LSI Logic Reports Strong Year-Over-Year Net Income Growth
First Quarter 2006 News Release Summary
- Revenues of $476 million; up 6% year-over-year
- GAAP* net income of 5 cents per diluted share, exceeding guidance
- Net income, excluding special items**, of 11 cents per diluted share
- Cash and short-term investments of $1.03 billion
Second Quarter 2006 Business Outlook
- Projected revenues of $470 million to $500 million
- GAAP* net income range of 8 – 10 cents per diluted share
- Net income, excluding special items**, in the range of 11 – 13 cents per diluted share
* Generally Accepted Accounting Principles
** Acquisition-related amortization, restructuring and other special items, including stock-based compensation expense. The Company adopted the provisions of SFAS No. 123(R) "Share-Based Payment" on January 1, 2006, using the modified prospective transition method.
Strong Demand for Storage Products Continues in Q1
Milpitas, Calif., April 26, 2006 - LSI Logic Corporation (NYSE: LSI) today reported first quarter 2006 revenues of $476 million, a 6% increase compared to the $450 million reported in the first quarter of 2005, and down 6% seasonally compared to the $506 million reported in the fourth quarter of 2005.
Exceeding guidance, first quarter 2006 GAAP* net income was $19 million or 5 cents per diluted share, compared to first quarter 2005 GAAP net income of $5 million or 1 cent per diluted share. First quarter 2006 GAAP results compare to fourth quarter 2005 GAAP net income of $38 million or 9 cents per diluted share. First quarter GAAP net income included $12 million of stock-based compensation expense and $14 million of acquisition-related amortization, restructuring, other special items and their related tax effect.
First quarter 2006 net income, excluding special items**, was $44 million or 11 cents per diluted share, an increase of 76% compared to first quarter 2005 net income, excluding special items, of $25 million or 6 cents per diluted share. Excluding special items, fourth quarter 2005 net income was $51 million or 13 cents per diluted share.
Cash and short-term investments grew 19% year-over-year to $1.03 billion, from $866 million in the year-ago period and up 10% from the fourth quarter of 2005.
"Continuing strong demand for our silicon-to-systems storage products helped to offset an expected seasonal revenue decline," said Abhi Talwalkar, LSI president and chief executive officer. "We also experienced strong year-over-year revenue growth within our storage components and storage systems markets, with Engenio achieving near record quarterly revenues. Going forward, we expect to benefit from increasing demand and technology transitions in our storage markets as well as the growing demand for digital media processing products in our consumer markets."
"During the first quarter, GAAP net income substantially improved over the year-ago period as revenues expanded and we continued to carefully manage operating expenses," said Bryon Look, LSI chief financial officer. "Our balance sheet remained strong, with cash and short-term investments topping $1 billion."
LSI Logic Second Quarter 2006 Business Outlook
| GAAP* | Special Items** | Excluding Special** Items | |
|---|---|---|---|
| Revenue | $470 million to $500 million |  |
$470 million to $500 million |
| Gross Margin | 42.5-43.5% | Approximately $2 million | 43-44% |
| Operating Expenses | $166 million to $170 million | Approximately $12 million | $154 million to $158 million |
| Net Other Income | $2 million | |
$2 million |
| Tax Provision | Approximately $7 million | Approximately $3 million | Approximately $10 million |
| Net Income Per Share | $0.08 to $0.10 | Approximately $.03 | $0.11 to $0.13 |
| Diluted Share Count | 405 million | |
405 million |
Capital spending is projected to be around $10 million in the second quarter and approximately $45 million in total for 2006.
Second quarter depreciation and software amortization is expected to be approximately $14 million.
* Generally Accepted Accounting Principles
** Acquisition-related amortization, restructuring and other special items, including approximately $12 million in stock-based compensation expense. The Company adopted the provisions of SFAS No. 123(R) "Share-Based Payment" on January 1, 2006, using the modified prospective transition method.
NOTE: The Company's financial guidance will be limited to the comments made on today's public conference call and contained in the Second Quarter 2006 Business Outlook section of this news release.
LSI Logic Conference Call Information
LSI Logic will hold a conference call today at 2 p.m. PDT to discuss first quarter financial results and the second quarter 2006 business outlook. The number is 1-303-262-2050. Internet users can access the conference call by visiting http://www.lsi.com/investors. A replay of the call will be available today at approximately 5 p.m. PDT and will be available for 48 hours. The replay access numbers are 1-800-405-2236 within the U.S. and 1-303-590-3000 for all other locations, passcode 11057760#.
Safe Harbor for Forward Looking Statements:
This news release contains forward-looking statements, which include the following: the expectation for increased demand and technology transitions in the company's storage markets, the growing demand for digital media processing products in the company's consumer markets, the expectation of the company to benefit from these increased demands in the storage and consumer markets, projected revenues for the second quarter of 2006, projected GAAP net income for the second quarter of 2006, projected net income, excluding special items, for the second quarter of 2006, projected capital spending in the second quarter of 2006 and for the year and expected second quarter of 2006 depreciation and software amortization. Forward-looking statements also include projections of gross margins, operating expenses, net other income, tax provisions, earnings per share and diluted share count. These forward-looking statements are based on the opinions and estimates of management at the time the statements are made and 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 Logic's actual results to differ materially from those set forth in the forward-looking statements include, but are not limited to: fluctuations in the timing and volumes of customer demand; the company's inability to achieve revenue objectives; the company's inability to meet financial targets and failure to execution its financial plan; the company's inability to generate positive operating cash flow or control operating expenses; the company's inability to benefit from increasing demand and technology transitions in its storage markets; the inability to benefit from the growing demand for digital media processing products in the company's consumer markets; and the unavailability of appropriate levels of manufacturing capacity. For additional information, readers are referred to the documents filed by LSI Logic with the SEC, and specifically the risk factors set forth in the company's most recent reports on Form 10-K, 10-Q and 8-K. LSI Logic is not obligated to update these forward-looking statements to reflect events or circumstances after the date of this document.
About LSI Logic
LSI Logic Corporation is a leading provider of silicon-to-system solutions that are used at the core of products that create, store and consume digital information. LSI offers a broad portfolio of capabilities including custom and standard product ICs, host bus and RAID adapters, storage area network solutions and software applications. LSI products enable leading technology companies in the Storage and Consumer markets to deliver some of the most advanced and well-known electronic systems in the market today. More information is available at www.lsi.com.
