LSI CORPORATION

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three Months Ended

Nine Months Ended

September 29,

June 30,

September 30,

September 29,

September 30,

2013

2013

2012

2013

2012

Operating activities:

Net income

$           36,559

$   24,620

$           39,665

$           79,611

$         173,575

Adjustments:

    Depreciation and amortization 

46,335

45,547

45,671

136,167

136,318

    Stock-based compensation expense

20,209

21,865

27,386

67,620

83,538

    Non-cash restructuring of operations and other items, net

85

(266)

698

6,415

5,739

    Gain on sale of investments

-

-

(2,550)

-

(2,550)

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

-

-

-

-

(5,765)

    (Gain)/loss on sale of property and equipment

(54)

-

2,644

(58)

2,574

    Unrealized foreign exchange (gain)/loss

(1,452)

(2,843)

2,655

(3,706)

(80)

    Deferred taxes 

(416)

(25)

(72)

(467)

(43,246)

    Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combination:

        Accounts receivable

(50,605)

(18,962)

40,348

(28,915)

931

        Inventories

3,436

7,447

(5,091)

36,006

(4,864)

        Prepaid expenses, assets held for sale and other assets

(1,398)

(1,162)

1,110

(10,515)

(720)

        Accounts payable

(28,186)

22,453

(25,186)

(38,787)

4,335

        Accrued and other liabilities

38,416

(20,854)

(15,471)

(39,792)

(70,481)

Net cash provided by operating activities

62,929

77,820

111,807

203,579

279,304

Investing activities:

    Purchases of debt securities available-for-sale

(45,941)

(63,833)

(22,087)

(163,119)

(94,456)

    Proceeds from maturities and sales of debt securities available-for-sale 

42,686

26,900

11,767

93,703

29,523

    Purchases of other investments

-

-

-

(750)

-

    Proceeds from sale of other investments

-

-

2,550

-

2,550

    Purchases of property and equipment

(21,697)

(18,282)

(25,667)

(65,054)

(103,285)

    Proceeds from sale of property and equipment

183

55

1,374

265

1,626

    Increase in non-current assets 

(3,821)

-

-

(3,821)

-

    Acquisition of business, net of cash acquired 

-

-

-

-

(319,231)

Net cash used in investing activities

(28,590)

(55,160)

(32,063)

(138,776)

(483,273)

Financing activities:

   Issuance of common stock

9,416

23,724

8,515

41,305

90,643

   Payment of dividends to stockholders

(16,311)

-

-

(16,311)

-

   Purchases of common stock under repurchase program

(41,207)

(61,515)

(50,062)

(163,487)

(226,247)

Net cash used in financing activities

(48,102)

(37,791)

(41,547)

(138,493)

(135,604)

Effect of exchange rate changes on cash and cash equivalents

443

(523)

166

(1,587)

269

Net change in cash and cash equivalents

(13,320)

(15,654)

38,363

(75,277)

(339,304)

Cash and cash equivalents at beginning of period

409,571

425,225

402,144

471,528

779,811

Cash and cash equivalents at end of period

$         396,251

$ 409,571

$         440,507

$         396,251

$         440,507