LSI Reports Fourth Quarter and Full-Year 2009 Results

Jan 27, 2010, 16:01 ET from LSI Corporation

MILPITAS, Calif., Jan. 27 /PRNewswire-FirstCall/ -- LSI Corporation (NYSE: LSI) today reported results for its fourth quarter and full year ended December 31, 2009.

Fourth Quarter and Full-Year 2009 News Release 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
    
    
    
    *   Generally Accepted Accounting Principles. 
    **  Excludes goodwill and other intangible asset impairment, stock-based
        compensation, amortization of acquisition-related intangibles, 
        purchase accounting effect on inventory, restructuring of operations 
        and other items, net, write-down of debt and equity securities and 
        gain on repurchase of convertible subordinated notes. It also excludes
        the income tax effect associated with the above mentioned items. 
    

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."

    
    
                    LSI First Quarter 2010 Business Outlook
    
                             GAAP*       Special Items    Non-GAAP**
                             -----       -------------    ----------
    Revenue             $590 million to                   $590 million to
    -------              $620 million                      $620 million
                         ------------                      ------------
    Gross Margin             39% –       $25 million to       45% –
    ------------              43%         $35 million          47%
                              --          -----------          ----
    Operating Expenses  $238 million to  $20 million to   $218 million to
    ------------------   $258 million     $30 million      $228 million
                         ------------     -----------      ------------
    Net Other
     (Loss)/Income       ($1 million)                    ($1 million)
    --------------       ------------                    ------------
    Tax                  Approximately                   Approximately
    ---                   $8 million                      $8 million
                          ----------                      ----------
    Net (Loss)/Income
     Per Share            ($0.06) to       ($0.07) to        $0.04 to
    -----------------        $0.03           ($0.10)           $0.10
                           ---------       ----------        ---------
    Diluted Share Count   658 million                     667 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.

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 2010 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.

Forward-Looking Statements: This news release contains forward-looking statements that are based on the current opinions and estimates of management. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could cause LSI's actual results to differ materially from those set forth in the forward-looking statements include, but are not limited to: our reliance on major customers and suppliers; our ability to keep up with rapid technological change; our ability to compete successfully in competitive markets; fluctuations in the timing and volumes of customer demand; the unavailability of appropriate levels of manufacturing capacity; and general industry and market conditions. For additional information, see the documents filed by LSI with the Securities and Exchange Commission, and specifically the risk factors set forth in the company's most recent reports on Form 10-K and 10-Q. LSI disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About LSI

LSI Corporation (NYSE: LSI) is a leading provider of innovative silicon, systems and software technologies that enable products which seamlessly bring people, information and digital content together. The company offers a broad portfolio of capabilities and services including custom and standard product ICs, adapters, systems and software that are trusted by the world's best known brands to power leading solutions in the Storage and Networking markets. More information is available at www.lsi.com.

Editor's Notes:

  1. All LSI news releases (financial, acquisitions, manufacturing, products, technology, etc.) are issued exclusively by PR Newswire and are immediately thereafter posted on the company's external website, http://www.lsi.com.
  2. LSI and the LSI & Design logo are trademarks or registered trademarks of LSI Corporation.
  3. All other brand or product names may be trademarks or registered trademarks of their respective companies.
    
    
                           LSI CORPORATION
                  Condensed Consolidated Balance Sheets
                             (In millions)
                              (Unaudited)
    
                                         December 31, October 4, December 31,
    Assets                                    2009       2009         2008
    ------                                    ----       ----         ----
    
    Current assets:
        Cash and short-term investments     $962.1     $907.1     $1,119.1
        Accounts receivable, net             339.0      307.2        304.0
        Inventories                          169.3      155.5        220.5
        Prepaid expenses and other
         current assets                      115.1      140.3        155.9
                                             -----      -----        -----
            Total current assets           1,585.5    1,510.1      1,799.5
    
    Property and equipment, net              219.0      215.9        236.0
    Goodwill and identified intangible
     assets, net                             927.9      970.7      1,065.6
    Other assets                             235.5      228.5        243.1
                                             -----      -----        -----
    
            Total assets                  $2,967.9   $2,925.2     $3,344.2
                                          --------   --------     --------
    Liabilities and Stockholders' Equity
    ------------------------------------
    
    Current
     liabilities:
        Current portion of long-term debt   $350.0     $350.0       $245.1
        Other current liabilities            504.4      484.6        552.4
                                             -----      -----        -----
    
            Total current liabilities        854.4      834.6        797.5
    
    Long-term debt, net of current
     portion                                     -          -        350.0
    Pension, tax and other liabilities       652.4      690.6        755.8
                                             -----      -----        -----
            Total liabilities              1,506.8    1,525.2      1,903.3
                                           -------    -------      -------
    Stockholders' equity:
        Common stock and additional
         paid-in capital                   6,149.2    6,129.6      6,065.3
        Accumulated deficit               (4,408.5)  (4,473.3)    (4,360.8)
        Accumulated other
         comprehensive loss                 (279.6)    (256.3)      (263.6)
                                            ------     ------       ------
    
            Total stockholders' equity     1,461.1    1,400.0      1,440.9
                                           -------    -------      -------
    
            Total liabilities and
             stockholders' equity         $2,967.9   $2,925.2     $3,344.2
                                          --------   --------     --------
    
    
    
    
    
    
                            LSI CORPORATION
               Consolidated Statements of Operations (GAAP)
                  (In thousands, except per share amounts)                  
                             (Unaudited)
    
                                                   Three Months Ended
                                                   ------------------
                                         December 31, October 4, December 31,
                                             2009        2009       2008
                                             ----        ----       ----
    
    Revenues                               $637,796    $578,419   $609,959
    
        Cost of revenues                    335,792     315,067    334,398
        Purchase accounting effect
         on inventory                            56       1,892          -
        Amortization of acquisition
         related intangibles                 33,448      34,177     46,074
        Stock-based compensation
         expense                              1,650       1,697      2,384
                                              -----       -----      -----
           Total cost of revenues           370,946     352,833    382,856
                                            -------     -------    -------
    
    Gross profit                            266,850     225,586    227,103
                                            -------     -------    -------
    
        Research and development            146,526     144,661    155,899
        Stock-based compensation
         expense                              6,536       6,386      7,229
                                              -----       -----      -----
           Total research and
            development                     153,062     151,047    163,128
                                            -------     -------    -------
    
        Selling, general and
         administrative                      63,239      66,323     76,211
        Amortization of acquisition
         related intangibles                  9,123       9,123     15,019
        Stock-based compensation
         expense                              5,993       6,729      8,378
                                              -----       -----      -----
           Total selling, general and
            administrative                   78,355      82,175     99,608
                                             ------      ------     ------
    
        Restructuring of operations
         and other items, net                 2,286       4,745     16,848
        Goodwill and identified
         intangible asset
         impairment charges                       -           -    541,586
                                                ---         ---    -------
    
    Income/(loss) from operations            33,147     (12,381)  (594,067)
    
        Interest expense                     (3,932)     (3,899)    (8,013)
        Interest income and other,
         net                                  4,530       3,535      5,231
                                              -----       -----      -----
    
    Income/(loss) before
     income taxes                            33,745     (12,745)  (596,849)
    (Benefit)/provision for
     income taxes                           (31,081)    (65,230)     9,500
                                            -------     -------      -----
    
    Net income/(loss)                       $64,826     $52,485  $(606,349)
                                            -------     -------  ---------
    
    Net income/(loss) per share:
        Basic                                 $0.10       $0.08     $(0.94)
                                              -----       -----     ------
        Diluted                               $0.10       $0.08     $(0.94)
                                              -----       -----     ------
    
    Shares used in computing
     per share amounts:
        Basic                               654,560     651,865    646,315
                                            -------     -------    -------
        Diluted                             663,237     658,963    646,315
                                            -------     -------    -------
    
    
                                                          Year Ended
                                                          ----------
                                                  December 31,  December 31,
                                                      2009        2008
                                                      ----        ----
    
    Revenues                                       $2,219,159  $2,677,077
    
        Cost of revenues                            1,228,776   1,420,905
        Purchase accounting effect on
         inventory                                      4,498           -
        Amortization of acquisition
         related intangibles                          135,102     177,934
        Stock-based compensation expense                7,382       9,269
                                                        -----       -----
           Total cost of revenues                   1,375,758   1,608,108
                                                    ---------   ---------
    
    Gross profit                                      843,401   1,068,969
                                                    ---------   ---------
    
        Research and development                      580,333     643,297
        Stock-based compensation
         expense                                       27,979      29,214
                                                       ------      ------
           Total research and
            development                               608,312     672,511
                                                      -------     -------
    
        Selling, general and
         administrative                               260,900     315,112
        Amortization of acquisition
         related intangibles                           36,492      57,963
        Stock-based compensation
         expense                                       28,622      33,800
                                                       ------      ------
           Total selling, general and
            administrative                            326,014     406,875
                                                      -------     -------
    
        Restructuring of operations
         and other items, net                          38,246      43,717
        Goodwill and identified
         intangible asset impairment
         charges                                            -     541,586
                                                          ---     -------
    
    Income/(loss) from operations                    (129,171)   (595,720)
    
        Interest expense                              (21,931)    (34,943)
        Interest income and other,
         net                                           20,272      36,110
                                                       ------      ------
    
    Income/(loss) before income
     taxes                                           (130,830)   (594,553)
    (Benefit)/provision for
     income taxes                                     (83,111)     27,700
                                                      -------      ------
    
    Net income/(loss)                                $(47,719)  $(622,253)
                                                     --------   ---------
    
    Net income/(loss) per share:
        Basic                                          $(0.07)     $(0.96)
                                                       ------      ------
        Diluted                                        $(0.07)     $(0.96)
                                                       ------      ------
    
    Shares used in computing per
     share amounts:
        Basic                                         651,238     647,953
                                                      -------     -------
    
        Diluted                                       651,238     647,953
                                                      -------     -------
    
    
    A reconciliation of net income/(loss) on the GAAP basis to non-GAAP
    net income is included below.
                                         
                                         
    Reconciliation of
     GAAP net income/                     Three Months Ended
     (loss) to                            ------------------    
        non-GAAP net           December 31,       October 4,      December 31,
         income:                  2009             2009             2008
        ------------              ----             ----             ----
    
    GAAP net income/
     (loss)                      $64,826          $52,485        $(606,349)
                                 -------          -------        ---------
    
    Special items:
    a) Stock-based compensation
       expense - cost  
       of revenues                 1,650            1,697            2,384
    b) Stock-based compensation
       expense - R&D               6,536            6,386            7,229
    c) Stock-based
       compensation  
       expense - SG&A              5,993            6,729            8,378
    d) Amortization
       of acquisition
       related intangibles -
       cost of revenues           33,448           34,177           46,074
    e) Amortization
       of acquisition related  
       intangibles - SG&A          9,123            9,123           15,019
    f) Purchase
       accounting effect
       on inventory                   56            1,892                -
    g) Restructuring
       of operations and
       other items, net            2,286            4,745           16,848
    h) Goodwill and
       identified intangible asset
       impairment charges              -                -          541,586
    i) Write-down of debt and
       equity securities               -            1,650           10,773
    j) Gain on repurchase of
       convertible subordinated
       notes                           -                -           (3,178)
    k) Income tax effect of above
       items                           -                -            2,529
                                     ---              ---            -----
    
           Total special items    59,092           66,399          647,642
                                  ------           ------          -------
    
    Non-GAAP net income         $123,918         $118,884          $41,293
                                --------         --------          -------
    
    Non-GAAP net income per share:
        Basic                      $0.19            $0.18            $0.06
                                   -----            -----            -----
        Diluted *                  $0.18            $0.18            $0.06
                                   -----            -----            -----
    
    Shares used in computing
     non-GAAP per share amounts:
        Basic                    654,560          651,865          646,315
                                 -------          -------          -------
        Diluted                  689,317          685,043          646,512
                                 -------          -------          -------
    
                                                             Year Ended
                                                             ----------
    Reconciliation of GAAP net income/
     (loss) to                                       December 31, December 31,
        non-GAAP net income:                            2009           2008
        --------------------                            ----           ----
    
    GAAP net income/(loss)                            $(47,719)     $(622,253)
                                                      --------      ---------
    
    Special items:
    a) Stock-based compensation expense - cost
       of revenues                                       7,382          9,269
    b) Stock-based compensation expense - R&D           27,979         29,214
    c) Stock-based compensation expense - SG&A          28,622         33,800
    d) Amortization of acquisition related
       intangibles - cost of revenues                  135,102        177,934
    e) Amortization of acquisition related
       intangibles - SG&A                               36,492         57,963
    f) Purchase accounting effect on inventory           4,498              -
    g) Restructuring of operations and
       other items, net                                 38,246         43,717
    h) Goodwill and identified intangible
       asset impairment charges                              -        541,586
    i) Write-down of debt and equity securities          1,650         15,273
    j) Gain on repurchase of convertible
       subordinated notes                                    -         (3,178)
    k) Income tax effect of above items                      -           (292)
                                                           ---           ----
    
           Total special items                         279,971        905,286
                                                       -------        -------
    
    Non-GAAP net income                               $232,252       $283,033
                                                      --------       --------
    
    Non-GAAP net income per share:
        Basic                                            $0.36          $0.44
                                                         -----          -----
        Diluted *                                        $0.35          $0.44
                                                         -----          -----
    
    Shares used in computing non-GAAP
     per share amounts:
        Basic                                          651,238        647,953
                                                       -------        -------
        Diluted                                        658,679        649,176
                                                       -------        -------
    
    
    * In computing non-GAAP diluted earnings per share for three months
      ended December 31 and October 4, 2009, net income was increased by
      $3,500 for interest, net of taxes, on the $350
      million convertible notes considered dilutive common stock.
    
    
    
    
                              
                               
    Reconciliation of GAAP
     to non-GAAP shares
     used in the                           Three Months Ended
     calculation                           ------------------
        of diluted per share     December 31,    October 4,       December 31,
         amounts:                    2009           2009              2008
        --------------------         ----           ----              ----
    
    Diluted shares used in
     per-share computation
      - GAAP                       663,237        658,963           646,315
    Dilutive stock awards                -              -               197
    Effect of $350 million
     convertible notes
     considered dilutive            26,080         26,080                 -
                                    ------         ------               ---
    Diluted shares used in
     per-share computation
     - non-GAAP                    689,317        685,043           646,512
                                   -------        -------           -------
    
    
                                              
    Reconciliation of
     GAAP to non-GAAP
     shares used in the                        Year Ended
     calculation                               ---------- 
     of diluted per share             December 31,    December 31,
      amounts:                           2009            2008
     --------------------                ----            ----
    
    Diluted shares used
     in per-share
     computation  - GAAP               651,238         647,953
    Dilutive stock awards                7,441           1,223
    Effect of $350
     million convertible
     notes considered
     dilutive                               -               -
                                          ---             ---
    Diluted shares used
     in per-share
     computation - non-
     GAAP                              658,679         649,176
                                       -------         -------
    
    
    
    
                                LSI CORPORATION
                    Consolidated Statement of Cash Flows
                                (In thousands)
                                  (Unaudited)
    
                                                 Three Months Ended
                                                 ------------------
                                        December 31, October 4, December 31,
                                             2009      2009       2008
                                             ----      ----       ----
    
    Operating activities:
    Net income/(loss)                      $64,826   $52,485  $(606,349)
    Adjustments:
        Depreciation and amortization *     69,244    67,600     84,278
        Stock-based compensation
         expense                            14,179    14,812     17,991
        Non-cash restructuring of
         operations and other items, net         -       699     (1,052)
        Goodwill and identified
         intangible asset impairment
         charges                                 -         -    541,586
        Gain on redemption/repurchase
         of convertible subordinated
         notes                                   -         -     (3,178)
        Write-down of debt and equity
         securities, net of gain on sale
         of equity securities                    -     1,529     10,773
        Loss/(gain) on sale of property
         and equipment                          75      (337)      (137)
        Non-cash foreign exchange loss         986     8,431     18,481
        Deferred taxes                       3,316      (242)     5,630
        Changes in assets and
         liabilities, net of assets
         acquired and liabilities
            assumed in business
             combinations:
            Accounts receivable, net       (31,769)  (39,271)    97,149
            Inventories                    (13,814)    4,824    (10,577)
            Prepaid expenses and other
             assets                         20,197     4,814     42,832
            Accounts payable                15,001    46,807    (37,806)
            Accrued and other liabilities  (65,490)  (93,493)   (61,434)
                                           -------   -------    -------
    Net cash provided by operating
     activities                             76,751    68,658     98,187
                                            ------    ------     ------
    
    Investing activities:
        Purchases of debt securities
         available-for-sale                      -         -    (31,947)
        Proceeds from maturities and
         sales of debt securities
         available-for-sale                 12,932    13,695    108,438
        Purchases of equity securities      (4,625)   (4,534)         -
        Proceeds from sales of equity
         securities                                      165
        Purchases of property, equipment
         and software                      (21,266)  (20,137)   (39,584)
        Proceeds from sale of property
         and equipment                          24     2,637      2,274
        Acquisition of business and
         companies, net of cash acquired         -   (26,141)         -
        Decrease/(increase) in non-
         current assets and deposits             -         -          -
        Proceeds from maturity of notes
         receivable associated with sale
         of semiconductor operations in
         Thailand                                -    10,000     20,000
        Proceeds received from the
         resolution of a pre-
         acquisition income tax
            contingency                          -         -          -
                                           -------   -------     ------
    
    
    Net cash (used in)/provided by
     investing activities                  (12,935)  (24,315)    59,181
                                           -------   -------     ------
    
    Financing activities:
       Redemption/repurchase of
        convertible subordinated notes           -         -   (116,636)
       Issuance of common stock              8,707     3,367      6,558
       Purchase of minority interest in
        subsidiary                                                  (70)
       Purchase of common stock under
        repurchase programs                      -         -          -
                                               ---       ---        ---
    Net cash provided by/(used in)
     financing activities                    8,707     3,367   (110,148)
                                             -----     -----   --------
    
    
    Effect of exchange rate changes
     on cash and cash equivalents              383     2,721     (2,829)
                                               ---     -----     ------
    
    Increase/(decrease) in cash and
     cash equivalents                       72,906    50,431     44,391
    
    Cash and cash equivalents at
     beginning of period                   705,385   654,954    784,910
                                           -------   -------    -------
    
    Cash and cash equivalents at end
     of period                            $778,291  $705,385   $829,301
                                          ========  ========   ========
    
    
    
    
    
                                                            Year Ended
                                                            ----------
                                                     December 31, December 31,
                                                         2009       2008
                                                         ----       ----
    Operating activities:
    Net income/(loss)                                  $(47,719) $(622,253)
    Adjustments:
        Depreciation and amortization*                  268,162    324,223
        Stock-based compensation expense                 63,983     72,283
        Non-cash restructuring of operations and
         other items, net                                   690     (4,215)
        Goodwill and identified intangible asset
         impairment charges                                   -    541,586
        Gain on redemption/repurchase of convertible
         subordinated notes                                (149)    (3,178)
        Write-down of debt and equity securities, net of
         gain on sale of equity securities                1,529     15,273
        Loss/(gain) on sale of property and equipment      (145)      (123)
        Non-cash foreign exchange loss                    1,301     25,469
        Deferred taxes                                    3,063     10,027
        Changes in assets and liabilities, net of assets
         acquired and liabilities assumed in
         business combinations:
            Accounts receivable, net                    (34,986)   102,386
            Inventories                                  64,592     20,307
            Prepaid expenses and other assets            68,469     52,024
            Accounts payable                              8,420   (130,129)
            Accrued and other liabilities              (192,736)  (125,628)
                                                       --------   --------
    Net cash provided by operating activities           204,474    278,052
                                                        -------    -------
    
    Investing activities:
        Purchases of debt securities available-for-sale     (10)  (190,548)
        Proceeds from maturities and sales of
         debt securities available-for-sale              90,572    240,157
        Purchases of equity securities                  (14,159)    (8,500)
        Proceeds from sales of equity securities            165          -
        Purchases of property, equipment and software   (90,004)  (134,589)
        Proceeds from sale of property and equipment      2,773     13,674
        Acquisition of business and companies, net
         of cash acquired                               (46,981)   (95,137)
        Decrease/(increase) in non-current assets
         and deposits                                    13,501    (13,300)
        Proceeds from maturity of notes receivable
         associated with sale of semiconductor
         operations in Thailand                          10,000     20,000
        Proceeds received from the resolution of a
         pre-acquisition income tax contingency               -      4,821
                                                        -------   --------
    
    Net cash (used in)/provided by investing
     activities                                         (34,143)  (163,422)
                                                        -------   --------
    
    Financing activities:
       Redemption/repurchase of convertible
        subordinated notes                             (244,047)  (116,636)
       Issuance of common stock                          18,747     42,928
       Purchase of minority interest in subsidiary            -        (70)
       Purchase of common stock under
        repurchase programs                                   -   (229,231)
                                                            ---   --------
    Net cash provided by/(used in)
     financing activities                              (225,300)  (303,009)
                                                       --------   --------
    
    
    Effect of exchange rate
     changes on cash and cash equivalents                 3,959     (3,889)
                                                          -----     ------
    
    Increase/(decrease) in cash and cash equivalents    (51,010)  (192,268)
    
    Cash and cash equivalents at beginning of period    829,301  1,021,569
                                                        -------  ---------
    
    Cash and cash equivalents at end of period         $778,291   $829,301
                                                       ========   ========
    
    
    * Depreciation of fixed assets and amortization of intangible assets,
      software, capitalized intellectual property, premiums on short-term
      investments, debt issuance costs,
      and accrued debt premium.
    
    
    
                                  LSI CORPORATION
                      Selected Financial Information (GAAP)
                                   (In millions)
                                    (Unaudited)
    
                                    Three Months Ended
                                    ------------------
                                    December 31, October 4, December 31,
                                       2009        2009         2008
                                       ----        ----         ----
    
     Semiconductor revenues           $380.8      $371.8     $373.8
     Storage Systems revenues         $257.0      $206.6     $236.2
     Total revenues                   $637.8      $578.4     $610.0
     Percentage change in
      revenues-qtr./qtr. ( a )          10.3%       11.1%     -14.6%
     Percentage change in
      revenues-yr./yr. ( b )             4.6%      -19.0%     -17.7%
    
     Days sales outstanding               48          48         45
     Days of inventory                    41          40         52
     Current ratio                       1.9         1.8        2.3
     Quick ratio                         1.5         1.5        1.8
    
     Gross margin as a
      percentage of revenues            41.8%       39.0%      37.2%
     R&D as a percentage of
      revenues                          24.0%       26.1%      26.7%
     SG&A as a percentage of
      revenues                          12.3%       14.2%      16.3%
    
     Employees  ( c )                  5,397       5,318      5,488
     Revenues per employee (in
      thousands) ( d )                $472.7      $435.1     $444.6
    
     Selected Cash Flow
      Information:
     ------------------
     Purchases of property and
      equipment ( e )                  $14.1       $11.4      $17.1
     Depreciation and
      amortization ( f )               $26.2       $23.9      $23.1
    
    
    ( a )  Represents a sequential quarterly change in revenues.
    ( b )  Represents a change in revenues in the quarter presented as
           compared to the same quarter of the previous year.
    ( c )  Actual number of employees at the end of each period presented.
    ( d )  Revenues per employee is calculated by annualizing revenues
           for each quarter presented and dividing it by the
           number of employees.
    ( e )  Excludes purchases of software.
    ( f )  Represents depreciation of fixed assets and amortization of
           software.
    
    
    

SOURCE LSI Corporation



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