LSI CORPORATION

Consolidated Statements of Operations (GAAP)

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended

Nine Months Ended

September 29,

June 30,

September 30,

September 29,

September 30,

2013

2013

2012

2013

2012

Revenues

$               606,943

$      589,583

$               623,962

$            1,765,162

$            1,905,959

    Cost of revenues

272,458

268,341

287,390

797,310

886,876

    Amortization of acquisition-related intangibles

19,746

19,746

21,348

59,238

64,086

    Purchase accounting effect on inventory

-

-

-

-

14,458

    Stock-based compensation expense

2,059

2,237

2,573

7,171

9,088

       Total cost of revenues

294,263

290,324

311,311

863,719

974,508

Gross profit 

312,680

299,259

312,651

901,443

931,451

    Research and development

163,486

166,829

156,318

489,211

477,472

    Stock-based compensation expense

8,810

9,619

11,170

30,838

35,451

       Total research and development

172,296

176,448

167,488

520,049

512,923

    Selling, general and administrative

66,199

67,540

69,722

203,089

206,046

    Amortization of acquisition-related intangibles

9,883

9,883

8,667

29,649

26,001

    Stock-based compensation expense

9,340

10,009

13,643

29,611

38,999

       Total selling, general and administrative

85,422

87,432

92,032

262,349

271,046

    Restructuring of operations and other items, net

6,739

7,807

4,221

34,998

26,174

Income from operations

48,223

27,572

48,910

84,047

121,308

    Interest income and other, net

836

2,248

5,855

10,964

30,105

Income before income taxes 

49,059

29,820

54,765

95,011

151,413

Provision for/(benefit from) income taxes

12,500

5,200

15,100

15,400

(22,162)

Net income

$                 36,559

$        24,620

$                 39,665

$                 79,611

$               173,575

Net income per share:

    Basic 

$                     0.07

$            0.04

$                     0.07

$                     0.15

$                     0.31

    Diluted

$                     0.06

$            0.04

$                     0.07

$                     0.14

$                     0.30

Shares used in computing per share amounts:

    Basic

545,451

548,282

555,197

547,978

561,708

    Diluted

563,621

561,801

572,022

565,570

582,296

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

Three Months Ended

Nine Months Ended

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

GAAP net income

$                 36,559

$        24,620

$                 39,665

$                 79,611

$               173,575

Special items:

a)   Stock-based compensation expense - cost of revenues

2,059

2,237

2,573

7,171

9,088

b)   Stock-based compensation expense - R&D

8,810

9,619

11,170

30,838

35,451

c)   Stock-based compensation expense - SG&A

9,340

10,009

13,643

29,611

38,999

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

19,746

19,746

21,348

59,238

64,086

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

9,883

9,883

8,667

29,649

26,001

f)   Purchase accounting effect on inventory

-

-

-

-

14,458

g)   Restructuring of operations and other items, net

6,739

7,807

4,221

34,998

26,174

h)  Gain on sale of investments

-

-

(2,550)

-

(2,550)

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

-

-

-

-

(5,765)

j)   Income tax effect

-

-

-

-

(43,198)

     Total special items

56,577

59,301

59,072

191,505

162,744

Non-GAAP net income 

$                 93,136

$        83,921

$                 98,737

$               271,116

$               336,319

Non-GAAP income per share: 

    Basic

$                     0.17

$            0.15

$                     0.18

$                     0.49

$                     0.60

    Diluted 

$                     0.17

$            0.15

$                     0.17

$                     0.48

$                     0.58

Shares used in computing non-GAAP per share amounts:

    Basic

545,451

548,282

555,197

547,978

561,708

    Diluted

563,621

561,801

572,022

565,570

582,296