LSI: Fiscal 3Q11 Financial Results

232.4(in US$ millions)	3Q10	3Q11	9 mo. 10	9 mo. 11
Revenues	452.9	546.9	1,399	1,520
*Growth*		21%		9%
Net income (loss)	23.4	29.3	53.4	333.3

LSI Corporation reported results for its third quarter ended October 2, 2011.

On May 6, 2011, LSI completed the sale of its external storage systems business to NetApp. The financial results of the external storage systems business have been classified as discontinued operations in LSI’s financial statements. Ongoing business is referred to as ‘continuing operations.’

Third Quarter 2011 News Release Summary

Third quarter 2011 revenues from continuing operations of $547 million
Third quarter 2011 GAAP income from continuing operations of 5 cents per diluted share
Third quarter 2011 non-GAAP income from continuing operations of 14 cents per diluted share
Third quarter operating cash flows of $45 million

Fourth Quarter 2011 Business Outlook

Projected revenues from continuing operations of $500 million to $550 million
GAAP (loss)/income from continuing operations in the range of ($0.04) to $0.08 per share
Non-GAAP income from continuing operations in the range of $0.06 to $0.14 per share

Note: The business outlook reflects supply chain impacts and uncertainties due to recent flooding in Thailand.

"Despite macro uncertainties, LSI delivered a strong quarter and is positioned to outgrow the markets we serve in both the near and longer term, based on our share gains and new product cycles across our businesses," said Abhi Talwalkar, LSI president and CEO. "Further extending LSI’s growth opportunities, the acquisition of SandForce, announced earlier today, will move us into a leadership position in the rapidly growing market for flash-based solutions."

Third quarter 2011 revenues from continuing operations were $547 million, in line with guidance, compared to $453 million generated from continuing operations in the third quarter of 2010, and compared to $501 million generated from continuing operations in the second quarter of 2011.

Third quarter 2011 GAAP income from continuing operations was $32 million or 5 cents per diluted share, compared to third quarter 2010 GAAP income from continuing operations of $13 million or 2 cents per diluted share. Second quarter 2011 GAAP income from continuing operations was $28 million or 5 cents per diluted share. Third quarter 2011 GAAP income from continuing operations included a net charge of $51 million from special items, consisting primarily of approximately $29 million of amortization of acquisition-related items, $12 million of stock-based compensation expense and $11 million of net restructuring and other items.

Third quarter 2011 GAAP net income was $29 million or 5 cents per diluted share, compared to third quarter 2010 GAAP net income of $23 million or 4 cents per diluted share. Second quarter 2011 GAAP net income was $294 million or 48 cents per diluted share. Second quarter 2011 GAAP net income included a gain of $260 million or 43 cents per diluted share related to the sale of the external storage systems business.

Third quarter 2011 non-GAAP income from continuing operations was $83 million or 14 cents per diluted share, compared to third quarter 2010 non-GAAP income from continuing operations of $63 million or 10 cents per diluted share. Second quarter 2011 non-GAAP income from continuing operations was $60 million or 10 cents per diluted share.

Third quarter 2011 non-GAAP net income was $83 million or 14 cents per diluted share, compared to third quarter 2010 non-GAAP net income of $79 million or 13 cents per diluted share. Second quarter 2011 non-GAAP net income was $79 million or 13 cents per diluted share.

Cash and short-term investments totaled approximately $879 million at quarter end. The company completed third-quarter purchases of approximately 11 million shares of its common stock for approximately $75 million. On a year-to-date basis, the company has purchased approximately 68 million shares of its common stock for approximately $472 million under its $750 million share repurchase program.

Bryon Look, LSI CFO and chief administrative officer, said: "Execution this quarter remained strong with revenues growing 9 percent sequentially. Year over year, our revenues increased 21 percent and non-GAAP operating income was up 38 percent. Looking forward, we have included the expected business impacts associated with Thailand supply chain disruptions in our Q4 guidance."