Revenue up 19% quarter-over-quarter, driven by hard disk recovery, flash storage processor demand and new product cycles

MILPITAS, Calif., April 25, 2012 –LSI Corporation (NYSE: LSI) today reported results for its first quarter ended April 1, 2012.

First Quarter 2012 Highlights

  • First quarter 2012 revenues from continuing operations* of $622 million
  • First quarter 2012 GAAP** income from continuing operations of 13 cents per diluted share
  • First quarter 2012 non-GAAP*** income from continuing operations of 20 cents per diluted share
  • First quarter 2012 operating cash flows of $50 million

Second Quarter 2012 Business Outlook

  • Projected revenues from continuing operations* of $630 million to $670 million
  • GAAP**income from continuing operations in the range of $0.03 to $0.13 per share
  • Non-GAAP*** income from continuing operations in the range of $0.15 to $0.21 per share

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

** Generally Accepted Accounting Principles.
***  Excludes stock-based compensation, amortization of acquisition-related intangibles, purchase accounting effect on inventory, restructuring of operations and other items, net, gain on remeasurement of a pre-acquisition equity interest to fair value and gain/loss on sale/write-down of investments. It also excludes the income tax effect associated with the above-mentioned items. It also excludes, in the case of non-GAAP net income, gain from the sale of the external storage systems business.

“Our performance in the first quarter demonstrates the positive results of our multi-year growth strategy and our ability to outgrow the storage and networking markets we serve. The significant revenue growth was driven by better-than-expected growth in our HDD business, strength in our new SandForce flash business and contribution from various new product cycles,” said Abhi Talwalkar, LSI president and CEO. “Going forward, LSI is firmly established as a central player in some of the most critical growth trends in computing, including cloud, Big Data, mobile networking and flash, with products that are bringing exciting new levels of speed and productivity to our customers.”

First quarter 2012 revenues from continuing operations were $622 million, above the high end of updated guidance, compared to $473 million generated from continuing operations in the first quarter of 2011, and compared to $523 million generated from continuing operations in the fourth quarter of 2011.

First quarter 2012 GAAP** income from continuing operations was $75 million or 13 cents per diluted share, compared to first quarter 2011 GAAP income from continuing operations of $19 million or 3 cents per diluted share. Fourth quarter 2011 GAAP income from continuing operations was $11 million or 2 cents per diluted share. First quarter 2012 GAAP income from continuing operations included a net charge of $42 million from special items, consisting primarily of approximately $31 million of stock-based compensation expense, $30 million of amortization of acquisition-related items, $15 million of net restructuring and other items, $14 million of purchase accounting effect on inventory, a $43 million favorable income tax effect and a $6 million gain on remeasurement of a pre-acquisition equity interest to fair value.

First quarter 2012 non-GAAP*** income from continuing operations was $117 million or 20 cents per diluted share, compared to first quarter 2011 non-GAAP income from continuing operations of $65 million or 10 cents per diluted share. Fourth quarter 2011 non-GAAP income from continuing operations was $73 million or 13 cents per diluted share.

Cash and short-term investments totaled approximately $623 million at quarter end. The company completed first-quarter purchases of approximately 4.6 million shares of its common stock for approximately $38 million, and on a cumulative basis, LSI has repurchased a total of 77 million shares and utilized approximately $537 million of the company’s current $750 million share repurchase program.

“In the first quarter, LSI delivered double-digit revenue growth and demonstrated significant progress towards our business model and non-GAAP operating margin target,” said Bryon Look, LSI CFO and chief administrative officer. “Year over year, our revenues grew 32% and non-GAAP income from operations increased 80%.”

LSI 2Q2012 Business Outlook for Continuing Operations

GAAP** Special Items Non-GAAP***
Revenue $630 million to $670 million $630 million to $670 million
Gross Margin 47% – 51% $20 million to $30 million 52% – 54%​
Operating Expenses $255 million to $275 million $30 million to $40 million $225 million to $235 million​
Net Other Income ​$3 million $3 million​
Tax Approximately $11 million​ Approximately $11 million​
(Loss)/Income from Continuing Operations Per Share​ $0.03 to $0.13 ($0.08) to ($0.12)​ $0.15 to $0.21​
Diluted Share Count​ ​600 million 600 million​

Capital spending is projected to be around $20 million in the second quarter and approximately $125 million in total for 2012.

Depreciation and software amortization is projected to be around $16 million in the second quarter and approximately $65 million in total for 2012.

LSI Conference Call Information

LSI will hold a conference call today at 2 p.m. PDT to discuss first quarter 2012 financial results and the second quarter 2012 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 ability to successfully integrate and manage the SandForce business and retain its key employees; our ability to achieve anticipated synergies and to develop integrated new products following our acquisition of SandForce; our ability to eliminate costs related to the external storage systems business that we sold in 2011; our ability to repurchase our common stock at prices we believe to be advantageous; the impact of the 2011 floods in Thailand; 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 macro-economic 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) designs semiconductors and software that accelerate storage and networking in datacenters and mobile networks. Our technology is the intelligence critical to enhanced application performance, and is applied in solutions created in collaboration with our partners. More information is available at www.lsi.com.

LSI and the LSI & Design logo are trademarks or registered trademarks of LSI Corporation.
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Q1 2012 Financial Tables (PDF, 40KB)