LSI: Fiscal 2Q08 Financial Results

LSI Corporation reported results for its second quarter ended June 29, 2008.

Second Quarter Summary

• Second quarter 2008 revenues of $692 million, exceeding guidance
• Second quarter 2008 GAAP net loss of 2 cents per share
• Second quarter 2008 non-GAAP net income of 13 cents per diluted share, exceeding guidance
• Second quarter operating cash flows of $27 million
• Cash and short-term investments of $1.1 billion

Third Quarter 2008 Business Outlook
Projected revenues of $695 million to $725 million
GAAP net (loss)/income in the range of ($0.03) to $0.04 per share
Non-GAAP net income in the range of 11 to 15 cents per diluted share

Quarterly Results
Second quarter 2008 revenues were $692 million, a 3% increase year-over-year compared to $670 million reported in the second quarter of 2007, and up 5% sequentially compared to $661 million reported in the first quarter of 2008. Adjusting for the sale of the consumer and mobility businesses, second quarter revenues increased 24% year-over-year compared to the second quarter of 2007.

Second quarter 2008 GAAP net loss was $14 million or 2 cents per share, compared to second quarter 2007 GAAP net loss of $378 million or 50 cents per share. Second quarter 2008 GAAP results compare to first quarter 2008 GAAP net loss of $14 million or 2 cents per share. Second quarter 2008 GAAP net loss included a net charge of $97 million from special items, consisting primarily of $58.6 million of amortization of acquisition-related items, $20.7 million of restructuring costs and other items, and $19.6 million of stock-based compensation expense.

Second quarter 2008 non-GAAP net income was $83 million or 13 cents per diluted share, compared to second quarter 2007 non-GAAP net loss of $14 million or 2 cents per share. First quarter 2008 non-GAAP net income was $64 million or 10 cents per diluted share.

Cash and short-term investments totaled approximately $1.1 billion at quarter end.

"Strong worldwide demand for our storage systems and networking products helped us deliver another quarter of solid results," said Abhi Talwalkar, LSI president and chief executive officer. "During the quarter, we also continued to build significant momentum for the future, introducing several new storage and networking products and securing additional silicon design wins with top- tier hard disk drive and server makers. Our business has demonstrated resilience through recent market uncertainty, and we expect this to continue as the positive effects of seasonal buying patterns materialize in the second half," added Talwalkar.

Bryon Look, LSI chief financial officer, said: "Our second quarter results reflect the ongoing benefit of the many strategic and operational steps we have taken over the past four quarters. Increases in net income compared to the year-ago period were significant, and we continue to focus on improving our top and bottom line results."

Capital spending is projected to be around $15 million in the third quarter and approximately $60 million in total for 2008.

Third quarter depreciation and software amortization is expected to be approximately $20 million.

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