Double-Digit year-over revenue growth in storage systems
(PresseBox) (CA Milpitas, )LSI Logic Corporation (NYSE: LSI) today reported second quarter 2006 revenues of $490 million, a 3% increase sequentially compared to the $476 million reported in the first quarter of 2006, and up 2% year-over-year compared to the $481 million reported in the second quarter of 2005.
Second quarter 2006 GAAP* net income was $54 million or 13 cents per diluted share, compared to first quarter 2006 GAAP net income of $13 million or 3 cents per diluted share. Second quarter 2006 GAAP results compare to second quarter 2005 GAAP net income of $25 million or 6 cents per diluted share. Second quarter GAAP net income included $13 million of stock-based compensation expense and a net gain of $10 million from special items, acquisition-related amortization, restructuring and their related tax effect. Second quarter 2006 non-GAAP** net income was $57 million or 14 cents per diluted share, an increase of 43% compared to first quarter 2006 non-GAAP net income of $40 million or 10 cents per diluted share. Second quarter non-GAAP 2005 net income was $45 million or 11 cents per diluted share.
Cash and short-term investments grew 16% sequentially to $1.2 billion, from $1.03 billion in the first quarter of 2006 and up 54% from the year-ago period.
"All segments of our business grew sequentially during the quarter. Demand for our Engenio 4 Gb/s Fibre Channel systems strengthened, driving our storage systems revenues to near record levels and 17% higher than the year-ago quarter," said Abhi Talwalkar, LSI Logic president and chief executive officer. "Our communications revenues grew significantly year-over-year, as demand for existing long-lifecycle products increased and several in-process designs ramped to production. We anticipate accelerating demand for our storage products in the second half of 2006 as broad market transitions to 4 Gb/s Fibre Channel interfaces and SAS-enabled servers are now well underway."
"In the second quarter, GAAP net income grew significantly, driven in part by successful completion of the sale of our Gresham, Oregon manufacturing facility and our ZSP digital signal processor unit," said Bryon Look, LSI Logic chief financial officer. "Our balance sheet also strengthened, with a $169 million increase in cash and short-term investments during the period."
LSI Logic Third Quarter 2006 Business Outlook:
GAAP* Special Items Non-GAAP**
Revenue $475 million to $500 million $475 million to $500 million
Gross Margin 42 - 43% Approximately $2 million 42.5 - 43.5%
Operating Expenses $175 million to $178 million Approximately $21 million $154 million to $157 million
Net Other Income $2 million $2 million
Tax Provision Approximately $7 million Approximately $7 million
Net Income Per Share $0.05 to $0.07 Approximately $.06 $0.11 to $0.13
Diluted Share Count 408 million 412 million
Capital spending is projected to be around $10 million in the third quarter and approximately $45 million in total for 2006.
Third quarter depreciation and software amortization is expected to be approximately $13 million.
* Generally Accepted Accounting Principles.
** Excludes special items defined as acquisition-related amortization, restructuring and other special items, and approximately $14.5 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 Third Quarter 2006 Business Outlook section of this news release.
Safe Harbor for Forward Looking Statements:
This news release contains forward-looking statements, which include the following: the anticipation of accelerating demand for storage products and technology transitions in the company's storage markets in the second half of 2006, projected revenues for the third quarter of 2006, projected GAAP net income for the third quarter of 2006, projected non-GAAP net income for the third quarter of 2006, projected capital spending in the third quarter of 2006 and for the year and expected third quarter of 2006 depreciation and software amortization. Forward-looking statements also include projections of gross margins, operating expenses, net other income, tax provisions, net income 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 execute on 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; 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.