8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

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

Date of Report (Date of earliest event reported): June 27, 2007

LSI CORPORATION

(Exact name of registrant as specified in its charter)

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

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

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

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

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

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

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

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

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

TABLE OF CONTENTS

	Item 2.05 Costs associated with exit or disposal activities
	Item 8.01 Other Events
	Item 9.01 Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
EXHIBIT 99.1
EXHIBIT 99.2

Item 2.05 Costs associated with exit or disposal activities

The Company announced today, June 27, 2007, a broad restructuring and an acceleration of merger related synergies to further reduce operating expenses. LSI announced that it will eliminate 900 positions or about 13 percent of its non-production workforce across all business and functional areas on a global basis. The restructuring is the result of a portfolio review that LSI has been conducting under a three-phase business acceleration plan adopted following its merger with Agere Systems on April 2, 2007. In connection with the action, we expect to take charges in the second and third quarters of 2007 that cannot be reasonably estimated at this time.

Item 8.01 Other Events

Attached as Exhibit 99.1 to this report is a news release issued by LSI Corporation on June 27, 2007, concerning its financial performance for the quarter ending July 1, 2007, and operating expenses for three months ended September 30, 2007 and December 31, 2007. A copy of the news release is furnished as Exhibit 99.1 to this Form 8-K and is incorporated by reference herein. Attached as Exhibit 99.2 to this report is a news release issued jointly by LSI Corporation and Magnum Semiconductor announcing the signing of a definitive agreement under which Magnum will acquire the LSI consumer products business in a transaction to be funded by private equity investment. A copy of the news release is furnished as Exhibit 99.2 to this Form 8-K and is incorporated by reference herein.

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

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

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

• evaluating the core operating performance of the company;

• determination of bonuses for certain key employees;

• establishing internal budgets;

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

• comparing performance with internal forecasts and targeted business models;

• strategic planning;

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

• benchmarking performance externally against our competitors.

Non-GAAP financial measures:

     Non-GAAP operating expenses:

     Non-GAAP operating expenses are important to the Company for the reasons noted above and excludes the following items:

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

• Amortization of acquisition related intangibles and in-process research and development. These charges are acquisition-related charges. Amortization of acquisition-related intangibles relates to purchased technology in acquisitions such as existing technology, patents and trademarks. In-process research and development relates to projects in process as of the acquisition date that have not reached technological feasibility and are immediately expensed. These charges are not factored into management’s evaluation of potential acquisitions, or our performance after completion of acquisitions, because they are not related to our core operating performance, and the frequency and amount of such charges vary significantly based on the size and timing of our acquisitions and the maturities of the businesses being acquired. Excluding this data provides investors with a

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basis to compare the company against the performance of other companies without this variability.

•

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

Non-GAAP net income per basic and diluted share:

The numerator used in the calculation of non-GAAP net income per diluted share is non-GAAP net income computed as described above. In the denominator, the number of non-GAAP diluted shares excludes the following item:

• The treasury stock method used to calculate weighted average outstanding shares on a diluted basis requires amounts related to compensation costs attributable to future services and not yet recognized in the financial statements to be treated as proceeds that are assumed to be used to repurchase shares. This reduces the total number of weighted average shares in the GAAP computation. LSI does not include stock-based compensation costs in its non-GAAP net income and accordingly does not consider these amounts in applying the treasury stock method.

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

• Stock-based compensation. LSI’s stock-based incentive plans are important components of our employee incentive compensation arrangements and are reflected in our GAAP results under Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment. Stock-based compensation should be considered for a complete view of the costs of our compensation arrangements.

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

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

• Other charges and gains. For the second quarter ending July 1, 2007, LSI included a one-time charge related to a mark-up to inventory as part of the purchase accounting associated with the merger with Agere on April 2, 2007.

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

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

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Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	News Release issued June 27, 2007.*
99.2	News Release issued June 27, 2007.*

* Furnished, not filed.

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SIGNATURES

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

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

Date: June 27, 2007

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EXHIBIT INDEX

Exhibit No.	Description
99.1	News Release issued June 27, 2007.*
99.2	News Release issued June 27, 2007.*

* Furnished, not filed.

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE JUNE 27, 2007

Investor Relations Contact:	Media Relations Contact:
Sujal Shah	Robert Guenther
610-712-5471	610-712-1514
sujal.shah@lsi.com	robert.guenther@lsi.com

LSI ANNOUNCES STRATEGIC RESTRUCTURING TO ALIGN
RESOURCES WITH OPPORTUNITIES AND REDUCE OPERATING
EXPENSES

Company Updates Second Quarter Outlook

MILPITAS, Calif., June 27, 2007 — LSI Corporation (NYSE: LSI) announced today a broad restructuring and an acceleration of merger related synergies to further reduce its operating expenses. As part of these cost savings, LSI announced that it will eliminate approximately 900 positions or about 13 percent of its non-production workforce across all business and functional areas on a global basis.

The restructuring is a result of a portfolio review that LSI has been conducting under a three-phase business acceleration plan adopted following its merger with Agere Systems on April 2, 2007. Related to this ongoing review, LSI also announced today a definitive agreement with Magnum Semiconductor, Inc. in which they will acquire the LSI consumer products business for an undisclosed amount.

These latest initiatives put LSI ahead of schedule on its merger integration and are expected to reduce LSI Non-GAAP* operating expenses to between $255 million and $265 million in the third quarter and to between $245 million and $255 million in the fourth quarter of 2007. The corresponding GAAP** operating expenses are expected to be between $290 million and $310 million for the third quarter of 2007 and between $275 million and $295 million for the fourth quarter of 2007. The quarterly operating expense run rate exiting 2007 is inclusive of all previously announced synergies and cost savings. The company expects to make further progress on operating expenses in 2008.

Abhi Talwalkar, LSI president and CEO, said, “We are accelerating our timetable for aligning the resources of the new LSI with market opportunities and focusing on those markets where we possess leading technology and sustainable competitive advantages. Today’s actions will position the company to improve our gross margins in our semiconductor business and to grow profitably in a competitive, fast-changing market.”

The company also updated its outlook for the second quarter ending June 30, 2007 and revised its estimated revenue range to between $650 million and $670 million. Non-GAAP earnings are expected to be between ($0.03) and $0.00 per diluted share in the second quarter primarily due to lower than expected revenues, partially offset by strong expense control and favorable product mix. GAAP loss is expected to be between 52 and 43 cents per diluted share, noting that the company is in the process of determining the exact amount of charges it will recognize in the second quarter.

Talwalkar said, “Our revised outlook for the second quarter reflects greater than anticipated softness in our businesses. Despite this, our business remains fundamentally strong, and we are confident of our long term direction. We continue to win new designs and we are strengthening our already solid relationships with industry-leading customers. We expect revenue to grow sequentially in the second half of 2007 based on typical seasonal patterns.”

Bryon Look, chief financial officer, said, “The steps we are taking today are designed to accelerate the synergies from the merger and further improve our cost structure. As a result, we will be better positioned to increase operating income and create shareholder value.”

Additionally, the company said that it has purchased approximately $400 million of its stock during the quarter as part of its previously announced $500 million stock repurchase program. Look added, “We remain committed to our share repurchase program and anticipate that our cash-generating capability would enable us to continue to repurchase shares in the future.”

The company continues to work through phase one of its three-phase business acceleration plan, with current businesses of storage systems and semiconductors targeting storage, networking and mobility applications.

The company will report second quarter results on July 25, 2007 and has scheduled an analyst meeting for July 31, 2007 in New York City.

*Excludes a one-time mark-up to inventory as part of the purchase accounting associated with the April 2, 2007 merger with Agere, stock based compensation, amortization of acquisition related intangibles, restructuring of operations and other items, net, and acquired in-process research and development. It also excludes the income tax effect associated with the above mentioned items.

**Generally Accepted Accounting Principles

Forward Looking Statements: This news release contains forward-looking statements that are based on the current opinions and estimates of management. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could cause LSI’s actual results to differ materially from those set forth in the forward-looking statements include, but are not limited to: the challenges and costs of integrating and restructuring our operations and achieving anticipated synergies following our recent acquisition of Agere Systems; fluctuations in the timing

and volumes of customer demand; our reliance on major customers and suppliers; our ability to compete successfully in competitive markets; our ability to keep up with rapid technological change; the unavailability of appropriate levels of manufacturing capacity; a delay in the closing of our agreement with Magnum Semiconductor; and general industry and market conditions. For additional information, see the documents filed by LSI with the SEC, and specifically the risk factors set forth in the company’s most recent reports on Form 10-K, 10-Q, and 8-K. LSI disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

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

# # #

Editor’s Notes:

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

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

EX-99.2

Exhibit 99.2

FOR IMMEDIATE RELEASE JUNE 27, 2007

For LSI:	For Magnum Semiconductor:
Investor Relations Contact:	Media Relations Contact:
Sujal Shah	Mark Singer
610-712-5471	408-945-3806
sujal.shah@lsi.com	mark.singer@magnumsemi.com
Media Relations Contact:
Robert Guenther
610-712-1514
robert.guenther@lsi.com

MAGNUM SEMICONDUCTOR AGREES TO ACQUIRE LSI CONSUMER
PRODUCTS BUSINESS

MILPITAS, Calif., June 27, 2007 — LSI Corporation (NYSE: LSI) and Magnum Semiconductor, Inc. announced today that they have entered into a definitive agreement under which Magnum will acquire the LSI consumer products business in a transaction to be funded by private equity investment.

The combination of each company’s consumer products portfolio is expected to allow Magnum to strengthen its position as a leading provider of chips, software and platforms for consumer entertainment systems. The sale of the consumer products business will enable LSI to focus its investments on its businesses in the storage, networking and mobility market segments. The transaction is expected to close in the third quarter and is not subject to regulatory approval. Financial terms are not being disclosed.

Jack Guedj, president and CEO of Magnum Semiconductor, said, “By taking this step we bring in people, talent and products that will accelerate our revenue ramp and our R&D efforts. Magnum now becomes one of the leaders in audio/video chips and software for the consumer electronics market. We also gain access to the market for professional broadcast solutions that deliver content to consumers.”

With this transaction, Magnum Semiconductor strengthens the company’s existing DVD, digital TV and digital entertainment center solutions while also adding MPEG-2 and H.264 high-definition media processing and low-power 3D graphics products to its portfolio. “Combining Magnum Semiconductor and the LSI consumer products business enhances and expands the products and services we offer to consumer electronics manufacturers worldwide,” Guedj said.

Abhi Talwalkar, LSI president and CEO, said, “After exploring a full range of strategic options, we have determined that the best opportunity for the long term

success of our consumer products business is an external one. The combination of both companies’ strong product portfolios, together with strong backing from top-tier private equity firms and a solid technical and management team will position Magnum to achieve scale and success in the consumer electronics market.”

The definitive agreement is the result of an ongoing strategic review within LSI of its business portfolio following its merger with Agere Systems on April 2, 2007.

Under the terms of the agreement, Magnum will purchase the LSI DoMiNo^®, Domino[X]™ and Zevio™ architectures, products and related IP of the LSI consumer products business. Additionally, Magnum will offer employment to a significant number of LSI employees associated with the business. The two companies will also work together to seamlessly transition the business to continue to offer customers the highest quality products, services and support.

Forward Looking Statements: This news release contains forward-looking statements that are based on the current opinions and estimates of management. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. For additional information, see the documents filed by LSI with the SEC, and specifically the risk factors set forth in the company’s most recent reports on Form 10-K, 10-Q, and 8-K. LSI disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

About the LSI Consumer Products Group
The LSI Consumer Products Group provides innovative digital media processing and silicon solutions to industry-leading, worldwide consumer electronics manufacturers including LG, Philips, and Motorola. The division offers a complete line of products for DVD recorder, HD set-top box, etoy/edutainment, PND and professional video production/broadcasting devices which enable solutions that deliver entertainment into and throughout the Digital Home.

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

About Magnum Semiconductor
Magnum Semiconductor is a premier provider of chips, software and reference platforms for recording, viewing and managing high-quality audio/video content. Magnum Semiconductor is a privately held corporation backed by August Capital, KTB Ventures, Investcorp Technology Partners, Investor Growth Capital, and WK Technology Fund with headquarters in Milpitas, California, and sales and engineering offices in Korea, Taiwan, Japan and China. Further information is available at www.magnumsemi.com.

# # #

Editor’s Notes:

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

2. LSI, the LSI logo design, DoMiNo, Domino[X], and Zevio are trademarks or registered trademarks of LSI Corporation.