8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) April 27, 2011

LSI CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE	1-10317	94-2712976
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1621 Barber Lane
Milpitas, California 95035
(Address of principal executive offices, including zip code)

(408) 433-8000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

 EXHIBIT 99.1

Item 2.02 Results of Operation and Financial Condition.

On April 27, 2011, LSI Corporation issued a news release regarding its financial results for the quarter ended April 3, 2011. A copy of the news release is furnished as Exhibit 99.1 to this Form 8-K and is incorporated by reference herein.

The news release contains non-GAAP financial information. Management believes that the presentation of non-GAAP net income (loss), non-GAAP gross margin, non-GAAP operating expenses, non-GAAP taxes, and non-GAAP net income (loss) per basic and diluted share provides important supplemental information to management and investors about financial and business trends relating to the company’s results of operations. Management believes that the use of these non-GAAP financial measures also provides consistency and comparability with our past financial reports.

Management has historically used these non-GAAP measures when evaluating operating performance because we believe that the inclusion or exclusion of the items described below provides an additional measure of our core operating results and facilitates comparisons of our core operating performance against prior periods and our business model objectives. We have chosen to provide this information to investors to enable them to perform additional analyses of past, present and future operating performance and as a supplemental means to evaluate our ongoing core operations. Externally, we believe that these non-GAAP measures continue to be useful to investors in their assessment of our operating performance and their valuation of the company.

Internally, these non-GAAP measures are significant measures used by management for purposes of:

• evaluating the core operating performance of the company;

• establishing internal budgets;

• calculating return on investment for development programs and growth initiatives;

• comparing performance with internal forecasts and targeted business models;

• strategic planning;

• evaluating and valuing potential acquisition candidates and how their operations compare to the company’s operations; and

• benchmarking performance externally against our competitors.

How we calculate our non-GAAP financial measures

Non-GAAP net income (loss), non-GAAP gross margin, non-GAAP operating expenses, non-GAAP taxes and non-GAAP net income (loss) per basic and diluted share are important to the company for the reasons noted above and exclude the following items:

• Stock-based compensation. Stock-based compensation relates primarily to LSI stock awards such as stock options and restricted stock units. Stock-based compensation is a non-cash expense that varies in amount from period to period and is dependent on market forces that are difficult to predict. As a result of this unpredictability, management excludes this item from its internal operating forecasts and models. Management believes that non-GAAP measures adjusted for stock-based compensation provide investors with a basis to measure the company’s core performance against the performance of other companies without the variability created by stock-based compensation.

• Purchase accounting effect on inventory. This is an acquisition-related charge. It results from marking to fair value an acquired company’s inventory at the time of acquisition. This charge is not factored into management’s evaluation of potential acquisitions or our performance after completion of acquisitions, because it is not related to our core operating performance, and the frequency and amount of this type of charge can vary significantly based on the size and timing of our acquisitions. Excluding this data provides investors with a basis to compare the company against the performance of other companies without this variability.

• Amortization of acquisition-related intangibles. This relates to purchased technology in acquisitions such as existing technology, patents and trademarks. This charge is not factored into management’s evaluation of potential acquisitions or our performance after completion of acquisitions, because it is not related to our core operating performance, and the frequency and amount of this type of charge can vary significantly based on the size and timing of our acquisitions and the maturities of the businesses being acquired. Excluding this data provides investors with a basis to compare the company against the performance of other companies without this variability.

• Restructuring of operations and other items, net. This represents charges/losses and gains that are not directly related to the company’s ongoing or core business results. Management regularly excludes such items from internal operating forecasts and models because they are not considered a core operating activity for the company and because the frequency and variability in the nature of the charges can vary significantly from period to period. Excluding this data provides investors with a basis to compare the company against the performance of other companies without this variability.

• Goodwill and other intangible asset impairment charges. This item reflects the write down of goodwill and other intangible assets to their fair values. Because of the infrequent nature of this charge, management does not include this type of item in internal operating forecasts and models. Excluding this data provides investors with a basis to compare the company’s core operating results in different periods without this variability.

• Other charges and gains. Other charges and gains consist of gains or losses on investments and certain non-operating gains and losses that occur on an infrequent basis and vary greatly in amount. We do not regularly trade public equity securities nor do we typically use these securities to fund our ongoing operations. Management excludes these items because they do not affect our core operations. Excluding this data provides investors with a basis to compare the company against the performance of other companies without this variability.

• Non-GAAP income tax expense/benefit. This item represents the additional amount of tax expense or benefit that the company would accrue if it used non-GAAP results instead of GAAP results in the calculation of its tax liability.

We use non-GAAP net income computed as described above as the numerator in the calculation of non-GAAP net income per basic and diluted share. We calculate the basic and diluted share amounts used in the denominator in accordance with GAAP rules, using non-GAAP net income rather than GAAP net income.

Limitations of relying on non-GAAP financial measures

Some of the limitations of relying on non-GAAP financial measures include:

• Stock-based compensation. LSI’s stock-based incentive plans are important components of our employee incentive compensation arrangements and are reflected in our GAAP results. Stock-based compensation should be considered for a complete view of the costs of our compensation arrangements.

• Purchase accounting effect on inventory. Acquisitions have been an important part of our business strategy and the corresponding acquisition-related charges reflect the costs of choosing acquisitions as a form of growth strategy.

• Amortization of acquisition-related intangibles. Acquisitions have been an important part of our business strategy and the corresponding acquisition-related charges reflect the costs of choosing acquisitions as a form of growth strategy.

• Restructuring of operations and other items, net. This item reflects charges for severance, exit costs associated with leased facilities, asset impairment charges and gains on sales of assets that are no longer strategic. While no longer strategic to the future of the company, such items reflect the costs of decisions made as part of running a business and are critical to a complete view of our historical results.

• Goodwill and other intangible asset impairment charges. This amount should be included for a complete view of our historical performance including the impact of declines of the value of our assets.

• Other charges and gains. These amounts should be included for a complete view of our historical performance even

though they are not related to our core operations.

• Non-GAAP income tax expense/benefit. This item represents the additional amount of tax expense or benefit that the company would accrue if it used non-GAAP results instead of GAAP results in the calculation of its tax liability. The limitation in it is that it does not include the effect of all the items excluded from the non-GAAP financial statements.

All supplemental non-GAAP financial measures should be read in conjunction with the comparable information presented in accordance with generally accepted accounting principles in the United States of America.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	News Release issued April 27, 2011.*

* Furnished, not filed.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

LSI CORPORATION
By:	/s/ Bryon Look
	Bryon Look
	Executive Vice President, Chief Financial Officer and Chief Administrative Officer

Date: April 27, 2011

EXHIBIT INDEX

Exhibit No.	Description
99.1	News Release issued April 27, 2011.*

* Furnished, not filed.

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE	APRIL 27, 2011
Investor Relations Contact: Sujal Shah 610-712-5471 sujal.shah@lsi.com	Media Relations Contact: Mitch Seigle 408-954-3225 mitch.seigle@lsi.com

cc11-23

LSI Reports First Quarter 2011 Results

MILPITAS, Calif., April 27, 2011 — LSI Corporation (NYSE: LSI) today reported results for its first quarter ended April 3, 2011.

On March 9, 2011, LSI entered into a definitive agreement to sell its external storage systems business to NetApp, Inc. The transaction is expected to be completed in May, 2011, and the financial results of this business have been classified as discontinued operations in the company’s financial statements. The company’s guidance for the first quarter included expected financial results for the external storage systems business, therefore financial measures including and excluding this business have been provided in this news release.

First Quarter 2011 News Release Summary

• First quarter 2011 revenues from continuing operations of $473 million

• First quarter 2011 GAAP* income from continuing operations of 3 cents per diluted share

• First quarter 2011 non-GAAP** income from continuing operations of 10 cents per diluted share

• First quarter operating cash flows of $108 million

Second Quarter 2011 Business Outlook

• Projected revenues from continuing operations of $465 million to $495 million

• GAAP* (loss)/income from continuing operations in the range of ($0.02) to $0.07 per share

• Non-GAAP** income from continuing operations in the range of $0.07 to $0.13 per share

*	Generally Accepted Accounting Principles.
**	Excludes goodwill and other intangible asset impairment, stock-based compensation, amortization of acquisition-related intangibles, purchase accounting effect on inventory, restructuring of operations and other items, net, and gain/loss on sale/write-down of investments. It also excludes the income tax effect associated with the above mentioned items.

First quarter 2011 revenues from continuing operations were $473 million, essentially flat year over year compared to $473 million generated from continuing operations in the first quarter of 2010, and compared to $471 million generated from continuing operations in the fourth quarter of 2010.

Including results from discontinued operations, first quarter 2011 revenues would have been $629 million, a 1% decrease year over year compared to $637 million reported in the first quarter of 2010, and compared to $664 million reported in the fourth quarter of 2010.

First quarter 2011 GAAP* income from continuing operations was $19 million or 3 cents per diluted share, compared to first quarter 2010 GAAP income from continuing operations of $14 million or 2 cents per diluted share. First quarter 2011 GAAP results compare to fourth quarter 2010 GAAP income from continuing operations of $5 million or 1 cent per diluted share. First quarter 2011 GAAP income from continuing operations included a net charge of $47 million from special items, consisting primarily of $30 million of amortization of acquisition-related items, $14 million of stock-based compensation expense, and $3 million of net restructuring and other items.

First quarter 2011 GAAP net income was $10 million or 2 cents per diluted share, compared to first quarter 2010 GAAP net income of $23 million or 3 cents per diluted share. First quarter 2011 GAAP net income compares to fourth quarter 2010 GAAP net loss of $13 million or 2 cents per share.

First quarter 2011 non-GAAP** income from continuing operations was $65 million or 10 cents per diluted share, compared to first quarter 2010 non-GAAP income from continuing operations of $78 million or 12 cents per diluted share. Fourth quarter 2010 non-GAAP income from continuing operations was $53 million or 8 cents per diluted share.

First quarter 2011 non-GAAP net income was $82 million or 13 cents per diluted share, compared to first quarter 2010 non-GAAP net income of $92 million or 14 cents per diluted share. Fourth quarter 2010 non-GAAP net income was $90 million or 14 cents per diluted share.

Cash and short-term investments totaled approximately $682 million at quarter end. The company completed first-quarter purchases of approximately 15 million shares of its common stock for approximately $97 million.

“Our first quarter revenues were strong, bolstered by market share gains with key hard disk drive system-on-chip customers that partially offset normal seasonal

patterns,” said Abhi Talwalkar, LSI president and chief executive officer. “I’m also pleased with our execution in the quarter, which contributed to both solid gross margin performance and effective operating expense control. We’re now well positioned to achieve our current business model and to establish a new, richer business model as we transition to becoming a leading, pure-play provider of semiconductors that enable growing storage and networking applications.”

Bryon Look, LSI CFO and chief administrative officer, said, “First-quarter operating cash flows of $108 million were healthy while our balance sheet remained strong and debt free. Our net cash position increased to $682 million after purchasing nearly 15 million shares of our common stock during the quarter.”

LSI Second Quarter 2011 Business Outlook
For Continuing Operations

	GAAP*	Special Items	Non-GAAP**
Revenue	$465 million to $495 million		$465 million to $495 million
Gross Margin	45.5% — 50.0%	$20 million to $30 million	52.0% — 54.0%
Operating Expenses	$205 million to $225 million	$15 million to $25 million	$190 million to $200 million
Net Other (Loss)/Income	$5 million		$5 million
Tax	Approximately $7 million		Approximately $7 million
(Loss)/Income From Continuing Operations Per Share	($0.02) to $0.07	($0.06) to ($0.09)	$0.07 to $0.13
Diluted Share Count	610 million		610 million

Capital spending is projected to be around $20 million in the second quarter and approximately $55 million in total for 2011.

Depreciation and software amortization is projected to be around $17 million in the second quarter and approximately $75 million in total for 2011.

LSI Conference Call Information

LSI will hold a conference call today at 2 p.m. PDT to discuss first quarter financial results and the second quarter 2011 business outlook. Internet users can access the conference call at http://www.lsi.com/webcast. Subsequent to the conference call, a replay will be available at the same web address.

Forward-Looking Statements: This news release contains forward-looking statements that are based on the current opinions and estimates of management. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could cause LSI’s actual results to differ materially from those set forth in the forward-looking statements include, but are not limited

to: a delay in the closing of the sale of our external storage systems business to NetApp; our ability to eliminate costs related to our external storage systems business; our ability to repurchase our common stock at prices we believe to be advantageous; the impact of the recent earthquake, tsunami and nuclear power plant events in Japan; our reliance on major customers and suppliers; our ability to keep up with rapid technological change; our ability to compete successfully in competitive markets; fluctuations in the timing and volumes of customer demand; the unavailability of appropriate levels of manufacturing capacity; and general industry and market conditions. For additional information, see the documents filed by LSI with the Securities and Exchange Commission, and specifically the risk factors set forth in the company’s most recent reports on Form 10-K and 10-Q. LSI disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About LSI

LSI Corporation (NYSE: LSI) is a leading provider of innovative silicon, systems and software technologies that enable products which seamlessly bring people, information and digital content together. The company offers a broad portfolio of capabilities and services including custom and standard product ICs, adapters, systems and software that are trusted by the world’s best known brands to power leading solutions in the Storage and Networking markets. More information is available at www.lsi.com.

# # #

Editor’s Notes:

1. All LSI news releases (financial, acquisitions, manufacturing, products, technology, etc.) are issued exclusively by PR Newswire and are immediately thereafter posted on the company’s external website, http://www.lsi.com.

2. LSI and the LSI & Design logo are trademarks or registered trademarks of LSI Corporation.

3. All other brand or product names may be trademarks or registered trademarks of their respective companies.

LSI CORPORATION
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)

	April 3,			December 31,			April 4,
Assets	2011			2010			2010
Current assets:
Cash and short-term investments	$	682.3		$	676.6		$	1,015.5
Accounts receivable, net		286.1			326.6			298.6
Inventories		155.0			186.8			185.8
Prepaid expenses and other current assets		68.4			73.3			107.2
Assets held for sale		236.3			0.5			17.2
Total current assets		1,428.1			1,263.8			1,624.3
Property and equipment, net		188.0			223.2			215.4
Goodwill and identified intangible assets, net		592.0			749.8			887.7
Other assets		146.8			188.1			223.1
Total assets	$	2,354.9		$	2,424.9		$	2,950.5
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	—		$	—		$	350.0
Other current liabilities		484.3			484.6			509.4
Total current liabilities		484.3			484.6			859.4
Pension, tax and other liabilities		611.0			622.8			618.9
Total liabilities		1,095.3			1,107.4			1,478.3
Stockholders’ equity:
Common stock and additional paid-in capital		5,932.3			6,004.3			6,141.6
Accumulated deficit		(4,358.3	)		(4,368.5	)		(4,386.0	)
Accumulated other comprehensive loss		(314.4	)		(318.3	)		(283.4	)
Total stockholders’ equity		1,259.6			1,317.5			1,472.2
Total liabilities and stockholders’ equity	$	2,354.9		$	2,424.9		$	2,950.5

LSI CORPORATION
Consolidated Statements of Operations (GAAP)
(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended
	April 3,			December 31,			April 4,
	2011			2010			2010
Revenues	$	473,264		$	470,657		$	472,672
Cost of revenues		225,459			217,059			227,627
Amortization of acquisition-related intangibles		21,818			28,914			28,835
Stock-based compensation expense		1,813			1,821			1,416
Total cost of revenues		249,090			247,794			257,878
Gross profit		224,174			222,863			214,794
Research and development		136,124			136,087			132,842
Stock-based compensation expense		6,223			4,654			6,020
Total research and development		142,347			140,741			138,862
Selling, general and administrative		54,917			55,231			55,730
Amortization of acquisition-related intangibles		8,319			8,949			8,948
Stock-based compensation expense		5,631			5,226			5,687
Total selling, general and administrative		68,867			69,406			70,365
Restructuring of operations and other items, net		2,806			(1,043	)		1,620
Operating income		10,154			13,759			3,947
Interest expense		—			—			(3,894	)
Interest income and other, net		4,288			7,701			(8,807	)
Income/(loss) before income taxes		14,442			21,460			(8,754	)
(Benefit)/provision for income taxes		(4,104	)		16,905			(23,102	)
Income from continuing operations		18,546			4,555			14,348
(Loss)/income from discontinued operations, net of tax		(8,392	)		(17,956	)		8,172
Net income/(loss)	$	10,154		$	(13,401	)	$	22,520
Basic income/(loss) per share:
Income from continuing operations	$	0.03		$	0.01		$	0.02
(Loss)/income from discontinued operations	$	(0.01	)	$	(0.03	)	$	0.01
Net Income	$	0.02		$	(0.02	)	$	0.03
Diluted income/(loss) per share:
Income from continuing operations	$	0.03		$	0.01		$	0.02
(Loss)/income from discontinued operations	$	(0.01	)	$	(0.03	)	$	0.01
Net Income	$	0.02		$	(0.02	)	$	0.03
Shares used in computing per share amounts:
Basic		615,450			616,809			656,528
Diluted		629,733			616,809			664,315

A reconciliation of certain GAAP measures to non-GAAP measures is included below.

	Three Months Ended
	April 3,		December 31,			April 4,
Reconciliation of GAAP net income/(loss) to non-GAAP net income:	2011		2010			2010
GAAP income from continuing operations	$	18,546	$	4,555		$	14,348
Special items:
a) Stock-based compensation expense — cost of revenues		1,813		1,821			1,416
b) Stock-based compensation expense — R&D		6,223		4,654			6,020
c) Stock-based compensation expense — SG&A		5,631		5,226			5,687
d) Amortization of acquisition-related intangibles — cost of revenues		21,818		28,914			28,835
e) Amortization of acquisition-related intangibles — SG&A		8,319		8,949			8,948
f) Restructuring of operations and other items, net		2,806		(1,043	)		1,620
g) Write-down of investments		—		—			11,600
Total special items from continuing operations		46,610		48,521			64,126
Non-GAAP income from continuing operations	$	65,156	$	53,076		$	78,474
Non-GAAP income from continuing operations per share
Basic	$	0.11	$	0.09		$	0.12
Diluted	$	0.10	$	0.08		$	0.12
GAAP net income/(loss)	$	10,154	$	(13,401	)	$	22,520
Special items:
a) Total special items from continuing operations		46,610		48,521			64,126
b) Stock-based compensation expense — discontinued operations		319		2,856			3,308
c) Amortization of acquisition-related intangibles — discontinued operations		886		2,453			2,453
d) Restructuring of operations — discontinued operations		23,811		49,548			—
Non-GAAP net income	$	81,780	$	89,977		$	92,407
Non-GAAP net income per share:
Basic	$	0.13	$	0.15		$	0.14
Diluted	$	0.13	$	0.14		$	0.14
Shares used in computing non-GAAP per share amounts:
Basic		615,450		616,809			656,528
Diluted		629,733		626,079			690,395

LSI CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

	Three Months Ended
	April 3,			December 31,			April 4,
	2011			2010			2010
Operating activities:
Net income/(loss)	$	10,154		$	(13,401	)	$	22,520
Adjustments:
Depreciation and amortization *		56,007			65,954			67,017
Stock-based compensation expense		13,986			14,557			16,431
Non-cash restructuring of operations and other items, net		10,824			45,681			(10	)
Write-down of investments		—			—			11,600
(Gain)/loss on sale of property and equipment		(239	)		(142	)		3
Unrealized foreign exchange loss/(gain)		1,379			(2,063	)		(2,215	)
Deferred taxes		(43	)		3,478			98
Changes in assets and liabilities:
Accounts receivable, net		40,471			(12,737	)		40,396
Inventories		(12,651	)		33,348			(16,441	)
Prepaid expenses, assets held for sale and other assets		(1,066	)		506			(8,095	)
Accounts payable		24,273			(11,672	)		(8,547	)
Accrued and other liabilities		(35,066	)		(11,869	)		(16,979	)
Net cash provided by operating activities		108,029			111,640			105,778
Investing activities:
Purchases of debt securities available-for-sale		(15,530	)		(20,425	)		—
Proceeds from maturities and sales of debt securities available-for-sale		12,958			20,320			11,254
Purchases of property, equipment and software		(21,542	)		(25,080	)		(27,276	)
Proceeds from sale of property and equipment		310			281			22
Proceeds from a repayment on a note receivable		—			10,000			—
Net cash used in investing activities		(23,804	)		(14,904	)		(16,000	)
Financing activities:
Issuance of common stock		17,319			18,826			3,635
Purchase of common stock under repurchase programs		(96,791	)		(32,199	)		(26,208	)
Net cash used in financing activities		(79,472	)		(13,373	)		(22,573	)
Effect of exchange rate changes on cash and cash equivalents		(11	)		(558	)		(2,117	)
Net change in cash and cash equivalents		4,742			82,805			65,088
Cash and cash equivalents at beginning of period		521,786			438,981			778,291
Cash and cash equivalents at end of period	$	526,528		$	521,786		$	843,379

* Depreciation of fixed assets and amortization of intangible assets, software, capitalized intellectual property, premiums on short-term investments, and debt issuance costs.