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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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