LSI Reports Third Quarter 2010 Results
MILPITAS, Calif., October 27, 2010 - LSI Corporation (NYSE: LSI) today reported results for its third quarter ended October 3, 2010.
Third Quarter 2010 News Release Summary
• Third quarter 2010 revenues of $629 million
• Third quarter 2010 GAAP* net income of 4 cents per diluted share
• Third quarter 2010 non-GAAP** net income of 13 cents per diluted share
• Third quarter operating cash flows of $82 million
Fourth Quarter 2010 Business Outlook
•Projected revenues of $635 million to $665 million
•GAAP* net (loss)/income in the range of ($0.01) to $0.08 per share
•Non-GAAP** net income in the range of $0.10 to $0.16 per share
* 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, gain on sale/write-down of securities and gain on repurchase of convertible subordinated notes. It also excludes the income tax effect associated with the above mentioned items.
Third quarter 2010 revenues were $629 million, a 9% increase year-over-year compared to $578 million reported in the third quarter of 2009, and compares to $639 million reported in the second quarter of 2010.
Third quarter 2010 GAAP* net income was $23 million or 4 cents per diluted share, compared to third quarter 2009 GAAP net income of $52 million or 8 cents per diluted share. Third quarter 2009 GAAP results included a tax benefit of $65 million, or 10 cents per diluted share. Third quarter 2010 GAAP results compare to second quarter 2010 GAAP net income of $7 million or 1 cent per diluted share. Third quarter 2010 GAAP net income included a net charge of $56 million from special items, consisting primarily of $40 million of amortization of acquisition-related items, $17 million of stock-based compensation expense, $4 million of net restructuring and other items, and $5 million of gain on the sale of securities.
Third quarter 2010 non-GAAP** net income was $79 million or 13 cents per diluted share, compared to third quarter 2009 non-GAAP net income of $119 million or 18 cents per diluted share. Third quarter 2009 non-GAAP results included earnings of 10 cents per diluted share reflecting the above-mentioned tax benefit. Second quarter 2010 non-GAAP net income was $71 million or 11 cents per diluted share.
Cash and short-term investments totaled approximately $601 million at quarter end. The company completed third-quarter purchases of approximately 32 million shares of its common stock for approximately $137 million. On a year-to-date basis, the company has purchased approximately 46 million shares of its common stock for approximately $218 million under its $250 million share repurchase program.
"Healthy growth in our storage systems business coupled with strong execution contributed to solid operating performance, with net income near the high end of our guidance range, despite some end-market softness and related customer inventory adjustments that affected sequential revenues," said Abhi Talwalkar, LSI president and chief executive officer. "While end-market demand challenges could continue, we expect to benefit from new product ramps in 2011 as several of our design wins with top-tier storage and networking customers transition to production."
Bryon Look, LSI CFO and chief administrative officer, said, "Our third quarter results reflect a continuing, strong focus on achieving our business model targets. Gross margins were at the high end of our guidance range, showing solid quarterly expansion and much improvement versus year-ago levels, while operating margins continued to grow on a sequential basis and were sharply higher year over year. Operating cash flows grew 21% sequentially to $82 million and were $256 million on a year-to-date basis, approximately double the $128 million recorded in the same period last year."
Capital spending is projected to be around $15 million in the fourth quarter and approximately $55 million in total for 2010.
Depreciation and software amortization is projected to be around $27 million in the fourth quarter and approximately $107 million in total for 2010.
LSI Conference Call Information
LSI will hold a conference call today at 2 p.m. PDT to discuss third quarter financial results and the fourth quarter 2010 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; 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.
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.