LSI: Fiscal 3Q09 Financial Results

LSI Corporation reported results for its third quarter ended October 4, 2009.

Third Quarter News Release Summary

• Third quarter 2009 revenues of $578 million
• Third quarter 2009 GAAP net income of $0.08 per diluted share
• Third quarter 2009 non-GAAP net income of $0.18 per diluted share
• Third quarter operating cash flows of $69 million

Fourth Quarter 2009 Business Outlook

• Projected revenues of $605 million to $645 million
• GAAP net (loss)/income in the range of ($0.04) to $0.05 per share
• Non-GAAP net income in the range of $0.07 to $0.13 per share

Third quarter 2009 revenues were $578 million, an 11% increase sequentially compared to $521 million reported in the second quarter of 2009. Third quarter 2009 revenues decreased 19% year over year compared to $714 million reported in the third quarter of 2008.

Third quarter 2009 GAAP net income was $52 million or 8 cents per diluted share, compared to second quarter 2009 GAAP net loss of $61 million or 9 cents per share. Third quarter GAAP results included a $65 million tax benefit, or 10 cents per diluted share, primarily related to the settlement of a multi-year foreign tax audit. Third quarter 2009 GAAP results compare to third quarter 2008 GAAP net income of $11 million or 2 cents per diluted share. Third quarter 2009 GAAP net income included a net charge of $66 million from special items, consisting primarily of $43 million of amortization of acquisition-related items, $15 million of stock-based compensation expense, $6.6 million in net restructuring and other items, and $1.7 million in write-down of investments.

Third quarter 2009 non-GAAP net income was $119 million or 18 cents per diluted share compared to second quarter 2009 non-GAAP net income of $7 million or 1 cent per diluted share. Third quarter non-GAAP results included earnings of 10 cents per diluted share reflecting the above-mentioned tax benefit. Third quarter non-GAAP net income compares to third quarter 2008 non-GAAP net income of $94 million or 14 cents per diluted share.

Cash and short-term investments totaled approximately $907 million at quarter end.

"With the economy demonstrating signs that a modest recovery is underway, our third quarter revenues exceeded our guidance range, supported by healthy sequential growth across our businesses overall," said Abhi Talwalkar, LSI president and chief executive officer. "As businesses resume spending on information technology, we are now poised to realize the benefits of the winning recipe we have worked to put in place over the last several years."

Bryon Look, LSI CFO and chief administrative officer, said: "We delivered a very solid third quarter, with improved profitability stemming from strong top-line growth, expanding gross margins across both our semiconductor and storage systems businesses, and continued focus on effectively managing our operating expenses. Operating cash flows were healthy at $69 million and our net cash position increased to $557 million."

LSI Fourth Quarter 2009 Business Outlook:

• GAAP revenue: $605 million to $645 million
• GAAP gross margin: 39% to 43%
• GAAP Net (loss)/income per share: ($0.04) to $0.05
• Capital spending: around $15 million in the fourth quarter and approximately $45 million in total for 2009.
• Depreciation and software amortization: around $22 million in the fourth quarter and approximately $90 million in total for 2009.