LSI CORPORATION

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

March 31,

July 1,

June 30,

July 1,

2013

2013

2012

2013

2012

Operating activities:

Net income

$   24,620

$   18,432

$   58,713

$   43,052

$ 133,910

Adjustments:

    Depreciation and amortization 

45,547

44,285

45,279

89,832

90,647

    Stock-based compensation expense

21,865

25,546

25,318

47,411

56,152

    Non-cash restructuring of operations and other items, net

(266)

6,596

2,901

6,330

5,041

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

-

-

-

-

(5,765)

    Gain on sale of property and equipment

-

(4)

(95)

(4)

(70)

    Unrealized foreign exchange (gain)/loss

(2,843)

589

(4,196)

(2,254)

(2,735)

    Deferred taxes 

(25)

(26)

28

(51)

(43,174)

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

        Accounts receivable

(18,962)

40,652

5,428

21,690

(39,417)

        Inventories

7,447

25,123

(3,226)

32,570

227

        Prepaid expenses, assets held for sale and other assets

(1,162)

(7,955)

460

(9,117)

(1,830)

        Accounts payable

22,453

(33,054)

(17,598)

(10,601)

29,521

        Accrued and other liabilities

(20,854)

(57,354)

4,260

(78,208)

(55,010)

Net cash provided by operating activities

77,820

62,830

117,272

140,650

167,497

Investing activities:

    Purchases of debt securities available-for-sale

(63,833)

(53,345)

(51,106)

(117,178)

(72,369)

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

26,900

24,117

8,250

51,017

17,756

    Purchases of other investments

-

(750)

-

(750)

-

    Purchases of property and equipment

(18,282)

(25,075)

(12,636)

(43,357)

(77,618)

    Proceeds from sale of property and equipment

55

27

231

82

252

    Acquisition of business, net of cash acquired 

-

-

-

-

(319,231)

Net cash used in investing activities

(55,160)

(55,026)

(55,261)

(110,186)

(451,210)

Financing activities:

   Issuance of common stock

23,724

8,165

16,854

31,889

82,128

   Purchases of common stock under repurchase program

(61,515)

(60,765)

(137,979)

(122,280)

(176,185)

Net cash used in financing activities

(37,791)

(52,600)

(121,125)

(90,391)

(94,057)

Effect of exchange rate changes on cash and cash equivalents

(523)

(1,507)

598

103

Net change in cash and cash equivalents

(15,654)

(46,303)

(58,516)

(61,957)

(377,667)

Cash and cash equivalents at beginning of period

425,225

471,528

460,660

471,528

779,811

Cash and cash equivalents at end of period

$ 409,571

$ 425,225

$ 402,144

$ 409,571

$ 402,144