LSI CORPORATION

Consolidated Statements of Operations (GAAP)

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

March 31,

July 1,

June 30,

July 1,

2013

2013

2012

2013

2012

Revenues

$   589,583

$   568,636

$   659,573

$    1,158,219

$    1,281,997

    Cost of revenues

268,341

256,511

303,334

524,852

599,486

    Amortization of acquisition-related intangibles

19,746

19,746

21,348

39,492

42,738

    Purchase accounting effect on inventory

-

-

-

-

14,458

    Stock-based compensation expense

2,237

2,875

3,003

5,112

6,515

       Total cost of revenues

290,324

279,132

327,685

569,456

663,197

Gross profit 

299,259

289,504

331,888

588,763

618,800

    Research and development

166,829

158,896

163,591

325,725

321,154

    Stock-based compensation expense

9,619

12,409

11,973

22,028

24,281

       Total research and development

176,448

171,305

175,564

347,753

345,435

    Selling, general and administrative

67,540

69,350

69,905

136,890

136,324

    Amortization of acquisition-related intangibles

9,883

9,883

8,667

19,766

17,334

    Stock-based compensation expense

10,009

10,262

10,342

20,271

25,356

       Total selling, general and administrative

87,432

89,495

88,914

176,927

179,014

    Restructuring of operations and other items, net

7,807

20,452

6,491

28,259

21,953

Income from operations

27,572

8,252

60,919

35,824

72,398

    Interest income and other, net

2,248

7,880

9,594

10,128

24,250

Income before income taxes 

29,820

16,132

70,513

45,952

96,648

Provision for/(benefit from) income taxes 

5,200

(2,300)

11,800

2,900

(37,262)

Net income

$     24,620

$     18,432

$     58,713

$         43,052

$       133,910

Net income per share:

    Basic 

$         0.04

$         0.03

$         0.10

$             0.08

$             0.24

    Diluted

$         0.04

$         0.03

$         0.10

$             0.08

$             0.23

Shares used in computing per share amounts:

    Basic

548,282

550,227

563,686

549,249

564,945

    Diluted

561,801

567,092

581,344

565,426

586,431

Reconciliations of certain GAAP measures to non-GAAP measures are included below.

Three Months Ended

Six Months Ended

June 30,

March 31,

July 1,

June 30,

July 1,

Reconciliation of GAAP net income to non-GAAP net income:

2013

2013

2012

2013

2012

GAAP net income

$     24,620

$     18,432

$     58,713

$         43,052

$       133,910

Special items:

a)   Stock-based compensation expense - cost of revenues

2,237

2,875

3,003

5,112

6,515

b)   Stock-based compensation expense - R&D

9,619

12,409

11,973

22,028

24,281

c)   Stock-based compensation expense - SG&A

10,009

10,262

10,342

20,271

25,356

d)   Amortization of acquisition-related intangibles - cost of revenues  

19,746

19,746

21,348

39,492

42,738

e)   Amortization of acquisition-related intangibles - SG&A

9,883

9,883

8,667

19,766

17,334

f)   Purchase accounting effect on inventory

-

-

-

-

14,458

g)   Restructuring of operations and other items, net

7,807

20,452

6,491

28,259

21,953

h)   Gain on re-measurement of a pre-acquisition equity interest to fair value

-

-

-

-

(5,765)

i)   Income tax effect

-

-

-

-

(43,198)

     Total special items

59,301

75,627

61,824

134,928

103,672

Non-GAAP net income 

$     83,921

$     94,059

$   120,537

$       177,980

$       237,582

Non-GAAP income per share: 

    Basic

$         0.15

$         0.17

$         0.21

$             0.32

$             0.42

    Diluted 

$         0.15

$         0.17

$         0.21

$             0.31

$             0.41

Shares used in computing non-GAAP per share amounts:

    Basic

548,282

550,227

563,686

549,249

564,945

    Diluted

561,801

567,092

581,344

565,426

586,431