LSI CORP 
By SAN JOSE, Calif., Jan. 23, 2013 /PRNewswire/ -- LSI Corporation (NASDAQ: LSI) today reported results for its fourth quarter and full year ended December 31, 2012.
(Logo: http://photos.prnewswire.com/prnh/20120222/SF57952LOGO)
Fourth Quarter and Full Year 2012 Highlights
-- Fourth quarter 2012 revenues from continuing operations* of $600
million, up 15% year-over-year
-- Fourth quarter 2012 GAAP** income from continuing operations of $0.05
per diluted share
-- Fourth quarter 2012 non-GAAP*** income from continuing operations of
$0.18 per diluted share
-- Fourth quarter 2012 operating cash flows of $95 million
-- Full year 2012 revenues of $2.51 billion, up 23% year over year
First Quarter 2013 Business Outlook
-- Projected revenues from continuing operations* of $535 million to $575
million
-- GAAP** income from continuing operations in the range of ($0.03) to
$0.06 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 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, gain/loss on sale/write-
down of investments and, in the case
of non-GAAP net income, gain from
the sale of the external storage
systems business. It also excludes
the income tax effect associated
with the above-mentioned items.
"2012 was a year of exciting progress for LSI as we delivered 23% revenue growth, strong expansion in operating margin and earnings per share from continuing operations, and record design wins. We introduced several important new products, and customers are increasingly looking to new LSI solutions for mega datacenters, mobile networks and flash," said Abhi Talwalkar, LSI's president and CEO. "LSI's intelligent silicon offers proven solutions as businesses turn to the cloud and look for new ways to accelerate their ability to quickly analyze, store, share and protect data. While there is uncertainty in the macro environment and softness in some end markets, we are centered in dynamic new growth cycles that are expected to drive long-term growth in our flash, server and networking businesses."
Fourth quarter 2012 revenues from continuing operations were $600 million, in line with guidance, compared to $523 million generated from continuing operations in the fourth quarter of 2011, and compared to $624 million generated from continuing operations in the third quarter of 2012.
Fourth quarter 2012 GAAP** income from continuing operations was $29 million or $0.05 per diluted share, compared to fourth quarter 2011 GAAP income from continuing operations of $11 million or $0.02 per diluted share. Third quarter 2012 GAAP income from continuing operations was $40 million or $0.07 per diluted share. Fourth quarter 2012 GAAP income from continuing operations included a net charge of $72 million from special items, consisting primarily of approximately $30 million of amortization of acquisition-related items, $25 million of stock-based compensation expense, $16 million of net restructuring and other items, and $1 million income tax effect.
Fourth quarter 2012 non-GAAP*** income from continuing operations was $101 million or $0.18 per diluted share, compared to fourth quarter 2011 non-GAAP income from continuing operations of $73 million or $0.13 per diluted share. Third quarter 2012 non-GAAP income from continuing operations was $99 million or $0.17 per diluted share.
Cash and short-term investments totaled approximately $676 million at quarter end. The company completed fourth-quarter purchases of approximately 7 million shares of its common stock for approximately $46 million. In 2012 the company purchased approximately 36 million shares of its common stock for approximately $273 million.
LSI recorded full-year 2012 revenues from continuing operations of $2.51 billion, a 23% increase compared to $2.04 billion in 2011.
"We delivered solid profitability and results in 2012, making good progress on our gross margin targets and generating strong cash flows," said Bryon Look, LSI's CFO. "With a strong balance sheet, zero debt and $479 million remaining on our share buyback authorization, we are in a good position to continue to return capital to our shareholders."
LSI 1Q2013 Business Outlook for Continuing Operations
---
GAAP** Special Items Non-GAAP***
----- ------------- ----------
Revenue $535 million to $575 million $535 million to $575 million
------- ---------------------------- ----------------------------
Gross Margin 48% to 52% $18 million to $28 million 53% to 55%
------------ --------- ---------------------- ---------
Operating Expenses $257 million to $277 million $32 million to $42 million $225 million to $235 million
------------------ ---------------------------- ---------------------- ----------------------------
Net Other Income $4 million $4 million
---------------- ---------- ----------
Tax Approximately $8 million Approximately $8 million
--- ------------------------ ------------------------
(Loss)/Income from
Continuing Operations
Per Share ($0.03) to $0.06 ($0.09) to ($0.12) $0.09 to $0.15
---------------------- ---------------- ----------------- --------------
Diluted Share Count 570 million 570 million
------------------- ----------- -----------
Capital spending is projected to be around $25 million in the first quarter and approximately $80 million in total for 2013.
Depreciation and software amortization is projected to be around $15 million in the first quarter and approximately $60 million in total for 2013.
LSI Conference Call Information
LSI will hold a conference call today at 2 p.m. PST to discuss fourth quarter and full year 2012 financial results and the first 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 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 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; 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 the Storage.Networking.Accelerated. tagline 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, September 30, December 31,
Assets 2012 2012 2011
---- ---- ----
Current assets:
Cash and short-term
investments $676.0 $643.0 $935.5
Accounts receivable,
net 264.1 256.5 246.5
Inventories 206.3 209.1 180.0
Prepaid expenses and
other current assets 87.2 64.6 60.7
---- ---- ----
Total current assets 1,233.6 1,173.2 1,422.7
Property and equipment,
net 269.7 250.2 180.6
Goodwill and identified
intangible assets, net 741.1 771.9 506.2
Other assets 113.2 108.1 122.6
----- ----- -----
Total assets $2,357.6 $2,303.4 $2,232.1
-------- -------- --------
Liabilities and
Stockholders' Equity
Current liabilities $506.9 $476.8 $460.9
Pension, tax and other
liabilities 684.6 628.6 712.2
----- ----- -----
Total liabilities 1,191.5 1,105.4 1,173.1
------- ------- -------
Stockholders' equity:
Common stock and
additional paid-in
capital 5,578.7 5,579.6 5,629.2
Accumulated deficit (3,834.3) (3,863.4) (4,037.0)
Accumulated other
comprehensive loss (578.3) (518.2) (533.2)
------ ------ ------
Total stockholders'
equity 1,166.1 1,198.0 1,059.0
------- ------- -------
Total liabilities and
stockholders' equity $2,357.6 $2,303.4 $2,232.1
-------- -------- --------
LSI CORPORATION
Consolidated Statements of Operations (GAAP)
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Year Ended
------------------ ----------
December 31, September 30, December 31, December 31, December 31,
2012 2012 2011 2012 2011
---- ---- ---- ---- ----
Revenues $600,128 $623,962 $523,140 $2,506,087 $2,043,958
Cost of revenues 275,538 287,390 264,364 1,162,414 991,914
Amortization of acquisition-related
intangibles 21,318 21,348 20,354 85,404 82,659
Purchase accounting effect on inventory - - - 14,458 -
Stock-based compensation expense 2,858 2,573 1,597 11,946 6,921
----- ----- ----- ------ -----
Total cost of revenues 299,714 311,311 286,315 1,274,222 1,081,494
------- ------- ------- --------- ---------
Gross profit 300,414 312,651 236,825 1,231,865 962,464
------- ------- ------- --------- -------
Research and development 165,758 156,318 139,061 643,230 552,342
Stock-based compensation expense 11,613 11,170 5,360 47,064 23,646
------ ------ ----- ------ ------
Total research and development 177,371 167,488 144,421 690,294 575,988
------- ------- ------- ------- -------
Selling, general and administrative 64,919 69,722 63,705 270,965 241,820
Amortization of acquisition-related
intangibles 8,667 8,667 8,319 34,668 33,276
Stock-based compensation expense 10,291 13,643 4,881 49,290 20,343
------ ------ ----- ------ ------
Total selling, general and administrative 83,877 92,032 76,905 354,923 295,439
------ ------ ------ ------- -------
Restructuring of operations and other items,
net 16,480 4,221 21,033 42,654 23,719
------ ----- ------ ------ ------
Income/(loss) from operations 22,686 48,910 (5,534) 143,994 67,318
Interest income and other, net 7,606 5,855 8,124 37,711 26,472
----- ----- ----- ------ ------
Income from continuing operations before
income taxes 30,292 54,765 2,590 181,705 93,790
Provision for/(benefit from) income taxes 1,202 15,100 (8,818) (20,960) 3,778
----- ------ ------ ------- -----
Income from continuing operations 29,090 39,665 11,408 202,665 90,012
(Loss)/income from discontinued operations,
net of taxes - - (13,194) - 241,479
--- --- ------- --- -------
Net income/(loss) $29,090 $39,665 $(1,786) $202,665 $331,491
------- ------- ------- -------- --------
Basic income/(loss) per share:
Income from continuing operations $0.05 $0.07 $0.02 $0.36 $0.15
----- ----- ----- ----- -----
(Loss)/income from discontinued operations $ - $ - $(0.02) $ - $0.42
------------------------- --------------------------- ------ ------------------------- -----
Net income/(loss) $0.05 $0.07 $0.00 $0.36 $0.57
----- ----- ----- ----- -----
Diluted income/(loss) per share:
Income from continuing operations $0.05 $0.07 $0.02 $0.35 $0.15
----- ----- ----- ----- -----
(Loss)/income from discontinued operations $ - $ - $(0.02) $ - $0.40
------------------------- --------------------------- ------ ------------------------- -----
Net income/(loss) $0.05 $0.07 $0.00 $0.35 $0.55
----- ----- ----- ----- -----
Shares used in computing per share amounts:
Basic 552,761 555,197 563,721 559,459 585,704
------- ------- ------- ------- -------
Diluted 568,611 572,022 573,018 580,548 600,893
------- ------- ------- ------- -------
Reconciliations of certain GAAP measures to non-GAAP measures are included below.
Three Months Ended Year Ended
------------------ ----------
December 31, September 30, December 31, December 31, December 31,
2012 2012 2011 2012 2011
---- ---- ---- ---- ----
Reconciliation of GAAP net income to non-GAAP net
income:
-------------------------------------------------
GAAP income from continuing operations $29,090 $39,665 $11,408 $202,665 $90,012
------- ------- ------- -------- -------
Special items:
a) Stock-based compensation expense -
cost of revenues 2,858 2,573 1,597 11,946 6,921
b) Stock-based compensation expense - R&D 11,613 11,170 5,360 47,064 23,646
c) Stock-based compensation expense - SG&A 10,291 13,643 4,881 49,290 20,343
d) Amortization of acquisition-related
intangibles - cost of revenues 21,318 21,348 20,354 85,404 82,659
e) Amortization of acquisition-related
intangibles - SG&A 8,667 8,667 8,319 34,668 33,276
f) Purchase accounting effect on inventory - - - 14,458 -
g) Restructuring of operations and other
items, net 16,480 4,221 21,033 42,654 23,719
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 833 - - (42,365) -
--- --- --- ------- ---
Total special items from continuing
operations 72,060 59,072 61,544 234,804 190,564
------ ------ ------ ------- -------
Non-GAAP income from continuing operations $101,150 $98,737 $72,952 $437,469 $280,576
-------- ------- ------- -------- --------
Non-GAAP income from continuing operations per share:
Basic $0.18 $0.18 $0.13 $0.78 $0.48
----- ----- ----- ----- -----
Diluted $0.18 $0.17 $0.13 $0.75 $0.47
----- ----- ----- ----- -----
GAAP net income/(loss) $29,090 $39,665 $(1,786) $202,665 $331,491
------- ------- ------- -------- --------
Special items:
a) Total special items from continuing
operations 72,060 59,072 61,544 234,804 190,564
b) Stock-based compensation expense -
discontinued operations - - - - (592)
c) Amortization of acquisition-related
intangibles - discontinued operations - - - - 886
d) Restructuring of operations -
discontinued operations - - (67) - 40,863
e) Gain on sale of business - - - - (260,066)
Non-GAAP net income $101,150 $98,737 $59,691 $437,469 $303,146
-------- ------- ------- -------- --------
Non-GAAP net income per share:
Basic $0.18 $0.18 $0.11 $0.78 $0.52
----- ----- ----- ----- -----
Diluted $0.18 $0.17 $0.10 $0.75 $0.50
----- ----- ----- ----- -----
Shares used in computing non-GAAP per share amounts:
Basic 552,761 555,197 563,721 559,459 585,704
------- ------- ------- ------- -------
Diluted 568,611 572,022 573,018 580,548 600,893
------- ------- ------- ------- -------
LSI CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended Year Ended
------------------ ----------
December 31, September 30, December 31, December 31, December 31,
2012 2012 2011 2012 2011
---- ---- ---- ---- ----
Operating activities:
Net income/(loss) $29,090 $39,665 $(1,786) $202,665 $331,491
Adjustments:
Depreciation and amortization 44,166 45,671 43,357 180,484 189,200
Stock-based compensation
expense 24,762 27,386 11,838 108,300 50,318
Non-cash restructuring of
operations and other items,
net 221 698 4,747 5,960 35,282
Gain on sale of investments/
write-down of investment - (2,550) 183 (2,550) 183
Gain on re-measurement of a
pre-acquisition equity
interest to fair value - - - (5,765) -
Gain on sale of business - - - - (260,066)
(Gain)/loss on sale of
property and equipment (46) 2,644 78 2,528 (465)
Unrealized foreign exchange
(gain)/loss (518) 2,655 (2,215) (598) (2,015)
Deferred taxes (10,743) (72) (9,894) (53,989) (28,838)
Changes in assets and
liabilities, net of assets
acquired and liabilities
assumed in business
combination:
Accounts receivable (7,620) 40,348 1,850 (6,689) 80,065
Inventories 2,748 (5,091) 30,399 (2,116) (29,804)
Prepaid expenses, assets held
for sale and other assets (13,308) 1,110 (526) (14,028) (10,782)
Accounts payable 23,208 (25,186) (2,179) 27,543 (3,879)
Accrued and other liabilities 2,895 (15,471) (20,436) (67,586) (103,915)
Net cash provided by
operating activities 94,855 111,807 55,416 374,159 246,775
------ ------- ------ ------- -------
Investing activities:
Purchases of debt securities
available-for-sale (37,206) (22,087) (12,284) (131,662) (50,967)
Proceeds from maturities and
sales of debt securities
available-for-sale 28,320 11,767 5,472 57,843 37,460
Purchases of other
investments (500) - - (500) (4,000)
Proceeds from sale of other
investments - 2,550 - 2,550 -
Purchases of property and
equipment (27,494) (25,667) (14,079) (130,779) (60,920)
Proceeds from sale of
property and equipment 67 1,374 22,683 1,693 23,622
Acquisition of business, net
of cash acquired - - - (319,231) -
Proceeds from sale of
business, net of transaction
costs - - - - 475,150
Proceeds from maturity of a
note receivable - - 10,000 - 10,000
Net cash (used in)/provided
by investing activities (36,813) (32,063) 11,792 (520,086) 430,345
------- ------- ------ -------- -------
Financing activities:
Issuance of common stock 20,985 8,515 14,980 111,628 81,040
Purchases of common stock
under repurchase program (46,338) (50,062) (26,999) (272,585) (498,786)
Net cash used in financing
activities (25,353) (41,547) (12,019) (160,957) (417,746)
------- ------- ------- -------- --------
Effect of exchange rate
changes on cash and cash
equivalents (1,668) 166 (528) (1,399) (1,349)
------ --- ---- ------ ------
Net change in cash and cash
equivalents 31,021 38,363 54,661 (308,283) 258,025
Cash and cash equivalents at
beginning of period 440,507 402,144 725,150 779,811 521,786
------- ------- ------- ------- -------
Cash and cash equivalents at
end of period $471,528 $440,507 $779,811 $471,528 $779,811
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SOURCE LSI Corporation
