LSI Reports First Quarter 2014 Results

                    LSI Reports First Quarter 2014 Results

PR Newswire

SAN JOSE, Calif., April 23, 2014

SAN JOSE, Calif., April 23, 2014 /PRNewswire/ -- LSI Corporation (NASDAQ: LSI)
today reported results for its first quarter ended March 30, 2014.

LSI Logo

On December 15, 2013, LSI entered into a definitive agreement with Avago
Technologies Limited (NASDAQ: AVGO) under which Avago has agreed to acquire
LSI for $11.15 per share in an all-cash transaction valued at approximately
$6.6 billion. In anticipation of this transaction, which is expected to close
in early May, LSI will not issue financial guidance for the upcoming quarter
or conduct a first quarter results conference call. LSI has also discontinued
its quarterly dividend and stock repurchases.

First Quarter 2014 Financial Highlights

  oFirst quarter 2014 revenues of $569 million
  oFirst quarter 2014 GAAP* net income of $0.06 per diluted share
  oFirst quarter 2014 non-GAAP** net income of $0.17 per diluted share
  oFirst quarter 2014 operating cash flows of $43 million
  oFirst quarter 2014 operating expenses of $266 million on a GAAP basis and
    $223 million on a non-GAAP basis

First quarter 2014 revenues were $569 million, compared to $569 million in the
first quarter of 2013 and $605 million in the fourth quarter of 2013.

First quarter 2014 GAAP net income was $33 million or $0.06 per diluted share,
compared to first quarter 2013 GAAP net income of $18 million or $0.03 per
diluted share. Fourth quarter 2013 GAAP net income was $45 million or $0.08
per diluted share.

First quarter 2014 GAAP net income included a net charge of $66.5 million from
special items, consisting primarily of approximately $30 million of
amortization of acquisition-related items, $21 million of stock-based
compensation expense, and $15.5 million of net restructuring and other items,
including merger-related costs.

First quarter 2014 non-GAAP net income was $100 million or $0.17 per diluted
share, compared to first quarter 2013 non-GAAP net income of $94 million or
$0.17 per diluted share. Fourth quarter 2013 non-GAAP net income was $113
million or $0.20 per diluted share.

Cash and short-term investments totaled approximately $883 million at quarter
end. LSI did not repurchase any shares in the first quarter.

*  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.

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: the risk that the conditions to the closing
of the merger of LSI and a subsidiary of Avago are not satisfied; litigation
relating to the merger; uncertainties as to the ability of each of LSI and
Avago to consummate the merger; risks that the proposed transaction disrupts
the current plans and operations of LSI; the ability of LSI to retain and hire
key personnel; competitive responses to the proposed merger; unexpected costs,
charges or expenses resulting from the merger; the failure by Avago to obtain
the necessary debt financing arrangements set forth in the commitment letters
received in connection with the merger; potential adverse reactions or changes
to business relationships resulting from the announcement or completion of the
merger; legislative, regulatory and economic developments; our ability to
achieve anticipated synergies and to develop integrated new products following
our acquisition of SandForce; 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 report on Form 10-K. 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 30,    December 31,       March 31,
Assets                           2014         2013               2013
Current assets:
 Cash and short-term          $   883.3  $      809.8  $   658.5
investments
 Accounts receivable, net     251.2        270.8              223.2
 Inventories                  161.9        156.3              181.1
 Prepaid expenses and other   85.1         71.7               70.0
current assets
 Total current assets     1,381.5      1,308.6            1,132.8
Property and equipment, net      298.6        302.3              278.0
Goodwill and identified          592.5        622.6              711.5
intangible assets, net
Other assets                     126.9        128.2              118.6
 Total assets             $ 2,399.5   $    2,361.7   $ 2,240.9
Liabilities and Stockholders'
Equity
Current liabilities              $   453.9  $      483.0  $   441.5
Pension, tax and other           421.1        443.0              658.4
liabilities
 Total liabilities        875.0        926.0              1,099.9
Stockholders' equity:
 Common stock and additional  5,626.5      5,576.0            5,535.9
paid-in capital
 Accumulated deficit          (3,715.8)    (3,749.0)          (3,822.4)
 Accumulated other            (386.2)      (391.3)            (572.5)
comprehensive loss
 Total stockholders'      1,524.5      1,435.7            1,141.0
equity
 Total liabilities and    $ 2,399.5   $    2,361.7   $ 2,240.9
stockholders' equity





LSI CORPORATION
Consolidated Statements of Operations (GAAP)
(In thousands, except per share amounts)
(Unaudited)
                                   Three Months Ended
                                   March 30,       December 31,   March 31,
                                   2014            2013           2013
Revenues                           $   569,066  $        $  
                                                   605,067        568,636
 Cost of revenues               254,618         272,284        256,511
 Amortization of                20,865          19,746         19,746
acquisition-related intangibles
 Stock-based compensation       2,458           2,203          2,875
expense
 Total cost of revenues      277,941         294,233        279,132
Gross profit                      291,125         310,834        289,504
 Research and development       163,818         162,691        158,896
 Stock-based compensation       10,295          9,628          12,409
expense
 Total research and          174,113         172,319        171,305
development
 Selling, general and           58,736          62,437         69,350
administrative
 Amortization of                9,200           9,883          9,883
acquisition-related intangibles
 Stock-based compensation       8,232           8,757          10,262
expense
 Total selling, general and  76,168          81,077         89,495
administrative
 Restructuring of operations    15,473          17,405         20,452
and other items, net
Income from operations             25,371          40,033         8,252
 Interest income and other, net 2,669           2,746          7,880
Income before income taxes        28,040          42,779         16,132
Benefit from income taxes          (5,193)         (2,264)        (2,300)
Net income                         $            $        $   
                                   33,233          45,043       18,432
Net income per share:
 Basic                         $          $        $     
                                   0.06              0.08     0.03
 Diluted                        $          $        $     
                                   0.06              0.08     0.03
Shares used in computing per share
amounts:
 Basic                          558,490         547,347        550,227
 Diluted                        588,455         570,206        567,092
Reconciliations of certain GAAP measures to
non-GAAP measures are included below.
                                   Three Months Ended
                                   March 30,       December 31,   March 31,
Reconciliation of GAAP net income  2014            2013           2013
to non-GAAP net income:
GAAP net income                    $            $        $   
                                   33,233          45,043       18,432
Special items:
a) Stock-based compensation      2,458           2,203          2,875
expense - cost of revenues
b) Stock-based compensation      10,295          9,628          12,409
expense - R&D
c) Stock-based compensation      8,232           8,757          10,262
expense - SG&A
d) Amortization of
acquisition-related intangibles -  20,865          19,746         19,746
cost of revenues
e) Amortization of
acquisition-related intangibles -  9,200           9,883          9,883
SG&A
f) Restructuring of operations   15,473          17,405         20,452
and other items, net
 Total special items           66,523          67,622         75,627
Non-GAAP net income               $            $        $   
                                   99,756         112,665        94,059
Non-GAAP income per share:
 Basic                          $          $        $     
                                   0.18              0.21     0.17
 Diluted                       $          $        $     
                                   0.17              0.20     0.17
Shares used in computing non-GAAP
per share amounts:
 Basic                          558,490         547,347        550,227
 Diluted                        588,455         570,206        567,092
Reconciliation of GAAP operating
expenses to non-GAAP operating
expenses:
Operating expenses- GAAP           $   265,754  $        $  
                                                   270,801        281,252
Special items:
a) Stock-based compensation      10,295          9,628          12,409
expense - R&D
b) Stock-based compensation      8,232           8,757          10,262
expense - SG&A
c) Amortization of
acquisition-related intangibles -  9,200           9,883          9,883
SG&A
d) Restructuring of operations   15,473          17,405         20,452
and other items, net
Operating expenses- Non-GAAP       $   222,554  $        $  
                                                   225,128        228,246





LSI CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                         Three Months Ended
                                         March 30,   December 31,  March 31,
                                         2014        2013          2013
Operating activities:
Net income                               $  33,233  $         $  18,432
                                                     45,043
Adjustments:
 Depreciation and amortization       45,929      45,111        44,285
 Stock-based compensation expense     20,985      20,588        25,546
 Non-cash restructuring of operations 434         247           6,596
and other items, net
 Gain on sale of property and         -           -             (4)
equipment
 Unrealized foreign exchange loss     494         425           589
 Deferred taxes                      (51)        22,783        (26)
 Changes in assets and liabilities,
net of assets acquired and
liabilitiesassumed in business
combination:
 Accounts receivable              19,626      21,718        40,652
 Inventories                      (5,616)     13,837        25,123
 Prepaid expenses, assets held    (32,903)    (13,956)      (7,955)
for sale and other assets
 Accounts payable                 7,936       5,980         (33,054)
 Accrued and other liabilities    (47,054)    (27,560)      (57,354)
Net cash provided by operating           43,013      134,216       62,830
activities
Investing activities:
 Purchases of debt securities         (26)        (43,300)      (53,345)
available-for-sale
 Proceeds from maturities and sales   25,601      40,732        24,117
of debt securities available-for-sale
 Purchases of other investments       (232)       (800)         (750)
 Purchases of property and equipment  (20,527)    (21,521)      (25,075)
 Proceeds from sale of property and   12          155           27
equipment
Net cash provided by/(used in) investing 4,828       (24,734)      (55,026)
activities
Financing activities:
 Issuance of common stock              51,965      52,798        8,165
 Payment of dividends to stockholders  -           (16,478)      -
 Purchases of common stock under       -           -             (60,765)
repurchase program
Net cash provided by/(used in) financing 51,965      36,320        (52,600)
activities
Effect of exchange rate changes on cash  14          715           (1,507)
and cash equivalents
Net change in cash and cash equivalents  99,820      146,517       (46,303)
Cash and cash equivalents at beginning   542,768     396,251       471,528
of period
Cash and cash equivalents at end of      $ 642,588   $          $ 425,225
period                                               542,768

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SOURCE LSI Corporation

Website: http://www.lsi.com
 
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