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): January 25, 2006

LSI LOGIC 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 2.02 Results of Operation and Financial Condition.
	Item 8.01 Other Events.
	Item 9.01 Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
EXHIBIT 99.1

Item 2.02 Results of Operation and Financial Condition.

On January 25, 2006, LSI Logic Corporation (referred to here as “LSI Logic” or the “Company”) issued a news release regarding its financial results for the fourth quarter ended December 31, 2005. A copy of the news release is furnished as Exhibit 99.1 to this Form 8-K and is incorporated by reference herein.

Use of Non-GAAP Financial Information

LSI Logic has referenced non-GAAP financial information in the news release. LSI Logic management believes that the results of operations excluding special items presented herein for the three- and 12-month periods ended December 31, 2005 and December 31, 2004, and the three-month period ended October 2, 2005 provide useful information to investors regarding results of operations, as they exclude charges, expenses, gains, and losses that are not directly related to the Company’s 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, acquisition-related amortization including intangibles and non-cash deferred stock compensation and other special items are examples of charges that are not directly related to the Company’s ongoing business results and/or stem from purchase business combinations. For a complete reconciliation of special items excluded from our results of operations for the three- and 12-month periods ended December 31, 2005 and December 31, 2004, and the three-month period ended October 2, 2005, refer to the tables furnished in the news release attached 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 and the Company’s most recent annual report on Form 10-K for the twelve months ended December 31, 2004.

Item 8.01 Other Events.

The Company reported revenues of $506 million in the fourth quarter of 2005, compared to revenues of $482 million reported in the third quarter of 2005, and a 21 percent increase compared to the $420 million reported in the fourth quarter of 2004.

Fourth quarter net income was $38 million or 9 cents per diluted share. The fourth quarter 2005 results compare to third quarter 2005 net loss of $73 million or 19 cents per diluted share. The third quarter 2005 net loss was primarily attributable to the $91 million restructuring charge associated with the planned sale of the Company’s Gresham, Oregon manufacturing facility. Fourth quarter 2004 net loss was $197 million or 51 cents per diluted share, and included a $178 million non-cash charge for the impairment of the Gresham, Oregon facility.

Cash and short-term investments totaled $939 million at the end of the fourth quarter of 2005.

The Company recorded 2005 revenues of $1.92 billion, a 13 percent increase compared to $1.70 billion in 2004.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

Exhibit No.	Description
99.1	LSI Logic Corporation News Release issued January 25, 2006*

     *Furnished, not filed

SIGNATURES

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

LSI LOGIC CORPORATION, a Delaware corporation
By:	/s/ David G. Pursel
	David G. Pursel
	Vice President, General Counsel & Corporate Secretary

Date: January 25, 2006

EXHIBIT INDEX

Exhibit No.	Description
99.1	LSI Logic Corporation News Release issued January 25, 2006*
	*Furnished, not filed

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE	JANUARY 25, 2006
Investor Relations Contact:	Media Relations Contact:
Diana Matley	Tara Yingst
408-433-4365	408-433-7139
diana.matley@lsi.com	tara.yingst@lsi.com

CC06-03

LSI LOGIC REPORTS Q4 REVENUE INCREASE OF 21%

YEAR-OVER-YEAR

2005 REVENUES UP 13% OVER 2004

Fourth Quarter and Full Year 2005 News Release Summary

• Revenues of $506 million; up 5% sequentially

• GAAP* net income of 9 cents per diluted share

• Net income, excluding special items**, of 13 cents per diluted share

• Gross margin of 43.5%

• 2005 revenues of $1.92 billion; up 13% compared to $1.7 billion for 2004

• Net cash from operations grows 186% to $260 million for 2005

First Quarter 2006 Business Outlook

• Projected revenue of $465 million to $490 million

• GAAP* net income range of 1 – 3 cents per diluted share

• Net income, excluding special items**, in the range of 10 – 12 cents per diluted share

*Generally Accepted Accounting Principles

**Acquisition-related amortization, restructuring and other special items.

-more-

LSI Logic Reports Q4 and 2005 Financial Results
January 25, 2006 Page 2 of 4

STRONG DEMAND FOR STORAGE AND CONSUMER PRODUCTS DRIVES GROWTH

MILPITAS, CA – LSI Logic Corporation (NYSE: LSI) today reported fourth quarter 2005 revenues of $506 million, a sequential increase of 5% compared to the $482 million reported in the third quarter of 2005, and a 21% increase compared to the $420 million reported in the fourth quarter of 2004.

The company generated $63 million in cash from operations in the fourth quarter of 2005, representing the 15th consecutive quarter of positive operating cash flow. Net cash from operations nearly tripled to $260 million for 2005 compared to $91 million for 2004. Cash and short-term investments grew 15% to $939 million in 2005 from $815 in 2004.

Fourth quarter 2005 GAAP* net income was $38 million or 9 cents per diluted share, compared to third quarter GAAP net loss of $73 million or 19 cents per diluted share, which included a $91 million restructuring charge associated with the planned sale of the company’s Gresham, Oregon manufacturing facility. Fourth quarter 2004 GAAP net loss was $197 million or 51 cents per diluted share, which included a $178 million non-cash charge associated with the Gresham facility.

Fourth quarter 2005 net income, excluding special items**, was $51 million or 13 cents per diluted share compared to a net income, excluding special items, of $45 million or 11 cents per diluted share in the third quarter. Excluding special items, fourth quarter 2004 net income was $15 million or 4 cents per diluted share.

“A strong 2005 performance in our Storage and Consumer businesses was capped off by record fourth quarter and full year revenues for our Engenio Storage Group, fueled by the continuing demand for high-performance 4Gb/sec. Fibre Channel systems,” said Abhi Talwalkar, LSI president and chief executive officer. “Revenues from our storage semiconductors grew in the fourth quarter and we extended our lead in SAS (serial attached SCSI) by introducing a number of new products. Consumer revenues met our fourth quarter expectations and grew 34% for the full year 2005.

“Entering 2006, our strong position in enterprise storage and the industry-projected growth of consumer electronics products are expected to be the primary growth drivers for the company. We are well positioned to capitalize on these opportunities with our leadership technology.”

LSI recorded 2005 revenues of $1.92 billion, a 13% increase compared to $1.70 billion in 2004.

The company reported GAAP 2005 net loss of $6 million or 1 cent per diluted share, which includes $91 million in charges associated with the planned sale of the Gresham manufacturing facility. The 2004 GAAP net loss was $464 million or $1.21 per diluted

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LSI Logic Reports Q4 and 2005 Financial Results
January 25, 2006 Page 3 of 4

share, which included a $384 million non-cash charge associated with the impairment of the Gresham manufacturing facility.

Net income for 2005, excluding special items, grew to $166 million or 42 cents per diluted share compared to 2004 net income, excluding special items, of $43 million or 11 cents per diluted share.

LSI reduced its convertible debt to $624 million in 2005 through open market purchases, compared to convertible debt of $782 million in 2004 .

“During 2005, we grew revenues significantly, reduced operating expenses by $28 million compared to the previous year and nearly quadrupled net profit, excluding special items,” said Bryon Look, LSI chief financial officer. “Building on our balance sheet strength, our net cash to debt position increased to $315 million.”

LSI Logic First Quarter 2006 Business Outlook

		GAAP*		Special Items**	Excluding Special**
					Items
Revenue	$465 million to $490 million				$465 million to $490 million
Gross Margin		42.5-43.5%	Approximately $2 million			43-44%
Operating Expenses	$187 million to $191 million		Approximately $33 million		$154 million to $158 million
Net Other Income	$1 million				$1 million
Tax Provision	$8 million		Approximately ($1 million)		$9 million
Net Income Per Share		$0.01 to $0.03	Approximately ($0.09)***			$0.10 to $0.12
Diluted Share Count	410 million				410 million

Capital spending is projected to be around $18 million in the first quarter and approximately $60 million in total for 2006.

First quarter depreciation and software amortization is expected to be approximately $12 million.

* Generally Accepted Accounting Principles

** Acquisition-related amortization, restructuring and other special items.

*** Includes approximately $15M in employee stock option expensing.

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LSI Logic Reports Q4 and 2005 Financial Results
January 25, 2006 Page 4 of 4

NOTE: The company’s financial guidance will be limited to the comments made on today’s public conference call and contained in the First Quarter 2006 Business Outlook section of this news release.

LSI Logic Conference Call Information
LSI Logic will hold a conference call today at 2 p.m. PST to discuss fourth quarter and 2005 financial results and the first quarter 2006 business outlook. The number is 1-303-262-2194. Internet users can access the conference call by visiting http://www.lsi.com/investors. A replay of the call will be available today at approximately 5 p.m. PST and will be available for 48 hours. The replay access numbers are 1-800-405-2236 within the U.S. and 1-303-590-3000 for all other locations, passcode 11050744#.

Safe Harbor for Forward Looking Statements: This news release contains forward-looking statements, which include the following: the expectation for enterprise storage and consumer electronics products to be the primary growth drivers for the company in 2006, the expectation to capitalize on enterprise storage and consumer products opportunities in 2006, projected revenues for the first quarter of 2006, projected GAAP net income for the first quarter of 2006, projected net income, excluding special items, for the first quarter of 2006, projected capital spending in the first quarter of 2006 and for the year and expected first quarter of 2006 depreciation and software amortization. Forward-looking statements also include projections of gross margins, operating expenses, net other income, tax provisions, earnings per share and diluted share count. These forward-looking statements are based on the opinions and estimates of management at the time the statements are made and 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 Logic’s actual results to differ materially from those set forth in the forward-looking statements include, but are not limited to: fluctuations in the timing and volumes of customer demand, particularly for storage, the company’s inability to achieve revenue objectives, the company’s inability to meet financial targets and failure to execute on its financial plan, the company’s inability to generate positive operating cash flow or control operating expenses, the company’s inability to capitalize on enterprise storage and consumer products growth opportunities, the inability of the consumer electronics products to grow as projected by industry, and the unavailability of appropriate levels of manufacturing capacity. For additional information, readers are referred to the documents filed by LSI Logic 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 Logic is not obligated to update these forward-looking statements to reflect events or circumstances after the date of this document.

About LSI Logic
LSI Logic Corporation is a leading provider of silicon-to-system solutions that are used at the core of products that create, move and store digital content. LSI offers a broad portfolio of capabilities including custom and standard product ICs, host bus and RAID adapters, storage area network solutions and software applications. LSI products enable leading technology companies in the Consumer, Communications and Storage markets to deliver some of the most advanced and well-known electronic systems in the market today. More information is available at www.lsi.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.lsi.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									Year Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2005			2005			2004			2005			2004
Revenues	$	506,235		$	481,716		$	419,693		$	1,919,250		$	1,700,164
Cost of revenues		286,032			271,511			246,132			1,086,814			964,556
Gross profit		220,203			210,205			173,561			832,436			735,608
Research and development		97,892			100,524			94,343			397,312			421,516
Selling, general and administrative		59,579			58,342			55,123			235,933			239,962
Income from operations		62,732			51,339			24,095			199,191			74,130
Interest expense		(6,195	)		(6,058	)		(7,342	)		(25,283	)		(25,320	)
Interest income and other, net		6,828			6,054			4,403			23,334			17,907
Income before income taxes		63,365			51,335			21,156			197,242			66,717
Provision for income taxes		12,155			6,250			6,000			30,905			24,000
Net income excluding special items	$	51,210		$	45,085		$	15,156		$	166,337		$	42,717
Income per share excluding special items:
Basic	$	0.13		$	0.12		$	0.04		$	0.43		$	0.11
Diluted	$	0.13		$	0.11		$	0.04		$	0.42		$	0.11
Shares used in computing per share amounts:
Basic		392,850			391,017			386,267			390,135			384,070
Diluted		401,171			402,664			386,781			396,936			388,204

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 December 31, 2005, 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 gains on the sale of certain equity securities offset in part by write-downs of certain equity securities due to impairment. The tax benefit is related to interest received on a refund for a pre-acquisition tax matter.

During the year ended December 31, 2005, the special items represented all the items mentioned above in addition to gains associated with the repurchase of a portion of the Company’s Convertible Subordinated Notes.

During the three month period ended September 30, 2005, 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 write-downs of certain equity securities due to impairment.

During the three month period ended December 31, 2004, the special items represented amortization of acquisition related items including intangibles and non-cash deferred stock compensation, and restructuring of operations and other items, net.

During the year ended December 31, 2004, the special items represented all the items mentioned above in addition to the following items: write-downs of certain equity securities due to impairment and fees related to our subsidiary Engenio’s initial public offering, which was postponed in August of 2004 due to market conditions. These charges were offset in part by gains on certain equity securities and gains associated with the repurchase of a portion of the Company’s Convertible Subordinated Notes.

For the three month periods ended December 31, 2005, September 30, 2005, and December 31, 2004, the statements excluding special items are prepared using the Company’s calculated tax expense of $12,155, $6,250 and $6,000, respectively when excluding special items. For the year ended December 31, 2005 and 2004, the statements excluding special items are prepared using the Company’s calculated tax expense of $30,905 and $ 24,000, respectively when excluding special items.

For the three month periods ended December 31, 2005, September 30, 2005 and December 31, 2004, 8,321, 11,647 and 514 shares, respectively were considered dilutive common stock equivalents and included in the computation of diluted income per share excluding special items. For the years ended December 31, 2005 and 2004, 6,801 and 4,134 shares, respectively were considered dilutive common stock equivalents and included in the computation of diluted income per share excluding special items.

A reconciliation from net income excluding special items 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									Year Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2005			2005			2004			2005			2004
Net income excluding special items	$	51,210		$	45,085		$	15,156		$	166,337		$	42,717
Special items:
Amortization of acquisition related items including intangibles and non-cash deferred stock compensation		(13,074	)		(17,006	)		(20,193	)		(67,933	)		(83,499	)
Restructuring of operations and other items, net		(10,377	)		(99,986	)		(192,389	)		(119,052	)		(423,444	)
Other special items		5,666			(1,487	)		—			10,660			695
Tax benefit		4,365			—			—			4,365			—
Total special items		(13,420	)		(118,479	)		(212,582	)		(171,960	)		(506,248	)
Net income/(loss)	$	37,790		$	(73,394	)	$	(197,426	)	$	(5,623	)	$	(463,531	)
Basic income/(loss) per share:
Net income excluding special items	$	0.13		$	0.12		$	0.04		$	0.43		$	0.11
Special items **		(0.03	)		(0.31	)		(0.55	)		(0.44	)		(1.32	)
Net income/(loss)	$	0.10		$	(0.19	)	$	(0.51	)	$	(0.01	)	$	(1.21	)
Diluted income/(loss) per share*:
Net income excluding special items	$	0.13		$	0.11		$	0.04		$	0.42		$	0.11
Special items **		(0.04	)		(0.30	)		(0.55	)		(0.43	)		(1.32	)
Net income/(loss)	$	0.09		$	(0.19	)	$	(0.51	)	$	(0.01	)	$	(1.21	)
Shares used in computing per share amounts:
Basic		392,850			391,017			386,267			390,135			384,070
Diluted		401,171			391,017			386,267			390,135			384,070

*

For the three month period ended December 31, 2005, 8,321 shares were considered dilutive common stock equivalents and included in the computation of diluted income per share. For the twelve month period ended December 31, 2005, the three month period ended September 30, 2005 and the three and twelve month periods ended December 31, 2004, all common stock equivalents were excluded from the computation of diluted loss per share 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									Year Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2005			2005			2004			2005			2004
Revenues	$	506,235		$	481,716		$	419,693		$	1,919,250		$	1,700,164
Cost of revenues		286,032			271,511			246,132			1,086,814			964,556
Gross profit		220,203			210,205			173,561			832,436			735,608
Research and development		97,892			100,524			94,343			397,312			421,516
Selling, general and administrative		59,579			58,342			55,123			235,933			243,498
Restructuring of operations and other items, net		10,377			99,986			192,389			119,052			423,444
Amortization of acquisition related items including intangibles and non-cash deferred stock compensation *		13,074			17,006			20,193			67,933			83,499
Income/(loss) from operations		39,281			(65,653	)		(188,487	)		12,206			(436,349	)
Interest expense		(6,195	)		(6,058	)		(7,342	)		(25,283	)		(25,320	)
Interest income and other, net		12,494			4,567			4,403			33,994			22,138
Income/(loss) before income taxes		45,580			(67,144	)		(191,426	)		20,917			(439,531	)
Provision for income taxes **		7,790			6,250			6,000			26,540			24,000
Net income/(loss)	$	37,790		$	(73,394	)	$	(197,426	)	$	(5,623	)	$	(463,531	)
Income/(loss) per share:
Basic	$	0.10		$	(0.19	)	$	(0.51	)	$	(0.01	)	$	(1.21	)
Diluted ***	$	0.09		$	(0.19	)	$	(0.51	)	$	(0.01	)	$	(1.21	)
Shares used in computing per share amounts:
Basic		392,850			391,017			386,267			390,135			384,070
Diluted		401,171			391,017			386,267			390,135			384,070

* The amortization of acquisition related items including intangibles and non-cash deferred stock compensation for the three month period ended December 31, 2005 are comprised of the following items:

Amortization of intangibles	$	11.565
Amortization of non-cash deferred stock compensation		1,509
	$	13,074

**

The provision for income taxes for the three and twelve month periods ended December 31, 2005 includes a $5,354 charge related to the correction of certain income tax balances arising from the Company’s adoption of a new goodwill accounting standard in 2002.

***

For the three month period ended December 31, 2005, 8,321 shares were considered dilutive common stock equivalents and included in the computation of diluted income per share. For the twelve month period ended December 31, 2005, the three month period ended September 30, 2005 and the three and twelve month periods ended December 31, 2004, all common stock equivalents were excluded from the computation of diluted loss per share as a result of their antidilutive effect.

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

	December 31,			September 30,			December 31,
Assets	2005			2005			2004
Current assets:
Cash and short-term investments	$	938.9		$	845.0		$	814.6
Accounts receivable, net		323.3			298.5			272.1
Inventories		194.8			189.1			218.9
Prepaid expenses and other current assets		163.1			151.8			59.7
Total current assets		1,620.1			1,484.4			1,365.3
Property and equipment, net		98.3			97.9			311.9
Goodwill and other intangibles		974.5			1,023.0			1,081.6
Other assets		103.2			113.2			115.2
Total assets	$	2,796.1		$	2,718.5		$	2,874.0
Liabilities and Stockholders’ Equity
Current liabilities:
Other current liabilities	$	468.9		$	429.6		$	396.2
Current portion of long-term debt		273.9			—			0.1
Total current liabilities		742.8			429.6			396.3
Long-term debt		350.0			624.8			781.9
Tax related liabilities and other		75.1			77.3			77.6
Total liabilities		1,167.9			1,131.7			1,255.8
Minority interest in subsidiary		0.2			0.2			0.3
Stockholders’ equity:
Common stock		3,014.1			3,001.1			2,973.4
Deferred stock compensation		(14.1	)		(13.3	)		(8.9	)
Accumulated deficit		(1,389.9	)		(1,427.7	)		(1,384.3	)
Accumulated other comprehensive income		17.9			26.5			37.7
Total stockholders’ equity		1,628.0			1,586.6			1,617.9
Total liabilities and stockholders’ equity	$	2,796.1		$	2,718.5		$	2,874.0

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

	Three Months Ended									Year Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2005			2005			2004			2005			2004
Operating Activities:
Net income/(loss)	$	37,790		$	(73,394	)	$	(197,426	)	$	(5,623	)	$	(463,531	)
Adjustments:
Depreciation & amortization *		25,701			38,175			40,199			146,169			176,606
Amortization of non-cash deferred stock compensation		1,509			1,313			2,027			5,449			8,449
Non-cash restructuring and other items		1,563			85,311			187,000			88,224			401,058
(Gain)/loss on write-down on sale and exchange of equity securities		(5,651	)		1,487			200			(6,475	)		(1,913	)
Gain on repurchase of Convertible Subordinated Notes		—			—			—			(4,123	)		(1,767	)
Loss/(gain) on sales of property and equipment		118			(88	)		(467	)		27			(6,348	)
Changes in deferred tax assets and liabilities		14,108			58			4,657			14,220			4,895
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combinations:
Accounts receivable		(24,839	)		(13,615	)		(7,221	)		(51,307	)		(40,076	)
Inventories		(5,681	)		(3,393	)		25,372			24,086			(20,660	)
Prepaid expenses and other assets		(20,275	)		6,070			25,445			(22,365	)		23,377
Accounts payable		40,861			8,496			(8,852	)		46,979			21,056
Accrued and other liabilities		(2,083	)		27,120			(44,672	)		24,544			(10,329	)
Net cash provided by operating activities		63,121			77,540			26,262			259,805			90,817
Investing activities:
Purchases of debt securities available-for-sale		(153,672	)		(134,708	)		(105,661	)		(550,912	)		(747,096	)
Proceeds from maturities and sales of debt securities available-for-sale		97,302			82,045			111,305			462,530			679,483
Purchases of equity securities		(150	)		—			—			(150	)		(2,250	)
Proceeds from sales of equity securities		7,234			—			—			11,105			10,518
Purchases of property, equipment and software		(12,729	)		(15,906	)		(10,982	)		(48,055	)		(52,776	)
Proceeds from sale of property and equipment		1,495			184			2,339			4,894			10,936
Buyout of equipment operating lease		—			—			(332,396	)		—			(332,396	)
Decrease in non-current assets and deposits		—			—			319,530			—			688,994
Increase in non-current assets and deposits		—			—			—			—			(313,013	)
Acquisitions of companies, net of cash acquired		—			—			—			—			(32,025	)
Adjustment to goodwill acquired in a prior year for resolution of a pre-acquisition income tax contingency		28,645			—			—			36,307			—
Net cash used in investing activities		(31,875	)		(68,385	)		(15,865	)		(84,281	)		(89,625	)
Financing activities:
Issuance of common stock		10,789			7,247			10,124			30,862			27,988
Repurchase of Convertible Subordinated Notes		—			—			—			(148,126	)		(68,117	)
Purchase of minority interest in subsidiary		—			—			(42	)		—			(8,020	)
Repayment of debt obligations		—			—			(141	)		(129	)		(438	)
Net cash provided by/(used in) financing activities		10,789			7,247			9,941			(117,393	)		(48,587	)
Effect of exchange rate changes on cash and cash equivalents		(3,040	)		(2,204	)		(4,242	)		(12,205	)		(3,564	)
Increase/(decrease) in cash and cash equivalents		38,995			14,198			16,096			45,926			(50,959	)
Cash and cash equivalents at beginning of period		225,654			211,456			202,627			218,723			269,682
Cash and cash equivalents at end of period	$	264,649		$	225,654		$	218,723		$	264,649		$	218,723

* 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
	Dec. 31,			Sept. 30,			Dec. 31,
	2005			2005			2004
Semiconductor revenues ( a )	$	303.3		$	311.7		$	254.2
Storage Systems revenues ( a )	$	202.9		$	170.0		$	165.5
Total revenues	$	506.2		$	481.7		$	419.7
Percentage change in revenues-qtr./qtr. ( b )		5.1	%		0.1	%		10.4	%
Percentage change in revenues-yr./yr. ( c )		20.6	%		26.7	%		-9.3	%
Days sales outstanding		57			56			58
Days of inventory		61			63			80
Current ratio		2.2			3.5			3.4
Quick ratio		1.7			2.7			2.7
Gross margin as a percentage of revenues		43.5	%		43.6	%		41.4	%
R&D as a percentage of revenues		19.3	%		20.9	%		22.5	%
SG&A as a percentage of revenues		11.8	%		12.1	%		13.1	%
Employees ( d )		4,324			4,415			4,429
Revenues per employee (in thousands) ( e )	$	468.3		$	436.4		$	379.0
Selected Cash Flow information
Purchases of property and equipment ( f )	$	10.1		$	14.8		$	33.2
Depreciation / amortization ( g )	$	12.1		$	20.6		$	19.9

( a )	For the three months ended December 31, 2004, amounts presented have been recast to include RAID Storage Adapter (RSA) revenues into Storage Systems revenues from Semiconductor revenues.
( b )	Represents sequential quarter growth in revenues.
( c )	Represents growth in revenues in the quarter presented as compared to the same quarter of the previous year.
( d )	Actual number of employees at the end of each period presented.
( e )	Revenue per employee is calculated by annualizing revenue for each quarter presented and dividing it by the number of employees.
( f )	Excludes purchases of software.
( g )	Represents depreciation of fixed assets and amortization of software.