LSI Reports Second Quarter 2011 Results
Company anticipates 10% sequential revenue growth in Q3
MILPITAS, Calif., July 27, 2011 – LSI Corporation (NYSE: LSI) today reported results for its second quarter ended July 3, 2011.
On May 6, 2011, LSI completed the sale of its external storage systems business to NetApp. The financial results of the external systems business have been classified as discontinued operations in LSI’s financial statements. Our ongoing business is referred to as “continuing operations.”
Second Quarter 2011 News Release Summary
- Second quarter 2011 revenues from continuing operations of $501 million
- Second quarter 2011 GAAP* income from continuing operations of 5 cents per diluted share
- Second quarter 2011 non-GAAP** income from continuing operations of 10 cents per diluted share
- Second quarter operating cash flows of $38 million
Third Quarter 2011 Business Outlook
- Projected revenues from continuing operations of $535 million to $565 million
- GAAP* income from continuing operations in the range of $0.01 to $0.11 per share
- Non-GAAP** income from continuing operations in the range of $0.11 to $0.17 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, 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 strong execution in the second quarter and guidance for the third quarter, which represents 10 percent sequential revenue growth at the mid-point, reflect share gains and program ramps at key customers across multiple businesses,” said Abhi Talwalkar, LSI president and CEO. “LSI is now entering an exciting new phase in our evolution. With our transformation complete, we are well positioned to drive above-market growth, generate greater profitability and increase shareholder value.”
Second quarter 2011 revenues from continuing operations were $501 million, above the high end of guidance, compared to $473 million generated from continuing operations in the second quarter of 2010, and compared to $473 million generated from continuing operations in the first quarter of 2011.
Second quarter 2011 GAAP* income from continuing operations was $28 million or 5 cents per diluted share, compared to second quarter 2010 GAAP income from continuing operations of $3 million or break-even per diluted share. Second quarter 2011 GAAP results compare to first quarter 2011 GAAP income from continuing operations of $19 million or 3 cents per diluted share. Second quarter 2011 GAAP income from continuing operations included a net charge of $31 million from special items, consisting primarily of $29 million of amortization of acquisition-related items and $14 million of stock-based compensation expense, offset by an $11 million credit for net restructuring and other items.
Second quarter 2011 GAAP net income was $294 million or 48 cents per diluted share, compared to second quarter 2010 GAAP net income of $7 million or 1 cent per diluted share. Second quarter 2011 GAAP net income includes a gain of $260 million or 43 cents per diluted share related to the sale of the external storage systems business to NetApp. Second quarter 2011 GAAP net income compares to first quarter 2011 GAAP net income of $10 million or 2 cents per diluted share.
Second quarter 2011 non-GAAP** income from continuing operations was $60 million or 10 cents per diluted share, compared to second quarter 2010 non-GAAP income from continuing operations of $61 million or 9 cents per diluted share. First quarter 2011 non-GAAP income from continuing operations was $65 million or 10 cents per diluted share.
Second quarter 2011 non-GAAP net income was $79 million or 13 cents per diluted share, compared to second quarter 2010 non-GAAP net income of $71 million or 11 cents per diluted share. First quarter 2011 non-GAAP net income was $82 million or 13 cents per diluted share.
Cash and short-term investments totaled approximately $907 million at quarter end. The company completed second-quarter purchases of approximately 42 million shares of its common stock for approximately $300 million. On a year-to-date basis, the company has purchased approximately 56 million shares of its common stock for approximately $397 million under its $750 million share repurchase program.
Bryon Look, LSI CFO and chief administrative officer, said, “In addition to exceeding the high end of our revenue guidance in the second quarter, we were active in buying back stock and have repurchased 56 million shares year to date. We remain committed to driving earnings growth and getting to our target business model. Our guidance implies strong operating margin expansion in the third quarter, demonstrating the earnings leverage we have created.”
LSI Third Quarter 2011 Business Outlook For Continuing Operations
||$535 million to $565 million
||$535 million to $565 million|
||45.5% – 49.5%
||$20 million to $30 million
||51.0% – 53.0%|
||$213 million to $233 million
||$15 million to $25 million
||$198 million to $208 million|
|Net Other Income
||Approximately $10 million
||Approximately $10 million|
|Income From Continuing Operations Per Share
||$0.01 to $0.11
||($0.06) to ($0.10)
||$0.11 to $0.17|
|Diluted Share Count
Capital spending is projected to be around $20 million in the third quarter and approximately $55 million in total for 2011.
Depreciation and software amortization is projected to be around $16 million in the third quarter and approximately $75 million in total for 2011.
LSI Conference Call Information
LSI will hold a conference call today at 2 p.m. PDT to discuss second quarter financial results and the third quarter 2011 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 eliminate costs related to the external storage systems business that we sold to NetApp; our ability to repurchase our common stock at prices we believe to be advantageous; the impact of the recent earthquake, tsunami and nuclear power plant events in Japan; 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.
LSI Corporation (NYSE: LSI) is a leading provider of innovative silicon 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 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 www.lsi.com
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Q2 2011 Financial Tables (PDF, 28KB)