LSI: Fiscal 4Q09 Financial Results

in US$ millions)	4Q08	4Q09	FY 08	FY 09
Revenues	610.0	637.8	2,677	2,219
*Growth*		+5%		*-17%*
Net income (loss)	(606.3)	64.8	(622.2)	(47.7)

(in US$ millions)	4Q08	4Q09	*Growth*
Semiconductor revenues	373.8	380.8	+2%
Storage systems revenues	236.2	257.0	-9%

LSI Corporation reported results for its fourth quarter and full year ended December 31, 2009.

Fourth Quarter and Full-Year 2009 Summary

Fourth quarter 2009 revenues of $638 million
Fourth quarter 2009 GAAP net income of 10 cents per diluted share
Fourth quarter 2009 non-GAAP net income of 18 cents per diluted share
Fourth quarter operating cash flows of $77 million — Full-year 2009 revenues of $2.2 billion

First Quarter 2010 Business Outlook

Projected revenues of $590 million to $620 million
GAAP net (loss)/income in the range of ($0.06) to $0.03 cents per share
Non-GAAP net income in the range of $0.04 to $0.10 cents per share

Fourth quarter 2009 revenues were $638 million, a 5% increase year-over-year compared to $610 million reported in the fourth quarter of 2008, and up 10% sequentially compared to $578 million reported in the third quarter of 2009.

Fourth quarter 2009 GAAP net income was $65 million or 10 cents per diluted share, compared to fourth quarter 2008 GAAP net loss of $606 million or 94 cents per share. Fourth quarter GAAP results included a $31 million tax benefit, or 5 cents per diluted share, primarily related to the settlement of a multi-year foreign tax audit. Fourth quarter 2009 GAAP results compare to third quarter 2009 GAAP net income of $52 million or 8 cents per diluted share. Fourth quarter 2009 GAAP net income included a net charge of $59 million from special items, consisting primarily of $43 million of amortization of acquisition-related items, $14 million of stock-based compensation expense, and $2 million in net restructuring and other items.

Fourth quarter 2009 non-GAAP net income was $124 million or 18 cents per diluted share, compared to fourth quarter 2008 non-GAAP net income of $41 million or 6 cents per diluted share. Third quarter 2009 non-GAAP net income was $119 million or 18 cents per diluted share.

Cash and short-term investments totaled approximately $962 million at quarter end.

"With increasing signs in the fourth quarter that an early-stage recovery of enterprise IT spending is now underway, LSI achieved double-digit sequential revenue growth, with revenues coming in at the high end of our guidance range," said Abhi Talwalkar, LSI president and chief executive officer. "With more than 80% of our revenues tied to enterprise technology spending, we are well positioned to benefit as this recovery gains strength going forward."

LSI recorded full-year 2009 revenues of $2.22 billion, a 17% decrease compared to $2.68 billion in 2008. The company reported 2009 GAAP net loss of $48 million or 7 cents per share. Full-year 2009 GAAP results compare to full-year 2008 GAAP net loss of $622 million or 96 cents per share. Full-year 2009 GAAP results included an $83 million tax benefit, or 13 cents per share, primarily related to the settlement of multi-year foreign tax audits. Full-year 2009 GAAP net loss included a net charge of $280 million from special items, consisting primarily of $172 million in the amortization of acquisition-related items, $64 million of stock-based compensation expense, and $38 million of restructuring costs.

Non-GAAP net income for 2009 was $232 million or 35 cents per diluted share compared to 2008 non-GAAP net income of $283 million or 44 cents per diluted share.

Bryon Look, LSI CFO and chief administrative officer, said: "We demonstrated strong fourth quarter performance, with significant improvements in revenues, gross margin, operating income and cash flows. Our storage systems business achieved record quarterly revenues, growing 24% sequentially and contributing to a second-half consisting of two consecutive quarters of double-digit revenue growth. We ended the year with nearly $1 billion in cash and short-term investments while our net cash position increased to $612 million."

Capital spending is projected to be around $15 million in the first quarter and approximately $55 million in total for 2010.

Depreciation and software amortization is projected to be around $25 million in the first quarter and approximately $100 million in total for 2010.