
business - - - (260,066) -
--- --- --- -------- ---
Non-GAAP net income $59,691 $83,056 $89,977 $303,146 $333,101
------- ------- ------- -------- --------
Non-GAAP net income per share:
Basic $0.11 $0.15 $0.15 $0.52 $0.52
----- ----- ----- ----- -----
Diluted $0.10 $0.14 $0.14 $0.50 $0.52
----- ----- ----- ----- -----
Shares used in computing non-GAAP
per share amounts:
Basic 563,721 567,790 616,809 585,704 638,998
------- ------- ------- ------- -------
Diluted 573,018 581,483 626,079 600,893 646,324
------- ------- ------- ------- -------
LSI CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended Year Ended
------------------ ----------
October
December 31, 2, December 31, December 31, December 31,
2011 2011 2010 2011 2010
---- ---- ---- ---- ----
Operating activities:
Net (loss)/income $(1,786) $29,339 $(13,401) $331,491 $39,972
Adjustments:
Depreciation and amortization * 43,357 43,533 65,954 189,200 266,672
Stock-based compensation
expense 11,838 11,368 14,557 50,318 66,441
Non-cash restructuring of
operations and other items,
net 4,747 9,571 45,681 35,282 45,681
Write-down of investments, net
of gain on sale 183 - - 183 6,779
Gain on sale of business - - - (260,066) -
Loss/(gain) on sale of
property and equipment 78 (35) (142) (465) 11
Unrealized foreign exchange
(gain)/loss (2,215) (2,381) (2,063) (2,015) 4,311
Deferred taxes (1,100) 822 3,478 (20,044) 3,512
Changes in assets and
liabilities:
Accounts receivable, net 1,850 (14,262) (12,737) 80,065 12,357
Inventories 30,399 (17,063) 33,348 (29,804) (17,437)
Prepaid expenses, assets held
for sale and other assets (526) 735 506 (10,782) 14,404
Accounts payable (2,179) (10,990) (11,672) (3,879) (35,213)
Accrued and other liabilities (29,230) (5,601) (11,869) (112,709) (40,315)
Net cash provided by operating
activities 55,416 45,036 111,640 246,775 367,175
------ ------ ------- ------- -------
Investing activities:
Purchases of debt securities
available-for-sale (12,284) (14,552) (20,425) (50,967) (44,643)
Proceeds from maturities and
sales of debt securities 5,472 8,543 20,320 37,460 56,529
available-for-sale
Purchases of other investments - - - (4,000) (316)
Proceeds from sales of other
investments - - - - 9,795
Purchases of property and
equipment (14,079) (9,643) (25,080) (60,920) (92,342)
Proceeds from sale of property
and equipment 22,683 43 281 23,622 840
Proceeds from sale of business,
net of transaction costs - - - 475,150 -
Proceeds from maturity of a
note receivable 10,000 - 10,000 10,000 10,000
Net cash provided by/(used in)
investing activities 11,792 (15,609) (14,904) 430,345 (60,137)
------ ------- ------- ------- -------
Financing activities:
Redemption of convertible
subordinated notes - - - - (349,999)
Issuance of common stock 14,980 15,129 18,826 81,040 40,883
Purchase of common stock under
repurchase programs (26,999) (74,995) (32,199) (498,786) (249,942)
Net cash used in financing
activities (12,019) (59,866) (13,373) (417,746) (559,058)
------- ------- ------- -------- --------
Effect of exchange rate changes
on cash and cash equivalents (528) 147 (558) (1,349) (4,485)
---- --- ---- ------ ------
Net change in cash and cash
equivalents 54,661 (30,292) 82,805 258,025 (256,505)
Cash and cash equivalents at
beginning of period 725,150 755,442 438,981 521,786 778,291
------- ------- ------- ------- -------
Cash and cash equivalents at
end of period $779,811 $725,150 $521,786 $779,811 $521,786
======== ======== ======== ======== ========
* Depreciation of fixed assets and amortization of intangible assets,
software, and premiums on short-term investments.
SOURCE LSI Corporation
