CONTACT:
|
Investor
Contact:
|
Media
Contact:
|
Jay
Iyer
|
Ryan
Donovan
|
|
(408)
801-2067
|
(408)
801-2857
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
27, 2009
|
September
28, 2008(1)
|
September
27, 2009
|
September
28, 2008(1)
|
|||||||||||||
Revenues:
|
||||||||||||||||
Product
|
$ | 813,811 | $ | 689,556 | $ | 2,012,342 | $ | 2,101,115 | ||||||||
License
and royalty
|
121,360 | 131,941 | 312,873 | 386,360 | ||||||||||||
Total
revenues
|
935,171 | 821,497 | 2,325,215 | 2,487,475 | ||||||||||||
Cost
of product revenues
|
495,769 | 812,832 | 1,631,691 | 2,039,994 | ||||||||||||
Amortization
of acquisition-related intangible assets
|
3,132 | 14,582 | 9,396 | 43,746 | ||||||||||||
Total
cost of product revenues
|
498,901 | 827,414 | 1,641,087 | 2,083,740 | ||||||||||||
Gross
profit (loss)
|
436,270 | (5,917 | ) | 684,128 | 403,735 | |||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development
|
94,925 | 104,560 | 273,080 | 328,137 | ||||||||||||
Sales
and marketing
|
55,750 | 87,859 | 144,037 | 245,653 | ||||||||||||
General
and administrative
|
45,350 | 47,091 | 122,311 | 158,579 | ||||||||||||
Amortization
of acquisition-related intangible assets
|
292 | 4,766 | 875 | 13,794 | ||||||||||||
Restructuring
and other
|
─ | ─ | 765 | 4,085 | ||||||||||||
Total
operating expenses
|
196,317 | 244,276 | 541,068 | 750,248 | ||||||||||||
Operating
income (loss)
|
239,953 | (250,193 | ) | 143,060 | (346,513 | ) | ||||||||||
Other
income (expense)
|
(2,538 | ) | (12,901 | ) | (16,515 | ) | 9,307 | |||||||||
Income
(loss) before income taxes
|
237,415 | (263,094 | ) | 126,545 | (337,206 | ) | ||||||||||
Provision
for (benefit from) income taxes
|
6,122 | (97,195 | ) | 50,740 | (108,513 | ) | ||||||||||
Net
income (loss)
|
$ | 231,293 | $ | (165,899 | ) | $ | 75,805 | $ | (228,693 | ) | ||||||
Net
income (loss) per share:
|
||||||||||||||||
Basic
|
$ | 1.02 | $ | (0.74 | ) | $ | 0.33 | $ | (1.02 | ) | ||||||
Diluted
|
$ | 0.99 | $ | (0.74 | ) | $ | 0.33 | $ | (1.02 | ) | ||||||
Shares
used in computing net income (loss) per share:
|
||||||||||||||||
Basic
|
227,771 | 225,682 | 227,092 | 225,030 | ||||||||||||
Diluted
|
232,724 | 225,682 | 230,936 | 225,030 |
|
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
27, 2009
|
September
28, 2008(2)
|
September
27, 2009
|
September
28, 2008(2)
|
|||||||||||||
SUMMARY
RECONCILIATION OF NET INCOME (LOSS)
|
||||||||||||||||
GAAP
NET INCOME (LOSS)
|
$ | 231,293 | $ | (165,899 | ) | $ | 75,805 | $ | (228,693 | ) | ||||||
Share-based
compensation (a)
|
19,374 | 25,551 | 58,058 | 73,885 | ||||||||||||
Amortization
of acquisition-related intangible assets (b)
|
3,424 | 19,348 | 10,271 | 57,540 | ||||||||||||
Convertible
debt interest (c)
|
13,410 | 12,451 | 39,495 | 36,667 | ||||||||||||
Income
tax adjustments (d)
|
(91,990 | ) | (23,539 | ) | (33,633 | ) | (46,042 | ) | ||||||||
NON-GAAP
NET INCOME (LOSS)
|
$ | 175,511 | $ | (132,088 | ) | $ | 149,996 | $ | (106,643 | ) | ||||||
GAAP
COST OF PRODUCT REVENUES
|
$ | 498,901 | $ | 827,414 | $ | 1,641,087 | $ | 2,083,740 | ||||||||
Share-based
compensation (a)
|
(2,347 | ) | (2,648 | ) | (7,167 | ) | (8,286 | ) | ||||||||
Amortization
of acquisition-related intangible assets (b)
|
(3,132 | ) | (14,582 | ) | (9,396 | ) | (43,746 | ) | ||||||||
NON-GAAP
COST OF PRODUCT REVENUES
|
$ | 493,422 | $ | 810,184 | $ | 1,624,524 | $ | 2,031,708 | ||||||||
GAAP
GROSS PROFIT (LOSS)
|
$ | 436,270 | $ | (5,917 | ) | $ | 684,128 | $ | 403,735 | |||||||
Share-based
compensation (a)
|
2,347 | 2,648 | 7,167 | 8,286 | ||||||||||||
Amortization
of acquisition-related intangible assets (b)
|
3,132 | 14,582 | 9,396 | 43,746 | ||||||||||||
NON-GAAP
GROSS PROFIT
|
$ | 441,749 | $ | 11,313 | $ | 700,691 | $ | 455,767 | ||||||||
GAAP
RESEARCH AND DEVELOPMENT EXPENSES
|
$ | 94,925 | $ | 104,560 | $ | 273,080 | $ | 328,137 | ||||||||
Share-based
compensation (a)
|
(7,137 | ) | (10,543 | ) | (22,341 | ) | (28,693 | ) | ||||||||
NON-GAAP
RESEARCH AND DEVELOPMENT EXPENSES
|
$ | 87,788 | $ | 94,017 | $ | 250,739 | $ | 299,444 | ||||||||
GAAP
SALES AND MARKETING EXPENSES
|
$ | 55,750 | $ | 87,859 | $ | 144,037 | $ | 245,653 | ||||||||
Share-based
compensation (a)
|
(3,918 | ) | (5,546 | ) | (11,153 | ) | (15,480 | ) | ||||||||
NON-GAAP
SALES AND MARKETING EXPENSES
|
$ | 51,832 | $ | 82,313 | $ | 132,884 | $ | 230,173 | ||||||||
GAAP
GENERAL AND ADMINISTRATIVE EXPENSES
|
$ | 45,350 | $ | 47,091 | $ | 122,311 | $ | 158,579 | ||||||||
Share-based
compensation (a)
|
(5,972 | ) | (6,814 | ) | (17,397 | ) | (21,426 | ) | ||||||||
NON-GAAP
GENERAL AND ADMINISTRATIVE EXPENSES
|
$ | 39,378 | $ | 40,277 | $ | 104,914 | $ | 137,153 | ||||||||
GAAP
TOTAL OPERATING EXPENSES
|
$ | 196,317 | $ | 244,276 | $ | 541,068 | $ | 750,248 | ||||||||
Share-based
compensation (a)
|
(17,027 | ) | (22,903 | ) | (50,891 | ) | (65,599 | ) | ||||||||
Amortization
of acquisition-related intangible assets (b)
|
(292 | ) | (4,766 | ) | (875 | ) | (13,794 | ) | ||||||||
NON-GAAP
TOTAL OPERATING EXPENSES
|
$ | 178,998 | $ | 216,607 | $ | 489,302 | $ | 670,855 | ||||||||
GAAP
OPERATING INCOME (LOSS)
|
$ | 239,953 | $ | (250,193 | ) | $ | 143,060 | $ | (346,513 | ) | ||||||
Cost
of product revenues adjustments (a) (b)
|
5,479 | 17,230 | 16,563 | 52,032 | ||||||||||||
Operating
expense adjustments (a) (b)
|
17,319 | 27,669 | 51,766 | 79,393 | ||||||||||||
NON-GAAP
OPERATING INCOME (LOSS)
|
$ | 262,751 | $ | (205,294 | ) | $ | 211,389 | $ | (215,088 | ) | ||||||
GAAP
OTHER INCOME (EXPENSE)
|
$ | (2,538 | ) | $ | (12,901 | ) | $ | (16,515 | ) | $ | 9,307 | |||||
Convertible
debt interest (c)
|
13,410 | 12,451 | 39,495 | 36,667 | ||||||||||||
NON-GAAP
OTHER INCOME (EXPENSE)
|
$ | 10,872 | $ | (450 | ) | $ | 22,980 | $ | 45,974 | |||||||
GAAP
NET INCOME (LOSS)
|
$ | 231,293 | $ | (165,899 | ) | $ | 75,805 | $ | (228,693 | ) | ||||||
Cost
of product revenues adjustments (a) (b)
|
5,479 | 17,230 | 16,563 | 52,032 | ||||||||||||
Operating
expense adjustments (a) (b)
|
17,319 | 27,669 | 51,766 | 79,393 | ||||||||||||
Convertible
debt interest (c)
|
13,410 | 12,451 | 39,495 | 36,667 | ||||||||||||
Income
tax adjustments (d)
|
(91,990 | ) | (23,539 | ) | (33,633 | ) | (46,042 | ) | ||||||||
NON-GAAP
NET INCOME (LOSS)
|
$ | 175,511 | $ | (132,088 | ) | $ | 149,996 | $ | (106,643 | ) | ||||||
Diluted
net income (loss) per share:
|
||||||||||||||||
GAAP
|
$ | 0.99 | $ | (0.74 | ) | $ | 0.33 | $ | (1.02 | ) | ||||||
Non-GAAP
|
$ | 0.75 | $ | (0.59 | ) | $ | 0.65 | $ | (0.47 | ) | ||||||
Shares
used in computing diluted net income (loss) per share:
|
||||||||||||||||
GAAP
|
232,724 | 225,682 | 230,936 | 225,030 | ||||||||||||
Non-GAAP
|
232,961 | 225,682 | 231,424 | 225,030 |
September
27, 2009
|
December
28, 2008(1)
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 752,483 | $ | 962,061 | ||||
Short-term
investments
|
699,577 | 477,296 | ||||||
Accounts
receivable from product revenues, net
|
279,676 | 122,092 | ||||||
Inventory
|
620,976 | 598,251 | ||||||
Deferred
taxes
|
84,680 | 84,023 | ||||||
Other
current assets
|
75,542 | 469,961 | ||||||
Total
current assets
|
2,512,934 | 2,713,684 | ||||||
Long-term
investments
|
1,132,365 | 1,097,302 | ||||||
Property
and equipment, net
|
322,428 | 396,987 | ||||||
Notes
receivable and investments in the flash ventures with
Toshiba
|
1,600,810 | 1,602,291 | ||||||
Deferred
taxes
|
14,941 | 15,188 | ||||||
Intangible
assets, net
|
63,663 | 63,182 | ||||||
Other
non-current assets
|
102,143 | 43,506 | ||||||
Total
assets
|
$ | 5,749,284 | $ | 5,932,140 | ||||
LIABILITIES
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable trade
|
$ | 123,454 | $ | 240,985 | ||||
Accounts
payable to related parties
|
292,737 | 370,006 | ||||||
Convertible
short-term debt
|
75,000 | ─ | ||||||
Other
current accrued liabilities
|
216,317 | 502,443 | ||||||
Deferred
income on shipments to distributors and retailers and deferred
revenue
|
246,279 | 149,575 | ||||||
Total
current liabilities
|
953,787 | 1,263,009 | ||||||
Convertible
long-term debt
|
919,470 | 954,094 | ||||||
Non-current
liabilities
|
317,824 | 274,316 | ||||||
Total
liabilities
|
2,191,081 | 2,491,419 | ||||||
EQUITY
|
||||||||
Stockholders'
equity:
|
||||||||
Common
stock
|
4,225,645 | 4,154,392 | ||||||
Accumulated
deficit
|
(826,994 | ) | (902,799 | ) | ||||
Accumulated
other comprehensive income
|
160,962 | 188,977 | ||||||
Total
stockholders' equity
|
3,559,613 | 3,440,570 | ||||||
Non-controlling
interests
|
(1,410 | ) | 151 | |||||
Total
equity
|
3,558,203 | 3,440,721 | ||||||
Total
liabilities and equity
|
$ | 5,749,284 | $ | 5,932,140 |
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
27, 2009
|
September
28, 2008(1)
|
September
27, 2009
|
September
28, 2008(1)
|
|||||||||||||
Cash
flows from operating activities:
|
||||||||||||||||
Net
income (loss)
|
$ | 231,293 | $ | (165,899 | ) | $ | 75,805 | $ | (228,693 | ) | ||||||
Adjustments
to reconcile net income (loss) to net cash flows from operating
activities:
|
||||||||||||||||
Deferred
and other taxes
|
218 | (30,318 | ) | 2,521 | (43,949 | ) | ||||||||||
Depreciation
|
37,943 | 47,466 | 114,595 | 134,341 | ||||||||||||
Amortization
|
19,576 | 34,566 | 56,686 | 102,280 | ||||||||||||
Provision
for doubtful accounts
|
2,454 | (740 | ) | 1,675 | 6,211 | |||||||||||
Share-based
compensation expense
|
19,374 | 25,551 | 58,058 | 73,885 | ||||||||||||
Excess
tax benefit from share-based compensation
|
─ | (360 | ) | ─ | (2,037 | ) | ||||||||||
Impairment,
restructuring and other charges
|
(1,432 | ) | 23,095 | 5,701 | 27,578 | |||||||||||
Other
non-cash charges
|
1,950 | 8,446 | 983 | 15,730 | ||||||||||||
Changes
in operating assets and liabilities:
|
||||||||||||||||
Accounts
receivable from product revenues
|
(131,300 | ) | 86,208 | (159,260 | ) | 338,210 | ||||||||||
Inventory
|
(98,699 | ) | 83,023 | (37,151 | ) | (157,336 | ) | |||||||||
Other
assets
|
68,467 | 77,825 | 339,275 | 28,250 | ||||||||||||
Accounts
payable trade
|
7,061 | 4,353 | (117,625 | ) | (43,536 | ) | ||||||||||
Accounts
payable to related parties
|
45,994 | (2,752 | ) | (77,269 | ) | (29,007 | ) | |||||||||
Other
liabilities
|
35,473 | (54,327 | ) | (164,170 | ) | (199,803 | ) | |||||||||
Total
adjustments
|
7,079 | 302,036 | 24,019 | 250,817 | ||||||||||||
Net
cash provided by operating activities
|
238,372 | 136,137 | 99,824 | 22,124 | ||||||||||||
Cash
flows from investing activities:
|
||||||||||||||||
Purchases
of short and long-term investments
|
(701,768 | ) | (776,290 | ) | (1,237,877 | ) | (1,668,510 | ) | ||||||||
Proceeds
from sale of short and long-term investments
|
285,088 | 560,010 | 860,855 | 1,288,906 | ||||||||||||
Maturities
of short and long-term investments
|
55,477 | 127,285 | 143,117 | 479,848 | ||||||||||||
Acquisition
of property and equipment, net
|
(10,687 | ) | (5,768 | ) | (43,354 | ) | (112,680 | ) | ||||||||
Investment
in Flash Alliance Ltd.
|
─ | ─ | ─ | (96,705 | ) | |||||||||||
Distribution
from FlashVision Ltd.
|
─ | 73,543 | 12,713 | 102,530 | ||||||||||||
Issuance
of notes receivable from Flash Partners Ltd. and Flash Alliance
Ltd.
|
─ | ─ | (377,923 | ) | (37,418 | ) | ||||||||||
Proceeds
from notes receivable from Flash Partners Ltd. and Flash Alliance
Ltd.
|
─ | (93,110 | ) | 330,149 | (93,110 | ) | ||||||||||
Purchased
technology and other assets
|
(7,500 | ) | 1,000 | (13,790 | ) | (875 | ) | |||||||||
Acquisition
of MusicGremlin, Inc.
|
─ | (76 | ) | ─ | (4,604 | ) | ||||||||||
Net
cash used in investing activities
|
(379,390 | ) | (113,406 | ) | (326,110 | ) | (142,618 | ) | ||||||||
Cash
flows from financing activities:
|
||||||||||||||||
Repayment
of debt financing
|
─ | ─ | ─ | (9,785 | ) | |||||||||||
Proceeds
from employee stock programs
|
7,723 | 10,008 | 13,998 | 19,358 | ||||||||||||
Excess
tax benefit from share-based compensation
|
─ | 360 | ─ | 2,037 | ||||||||||||
Net
cash provided by financing activities
|
7,723 | 10,368 | 13,998 | 11,610 | ||||||||||||
Effect
of changes in foreign currency exchange rates on cash
|
1,251 | (1,570 | ) | 2,710 | (3,758 | ) | ||||||||||
Net
increase (decrease) in cash and cash equivalents
|
(132,044 | ) | 31,529 | (209,578 | ) | (112,642 | ) | |||||||||
Cash
and cash equivalents at beginning of period
|
884,527 | 689,578 | 962,061 | 833,749 | ||||||||||||
Cash
and cash equivalents at end of period
|
$ | 752,483 | $ | 721,107 | $ | 752,483 | $ | 721,107 |