8-K

UNITED STATES

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): October 22, 2003

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.)

1621 Barber Lane
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 Items and Regulation FD Disclosure
	Item 7. Financial Statements and Exhibits
	Item 12. Results of Operations and Financial Condition
SIGNATURE
EXHIBIT INDEX
EXHIBIT 99.1

Item 5. Other Items and Regulation FD Disclosure

LSI Logic Corporation (“LSI Logic” or the “Registrant”) reported revenues of $450 million in the third quarter of 2003, an 11 percent sequential increase compared to the $407 million reported in the second quarter of 2003, and a decline of 8 percent compared to the $487 million reported in the third quarter of 2002.

Cash and short-term investments totaled $987 million at the end of the 2003-third quarter. The Registrant generated positive operating cash flow for the sixth consecutive quarter and repurchased approximately $172 million in convertible notes, eliminating all current debt.

The 2003-third quarter GAAP (generally accepted accounting principles) net loss was $32 million or 8 cents a diluted share, including a $25 million charge for restructuring. The 2003-second quarter GAAP net loss was $162 million or 43 cents a diluted share. The Registrant reported a GAAP net loss of $28 million or 7 cents a diluted share in the 2002-third quarter.

Last month, the Registrant signed a definitive agreement to sell the company’s Tsukuba, Japan manufacturing facility and extend its foundry usage. The transaction is scheduled to close in the fourth quarter. When this action is finalized, the Registrant will have completed the consolidation of its internal manufacturing at the Registrant’s Gresham campus, supplemented by strategic foundry engagements.

Safe Harbor for Forward Looking Statements

This news release and the statements by LSI Logic management include forward-looking statements that may involve a number of risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from the actual future events or results. Forward-looking statements include projected sequential revenue growth in the fourth quarter, projections of growth in the storage components, storage systems, consumer, communications and enterprise networking businesses. Additional forward-looking statements include forecasts of sequential revenue growth, operating expenses, projections of profitability, projections of the company’s fourth-quarter business outlook, including net other income, earnings, gross margins, tax provisions, capital spending, depreciation, acquisition-related amortization, restructuring expenses, other special items, common share count, the expected close of the sale of the Tsukuba manufacturing facility and the RapidChip platform generating new business in the fourth quarter. 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 include, but are not necessarily limited to, fluctuations in the timing and volumes of customer demand, the rate of depletion of customer inventory buildup, the company’s achievement of revenue objectives and other financial targets, the development of new products, and the timing and the success of new product introductions. Other risks and uncertainties include: the RapidChip platform continuing to generate new business and continuing to find traction with existing customers, the continued availability of appropriate levels of manufacturing capacity, the realization of benefits from the company’s strategic relationships, competing technologies, R&D investments, products and other competitive factors and investments and disruptions in general economic activity due to worsening global business conditions or 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 workforce and operating expenses as a result of the sale of the Tsukuba facility 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. For additional information, 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. In the context of forward-looking information, reference is made to the discussion of risk factors described in the company’s SEC reports filed during the past 12 months.

months ended September 30, 2003, and 2002, refer to the tables furnished in the news release as Exhibit 99.1.

Results of operations excluding special items for the periods presented are provided for illustrative purposes only and should be read in conjunction with the comparable information presented in accordance with generally accepted accounting principles in the United States of America and the Company’s most recent annual report on Form 10-K for the twelve months ended December 31, 2002.

Item 7. Financial Statements and Exhibits

The following exhibit is furnished pursuant to Item 12:

Exhibit 99.1* LSI Logic Corporation News Release issued October 22, 2003.

*Furnished, not filed

Item 12. Results of Operations and Financial Condition

On October 22, 2003, the Registrant issued a news release and will hold a conference call regarding its financial results for the fiscal quarter ended September 30, 2003. A copy of the news release is furnished as Exhibit 99.1 to this Form 8-K and is incorporated by reference herein.

The information filed under Item 5 to this Form 8-K is incorporated by reference into Item 12 of this Form 8-K.

Use of Non-GAAP Financial Information

LSI Logic will make forward-looking statements regarding 2003 during the conference call and will make reference to non-GAAP financial information in both the news release and the conference call.

LSI Logic management believes that the results of operations excluding special items presented herein for each of the three and nine months ending September 30, 2003, and 2002, provides useful information to investors regarding results of operations, as it excludes charges, expenses, gains and losses that are not directly related to the ongoing business results and/or stem from purchase business combinations. These business results are used by management for evaluating historical performance in addition to being used for the Company’s forecasting and planning for future periods. Restructuring of operations and other items, net, are examples of charges that are not directly related to the Company’s ongoing business. Charges for acquired in-process research and development and amortization of non-cash deferred stock compensation and intangibles are examples of items stemming from purchase business combinations. For a complete reconciliation of special items excluded from our results of operations for the three and nine

SIGNATURE

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: October 22, 2003	By:	/s/ Bryon Look
		Bryon Look
		Executive Vice President and
		Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Text of News Release dated October 22, 2003

EX-99.1 3 f93808exv99w1.htm EXHIBIT 99.1

		Exhibit 99.1
FOR IMMEDIATE RELEASE		OCTOBER 22, 2003
	Investor Relations Contact:	Media Relations Contact:
	Diana Matley	Kevin Brett
	408-433-4365	408-433-7150
	diana@lsil.com	kbrett@lsil.com
CC03-108

LSI Logic Reports Double-Digit Top-Line Growth

Third Quarter News Release Summary

• Revenues of $450 million, 11 percent sequential growth.

• GAAP* net loss of 8 cents per diluted share.

• Net income, excluding special items**, of 4 cents per diluted share.

• Gross margin of 41 percent.

• Generated positive operating cash flow for sixth consecutive quarter.

• Cash and short-term investments total $987 million at end of quarter.

Fourth Quarter Business Outlook

• Projected sequential revenue growth of approximately 0-2 percent.

• GAAP range of break-even to a net loss of 2 cents per share.

• Net income per share, excluding special items, in the range of 3-5 cents.

*	Generally Accepted Accounting Principles
**	Acquisition-related amortization, restructuring and other special items.

- more -

LSI Logic Reports Q3 2003 Financial Results	Page 2 of 4
October 22, 2003

LSI LOGIC Q3 REVENUES UP 11 PERCENT;
STORAGE 2003 REVENUES ON COURSE FOR $1 BILLION;
FIRST RAPIDCHIP^TM PRODUCTS SET TO SHIP IN Q4

Milpitas, California – LSI Logic Corporation (NYSE: LSI) today reported revenues of $450 million in the third quarter of 2003, an 11 percent sequential increase compared to the $407 million reported in the second quarter of 2003, and a decline of 8 percent compared to the $487 million reported in the third quarter of 2002.

Cash and short-term investments totaled $987 million at the end of the 2003-third quarter. The company generated positive operating cash flow for the sixth consecutive quarter and repurchased approximately $172 million in convertible notes, eliminating all current debt.

The 2003-third quarter GAAP* net loss was $32 million or 8 cents a diluted share, including a $25 million charge for restructuring. The 2003-second quarter GAAP net loss was $162 million or 43 cents a diluted share. The company reported a GAAP net loss of $28 million or 7 cents a diluted share in the 2002-third quarter.

Excluding special items**, third quarter net income was $17 million or 4 cents a diluted share compared to a second quarter net loss of $6 million or 2 cents a diluted share. The company reported net income, excluding special items, of $17 million or 4 cents a diluted share in the third quarter of 2002.

“LSI Logic’s double-digit top-line growth was paced by our Consumer business, which demonstrated seasonal third-quarter strength,” said Wilfred Corrigan, LSI Logic chairman and chief executive officer. “In Communications, our Enterprise Networking business is expected to continue its gradual growth pattern in the fourth quarter, while the WAN market remains under pressure. Our Storage Systems business is expanding and we anticipate strong sequential growth in the fourth quarter. Storage Components recorded key Ultra320 SCSI and RAID design wins in the third quarter and is gathering momentum for the fourth quarter. Combined, our two storage businesses are anticipated to contribute more than $1 billion in revenues this year.

“In the fourth quarter, we are forecasting 0-2% revenue growth and net income of 3-5 cents per share, excluding special items, and a break-even to a modest net loss on a GAAP basis. Our continuing R&D investments, our flexible

LSI Logic Reports Q3 2003 Financial Results	Page 3 of 4
October 22, 2003

manufacturing strategy and our strong cash balance have all enhanced LSI Logic’s competitive position heading into the projected industry upturn in 2004.”

“LSI Logic’s first RapidChip™ platform products are scheduled for shipment in the fourth quarter,” said Rick Marz, LSI Logic executive vice president of ASIC Technology. “We are confident that our cost sensitive, fast time-to-market RapidChip platform provides us with a significant competitive advantage in the strategic and growing global Platform ASIC market.”

Last month, LSI Logic signed a definitive agreement to sell the company’s Tsukuba, Japan manufacturing facility and extend its foundry usage. The transaction is scheduled to close in the fourth quarter. When this action is finalized, LSI Logic will have completed the consolidation of its internal manufacturing at the company’s Gresham campus, supplemented by strategic foundry engagements.

“During the third quarter, LSI Logic made further strides towards achieving GAAP profitability, generated positive operating cash flow for the sixth straight quarter, reduced operating expenses, eliminated all current debt and maintained nearly $1 billion in cash and short-term investments,” said Bryon Look, LSI Logic chief financial officer. “As a result of all of these actions, we have increased LSI Logic’s financial strength and strategic positioning in the global marketplace.”

LSI Logic Fourth Quarter Business Outlook

	GAAP*	Special Items**	Excluding Special Items
Revenue Growth	0-2% Sequentially		0-2% Sequentially
Gross Margin	41-42 percent		41-42 percent
Operating Expenses	$181 to $191 million	$20 to $25 million	$161 to $166 million
Net Other Income (Exp.)	$(2) to $(4) million		$(2) to $(4) million
Tax Provision	$6 million		$6 million
Earnings (Loss)/Share	$0.00 to $(0.02)	$(0.05) to $(0.06)	$0.03 to $0.05
Diluted Share Count	380 million		390 million

Common stock equivalents are excluded from share count in loss periods as a result of their anti-dilutive effect.

Capital spending is projected to be around $25 million in the fourth quarter, and less than $75 million in 2003.

LSI Logic Reports Q3 2003 Financial Results	Page 4 of 4
October 22, 2003

Fourth quarter depreciation and software amortization are expected to be approximately $37 million.

*	Generally Accepted Accounting Principles
**	Acquisition-related amortization, restructuring and other special items.

NOTE: The company’s financial guidance will be limited to the comments made on today’s public conference call and contained in the Fourth Quarter Business Outlook section of this news release.

LSI Logic Conference Call Information

LSI Logic will hold a conference call today at 2 p.m. PDT to discuss third quarter 2003 financial results. The number is 1-303-262-2175. Internet users can access the conference call by visiting http://www.lsilogic.com/investors. 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 1-800-405-2236 (International, 1-303-590-3000), passcode 555080#.

Safe Harbor for Forward Looking Statements: This news release and the statements by LSI Logic management include forward-looking statements that may involve a number of risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from the actual future events or results. Forward-looking statements include projected sequential revenue growth in the fourth quarter, projections of growth in the storage components, storage systems, consumer, communications and enterprise networking businesses. Additional forward looking statements include forecasts of sequential revenue growth, operating expenses, projections of profitability, projections of the company’s fourth-quarter business outlook including, net other income, earnings, gross margins, tax provisions, capital spending, depreciation, acquisition-related amortization, restructuring expenses, other special items, common share count, the expected close of the sale of the Tsukuba manufacturing facility and the RapidChip platform generating new business in the fourth quarter. 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 include, but are not necessarily 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, other financial targets, the development of new products, the timing and the success of new product introductions. Other risks and uncertainties include: the RapidChip platform continuing to generate new business and continuing to find traction with existing customers, the continued availability of appropriate levels of manufacturing capacity, the realization of benefits from the company’s strategic relationships, competing technologies, R&D investments, products and other competitive factors and investments and disruptions in general economic activity due to worsening global business conditions or 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 workforce and operating expenses as a result of the sale of the Tsukuba facility 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. For additional information, 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. In the context of forward-looking information, reference is made to the discussion of risk factors described in the company’s SEC reports filed during the past 12 months.

About LSI Logic

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 1621 Barber Lane, Milpitas, CA 95035. 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.

LSI LOGIC CORPORATION
Consolidated Condensed Statements of Operations Excluding Special Items
(In thousands, except per share amounts)
(Unaudited)

			Three Months Ended						Nine Months Ended
			Sept. 30,			Sept. 30,			Sept. 30,			Sept. 30,
			2003			2002			2003			2002
Revenues			$	450,227		$	486,964		$	1,230,225		$	1,337,241
Costs and expenses:
	Cost of revenues			265,243			288,433			751,780			823,974
	Research and development			103,803			114,423			330,256			341,599
	Selling, general and administrative			57,715			59,054			172,214			174,600
		Total costs and expenses		426,761			461,910			1,254,250			1,340,173
Income/(loss) from operations				23,466			25,054			(24,025	)		(2,932	)
Interest expense				(6,971	)		(10,079	)		(23,116	)		(41,399	)
Interest income and other, net				6,463			9,470			24,969			15,737
Income/(loss) before income taxes				22,958			24,445			(22,172	)		(28,594	)
Provision for income taxes				6,000			7,938			18,000			18,188
Net income/(loss) excluding special items			$	16,958		$	16,507		$	(40,172	)	$	(46,782	)
Income/(loss) per share excluding special items:
	Basic		$	0.04		$	0.04		$	(0.11	)	$	(0.13	)
	Diluted		$	0.04		$	0.04		$	(0.11	)	$	(0.13	)
Shares used in computing per share amounts:
	Basic			378,749			370,948			376,931			369,707
	Diluted			386,962			372,538			376,931			369,707

Statements of operations excluding special items are intended to present the Company’s operating results, excluding special items described below, for the periods presented.

During the three month period ended September 30, 2003, the special items represented amortization of acquisition related items including intangibles and non-cash deferred stock compensation, restructuring of operations and other items, net, and other special items. The other special items consisted of losses associated with the repurchase of a portion of the Company’s Convertible Subordinated Notes and losses on miscellaneous asset sales.

During the nine month period ended September 30, 2003, the special items represented all the items mentioned above in addition to write downs on certain equity securities due to impairment, offset in part by gains on miscellaneous asset sales.

During the three month period ended September 30, 2002, the special items represented acquired in-process research and development, amortization of acquisition related items including intangibles and non-cash deferred stock compensation, restructuring of operations and other items, net, related to the revaluation of assets held for sale in accordance with Statement of Financial Accounting Standards No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” adopted by the Company on January 1, 2002, and other special items. The other special items consisted of gains associated with repurchases of a portion of the Company’s Convertible Subordinated Notes, gains on miscellaneous asset sales and a write down of certain equity securities.

During the nine month period ended September 30, 2002, the special items represented all the items mentioned above in addition to additional excess inventory and related charges and a $22 million tax benefit as a result of changes in the tax laws.

For the three and nine month periods ended September 30, 2003, the statements excluding special items are prepared using the Company’s calculated tax expense of $6,000 and $18,000, respectively when excluding special items. For the three and nine month periods ended September 30, 2002, the statements excluding special items are prepared using the Company’s calculated tax expense of $7,938 and $18,188 when excluding special items.

For the three months ended September 30, 2003 and 2002, 8,213 and 1,590 shares, respectively were considered dilutive common stock equivalents and included in the computation of diluted pro forma earnings per share. In computing the diluted pro forma loss per share for the nine month period ended September 30, 2003 and 2002, all common stock equivalents were excluded as a result of their antidilutive effect.

A reconciliation from pro forma net income/(loss) 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 Net Income/(Loss) Excluding Special Items To GAAP Results
(In thousands, except per share amounts)
(Unaudited)

			Three Months Ended						Nine Months Ended
			Sept. 30,			Sept. 30,			Sept. 30,			Sept. 30,
			2003			2002			2003			2002
Net income/(loss) excluding special items			$	16,958		$	16,507		$	(40,172	)	$	(46,782	)
Special items:
	Additional excess inventory and related charges in cost of revenues			—			—			—			(45,526	)
	Amortization of acquisition related items including intangibles and non-cash deferred stock compensation			(22,598	)		(33,877	)		(81,417	)		(122,951	)
	Acquired in-process research and development			—			(1,922	)		—			(1,922	)
	Restructuring of operations and other items, net			(24,516	)		(12,985	)		(184,709	)		(71,640	)
	Other special items			(1,496	)		4,651			(9,863	)		4,651
	Tax benefit			—			—			—			22,500
		Total special items		(48,610	)		(44,133	)		(275,989	)		(214,888	)
Net loss			$	(31,652	)	$	(27,626	)	$	(316,161	)	$	(261,670	)
Basic income/(loss) per share:
	Net income/(loss) excluding special items		$	0.04		$	0.04		$	(0.11	)	$	(0.13	)
	Special items **			(0.12	)		(0.11	)		(0.73	)		(0.58	)
	Net loss		$	(0.08	)	$	(0.07	)	$	(0.84	)	$	(0.71	)
Diluted income/(loss) per share*:
	Net income/(loss) excluding special items		$	0.04		$	0.04		$	(0.11	)	$	(0.13	)
	Special items **			(0.12	)		(0.11	)		(0.73	)		(0.58	)
	Net loss		$	(0.08	)	$	(0.07	)	$	(0.84	)	$	(0.71	)
Shares used in computing per share amounts:
	Basic			378,749			370,948			376,931			369,707
	Diluted			378,749			370,948			376,931			369,707

*	In computing diluted loss per share for the three and nine month periods ended September 30, 2003 and 2002, all common stock equivalents were excluded as a result of their antidilutive effect.
**	This line item includes rounding adjustments.

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

			Three Months Ended						Nine Months Ended
			Sept. 30,			Sept. 30,			Sept. 30,			Sept. 30,
			2003			2002			2003			2002
Revenues			$	450,227		$	486,964		$	1,230,225		$	1,337,241
Costs and expenses:
	Cost of revenues			265,243			288,433			751,780			869,500
	Research and development			103,803			114,423			330,256			341,599
	Selling, general and administrative			57,715			59,054			172,214			174,600
	Acquired in-process research and development			—			1,922			—			1,922
	Restructuring of operations and other items, net			24,516			12,985			184,709			71,640
	Amortization of acquisition related items including intangibles and non-cash deferred stock compensation *			22,598			33,877			81,417			122,951
		Total costs and expenses		473,875			510,694			1,520,376			1,582,212
Loss from operations				(23,648	)		(23,730	)		(290,151	)		(244,971	)
Interest expense				(6,971	)		(10,079	)		(23,116	)		(41,399	)
Interest income and other, net				4,967			14,121			15,106			20,388
Loss before income taxes				(25,652	)		(19,688	)		(298,161	)		(265,982	)
Provision/ (benefit) for income taxes				6,000			7,938			18,000			(4,312	)
Net loss			$	(31,652	)	$	(27,626	)	$	(316,161	)	$	(261,670	)
Loss per share:
	Basic		$	(0.08	)	$	(0.07	)	$	(0.84	)	$	(0.71	)
	Diluted **		$	(0.08	)	$	(0.07	)	$	(0.84	)	$	(0.71	)
Shares used in computing per share amounts:
	Basic			378,749			370,948			376,931			369,707
	Diluted			378,749			370,948			376,931			369,707

* The amortization of acquisition related items including intangibles and non-cash deferred stock compensation for the three month period ended September 30, 2003 are comprised of the following items:

Amortization of intangibles	$	19,200
Amortization of non-cash deferred stock compensation		3,398
	$	22,598

** In computing diluted loss per share for the three and nine month periods ended September 30, 2003 and 2002, all common stock equivalents were excluded as a result of their antidilutive effect.

LSI LOGIC CORPORATION
Consolidated Condensed Balance Sheets
(In Millions)
(Unaudited)

			September 30,			December 31,
			2003			2002
Assets
Current assets:
	Cash and short-term investments		$	987.0		$	990.0
	Accounts receivable, net			264.3			248.6
	Inventories			203.2			194.5
	Prepaid expenses and other current assets			189.9			193.0
		Total current assets		1,644.4			1,626.1
Property and equipment, net				485.3			747.0
Goodwill and other intangibles				1,148.1			1,251.0
Other assets				579.7			518.6
		Total assets	$	3,857.5		$	4,142.7
Liabilities and Stockholders’ Equity
Current liabilities:
	Other current liabilities		$	444.1		$	397.4
	Current portion of long-term debt, capital lease obligations and short-term borrowings			0.4			0.4
		Total current liabilities		444.5			397.8
Long-term debt and capital lease obligations				1,126.5			1,241.2
Deferred tax and other long-term liabilities				263.8			196.9
		Total liabilities		1,834.8			1,835.9
Minority interest in consolidated subsidiaries				7.1			6.5
Stockholders’ equity:
	Common stock			2,941.3			2,958.0
	Deferred stock compensation			(28.0	)		(51.2	)
	Accumulated deficit			(928.4	)		(612.2	)
	Accumulated other comprehensive income			30.7			5.7
		Total stockholders’ equity		2,015.6			2,300.3
		Total liabilities and stockholders’ equity	$	3,857.5		$	4,142.7

LSI LOGIC CORPORATION
Statement of Cash Flows
(In thousands, except where noted)
(Unaudited)

		Three Months Ended						Nine Months Ended
		Sept. 30,			Sept. 30,			Sept. 30,			Sept. 30,
		2003			2002			2003			2002
Operating Activities:
Net loss			(31,652	)		(27,626	)		(316,161	)		(261,670	)
Adjustments:
	Depreciation & amortization *		56,504			83,827			208,615			259,755
	Amortization of non-cash deferred stock compensation		3,398			14,204			22,825			64,973
	Acquired in-process research and development		—			1,922			—			1,922
	Non-cash restructuring and non-recurring items		18,505			12,985			145,828			56,473
	Loss on write down of equity securities, net of gain on sales		(31	)		9,905			9,043			9,905
	Loss/(gain) on repurchase of Convertible Subordinated Notes		1,162			(11,574	)		3,191			(11,574	)
	(Gain)/loss on sales of property and equipment		410			799			(2,150	)		3,955
	Changes in deferred tax assets and liabilities		(131	)		392			(94	)		(2,779	)
Changes in working capital components, net of assets acquired and liabilities assumed in business combinations:
	Accounts receivable		(23,273	)		(56,996	)		(14,773	)		(106,573	)
	Inventories		2,990			(15,016	)		(7,050	)		46,099
	Prepaid expenses and other assets		10,709			20,655			63,149			11,347
	Accounts payable		(13,366	)		20,538			(1,338	)		(20,860	)
	Accrued and other liabilities		9,114			436			27,319			(3,300	)
Net cash provided by operating activities			34,339			54,451			138,404			47,673
Investing activities:
	Purchases of debt and equity securities available-for-sale		(585,793	)		(345,493	)		(1,995,322	)		(1,283,235	)
	Maturities and sales of debt and equity securities available-for-sale		434,138			433,330			1,890,065			1,061,153
	Purchases of equity securities		—			(1,000	)		—			(10,894	)
	Purchases of property and equipment		(17,257	)		(12,939	)		(48,775	)		(30,112	)
	Proceeds from sale of property and equipment		1,822			1,058			13,677			2,927
	Proceeds from the sale leaseback of equipment		—			—			160,000			—
	Deposit toward the expected sale of the Japan manufacturing facility		4,869			—			4,869			—
	Increase in non-current assets and deposits		—			—			(390,135	)		(8,920	)
	Decrease in non-current assets and deposits		12,239			—			256,606			9,156
	Acquisition of companies, net of cash acquired		—			(50,472	)		—			(50,472	)
Net cash (used in) / provided by investing activities			(149,982	)		24,484			(109,015	)		(310,397	)
Financing activities:
	Proceeds from borrowings		—			—			350,000			—
	Repurchase of Convertible Subordinated Notes		(173,396	)		(50,626	)		(461,983	)		(50,626	)
	Cash paid for call spread options		—			—			(28,000	)		—
	Debt issuance costs		(370	)		—			(10,936	)		—
	Repayment of debt obligations		(90	)		(396	)		(264	)		(247	)
	Issuance of common stock		1,873			—			17,763			26,249
Net cash used in financing activities			(171,983	)		(51,022	)		(133,420	)		(24,624	)
Effect of exchange rate changes on cash and cash equivalents			1,215			(2,465	)		4,937			1,600
(Decrease)/increase in cash and cash equivalents			(286,411	)		25,448			(99,094	)		(285,748	)
Cash and cash equivalents at beginning of period			636,164			445,942			448,847			757,138
Cash and cash equivalents at end of period			349,753			471,390			349,753			471,390

* Depreciation of fixed assets, amortization of intangible assets, software, capitalized intellectual property, debt issuance costs and deferred gains on cancelled interest rate swaps.

LSI LOGIC CORPORATION
Selected Financial Information (GAAP)
(In millions, except where noted)
(Unaudited)

	Three Months Ended
		Sept. 30,			June 30,			Sept. 30,
		2003			2003			2002
Semiconductor revenues		$	346.4		$	306.2		$	400.3
Storage Systems revenues		$	103.8		$	101.0		$	86.7
Total revenues		$	450.2		$	407.2		$	487.0
Percentage change in revenues-qtr./qtr. ( a )			10.6	%		9.2	%		11.2	%
Percentage change in revenues-yr./yr. ( b )			-7.6	%		-7.0	%		22.8	%
Days sales outstanding			53			53			56
Days of inventory			69			78			70
Current ratio			3.7			2.9			3.4
Quick ratio			2.8			2.2			2.4
R&D as a percentage of revenues			23.1	%		27.3	%		23.5	%
SG&A as a percentage of revenues			12.8	%		14.0	%		12.1	%
Gross margin as a percentage of revenues			41.1	%		41.4	%		40.8	%
Employees ( c )			4,915			5,044			5,508
Revenues per employee (in thousands) ( d )		$	366.4		$	322.9		$	353.7
Diluted shares (in thousands)			378,749			376,619			370,948
Selected Cash Flow information
Purchases of property and equipment		$	17.3		$	13.0		$	12.9
Depreciation / amortization ( e )		$	36.8		$	41.8		$	59.1

(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)	Actual number of employees at the end of each period presented.
(d)	Revenue per employee is calculated by annualizing revenue for each quarter presented and dividing it by the number of employees.
(e)	Represents depreciation of fixed assets and amortization of software.

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EX-99.1

Exhibit 99.1