LSI Reports First Quarter 2009 Results

MILPITAS, Calif., April 29 /PRNewswire-FirstCall/ -- LSI Corporation (NYSE:
LSI) today reported results for its first quarter ended April 5, 2009.

First Quarter News Release Summary

-- First quarter 2009 revenues of $482 million
-- First quarter 2009 GAAP* net loss of ($0.16) per share
-- First quarter 2009 non-GAAP** net loss of ($0.03) per share

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

Second Quarter 2009 Business Outlook

-- Projected revenues of $470 million to $530 million
-- GAAP* net loss in the range of ($0.09) to ($0.19) per share

-- Non-GAAP** net income (loss) in the range of $0.01 to ($0.06) per
share

* Generally Accepted Accounting Principles.
** Excludes goodwill and other intangible asset impairment charges, stock-
based compensation, amortization of acquisition-related intangibles,
restructuring of operations and other items, net, 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.

First quarter 2009 revenues were $482 million, a 27% decrease year-over-year
compared to $661 million reported in the first quarter of 2008, and down 21%
sequentially compared to $610 million reported in the fourth quarter of 2008.

First quarter 2009 GAAP* net loss was $104 million or 16 cents per share,
compared to first quarter 2008 GAAP net loss of $14 million or 2 cents per
share. First quarter 2009 GAAP results compare to fourth quarter 2008 GAAP net
loss of $606 million or 94 cents per share. First quarter 2009 GAAP net loss
included a net charge of $86 million from special items, consisting primarily
of $42.7 million of amortization of acquisition-related items, $25.2 million
in net restructuring and other items and $18 million of stock-based
compensation expense.

First quarter 2009 non-GAAP** net loss was $18 million or 3 cents per share,
compared to first quarter 2008 non-GAAP net income of $64 million or 10 cents
per diluted share. Fourth quarter 2008 non-GAAP net income was $41 million or
6 cents per diluted share.

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

"Despite continued macroeconomic uncertainty, our first quarter revenues were
above the midpoint of our guidance range with our storage semiconductor and
networking businesses demonstrating strength late in the quarter," said Abhi
Talwalkar, LSI president and chief executive officer. "We have also
significantly lowered our operating expenses while continuing to invest in key
opportunities which position us to grow at above-market rates coming out of
the downturn."

Bryon Look, LSI CFO and chief administrative officer, said, "Through a
combination of effective cost controls and streamlining actions, operating
expenses for the quarter came in below our expected range. Inventory levels
were also sequentially down and sharply lower on a year-over-year basis,
contributing to our continued balance sheet strength."

LSI Second Quarter 2009 Business Outlook

GAAP* Special Items Non-GAAP**
Revenue $470 million to $470 million to
$530 million $530 million
Gross Margin 33 - 37% $33 to $40 41 - 43%
million
Operating
Expenses $245 million to $32 to $45 $213 million
$268 million million to $223 million
Net Other
Income ($2) million ($2) million

Tax Approximately Approximately
$6 million $6 million
Net (Loss)/
Income Per
Share ($0.19) to ($0.10) to ($0.06) to
($0.09) ($0.13) $0.01
Diluted Share
Count 650 million 650 million

Capital spending is projected to be around $15 million in the second quarter
and approximately $50 million in total for 2009.

Depreciation and software amortization is projected to be around $20 million
in the second quarter and approximately $90 million in total for 2009.

LSI Conference Call Information
LSI will hold a conference call today at 2 p.m. PDT to discuss first quarter
financial results and the second 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.

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; our ability to successfully
transition the operations of Agere Systems to our enterprise resource planning
system; 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 logo design 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)

April 5, December 31, March 30,
Assets 2009 2008 2008
------ ---- ---- ----

Current assets:
Cash and short-term
investments $1,073.8 $1,119.1 $1,236.8
Accounts receivable, net 273.3 304.0 332.1
Inventories 201.2 220.5 258.6
Prepaid expenses and other
current assets 136.7 155.9 158.6
----- ----- -----

Total current assets 1,685.0 1,799.5 1,986.1

Property and equipment, net 226.6 236.0 235.2
Goodwill and other intangible
assets, net 1,022.9 1,065.6 1,665.9
Other assets 243.5 243.1 252.5
----- ----- -----

Total assets $3,178.0 $3,344.2 $4,139.7
-------- -------- --------

Liabilities and Stockholders' Equity
------------------------------------

Current liabilities:
Current portion of long-term debt $244.6 $245.1 $-
Other current liabilities 490.0 552.4 729.0
----- ----- -----

Total current liabilities 734.6 797.5 729.0

Long-term debt 350.0 350.0 717.2
Pension, tax and other liabilities 750.8 755.8 407.0
----- ----- -----

Total liabilities 1,835.4 1,903.3 1,853.2
------- ------- -------

Minority interest in subsidiary - - 0.3
--- --- ---

Stockholders' equity:
Common stock and additional
paid-in capital 6,088.4 6,065.3 5,959.2
Accumulated deficit (4,464.3) (4,360.8) (3,752.1)
Accumulated other comprehensive
income/(loss) (281.5) (263.6) 79.1
------ ------ ----

Total stockholders' equity 1,342.6 1,440.9 2,286.2
------- ------- -------

Total liabilities and
stockholders' equity $3,178.0 $3,344.2 $4,139.7
-------- -------- --------

LSI CORPORATION
Consolidated Statements of Operations (GAAP)
(In thousands, except per share amounts)
(Unaudited)

Three Months Ended
------------------
April 5, December 31, March 30,
2009 2008 2008
---- ---- ----

Revenues $482,279 $609,959 $660,747

Cost of revenues 276,584 334,398 356,878
Amortization of acquisition
related intangibles 33,610 46,074 42,255
Stock-based compensation expense 2,013 2,384 2,061
----- ----- -----
Total cost of revenues 312,207 382,856 401,194
------- ------- -------

Gross profit 170,072 227,103 259,553
------- ------- -------

Research and development 147,422 155,899 161,894
Stock-based compensation expense 7,862 7,229 7,823
----- ----- -----
Total research and development 155,284 163,128 169,717
------- ------- -------

Selling, general and
administrative 66,519 76,211 77,708
Amortization of
acquisition
related intangibles 9,123 15,019 13,434
Stock-based
compensation expense 8,115 8,378 7,911
----- ----- -----
Total selling, general and
administrative 83,757 99,608 99,053
------ ------ ------

Restructuring of operations and
other items, net 25,205 16,848 4,564
Goodwill and intangible asset
impairment charges - 541,586 -
--- ------- ---

Loss from operations (94,174) (594,067) (13,781)

Interest expense (7,236) (8,013) (8,978)
Interest income and other, net 5,863 5,231 14,631
----- ----- ------

Loss before income taxes (95,547) (596,849) (8,128)
Provision for income taxes 8,000 9,500 5,500
----- ----- -----

Net loss $(103,547) $(606,349) $(13,628)
--------- --------- --------

Net loss per share:
Basic $(0.16) $(0.94) $(0.02)
------ ------ ------

Diluted $(0.16) $(0.94) $(0.02)
------ ------ ------

Shares used in computing
per share amounts:
Basic 648,459 646,315 661,984
------- ------- -------

Diluted 648,459 646,315 661,984
------- ------- -------

A reconciliation of net loss on the GAAP basis to non-GAAP net income or
loss is included below.

Three Months Ended
------------------
Reconciliation of GAAP net loss April 5, December 31, March 30,
to non-GAAP net (loss)/income: 2009 2008 2008
------------------------------------ ---- ---- ----

GAAP net loss $(103,547) $(606,349) $(13,628)
--------- --------- --------

Special items:
a) Stock-based compensation
expense - cost of revenues 2,013 2,384 2,061
b) Stock-based compensation
expense - R&D 7,862 7,229 7,823
c) Stock-based
compensation expense -
SG&A 8,115 8,378 7,911
d) Amortization of acquisition
related intangibles - cost
of revenues 33,610 46,074 42,255
e) Amortization of acquisition
related intangibles - SG&A 9,123 15,019 13,434
f) Restructuring of operations
and other items, net 25,205 16,848 4,564
g) Goodwill and intangible
asset impairment charges - 541,586 -
h) Write-down of debt and
equity securities - 10,773 -
i) Gain on repurchase of
convertible subordinated notes - (3,178) -
j) Income tax effect of
above items - 2,529 (94)
--- ----- ---

Total special items 85,928 647,642 77,954
------ ------- ------

Non-GAAP net income/(loss) $(17,619) $41,293 $64,326
-------- ------- -------

Non-GAAP net income/(loss) per share:
Basic $(0.03) $0.06 $0.10
------ ----- -----

Diluted $(0.03) $0.06 $0.10
------ ----- -----

Shares used in computing non-
GAAP per share amounts:
Basic 648,459 646,315 661,984
------- ------- -------

Diluted 648,459 646,512 662,485
------- ------- -------

Three Months Ended
------------------
Reconciliation of GAAP to non-GAAP
shares used in the calculation April 5, December 31, March 30,
of diluted per share amounts: 2009 2008 2008
--------------------------------- ---- ---- ----

Diluted shares used in per-
share computation - GAAP 648,459 646,315 661,984
Dilutive stock awards - 197 501
------- ------- -------
Diluted shares used in per-share
computation - non-GAAP 648,459 646,512 662,485
------- ------- -------

LSI CORPORATION
Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)

Three Months Ended
------------------
April 5, December 31, March 30,
2009 2008 2008
---- ---- ----
Operating activities:
Net loss $(103,547) $(606,349) $(13,628)
Adjustments:
Depreciation and
amortization * 65,079 84,278 78,328
Stock-based compensation
expense 17,990 17,991 17,795
Non-cash restructuring and
other items (1) (1,052) (3,291)
Goodwill and intangible
asset impairment charges - 541,586 -
Gain on repurchase of
convertible subordinated
notes - (3,178) -
Write-down of debt and
equity securities - 10,773 -
Loss/(gain) on sale of
property and equipment,
including assets held-for-
sale 100 (137) (12)
Non-cash foreign exchange
(gain)/loss (12,384) 18,481 12,918
Changes in deferred tax
assets and liabilities 73 5,630 2,115
Changes in assets and
liabilities, net of assets
acquired and liabilities
assumed in business
combinations:
Accounts receivable,
net 30,690 97,149 74,272
Inventories 19,340 (10,577) (17,719)
Prepaid expenses and
other assets 32,443 42,832 (4,317)
Accounts payable (63,535) (37,806) (39,432)
Accrued and other
liabilities 3,905 (61,434) (10,828)
----- ------- -------
Net cash (used in)/provided by
operating activities (9,847) 98,187 96,201
------ ------ ------

Investing activities:
Purchases of debt
securities available-for-
sale (10) (31,947) (44,151)
Proceeds from maturities
and sales of debt
securities available-for-
sale 35,882 108,438 50,904
Purchases of equity
securities (5,000) - (3,500)
Purchases of property,
equipment and software (25,463) (39,584) (35,230)
Proceeds from sale of
property and equipment 7 2,274 6,333
Proceeds from maturity
of notes receivable
associated with
sale of semiconductor
operations in Thailand - 20,000 -
Proceeds received from
the resolution of a pre-
acquisition income tax
contingency - - 4,821
--- --- -----
Net cash provided by/(used in)
investing activities 5,416 59,181 (20,823)
----- ------ -------

Financing activities:
Repurchase of convertible
subordinated notes - (116,636) -
Issuance of common stock 1 6,558 346
Purchase of minority interest
in subsidiary - (70) -
Purchase of common stock under
repurchase programs - - (229,231)
--- --- --------
Net cash provided by/(used in)
financing activities 1 (110,148) (228,885)
--- -------- --------

------ ------ -----
Effect of exchange rate changes
on cash
and cash equivalents (2,366) (2,829) 1,816
------ ------ -----

(Decrease)/increase in cash and
cash equivalents (6,796) 44,391 (151,691)

Cash and cash equivalents at
beginning of period 829,301 784,910 1,021,569
------- ------- ---------

Cash and cash equivalents at
end of period $822,505 $829,301 $869,878
======== ======== ========

* 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
------------------
April 5, December 31, March 30,
2009 2008 2008
---- ---- ----

Semiconductor revenues $325.0 $373.8 $458.8
Storage Systems revenues $157.3 $236.2 $201.9
Total revenues $482.3 $610.0 $660.7
Percentage change in revenues-qtr./
qtr. ( a ) -20.9% -14.6% -10.8%
Percentage change in revenues-yr./
yr. ( b ) -27.0% -17.7% 42.0%

Days sales outstanding 51 45 45
Days of inventory 58 52 58
Current ratio 2.3 2.3 2.7
Quick ratio 1.8 1.8 2.2

Gross margin as a percentage of
revenues 35.3% 37.2% 39.3%
R&D as a percentage of revenues 32.2% 26.7% 25.7%
SG&A as a percentage of revenues 17.4% 16.3% 15.0%

Employees ( c ) 5,310 5,488 5,351
Revenues per employee (in
thousands) ( d ) $363.3 $444.6 $493.9

Selected Cash Flow Information:
-------------------------------
Purchases of property and
equipment ( e ) $10.2 $17.1 $21.1
Depreciation and amortization ( f ) $22.5 $23.1 $21.9

( a ) Represents sequential quarterly change in revenues.
( b ) Represents 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

Investor Relations, Sujal Shah, +1-610-712-5471, sujal.shah@lsi.com, or Media
Relations, Mitch Seigle, +1-408-954-3225, mitch.seigle@lsi.com, both of LSI