LSI Reports Fourth Quarter and Full-Year 2008 Results

MILPITAS, Calif., Jan. 28 /PRNewswire-FirstCall/ -- LSI Corporation (NYSE: LSI) today reported results for its fourth quarter and full year ended December 31, 2008.

            Fourth Quarter and Full-Year 2008 News Release Summary

    -- Fourth quarter 2008 revenues of $610 million

    -- Fourth quarter 2008 GAAP* net loss of 94 cents per share, including
       goodwill and other intangible asset impairment charges of 84 cents per
       share

    -- Fourth quarter 2008 non-GAAP** net income of 6 cents per diluted share

    -- Fourth quarter operating cash flows of $98 million

    -- Full-year 2008 revenues of $2.7 billion

    -- Cash and short-term investments of $1.1 billion


                     First Quarter 2009 Business Outlook

    -- Projected revenues of $440 million to $500 million

    -- GAAP* net loss in the range of 10 to 20 cents per share

    -- Non-GAAP** net loss in the range of breakeven to 7 cents per diluted
       share


    * Generally Accepted Accounting Principles.

    ** Excludes goodwill and other intangible asset impairment, stock-based
       compensation, amortization of acquisition-related intangibles,
       restructuring of operations and other items, net, purchase accounting
       effect on inventory, loss on write-down of debt/equity securities, gain
       on repurchase of convertible subordinated notes and acquired in-process
       research and development.  It also excludes the income tax effect
       associated with the above mentioned items.

Fourth quarter 2008 revenues were $610 million, an 18% decrease year-over-year compared to $741 million reported in the fourth quarter of 2007, and down 15% sequentially compared to $714 million reported in the third quarter of 2008.

Fourth quarter 2008 GAAP* net loss was $606 million or 94 cents per share, compared to fourth quarter 2007 GAAP net loss of $2.0 billion or $2.87 per share. Fourth quarter 2008 GAAP results compare to third quarter 2008 GAAP net income of $11 million or 2 cents per diluted share. Fourth quarter 2008 GAAP net loss included a net charge of $648 million from special items, including a $542 million non-cash charge for impairment of goodwill and other intangible assets, $61.1 million of amortization of acquisition-related items, $18 million of stock-based compensation expense, $16.8 million in net restructuring and other items, and $10.8 million in write-down of investments.

Fourth quarter 2008 non-GAAP** net income was $41 million or 6 cents per diluted share, compared to fourth quarter 2007 non-GAAP net income of $94 million or 13 cents per diluted share. Third quarter 2008 non-GAAP net income was $94 million or 14 cents per diluted share.

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

"Fourth quarter revenues were within our revised guidance range, with weakening demand for our semiconductor products partially offset by seasonally higher sales of storage systems," said Abhi Talwalkar, LSI president and chief executive officer. "While we continue to execute well, we have taken aggressive steps to lower our operating expenses in light of the current business climate.

"Going forward, we intend to play offense by seeking to extend our competitive lead in key areas, increasing our design win momentum, and managing our cash well to position ourselves as a stronger player when economic conditions improve."

LSI recorded full-year 2008 revenues of $2.68 billion, a 3% increase compared to $2.60 billion in 2007. The company reported 2008 GAAP net loss of $622 million or 96 cents per share. Full-year 2008 GAAP net loss included a net charge of $905 million from special items, including a $542 million non-cash charge for impairment of goodwill and other intangible assets, $236 million in the amortization of acquisition-related items, $44 million of restructuring costs, and $72 million of stock-based compensation expense. Full-year 2008 GAAP results compare to full-year 2007 GAAP net loss of $2.49 billion or $3.87 per share.

Non-GAAP net income for 2008 was $283 million or 44 cents per diluted share compared to 2007 non-GAAP net income of $168 million or 26 cents per diluted share.

Bryon Look, LSI CFO and chief administrative officer, said, "Despite challenging conditions in the fourth quarter, we delivered a 68% improvement in non-GAAP net income in 2008 compared to 2007 and generated strong positive operating cash flows. We ended the year with more than $1.1 billion in cash, and repurchased approximately $119 million of debt during the quarter."


                   LSI First Quarter 2009 Business Outlook

                         GAAP*           Special Items         Non-GAAP**
    Revenue       $440 million to $500                    $440 million to $500
                        million                                 million
    Gross Margin       30 - 34%        $30 to $40 million       41 - 43%
    Operating     $265 million to $285 $45 to $55 million   $220 million to
     Expenses           million                              $230 million
    Net Other       ($2) million                             ($2) million
     Income
    Tax           Approximately ($14)                       Approximately 15%
                        million
    Net (Loss)/   ($0.20) to ($0.10)    ($0.10) to ($0.13)  ($0.07) to $0.00
     Income Per
     Share
    Diluted           649 million                              649 million
     Share
     Count

Capital spending is projected to be around $13 million in the first quarter and approximately $50 million in total for 2009.

Depreciation and software amortization is projected to be around $20 million in the first quarter and approximately $85 million in total for 2009.

LSI Conference Call Information

LSI will hold a conference call today at 2 p.m. PST to discuss fourth quarter financial results and the first quarter 2009 business outlook. Internet users can access the conference call at http://www.lsi.com/webcast. Subsequent to the conference call, a replay will be available at the same web address.

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