LSI CORPORATION

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2012

2012

2011

2012

2011

Operating activities:

Net income/(loss)

$         29,090

$           39,665

$          (1,786)

$       202,665

$       331,491

Adjustments:

    Depreciation and amortization 

44,166

45,671

43,357

180,484

189,200

    Stock-based compensation expense

24,762

27,386

11,838

108,300

50,318

    Non-cash restructuring of operations and other items, net

221

698

4,747

5,960

35,282

    Gain on sale of investments/write-down of investment 

-

(2,550)

183

(2,550)

183

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

-

-

-

(5,765)

-

    Gain on sale of business

-

-

-

-

(260,066)

    (Gain)/loss on sale of property and equipment

(46)

2,644

78

2,528

(465)

    Unrealized foreign exchange (gain)/loss

(518)

2,655

(2,215)

(598)

(2,015)

    Deferred taxes 

(10,743)

(72)

(9,894)

(53,989)

(28,838)

    Changes in assets and liabilities, net of assets acquired and liabilities 

        assumed in business combination:

        Accounts receivable

(7,620)

40,348

1,850

(6,689)

80,065

        Inventories

2,748

(5,091)

30,399

(2,116)

(29,804)

        Prepaid expenses, assets held for sale and other assets

(13,308)

1,110

(526)

(14,028)

(10,782)

        Accounts payable

23,208

(25,186)

(2,179)

27,543

(3,879)

        Accrued and other liabilities

2,895

(15,471)

(20,436)

(67,586)

(103,915)

Net cash provided by operating activities

94,855

111,807

55,416

374,159

246,775

Investing activities:

    Purchases of debt securities available-for-sale

(37,206)

(22,087)

(12,284)

(131,662)

(50,967)

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

28,320

11,767

5,472

57,843

37,460

    Purchases of other investments

(500)

-

-

(500)

(4,000)

    Proceeds from sale of other investments

-

2,550

-

2,550

-

    Purchases of property and equipment

(27,494)

(25,667)

(14,079)

(130,779)

(60,920)

    Proceeds from sale of property and equipment

67

1,374

22,683

1,693

23,622

    Acquisition of business, net of cash acquired 

-

-

-

(319,231)

-

    Proceeds from sale of business, net of transaction costs 

-

-

-

-

475,150

    Proceeds from maturity of a note receivable 

-

-

10,000

-

10,000

Net cash (used in)/provided by investing activities

(36,813)

(32,063)

11,792

(520,086)

430,345

Financing activities:

   Issuance of common stock

20,985

8,515

14,980

111,628

81,040

   Purchases of common stock under repurchase program

(46,338)

(50,062)

(26,999)

(272,585)

(498,786)

Net cash used in financing activities

(25,353)

(41,547)

(12,019)

(160,957)

(417,746)

Effect of exchange rate changes on cash and cash equivalents

(1,668)

166

(528)

(1,399)

(1,349)

Net change in cash and cash equivalents

31,021

38,363

54,661

(308,283)

258,025

Cash and cash equivalents at beginning of period

440,507

402,144

725,150

779,811

521,786

Cash and cash equivalents at end of period

$       471,528

$         440,507

$       779,811

$       471,528

$       779,811