LSI Reports First Quarter 2013 Results

                    LSI Reports First Quarter 2013 Results

Strong earnings per share and gross margins

PR Newswire

SAN JOSE, Calif., April 24, 2013

SAN JOSE, Calif., April 24, 2013 /PRNewswire/ -- LSI Corporation (NASDAQ: LSI)
today reported results for its first quarter ended March 31, 2013.

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

First Quarter 2013 Highlights

  oFirst quarter 2013 revenues of $569 million
  oFirst quarter 2013 GAAP* net income of $0.03 per diluted share
  oFirst quarter 2013 non-GAAP** net income of $0.17 per diluted share
  oFirst quarter 2013 operating cash flows of $63 million

Second Quarter 2013 Business Outlook

  oProjected revenues of $560 million to $600 million
  oGAAP* net income in the range of ($0.02) to $0.07 per share
  oNon-GAAP** net income in the range of $0.10 to $0.16 per share
    *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.

"LSI achieved strong results and better than expected revenues in the first
quarter, despite a challenging environment for PCs and mobile infrastructure
investment," said Abhi Talwalkar, LSI's president and CEO. "Looking forward,
we are very excited about the flash application acceleration market and our
Nytro flash adapter solutions continue to gain strong acceptance with
customers looking to accelerate Virtual Desktop Infrastructure (VDI), Hadoop
and other Big Data applications, as well as with leading cloud based
services."

First quarter 2013 revenues were $569 million, in line with guidance, compared
to $622 million in the first quarter of 2012, and compared to $600 million in
the fourth quarter of 2012.

First quarter 2013 GAAP* net income was $18 million or $0.03 per diluted
share, compared to first quarter 2012 GAAP net income of $75 million or $0.13
per diluted share. Fourth quarter 2012 GAAP net income was $23 million or
$0.04 per diluted share. First quarter 2013 GAAP net income included a net
charge of $76 million from special items, consisting primarily of
approximately $30 million of amortization of acquisition-related items, $26
million of stock-based compensation expense and $20 million of net
restructuring and other items.

First quarter 2013 non-GAAP** net income was $94 million or $0.17 per diluted
share, compared to first quarter 2012 non-GAAP net income of $117 million or
$0.20 per diluted share. Fourth quarter 2012 non-GAAP net income was $101
million or $0.18 per diluted share.

Cash and short-term investments totaled approximately $659 million at quarter
end. The company completed first-quarter purchases of approximately 9 million
shares of its common stock for approximately $61 million.

"We delivered solid earnings per share, while investing for growth in current
and future product areas," said Bryon Look, LSI's CFO. "We also generated
strong gross margins in Q1, and continue to use our healthy cash position to
pursue our stock buyback program."

LSI 2Q2013 Business Outlook

                      GAAP*                Special Items  Non-GAAP**
Revenue               $560 million to $600                $560 million to $600
                      million                             million
Gross Margin          48% to 52%           $18 million to 53% to 55%
                                           $28 million
Operating Expenses    $260 million to $280 $32 million to $228 million to $238
                      million              $42 million    million
Net Other Income      $2 million                          $2 million
Tax                   Approximately $8                    Approximately $8
                      million                             million
Net (Loss)/Income Per ($0.02) to $0.07     ($0.09) to     $0.10 to $0.16
Share                                      ($0.12)
Diluted Share Count   565 million                         565 million



Capital spending is projected to be around $20 million in the second quarter
and approximately $85 million in total for 2013.

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

LSI Conference Call Information
LSI will hold a conference call today at 2 p.m. PDT to discuss first quarter
2013 financial results and the second 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 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 Storage.Networking.Accelerated. are trademarks
or registered trademarks of LSI Corporation in the United States and/or other
countries.
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)
                                  March 31,    December 31,       April 1,
Assets                            2013         2012               2012
Current assets:
 Cash and short-term           $   658.5  $      676.0  $  623.1
investments
 Accounts receivable, net      223.2        264.1              302.1
 Inventories                   181.1        206.3              200.8
 Prepaid expenses and other    70.0         80.4               62.4
current assets
 Total current assets      1,132.8      1,226.8            1,188.4
Property and equipment, net       278.0        269.7              235.1
Goodwill and identified           711.5        741.1              832.0
intangible assets, net
Other assets                      118.6        118.6              111.6
 Total assets              $ 2,240.9   $    2,356.2   $ 2,367.1
Liabilities and Stockholders'
Equity
Current liabilities               $   441.5  $      516.9  $  470.3
Pension, tax and other            658.4        679.6              693.5
liabilities
 Total liabilities         1,099.9      1,196.5            1,163.8
Stockholders' equity:
 Common stock and additional   5,535.9      5,578.8            5,691.4
paid-in capital
 Accumulated deficit           (3,822.4)    (3,840.8)          (3,961.8)
 Accumulated other             (572.5)      (578.3)            (526.3)
comprehensive loss
 Total stockholders'       1,141.0      1,159.7            1,203.3
equity
 Total liabilities and     $ 2,240.9   $    2,356.2   $ 2,367.1
stockholders' equity





LSI CORPORATION
Consolidated Statements of Operations (GAAP)
(In thousands, except per share amounts)
(Unaudited)
                                    Three Months Ended
                                    March 31,       December 31,   April 1,
                                    2013            2012           2012
Revenues                            $   568,636  $        $  
                                                    600,128        622,424
 Cost of revenues                256,511         275,538        296,152
 Amortization of                 19,746          21,318         21,390
acquisition-related intangibles
 Purchase accounting effect on   -               -              14,458
inventory
 Stock-based compensation        2,875           2,858          3,512
expense
 Total cost of revenues       279,132         299,714        335,512
Gross profit                       289,504         300,414        286,912
 Research and development        158,896         165,758        157,563
 Stock-based compensation        12,409          11,613         12,308
expense
 Total research and           171,305         177,371        169,871
development
 Selling, general and            69,350          64,919         66,419
administrative
 Amortization of                 9,883           8,667          8,667
acquisition-related intangibles
 Stock-based compensation        10,262          10,291         15,014
expense
 Total selling, general and   89,495          83,877         90,100
administrative
 Restructuring of operations and 20,452          22,917         15,462
other items, net
Income from operations              8,252           16,249         11,479
 Interest income and other, net  7,880           7,606          14,656
Income before income taxes         16,132          23,855         26,135
(Benefit from)/provision for income (2,300)         1,202          (49,062)
taxes
Net income                          $            $        $   
                                    18,432          22,653       75,197
Net income per share:
 Basic                          $          $        $     
                                    0.03              0.04     0.13
 Diluted                         $          $        $     
                                    0.03              0.04     0.13
Shares used in computing per share
amounts:
 Basic                           550,227         552,761        566,709
 Diluted                         567,092         568,611        590,556
Reconciliations of certain GAAP measures to non-GAAP measures are
included below.
                                    Three Months Ended
                                    March 31,       December 31,   April 1,
Reconciliation of GAAP net income   2013            2012           2012
to non-GAAP net income:
GAAP net income                     $            $        $   
                                    18,432          22,653       75,197
Special items:
a) Stock-based compensation       2,875           2,858          3,512
expense - cost of revenues
b) Stock-based compensation       12,409          11,613         12,308
expense - R&D
c) Stock-based compensation       10,262          10,291         15,014
expense - SG&A
d) Amortization of
acquisition-related intangibles -   19,746          21,318         21,390
cost of revenues
e) Amortization of
acquisition-related intangibles -   9,883           8,667          8,667
SG&A
f) Purchase accounting effect on  -               -              14,458
inventory
g) Restructuring of operations    20,452          22,917         15,462
and other items, net
h) Gain on re-measurement of a
pre-acquisition equity interest to  -               -              (5,765)
fair value
i) Income tax effect              -               833            (43,198)
 Total special items            75,627          78,497         41,848
Non-GAAP net income                $            $        $  
                                    94,059         101,150        117,045
Non-GAAP income per share:
 Basic                           $          $        $     
                                    0.17              0.18     0.21
 Diluted                        $          $        $     
                                    0.17              0.18     0.20
Shares used in computing non-GAAP
per share amounts:
 Basic                           550,227         552,761        566,709
 Diluted                         567,092         568,611        590,556





LSI CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                       Three Months Ended
                                       March 31,   December 31,     April 1,
                                       2013        2012             2012
Operating activities:
Net income                             $  18,432  $            $  75,197
                                                   22,653
Adjustments:
 Depreciation and amortization     44,285      44,166           45,368
 Stock-based compensation expense   25,546      24,762           30,834
 Non-cash restructuring of          1,536       221              2,140
operations and other items, net
 Gain on re-measurement of a
pre-acquisition equity interest to     -           -                (5,765)
fair value
 (Gain)/loss on sale of property    (4)         (46)             25
and equipment
 Unrealized foreign exchange        589         (518)            1,461
loss/(gain)
 Deferred taxes                    (26)        (9,972)          (43,202)
 Changes in assets and liabilities,
net of assets acquired and
liabilities
 assumed in business
combination:
 Accounts receivable            40,652      (7,620)          (44,845)
 Inventories                    25,123      2,748            3,453
 Prepaid expenses, assets held  (7,955)     (16,850)         (2,290)
for sale and other assets
 Accounts payable               (33,054)    23,208           47,119
 Accrued and other liabilities  (52,294)    12,103           (59,270)
Net cash provided by operating         62,830      94,855           50,225
activities
Investing activities:
 Purchases of debt securities       (53,345)    (37,206)         (21,263)
available-for-sale
 Proceeds from maturities and sales 24,117      28,320           9,506
of debt securities available-for-sale
 Purchases of other investments     (750)       (500)            -
 Purchases of property and          (25,075)    (27,494)         (64,982)
equipment
 Proceeds from sale of property and 27          67               21
equipment
 Acquisition of business, net of    -           -                (319,231)
cash acquired
Net cash used in investing activities  (55,026)    (36,813)         (395,949)
Financing activities:
 Issuance of common stock            8,165       20,985           65,274
 Purchases of common stock under     (60,765)    (46,338)         (38,206)
repurchase program
Net cash (used in)/provided by         (52,600)    (25,353)         27,068
financing activities
Effect of exchange rate changes on     (1,507)     (1,668)          (495)
cash and cash equivalents
Net change in cash and cash            (46,303)    31,021           (319,151)
equivalents
Cash and cash equivalents at beginning 471,528     440,507          779,811
of period
Cash and cash equivalents at end of    $ 425,225   $    471,528  $ 460,660
period

SOURCE LSI Corporation

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