8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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): January 16, 2002

LSI LOGIC CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware	0-11674	94-2712976
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

1551 McCarthy Boulevard
Milpitas, California 95035

(Address, including zip code, of principal executive offices)

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

Not Applicable

(Former name or former address, if changed since last report)

TABLE OF CONTENTS

	Item 5. Other Events.
	Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
		CONDENSED FINANCIAL STATEMENTS
		NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
EXHIBIT INDEX
EXHIBIT 99.1
EXHIBIT 99.2

Item 5. Other Events.

     The information that is set forth in the Registrant’s News Releases dated January 16, 2002 and January 23, 2002 is incorporated herein by reference to exhibits 99.1 and 99.2.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits

7 (b). Pro Forma Financial Information

     The following unaudited pro forma combined condensed financial information combines LSI Logic’s unaudited consolidated financial statements for the nine months ended September 30, 2001 and C-Cube’s historical unaudited consolidated financial statements for the period ended May 10, 2001, giving effect to the merger as if it had occurred as of the beginning of the period for the statement of operations. The unaudited pro forma combined condensed financial statements are presented for illustrative purposes only and are not necessarily indicative of the consolidated financial position or results of operations for future periods or the results that actually would have been realized had LSI Logic and C-Cube been a consolidated company during the periods presented. The unaudited pro forma combined condensed financial statements, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with the historical consolidated financial statements and the notes thereto of LSI Logic which were previously reported in LSI Logic’s Annual Report on Form 10-K for the year ended December 31, 2000 and the Quarterly Report on Form 10-Q for the quarter ended September 30, 2001, respectively and also C-Cube’s Annual Report on Form 10-K for the year ended December 31, 2000 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2001, respectively.

     The following unaudited pro forma combined condensed financial statements give effect to the merger of LSI Logic and C-Cube using the purchase method of accounting and the assumptions and adjustments described below. The purchase price was allocated to the estimated fair value of assets acquired and liabilities assumed based on independent appraisals and management estimates. The excess of the purchase price over the fair value of net tangible assets on C-Cube’s balance sheet was then allocated to identifiable intangible assets, including in-process research and development, and goodwill. For both in-process and developed technology, fair value was determined by estimating future revenues and costs as well as their stage of completion or remaining product life by individual project or product. The types of projects in-process consisted of digital video disc, recordable digital video, consumer set-top box and cable modem.

     The total amount of goodwill and identified intangible assets was $780 million with an estimated weighted average useful life of approximately 6 years.

UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS

LSI Logic Corporation
Unaudited Pro Forma Combined Condensed Statement of Operations
(In thousands, except per share amounts)

			Historical
			LSI Logic			C-Cube
									Pro Forma
			Nine Months Ended			Period Ended			Adjustments			Pro Forma
			September 30, 2001			May 10, 2001			(Notes 2 & 3)			Combined
Revenues			$	1,379,093		$	66,736			—		$	1,445,829
Costs and expenses:
	Cost of revenues			1,040,608			30,755			—			1,071,363
	Research and development			381,813			19,629			—			401,442
	Selling, general and administrative			236,579			15,573			—			252,152
	Restructuring of operations and other non- recurring charges, net			192,370			—						192,370
	Acquired in-process research and development			96,600			—			(77,500)	(a)		19,100
	Amortization of non-cash deferred stock compensation (*)			75,912			—			7,153	(b)		83,065
	Amortization of intangibles			128,283			152			42,497	(c)		170,932
		Total costs and expenses		2,152,165			66,109			(27,850	)		2,190,424
Income/(loss) from operations				(773,072	)		627			27,850			(744,595	)
Interest expense				(29,841	)		(781	)		—			(30,622	)
Interest income and other, net				16,602			2,300			—			18,902
Gain on sale of equity securities				5,302			—			—			5,302
(Loss)/income before income taxes				(781,009	)		2,146			27,850			(751,013	)
(Benefit)/provision for income taxes				(39,198	)		529						(38,669	)
(Loss)/ income from continuing operations			$	(741,811	)	$	1,617		$	27,850		$	(712,344	)
Basic earnings per share:
(Loss) from continuing operations				($2.16	)					—			($1.96	)
Diluted earnings per share:
(Loss) from continuing operations				($2.16	)					—			($1.96	)
Shares used in computing per share amounts:
	Basic			343,441						19,279	(d)		362,720
	Diluted			343,441						19,279	(e)		362,720

(*) Amortization of non-cash deferred stock compensation, if not shown separately, of $2.0 million, $59.2 million and $21.9 million would have been included in cost of revenues, research and development, and selling, general and administrative expenses respectively, for the nine months ended September 30, 2001.

The accompanying notes are an integral part of these unaudited pro forma combined condensed financial statements.

LSI LOGIC CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS
(in thousands)

Note 1. Basis of Presentation

     On March 26, 2001, LSI Logic signed a definitive merger agreement (“Merger Agreement”) to acquire C-Cube Microsystems Inc. (“C-Cube”). In accordance with the Merger Agreement, LSI Logic commenced an exchange offer whereby it offered 0.79 of a share of common stock for each outstanding share of C-Cube common stock. Under the terms of the Merger Agreement, the exchange offer was followed by a merger in which LSI Logic acquired, at the same exchange ratio, the remaining shares of C-Cube common stock not previously acquired in the exchange offer. Upon completion of the merger, LSI Logic assumed all options and warrants to purchase shares of C-Cube common stock and converted them into options and warrants to purchase shares of LSI Logic’s common stock. The merger was subject to customary closing conditions, including the tender for exchange of at least a majority of C-Cube’s outstanding shares of common stock (including for purposes of the calculation of the majority of shares, certain outstanding options and warrants to purchase C-Cube shares). The acquisition was effective May 11, 2001.

     The acquisition was accounted for as a purchase. Accordingly, the results of operations of C-Cube and estimated fair value of assets acquired and liabilities assumed were included in LSI Logic’s consolidated financial statements as of May 11, 2001 through the end of the period.

     The components of purchase price are as follows (in thousands):

Fair value of common shares issued	$	752,557
Fair value of options assumed		116,174
Fair value of warrants assumed		8,121
Direct acquisition costs		16,856
Total purchase price	$	893,708

     LSI Logic issued approximately 40.2 million shares of its common stock, 10.6 million options and 0.8 million warrants in exchange for the outstanding ordinary shares, options and warrants of C-Cube, respectively.

     The fair value of common shares issued was determined using a price of approximately $18.73, which represents the average closing stock price for the period of two days before and after the announcement of the merger. The fair value of the options and warrants assumed was determined using the Black-Scholes method. The portion of the intrinsic value of unvested options of C-Cube relating to the vesting period following consummation of the transaction has been allocated to deferred stock compensation. LSI Logic calculated the intrinsic value of the unvested options using the closing price of its common stock on the date of consummation of the merger. Deferred stock compensation is included as a component of stockholders’ equity and will

be amortized over the remaining vesting period of the options. Direct acquisition costs consist of investment banking, legal and accounting fees.

     The total purchase price was allocated to the estimated fair value of assets acquired and liabilities assumed based on independent appraisals and management estimates as follows (in thousands):

Tangible net assets acquired	$	64,315
Acquired in-process research and development		77,500
Current technology		74,000
Trademarks		20,500
Assembled workforce		36,000
Excess of purchase price over net assets acquired		572,120
Total purchase price excluding deferred stock compensation		844,435
Deferred stock compensation		49,273
Total purchase price	$	893,708

     In-process research and development. In connection with the purchase of C-Cube, LSI Logic recorded a $77.5 million charge to in-process research and development. The amount was determined by identifying research projects for which technological feasibility had not been established and no alternative future uses existed. As of the acquisition date, there were various projects that met the above criteria. The primary projects identified consisted of digital video disc (“DVD”), recordable digital video (“DVD-R”), Consumer Set-Top Box and Cable Modem.

     The value of the projects identified to be in progress was determined by estimating the future cash flows from the projects once commercially feasible, discounting the net cash flows back to their present value and then applying a percentage of completion to the calculated value. The net cash flows from the identified projects were based on estimates of revenues, cost of revenues, research and development costs, selling general and administrative costs and applicable income taxes for the projects. The percentage of completion for the projects was determined based on research and development expenses incurred as of May 11, 2001 for the projects as a percentage of total research and development expenses to bring the projects to technological feasibility. The discount rate used was 27.5% for these projects. The development of these projects started in early 1999. As of May 11, 2001, LSI Logic estimated the projects were approximately 84%, 62%, 61% and 69% complete for DVD, DVD-R, Consumer Set-Top Box and Cable Modem, respectively.

     Development of the technology remains a substantial risk to LSI Logic due to factors including the remaining effort to achieve technological feasibility, rapidly changing customer markets and competitive threats from other companies. Additionally, the value of other intangible assets acquired may become impaired.

     Useful life of intangible assets. The amount allocated to current technology, trademarks, assembled workforce and excess of purchase price over net assets acquired is being amortized over their estimated weighted average useful life of six years using the straight-line method.

Note 2. Unaudited Pro Forma Combined Condensed Statements of Operations

     The following adjustments were applied to the historical unaudited statements of operations for the nine months ended September 30, 2001, to arrive at the unaudited pro forma combined condensed statement of operations as though the acquisition took place on January 1, 2001.

(a)	Adjustment to exclude the in-process research and development charge that arose from the acquisition of C-Cube.
(b)	Adjustment to recognize amortization of non-cash deferred stock compensation over the remaining vesting period of the options assumed for the period presented.
(c)	Adjustment to recognize amortization of identified intangibles arising from the merger over their estimated useful lives of 6 years for the period presented.

Note 3. Unaudited Pro Forma Combined Income Per Share from Continuing Operations

     The following adjustments were applied to the historical unaudited statements of operations for the nine months ended September 30, 2001 to arrive at the unaudited pro forma combined condensed statement of operations as though the acquisition took place on January 1, 2001.

(d)	Adjustment to reflect the number of LSI Logic common shares issued in exchange for C-Cube common shares.
(e)	In computing diluted earnings per share for the nine month period ended September 30, 2001, options and warrants to purchase approximately 72.4 million shares were excluded from the computation of diluted shares because of their antidilutive effect on earnings per share.

Note 4. Recent Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board (“FASB”) issued FASB Statement 142 (“SFAS 142”), “Goodwill and Other Intangible Assets.” SFAS 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Under SFAS 142, goodwill will be tested annually and whenever events or circumstances occur indicating that goodwill might be impaired. LSI Logic adopted SFAS 142 on January 1, 2002, the beginning of fiscal 2002. In connection with the adoption of SFAS 142, the Company will be required to perform a transitional goodwill impairment assessment. LSI Logic has not yet determined the impact this standard will have on its results of operations and financial position.

     In October 2001, the FASB issued Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS 144 addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed. SFAS 144 will be effective for fiscal years beginning after December 15, 2001. The Company does not expect that its adoption on January 1, 2002 will have a material effect on its financial statements.

7(c). Exhibits

Exhibit 99.1 LSI Logic Corporation News Release issued January 16, 2002.

Exhibit 99.2 LSI Logic Corporation News Release issued January 23, 2002.

     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 LOGIC CORPORATION A Delaware Corporation
Dated: January 25, 2002	By:	/s/	David G. Pursel
			David G. Pursel Vice President, General Counsel and Secretary

EXHIBIT INDEX

Exhibit Number	Description
99.1	Text of News Release dated January 16, 2002
99.2	Text of News Release dated January 23, 2002

EX-99.1 3 f78616ex99-1.txt EXHIBIT 99.1 EXHIBIT 99.1 FOR IMMEDIATE RELEASE JANUARY 16, 2002 MEDIA CONTACT: KEVIN BRETT INVESTOR CONTACT: DIANA MATLEY 408-433-7150 408-433-4365 kbrett@lsil.com diana@lsil.com CC02-22 LSI LOGIC RESTRUCTURES OPERATIONS TO SPEED RETURN TO PROFITABILITY BY 2ND HALF OF 2002 COMPANY WILL MEET Q4 2001 GUIDANCE MILPITAS, CA - LSI Logic Corporation (NYSE: LSI) today announced a series of actions to reduce costs and tailor company expenses to current revenues, putting the company on track for its return to profitability in the second half of the year. These actions include: Restructuring Tsukuba, Japan manufacturing operations; divesting CDMA handset and DSL standard product business units and reducing the worldwide workforce by 1,400 positions or 20 percent. These cost reductions are expected to reduce cost of sales and operating expenses by about $30 million per quarter. The company will take a related charge in the range of $50 million to $70 million in the first quarter of 2002 to cover these actions. LSI Logic will meet its guidance for 2001 fourth quarter revenue growth of between 0-5 percent sequentially from the $397 million reported in the third quarter. The company will also meet its projection of pro forma fourth quarter loss of 23 cents, an improvement over the pro forma third quarter loss of 29 cents. "We believe that both our semiconductor component and storage systems businesses have bottomed and we expect our overall revenues to grow in line with the semiconductor industry this year," said Wilfred J. Corrigan, LSI Logic chairman and chief executive officer. "However, we are taking these actions to bring into line our cost structure with our present revenue stream and to return to profitability as expeditiously as possible." "We are emphasizing our core strengths and concentrating on those parts of the communications, storage and consumer electronics businesses where we have leadership positions," said Corrigan. "At the same time, we have made the decision to divest our CDMA wireless handset and DSL standard product business units. We are in discussions to sell these businesses." LSI Logic is consolidating its U.S. manufacturing activities and process R&D into the corporation's Gresham, Oregon campus. Earlier, the company closed its Colorado Springs and Santa Clara manufacturing facilities. The company is restructuring its manufacturing operations in Tsukuba, Japan. Bryon Look, LSI Logic executive vice president and chief financial officer, said the expanded cost-reduction program is designed to put LSI Logic on the fast track to positive cash flow and profitability. LSI Logic will report its 2001 and fourth quarter financial results Wednesday, January 23 at the close of market. At that time, LSI Logic will provide guidance for the 2002 first quarter. SAFE HARBOR FOR FORWARD LOOKING STATEMENTS: This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities and Exchange Act of 1934, as amended, and other projections by LSI Logic management which involve risks and uncertainties regarding future events and the future financial performance of LSI Logic. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. Readers are referred to the documents filed by LSI Logic with the SEC, specifically the most recent reports on Form 10-K, 10-Q and 8-K, each as it may be amended from time to time, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. Forward-looking statements include risks associated with the efficacy of actions taken by management to reduce costs, restructure manufacturing operations, divest business units, and reduce the size of the workforce. Further risks include realizing neither the magnitude of the cost savings expected from management actions, nor the acceleration or deceleration of future revenue growth, earnings, profitability or cash flow. The company's actual results in future periods may be materially different from any performance suggested in this news release. Risks and uncertainties to which the company is subject may include, but may not necessarily be limited to fluctuations in the timing and volumes of customer demand, the rate of depletion of customer inventory buildup, and the company's achievement of revenue objectives and other financial targets. Other risks and uncertainties that many affect the company's actual results include, but are not necessarily limited to the timing and success of new product introductions, the continued availability of appropriate levels of manufacturing capacity, the realization of benefits from the company's strategic relationships, and investments and disruptions in general economic activity caused by the effects of terrorist activities and armed conflict. The company operates in an industry sector where securities' values are highly volatile and may be influenced by the cyclical nature of the industry, the unpredictability of the economy and other factors beyond the company's control. LSI Logic Corporation (NYSE: LSI) is a leading designer and manufacturer of communications, consumer and storage semiconductors for applications that access, interconnect and store data, voice and video. In addition, the company supplies storage network solutions for the enterprise. LSI Logic is headquartered at 1551 McCarthy Boulevard, Milpitas, CA 95035, 866-574-5741 (within U.S.), 719-533-7679 (outside U.S.), http://www.lsilogic.com. # # # Editor's Notes: 1. All LSI Logic 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.lsilogic.com. 2. The LSI Logic logo design is a registered trademark of LSI Logic Corporation. 3. All other brand or product names may be trademarks or registered trademarks of their respective companies. EX-99.2 4 f78616ex99-2.txt EXHIBIT 99.2 Exhibit 99.2 FOR IMMEDIATE RELEASE JANUARY 23, 2002 INVESTOR RELATIONS CONTACT: MEDIA RELATIONS CONTACT: DIANA MATLEY KEVIN BRETT 408-433-4365 408-433-7150 diana@lsil.com kbrett@lsil.com CC02-23 LSI Logic Reports 2001 and Q4 Financial Results MILPITAS, CALIFORNIA - LSI Logic Corporation (NYSE: LSI) today reported $406 million in revenues in the 2001 fourth quarter, a 2.3 percent increase over the $397 million reported in the third quarter and a 46 percent decrease from the $751 million reported in the fourth quarter of 2000. Pro forma 2001 fourth quarter net loss was $74 million or 20 cents a diluted share, a $30 million improvement over the pro forma third quarter net loss of $104 million or 29 cents a diluted share. The company reported pro forma net income of $116 million or 34 cents a diluted share in the fourth quarter of 2000. Cash and short-term investments increased $239 million in the fourth quarter to $1.01 billion. "The combination of a sequential revenue increase and reduced operating expenses enabled LSI Logic to meet its guidance for top-line growth and exceed expectations for improvement of its bottom line in the fourth quarter," said Wilfred J. Corrigan, LSI Logic chairman and chief executive officer. "We have already taken significant steps this month to reduce our operating expenses, thus lowering our break-even point. "We anticipate growth in our communications, storage components and storage systems businesses in the first quarter. Overall, we expect modest sequential revenue growth in the first quarter, despite normal seasonality in our consumer electronics business. We also anticipate returning to profitability in the second half of 2002." LSI Logic recorded 2001 revenues of $1.78 billion, a 35 percent decrease from the $2.74 billion in 2000. Pro forma 2001 net loss, before amortization of goodwill and other special items, was $190 million or a loss of 54 cents a diluted share. Pro forma 2000 net income was $417 million or $1.21 a diluted share. Cash and short-term investments decreased slightly to $1.01 billion at the end of 2001 from the $1.13 billion at the end of 2000. "We improved both our top-line and bottom-line performance and we have been aggressive about reducing costs," said Bryon Look, LSI Logic executive vice president and chief financial officer. "We are targeting to generate positive cash flow in the second quarter. We are positioned to fully capitalize on the coming recovery of our targeted communications, consumer and storage markets." LSI LOGIC BUSINESS OUTLOOK LSI Logic expects 2002 Q1 revenues to grow between 0 to 3 percent sequentially from the $406 million reported in the fourth quarter. The company anticipates reporting a pro forma first quarter loss of about 14 cents a diluted share and gross margin in the range of 32-34 percent. The company does not anticipate selling any equity investments in the first quarter. The first quarter pro forma tax provision is expected to be a charge in the range of $3 million to $5 million. Capital spending is expected to be less than $40 million in the first quarter and under $200 million for 2002. First quarter depreciation is projected to be about $70 million. The first quarter diluted common share count will be approximately 370 million. NOTE: The company's financial guidance will be limited to the comments made on today's public conference call and contained in the Business Outlook section of this news release. The company assumes no obligation to update the information contained in this news release. LSI LOGIC TECHNOLOGY AND PRODUCT ANNOUNCEMENTS - - LSI Logic Storage Systems, Inc. and Storage Technology Corp. announced a strategic alliance, leveraging LSI Logic's manufacturing and engineering expertise and StorageTek's worldwide distribution, support and professional services, for the open systems storage market. http://www.lsilogic.com/news/product_news/pr20020122a.html - - LSI Logic announced four Ultra320 SCSI design wins with leading OEM providers, including Dell Computer, which are expected to exceed $250 million in revenues over the next three years. http://www.lsilogic.com/news/product_news/pr20011112a.html - - LSI Logic introduced the first single-chip DVD recorder systems processor, the DiMeNsion(TM)-8600, supporting all DVD recording and playback formats, enabling feature-rich DVD recorder solutions and reducing system-level costs and design complexity for consumer electronics manufacturers. http://www.lsilogic.com/news/product_news/pr20020107a.html - - LSI Logic Storage Components and Storage Systems, Inc. teamed with Brocade to deliver an end-to-end two-gigabit Fibre Channel storage solution. This solution can deliver data up to four times faster in high throughput applications compared to previous generation one-gigabit systems. http://www.lsilogic.com/news/product_news/pr20020108.html http://www.lsilogic.com/news/product_news/pr20011221.html - - LSI Logic announced the availability of the industry's first ARM946E-S(TM) processor core to run at 200MHz, a significant performance enhancement to earlier implementations of the intellectual property core. LSI Logic has already won a number of key-customer SoC designs with the new implementation of the ARM946E-S core. http://www.lsilogic.com/news/product_news/pr20011031a.html - - NEC selected LSI Logic's intelligent IDE RAID storage adapter for its market leading IDE RAID servers. The NEC design win underscores market demand for the MegaRAID i4, the world's first intelligent half-size, four channel PCI IDE RAID solution. http://www.lsilogic.com/news/product_news/pr20011031a.html - - Compagnie Generale de Geophysique (CGG), a global oilfield services company, installed 100 terabytes of LSI Logic Storage Systems, Inc.'s MetaStor(R) E4600 storage as part of Europe's first two gigabit per second Fibre Channel SAN. http://www.lsilogic.com/news/product_news/pr20011217.html - - LSI Logic introduced its new thermally enhanced EPBGA-T package, designed to provide 20 percent lower thermal resistance than standard plastic ball grid array packages. The thermally enhanced plastic ball grid array targets cost-sensitive, performance-driven communications, consumer and storage applications. http://lsilogic.com/news/product_news/pr20011204.html - - LSI Logic Storage Systems, Inc. announced the MetaStor(R) E4600HPCx storage system, designed expressly for high throughput applications such as complex modeling, seismic processing and steaming video. http://www.lsilogic.com/news/product_news/pr20011113a.html - - LSI Logic Storage Systems, Inc. announced the general availability of the new 36 gigabyte, 15000-RPM disk drive for its MetaStor(R) E-Series family of storage systems, enabling up to 40 percent more input/output operations per second. http://www.lsilogic.com/news/product_news/pr20011218.html - - ISG Broadband Inc. became the first company to adopt LSI Logic's Hi-IQ(TM) RF tuner, reducing the power and form factor of ISG's RF receiver modules. LSI Logic's Hi-IQ tuner enables the industry's first 3.3-volt, highly integrated cable receiver module series. http://www.lsilogic.com/news/product_news/pr20011218.html - - LSI Logic announced that VMIC has selected LSI Logic's dual-channel PCI to Fibre Channel controller to power VMIC's first-ever 2 Gbits host bus adapters for storage area networks (SANs), clustering, video editing and date warehousing. http://www.lsilogic.com/news/product_news/pr20011031b.html - - LSI Logic and Pinnacle Systems, Inc. announced plans to develop a complete low-cost analog and digital video editing and authoring solution based on LSI Logic's iDVx(TM) single-chip DV/MPEG codec. Pinnacle's new consumer product will support both analog and DV camcorder video input and will provide theater-quality video to tape, CD, DVD or Internet video streams. http://www.lsilogic.com/news/product_news/pr20011112d.html LSI Logic Conference Call Information: LSI Logic will hold a conference call today at 2 p.m. PDT to discuss fourth quarter and 2001 financial results. The access number is 1-785-832-1077. Internet users can access the conference call by visiting www.videonewswire.com/event.asp?id=2540. A replay of the call will be available today at approximately 5 p.m. PDT and will be available for 48 hours. The number is 1-800-374-1216. The webcast replay will be available until January 30. SAFE HARBOR FOR FORWARD LOOKING STATEMENTS: This news release and the statements by LSI Logic management include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities and Exchange Act of 1934, as amended. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from the actual future events or results. Readers are referred to the documents filed by LSI Logic with the SEC, and specifically the most recent reports on Form 10-K, 10-Q and 8-K. Forward-looking statements include the efficacy of cost reduction measures and reduction of operating expenses, projections of growth in the communications, storage components and storage systems businesses, estimates of revenue growth, earnings, gross margins, gains from investment income, tax rates, capital spending and depreciation made in this news release. The company's actual results in future periods may be materially different from any performance suggested in this news release. Risks and uncertainties to which the company is subject may include, but may not necessarily be limited to fluctuations in the timing and volumes of customer demand, the rate of depletion of customer inventory buildup, and the company's achievement of revenue objectives and other financial targets. Other risks and uncertainties that may affect the company's actual results include, but are not necessarily limited to the timing and success of new product introductions, the continued availability of appropriate levels of manufacturing capacity, the realization of benefits from the company's strategic relationships, and investments and disruptions in general economic activity caused by the effects of terrorist activities and armed conflict. The extent to which the company may not realize the cost savings it expects from the reduction in operating expenses may also impact its future performance. The company operates in an industry sector where securities' values are highly volatile and may be influenced by the cyclical nature of the industry, the unpredictability of the economy and other factors beyond the company's control. In the context of forward-looking information provided in this news release, reference is made to the discussion of risk factors detailed in the company's filings from time to time with the Securities and Exchange Commission, including but not limited to filings made during the past 12 months. LSI Logic Corporation (NYSE: LSI) is a leading designer and manufacturer of communications, consumer and storage semiconductors for applications that access, interconnect and store data, voice and video. In addition, the company supplies storage network solutions for the enterprise. LSI Logic is headquartered at 1551 McCarthy Boulevard, Milpitas, CA 95035, 866-574-5741 (within U.S.), 719-533-7679 (outside U.S.), http://www.lsilogic.com. # # # Editor's Notes: 3. All LSI Logic 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.lsilogic.com. 4. The LSI Logic logo design is a registered trademark of LSI Logic Corporation. 3. All other brand or product names may be trademarks or registered trademarks of their respective companies. LSI LOGIC CORPORATION PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)

Three Months Ended Year Ended ---------------------------- ---------------------------- Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2001 2000 2001 2000 ----------- ----------- ----------- ----------- Revenues $ 405,830 $ 750,575 $ 1,784,923 $ 2,737,667 ----------- ----------- ----------- ----------- Costs and expenses: Cost of revenues 277,888 422,046 1,160,432 1,557,232 Research and development 121,295 110,237 503,108 378,936 Selling, general and administrative 70,731 82,544 307,310 306,962 ----------- ----------- ----------- ----------- Total costs and expenses 469,914 614,827 1,970,850 2,243,130 ----------- ----------- ----------- ----------- (Loss)/ income from operations (64,084) 135,748 (185,927) 494,537 Interest expense (14,737) (10,181) (44,578) (40,384) Interest income and other, net 4,429 14,230 35,275 45,837 Recurring investment income -- 15,305 5,302 55,428 ----------- ----------- ----------- ----------- (Loss)/ income before income taxes (74,392) 155,102 (189,928) 555,418 Provision for income taxes -- 38,776 -- 138,856 ----------- ----------- ----------- ----------- Pro forma net (loss)/ income $ (74,392) $ 116,326 $ (189,928) $ 416,562 =========== =========== =========== =========== Pro forma (loss)/ earnings per share: Basic $ (0.20) $ 0.37 $ (0.54) $ 1.34 =========== =========== =========== =========== Diluted $ (0.20) $ 0.34 $ (0.54) $ 1.21 =========== =========== =========== =========== Shares used in computing per share amounts: Basic 365,998 317,976 349,280 310,813 =========== =========== =========== =========== Diluted 365,998 353,408 349,280 354,337 =========== =========== =========== ===========

Pro forma statements of operations are intended to present the Company's operating results, excluding special items described below, for the periods presented. During the three month period ended December 31, 2001, the special items represented additional excess inventory and related charges, amortization of acquisition related items including intangibles and non-cash deferred stock compensation, restructuring of operations and other non-recurring items, net, and other special items. The other special items consisted of a net write down of certain equity securities and the write-off of debt issuance costs associated with the repayment of bank debt during the quarter. During the year ended December 31, 2001, the special items consisted of the items above and acquired in-process research and development. The other special items consisted of the items above and the write-off of debt issuance costs associated with the restructuring of a master lease and security agreement. During the three month period ended December 31, 2000, the special items represented acquired in-process research and development and amortization of acquisition related items including intangibles and non-cash deferred stock compensation. During the year ended December 31, 2000, the special items represented those in the previous paragraph, additional excess inventory and related charges, restructuring of operations and other non-recurring items, net and other special items. The other special items consisted of an unplanned gain on sale of equity securities, a gain on the sale of a U.S. facility and the write-off of debt issuance costs resulting from the repayment of bank debt. For the three and twelve month periods ended December 31, 2001, the pro forma statements are prepared using the Company's calculated tax rate of 0% when excluding special items. For the three and twelve month periods ended December 31, 2000, the pro forma statements are prepared using the Company's calculated tax rate of 25% when excluding special items. In computing diluted pro forma earnings per share for the three and twelve month periods ended December 31, 2000, pro forma net income was increased by $2,750 and $10,997 for interest, respectively, net of taxes, on the $345 million convertible notes considered dilutive common stock equivalents. A reconciliation from pro forma net income to the reported results is presented on the following page. The format presented above is not intended to be in accordance with Generally Accepted Accounting Principles. LSI LOGIC CORPORATION RECONCILIATION OF PRO FORMA NET INCOME TO REPORTED RESULTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)

Three Months Ended Year Ended ------------------------ ------------------------ Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2001 2000 2001 2000 --------- --------- --------- --------- Pro forma net (loss)/ income $ (74,392) $ 116,326 $(189,928) $ 416,562 --------- --------- --------- --------- Special items: Additional excess inventory and related charges (52,500) -- (210,564) (11,100) Amortization of acquisition related items including intangibles and non-cash deferred stock compensation (88,683) (46,949) (292,878) (113,761) Acquired in-process research and development -- (6,950) (96,600) (77,438) Restructuring of operations and other non-recurring items, net (27,269) -- (219,639) (2,781) Other special items (7,300) -- (21,544) 29,221 Tax (provision)/ benefit -- (742) 39,198 (4,103) --------- --------- --------- --------- Total special items (175,752) (54,641) (802,027) (179,962) --------- --------- --------- --------- Net (loss)/ income $(250,144) $ 61,685 $(991,955) $ 236,600 ========= ========= ========= ========= Basic (loss)/ earnings per share: Pro forma net (loss)/ income $ (0.20) $ 0.37 $ (0.54) $ 1.34 Special items ** (0.48) (0.18) (2.30) (0.58) --------- --------- --------- --------- Net (loss)/ income $ (0.68) $ 0.19 $ (2.84) $ 0.76 ========= ========= ========= ========= Diluted (loss)/ earnings per share*: Pro forma net (loss)/ income $ (0.20) $ 0.34 $ (0.54) $ 1.21 Special items ** (0.48) (0.16) (2.30) (0.51) --------- --------- --------- --------- Net (loss)/ income $ (0.68) $ 0.18 $ (2.84) $ 0.70 ========= ========= ========= ========= Shares used in computing per share amounts: Basic 365,998 317,976 349,280 310,813 ========= ========= ========= ========= Diluted 365,998 353,408 349,280 354,337 ========= ========= ========= =========

* In computing diluted loss per share for the three and twelve month periods ended December 31, 2001, common stock equivalents were excluded from the computation of diluted loss per share as a result of their antidilutive effect. In computing diluted earnings per share for the three month period ended December 31, 2000, net income was increased by $2,750 for interest, net of taxes, on the $345 million convertible notes considered dilutive common stock equivalents. In computing diluted earnings per share for the year ended December 31, 2000, net income was increased by $10,997 for interest, net of taxes, on the $345 million convertible notes considered dilutive common stock equivalents. ** This line item includes rounding adjustments. LSI LOGIC CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)

Three Months Ended Year Ended --------------------------- --------------------------- Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2001 2000 2001 2000 ----------- ----------- ----------- ----------- Revenues $ 405,830 $ 750,575 $ 1,784,923 $ 2,737,667 ----------- ----------- ----------- ----------- Costs and expenses: Cost of revenues: Cost of revenues 277,888 422,046 1,160,432 1,557,232 Additional excess inventory and related charges 52,500 -- 210,564 11,100 Research and development 121,295 110,237 503,108 378,936 Selling, general and administrative 70,731 82,544 307,310 306,962 Acquired in-process research and development -- 6,950 96,600 77,438 Restructuring of operations and other non-recurring items, net 27,269 -- 219,639 2,781 Amortization of acquisition related items including intangibles and non-cash deferred stock compensation * 88,683 46,949 292,878 113,761 ----------- ----------- ----------- ----------- Total costs and expenses 638,366 668,726 2,790,531 2,448,210 ----------- ----------- ----------- ----------- (Loss)/ income from operations (232,536) 81,849 (1,005,608) 289,457 Interest expense (14,737) (10,181) (44,578) (41,573) Interest income and other, net (2,871) 14,230 13,731 51,575 Gain on sale of equity securities -- 15,305 5,302 80,100 ----------- ----------- ----------- ----------- (Loss)/ income before income taxes (250,144) 101,203 (1,031,153) 379,559 Provision/ (benefit) for income taxes -- 39,518 (39,198) 142,959 ----------- ----------- ----------- ----------- Net (loss)/ income $ (250,144) $ 61,685 $ (991,955) $ 236,600 =========== =========== =========== =========== (Loss)/ earnings per share: Basic $ (0.68) $ 0.19 $ (2.84) $ 0.76 =========== =========== =========== =========== Diluted ** $ (0.68) $ 0.18 $ (2.84) $ 0.70 =========== =========== =========== =========== Shares used in computing per share amounts: Basic 365,998 317,976 349,280 310,813 =========== =========== =========== =========== Diluted 365,998 353,408 349,280 354,337 =========== =========== =========== ===========

* The amortization of acquisition related items including intangibles and non-cash deferred stock compensation for the three month period ended December 31, 2001 are comprised of the following items: Amortization of continuing intangibles $ 59,969 Amortization of newly purchased intangibles -- Amortization of non-cash deferred stock compensation 28,714 --------- $ 88,683 ** In computing diluted loss per share for the three and twelve month periods ended December 31, 2001, common stock equivalents were excluded from the computation of diluted loss per share as a result of their antidilutive effect. In computing diluted earnings per share for the three month period ended December 31, 2000, net income was increased by $2,750 for interest, net of taxes, on the $345 million convertible notes considered dilutive common stock equivalents. In computing diluted earnings per share for the year ended December 31, 2000, net income was increased by $10,997 for interest, net of taxes, on the $345 million convertible notes considered dilutive common stock equivalents. LSI LOGIC CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (IN MILLIONS) (UNAUDITED)

December 31, December 31, ASSETS 2001 2000 ---------- ---------- Current assets: Cash and short-term investments $ 1,013.3 $ 1,133.2 Accounts receivable, net 191.7 522.7 Inventories 256.6 290.4 Prepaid expenses and other current assets 307.3 125.9 ---------- ---------- Total current assets 1,768.9 2,072.2 Property and equipment, net 944.4 1,278.7 Goodwill and other intangibles 1,319.8 580.9 Other assets 592.7 265.7 ---------- ---------- Total assets $ 4,625.8 $ 4,197.5 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current liabilities $ 509.7 $ 626.0 Current portion of long-term debt, capital lease obligations and short-term borrowings 0.3 1.0 ---------- ---------- Total current liabilities 510.0 627.0 Long-term debt, capital lease obligations and other noncurrent liabilities 1,630.0 1,066.7 ---------- ---------- Total liabilities 2,140.0 1,693.7 Minority interest in consolidated subsidiaries 5.9 5.7 ---------- ---------- Stockholders' equity: Common stock 2,909.3 1,934.7 Deferred stock compensation (124.1) (163.0) Accumulated (deficit)/ earnings (319.8) 672.2 Accumulated other comprehensive income 14.5 54.2 ---------- ---------- Total stockholders' equity 2,479.9 2,498.1 ---------- ---------- Total liabilities and stockholders' equity $ 4,625.8 $ 4,197.5 ========== ==========

LSI LOGIC CORPORATION SELECTED FINANCIAL INFORMATION (IN MILLIONS, EXCEPT WHERE NOTED) (UNAUDITED)

Three Months Ended ------------------------------------------ Dec. 31, Sept. 30, Dec. 31, 2001 2001 2000 ---------- ---------- ---------- Semiconductor revenues $ 353.4 $ 351.4 $ 642.5 SAN Systems revenues $ 52.4 $ 45.3 $ 108.1 Total revenues $ 405.8 $ 396.7 $ 750.6 Percentage change in revenues-qtr./qtr. (a) 2.3% -14.7% 3.2% Percentage change in revenues-yr./yr. (b) -45.9% -45.5% 28.3% Capital additions $ 43.9 $ 59.5 $ 247.9 Depreciation / amortization (c) $ 72.5 $ 82.7 $ 87.8 Days sales outstanding 43 51 63 Days of inventory (d) 83 97 62 Current ratio 3.5 2.1 3.3 Quick ratio 2.4 1.4 2.6 R&D as a percentage of revenues 29.9% 34.2% 14.7% SG&A as a percentage of revenues 17.4% 20.2% 11.0% Gross margin as a percentage of revenues (d) 31.5% 27.7% 43.8% Employees (e) 6,742 7,352 7,221 Revenues per employee (in thousands) (f) $ 240.8 $ 215.8 $ 415.8 Diluted shares (in thousands) (g) 365,998 364,441 353,408

(a) Represents sequential quarter growth in revenues. (b) Represents growth in revenues in the quarter presented as compared to the same quarter of the previous year. (c) Excludes amortization of acquisition related intangibles and non-cash deferred stock compensation. (d) Based on pro forma cost of revenues. (e) Actual number of employees at the end of each period presented. (f) Revenue per employee is calculated by annualizing revenue for each quarter presented and dividing it by the number of employees. (g) Shares used in determining pro forma diluted (loss)/ earnings per share. -----END PRIVACY-ENHANCED MESSAGE-----

EX-99.1

EXHIBIT 99.1
FOR IMMEDIATE RELEASE                                           JANUARY 16, 2002

MEDIA CONTACT:   KEVIN BRETT               INVESTOR CONTACT: DIANA MATLEY
                 408-433-7150                                408-433-4365
                 kbrett@lsil.com                             diana@lsil.com

CC02-22

                      LSI LOGIC RESTRUCTURES OPERATIONS TO
                SPEED RETURN TO PROFITABILITY BY 2ND HALF OF 2002

                       COMPANY WILL MEET Q4 2001 GUIDANCE

MILPITAS, CA - LSI Logic Corporation (NYSE: LSI) today announced a series of
actions to reduce costs and tailor company expenses to current revenues, putting
the company on track for its return to profitability in the second half of the
year.

These actions include: Restructuring Tsukuba, Japan manufacturing operations;
divesting CDMA handset and DSL standard product business units and reducing the
worldwide workforce by 1,400 positions or 20 percent.

These cost reductions are expected to reduce cost of sales and operating
expenses by about $30 million per quarter. The company will take a related
charge in the range of $50 million to $70 million in the first quarter of 2002
to cover these actions.

LSI Logic will meet its guidance for 2001 fourth quarter revenue growth of
between 0-5 percent sequentially from the $397 million reported in the third
quarter. The company will also meet its projection of pro forma fourth quarter
loss of 23 cents, an improvement over the pro forma third quarter loss of 29
cents.

"We believe that both our semiconductor component and storage systems businesses
have bottomed and we expect our overall revenues to grow in line with the
semiconductor industry this year," said Wilfred J. Corrigan, LSI Logic chairman
and chief executive officer. "However, we are taking these actions to bring into
line our cost structure with our present revenue stream and to return to
profitability as expeditiously as possible."



"We are emphasizing our core strengths and concentrating on those parts of the
communications, storage and consumer electronics businesses where we have
leadership positions," said Corrigan. "At the same time, we have made the
decision to divest our CDMA wireless handset and DSL standard product business
units. We are in discussions to sell these businesses."

LSI Logic is consolidating its U.S. manufacturing activities and process R&D
into the corporation's Gresham, Oregon campus. Earlier, the company closed its
Colorado Springs and Santa Clara manufacturing facilities. The company is
restructuring its manufacturing operations in Tsukuba, Japan.

Bryon Look, LSI Logic executive vice president and chief financial officer, said
the expanded cost-reduction program is designed to put LSI Logic on the fast
track to positive cash flow and profitability.

LSI Logic will report its 2001 and fourth quarter financial results Wednesday,
January 23 at the close of market. At that time, LSI Logic will provide guidance
for the 2002 first quarter.

SAFE HARBOR FOR FORWARD LOOKING STATEMENTS: This release contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities and Exchange Act of
1934, as amended, and other projections by LSI Logic management which involve
risks and uncertainties regarding future events and the future financial
performance of LSI Logic. Readers are cautioned that these forward-looking
statements are only predictions and may differ materially from actual future
events or results. Readers are referred to the documents filed by LSI Logic with
the SEC, specifically the most recent reports on Form 10-K, 10-Q and 8-K, each
as it may be amended from time to time, which identify important risk factors
that could cause actual results to differ from those contained in the
forward-looking statements. Forward-looking statements include risks associated
with the efficacy of actions taken by management to reduce costs, restructure
manufacturing operations, divest business units, and reduce the size of the
workforce. Further risks include realizing neither the magnitude of the cost
savings expected from management actions, nor the acceleration or deceleration
of future revenue growth, earnings, profitability or cash flow. The company's
actual results in future periods may be materially different from any
performance suggested in this news release. Risks and uncertainties to which the
company is subject may include, but may not necessarily be limited to
fluctuations in the timing and volumes of customer demand, the rate of depletion
of customer inventory buildup, and the company's achievement of revenue
objectives and other financial targets. Other risks and uncertainties that many
affect the company's actual results include, but are not necessarily limited to
the timing and success of new product introductions, the continued availability
of appropriate levels of manufacturing capacity, the



realization of benefits from the company's strategic relationships, and
investments and disruptions in general economic activity caused by the effects
of terrorist activities and armed conflict. The company operates in an industry
sector where securities' values are highly volatile and may be influenced by the
cyclical nature of the industry, the unpredictability of the economy and other
factors beyond the company's control.

LSI Logic Corporation (NYSE: LSI) is a leading designer and manufacturer of
communications, consumer and storage semiconductors for applications that
access, interconnect and store data, voice and video. In addition, the company
supplies storage network solutions for the enterprise. LSI Logic is
headquartered at 1551 McCarthy Boulevard, Milpitas, CA 95035, 866-574-5741
(within U.S.), 719-533-7679 (outside U.S.), http://www.lsilogic.com.

                                      # # #


Editor's Notes:

1.  All LSI Logic 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.lsilogic.com.

2.  The LSI Logic logo design is a registered trademark of LSI Logic
    Corporation.

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

EX-99.2

Exhibit 99.2
FOR IMMEDIATE RELEASE                                           JANUARY 23, 2002

INVESTOR RELATIONS CONTACT:                        MEDIA RELATIONS CONTACT:
DIANA MATLEY                                       KEVIN BRETT
408-433-4365                                       408-433-7150
diana@lsil.com                                     kbrett@lsil.com

CC02-23

                 LSI Logic Reports 2001 and Q4 Financial Results

MILPITAS, CALIFORNIA - LSI Logic Corporation (NYSE: LSI) today reported $406
million in revenues in the 2001 fourth quarter, a 2.3 percent increase over the
$397 million reported in the third quarter and a 46 percent decrease from the
$751 million reported in the fourth quarter of 2000.

Pro forma 2001 fourth quarter net loss was $74 million or 20 cents a diluted
share, a $30 million improvement over the pro forma third quarter net loss of
$104 million or 29 cents a diluted share. The company reported pro forma net
income of $116 million or 34 cents a diluted share in the fourth quarter of
2000. Cash and short-term investments increased $239 million in the fourth
quarter to $1.01 billion.

"The combination of a sequential revenue increase and reduced operating expenses
enabled LSI Logic to meet its guidance for top-line growth and exceed
expectations for improvement of its bottom line in the fourth quarter," said
Wilfred J. Corrigan, LSI Logic chairman and chief executive officer. "We have
already taken significant steps this month to reduce our operating expenses,
thus lowering our break-even point.

"We anticipate growth in our communications, storage components and storage
systems businesses in the first quarter. Overall, we expect modest sequential
revenue growth in the first quarter, despite normal seasonality in our consumer
electronics business. We also anticipate returning to profitability in the
second half of 2002."

LSI Logic recorded 2001 revenues of $1.78 billion, a 35 percent decrease from
the $2.74 billion in 2000.

Pro forma 2001 net loss, before amortization of goodwill and other special
items, was $190 million or a loss of 54 cents a diluted share. Pro forma 2000
net income was $417 million or $1.21 a diluted share. Cash and short-term
investments decreased slightly to $1.01 billion at the end of 2001 from the
$1.13 billion at the end of 2000.

"We improved both our top-line and bottom-line performance and we have been
aggressive about reducing costs," said Bryon Look, LSI Logic executive vice
president and chief financial officer. "We are targeting to generate positive
cash flow in the second quarter. We are positioned to fully capitalize on the
coming recovery of our targeted communications, consumer and storage markets."



                           LSI LOGIC BUSINESS OUTLOOK

LSI Logic expects 2002 Q1 revenues to grow between 0 to 3 percent sequentially
from the $406 million reported in the fourth quarter.

The company anticipates reporting a pro forma first quarter loss of about 14
cents a diluted share and gross margin in the range of 32-34 percent.

The company does not anticipate selling any equity investments in the first
quarter.

The first quarter pro forma tax provision is expected to be a charge in the
range of $3 million to $5 million.

Capital spending is expected to be less than $40 million in the first quarter
and under $200 million for 2002.

First quarter depreciation is projected to be about $70 million.

The first quarter diluted common share count will be approximately 370 million.

NOTE: The company's financial guidance will be limited to the comments made on
today's public conference call and contained in the Business Outlook section of
this news release. The company assumes no obligation to update the information
contained in this news release.

                 LSI LOGIC TECHNOLOGY AND PRODUCT ANNOUNCEMENTS

- - LSI Logic Storage Systems, Inc. and Storage Technology Corp. announced a
strategic alliance, leveraging LSI Logic's manufacturing and engineering
expertise and StorageTek's worldwide distribution, support and professional
services, for the open systems storage market.
http://www.lsilogic.com/news/product_news/pr20020122a.html

- - LSI Logic announced four Ultra320 SCSI design wins with leading OEM providers,
including Dell Computer, which are expected to exceed $250 million in revenues
over the next three years.
http://www.lsilogic.com/news/product_news/pr20011112a.html

- - LSI Logic introduced the first single-chip DVD recorder systems processor, the
DiMeNsion(TM)-8600, supporting all DVD recording and playback formats, enabling
feature-rich DVD recorder solutions and reducing system-level costs and design
complexity for consumer electronics manufacturers.
http://www.lsilogic.com/news/product_news/pr20020107a.html

- - LSI Logic Storage Components and Storage Systems, Inc. teamed with Brocade to
deliver an end-to-end two-gigabit Fibre Channel storage solution. This solution
can deliver data up to four times faster in high throughput applications
compared to previous generation one-gigabit systems.
http://www.lsilogic.com/news/product_news/pr20020108.html
http://www.lsilogic.com/news/product_news/pr20011221.html



- - LSI Logic announced the availability of the industry's first ARM946E-S(TM)
processor core to run at 200MHz, a significant performance enhancement to
earlier implementations of the intellectual property core. LSI Logic has already
won a number of key-customer SoC designs with the new implementation of the
ARM946E-S core.
http://www.lsilogic.com/news/product_news/pr20011031a.html

- - NEC selected LSI Logic's intelligent IDE RAID storage adapter for its market
leading IDE RAID servers. The NEC design win underscores market demand for the
MegaRAID i4, the world's first intelligent half-size, four channel PCI IDE RAID
solution. http://www.lsilogic.com/news/product_news/pr20011031a.html

- - Compagnie Generale de Geophysique (CGG), a global oilfield services company,
installed 100 terabytes of LSI Logic Storage Systems, Inc.'s MetaStor(R) E4600
storage as part of Europe's first two gigabit per second Fibre Channel SAN.
http://www.lsilogic.com/news/product_news/pr20011217.html

- - LSI Logic introduced its new thermally enhanced EPBGA-T package, designed to
provide 20 percent lower thermal resistance than standard plastic ball grid
array packages. The thermally enhanced plastic ball grid array targets
cost-sensitive, performance-driven communications, consumer and storage
applications.
http://lsilogic.com/news/product_news/pr20011204.html

- - LSI Logic Storage Systems, Inc. announced the MetaStor(R) E4600HPCx storage
system, designed expressly for high throughput applications such as complex
modeling, seismic processing and steaming video.
http://www.lsilogic.com/news/product_news/pr20011113a.html

- - LSI Logic Storage Systems, Inc. announced the general availability of the new
36 gigabyte, 15000-RPM disk drive for its MetaStor(R) E-Series family of storage
systems, enabling up to 40 percent more input/output operations per second.
http://www.lsilogic.com/news/product_news/pr20011218.html

- - ISG Broadband Inc. became the first company to adopt LSI Logic's Hi-IQ(TM) RF
tuner, reducing the power and form factor of ISG's RF receiver modules. LSI
Logic's Hi-IQ tuner enables the industry's first 3.3-volt, highly integrated
cable receiver module series.
http://www.lsilogic.com/news/product_news/pr20011218.html

- - LSI Logic announced that VMIC has selected LSI Logic's dual-channel PCI to
Fibre Channel controller to power VMIC's first-ever 2 Gbits host bus adapters
for storage area networks (SANs), clustering, video editing and date
warehousing.
http://www.lsilogic.com/news/product_news/pr20011031b.html

- - LSI Logic and Pinnacle Systems, Inc. announced plans to develop a complete
low-cost analog and digital video editing and authoring solution based on LSI
Logic's iDVx(TM) single-chip DV/MPEG codec. Pinnacle's new consumer product will
support both analog and DV camcorder video input and will provide
theater-quality video to tape, CD, DVD or Internet video streams.
http://www.lsilogic.com/news/product_news/pr20011112d.html



LSI Logic Conference Call Information: LSI Logic will hold a conference call
today at 2 p.m. PDT to discuss fourth quarter and 2001 financial results. The
access number is 1-785-832-1077. Internet users can access the conference call
by visiting www.videonewswire.com/event.asp?id=2540. A replay of the call will
be available today at approximately 5 p.m. PDT and will be available for 48
hours. The number is 1-800-374-1216. The webcast replay will be available until
January 30.

SAFE HARBOR FOR FORWARD LOOKING STATEMENTS: This news release and the statements
by LSI Logic management include forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities and Exchange Act of 1934, as amended. Readers are cautioned that
these forward-looking statements are only predictions and may differ materially
from the actual future events or results. Readers are referred to the documents
filed by LSI Logic with the SEC, and specifically the most recent reports on
Form 10-K, 10-Q and 8-K. Forward-looking statements include the efficacy of cost
reduction measures and reduction of operating expenses, projections of growth in
the communications, storage components and storage systems businesses, estimates
of revenue growth, earnings, gross margins, gains from investment income, tax
rates, capital spending and depreciation made in this news release. The
company's actual results in future periods may be materially different from any
performance suggested in this news release. Risks and uncertainties to which the
company is subject may include, but may not necessarily be limited to
fluctuations in the timing and volumes of customer demand, the rate of depletion
of customer inventory buildup, and the company's achievement of revenue
objectives and other financial targets. Other risks and uncertainties that may
affect the company's actual results include, but are not necessarily limited to
the timing and success of new product introductions, the continued availability
of appropriate levels of manufacturing capacity, the realization of benefits
from the company's strategic relationships, and investments and disruptions in
general economic activity caused by the effects of terrorist activities and
armed conflict. The extent to which the company may not realize the cost savings
it expects from the reduction in operating expenses may also impact its future
performance. The company operates in an industry sector where securities' values
are highly volatile and may be influenced by the cyclical nature of the
industry, the unpredictability of the economy and other factors beyond the
company's control. In the context of forward-looking information provided in
this news release, reference is made to the discussion of risk factors detailed
in the company's filings from time to time with the Securities and Exchange
Commission, including but not limited to filings made during the past 12 months.

LSI Logic Corporation (NYSE: LSI) is a leading designer and manufacturer of
communications, consumer and storage semiconductors for applications that
access, interconnect and store data, voice and video. In addition, the company
supplies storage network solutions for the enterprise. LSI Logic is
headquartered at 1551 McCarthy Boulevard, Milpitas, CA 95035, 866-574-5741
(within U.S.), 719-533-7679 (outside U.S.), http://www.lsilogic.com.

                                      # # #

Editor's Notes:

3.  All LSI Logic 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.lsilogic.com.

4.  The LSI Logic logo design is a registered trademark of LSI Logic
    Corporation.

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

                              LSI LOGIC CORPORATION
            PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)





                                                    Three Months Ended                    Year Ended
                                                ----------------------------      ----------------------------
                                                   Dec. 31,        Dec. 31,         Dec. 31,         Dec. 31,
                                                    2001             2000             2001             2000
                                                -----------      -----------      -----------      -----------

                                                                                       
Revenues                                        $   405,830      $   750,575      $ 1,784,923      $ 2,737,667
                                                -----------      -----------      -----------      -----------

Costs and expenses:
    Cost of revenues                                277,888          422,046        1,160,432        1,557,232
    Research and development                        121,295          110,237          503,108          378,936
    Selling, general and administrative              70,731           82,544          307,310          306,962
                                                -----------      -----------      -----------      -----------

        Total costs and expenses                    469,914          614,827        1,970,850        2,243,130
                                                -----------      -----------      -----------      -----------

(Loss)/ income from operations                      (64,084)         135,748         (185,927)         494,537

Interest expense                                    (14,737)         (10,181)         (44,578)         (40,384)
Interest income and other, net                        4,429           14,230           35,275           45,837
Recurring investment income                              --           15,305            5,302           55,428
                                                -----------      -----------      -----------      -----------

(Loss)/ income before income taxes                  (74,392)         155,102         (189,928)         555,418
Provision for income taxes                               --           38,776               --          138,856
                                                -----------      -----------      -----------      -----------

Pro forma net (loss)/ income                    $   (74,392)     $   116,326      $  (189,928)     $   416,562
                                                ===========      ===========      ===========      ===========

Pro forma (loss)/ earnings per share:
    Basic                                       $     (0.20)     $      0.37      $     (0.54)     $      1.34
                                                ===========      ===========      ===========      ===========

    Diluted                                     $     (0.20)     $      0.34      $     (0.54)     $      1.21
                                                ===========      ===========      ===========      ===========


Shares used in computing per share amounts:
    Basic                                           365,998          317,976          349,280          310,813
                                                ===========      ===========      ===========      ===========

    Diluted                                         365,998          353,408          349,280          354,337
                                                ===========      ===========      ===========      ===========


Pro forma statements of operations are intended to present the Company's
operating results, excluding special items described below, for the periods
presented.

During the three month period ended December 31, 2001, the special items
represented additional excess inventory and related charges, amortization of
acquisition related items including intangibles and non-cash deferred stock
compensation, restructuring of operations and other non-recurring items, net,
and other special items. The other special items consisted of a net write down
of certain equity securities and the write-off of debt issuance costs associated
with the repayment of bank debt during the quarter. During the year ended
December 31, 2001, the special items consisted of the items above and acquired
in-process research and development. The other special items consisted of the
items above and the write-off of debt issuance costs associated with the
restructuring of a master lease and security agreement.

During the three month period ended December 31, 2000, the special items
represented acquired in-process research and development and amortization of
acquisition related items including intangibles and non-cash deferred stock
compensation.

During the year ended December 31, 2000, the special items represented those in
the previous paragraph, additional excess inventory and related charges,
restructuring of operations and other non-recurring items, net and other special
items. The other special items consisted of an unplanned gain on sale of equity
securities, a gain on the sale of a U.S. facility and the write-off of debt
issuance costs resulting from the repayment of bank debt.

For the three and twelve month periods ended December 31, 2001, the pro forma
statements are prepared using the Company's calculated tax rate of 0% when
excluding special items. For the three and twelve month periods ended December
31, 2000, the pro forma statements are prepared using the Company's calculated
tax rate of 25% when excluding special items.

In computing diluted pro forma earnings per share for the three and twelve month
periods ended December 31, 2000, pro forma net income was increased by $2,750
and $10,997 for interest, respectively, net of taxes, on the $345 million
convertible notes considered dilutive common stock equivalents.

A reconciliation from pro forma net income to the reported results is presented
on the following page.

The format presented above is not intended to be in accordance with Generally
Accepted Accounting Principles.

                              LSI LOGIC CORPORATION
           RECONCILIATION OF PRO FORMA NET INCOME TO REPORTED RESULTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)





                                                                          Three Months Ended                Year Ended
                                                                       ------------------------      ------------------------
                                                                        Dec. 31,       Dec. 31,       Dec. 31,        Dec. 31,
                                                                          2001           2000           2001           2000
                                                                       ---------      ---------      ---------      ---------

                                                                                                        
Pro forma net (loss)/ income                                           $ (74,392)     $ 116,326      $(189,928)     $ 416,562
                                                                       ---------      ---------      ---------      ---------

Special items:
    Additional excess inventory and related charges                      (52,500)            --       (210,564)       (11,100)
    Amortization of acquisition related items including
        intangibles and non-cash deferred stock compensation             (88,683)       (46,949)      (292,878)      (113,761)
    Acquired in-process research and development                              --         (6,950)       (96,600)       (77,438)
    Restructuring of operations and other non-recurring items, net       (27,269)            --       (219,639)        (2,781)
    Other special items                                                   (7,300)            --        (21,544)        29,221
    Tax (provision)/ benefit                                                  --           (742)        39,198         (4,103)
                                                                       ---------      ---------      ---------      ---------

        Total special items                                             (175,752)       (54,641)      (802,027)      (179,962)
                                                                       ---------      ---------      ---------      ---------

Net (loss)/ income                                                     $(250,144)     $  61,685      $(991,955)     $ 236,600
                                                                       =========      =========      =========      =========

Basic (loss)/ earnings per share:
    Pro forma net (loss)/ income                                       $   (0.20)     $    0.37      $   (0.54)     $    1.34
    Special items **                                                       (0.48)         (0.18)         (2.30)         (0.58)
                                                                       ---------      ---------      ---------      ---------

    Net (loss)/ income                                                 $   (0.68)     $    0.19      $   (2.84)     $    0.76
                                                                       =========      =========      =========      =========

Diluted (loss)/ earnings per share*:
    Pro forma net (loss)/ income                                       $   (0.20)     $    0.34      $   (0.54)     $    1.21
    Special items **                                                       (0.48)         (0.16)         (2.30)         (0.51)
                                                                       ---------      ---------      ---------      ---------

    Net (loss)/ income                                                 $   (0.68)     $    0.18      $   (2.84)     $    0.70
                                                                       =========      =========      =========      =========

Shares used in computing per share amounts:
    Basic                                                                365,998        317,976        349,280        310,813
                                                                       =========      =========      =========      =========

    Diluted                                                              365,998        353,408        349,280        354,337
                                                                       =========      =========      =========      =========




*    In computing diluted loss per share for the three and twelve month periods
     ended December 31, 2001, common stock equivalents were excluded from the
     computation of diluted loss per share as a result of their antidilutive
     effect.

     In computing diluted earnings per share for the three month period ended
     December 31, 2000, net income was increased by $2,750 for interest, net of
     taxes, on the $345 million convertible notes considered dilutive common
     stock equivalents. In computing diluted earnings per share for the year
     ended December 31, 2000, net income was increased by $10,997 for interest,
     net of taxes, on the $345 million convertible notes considered dilutive
     common stock equivalents.

**   This line item includes rounding adjustments.

                              LSI LOGIC CORPORATION
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)





                                                                           Three Months Ended                     Year Ended
                                                                       ---------------------------      ---------------------------
                                                                         Dec. 31,       Dec. 31,          Dec. 31,       Dec. 31,
                                                                          2001            2000             2001            2000
                                                                       -----------     -----------      -----------     -----------

                                                                                                            
Revenues                                                               $   405,830     $   750,575      $ 1,784,923     $ 2,737,667
                                                                       -----------     -----------      -----------     -----------

Costs and expenses:
    Cost of revenues:
           Cost of revenues                                                277,888         422,046        1,160,432       1,557,232
           Additional excess inventory and related charges                  52,500              --          210,564          11,100
    Research and development                                               121,295         110,237          503,108         378,936
    Selling, general and administrative                                     70,731          82,544          307,310         306,962
    Acquired in-process research and development                                --           6,950           96,600          77,438
    Restructuring of operations and other non-recurring items, net          27,269              --          219,639           2,781
    Amortization of acquisition related items including
        intangibles and non-cash deferred stock compensation *              88,683          46,949          292,878         113,761
                                                                       -----------     -----------      -----------     -----------

        Total costs and expenses                                           638,366         668,726        2,790,531       2,448,210
                                                                       -----------     -----------      -----------     -----------

(Loss)/ income from operations                                            (232,536)         81,849       (1,005,608)        289,457

Interest expense                                                           (14,737)        (10,181)         (44,578)        (41,573)
Interest income and other, net                                              (2,871)         14,230           13,731          51,575
Gain on sale of equity securities                                               --          15,305            5,302          80,100
                                                                       -----------     -----------      -----------     -----------

(Loss)/ income before income taxes                                        (250,144)        101,203       (1,031,153)        379,559
Provision/ (benefit) for income taxes                                           --          39,518          (39,198)        142,959
                                                                       -----------     -----------      -----------     -----------

Net (loss)/ income                                                     $  (250,144)    $    61,685      $  (991,955)    $   236,600
                                                                       ===========     ===========      ===========     ===========

(Loss)/ earnings per share:
    Basic                                                              $     (0.68)    $      0.19      $     (2.84)    $      0.76
                                                                       ===========     ===========      ===========     ===========

    Diluted **                                                         $     (0.68)    $      0.18      $     (2.84)    $      0.70
                                                                       ===========     ===========      ===========     ===========

Shares used in computing per share amounts:
    Basic                                                                  365,998         317,976          349,280         310,813
                                                                       ===========     ===========      ===========     ===========

    Diluted                                                                365,998         353,408          349,280         354,337
                                                                       ===========     ===========      ===========     ===========



*    The amortization of acquisition related items including intangibles and
     non-cash deferred stock compensation for the three month period ended
     December 31, 2001 are comprised of the following items:

                                                                     
            Amortization of continuing intangibles                      $  59,969
            Amortization of newly purchased intangibles                        --
            Amortization of non-cash deferred stock compensation           28,714
                                                                        ---------
                                                                         $ 88,683



**   In computing diluted loss per share for the three and twelve month periods
     ended December 31, 2001, common stock equivalents were excluded from the
     computation of diluted loss per share as a result of their antidilutive
     effect.

     In computing diluted earnings per share for the three month period ended
     December 31, 2000, net income was increased by $2,750 for interest, net of
     taxes, on the $345 million convertible notes considered dilutive common
     stock equivalents. In computing diluted earnings per share for the year
     ended December 31, 2000, net income was increased by $10,997 for interest,
     net of taxes, on the $345 million convertible notes considered dilutive
     common stock equivalents.

                              LSI LOGIC CORPORATION
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                  (IN MILLIONS)
                                   (UNAUDITED)






                                                        December 31,   December 31,
ASSETS                                                      2001          2000
                                                         ----------    ----------
                                                                 
Current assets:
    Cash and short-term investments                      $  1,013.3    $  1,133.2
    Accounts receivable, net                                  191.7         522.7
    Inventories                                               256.6         290.4
    Prepaid expenses and other current assets                 307.3         125.9
                                                         ----------    ----------

        Total current assets                                1,768.9       2,072.2

Property and equipment, net                                   944.4       1,278.7
Goodwill and other intangibles                              1,319.8         580.9
Other assets                                                  592.7         265.7
                                                         ----------    ----------


        Total assets                                     $  4,625.8    $  4,197.5
                                                         ==========    ==========


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Current liabilities                                  $    509.7    $    626.0
    Current portion of long-term debt, capital lease
        obligations and short-term borrowings                   0.3           1.0
                                                         ----------    ----------

        Total current liabilities                             510.0         627.0

Long-term debt, capital lease obligations and
        other noncurrent liabilities                        1,630.0       1,066.7
                                                         ----------    ----------

        Total liabilities                                   2,140.0       1,693.7

Minority interest in consolidated subsidiaries                  5.9           5.7
                                                         ----------    ----------

Stockholders' equity:
    Common stock                                            2,909.3       1,934.7
    Deferred stock compensation                              (124.1)       (163.0)
    Accumulated (deficit)/ earnings                          (319.8)        672.2
    Accumulated other comprehensive income                     14.5          54.2
                                                         ----------    ----------

        Total stockholders' equity                          2,479.9       2,498.1
                                                         ----------    ----------

        Total liabilities and stockholders' equity       $  4,625.8    $  4,197.5
                                                         ==========    ==========


                              LSI LOGIC CORPORATION
                         SELECTED FINANCIAL INFORMATION
                        (IN MILLIONS, EXCEPT WHERE NOTED)
                                   (UNAUDITED)




                                                              Three Months Ended
                                                 ------------------------------------------
                                                  Dec. 31,        Sept. 30,        Dec. 31,
                                                    2001            2001            2000
                                                 ----------      ----------      ----------

                                                                        
Semiconductor revenues                           $    353.4      $    351.4      $    642.5
SAN Systems revenues                             $     52.4      $     45.3      $    108.1
Total revenues                                   $    405.8      $    396.7      $    750.6
Percentage change in revenues-qtr./qtr.  (a)            2.3%         -14.7%             3.2%
Percentage change in revenues-yr./yr. (b)            -45.9%          -45.5%            28.3%


Capital additions                                $     43.9      $     59.5      $    247.9
Depreciation / amortization (c)                  $     72.5      $     82.7      $     87.8

Days sales outstanding                                   43              51              63
Days of inventory (d)                                    83              97              62
Current ratio                                           3.5             2.1             3.3
Quick ratio                                             2.4             1.4             2.6

R&D as a percentage of revenues                        29.9%           34.2%           14.7%
SG&A as a percentage of revenues                       17.4%           20.2%           11.0%
Gross margin as a percentage of revenues (d)           31.5%           27.7%           43.8%

Employees  (e)                                        6,742           7,352           7,221
Revenues per employee (in thousands) (f)         $    240.8      $    215.8      $    415.8
Diluted shares (in thousands) (g)                   365,998         364,441         353,408


(a)  Represents sequential quarter growth in revenues.

(b)  Represents growth in revenues in the quarter presented as compared to the
     same quarter of the previous year.

(c)  Excludes amortization of acquisition related intangibles and non-cash
     deferred stock compensation.

(d)  Based on pro forma cost of revenues.

(e)  Actual number of employees at the end of each period presented.

(f)  Revenue per employee is calculated by annualizing revenue for each quarter
     presented and dividing it by the number of employees.

(g)  Shares used in determining pro forma diluted (loss)/ earnings per share.