LSI Reports Second Quarter 2007 Results
First Full Quarter of Combined Operations with Agere Systems Completed
Second Quarter News Release Summary
- Second quarter 2007 revenues of $670 million
- Second quarter 2007 GAAP* net loss of 50 cents per diluted share
- Second quarter 2007 non-GAAP** net loss of 2 cents per diluted share
- Cash and short-term investments of $1.2 billion
Third Quarter 2007 Business Outlook
- Projected revenues of $675 million to $705 million
- GAAP* net loss range of 9 – 15 cents per diluted share
- Non-GAAP** net income in the range of 2 – 5 cents per diluted share
* Generally Accepted Accounting Principles.
** Excludes stock-based compensation, amortization of acquisition-related intangibles, restructuring of operations and other items, net, purchase accounting effect on inventory, loss on write-down of equity securities and acquired in-process research and development. It also excludes the income tax effect associated with the above mentioned items.
Significant Progress on Merger Integration Achieved
MILPITAS, Calif., July 25, 2007 - LSI Corporation (NYSE: LSI) today reported second quarter 2007 revenues of $670 million, compared to $490 million in the second quarter of 2006 and $465 million in the first quarter of 2007. LSI second quarter financial results reflect the integration of the former Agere Systems. The company's merger transaction with Agere closed on April 2, 2007.
Second quarter 2007 GAAP* net loss was $378 million or 50 cents per diluted share, compared to second quarter 2006 GAAP net income of $54 million or 13 cents per diluted share. Second quarter 2007 GAAP results compare to first quarter 2007 GAAP net income of $30 million or 7 cents per diluted share. Second quarter 2007 GAAP net loss included $22.8 million of stock-based compensation expense, and a net charge of $340.9 million from other special items, principally related to the company's merger with Agere.
Second quarter 2007 non-GAAP** net loss was $14.2 million or 2 cents per diluted share, compared to second quarter 2006 non-GAAP net income of $57 million or 14 cents per diluted share. First quarter 2007 non-GAAP net income was $44 million or 11 cents per diluted share.
Cash and short-term investments totaled approximately $1.2 billion at quarter end. LSI also announced today that it has completed its $500 million share repurchase program.
"During our first full quarter of combined operations with Agere, we took significant steps to accelerate our merger integration, and signed a definitive agreement to sell our consumer products business to Magnum Semiconductor," said Abhi Talwalkar, LSI president and chief executive officer. "Today, we're also announcing a global transition to third-party assembly and test contract manufacturing to leverage greater cost efficiencies and provide scalable capacity. As part of this transition, we have agreed to sell our Thailand assembly and test operations to STATS ChipPAC Ltd. for approximately $100 million."
"Customers are responding positively to the new LSI and our business remains fundamentally strong," added Talwalkar. "We are winning significant new designs with industry-leading customers as a result of the combination of LSI and Agere, and I am confident that we are well positioned to achieve our long-term objectives. We expect revenue to grow sequentially in the second half of 2007, consistent with typical seasonal patterns."
Bryon Look, LSI chief financial officer, said, "We are continuing to drive strategic focus and accelerate operational efficiencies. The steps taken during the second quarter and the manufacturing decisions announced today are significant components of positioning the company for profitable growth."
LSI Third Quarter 2007 Business Outlook
| GAAP* | Special Items | Non-GAAP** | |
|---|---|---|---|
| Revenue | $675 million to $705 million | $675 million to $705 million | |
| Gross Margin | 30 - 34% | $70 to $80 million | 42 - 44% |
| Operating Expenses | $285 million to $305 million | $30 to $40 million | $255 million to $265 million |
| Net Other Income | $0 million | $ 0 million | |
| Tax | Approximately $5 million | Approximately 20% | |
| Net (Loss) /Income Per Share | ($0.15) to ($0.09) | ($0.14) to ($0.17) | $0.02 to $0.05 |
| Diluted Share Count | 725 million | 730 million |
Capital spending is projected to be around $20 million in the third quarter and approximately $80 million in total for 2007.
Third quarter depreciation and software amortization is expected to be approximately $25 million.
LSI Conference Call Information
LSI will hold a conference call today at 2 pm PDT to discuss second quarter financial results and the third quarter 2007 business outlook. The number is 1-877-675-5901 within the U.S. and 1-210-839-8500 for all other locations. 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 or may be accessed by calling 1-866-357-1423 within the U.S. and 1-203-369-0115 for all other locations.
The company has also scheduled an analyst meeting for July 31, 2007 in New York City. For more information, please visit http://www.lsi.com/investors/.
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 challenges and costs of integrating and restructuring our operations and achieving anticipated synergies following our recent acquisition of Agere Systems; a delay in the closing of the sale of our Consumer business to Magnum Semiconductor; our ability to successfully and timely transition our assembly and test operations to third parties; fluctuations in the timing and volumes of customer demand; our reliance on major customers and suppliers; our ability to compete successfully in competitive markets; our ability to keep up with rapid technological change; 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 SEC, 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) 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, Networking and Mobility markets. More information is available at www.lsi.com.
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