LSI CORPORATION

Consolidated Statements of Operations (GAAP)

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2012

2012

2011

2012

2011

Revenues

$             600,128

$               623,962

$             523,140

$          2,506,087

$          2,043,958

    Cost of revenues

275,538

287,390

264,364

1,162,414

991,914

    Amortization of acquisition-related intangibles

21,318

21,348

20,354

85,404

82,659

    Purchase accounting effect on inventory

-

-

-

14,458

-

    Stock-based compensation expense

2,858

2,573

1,597

11,946

6,921

       Total cost of revenues

299,714

311,311

286,315

1,274,222

1,081,494

Gross profit 

300,414

312,651

236,825

1,231,865

962,464

    Research and development

165,758

156,318

139,061

643,230

552,342

    Stock-based compensation expense

11,613

11,170

5,360

47,064

23,646

       Total research and development

177,371

167,488

144,421

690,294

575,988

    Selling, general and administrative

64,919

69,722

63,705

270,965

241,820

    Amortization of acquisition-related intangibles

8,667

8,667

8,319

34,668

33,276

    Stock-based compensation expense

10,291

13,643

4,881

49,290

20,343

       Total selling, general and administrative

83,877

92,032

76,905

354,923

295,439

    Restructuring of operations and other items, net

16,480

4,221

21,033

42,654

23,719

Income/(loss) from operations

22,686

48,910

(5,534)

143,994

67,318

    Interest income and other, net

7,606

5,855

8,124

37,711

26,472

Income from continuing operations before income taxes 

30,292

54,765

2,590

181,705

93,790

Provision for/(benefit from) income taxes 

1,202

15,100

(8,818)

(20,960)

3,778

Income from continuing operations

29,090

39,665

11,408

202,665

90,012

(Loss)/income from discontinued operations, net of taxes 

-

-

(13,194)

-

241,479

Net income/(loss)

$               29,090

$                 39,665

$               (1,786)

$             202,665

$             331,491

Basic income/(loss) per share:

    Income from continuing operations 

$                   0.05

$                     0.07

$                   0.02

$                   0.36

$                   0.15

    (Loss)/income from discontinued operations 

$                       -

$                         -

$                 (0.02)

$                       -

$                   0.42

    Net income/(loss)

$                   0.05

$                     0.07

$                   0.00

$                   0.36

$                   0.57

Diluted income/(loss) per share:

    Income from continuing operations 

$                   0.05

$                     0.07

$                   0.02

$                   0.35

$                   0.15

    (Loss)/income from discontinued operations 

$                       -

$                         -

$                 (0.02)

$                       -

$                   0.40

    Net income/(loss)

$                   0.05

$                     0.07

$                   0.00

$                   0.35

$                   0.55

Shares used in computing per share amounts:

    Basic

552,761

555,197

563,721

559,459

585,704

    Diluted

568,611

572,022

573,018

580,548

600,893

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

Three Months Ended

Year Ended

December 31,

2012

September 30,

2012

December 31,

2011

December 31,

2012

December 31,

2011

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

GAAP income from continuing operations

$               29,090

$                 39,665

$               11,408

$             202,665

$               90,012

Special items:

a)   Stock-based compensation expense - cost of revenues

2,858

2,573

1,597

11,946

6,921

b)   Stock-based compensation expense - R&D

11,613

11,170

5,360

47,064

23,646

c)   Stock-based compensation expense - SG&A

10,291

13,643

4,881

49,290

20,343

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

21,318

21,348

20,354

85,404

82,659

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

8,667

8,667

8,319

34,668

33,276

f)   Purchase accounting effect on inventory

-

-

-

14,458

-

g)   Restructuring of operations and other items, net

16,480

4,221

21,033

42,654

23,719

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

833

-

-

(42,365)

-

     Total special items from continuing operations

72,060

59,072

61,544

234,804

190,564

Non-GAAP income from continuing operations

$             101,150

$                 98,737

$               72,952

$             437,469

$             280,576

Non-GAAP income from continuing operations per share: 

    Basic

$                   0.18

$                     0.18

$                   0.13

$                   0.78

$                   0.48

    Diluted 

$                   0.18

$                     0.17

$                   0.13

$                   0.75

$                   0.47

GAAP net income/(loss)

$               29,090

$                 39,665

$               (1,786)

$             202,665

$             331,491

Special items:

a)   Total special items from continuing operations

72,060

59,072

61,544

234,804

190,564

b)   Stock-based compensation expense - discontinued operations

-

-

-

-

(592)

c)   Amortization of acquisition-related intangibles - discontinued operations

-

-

-

-

886

d)   Restructuring of operations - discontinued operations

-

-

(67)

-

40,863

e)   Gain on sale of business

-

-

-

-

(260,066)

Non-GAAP net income

$             101,150

$                 98,737

$               59,691

$             437,469

$             303,146

Non-GAAP net income per share:

    Basic

$                   0.18

$                     0.18

$                   0.11

$                   0.78

$                   0.52

    Diluted 

$                   0.18

$                     0.17

$                   0.10

$                   0.75

$                   0.50

Shares used in computing non-GAAP per share amounts:

    Basic

552,761

555,197

563,721

559,459

585,704

    Diluted

568,611

572,022

573,018

580,548

600,893