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)
October 22, 2008

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 2.02 Results of Operation and Financial Condition.
	Item 9.01 Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
EXHIBIT 99.1

Item 2.02 Results of Operation and Financial Condition.

On October 22, 2008, LSI Corporation issued a news release regarding its financial results for the quarter ended September 28, 2008. A copy of the news release is furnished as Exhibit 99.1 to this Form 8-K and is incorporated by reference herein.

The news release contains non-GAAP financial information. Management believes that the presentation of non-GAAP net income (loss), non-GAAP gross margin, non-GAAP operating expenses, non-GAAP taxes, and non-GAAP net income (loss) per basic and diluted share provides important supplemental information to management and investors about financial and business trends relating to the company’s 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;

• 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.

The news release also presents information about our revenues for the third quarter of 2007, excluding revenues from the Mobility business that we sold in late October 2007 and the Consumer business that we sold in late July 2007. We believe that the presentation of revenues computed on this basis may be useful to investors as it enables them to compare the revenue performance of the businesses that we currently operate.

How we calculate our non-GAAP financial measures

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

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

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

1

• Amortization of acquisition-related intangibles and acquired in-process research and development. These 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 these types of 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 basis to compare the company against the performance of other companies without this variability.

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

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

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

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

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

Limitations of relying on non-GAAP financial measures

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

• Stock-based compensation. LSI’s stock-based incentive plans are important components of our employee incentive compensation arrangements and are reflected in our GAAP results 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.

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

• Amortization of acquisition-related intangibles and acquired 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.

2

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

• Goodwill impairment charge. This amount should be included for a complete view of our historical performance including the impact of declines of the value of our assets.

• Other charges and gains. These amounts should be included for a complete view of our historical performance even though they are not related to our core operations.

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

• Revenues excluding revenues from businesses sold. Revenues from businesses sold should be included in revenues for a complete view of our historical performance even though we no longer own those businesses.

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 October 22, 2008.*

* 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: October 22, 2008

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EXHIBIT INDEX

Exhibit No.	Description
99.1	News Release issued October 22, 2008.*

* Furnished, not filed.

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE	OCTOBER 22, 2008
Investor Relations Contact: Sujal Shah 610-712-5471 sujal.shah@lsi.com	Media Relations Contact: Mitch Seigle 408-954-3225 mitch.seigle@lsi.com

cc08-67

LSI REPORTS THIRD QUARTER 2008 RESULTS

MILPITAS, Calif., October 22, 2008 — LSI Corporation (NYSE: LSI) today reported results for its third quarter ended September 28, 2008.

Third Quarter News Release Summary

• Third quarter 2008 revenues of $714 million

• Third quarter 2008 GAAP* net income of 2 cents per share

• Third quarter 2008 non-GAAP** net income of 14 cents per diluted share

• Third quarter operating cash flows of $56 million

• Cash and short-term investments of $1.2 billion

Fourth Quarter 2008 Business Outlook

• Projected revenues of $670 million to $710 million

• GAAP* net (loss)/income in the range of ($0.07) to $0.03 per share

• Non-GAAP** net income in the range of 8 to 14 cents per diluted share

*	Generally Accepted Accounting Principles.
**	Excludes goodwill impairment, stock-based compensation, amortization of acquisition-related intangibles, restructuring of operations and other items, net, purchase accounting effect on inventory, loss on write-down of debt/equity securities and acquired in-process research and development. It also excludes the income tax effect associated with the above mentioned items.

1

GROWTH IN STORAGE SEMICONDUCTORS DRIVES SOLID
QUARTERLY RESULTS

Third quarter 2008 revenues were $714 million, a 2% decrease year-over-year compared to $727 million reported in the third quarter of 2007, and up 3% sequentially compared to $692 million reported in the second quarter of 2008. Adjusting for the sale of the consumer and mobility businesses, third quarter revenues increased 14% year-over-year compared to the third quarter of 2007.

Third quarter 2008 GAAP* net income was $11 million or 2 cents per diluted share, compared to third quarter 2007 GAAP net loss of $141 million or 20 cents per share. Third quarter 2008 GAAP results compare to second quarter 2008 GAAP net loss of $14 million or 2 cents per share. Third quarter 2008 GAAP net income included a net charge of $83 million from special items, consisting primarily of $60.5 million of amortization of acquisition-related items, $16.9 million of stock-based compensation expense, $1.7 million in write-down of investments, and $1.6 million in net restructuring and other items.

Third quarter 2008 non-GAAP** net income was $94 million or 14 cents per diluted share, compared to third quarter 2007 non-GAAP net income of $44 million or 6 cents per share. Second quarter 2008 non-GAAP net income was $83 million or 13 cents per diluted share.

Cash and short-term investments totaled approximately $1.2 billion at quarter end.

“Healthy demand in the quarter for our HDD and SAN semiconductors provided a foundation for delivering solid results,” said Abhi Talwalkar, LSI president and chief executive officer. “We are also pleased by our progress in securing new opportunities, with recently announced Tier 1 OEM wins for next-generation HDD, SSD and 6Gb/s SAS products.

“Although fourth quarter visibility is limited, we are confident that our strategic focus, continuing design win momentum and strong financial position leave us well positioned for the foreseeable future,” added Talwalkar.

Bryon Look, LSI chief financial officer, said, “Significantly higher gross margins and continued focus on cost control contributed to third quarter EPS near the high end of our guidance range. Compared to the same quarter in 2007 we have grown revenue in our core businesses by 14% while significantly reducing quarterly operating expenses.”

2

LSI Fourth Quarter 2008 Business Outlook

	GAAP*		Special Items		Non-GAAP**
Revenue	$670 million to $710 million				$670 million to $710 million
Gross Margin		38.5 — 41.5%		$40 to $50 million		45.5 — 47.5%
Operating Expenses	$265 million to $285 million			$30 to $40 million	$235 million to $245 million
Net Other Income	($2) million				($2) million
Tax	Approximately $10 million				Approximately 8%
Net (Loss)/Income Per Share	($0.07) to $0.03		($0.11) to ($0.15)			$0.08 to $0.14
Diluted Share Count	647 million				651 million

Capital spending is projected to be around $10 million in the fourth quarter and approximately $60 million in total for 2008.

Fourth quarter depreciation and software amortization is expected to be approximately $20 million.

LSI Conference Call Information

LSI will hold a conference call today at 2 p.m. PDT to discuss third quarter financial results and the fourth quarter 2008 business outlook. Internet users can access the conference call at http://www.lsi.com/webcast. Subsequent to the conference call, a replay will be available at the same web address.

Forward Looking Statements: This news release contains forward-looking statements that are based on the current opinions and estimates of management. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could cause LSI’s actual results to differ materially from those set forth in the forward-looking statements include, but are not limited to: our reliance on major customers and suppliers; our ability to keep up with rapid technological change; our ability to compete successfully in competitive markets; our ability to achieve anticipated synergies following our acquisition of Agere Systems; fluctuations in the timing and volumes of customer demand; the unavailability of appropriate levels of manufacturing capacity; our ability to successfully and timely transition our assembly and test operations to third parties; and general industry and market conditions. For additional information, see the documents filed by LSI with the Securities and Exchange Commission, and specifically the risk factors set forth in the company’s most recent reports on Form 10-K and 10-Q. LSI disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

About LSI

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

# # #

Editor’s Notes:

1.	All LSI news releases (financial, acquisitions, manufacturing, products, technology etc.) are issued exclusively by PR Newswire and are immediately thereafter posted on the company’s external website, http://www.lsi.com.
2.	LSI and the LSI logo design are trademarks or registered trademarks of LSI Corporation or its subsidiaries.
3.	All other brand or product names may be trademarks or registered trademarks of their respective companies.

3

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

	September 28,			June 29,			December 31,
	2008			2008			2007
Assets
Current assets:
Cash and short-term investments	$	1,173.9		$	1,147.2		$	1,397.6
Accounts receivable, net		401.1			359.3			406.4
Inventories		210.0			241.0			240.8
Prepaid expenses and other current assets		174.6			179.1			147.8
Total current assets		1,959.6			1,926.6			2,192.6
Property and equipment, net		234.0			240.2			229.7
Goodwill and other intangible assets, net		1,666.1			1,692.3			1,724.7
Other assets		265.8			268.8			249.4
Total assets	$	4,125.5		$	4,127.9		$	4,396.4
Liabilities and Stockholders’ Equity
Current liabilities	$	633.3		$	683.5		$	762.5
Long-term debt		715.6			716.4			718.0
Pension, tax and other liabilities		420.7			406.6			430.7
Total liabilities		1,769.6			1,806.5			1,911.2
Minority interest in subsidiary		0.3			0.3			0.2
Stockholders’ equity:
Common stock and additional paid-in capital		6,042.4			6,019.3			6,159.2
Accumulated deficit		(3,754.4	)		(3,765.8	)		(3,738.5	)
Accumulated other comprehensive income		67.6			67.6			64.3
Total stockholders’ equity		2,355.6			2,321.1			2,485.0
Total liabilities and stockholders’ equity	$	4,125.5		$	4,127.9		$	4,396.4

4

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

	Three Months Ended									Nine Months Ended
	September 28,			June 29,			September 30,			September 28,			September 30,
	2008			2008			2007			2008			2007
Revenues	$	714,308		$	692,063		$	727,415		$	2,067,118		$	1,862,769
Cost of revenues		369,137			360,492			411,866			1,086,507			1,071,143
Purchase accounting effect on inventory		—			—			—			—			47,904
Amortization of acquisition related intangibles		45,502			44,103			64,860			131,860			141,455
Stock-based compensation expense		2,252			2,572			2,824			6,885			7,916
Total cost of revenues		416,891			407,167			479,550			1,225,252			1,268,418
Gross profit		297,417			284,896			247,865			841,866			594,351
Research and development		162,958			162,546			173,375			487,398			465,460
Stock-based compensation expense		6,593			7,569			8,916			21,985			22,611
Total research and development		169,551			170,115			182,291			509,383			488,071
Selling, general and administrative		80,720			80,473			88,769			238,901			243,296
Amortization of acquisition related intangibles		15,019			14,491			5,714			42,944			12,390
Stock-based compensation expense		8,005			9,506			10,035			25,422			25,245
Total selling, general and administrative		103,744			104,470			104,518			307,267			280,931
Restructuring of operations and other items, net		1,586			20,719			101,231			26,869			119,071
Acquired in-process research and development		—			—			—			—			182,900
Income/(loss) from operations		22,536			(10,408	)		(140,175	)		(1,653	)		(476,622	)
Interest expense		(8,993	)		(8,959	)		(9,033	)		(26,930	)		(21,972	)
Interest income and other, net		8,028			8,220			11,808			30,879			33,129
Income/(loss) before income taxes		21,571			(11,147	)		(137,400	)		2,296			(465,465	)
Provision for income taxes		10,200			2,500			3,200			18,200			23,156
Net income/(loss)	$	11,371		$	(13,647	)	$	(140,600	)	$	(15,904	)	$	(488,621	)
Net income/(loss) per share:
Basic	$	0.02		$	(0.02	)	$	(0.20	)	$	(0.02	)	$	(0.78	)
Diluted	$	0.02		$	(0.02	)	$	(0.20	)	$	(0.02	)	$	(0.78	)
Shares used in computing per share amounts:
Basic		643,849			639,872			715,733			648,519			623,692
Diluted		647,418			639,872			715,733			648,519			623,692

A reconciliation of net income/(loss) on the GAAP basis to non-GAAP net income is included below.

	Three Months Ended								Nine Months Ended
	September 28,		June 29,			September 30,			September 28,			September 30,
Reconciliation of GAAP net income/(loss) to non-GAAP net income:	2008		2008			2007			2008			2007
GAAP net income/(loss)	$	11,371	$	(13,647	)	$	(140,600	)	$	(15,904	)	$	(488,621	)
Special items:
a) Stock-based compensation expense — cost of revenues		2,252		2,572			2,824			6,885			7,916
b) Stock-based compensation expense — R&D		6,593		7,569			8,916			21,985			22,611
c) Stock-based compensation expense — SG&A		8,005		9,506			10,035			25,422			25,245
d) Amortization of acquisition related intangibles — cost of revenues		45,502		44,103			64,860			131,860			141,455
e) Amortization of acquisition related intangibles — SG&A		15,019		14,491			5,714			42,944			12,390
f) Purchase accounting effect on inventory		—		—			—			—			47,904
g) Restructuring of operations and other items, net		1,586		20,719			101,231			26,869			119,071
h) Acquired in-process research and development		—		—			—			—			182,900
i) Write-down of debt and equity securities		1,673		2,827			—			4,500			2,396
j) Income tax effect		2,024		(4,751	)		(8,916	)		(2,821	)		979
Total special items		82,654		97,036			184,664			257,644			562,867
Non-GAAP net income	$	94,025	$	83,389		$	44,064		$	241,740		$	74,246
Non-GAAP net income per share:
Basic	$	0.15	$	0.13		$	0.06		$	0.37		$	0.12
Diluted*	$	0.14	$	0.13		$	0.06		$	0.37		$	0.12
Shares used in computing non-GAAP per share amounts:
Basic		643,849		639,872			715,733			648,519			623,692
Diluted		673,498		643,106			720,317			652,208			632,563

* In computing non-GAAP diluted earnings per share for the three month period ended September 28, 2008, net income was increased by $3,500 for interest, net of taxes, on the $350 million convertible notes considered dilutive common stock equivalents.

	Three Months Ended						Nine Months Ended
Reconciliation of GAAP to non-GAAP shares used in the calculation of diluted per share amounts:	September 28, 2008		June 29, 2008		September 30, 2007		September 28, 2008		September 30, 2007
Diluted shares used in per-share calculation — GAAP		647,418		639,872		715,733		648,519		623,692
Dilutive stock awards		—		3,234		4,584		3,689		8,871
Effect of $350 million convertible notes considered dilutive		26,080		—		—		—		—
Diluted shares used in per-share calculation — non-GAAP		673,498		643,106		720,317		652,208		632,563

5

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

	Three Months Ended									Nine Months Ended
	September 28,			June 29,			September 30,			September 28,			September 30,
	2008			2008			2007			2008			2007
Operating activities:
Net income/(loss)	$	11,371		$	(13,647	)	$	(140,600	)	$	(15,904	)	$	(488,621	)
Adjustments:
Depreciation and amortization *		82,327			79,290			96,545			239,945			216,720
Stock-based compensation expense		16,850			19,647			21,775			54,292			55,772
Non-cash restructuring and other items		82			46			88,155			(3,163	)		88,354
Acquired in-process research and development		—			—			—			—			182,900
Write-down of debt and equity securities		1,673			2,827			—			4,500			2,396
Loss/(gain) on sale of property and equipment, including assets held-for-sale		37			(11	)		(11	)		14			(9,513	)
Non-cash foreign exchange loss/(gain)		1,939			(7,869	)		7,109			6,988			3,221
Changes in deferred tax assets and liabilities		268			2,014			(1,327	)		4,397			(6,797	)
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combinations:
Accounts receivable, net		(41,782	)		(27,253	)		(6,167	)		5,237			143,998
Inventories		30,983			17,620			49,906			30,884			95,148
Prepaid expenses and other assets		18,784			(5,275	)		1,197			9,192			35,061
Accounts payable		(41,515	)		(11,376	)		(3,567	)		(92,323	)		(134,621	)
Accrued and other liabilities		(24,604	)		(28,762	)		(14,202	)		(64,194	)		658
Net cash provided by operating activities		56,413			27,251			98,813			179,865			184,676
Investing activities:
Purchases of debt securities available-for-sale		(51,969	)		(62,481	)		(31,851	)		(158,601	)		(154,087	)
Proceeds from maturities and sales of debt securities available-for-sale		38,516			42,299			118,897			131,719			493,029
Purchases of equity securities		(5,000	)		—			(7,500	)		(8,500	)		(10,500	)
Purchases of property, equipment and software		(27,150	)		(32,625	)		(36,272	)		(95,005	)		(76,986	)
Proceeds from sale of property and equipment		150			4,917			5			11,400			13,790
Proceeds from sale of Consumer Group		—			—			22,555			—			22,555
Cash acquired from acquisition of Agere, net of acquisition costs		—			—			—			—			517,712
Acquisitions of other companies, net of cash acquired		—			(95,137	)		—			(95,137	)		(52,079	)
Increase in non-current assets and deposits		—			(13,300	)		—			(13,300	)		—
Adjustment to goodwill acquired in a prior year for resolution of a pre-acquisition income tax contingency		—			—			—			4,821			2,442
Net cash (used in)/provided by investing activities		(45,453	)		(156,327	)		65,834			(222,603	)		755,876
Financing activities:
Issuance of common stock		6,821			29,203			7,077			36,370			28,994
Purchase of common stock under repurchase programs		—			—			(148,758	)		(229,231	)		(549,113	)
Net cash provided by/(used in) financing activities		6,821			29,203			(141,681	)		(192,861	)		(520,119	)
Effect of exchange rate changes on cash and cash equivalents		(1,932	)		(944	)		1,497			(1,060	)		1,700
Increase/(decrease) in cash and cash equivalents		15,849			(100,817	)		24,463			(236,659	)		422,133
Cash and cash equivalents at beginning of period		769,061			869,878			725,470			1,021,569			327,800
Cash and cash equivalents at end of period	$	784,910		$	769,061		$	749,933		$	784,910		$	749,933

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

6

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

	Three Months Ended
	September 28,			June 29,			September 30,
	2008			2008			2007
Semiconductor revenues	$	500.4		$	462.0		$	530.0
Storage Systems revenues	$	213.9		$	230.1		$	197.4
Total revenues	$	714.3		$	692.1		$	727.4
Percentage change in revenues-qtr./qtr. (a)		3.2	%		4.7	%		8.6	%
Percentage change in revenues-yr./yr. (b)		-1.8	%		3.3	%		47.6	%
Days sales outstanding		51			47			54
Days of inventory		45			53			41
Current ratio		3.1			2.8			3.3
Quick ratio		2.5			2.2			2.1
Gross margin as a percentage of revenues		41.6	%		41.2	%		34.1	%
R&D as a percentage of revenues		23.7	%		24.6	%		25.1	%
SG&A as a percentage of revenues		14.5	%		15.1	%		14.4	%
Employees (c)		5,356			5,378			8,302
Revenues per employee (in thousands) (d)	$	533.5		$	514.7		$	350.5
Selected Cash Flow Information:
Purchases of property and equipment (e)	$	14.1		$	14.3		$	13.4
Depreciation and amortization (f)	$	22.1		$	20.6		$	24.6

(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)	Revenues per employee is calculated by annualizing revenues for each quarter presented and dividing it by the number of employees.
(e)	Excludes purchases of software.
(f)	Represents depreciation of fixed assets and amortization of software.

7

LSI CORPORATION
Reconciliations of Non-GAAP to GAAP measures
(In thousands)
(Unaudited)

	Three Months Ended
	September 28,			September 30,
	2008			2007
Consolidated revenues	$	714,308		$	727,415
Less:
Mobility revenues		—			93,305
Consumer revenues		—			5,600
Consolidated revenues excluding Mobility & Consumer	$	714,308		$	628,510
% change in revenues-yr./yr.		14	%

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