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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  Logo - http://photos.prnewswire.com/prnh/20120222/SF57952LOGO  SOURCE LSI Corporation  Website: http://www.lsi.com