LSI Reports Fourth Quarter and Full Year 2012 Results

            LSI Reports Fourth Quarter and Full Year 2012 Results

23% revenue growth year-over-year

PR Newswire

SAN JOSE, Calif., Jan. 23, 2013

SAN JOSE, Calif., Jan. 23, 2013 /PRNewswire/ -- LSI Corporation (NASDAQ: LSI)
today reported results for its fourth quarter and full year ended December 31,
2012.

(Logo: http://photos.prnewswire.com/prnh/20120222/SF57952LOGO)

Fourth Quarter and Full Year 2012 Highlights

  oFourth quarter 2012 revenues from continuing operations* of $600 million,
    up 15% year-over-year
  oFourth quarter 2012 GAAP** income from continuing operations of $0.05 per
    diluted share
  oFourth quarter 2012 non-GAAP*** income from continuing operations of $0.18
    per diluted share
  oFourth quarter 2012 operating cash flows of $95 million
  oFull year 2012 revenues of $2.51 billion, up 23% year over year

First Quarter 2013 Business Outlook

  oProjected revenues from continuing operations* of $535 million to $575
    million
  oGAAP** income from continuing operations in the range of ($0.03) to $0.06
    per share
  oNon-GAAP*** income from continuing operations in the range of $0.09 to
    $0.15 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, gain/loss on
    sale/write-down of investments and, in the case of non-GAAP net income,
    gain from the sale of the external storage systems business. It also
    excludes the income tax effect associated with the above-mentioned items.

"2012 was a year of exciting progress for LSI as we delivered 23% revenue
growth, strong expansion in operating margin and earnings per share from
continuing operations, and record design wins. We introduced several important
new products, and customers are increasingly looking to new LSI solutions for
mega datacenters, mobile networks and flash," said Abhi Talwalkar, LSI's
president and CEO. "LSI's intelligent silicon offers proven solutions as
businesses turn to the cloud and look for new ways to accelerate their ability
to quickly analyze, store, share and protect data.While there is uncertainty
in the macro environment and softness in some end markets, we are centered in
dynamic new growth cycles that are expected to drive long-term growth in our
flash, server and networking businesses."

Fourth quarter 2012 revenues from continuing operations were $600 million, in
line with guidance, compared to $523 million generated from continuing
operations in the fourth quarter of 2011, and compared to $624 million
generated from continuing operations in the third quarter of 2012.

Fourth quarter 2012 GAAP** income from continuing operations was $29 million
or $0.05 per diluted share, compared to fourth quarter 2011 GAAP income from
continuing operations of $11 million or $0.02 per diluted share. Third quarter
2012 GAAP income from continuing operations was $40 million or $0.07 per
diluted share. Fourth quarter 2012 GAAP income from continuing operations
included a net charge of $72 million from special items, consisting primarily
of approximately $30 million of amortization of acquisition-related items, $25
million of stock-based compensation expense, $16 million of net restructuring
and other items, and $1 million income tax effect.

Fourth quarter 2012 non-GAAP*** income from continuing operations was $101
million or $0.18 per diluted share, compared to fourth quarter 2011 non-GAAP
income from continuing operations of $73 million or $0.13 per diluted share.
Third quarter 2012 non-GAAP income from continuing operations was $99 million
or $0.17 per diluted share.

Cash and short-term investments totaled approximately $676 million at quarter
end. The company completed fourth-quarter purchases of approximately 7 million
shares of its common stock for approximately $46 million. In 2012 the company
purchased approximately 36 million shares of its common stock for
approximately $273 million.

LSI recorded full-year 2012 revenues from continuing operations of $2.51
billion, a 23% increase compared to $2.04 billion in 2011.

"We delivered solid profitability and results in 2012, making good progress on
our gross margin targets and generating strong cash flows," said Bryon Look,
LSI's CFO. "With a strong balance sheet, zero debt and $479 million remaining
on our share buyback authorization, we are in a good position to continue to
return capital to our shareholders."

LSI 1Q2013 Business Outlook for Continuing Operations
                           GAAP**               Special Items Non-GAAP***
Revenue                    $535 million to $575               $535 million to
                           million                            $575 million
                                                $18 million
Gross Margin               48% to 52%           to $28        53% to 55%
                                                million
                           $257 million to $277 $32 million   $225 million to
Operating Expenses         million              to $42        $235 million
                                                million
Net Other Income           $4 million                         $4 million
Tax                        Approximately $8                   Approximately $8
                           million                            million
(Loss)/Income from                              ($0.09) to
Continuing Operations Per  ($0.03) to $0.06     ($0.12)       $0.09 to $0.15
Share
Diluted Share Count        570 million                        570 million

Capital spending is projected to be around $25 million in the first quarter
and approximately $80 million in total for 2013.

Depreciation and software amortization is projected to be around $15 million
in the first quarter and approximately $60 million in total for 2013.

LSI Conference Call Information
LSI will hold a conference call today at 2 p.m. PST to discuss fourth quarter
and full year 2012 financial results and the first quarter 2013 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 repurchase our common stock at
prices we believe to be advantageous; 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 (NASDAQ: LSI) designs semiconductors and software that
accelerate storage and networking in datacenters, mobile networks and client
computing. 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, the LSI & Design logo and the Storage.Networking.Accelerated. tagline are
trademarks or registered trademarks of LSI Corporation.
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,      September 30,  December 31,
Assets                           2012              2012           2011
Current assets:
 Cash and short-term          $            $        $     
investments                      676.0             643.0          935.5
 Accounts receivable, net     264.1             256.5          246.5
 Inventories                  206.3             209.1          180.0
 Prepaid expenses and other   87.2              64.6           60.7
current assets
 Total current assets     1,233.6           1,173.2        1,422.7
Property and equipment, net      269.7             250.2          180.6
Goodwill and identified          741.1             771.9          506.2
intangible assets, net
Other assets                     113.2             108.1          122.6
 Total assets             $    2,357.6  $          $   
                                                   2,303.4       2,232.1
Liabilities and Stockholders'
Equity
Current liabilities              $            $        $     
                                 506.9             476.8          460.9
Pension, tax and other           684.6             628.6          712.2
liabilities
 Total liabilities        1,191.5           1,105.4        1,173.1
Stockholders' equity:
 Common stock and additional  5,578.7           5,579.6        5,629.2
paid-in capital
 Accumulated deficit          (3,834.3)         (3,863.4)      (4,037.0)
 Accumulated other            (578.3)           (518.2)        (533.2)
comprehensive loss
 Total stockholders'      1,166.1           1,198.0        1,059.0
equity
 Total liabilities and    $    2,357.6  $          $   
stockholders' equity                               2,303.4       2,232.1



LSI CORPORATION
Consolidated Statements of Operations (GAAP)
(In thousands, except per share amounts)
(Unaudited)
                      Three Months Ended               Year Ended
                      December   September  December   December     December
                      31,        30,        31,        31,          31,
                      2012       2012       2011       2012         2011
                      $      $      $      $        $    
Revenues                                        2,506,087   2,043,958
                      600,128    623,962    523,140
 Cost of revenues  275,538    287,390    264,364    1,162,414    991,914
 Amortization of
acquisition-related   21,318     21,348     20,354     85,404       82,659
intangibles
 Purchase
accounting effect on  -          -          -          14,458       -
inventory
 Stock-based       2,858      2,573      1,597      11,946       6,921
compensation expense
 Total cost of  299,714    311,311    286,315    1,274,222    1,081,494
revenues
Gross profit         300,414    312,651    236,825    1,231,865    962,464
 Research and      165,758    156,318    139,061    643,230      552,342
development
 Stock-based       11,613     11,170     5,360      47,064       23,646
compensation expense
 Total research 177,371    167,488    144,421    690,294      575,988
and development
 Selling, general  64,919     69,722     63,705     270,965      241,820
and administrative
 Amortization of
acquisition-related   8,667      8,667      8,319      34,668       33,276
intangibles
 Stock-based       10,291     13,643     4,881      49,290       20,343
compensation expense
 Total selling,
general and           83,877     92,032     76,905     354,923      295,439
administrative
 Restructuring of
operations and other  16,480     4,221      21,033     42,654       23,719
items, net
Income/(loss) from    22,686     48,910     (5,534)    143,994      67,318
operations
 Interest income   7,606      5,855      8,124      37,711       26,472
and other, net
Income from
continuing operations 30,292     54,765     2,590      181,705      93,790
before income taxes
Provision
for/(benefit from)    1,202      15,100     (8,818)    (20,960)     3,778
income taxes
Income from           29,090     39,665     11,408     202,665      90,012
continuing operations
(Loss)/income from
discontinued          -          -          (13,194)   -            241,479
operations, net of
taxes
                      $      $      $      $       $    
Net income/(loss)                             202,665     
                      29,090     39,665     (1,786)                 331,491
Basic income/(loss)
per share:
 Income from       $      $      $      $       $    
continuing                                           
operations           0.05        0.07     0.02       0.36         0.15
 (Loss)/income     $      $      $      $       $    
from discontinued                                   
operations             -         -    (0.02)     -            0.42
                      $      $      $      $       $    
 Net income/(loss)                                
                      0.05        0.07     0.00       0.36         0.57
Diluted income/(loss)
per share:
 Income from       $      $      $      $       $    
continuing                                           
operations           0.05        0.07     0.02       0.35         0.15
 (Loss)/income     $      $      $      $       $    
from discontinued                                   
operations             -         -    (0.02)     -            0.40
                      $      $      $      $       $    
 Net income/(loss)                                
                      0.05        0.07     0.00       0.35         0.55
Shares used in
computing per share
amounts:
 Basic             552,761    555,197    563,721    559,459      585,704
 Diluted           568,611    572,022    573,018    580,548      600,893
Reconciliations of certain GAAP measures to non-GAAP
measures are included below.
                      Three Months Ended               Year Ended
                      December   September  December   December     December
Reconciliation of     31,        30,        31,        31,          31,
GAAP net income to
non-GAAP net income:  2012       2012       2011       2012         2011
GAAP income from      $      $      $      $       $    
continuing operations                         202,665      
                      29,090     39,665     11,408                  90,012
Special items:
a) Stock-based
compensation expense  2,858      2,573      1,597      11,946       6,921
- cost of revenues
b) Stock-based
compensation expense  11,613     11,170     5,360      47,064       23,646
- R&D
c) Stock-based
compensation expense  10,291     13,643     4,881      49,290       20,343
- SG&A
d) Amortization of
acquisition-related   21,318     21,348     20,354     85,404       82,659
intangibles - cost of
revenues
e) Amortization of
acquisition-related   8,667      8,667      8,319      34,668       33,276
intangibles - SG&A
f) Purchase
accounting effect on  -          -          -          14,458       -
inventory
g) Restructuring of
operations and other  16,480     4,221      21,033     42,654       23,719
items, net
h) Gain on sale of   -          (2,550)    -          (2,550)      -
investments
i) Gain on
re-measurement of a
pre-acquisition       -          -          -          (5,765)      -
equity interest to
fair value
j) Income tax       833        -          -          (42,365)     -
effect
 Total special
items from continuing 72,060     59,072     61,544     234,804      190,564
operations
Non-GAAP income from  $      $      $      $       $    
continuing operations                          437,469     
                      101,150    98,737     72,952                  280,576
Non-GAAP income from
continuing operations
per share:
                      $      $      $      $       $    
 Basic                                            
                      0.18        0.18     0.13       0.78         0.48
                      $      $      $      $       $    
 Diluted                                         
                      0.18        0.17     0.13       0.75         0.47
GAAP net              $      $      $      $       $    
income/(loss)                                 202,665     
                      29,090     39,665     (1,786)                 331,491
Special items:
a) Total special
items from continuing 72,060     59,072     61,544     234,804      190,564
operations
b) Stock-based
compensation expense  -          -          -          -            (592)
- discontinued
operations
c) Amortization of
acquisition-related
intangibles -         -          -          -          -            886
discontinued
operations
d) Restructuring of
operations -          -          -          (67)       -            40,863
discontinued
operations
e) Gain on sale of  -          -          -          -            (260,066)
business
                      $      $      $      $       $    
Non-GAAP net income                            437,469     
                      101,150    98,737     59,691                  303,146
Non-GAAP net income
per share:
                      $      $      $      $       $    
 Basic                                            
                      0.18        0.18     0.11       0.78         0.52
                      $      $      $      $       $    
 Diluted                                         
                      0.18        0.17     0.10       0.75         0.50
Shares used in
computing non-GAAP
per share amounts:
 Basic             552,761    555,197    563,721    559,459      585,704
 Diluted           568,611    572,022    573,018    580,548      600,893



LSI CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                         Three Months Ended               Year Ended
                         December   September  December   December   December
                         31,        30,        31,        31,        31,
                         2012       2012       2011       2012       2011
Operating activities:
Net income/(loss)        $      $      $      $       $   
                         29,090      39,665   (1,786)   202,665    331,491
Adjustments:
 Depreciation and     44,166     45,671     43,357     180,484    189,200
amortization
 Stock-based          24,762     27,386     11,838     108,300    50,318
compensation expense
 Non-cash
restructuring of         221        698        4,747      5,960      35,282
operations and other
items, net
 Gain on sale of
investments/write-down   -          (2,550)    183        (2,550)    183
of investment
 Gain on
re-measurement of a      -          -          -          (5,765)    -
pre-acquisition equity
interest to fair value
 Gain on sale of      -          -          -          -          (260,066)
business
 (Gain)/loss on sale
of property and          (46)       2,644      78         2,528      (465)
equipment
 Unrealized foreign   (518)      2,655      (2,215)    (598)      (2,015)
exchange (gain)/loss
 Deferred taxes      (10,743)   (72)       (9,894)    (53,989)   (28,838)
 Changes in assets
and liabilities, net of
assets acquired and
liabilities
 assumed in
business combination:
 Accounts         (7,620)    40,348     1,850      (6,689)    80,065
receivable
 Inventories      2,748      (5,091)    30,399     (2,116)    (29,804)
 Prepaid
expenses, assets held    (13,308)   1,110      (526)      (14,028)   (10,782)
for sale and other
assets
 Accounts payable 23,208     (25,186)   (2,179)    27,543     (3,879)
 Accrued and      2,895      (15,471)   (20,436)   (67,586)   (103,915)
other liabilities
Net cash provided by     94,855     111,807    55,416     374,159    246,775
operating activities
Investing activities:
 Purchases of debt
securities               (37,206)   (22,087)   (12,284)   (131,662)  (50,967)
available-for-sale
 Proceeds from
maturities and sales of  28,320     11,767     5,472      57,843     37,460
debt securities
available-for-sale
 Purchases of other   (500)      -          -          (500)      (4,000)
investments
 Proceeds from sale   -          2,550      -          2,550      -
of other investments
 Purchases of         (27,494)   (25,667)   (14,079)   (130,779)  (60,920)
property and equipment
 Proceeds from sale
of property and          67         1,374      22,683     1,693      23,622
equipment
 Acquisition of
business, net of cash    -          -          -          (319,231)  -
acquired
 Proceeds from sale
of business, net of      -          -          -          -          475,150
transaction costs
 Proceeds from
maturity of a note       -          -          10,000     -          10,000
receivable
Net cash (used
in)/provided by          (36,813)   (32,063)   11,792     (520,086)  430,345
investing activities
Financing activities:
 Issuance of common    20,985     8,515      14,980     111,628    81,040
stock
 Purchases of common
stock under repurchase   (46,338)   (50,062)   (26,999)   (272,585)  (498,786)
program
Net cash used in         (25,353)   (41,547)   (12,019)   (160,957)  (417,746)
financing activities
Effect of exchange rate
changes on cash and cash (1,668)    166        (528)      (1,399)    (1,349)
equivalents
Net change in cash and   31,021     38,363     54,661     (308,283)  258,025
cash equivalents
Cash and cash
equivalents at beginning 440,507    402,144    725,150    779,811    521,786
of period
Cash and cash            $       $      $       $       $   
equivalents at end of    471,528    440,507    779,811    471,528    779,811
period



SOURCE LSI Corporation

Website: http://www.lsi.com
Contact: Investor Relations, Sujal Shah, +1-610-712-5471, sujal.shah@lsi.com;
or Media Relations, Dave Miller, +1-408-712-7813, dave.c.miller@lsi.com
 
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