##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
    Form 10-K
    (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    December 31, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          
    to          .   Commission File
    No. 1-10317
 LSI CORPORATION
 (Exact name of registrant as
    specified in its charter)
  DELAWARE

94-2712976(State or other jurisdiction
    of
    incorporation or organization)

(IRS Employer
    Identification No.)   1621 Barber Lane
 Milpitas, California 95035
 (Address of principal executive
    offices) (Zip Code)
  Registrants telephone number, including area code:
 (408) 433-8000
 Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.01 par value

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 NONE
  þ o
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large Accelerated
    Filer þ

Accelerated
    Filer o

Non-accelerated
    Filer o

Smaller reporting
    company o(Do not check if a smaller reporting
    company)   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 






LSI
    CorporationForm 10-K
    For the Year Ended December 31, 2009
   
 PAGEPART IItem 1.

Business

1Item 1A.

Risk Factors

11Item 1B.

Unresolved Staff Comments

18Item 2.

Properties

18Item 3.

Legal Proceedings

18Item 4.

Submission of Matters to a Vote of Security
    Holders

18Executive Officers of LSI

18PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities

20Item 6.

Selected Financial Data

21Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations

22Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk

40Item 8.

Financial Statements and Supplementary Data

42Item 9.

Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure

100Item 9A.

Controls and Procedures

100Item 9B.

Other Information

100PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance

100Item 11.

Executive Compensation

101Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters

101Item 13.

Certain Relationships and Related Transactions,
    and Director Independence

101Item 14.

Principal Accounting Fees and Services

101PART IVItem 15.

Exhibits and Financial Statement Schedules

102SIGNATURES

103EXHIBIT INDEXEX-10.6.2EX-10.6.4EX-10.6.5EX-10.6.6EX-10.12EX-21EX-23EX-24EX-31.1EX-31.2EX-32.1EX-32.2    FORWARD-LOOKING
    STATEMENTS
  Form 10-K Item 1A-Risk




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##### Table of Contents



PART I  Item 1.
    Business  General
  silicon-to-system
      
    merging with Agere Systems to strengthen our position in storage
    and networking semiconductors;
    selling our consumer and mobile handset chipset businesses,
    where we felt the company did not have the scale to be a strong
    competitor;
    engaging in several strategic acquisitions, such as the
    acquisition in 2007 of Tarari, Inc., a provider of content
    processors, the acquisition in 2008 of the assets of
    Infineons hard disk drive semiconductor business, and the
    acquisition in 2009 of the
    3ware®

    RAID server adapter assets and of ONStor, Inc., a provider of
    network attached storage solutions; and
    selling our manufacturing operations so that we could avoid the
    associated capital costs and focus our efforts on product
    development.    Segment
    Information
         1




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Company
    Information
    www.lsi.com. Form 10-K, Form 10-Q, Form 8-K (800) 732-0330.
  Products
  SEMICONDUCTOR
    SEGMENT
  Storage
    Products
  Hard Disk, Solid State and Tape Drive
    Electronics. back-up
  ® systems-on-a-chip, pre-amplifiers,
  system-on-a-chip, pre-amplifiers,
  Storage Interface Products.
  
    Storage Standard Products.  Our product line
    includes SAS, SATA and
    RAID-On-Chip,
    or RoC, integrated circuits combined with our
    Fusion-MPTtm

    firmware and drivers to form intelligent storage interface
    solutions primarily for server and storage system motherboard
    applications. Additionally, our product line 2




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includes SCSI, SAS and SATA bus expander integrated circuits,
    Fibre Channel integrated circuits, SAS switches, and disk drive
    bridging or interposer circuits used primarily in storage
    systems. We sell our integrated circuit solutions both in an
    integrated circuit plus software form or as a complete solution
    including the host bus adapter board itself.  
    Storage Custom Solutions.  We also offer custom
    solutions to customers who develop Fibre Channel and Fibre
    Channel over Ethernet storage area network, or SAN, switches and
    host bus adapters, storage systems, hard disk drives and tape
    peripherals. By leveraging our extensive experience in providing
    solutions for these applications, we have developed a full
    portfolio of high-speed interface intellectual property that is
    combined with our customers intellectual property to form
    custom solutions that provide a connection to the network, the
    SAN, memory systems and host buses. Using these pre-verified
    interfaces, our customers can reduce development risk and
    achieve quicker time to market. Our intellectual property
    offerings include high performance SerDes cores supporting Fibre
    Channel, SAS, SATA, 10-Gigabit Ethernet, Gigabit Ethernet,
    Infiniband, SAS, Serial RapidIO and PCI-Express industry
    standards and a family of high-performance Fibre Channel,
    Ethernet, RapidIO, PCI-E, SAS and SATA protocol controllers.  Networking
    Products
      small-to-medium
    Custom
    Networking Products
    Network
    Processors and Communication Processors
   3




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##### Table of Contents



Digital
    Signal Processors
  Voice-over-IP,
  Content
    Inspection Processors
  ®
  Multi-Service
    Processors
    Broadband Aggregation Devices.
  E-carrier point-to-point
  SONET/SDH Network Devices.
  Personal
    Connectivity Solutions
   4




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##### Table of Contents



point-of-sale
    STORAGE
    SYSTEMS SEGMENT
  sub-assemblies
  External Storage Systems sub-assemblies
    Internal Storage Products. ® RAID-on-motherboard
  Value Added Storage Software. tm
  e-commerce,
 5




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Marketing
    and Distribution
  Semiconductor
    Marketing and Distribution
      Storage
    Systems Marketing and Distribution
      go-to-market
  Customers
   6




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Manufacturing
  Semiconductor
    Manufacturing
          Storage
    Systems Manufacturing
    sub-assemblies build-to-order, configure-to-order,
   7




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Backlog
  Semiconductor
    Backlog
    Storage
    Systems Backlog
    Competition
  Semiconductor
    Competitors
        
    design capabilities;
    differentiating product features;
    product performance characteristics;
    time to market;
    price;
    breadth of product line;
    customer support;
    logistics and planning systems; and
    utilization of emerging industry standards.   8




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##### Table of Contents



Storage
    Systems Competitors
      
    features and functionality;
    product performance and price;
    reliability, scalability and data availability;
    interoperability with other server, storage networking and
    storage system platforms;
    interoperability with industry applications, including database,
    email and internet content delivery systems;
    support for emerging industry and customer standards;
    levels of training, marketing and customer support;
    level of easily customizable features;
    quality and availability of supporting software;
    quality of system integration; and
    technical services and support.    Patents,
    Trademarks and Licenses
   9




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##### Table of Contents




    Integrated circuit and optoelectronic manufacturing processes;
    A number of technologies related to storage systems;
    Consumer electronics products such as digital cameras, digital
    audio players, DVD players, digital televisions and personal
    computers;
    Modems, digital signal processors, wireless communications,
    network processors and communication protocols; and
    Optoelectronic products including lasers, optical modulators,
    optical receivers and optical amplifiers.          Research
    and Development
    Working
    Capital
    Environmental
    Regulation
     10




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
    the need for additional capital or other material improvements
    to comply with such regulations;
    liability to our employees
    and/or third
    parties; and/or
    business interruptions as a consequence of environmental permit
    suspensions or revocations, the granting of injunctions
    requested by governmental agencies or private parties, or the
    unintentional presence of restricted substances in our products.  Employees
      Seasonality
    Item 1A.
    Risk
    Factors    We
    depend on a small number of customers. The loss of, or a
    significant reduction in revenue from, any of these customers
    would harm our results of operations.
      If we
    fail to keep pace with technological advances, or if we pursue
    technologies that do not become commercially accepted, customers
    may not buy our products and our results of operations may be
    harmed.
   11




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We
    operate in intensely competitive markets, and our failure to
    compete effectively would harm our results of
    operations.
      Customer
    orders and ordering patterns can change quickly, making it
    difficult for us to predict our revenues and making it possible
    that our actual revenues may vary materially from our
    expectations, which could harm our results of operations and
    stock price.
   12




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A
    prolonged economic downturn could have a material negative
    impact on our results of operations and financial
    condition.
          We
    depend on outside suppliers to manufacture, assemble, package
    and test our products; accordingly, any failure to secure and
    maintain sufficient manufacturing capacity or to maintain the
    quality of our products could harm our business and results of
    operations.
    
    a supplier may be unwilling to devote adequate capacity to the
    production of our products or may be unable to produce our
    products;
    a supplier may fail to develop, or may discontinue,
    manufacturing methods or technologies appropriate for our
    products;
    manufacturing costs may be higher than planned;
    product reliability may decline;
    a manufacturer may not be able to maintain continuing
    relationships with its suppliers; and
    we may have reduced control over delivery schedules, quality,
    manufacturing yields and costs of products.   13




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##### Table of Contents



Failure
    to qualify our semiconductor products or our suppliers
    manufacturing lines with key customers could harm our business
    and results of operations.
    Any
    defects in our products could harm our reputation, customer
    relationships and results of operations.
    
    cancellation of orders;
    product returns, repairs or replacements;
    diversion of our resources;
    legal actions by customers or customers end users;
    increased insurance costs; and
    other losses to us or to customers or end users.    We may
    be subject to intellectual property infringement claims and
    litigation, which could cause us to incur significant expenses
    or prevent us from selling our products.
   14




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##### Table of Contents



If we
    are unable to protect or assert our intellectual property
    rights, our business and results of operations may be
    harmed.
        We are
    exposed to legal, business, political and economic risks
    associated with our international operations.
    
    political, social and economic instability;
    fluctuations in foreign currency exchange rates;
    exposure to different legal standards, particularly with respect
    to intellectual property;
    natural disasters, civil unrest, terrorism and public health
    emergencies;
    nationalization of businesses and blocking of cash flows;
    trade and travel restrictions;
    imposition of governmental controls and restrictions;
    burdens of complying with a variety of foreign laws;
    import and export license requirements and restrictions;
    unexpected changes in regulatory requirements;
    foreign technical standards;
    difficulties in staffing and managing international operations;
    international trade disputes; 15




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##### Table of Contents




    difficulties in collecting receivables from foreign entities or
    delayed revenue recognition; and
    potentially adverse tax consequences, including adverse impacts
    from changes in United States tax laws.  We use
    indirect channels of product distribution over which we have
    limited control.
    We may
    engage in acquisitions and strategic alliances, which may not be
    successful and could harm our business and operating
    results.
    The
    semiconductor industry is highly cyclical, which may cause our
    operating results to fluctuate.
    Our
    failure to attract, retain and motivate key employees could harm
    our business.
    Our
    operations and our suppliers operations are subject to
    natural disasters and other events outside of our control that
    may disrupt our business and harm our operating
    results.
   16




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We are
    subject to various environmental laws and regulations that could
    impose substantial costs on us and may harm our
    business.
    Our
    blank check preferred stock and Delaware law contain provisions
    that may inhibit potential acquisition bids, which may harm our
    stock price, discourage merger offers or prevent changes in our
    management.
    Class
    action litigation due to stock price volatility or other factors
    could cause us to incur substantial costs and divert our
    managements attention and resources.
   17




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##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties            Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   Executive
    Officers of LSI    Name

Age

PositionAbhijit Y. Talwalkar


45


President and Chief Executive OfficerPhilip W. Bullinger


45


Executive Vice President and General Manager, Engenio Storage
    GroupBryon Look


56


Executive Vice President, Chief Financial Officer and Chief
    Administrative OfficerJean F. Rankin


51


Executive Vice President, General Counsel and SecretaryD. Jeffrey Richardson


45


Executive Vice President and General Manager, Semiconductor
    Solutions Group      18




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21-year
       19




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##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities      2009


2008High


Low


High


LowFirst Quarter

$
3.93


$
2.39


$
5.57


$
3.79Second Quarter

$
5.20


$
3.29


$
7.53


$
4.73Third Quarter

$
5.78


$
4.35


$
7.87


$
5.12Fourth Quarter

$
6.14


$
4.88


$
5.70


$
2.36       PERFORMANCE
    GRAPH
    
 Dec 31, 2004


Dec 31, 2005


Dec 31, 2006


Dec 31, 2007


Dec 31, 2008


Dec 31, 2009LSI Corporation

$
100


$
145.99


$
164.23


$
96.90


$
60.04


$
109.67S&P 500 Index

$
100


$
104.91


$
121.48


$
128.16


$
80.74


$
102.11S&P 500 Semiconductors Index

$
100


$
112.16


$
102.16


$
114.40


$
62.07


$
99.93  20




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Five-Year
    Consolidated Summary
  Year Ended December 31,2009


2008


2007


2006


2005(In thousands, except per share amounts)Revenues

$
2,219,159


$
2,677,077


$
2,603,643


$
1,982,148


$
1,919,250Cost of revenues


1,375,758



1,608,108



1,699,785



1,158,983



1,150,042Gross profit


843,401



1,068,969



903,858



823,165



769,208Research and development


608,312



672,511



655,224



413,432



399,685Selling, general and administrative


326,014



406,875



381,409



255,569



238,265Restructuring of operations and other items, net


38,246



43,717



148,121



(8,427
)


119,052Goodwill and identified intangible asset impairment charges






541,586



2,021,463







Acquired in-process research and development










188,872



4,284



(Loss)/income from operations


(129,171
)


(595,720
)


(2,491,231
)


158,307



12,206Interest expense


(21,931
)


(34,943
)


(31,020
)


(24,263
)


(25,283
)Interest income and other, net


20,272



36,110



46,758



51,276



33,994(Loss)/income before income taxes


(130,830
)


(594,553
)


(2,475,493
)


185,320



20,917(Benefit)/provision for income taxes


(83,111
)


27,700



11,326



15,682



26,540Net (loss)/income

$
(47,719
)

$
(622,253
)

$
(2,486,819
)

$
169,638


$
(5,623
)Basic net (loss)/income per share

$
(0.07
)

$
(0.96
)

$
(3.87
)

$
0.43


$
(0.01
)Diluted net (loss)/income per share

$
(0.07
)

$
(0.96
)

$
(3.87
)

$
0.42


$
(0.01
)Year-end status:Total assets

$
2,967,930


$
3,344,194


$
4,396,390


$
2,852,144


$
2,796,066Long-term obligations

$
652,441


$
1,105,739


$
1,148,689


$
429,400


$
699,050Stockholders equity

$
1,461,104


$
1,440,922


$
2,484,996


$
1,895,738


$
1,627,950            21




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Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  This managements discussion and analysis should be read
    in conjunction with the other sections of this
    Form 10-K,
    including Part 1, Item 1: Business;
    Part II, Item 1A: Risk Factors;
    Part II, Item 6: Selected Financial Data;
    and Part II, Item 8: Financial Statements and
    Supplementary Data.
    OVERVIEW
  silicon-to-system
               22




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##### Table of Contents



RESULTS
    OF OPERATIONS
  Revenues
    Year Ended December 31,2009


2008


2007(In millions)Semiconductor segment

$
1,421.5


$
1,795.1


$
1,778.9Storage Systems segment


797.7



882.0



824.7Consolidated

$
2,219.2


$
2,677.1


$
2,603.6   2009
    compared to 2008:
    Semiconductor
    Segment:
    Storage
    Systems Segment:
    2008
    compared to 2007:
   23




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##### Table of Contents



Semiconductor
    Segment:
    
    Increased demand for semiconductors used in storage and
    networking product applications, primarily as a result of having
    a full year of revenues from the Agere Systems business, which
    we acquired in 2007; and
    Revenues from the HDD semiconductor business acquired from
    Infineon in April 2008.    Storage
    Systems Segment:
    Significant
    Customers:
    Year Ended December 31,2009


2008


2007Semiconductor segment:Number of significant customers


1



1



2Percentage of segment revenues


24%



26%



28%, 12%Storage Systems segment:Number of significant customers


2



3



3Percentage of segment revenues


48%, 13%



46%, 14%, 11%



47%, 16%, 11%Consolidated:Number of significant customers


2



2



2Percentage of consolidated revenues


19%, 16%



17%, 16%



19%, 15%   Revenues
    by Geography
    Year Ended December 31,2009


2008


2007(In millions)North America*

$
519.2


$
737.2


$
858.7Asia**


1,126.0



1,359.8



1,401.3Europe and the Middle East


574.0



580.1



343.6Total

$
2,219.2


$
2,677.1


$
2,603.6     *
    
    Primarily the United States.**
    
    Including Japan. 24




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##### Table of Contents



2009
    compared to 2008:
    2008
    compared to 2007:
    Gross
    Profit Margin
    Year Ended December 31,2009


2008


2007(Dollars in millions)Semiconductor segment

$
564.1


$
736.9


$
603.7Percentage of Semiconductor segment revenues


39.7
%


41.1
%


33.9
%Storage Systems segment

$
279.3


$
332.1


$
300.2Percentage of Storage Systems segment revenues


35.0
%


37.7
%


36.4
%Consolidated

$
843.4


$
1,069.0


$
903.9Percentage of total revenues


38.0
%


39.9
%


34.7
%   2009
    compared to 2008:
    Semiconductor
    Segment:
    Storage
    Systems Segment:
   25




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2008
    compared to 2007:
    Semiconductor
    Segment:
    
    Increased sales of products with higher gross profit margins in
    2008;
    An inventory charge of $47.9 million recorded in the second
    quarter of 2007 related to fair valuing the inventory in the
    acquisition of Agere;
    A decrease in inventory provisions from 2007 to 2008, primarily
    as a result of improvements in supply chain management; and
    $19.0 million in charges recorded in 2007 for a wafer
    supply agreement with ON Semiconductor resulting from a decline
    in demand.  Storage
    Systems Segment:
    Research
    and Development
    Year Ended December 31,2009


2008


2007(Dollars in millions)Semiconductor segment

$
475.3


$
534.0


$
525.4Percentage of Semiconductor segment revenues


33.4
%


29.7
%


29.5
%Storage Systems segment

$
133.0


$
138.5


$
129.8Percentage of Storage Systems segment revenues


16.7
%


15.7
%


15.7
%Consolidated

$
608.3


$
672.5


$
655.2Percentage of total revenues


27.4
%


25.1
%


25.2
%   2009
    compared to 2008:
    Semiconductor
    Segment:
     26




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##### Table of Contents



Storage
    Systems Segment:
      2008
    compared to 2007:
    Semiconductor
    Segment:
    Storage
    Systems Segment:
    Selling,
    General and Administrative
    Year Ended December 31,2009


2008


2007(Dollars in millions)Semiconductor segment

$
212.7


$
278.6


$
264.1Percentage of Semiconductor segment revenues


15.0
%


15.5
%


14.8
%Storage Systems segment

$
113.3


$
128.3


$
117.3Percentage of Storage Systems segment revenues


14.2
%


14.5
%


14.2
%Consolidated

$
326.0


$
406.9


$
381.4Percentage of total revenues


14.7
%


15.2
%


14.6
%   2009
    compared to 2008:
   27




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##### Table of Contents



Semiconductor
    Segment:
    Storage
    Systems Segment:
    2008
    compared to 2007:
    Semiconductor
    Segment:
    Storage
    Systems Segment:
    Restructuring
    of Operations and Other Items
         28




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Goodwill
    and Identified Intangible Asset Impairment Charges
    Acquired
    In-Process Research and Development
  cost-of-capital
   29




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Estimated Cost





Revenue ProjectionsCompany

Acquisition Date

Projects

IPR&D


to Complete


Discount Rate


Extend Through(Dollars in millions)Tarari

October 3, 2007

Content Inspection-Abraxas-5 Gbps;

$
6.0


$
2.9



22.7
%


2013Abraxas-10Gbps; ElectraAgere

April 2, 2007

Storage  read channel and preamps;

$
176.4


$
85.8
*


13.8
%


2021Mobility  HSPDA for 3G;Networking  modems, Firewire, serdes, media gateway,
    VoIP, network processors, Ethernet, mappers and framersSiliconStor

March 13, 2007

Storage  SATA/SAS multiplexers

$
6.5


$
4.4



27.0
%


2017     *
    
    This amount excludes estimated costs to complete the
    Mobility-HSPDA for 3G project because we sold the Mobility
    Products Group to Infineon Technologies in the fourth quarter of
    2007.    Interest
    (Expense) or Income and Other, net
    Year Ended December 31,2009


2008


2007(In millions)Interest expense

$
(21.9
)

$
(34.9
)

$
(31.0
)Interest income


20.6



46.2



58.6Other expense, net


(0.3
)


(10.1
)


(11.8
)Total

$
(1.6
)

$
1.2


$
15.8   Interest
    Expense:
      Interest
    Income and Other, net:
     30




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##### Table of Contents



available-for-sale
  Provision
    for Income Taxes
  non-U.S. net non-U.S. jurisdictions
  non-U.S. net non-U.S. jurisdictions.
  non-U.S. net
    FINANCIAL
    CONDITION, CAPITAL RESOURCES AND LIQUIDITY
    Working
    Capital
    
    Cash, cash equivalents and short-term investments decreased by
    $157.0 million;
    Current portion of long-term debt increased by
    $104.9 million because of the reclassification of
    $350.0 million of 4% Convertible Subordinated Notes
    due in May 2010 from long-term debt to the current portion of
    long-term debt, offset in part by the redemption of
    $243.0 million principal amount of 6.5% Convertible
    Subordinated Notes during 2009;
    Inventories decreased by $51.2 million primarily as a
    result of reduced inventory purchases to reflect the reduction
    in revenues from the global economic downturn and also as a
    direct result of our continued focus on supply chain management;
    Prepaid expenses and other current assets decreased by
    $40.7 million primarily due to decreases in prepaid taxes
    and prepaid software maintenance; and 31




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##### Table of Contents




    Accounts payable increased by $12.0 million primarily as a
    result of the normal timing of invoice receipts and payments.    
    Accrued salaries, wages and benefits decreased by
    $37.4 million primarily as a result of the absence of
    performance-based compensation accruals;
    Accounts receivable increased by $35.0 million primarily as
    a result of higher revenues in the fourth quarter of 2009
    compared to the same quarter of 2008; and
    Other accrued liabilities decreased by $22.6 million
    primarily attributable to a reversal in tax liabilities because
    of settlements of multi-year tax audits in foreign
    jurisdictions, utilization of restructuring reserves and a
    decrease in liabilities with third-party manufacturers.    
    Cash, cash equivalents and short-term investments decreased by
    $278.5 million;
    The current portion of our long-term debt increased by
    $245.1 million because of the reclassification of our
    6.5% Convertible Subordinated Notes due in December 2009
    from long-term debt to the current portion of long-term debt;
    Accounts receivable decreased by $102.4 million as a result
    of lower revenues in the fourth quarter of 2008 compared to the
    same period in 2007; and
    Inventories declined by $20.3 million primarily as the
    result of a shift to progress billing for one of our customers
    and a reduction in buffer stocks established to facilitate our
    transition to contract manufacturers, offset in part by
    inventories sold to customers later than expected.    
    Accounts payable decreased by $128.4 million primarily
    attributable to a reduction in purchases as a result of the
    global economic downturn and the timing of invoice receipts and
    payments;
    Other accrued liabilities decreased by $77.4 million
    primarily as a result of the utilization of restructuring
    reserves, decreases in the retiree medical liability, income
    taxes payable and liabilities with third-party manufacturers,
    partially offset by an increase in tax reserves;
    Prepaid expenses and other current assets increased by
    $8.1 million primarily attributable to an increase in
    deferred tax assets, prepaid taxes, and software additions, net
    of amortization, offset in part by decreases in assets held for
    sale and a reduction in notes receivables; and
    Accrued salaries, wages and benefits decreased by
    $4.2 million primarily attributable to timing of payments
    offset in part by the establishment of a sabbatical reserve.  Cash
    Provided by Operating Activities
    
    A net loss offset by positive non-cash adjustments, including
    depreciation, amortization and stock-based compensation expense.
    The non-cash items and other non-operating adjustments are
    quantified in our consolidated statements of cash flows included
    in Item 8; and
    A net decrease of $86.2 million in assets and liabilities,
    including changes in working capital components from
    December 31, 2008 to December 31, 2009, as discussed
    above. 32




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##### Table of Contents




    A net loss offset by positive non-cash adjustments, including
    goodwill and other intangible impairment charges and
    depreciation and amortization. The non-cash items and other
    non-operating adjustments are quantified in our consolidated
    statements of cash flows included in Item 8; and
    A net decrease of $81.0 million in assets and liabilities,
    including changes in working capital components from
    December 31, 2007 to December 31, 2008, as discussed
    above.  Cash Used
    in Investing Activities
    
    Purchases of property, equipment and software, net of sales;
    Proceeds from maturities and sales of
    available-for-sale
    debt securities and equity securities, net of purchases;
    Acquisition of businesses and companies, net of cash acquired;
    A decrease in non-current assets and deposits; and
    Proceeds from maturity of notes receivable associated with sale
    of our assembly and test operations in Thailand.    
    Proceeds from maturities and sales of
    available-for-sale
    debt securities and equity securities, net of purchases;
    Purchases of property, equipment and software, net of sales;
    Acquisition of businesses, net of cash acquired;
    Proceeds from maturity of notes receivable associated with sale
    of our assembly and test operations in Thailand; and
    An increase in non-current assets and deposits.    Cash Used
    in Financing Activities
     33




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##### Table of Contents



CONTRACTUAL
    OBLIGATIONS
    Payments Due by PeriodLess Than 1 Year


1-3 Years


4-5 Years


After 5 Years


Other


Total(In millions)Convertible subordinated notes

$
350.0


$



$



$



$



$
350.0Interest payments on convertible subordinated notes


7.0



















7.0Operating lease obligations


71.9



49.9



13.6



1.3







136.7Purchase commitments


408.4



151.2















559.6Unrecognized tax positions plus interest and penalties


11.2















103.0
**


114.2Pension contributions


31.0 to 37.0



*



*



*



*



31.0 to 37.0Total

$
879.5 to 885.5


$
201.1


$
13.6


$
1.3


$
103.0


$
1,198.5 to 1,204.5     *
    
    We have pension plans covering substantially all former Agere
    U.S. employees, excluding management employees hired after
    June 30, 2003. We also have pension plans covering certain
    international employees. Although additional future
    contributions will be required, the amount and timing of these
    contributions will be affected by actuarial assumptions, the
    actual rate of return on plan assets, the level of market
    interest rates, and the amount of voluntary contributions to the
    plans. The amount shown in the table represents our planned
    contributions to our pension plans within a year. Because any
    contributions for 2011 and later will depend on the value of the
    plan assets in the future and thus are uncertain, we have not
    included any amounts for 2011 and beyond in the above table.
    Effective April 6, 2009, we froze the U.S. defined benefit
    pension plans, which cover active participants who joined us
    from Agere. As of December 31, 2009, our projected pension
    benefit obligation exceeded the fair value of our plan assets by
    $455.0 million. See Note 5 to our consolidated
    financial statements in Item 8.**
    
    Represents the non-current tax payable obligation. We are unable
    to make a reasonably reliable estimate as to when cash
    settlement with a taxing authority may occur.  Convertible
    Subordinated Notes
   34




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##### Table of Contents



Operating
    Lease Obligations
    Purchase
    Commitments
    Uncertain
    Tax Positions
    Standby
    Letters of Credit
    CRITICAL
    ACCOUNTING ESTIMATES
     35




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##### Table of Contents



Stock-Based
    Compensation
    Stock
    Options:
            Employee
    Stock Purchase Plan:
    Inventory
    Valuation Methodology
  first-in,
   36




---



##### Table of Contents



Valuation
    of Long-Lived Assets, Intangible Assets and Goodwill
      cost-of-capital
     37




---



##### Table of Contents



Restructuring
    Reserves
    Income
    Taxes
        Retirement
    Benefits
       38




---



##### Table of Contents



Fair
    Value Measurements
          Other
    Than Temporary Impairment
     39




---



##### Table of Contents



RECENT
    ACCOUNTING PRONOUNCEMENTS
    Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk  Interest
    Rate Sensitivity
    cost-of-capital,
  Foreign
    Currency Exchange Risk
      Equity
    Price Risk
  available-for-sale
  available-for-sale available-for-sale
 40




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##### Table of Contents



Credit
    and Market Liquidity Risks
  available-for-sale
  available-for-sale
      available-for-sale
 41




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  LSI
    Corporation
 Consolidated Balance Sheets

(In thousands, except per share amounts)  December 31,2009


2008ASSETSCash and cash equivalents

$
778,291


$
829,301Short-term investments


183,781



289,841Accounts receivable, less allowances of $9,902 and $9,627,
    respectively


338,961



303,971Inventories


169,335



220,535Prepaid expenses and other current assets


115,084



155,814Total current assets


1,585,452



1,799,462Property and equipment, net


218,972



235,963Identified intangible assets, net


739,244



889,995Goodwill


188,698



175,624Other assets


235,564



243,150Total assets

$
2,967,930


$
3,344,194LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable

$
213,008


$
201,035Accrued salaries, wages and benefits


77,281



114,730Other accrued liabilities


214,096



236,661Current portion of long-term debt


350,000



245,107Total current liabilities


854,385



797,533Long-term debt, net of current portion






350,000Pension, post-retirement and other benefits


455,134



451,079Income taxes payable  non-current


103,047



193,590Other non-current liabilities


94,260



111,070Total long-term obligations and other liabilities


652,441



1,105,739Commitments and contingencies (Note 14)Stockholders equity:Preferred shares; $.01 par value; 2,000 shares
    authorized; none outstanding






Common stock; $.01 par value; 1,300,000 shares
    authorized; 656,484 and 648,132 shares outstanding,
    respectively


6,565



6,481Additional paid-in capital


6,142,674



6,058,786Accumulated deficit


(4,408,494
)


(4,360,775
)Accumulated other comprehensive loss


(279,641
)


(263,570
)Total stockholders equity


1,461,104



1,440,922Total liabilities and stockholders equity

$
2,967,930


$
3,344,194    42




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##### Table of Contents



LSI
    Corporation
  Consolidated Statements of Operations
 (In thousands, except per share amounts)
  Year Ended December 31,2009


2008


2007Revenues

$
2,219,159


$
2,677,077


$
2,603,643Cost of revenues


1,375,758



1,608,108



1,699,785Gross profit


843,401



1,068,969



903,858Research and development


608,312



672,511



655,224Selling, general and administrative


326,014



406,875



381,409Restructuring of operations and other items, net


38,246



43,717



148,121Goodwill and identified intangible asset impairment charges






541,586



2,021,463Acquired in-process research and development










188,872Loss from operations


(129,171
)


(595,720
)


(2,491,231
)Interest expense


(21,931
)


(34,943
)


(31,020
)Interest income and other, net


20,272



36,110



46,758Loss before income taxes


(130,830
)


(594,553
)


(2,475,493
)(Benefit)/provision for income taxes


(83,111
)


27,700



11,326Net loss

$
(47,719
)

$
(622,253
)

$
(2,486,819
)Net loss per share:Basic

$
(0.07
)

$
(0.96
)

$
(3.87
)Diluted

$
(0.07
)

$
(0.96
)

$
(3.87
)Shares used in computing per share amounts:Basic


651,238



647,953



641,823Diluted


651,238



647,953



641,823    43




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##### Table of Contents



LSI
    Corporation
  Consolidated Statements of Stockholders
    Equity
 (In thousands)
  AccumulatedAdditional





OtherCommon Stock


Paid-in


Accumulated


ComprehensiveShares


Amount


Capital


Deficit


Income/(Loss)


TotalBalances at December 31, 2006


403,680


$
4,037


$
3,102,178


$
(1,220,306
)

$
9,829


$
1,895,738Net loss














(2,486,819
)Cumulative effect adjustment to accumulated deficit with respect
    to the adoption of FASB guidance on uncertain tax positions














(27,193
)Adoption of FASB guidance on sabbatical leave














(4,204
)Foreign currency translation adjustments


















6,982Net unrealized gain on
    available-for-sale
    securities, net of tax $197


















5,682Actuarial gain on pension and post-retirement plans, net of tax
    $26,122


















41,798Total comprehensive loss






















(2,463,754
)Issuance of common stock in connection with Agere merger


368,002



3,680



3,641,384











3,645,064Agere restricted stock units & options vested as of
    acquisition date










50,158











50,158Repurchase of shares


(102,642
)


(1,026
)


(769,726
)










(770,752
)Issuance to employees under stock option and purchase plans


7,176



71



46,238











46,309Issuance of common stock pursuant to restricted stock awards, net


4,379



44



(11,869
)










(11,825
)Stock-based compensation related to employee stock options










47,127











47,127Stock-based compensation related to employee stock purchase plan










11,757











11,757Stock-based compensation related to restricted shares










35,174











35,174Balances at December 31, 2007


680,595



6,806



6,152,421



(3,738,522
)


64,291



2,484,996Net loss














(622,253
)Foreign currency translation adjustments


















20,824Net unrealized gain on
    available-for-sale
    securities, net of tax $1,288


















852Net unrealized loss on cash-flow hedges, net of tax $0


















(905
)Actuarial loss on pension and post-retirement plans, net of tax
    $0


















(357,957
)Amortization of prior service cost and net actuarial loss
    included in net periodic benefit credit


















9,325Total comprehensive loss






















(950,114
)Repurchase of shares


(44,611
)


(446
)


(228,978
)










(229,424
)Issuance to employees under stock option and purchase plans


9,403



94



42,834











42,928Issuance of common stock pursuant to restricted stock awards, net


2,745



27



(6,022
)










(5,995
)Stock-based compensation related to employee stock options










55,037











55,037Stock-based compensation related to employee stock purchase plan










8,473











8,473Stock-based compensation related to restricted shares










35,021











35,021Balances at December 31, 2008


648,132



6,481



6,058,786



(4,360,775
)


(263,570
)


1,440,922Net loss














(47,719
)Foreign currency translation adjustments


















5,273Net unrealized gain on
    available-for-sale
    securities, net of tax $1,957


















3,248Net unrealized gain on cash-flow hedges, net of tax $467


















775Actuarial loss on pension and post-retirement plans, net of tax
    $717


















(23,828
)Amortization of prior service cost and net actuarial loss
    included in net periodic benefit credit


















(1,539
)Total comprehensive loss






















(63,790
)Issuance to employees under stock option and purchase plans


6,139



62



18,685











18,747Issuance of common stock pursuant to restricted stock awards, net


2,213



22



(4,857
)










(4,835
)Stock-based compensation related to employee stock options










39,988











39,988Stock-based compensation related to employee stock purchase plan










8,394











8,394Stock-based compensation related to restricted shares










21,678











21,678Balances at December 31, 2009


656,484


$
6,565


$
6,142,674


$
(4,408,494
)

$
(279,641
)

$
1,461,104    44




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##### Table of Contents



LSI
    Corporation
  Consolidated Statements of Cash Flows
 (In thousands)
  Year Ended December 31,2009


2008


2007Operating activities:Net loss

$
(47,719
)

$
(622,253
)

$
(2,486,819
)Adjustments:Depreciation and amortization


268,162



324,223



278,542Stock-based compensation expense


63,983



72,283



77,267Non-cash restructuring of operations and other items, net


690



(4,215
)


98,909Goodwill and identified intangible assets impairment charges






541,586



2,021,463Acquired in-process research and development










188,872Gain on redemption/repurchase of convertible subordinated notes


(149
)


(3,178
)


Write-down of debt and equity securities, net of gain on sale of
    equity securities


1,529



15,273



2,396Gain on sale of property and equipment, including assets
    held-for-sale


(145
)


(123
)


(9,399
)Unrealized foreign exchange loss


1,301



25,469



4,207Deferred taxes


3,063



10,027



(3,619
)Changes in assets and liabilities, net of assets acquired and
    liabilities assumed in business combinations:Accounts receivable, net


(34,986
)


102,386



174,962Inventories


64,592



20,307



74,708Prepaid expenses and other assets


68,469



52,024



21,557Accounts payable


8,420



(130,129
)


(39,162
)Accrued and other liabilities


(192,736
)


(125,628
)


(108,885
)Net cash provided by operating activities


204,474



278,052



294,999Investing activities:Purchase of debt securities
    available-for-sale


(10
)


(190,548
)


(303,407
)Proceeds from maturities and sales of debt securities
    available-for-sale


90,572



240,157



616,224Purchases of equity securities


(14,159
)


(8,500
)


(10,500
)Proceeds from sale of equity securities


165







Purchases of property, equipment and software


(90,004
)


(134,589
)


(102,823
)Proceeds from sale of property and equipment


2,773



13,674



16,166Cash acquired from acquisition of Agere, net of acquisition costs










517,712Acquisitions of other businesses and companies, net of cash
    acquired


(46,981
)


(95,137
)


(132,830
)Proceeds from sale of Consumer Products Group










22,555Proceeds from sale of Mobility Products Group, net of
    transaction costs










445,500Proceeds from sale of semiconductor operations in Thailand, net
    of transaction costs










49,600Proceeds from maturity of notes receivable associated with sale
    of semiconductor operations in Thailand


10,000



20,000



Decrease/(increase) in non-current assets and deposits


13,501



(13,300
)


Proceeds received from the resolution of a pre-acquisition
    income tax contingency






4,821



3,230Net cash (used in)/provided by investing activities


(34,143
)


(163,422
)


1,121,427Financing activities:Redemption/repurchase of convertible subordinated notes


(244,047
)


(116,636
)


Issuances of common stock


18,747



42,928



46,280Purchase of minority interest in subsidiary






(70
)


Purchase of common stock under repurchase programs






(229,231
)


(770,752
)Net cash used in financing activities


(225,300
)


(303,009
)


(724,472
)Effect of exchange rate changes on cash and cash equivalents


3,959



(3,889
)


1,815(Decrease)/increase in cash and cash equivalents


(51,010
)


(192,268
)


693,769Cash and cash equivalents at beginning of year


829,301



1,021,569



327,800Cash and cash equivalents at end of year

$
778,291


$
829,301


$
1,021,569    45




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##### Table of Contents



LSI
    CorporationNotes to Consolidated Financial Statements
  Note 1 
    Significant
    Accounting Policies  Nature of the Business: silicon-to-system
          Basis of Presentation:
      Use of Estimates:
  Acquisitions:
 46




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##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    Revenue Recognition:
  more-than-incidental and/or
  Income/(Loss) per Share:
   Year Ended December 31,2009


2008


2007Per-Share








Per-Share








Per-ShareLoss*


Shares+


Amount


Loss*


Shares+


Amount


Loss*


Shares+


Amount(In thousands except per share amounts)Basic:Net loss available to common stockholders

$
(47,719
)


651,238


$
(0.07
)

$
(622,253
)


647,953


$
(0.96
)

$
(2,486,819
)


641,823


$
(3.87
)Stock options, employee stock purchase rights and restricted
    stock unit awards


































Diluted:Net loss available to common stockholders

$
(47,719
)


651,238


$
(0.07
)

$
(622,253
)


647,953


$
(0.96
)

$
(2,486,819
)


641,823


$
(3.87
)     *
    
    Numerator  +
    
    Denominator 47




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##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
       Stock-Based Compensation Expense:
  Sales and Value-Added Taxes:
  Cash Equivalents:
  Accounts Receivable and Allowance for Doubtful Accounts:
  Investments: Available-for-sale
   48




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##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    Inventories: first-in, work-in-process
  Property and Equipment:
  Buildings and improvements


20-40 yearsEquipment


3-5 yearsFurniture and fixtures


5 years     Software: and/or
  Impairment of Long-Lived Assets:
  Goodwill:
 49




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    Fair Value Disclosures of Financial
    Instruments:
  over-the-counter
  over-the-counter
    and/or
  Derivative Instruments:
 50




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
          Concentration of Credit Risk of Financial Instruments:
 51




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    Product Warranties:
  Litigation and Settlement Costs:
  Income Taxes:
      Assets Held for Sale:
    Recent
    Accounting Pronouncements
   52




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##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
        Note 2 
    Restructuring
    of Operations and Other Items  2009
    Restructuring:
    
    A charge of $14.0 million primarily related to an accrual
    for remaining payments to be made under a licensing arrangement
    for design tools that will no longer be used by the Company;
    A charge of $10.1 million for severance and termination
    benefits for employees, primarily related to headcount
    reductions from restructuring actions taken in April and July
    2009; and
    A charge of $5.5 million primarily for changes in estimates
    and sublease assumptions and for the change in time value of
    accruals for previously accrued facility lease exit costs.   53




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##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    Balance at


Restructuring


Utilized


Balance atDecember 31,


Expense


During


December 31,2008


2009


2009


2009(In thousands)Write-down of excess assets and other liabilities

$
83


$
608


$
(691
)

$
Lease terminations(a)


44,555



19,525



(23,683
)


40,397Payments to employees for severance(b)


28,031



10,094



(33,220
)


4,905Total

$
72,669


$
30,227


$
(57,594
)

$
45,302     (a)
    
    The amount utilized represents cash payments. The balance
    remaining is expected to be paid during the remaining terms of
    the leases, which extend through 2013, and includes accruals for
    a licensing agreement that is no longer being used by the
    Company.(b)
    
    The majority of the balance remaining for severance is expected
    to be paid by the first quarter of 2011.  Other
    Items:
    2008
    Restructuring:
      
    A charge of $22.6 million for severance and termination
    benefits for employees, primarily related to headcount
    reductions from the restructuring action and broad-based
    reorganization that was announced in January 2009;
    A charge of $9.0 million for lease termination costs, which
    included $7.0 million primarily for U.S. lease
    termination costs and a $2.0 million charge primarily for
    the change in time value of accruals for previously accrued
    facility lease exit costs; and
    A gain of $2.0 million from the sale of land in Gresham,
    Oregon.   54




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##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    Balance at


Restructuring


Utilized


Balance atDecember 31,


(Income)/Expense


During


December 31,2007


2008


2008


2008(In thousands)Write-down of excess assets and other liabilities(a)

$
225


$
(1,740
)

$
1,598


$
83Lease terminations(b)


23,318



8,946



(13,997
)


18,267Payments to employees for severance(c)


24,817



22,645



(21,781
)


25,681Total

$
48,360


$
29,851


$
(34,180
)

$
44,031     (a)
    
    The amount utilized includes a gain from the sale of land in
    Gresham, Oregon.(b)
    
    The amount utilized represents cash payments. The balance
    remaining for real estate lease terminations is expected to be
    paid during the remaining terms of the leases, which extend
    through 2011.(c)
    
    The amount utilized includes $6.6 million related to stock
    grants exercised or expired. The majority of the balance
    remaining for severance was paid during 2009.  Restructuring
    Actions Associated with the Agere Merger:
      
    A net charge of $5.4 million for lease termination costs,
    which included $2.3 million for the change in time value of
    accruals for previously accrued facility lease exit costs and
    $3.1 million for changes in sublease assumptions for
    previously accrued lease exit costs;
    A charge of $2.8 million for severance and termination
    benefits for employees primarily related to a change in
    severance estimates; and
    A credit of $2.6 million primarily related to a gain from
    the sale of assets held for sale in Singapore. 55




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
     Balance at


Changes in


Utilized


Balance atDecember 31,


Estimates During


During


December 31,2007


2008


2008


2008(In thousands)Lease terminations(a)

$
33,439


$
5,436


$
(12,587
)

$
26,288Payments to employees for severance(b)


18,926



2,756



(20,974
)


708Stock-based compensation charges(c)


20,860







(19,218
)


1,642Write-down of excess assets and other liabilities(d)






(2,569
)


2,569



Total

$
73,225


$
5,623


$
(50,210
)

$
28,638     (a)
    
    The amount utilized includes $0.8 million for write-off of
    leasehold improvements and the remaining utilized amount
    represents cash payments. The balance remaining for real estate
    lease terminations is expected to be paid during the remaining
    terms of these contracts, which extend through 2013.(b)
    
    The amount utilized represents cash severance payments to
    employees. The balance remaining for severance was paid during
    2009.(c)
    
    The amount utilized represents stock grants exercised or
    expired. The balance was utilized during 2009.(d)
    
    The amount includes a gain on the sale of assets in Singapore.  Other
    Items:
    2007
    Restructuring
    and impairment of long-lived assets:
    Sale of
    the Mobility Products Group:
   56




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##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    
    A charge of $17.7 million for the difference between the
    proceeds of $450.0 million received and the
    $467.7 million net book value of MPG at closing;
    A charge of $27.5 million for future credits the buyer was
    expected to receive from the Company on purchases of finished
    goods inventory;
    A charge of $21.8 million for post-closing inventory
    pricing benefits the buyer was expected to receive for products
    manufactured at Silicon Manufacturing Partners Pte. Ltd.
    (SMP), a joint venture LSI has with GLOBALFOUNDRIES;
    A charge of $14.4 million for the acceleration of stock
    awards previously granted to MPG employees whose positions were
    eliminated as part of the sale of MPG; and
    A charge of $4.5 million for MPG-related lease termination
    costs for leases not assumed by the buyer, a $4.5 million
    charge for estimated transaction costs, a $3.2 million
    charge for severance and termination benefits for employees and
    a charge of $1.8 million for the write-off of MPG fixed
    assets not acquired by the buyer.  Sale of
    the Consumer Products Group:
      
    A credit of $1.3 million for the difference between the
    $22.6 million received and the $21.3 million net book
    value of the assets as of the date the transaction closed;
    A $12.8 million charge for severance and termination
    benefits for employees; and
    A $2.5 million charge related to facility lease termination
    costs for leases not assumed by the buyer.  Sale of
    Thailand Semiconductor Assembly and Test Operations:
        
    A charge of $5.5 million to adjust the carrying value of
    the assets held for sale to fair market value; and
    A charge of $0.1 million for the difference between the net
    proceeds of $99.6 million received and the
    $99.7 million of net book value at closing. 57




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##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
   Other
    Restructuring Actions and Charges:
    
    A charge of $24.6 million for severance and termination
    benefits for employees, of which $13.3 million related to
    the general workforce reduction action announced on
    June 27, 2007, $7.9 million related to workforce
    reductions planned to occur in 2008, and $3.4 million
    related to the transition of the Kansas manufacturing operations
    to manufacturing partners;
    A charge of $7.4 million to adjust the carrying value of
    the assets held for sale in Singapore to fair market values and
    a charge of $1.0 million for certain other asset write-offs;
    A charge of $1.5 million primarily for changes in sublease
    assumptions for previously accrued facility lease terminations
    and $2.0 million to reflect the change in time value of
    accruals for facility lease terminations;
    A charge of $1.8 million for the acceleration of stock
    awards previously granted to employees whose positions were to
    be eliminated as a result of the planned workforce reductions in
    January 2008; and
    A net gain of $10.4 million for the sale of land in
    Colorado, which had a net book value of $2.0 million. Total
    proceeds from the sale were $12.4 million.  Restructuring
    Actions Associated with the Agere Merger:
    
    A reserve of $50.1 million for severance and termination
    benefits for employees as a result of the restructuring actions
    related to the Agere merger and the sale of the Thailand and
    Singapore assembly and test facilities;
    A reserve of $28.8 million for stock-related compensation
    expense associated with employees whose positions were
    eliminated; and
    A reserve of $14.5 million for facility lease exit costs,
    primarily in Singapore and Europe.    
    A charge of $1.3 million for changes in assumptions for
    previously accrued facility lease termination costs;
    A charge of $1.2 million to reflect a change in time value
    of accruals previously recorded for facility lease termination
    costs;
    A charge of $1.0 million for additional stock-based
    compensation charges for employees whose positions were
    eliminated; and
    A credit of $0.2 million for changes in estimated payments
    to employees for severance previously recorded for Thailand and
    other restructuring actions. 58




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
   Other
    Items:
    Note 3 
    Stock-Based
    Compensation and Common Stock  Description
    of the Companys Equity Compensation Plans
    
    Making a total of 45 million shares available for grants
    under the 2003 Plan after May 14, 2008. Of that amount,
    15 million shares were available for grants of restricted
    stock and restricted stock units;
    Allowing non-employee directors to be eligible to participate in
    the 2003 Plan;
    Including stock appreciation rights as a permitted type of award
    under the 2003 Plan;
    Increasing the limits on the size of awards that can be granted
    under the 2003 Plan to any person in one year from two million
    to four million shares for stock options and from
    0.5 million to one million shares for restricted stock and
    restricted stock units; and
    Allowing incentive stock options to be granted under the 2003
    Plan until May 14, 2018.      
    Making a total of 25 million shares available for purchase
    under the US ESPP after May 14, 2008;
    Consolidating the Companys International Employee Stock
    Purchase Plan (IESPP, and together with the US ESPP,
    the ESPP) into the US ESPP; and
    Extending the term of the ESPP through May 14, 2018.  2003
    Plan:
    ESPP:
  12-month
 59




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    Stock-Based
    Compensation Expense
    Year Ended December 31,Stock-Based Compensation Expense Included In:

2009


2008


2007(In thousands)Cost of revenues

$
7,382


$
9,269


$
10,711Research and development


27,979



29,214



31,743Selling, general and administrative


28,622



33,800



34,813Total stock-based compensation expense

$
63,983


$
72,283


$
77,267     Stock
    Options:
    Year Ended December 31,2009


2008


2007Weighted-average estimated grant date fair value per share

$
1.42


$
2.04


$
3.05Weighted-average assumptions in calculation:Expected life (years)


4.26



4.36



4.29Risk-free interest rate


1.80
%


2.51
%


4.50
%Volatility


67
%


52
%


47
%       near-the-money at-the-money.
 60




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
  in-the-money.
      Year Ended December 31,2009


2008


2007Weighted-Average





Weighted-Average





Weighted-AverageNumber of


Exercise Price


Number of


Exercise Price


Number of


Exercise PriceShares


Per Share


Shares


Per Share


Shares


Per ShareOptions outstanding at January 1


85,113


$
12.62



100,242


$
16.12



56,750


$
11.92Options assumed in Agere Acquisition


















48,884



22.41Options granted


23,203



3.13



18,627



5.68



15,628



8.61Options exercised


(1,084
)


4.83



(4,682
)


5.41



(3,725
)


5.91Options canceled


(15,706
)


15.40



(29,074
)


21.41



(17,295
)


15.56Options outstanding at December 31


91,526


$
9.83



85,113


$
12.62



100,242


$
16.12Options exercisable at December 31


49,528


$
14.00



49,446


$
16.72



67,124


$
20.12        61




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
  Employee
    Stock Purchase Plan:
    Year Ended December 31,2009


2008


2007Weighted-average estimated grant date fair value per share

$
1.79


$
1.37


$
2.09Weighted-average assumptions in calculation:Expected life (years)


0.7



0.8



0.7Risk-free interest rate


0.3
%


1
%


4
%Volatility


52
%


84
%


42
%     Restricted
    Stock Awards:
      Year Ended December 31,2009


2008


2007Number of Shares(In thousands)Unvested restricted stock units at January 1


6,391



9,177



1,910Assumed in Agere Acquisition










9,141Granted


383



1,779



4,337Vested


(3,279
)


(4,026
)


(5,555
)Forfeited


(509
)


(539
)


(656
)Unvested restricted stock units at December 31


2,986



6,391



9,177     Year Ended December 31,2009


2008


2007Weighted-Average





Weighted-Average





Weighted-AverageNumber of


Grant Date Fair


Number of


Grant Date Fair


Number of


Grant Date FairShares


Value per Share


Shares


Value per Share


Shares


Value per ShareRestricted stock units granted


383


$
4.56



1,779


$
5.02



4,337


$
8.20    62




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##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    Common
    Stock
  Stock
    Repurchase Programs:
  paid-in
  Note 4 
    Business
    Combinations    2009
  AcquiredEntity Name or Type of Technology;




Fair Value of





Net


Identified


In-ProcessSegment Included in;

Acquisition


Total


Type of


Tangible


Intangible


Research andDescription of Acquired Business

Date


Consideration


Consideration


Assets


Assets


Development


GoodwillONStor, Inc.; Storage Systems segment; Clustered
    network-attached storage solutions


July 27, 2009


$
25.5



Cash


$
0.8


$
15.0


$
0.8


$
8.93ware RAID storage adapter business; Storage Systems segment;
    Server RAID adapters and storage solutions


April 21, 2009


$
21.5



Cash


$
12.3


$
5.0



None


$
4.2   2008
  AcquiredEntity Name or Type of Technology;




Fair Value of





Net


Identified


In-ProcessSegment Included in;

Acquisition


Total


Type of


Tangible


Intangible


Research andDescription of Acquired Business

Date


Consideration


Consideration


Assets


Assets


Development


GoodwillHDD semiconductor business of Infineon; Semiconductor segment;
    Silicon solutions for hard disk drive makers


April 25, 2008


$
95.1



Cash


$
10.3


$
78.2



None


$
6.6  63




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
  2007
  AcquiredEntity Name or Type of Technology;




Fair Value of





Net


Identified


In-ProcessSegment Included in;

Acquisition


Total


Type of


Tangible


Intangible


Research andDescription of Acquired Business

Date


Consideration


Consideration


Assets


Assets


Development


GoodwillTarari, Inc.; Semiconductor segment; Silicon and software
    solutions for security and network control


October 3, 2007


$
93.0



Cash


$
6.3


$
23.3


$
6.0


$
57.4Agere Systems Inc.; Semiconductor segment; Integrated circuit
    solutions for communications and computing applications


April 2, 2007


$
3,720.1



368 million
    shares of LSI
    common stock


$
231.8


$
1,727.7


$
176.4


$
1,584.2SiliconStor, Inc..; Semiconductor segment; Silicon solutions for
    enterprise storage network based on SAS and FC-SATA


March 13, 2007


$
56.4



Cash


$
1.5


$
10.6


$
6.5


$
37.8   2009
  Acquisition
    of ONStor, Inc.:
        Weighted-Fair Value


Average Life(In millions)


(In years)Current technology

$
12.7



6Customer base


2.1



2Trade names


0.2



2Total acquired identified intangible assets

$
15.0   Acquisition
    of 3ware RAID Storage Adapter Business:
     64




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    Weighted-Fair Value


Average Life(In millions)


(In years)Current technology

$
1.5



2Customer base


3.2



5Trade names


0.3



2Total acquired identified intangible assets

$
5.0   2008
  Acquisition
    of Hard Disk Drive (HDD) Semiconductor Business of
    Infineon:
        Weighted-Fair Value


Average Life(In millions)


(In years)Current technology

$
46.5



4Customer base


31.7



5Total acquired identified intangible assets

$
78.2   2007
  Merger
    with Agere:
     65




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
      Fair value of LSI common shares issued

$
3,647,021(a) Fair value of stock awards assumed


218,713(b) Fair value of unvested stock awards assumed


(168,555
)(a)  (b) Fair value of the vested options assumed


50,158Direct transaction costs


22,970Total estimated purchase price

$
3,720,149   Purchase
    Price Allocation:
    Cash

$
540,140Accounts receivable


222,169Inventory


120,848Assets held for sale


122,756Property and equipment


162,047Accounts payable


(167,947
)Pension and post-retirement liabilities


(214,607
)Convertible notes


(370,249
)Other liabilities


(183,359
)Net assets acquired


231,798Identified intangible assets


1,727,700In-process research and development


176,400Goodwill


1,584,251Total estimated purchase price

$
3,720,149    66




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    Weighted-Fair Value


Average Life(In thousands)


(In years)Current technology

$
844,500



8.5Customer base


513,000



10Patent licensing


317,200



10Order backlog


53,000



0.5Total acquired identified intangible assets

$
1,727,700   Acquired
    In-Process Research and Development
      Estimated Cost To





Revenue ProjectionsEntity Name

IPR&D


Complete


Discount Rate


Extended ThroughAgere Systems Inc.:Storage  read channel and preamps

$
36.2


$
17.8



13.8
%


2016Mobility  HSPDA for 3G

$
31.2




*


13.8
%


Networking  modems, Firewire, serdes, media gateway,
    VoIP, network processors, Ethernet, mappers and framers

$
109.0


$
68.0



13.8
%


2021SiliconStor, Inc.

$
6.5


$
4.4



27.0
%


2017Tarari, Inc.

$
6.0


$
2.9



22.7
%


2013     *
    
    During the fourth quarter of 2007, the Company sold the Mobility
    Products Group and therefore no costs will be incurred to
    complete the acquired Mobility-HSPDA for 3G project.     67




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
  cost-of-capital
      Pro Forma
    Results (Unaudited)
      Year EndedDecember 31,2007(In thousands exceptper share amounts)Revenues

$
2,938,487Net loss

$
(2,307,572
)Basic loss per share

$
(2.29
)Diluted loss per share

$
(2.29
)   Note 5 
    Benefit
    Obligations  Pension
    and Post-retirement Benefit Plans
  dollar-per-month
 68




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
      Net
    Periodic Benefit Credit:
    Year Ended December 31,2009


2008


2007Pension


Post-retirement


Pension


Post-retirement


Pension


Post-retirementBenefits


Benefits


Benefits


Benefits


Benefits


Benefits(In thousands)Service cost

$
1,792


$
79


$
5,694


$
101


$
5,523


$
118Interest cost


73,774



2,426



75,016



3,024



55,361



2,776Expected return on plan assets


(76,802
)


(4,877
)


(82,575
)


(5,033
)


(62,804
)


(3,669
)Amortization of prior service cost


49







39











Net actuarial gain recognized


(94
)






(5
)


(119
)






(12
)Net periodic benefit credit


(1,281
)


(2,372
)


(1,831
)


(2,027
)


(1,920
)


(787
)Curtailment gain(a)










(771
)


(2,652
)


(414
)


(281
)Special termination benefit(b)


426



















Other(c)






(1,529
)














Settlement credit(d)










(32
)










Total benefit credit

$
(855
)

$
(3,901
)

$
(2,634
)

$
(4,679
)

$
(2,334
)

$
(1,068
)     (a)
    
    The curtailments in 2008 resulted from the pension plan freeze
    effective April 6, 2009 and the termination of the
    post-retirement medical plan effective January 1, 2009. The
    curtailments in 2007 reflect accelerated recognition of gains
    resulting from the sale of the Mobility Products Group.(b)
    
    Reflects enhanced retirement benefits given to active
    represented plan participants impacted by workforce reduction in
    January 2009.(c)
    
    Reflects the reversal of the excess retiree medical liability
    accrued for claims from 2008.(d)
    
    The settlement in 2008 reflects accelerated recognition of gains
    resulting from lump sum distributions from the non-qualified
    supplemental pension plan. 69




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
   Change
    in Projected Benefit Obligation:
    Year Ended December 31,2009


2008Pension


Post-retirement


Pension


Post-retirementBenefits


Benefits


Benefits


Benefits(In thousands)Projected benefit obligation at January 1

$
1,170,459


$
41,083


$
1,194,302


$
56,123Service cost


1,792



79



5,694



101Interest cost


73,774



2,426



75,016



3,024Plan participants contributions






4







9,375Amendments


(1,936
)






(13,683
)


322Actuarial loss/(gain)


118,341



517



8,569



(265
)Benefits paid


(88,669
)*


(2,985
)


(99,439
)*


(27,597
)Special termination benefits


426











Other adjustments


228











Projected benefit obligation at December 31

$
1,274,415


$
41,124


$
1,170,459


$
41,083     *
    
    Includes benefits paid under certain international pension
    plans, which do not maintain plan assets.    Change
    in Plan Assets:
    Year Ended December 31,2009


2008Pension


Post-retirement


Pension


Post-retirementBenefits


Benefits


Benefits


Benefits(In thousands)Fair value of plan assets at January 1

$
720,915


$
54,781


$
1,061,420


$
65,754Actual gain/(loss) on plan assets


168,582



8,829



(252,088
)


(9,583
)Employer contributions


20,180



1,671



10,968



16,832Transfer to defined contribution plan funds


(1,863
)










Plan participants contributions






4







9,375Benefits paid


(88,524
)


(2,985
)


(99,385
)


(27,597
)Other adjustments


120











Fair value of plan assets at December 31

$
819,410


$
62,300


$
720,915


$
54,781  70




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    Funded
    Status of the Plans:
    December 31,2009


2008Pension


Post-retirement


Pension


Post-retirementBenefits


Benefits


Benefits


Benefits(In thousands)Funded status of the plans

$
(455,005
)

$
21,176


$
(449,544
)

$
13,698   Plans
    with Projected Benefit Obligation and Accumulated Benefit
    Obligation in excess of Plan Assets:
  December 31,2009


2008Pension Benefits(In thousands)Projected benefit obligation

$
1,274,415


$
1,170,459Accumulated benefit obligation

$
1,272,562


$
1,168,798Fair value of plan assets

$
819,410


$
720,915     Plans
    with Accumulated Benefit Obligation less than Plan
    Assets:
  December 31,2009


2008Group Life Benefits(In thousands)Accumulated benefit obligation

$
41,124


$
37,883Fair value of plan assets

$
62,300


$
54,781     December 31,2009


2008Pension


Post-retirement


Pension


Post-retirementBenefits


Benefits


Benefits


Benefits(In thousands)Non-current assets

$



$
21,176


$



$
16,898Current liabilities


(799
)






(1,040
)


(3,200
)Non-current liabilities


(454,206
)






(448,504
)


Net (liability)/asset

$
(455,005
)

$
21,176


$
(449,544
)

$
13,698  71




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
  Accumulated
    Other Comprehensive (Income)/Loss:
    December 31,2009


2008Pension


Post-retirement


Pension


Post-retirementBenefits


Benefits


Benefits


Benefits(In thousands)Net prior service cost

$
340


$



$
405


$
Net actuarial loss


295,354



9,668



268,733



11,574Accumulated other comprehensive loss


295,694



9,668



269,138



11,574Tax


23,813



3,026



23,813



2,309Accumulated other comprehensive loss, net of tax

$
319,507


$
12,694


$
292,951


$
13,883     Year Ended December 31,2009


2008


2007Pension


Post-retirement


Pension


Post-retirement


Pension


Post-retirementBenefits


Benefits


Benefits


Benefits


Benefits


Benefits(In thousands)Accumulated other comprehensive loss/(income) at January 1,
    net of tax

$
292,951


$
13,883


$
(38,236
)

$
(3,562
)

$



$
Recognized during period  Prior service cost


(50
)






(170
)










Recognized during period  Actuarial gain/(loss)


89







(12,709
)


3,093







12Occurring during period  Prior service cost










405







170



Occurring during period  Actuarial loss/(gain)


26,546



(3,435
)


343,605



14,352



(64,662
)


(5,883
)Other adjustments


(29
)


1,529



56







2,443



Accumulated other comprehensive loss/(income) at December 31


319,507



11,977



292,951



13,883



(62,049
)


(5,871
)Tax






717











23,813



2,309Accumulated other comprehensive loss/(income) at
    December 31, net of tax

$
319,507


$
12,694


$
292,951


$
13,883


$
(38,236
)

$
(3,562
)    72




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    Plan
    Assets:
  Defined
    Benefit Pension Plans:
        Fair Value Measurements as of December 31, 2009Level 1


Level 2


Level 3


Total(In thousands)Cash & cash equivalents(a)

$
5,487


$
20,461


$



$
25,948Equity securities:U.S. companies


168,137
(b)


2,861
(c)






170,998International companies


138,529
(b)










138,529Fixed-income securities:U.S. treasuries(d)






44,695







44,695Corporate bonds(e)






156,239







156,239Asset-backed and mortgage-backed securities






19,445







19,445Agency-backed securities






12,062







12,062Municipal bonds






5,407







5,407Government bonds






3,440







3,440Other types of investments:Commingled funds  equities(f)






178,122







178,122Commingled funds  bonds(g)






64,525







64,525Total

$
312,153


$
507,257


$



$
819,410     (a)
    
    Cash equivalents were primarily in short-term investment funds,
    which consisted of short-term money market instruments that were
    valued using quoted prices for similar assets and liabilities in
    active markets. 73




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
   (b)
    
    Includes funds that invest primarily in equity securities of
    companies for which quoted prices are available in active
    markets.(c)
    
    Includes funds that invest primarily in equity securities that
    are traded less frequently than exchange-traded securities and
    are valued using inputs that include quoted prices for similar
    assets in active markets.(d)
    
    Fair value was determined based on compilation of primary
    observable market information and inputs that include quoted
    prices for similar assets in active markets, and inputs other
    than quoted prices that are observable for the asset, such as
    broker/dealer quotes, yield curves, and indices that are
    observable at commonly quoted intervals.(e)
    
    Includes funds that invest primarily in investment-grade debt
    securities.(f)
    
    Investments in funds not registered with U.S. Securities and
    Exchange Commission, with underlying investments primarily in
    publicly traded U.S. and
    non-U.S.
    equity securities, including securities with small and large
    market capitalization. Fair value was determined based on the
    net asset value per share of each investment at
    December 31, 2009. These funds are classified as
    level 2 in the fair value hierarchy as the Company could
    redeem these investments with the sponsoring investment
    management organizations at December 31, 2009 and with at
    least monthly frequency on an ongoing basis.(g)
    
    Investments in funds not registered with U.S. Securities and
    Exchange Commission, with underlying investments primarily in
    Treasury Inflation-Protected Securities and high-yield bonds.
    Fair value was determined based on the net asset value per share
    of each investment at December 31, 2009. These funds are
    classified as level 2 in the fair value hierarchy as the
    Company could redeem these investments with the sponsoring
    investment management organizations at December 31, 2009
    and with at least monthly frequency on an ongoing basis.  Post-retirement
    Benefit Plan:
      Fair Value Measurements as of December 31, 2009Level 1


Level 2


Level 3


Total(In thousands)Commingled funds  U.S. equities(a)

$



$
12,355


$



$
12,355Commingled funds  International equities(a)






12,546







12,546Commingled funds  bonds(a)






37,399







37,399Total

$



$
62,300


$



$
62,300     (a)
    
    Investments in funds not registered with U.S. Securities and
    Exchange Commission, with underlying investments primarily in
    the equity securities included in the S&P 500 Index,
    non-U.S.
    equity securities and investment grade
    fixed-income
    securities. Fair value was determined based on the net asset
    value per share of each investment at December 31, 2009.
    These funds are classified as level 2 in the fair value 74




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##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
  hierarchy as the Company could redeem these investments with the
    sponsoring investment management organizations at
    December 31, 2009 and with at least monthly frequency on an
    ongoing basis.  Non-qualified
    Supplemental Pension Plan:
      Fair Value Measurements as of December 31, 2009Level 1


Level 2


Level 3


Total(In thousands)Money market funds

$
2,060


$



$



$
2,060Mutual funds(a)


7,907











7,907Total

$
9,967


$



$



$
9,967     (a)
    
    Registered investment company funds with quoted prices in active
    markets.    Pension


Post-retirementBenefits


BenefitsEquity Securities


48
%


40
%Debt Securities


52
%


60
%    75




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
  Actuarial
    Assumptions:
    Year Ended December 31,2009

2008

2007Post-

Post-



Post-

Post-



Post-

Post-retirement

retirement



retirement

retirement



retirement

retirementPension

Health

Life

Pension

Health

Life

Pension

Health

LifeBenefits

Benefits

Benefits

Benefits

Benefits

Benefits

Benefits

Benefits

BenefitsDiscount rate to determine net periodic cost (before/after
    curtailment cost(d))

6.50%

N/A

6.50%

6.50%

6.50%

6.50%

6.00/6.25%(a)

6.00/6.25%(b)

6.00/6.25%Discount rate to determine the benefit obligation as of
    December 31

5.75%

N/A

6.00%

6.50%

6.50%

6.50%

6.50%

6.50%

6.50%Rate of compensation increase

4.00%

N/A

4.00%

4.00%

N/A

4.00%

4.00%

N/A

4.00%Expected average rate of return on plan assets

8.25/8.00%(c)

N/A

7.50%

8.25/8.00%(c)

N/A

7.75%

8.25/8.00%(c)

N/A

7.75%     (a)
    
    Management plans only; The rate for the represented and
    non-qualified supplemental plans was 6.00%.(b)
    
    Management plans only; The rate for the represented plan was
    6.00%.(c)
    
    Management/Represented plan; Rates vary by plan.(d)
    
    The sale of the Mobility Products Group in October 2007
    triggered curtailment and settlement accounting. This
    transaction resulted in a mid-year re-measurement of the pension
    and post-retirement benefit obligations, which used the
    prevailing interest rate at that time.     76




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
  Benefit
    Payments:
    Pension


Post-retirementBenefits


Benefits(In thousands)Year ending December 31, 2010

$
92,423


$
1,200Year ending December 31, 2011

$
88,432


$
1,300Year ending December 31, 2012

$
88,497


$
1,400Year ending December 31, 2013

$
88,343


$
1,510Year ending December 31, 2014

$
88,217


$
1,630Year ending December 31, 2015 through December 31, 2019

$
442,826


$
10,090     LSI
    401(k) Defined Contribution Plan
   77




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
   Note 6 
    Balance
    Sheet Detail    December 31,2009


2008(In thousands)Inventories:Raw materials

$
24,038


$
44,208Work-in-process


19,090



52,242Finished goods


126,207



124,085Total inventories

$
169,335


$
220,535Property and equipment:Land

$
38,021


$
38,101Buildings and improvements


94,139



107,309Equipment


339,685



381,826Furniture and fixtures


33,071



24,857Leasehold improvements


46,724



38,055Construction in progress


12,155



12,329Property and equipment, gross


563,795



602,477Accumulated depreciation


(344,823
)


(366,514
)Property and equipment, net

$
218,972


$
235,963Other accrued liabilities:Restructuring reserves

$
26,775


$
42,662Accrued expenses


187,321



193,999Total other accrued liabilities

$
214,096


$
236,661Accumulated other comprehensive loss:Net unrealized gain on
    available-for-sale
    securities, net of tax

$
5,928


$
2,680Net unrealized loss on cash-flow hedges, net of tax


(130
)


(905
)Actuarial loss on pension and post-retirement plans, net of tax


(332,201
)


(306,834
)Foreign currency translation adjustments


46,762



41,489Total accumulated other comprehensive loss

$
(279,641
)

$
(263,570
)    78




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
   Note 7 
    Identified
    Intangible Assets and Goodwill  Intangible
    Assets
    December 31,2009


2008Gross


Accumulated


Gross


AccumulatedCarrying Amount


Amortization


Carrying Amount


Amortization(In thousands)Semiconductor:Current technology

$
894,808


$
(613,886
)

$
894,808


$
(524,120
)Trademarks


26,657



(26,657
)


26,657



(26,657
)Customer base


399,508



(198,616
)


399,508



(160,925
)Non-compete agreements


1,949



(1,949
)


1,949



(1,888
)Existing purchase orders


200



(200
)


200



(200
)Supply agreement


100



(100
)


100



(100
)Patent licensing


312,800



(99,383
)


312,800



(63,243
)Order backlog


41,300



(41,300
)


41,300



(41,300
)Workforce


3,567



(1,854
)


3,567



(1,258
)Trade names


2,248



(2,248
)


2,248



(2,248
)Subtotal


1,683,137



(986,193
)


1,683,137



(821,939
)Storage Systems:Current technology


178,581



(142,399
)


164,339



(136,104
)Trademarks


7,150



(7,150
)


7,150



(7,150
)Customer base


10,301



(5,797
)


5,010



(5,010
)Non-compete agreements


1,600



(1,600
)


1,600



(1,600
)Supply agreement


8,147



(8,147
)


8,147



(8,147
)Trade names


1,350



(496
)


800



(238
)IPR&D


760











Subtotal


207,889



(165,589
)


187,046



(158,249
)Total identified intangible assets

$
1,891,026


$
(1,151,782
)

$
1,870,183


$
(980,188
)  79




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    Weighted-


Year Ended December 31,Average Lives


2009


2008


2007(In months)


(In thousands)Current technology


57


$
96,061


$
135,897


$
88,579Trademarks


83







50



855Customer base


45



38,478



60,731



19,253Non-compete agreements


27



61



1,076



1,662Supply agreement


32











775Patent licensing


36



36,140



37,059



27,510Order backlog


2











53,000Workforce


72



596



596



596Trade names


68



258



488



208Total


50


$
171,594


$
235,897


$
192,438     Amount(In thousands)Fiscal Year:2010

$
160,9432011


126,7692012


106,6942013


98,4502014 and thereafter


246,388Total

$
739,244  80




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
  Goodwill
    Semiconductor


Storage SystemsSegment


Segment


Total(In thousands)Balance as of December 31, 2007:Goodwill

$
2,343,827


$
175,624


$
2,519,451Accumulated impairment losses


(2,019,900
)






(2,019,900
)$
323,927


$
175,624


$
499,551Additions as a result of the acquisition during the year*


6,624







6,624Adjustment to goodwill acquired in a prior year for a
    pre-acquisition income tax contingency, net**


33,535







33,535Goodwill impairment


(364,086
)






(364,086
)Balance as of December 31, 2008:Goodwill

$
2,383,986


$
175,624


$
2,559,610Accumulated impairment losses


(2,383,986
)






(2,383,986
)$



$
175,624


$
175,624Additions as a result of the acquisitions during the year***






13,074



13,074Balance as of December 31, 2009:Goodwill

$



$
188,698


$
188,698Accumulated impairment losses










$



$
188,698


$
188,698     *
    
    During the year ended December 31, 2008, the Company
    recorded $6.6 million of goodwill in connection with the
    acquisition of Infineons HDD semiconductor business.**
    
    During the year ended December 31, 2008, the Company
    recorded $39.3 million of goodwill primarily relating to a
    re-measurement of uncertain tax positions based on new
    information received during 2008, offset by $5.8 million of
    income tax refunds.***
    
    During the year ended December 31, 2009, the Company
    recorded $4.2 million and $8.9 million of goodwill in
    connection with the acquisitions of the 3ware RAID storage
    adapter business and ONStor, respectively.   81




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    cost-of-capital
       82




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
   Note 8 
    Cash,
    Cash Equivalents And Investments    December 31,2009


2008(In thousands)Cash and cash equivalents:Cash in financial institutions

$
147,218


$
77,372Cash equivalents:Overnight deposits and money-market funds


631,073



744,430Commercial paper






1,085U.S. government and agency securities






6,414Total cash equivalents


631,073



751,929Total cash and cash equivalents

$
778,291


$
829,301Available-for-sale
    debt securities:Asset-backed and mortgage-backed securities

$
138,282


$
184,511U.S. government and agency securities


40,644



88,504Corporate and municipal debt securities


4,855



16,826Total short-term investments

$
183,781


$
289,841Long-term investments in equity securities*:Marketable
    available-for-sale
    equity securities

$
1,405


$
566Non-marketable equity securities


56,579



46,141Total long-term investments in equity securities

$
57,984


$
46,707     *
    
    Included in other assets in the consolidated balance sheets.  available-for-sale
  Fair Value Measurements as of December 31, 2009Level 1


Level 2


Level 3


Total(In thousands)Short-term investments in debt securities and cash equivalents

$
631,073


$
183,781


$



$
814,854Long-term investments in marketable equity securities

$
1,405


$



$



$
1,405   Fair Value Measurements as of December 31, 2008Level 1


Level 2


Level 3


Total(In thousands)Short-term investments in debt securities and certain cash
    equivalents

$
664,116


$
297,336


$



$
961,452Long-term investments in marketable equity securities

$
566


$



$



$
566  83




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
  Investments
    in
    Available-for-Sale
    Securities
  available-for-sale
  Amount(In thousands)Due within one year

$
29,579Due in 1-5 years


23,093Due in 5-10 years


10,630Due after 10 years


120,479Total

$
183,781     available-for-sale
  December 31, 2009Gross


GrossAmortized


Unrealized


UnrealizedCost


Gain


Loss (*)


Fair Value(In thousands)Short-term debt securities:Asset-backed and mortgage-backed securities

$
132,210


$
7,141


$
(1,069
)

$
138,282U.S. government and agency securities


39,033



1,611







40,644Corporate and municipal debt securities


4,736



175



(56
)


4,855Total short-term debt securities

$
175,979


$
8,927


$
(1,125
)

$
183,781Long-term marketable equity securities

$
111


$
1,294


$



$
1,405     *
    
    At December 31, 2009, there were 30 investments in an
    unrealized loss position.  December 31, 2008Gross


GrossAmortized


Unrealized


UnrealizedCost


Gain


Loss


Fair Value(In thousands)Short-term debt securities:Asset-backed and mortgage-backed securities

$
183,385


$
1,830


$
(704
)

$
184,511U.S. government and agency securities


85,426



3,078







88,504Corporate and municipal debt securities


17,183



53



(410
)


16,826Total short-term debt securities

$
285,994


$
4,961


$
(1,114
)

$
289,841Long-term marketable equity securities

$
155


$
413


$
(2
)

$
566  84




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    December 31, 2009Less than 12 Months


Greater than 12 MonthsFair Value


Unrealized Losses


Fair Value


Unrealized Losses(In thousands)Asset-backed and mortgage-backed securities

$
9,126


$
(1,037
)

$
870


$
(32
)Corporate and municipal debt securities


1,308



(56
)






Total

$
10,434


$
(1,093
)

$
870


$
(32
)   December 31, 2008Less than 12 Months


Greater than 12 MonthsFair Value


Unrealized Losses


Fair Value


Unrealized Losses(In thousands)Asset-backed and mortgage-backed securities

$
51,502


$
(544
)

$
9,334


$
(160
)Corporate and municipal debt securities


11,490



(410
)


331



Total

$
62,992


$
(954
)

$
9,665


$
(160
)   available-for-sale available-for-sale
  available-for-sale available-for-sale
  available-for-sale
  available-for-sale available-for-sale
    Note 9 
    Segment
    and Geographic Information   85




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    Summary
    of Operations by Segment
    Year Ended December 31,2009


2008


2007(In thousands)Revenues:Semiconductor

$
1,421,463


$
1,795,054


$
1,778,959Storage Systems


797,696



882,023



824,684Total

$
2,219,159


$
2,677,077


$
2,603,643Loss from operations:Semiconductor

$
(158,801
)

$
(658,442
)

$
(2,539,601
)Storage Systems


29,630



62,722



48,370Total

$
(129,171
)

$
(595,720
)

$
(2,491,231
)     Significant
    Customers
    Year Ended December 31,2009


2008


2007Semiconductor segment:Number of significant customers


1



1



2Percentage of segment revenues


24%



26%



28%, 12%Storage Systems segment:Number of significant customers


2



3



3Percentage of segment revenues


48%, 13%



46%, 14%, 11%



47%, 16%, 11%Consolidated:Number of significant customers


2



2



2Percentage of consolidated revenues


19%, 16%



17%, 16%



19%, 15%  86




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
  Information
    about Geographic Areas
    Year Ended December 31,2009


2008


2007(In thousands)Revenues:North America*

$
519,186


$
737,163


$
858,694Asia**


1,126,021



1,359,783



1,401,322Europe and the Middle East


573,952



580,131



343,627Total

$
2,219,159


$
2,677,077


$
2,603,643   December 31,2009


2008(In thousands)Long-lived assets:North America*

$
203,711


$
216,646Asia**


13,062



16,591Europe and the Middle East


2,199



2,726Total

$
218,972


$
235,963     *
    
    Primarily the United States.**
    
    Including Japan.  Note 10 
    Derivative
    Instruments    Cash-Flow
    Hedges
   87




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
  Other
    Foreign-Currency Hedges
    Fair
    Values of Derivative Instruments
    Fair Value Measurements as of December 31, 2009Level 1


Level 2


Level 3


Total(In thousands)Prepaid expenses and other current assets:Derivative assets designated as hedging instruments:Foreign exchange forward contracts

$



$
929


$



$
929Derivative assets not designated as hedging instruments:Foreign exchange forward contracts

$



$
4


$



$
4Other accrued liabilities:Derivative liabilities designated as hedging instruments:Foreign exchange forward contracts

$



$
299


$



$
299Derivative liabilities not designated as hedging instruments:Foreign exchange forward contracts

$



$
11


$



$
11   Effect of
    Derivative Instruments on Other Comprehensive Income and
    Statements of Operations
    (a)
    Cash-Flow
    Hedges:  Year EndedDecember 31,2009(In thousands)Accumulated loss in other comprehensive income at January 1

$
(905
)Net unrealized gain recorded in other comprehensive income
    (effective portion)


679Loss reclassified from accumulated other comprehensive income to
    research and development expenses (effective portion)


95Loss reclassified from accumulated other comprehensive income to
    selling, general and administrative expenses (effective portion)


1Accumulated loss in other comprehensive income at December 31

$
(130
)  88




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    (b)
    Other
    Foreign-Currency Hedges:  Year EndedDecember 31,2009(In thousands)Gain recognized in interest income and other, net

$
7,911     Note 11 
    Debt    Interest


Conversion


December 31,Maturity


Rate


Price


2009


2008(In thousands)4% Convertible Subordinated Notes


2010



4.00
%

$
13.4200


$
350,000


$
350,0006.5% Convertible Subordinated Notes


2009



6.50
%

$
15.3125







243,002Accrued debt premium


















7,405Amortization of accrued debt premium


















(5,300
)Total debt














350,000



595,107Current portion of long-term debt














(350,000
)


(245,107
)Long-term debt, net of current portion













$



$
350,000        89




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
        Note 12 
    Income
    Taxes    Year Ended December 31,2009


2008


2007(In thousands)Current:Federal

$
(6,237
)

$
(4,740
)

$
(25,887
)State


2,098



935



5,500Foreign


(82,201
)


19,074



31,430Total current taxes


(86,340
)


15,269



11,043Deferred:Federal


4,211



2,365



595State


313



132



74Foreign


(1,295
)


9,934



(386
)Total deferred taxes


3,229



12,431



283Total

$
(83,111
)

$
27,700


$
11,326     Year Ended December 31,2009


2008


2007(In thousands)Domestic

$
(100,826
)

$
(660,554
)

$
(2,450,380
)Foreign


(30,004
)


66,001



(25,113
)Loss before income taxes

$
(130,830
)

$
(594,553
)

$
(2,475,493
)  90




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##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    December 31,2009


2008(In thousands)Deferred tax assets:Tax credit carryovers

$
412,685


$
364,637Net operating loss carryforwards


1,382,990



1,310,204Capital loss carryover


142,630



137,247Future deductions for purchased intangible assets


194,298



288,334Depreciation and amortization


101,121



127,550Pension and post-retirement benefits


159,139



161,250Future deductions for reserves and other


136,808



10,792Future deductions for inventory reserves


4,359



13,930Total deferred tax assets


2,534,030



2,413,944Valuation allowance


(2,304,316
)


(2,062,718
)Net deferred tax assets


229,714



351,226Deferred tax liabilities:Unrealized gain on investments






(1,476
)Tax deductible goodwill


(31,490
)


(26,966
)Purchased intangible assets


(224,455
)


(345,954
)Total deferred tax liabilities


(255,945
)


(374,396
)Total net deferred tax liabilities

$
(26,231
)

$
(23,170
)      91




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##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    Year Ended December 31,2009


2008


2007Pre-tax income/loss federal statutory rate


35
%


35
%


35
%State taxes, net of federal benefit


0
%


0
%


0
%Foreign rate differential


(26
)%


(4
)%


(2
)%Settlements of foreign tax audits


62
%






Change in valuation allowance


(9
)%


(17
)%


(3
)%Nondeductible expenses


(3
)%


(1
)%


(3
)%Goodwill impairment






(20
)%


(28
)%Domestic unrecognized tax benefits


(2
)%


1
%


0
%Tax refunds


2
%


0
%


0
%Tax benefit related to refundable R&D credit


3
%


1
%


0
%Tax adjustments on unrealized other comprehensive income gain


2
%


0
%


1
%Others


0
%


0
%


0
%Effective tax rate


64
%


(5
)%


0
%           non-U.S. subsidiaries. non-U.S. subsidiaries
  Uncertain
    Income Tax Positions
     92




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##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    non-U.S. income
      Year Ended December 31,2009


2008


2007Balance at January 1

$
232,050


$
206,649


$
132,947Addition for Agere merger at April 2, 2007










65,241Tax positions related to current year:Additions


10,738



15,081



12,741Tax positions related to prior years:Additions


54,058



43,473
*


Reductions






(7,903
)


(1,551
)Lapses in statute of limitations


(16,374
)


(23,055
)


(3,615
)Settlements


(96,926
)


(3,042
)


Payments


(22,151
)






Foreign exchange loss


2,464



847



886Balance at December 31

$
163,859


$
232,050


$
206,649     *
    
    Of this amount, $39.1 million relates to pre-acquisition
    unrecognized tax benefits that were booked to goodwill.  Note 13 
    Related
    Party Transactions   93




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##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
    day-to-day day-to-day
    Note 14 
    Commitments,
    Contingencies and Legal Matters  Operating
    Leases
      Purchase
    Commitments
    take-or-pay
 94




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##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
  Guarantees
  Product
    Warranties:
      Year Ended December 312009


2008(In thousands)Balance at the beginning of the period

$
12,238


$
14,734Accruals for warranties issued during the period


16,245



14,563Accruals related to pre-existing warranties (including changes
    in estimates)


639



(1,961
)Settlements made during the period (in cash or in kind)


(15,291
)


(15,098
)Balance at the end of the period

$
13,831


$
12,238   Standby
    Letters of Credit:
    Uncertain
    Tax Positions
    Indemnifications
   95




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
  and/or
  Legal
    Matters
       96




---



##### Table of Contents



LSI
    Corporation
  Notes to
    Consolidated Financial
    Statements  (continued)
       97




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm  
  Internal Control 
    Integrated Framework
        
    98




---



##### Table of Contents



Supplementary
    Financial Data
    Interim Financial Information (Unaudited)
  QuarterFirst


Second


Third


Fourth(In thousands, except per share amounts)Year Ended December 31, 2009Revenues

$
482,279


$
520,665


$
578,419


$
637,796Gross profit


170,072



180,893



225,586



266,850Net (loss)/income


(103,547
)


(61,483
)


52,485



64,826Basic (loss)/income per share:

$
(0.16
)

$
(0.09
)

$
0.08


$
0.10Diluted (loss)/income per share:

$
(0.16
)

$
(0.09
)

$
0.08


$
0.10Year Ended December 31, 2008Revenues

$
660,747


$
692,063


$
714,308


$
609,959Gross profit


259,553



284,896



297,417



227,103Net (loss)/income


(13,628
)


(13,647
)


11,371



(606,349
)Basic (loss)/income per share:

$
(0.02
)

$
(0.02
)

$
0.02


$
(0.94
)Diluted (loss)/income per share:

$
(0.02
)

$
(0.02
)

$
0.02


$
(0.94
)          99




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation of Disclosure Controls and
    Procedures:
  Managements Report on Internal Control Over Financial
    Reporting: Rule 13a-15(f)
  Internal Control  Integrated
    Framework
    Changes in Internal Controls:
  Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance  http://www.lsi.com/governance.
 100




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##### Table of Contents



Room 10A-301C
   1-800-372-2447
    Item 11.
    Executive
    Compensation      Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accounting Fees and Services   101




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##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules    Form 10-K:
  PAGE INTHE FORM10-KConsolidated Balance Sheets  As of
    December 31, 2009 and 2008


42Consolidated Statements of Operations 
    For the Three Years Ended December 31, 2009, 2008 and
    2007


43Consolidated Statements of Stockholders
    Equity  For the Three Years Ended December 31,
    2009, 2008 and 2007


44Consolidated Statements of Cash Flows 
    For the Three Years Ended December 31, 2009, 2008 and
    2007


45Notes to Consolidated Financial Statements


46Report of Independent Registered Public
    Accounting Firm


98     Form 10-K:
  SCHEDULE II
    VALUATION AND QUALIFYING ACCOUNTS
    (In millions)
  Column A

Column B

Column C

Column D

Column EBalance at

Additions Charged to



Balance atBeginning of

Costs, Expenses



End ofDescription

Period

or Other Accounts

Deductions*

Period2009Accounts Receivable Allowances

$
10


$
12


$
(12
)

$
102008Accounts Receivable Allowances

$
10


$
7


$
(7
)

$
102007Accounts Receivable Allowances

$
14


$
6


$
(10
)

$
10     *
    
    Deductions include write-offs of uncollectible accounts and
    collections of amounts previously reserved.  Exhibits
    Exhibits
  Form 10-K.
  Financial statement schedule
   102




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##### Table of Contents



SIGNATURES      By:
    /s/  Abhijit
    Y. Talwalkar         Signature

Title

Date/s/  Abhijit
    Y. TalwalkarAbhijit
    Y. Talwalkar

President and Chief Executive Officer and Director (Principal
    Executive  Officer)

February 26, 2010/s/  Bryon
    LookBryon
    Look

Executive Vice President, Chief Financial Officer and Chief
    Administrative Officer (Principal Financial Officer and
    Principal Accounting Officer)

February 26, 2010*Charles
    A. Haggerty

Director

February 26, 2010*Richard
    S. Hill

Director

February 26, 2010*John
    H.F. Miner

Director

February 26, 2010*Arun
    Netravali

Director

February 26, 2010*Matthew
    J. ORourke

Director

February 26, 2010*Michael
    G. Strachan

Director

February 26, 2010*Gregorio
    Reyes

Director

February 26, 2010*Susan
    Whitney

Director

February 26, 2010*By: /s/  Bryon
    LookBryon
    Look
    Attorney-in-fact
    February 26, 2010  103




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##### Table of Contents



EXHIBIT INDEX  2
.1

Agreement and Plan of Merger, dated as of December 3, 2006,
    by and among LSI Logic Corporation, Atlas Acquisition Corp. and
    Agere Systems Inc. Incorporated by reference to Exhibit 2.1
    to our Current Report on
    Form 8-K
    filed on December 4, 2006.2
.2.1

Asset Purchase Agreement, dated as of July 25, 2007, among
    STATS ChipPAC (Thailand) Limited and STATS ChipPAC Ltd. and LSI
    (Thai) Ltd. and LSI Corporation. Incorporated by reference to
    Exhibit 2.1 to our Current Report on
    Form 8-K
    filed on October 9, 2007.2
.2.2

Amendment No. 1 to Asset Purchase Agreement, dated as of
    July 25, 2007, among STATS ChipPAC (Thailand) Limited and
    STATS ChipPAC Ltd. and LSI (Thai) Ltd. and LSI Corporation.
    Incorporated by reference to Exhibit 2.2 to our Current
    Report on
    Form 8-K
    filed on October 9, 2007.2
.3

Asset Purchase Agreement, dated as of August 20, 2007, by
    and between LSI Corporation and Infineon Technologies AG.
    Incorporated by reference to Exhibit 2.1 to our Current
    Report on
    Form 8-K
    filed on October 30, 2007.3
.1

Certificate of Incorporation. Incorporated by reference to
    Exhibit 3.2 to our Current Report on
    Form 8-K
    filed on November 16, 2009.3
.2

By-laws. Incorporated by reference to Exhibit 3.1 to our
    Current Report on
    Form 8-K
    filed on August 25, 2008.4
.1

Indenture relating to our 4% Convertible Subordinated Notes
    due 2010. Incorporated by reference to Exhibit 4.5 to our
    Quarterly Report on
    Form 10-Q
    filed on August 13, 2003.4
.2

Specimen Common Stock Certificate. Incorporated by reference to
    Exhibit 4.3 to our Annual Report on
    Form 10-K
    filed on March 2, 2009.10
.1

Form of Indemnification Agreement. Incorporated by reference to
    exhibit 10.1 to our Current Report on
    Form 8-K
    filed on February 22, 2008.*10
.2

LSI Corporation Severance Policy for Executive Officers.
    Incorporated by reference to Exhibit 10.3 to our Current
    Report on
    Form 8-K
    filed on May 20, 2008.*10
.3.1

1991 Equity Incentive Plan. Incorporated by reference to
    Exhibit 4.5 to our Registration Statement on
    Form S-8
    (No. 333-96543)
    filed on July 16, 2002.*10
.3.2

1991 Equity Incentive Plan Nonqualified Stock Option Agreement.
    Incorporated by reference to Exhibit 10.1 to our Quarterly
    Report on
    Form 10-Q
    filed on November 12, 2004.*10
.3.3

1991 Equity Incentive Plan Form of Notice of Grant of Stock
    Options and Option Agreement. Incorporated by reference to
    Exhibit 10.2 to our Quarterly Report on
    Form 10-Q
    filed on November 12, 2004.*10
.4.1

1995 Director Option Plan. Incorporated by reference to
    Exhibit 4.4 to our Registration Statement on
    Form S-8
    (No. 333-106205)
    filed on June 17, 2003.*10
.4.2

Form of Annual Director Option Agreement under
    1995 Director Option Plan. Incorporated by reference to
    Exhibit 1.3 to our Current Report on
    Form 8-K
    filed on April 7, 2005.*10
.4.3

Form of Notice of Grant of Stock Options and Option Agreement
    under 1995 Director Option Plan. Incorporated by reference
    to Exhibit 1.4 to our Current Report on
    Form 8-K
    filed on April 7, 2005.*10
.5

1999 Nonstatutory Stock Option Plan. Incorporated by reference
    to Exhibit 4.2 to our Registration Statement on
    Form S-8
    (No. 333-96549)
    filed on July 16, 2002.*10
.6.1

2003 Equity Incentive Plan. Incorporated by reference to
    Exhibit 10.1 to our Current Report on
    Form 8-K
    filed on May 20, 2008.*10
.6.2

2003 Equity Incentive Plan Form of Nonqualified Stock Option
    Agreement for Employees.*10
.6.3

2003 Equity Incentive Plan Form of Notice of Grant of Stock
    Option. Incorporated by reference to Exhibit 10.2 to our
    Current Report on
    Form 8-K
    filed on February 13, 2009.*10
.6.4

2003 Equity Incentive Plan Form of Restricted Stock Unit
    Agreement.*10
.6.5

2003 Equity Incentive Plan Form of Restricted Stock Unit
    Agreement for Non-Employee Directors.*10
.6.6

2003 Equity Incentive Plan Form of Notice of Grant of Restricted
    Stock Units.*10
.6.7

2003 Equity Incentive Plan Form of Notice of Grant of Restricted
    Stock Units (Revenue and non-GAAP operating income performance
    tests). Incorporated by reference to Exhibit 10.1 to our
    Current Report on
    Form 8-K
    filed on February 17, 2010.*10
.6.8

2003 Equity Incentive Plan Form of Nonqualified Stock Option
    Agreement for Non-Employee Directors. Incorporated by reference
    to Exhibit 10.5 to our Current Report on
    Form 8-K
    filed on February 13, 2009.*




---



##### Table of Contents



10
.6.9

Abhijit Y. Talwalkar 2003 Equity Incentive Plan Nonqualified
    Stock Option Agreement, effective as of June 1, 2005.
    Incorporated by reference to Exhibit 10.49 to our Quarterly
    Report on
    Form 10-Q
    filed on August 12, 2005.*10
.6.10

Abhijit Y. Talwalkar Notice of Grant of Stock Option, effective
    as of June 1, 2005. Incorporated by reference to
    Exhibit 10.50 to our Quarterly Report on
    Form 10-Q
    filed on August 12, 2005.*+10
.7

Standalone Stock Option Agreement issued to Abhijit Y.
    Talwalkar. Incorporated by reference to Exhibit 10.1 to our
    Registration Statement on
    Form S-8
    (No. 333-126594)
    filed on July 14, 2005.*10
.8.1

Agere Systems Inc. 2001 Long Term Incentive Plan. Incorporated
    by reference to Exhibit 10.1 to Ageres Quarterly
    Report on
    Form 10-Q
    filed on May 5, 2006.*10
.8.2

Agere Systems Inc. 2001 Long Term Incentive Plan Form of
    Nonstatutory Stock Option Agreement. Incorporated by reference
    to Exhibit 10.8 to Ageres Registration Statement on
    Form S-1/A,
    File
    No. 333-51594,
    filed on February 7, 2001.*10
.8.3

Agere Systems Inc. 2001 Long Term Incentive Plan Form of
    Restricted Stock Unit Award Agreement. Incorporated by reference
    to Exhibit 10.7 to Ageres Registration Statement on
    Form S-1/A,
    File
    No. 333-51594,
    filed on February 7, 2001.*10
.8.4

Form of Agere Performance-vested RSU Award Agreement 
    Earnings per share. Incorporated by reference to
    Exhibit 10.13 to Ageres Annual Report on
    Form 10-K,
    filed on December 1, 2006.*10
.9

1996 Lucent Long Term Incentive Program For Agere Employees.
    Incorporated by reference to Exhibit 10.28 to Ageres
    Annual Report on
    Form 10-K
    filed on December 12, 2002.*10
.10

1997 Lucent Long Term Incentive Plan For Agere Employees.
    Incorporated by reference to Exhibit 10.29 to Ageres
    Annual Report on
    Form 10-K,
    filed December 12, 2002.*10
.11.1

LSI Corporation Incentive Plan. Incorporated by reference to
    Exhibit 10.1 to our Current Report on
    Form 8-K
    filed on May 18, 2009.*10
.11.2

Written Description of 2008 bonus program for named executive
    officers. Incorporated by reference to Exhibit 10.1 of our
    Current Report on
    Form 8-K
    filed on March 4, 2008.*10
.12

Policy on Recoupment of Incentive Compensation.*10
.13

LSI Employee Commuter Expense Reimbursement Policy. Incorporated
    by reference to Exhibit 10.2 to our Current Report on
    Form 8-K
    filed on May 15, 2007.*10
.14

Agere Systems Inc. Supplemental Pension Plan. Incorporated by
    reference to Exhibit 10.10 to Ageres Registration
    Statement on
    Form S-1,
    File
    No. 333-51594,
    filed on February 7, 2001.*10
.15

Description of Mr. Talwalkars Housing Allowance.
    Incorporated by reference to Exhibit 10.2 to our Current
    Report on
    Form 8-K
    filed on May 20, 2008.*10
.16.1

Retention Agreement with Andrew Micallef. Incorporated by
    reference to Exhibit 10.18 to our Quarterly Report on
    Form 10-Q
    filed on May 11, 2007.*10
.16.2

International Assignment Agreement with Andrew Micallef.
    Incorporated by reference to Exhibit 10.4 to our Quarterly
    Report on
    Form 10-Q
    filed on August 8, 2008.*10
.16.3

Extension of International Assignment Agreement with Andrew
    Micallef. Incorporated by reference to Exhibit 10.1 to our
    Current Report on
    Form 8-K
    filed on August 25, 2008.*10
.17

Retention Agreement with Jean Rankin. Incorporated by reference
    to Exhibit 10.19 to our Quarterly Report on
    Form 10-Q
    filed on May 11, 2007.*10
.18

Retention Agreement with Ruediger Stroh. Incorporated by
    reference to Exhibit 10.21 to our Quarterly Report on
    Form 10-Q
    filed on May 11, 2007.*10
.19

Separation Agreement with Ruediger Stroh. Incorporated by
    reference to Exhibit 10.33 to our Annual Report on
    Form 10-K
    filed on March 2, 2009.*10
.20

Separation Agreement with Claudine Simson. Incorporated by
    reference to Exhibit 10.34 to our Annual Report on
    Form 10-K
    filed on March 2, 2009.*21


List of Subsidiaries.23


Consent of Independent Registered Public Accounting Firm.24


Power of Attorney.31
.1

Certification of the Chief Executive Officer pursuant to
    Securities Exchange Act
    Rule 13a-14(a).31
.2

Certification of the Chief Financial Officer pursuant to
    Securities Exchange Act
    Rule 13a-14(a).




---



##### Table of Contents



32
.1

Certification of the Chief Executive Officer pursuant to
    18 U.S.C. Section 1350.**32
.2

Certification of the Chief Financial Officer pursuant to
    18 U.S.C. Section 1350.**     *
    
    Denotes management contract or compensatory plan or arrangement.+
    
    Confidential treatment has been granted with respect to certain
    portions of these exhibits. Redacted versions have been filed
    with the Securities and Exchange Commission.**
    
    Furnished, not filed.  001-16397.