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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, 2006ORo

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 LOGIC 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 ExchangePreferred Share Purchase Rights

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




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TABLE OF CONTENTS  FORWARD-LOOKING STATEMENTSPART IItem 1. BusinessItem 1A. Risk Factors.Item 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Submission of Matters to a Vote of Security HoldersPART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesItem 6. Selected Financial DataItem 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 7A. Quantitative and Qualitative Disclosures about Market RiskItem 8. Financial Statements and Supplementary DataConsolidated Statements of Stockholders EquityConsolidated Statements of Cash FlowsNotes to Consolidated Financial StatementsReport of Independent Registered Public Accounting FirmItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPART IIIItem 10. Directors, Executive Officers and Corporate Governance.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.PART IVItem 15. Exhibits and Financial Statement SchedulesSIGNATURESPOWER OF ATTORNEYINDEX TO EXHIBITSEXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2    Table of Contents       DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K:
 
  FORWARD-LOOKING
    STATEMENTS
  Form 10-K Form 10-K. Form 10-K
 2




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PART I
 
  Item 1.
    Business  General
  silicon-to-system
  ® system-on-chip
    system-on-a-chip
    (408) 433-8000. www.lsi.com Form 10-K. Form 10-Q, Form 8-K
 3




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http://www.sec.gov (800) 732-0330.
  Recent
    Developments
  Proposed Merger with Agere.
        
    Complementary Businesses.  The products and
    development capabilities of LSI and Agere are complementary, and
    should enable the combined company to compete more effectively
    in their target markets. The combined company should be stronger
    than either company on its own, with greater breadth and depth
    in storage and networking/communications product offerings and a
    greater ability to develop new product offerings in these market
    segments. In addition, the combined company is expected to
    benefit from access to large growth markets, such as those
    served by the mobile products business of Agere and the consumer
    products business of LSI.
    Customers.  The combined company is expected to
    have deep relationships with many of the market-leading
    customers in our chosen markets. We expect to improve our
    ability to expand current customer relationships, and expect to
    increase the penetration of new customer accounts. We believe
    that the combination of the two companies product lines
    and engineering resources should enable the combined company to
    meet customer needs more effectively and to deliver more
    complete solutions to our customers. In addition, we believe
    that the larger sales organization, greater marketing resources
    and financial strength of the combined company may lead to
    improved opportunities for marketing the combined companys
    products. 4




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
    Engineering Talent.  The combined company will
    have over 4,200 engineers, including over 1,700 that hold
    masters or doctorate degrees, which should enable the combined
    company to compete more effectively by developing innovative
    products and delivering greater value to customers more rapidly
    than either company could do on a stand-alone basis.
    Intellectual Property Portfolio.  The combined
    company will have over 10,000 pending and issued
    U.S. patents, which will be one of the largest intellectual
    property portfolios in the semiconductor industry. This
    portfolio is expected to provide the combined company with
    additional licensing opportunities.
    Reduction in Operating Costs.  The combined
    company is expected to realize substantial cost savings
    beginning in 2007, with annual cost savings reaching at least
    $125 million in 2008 from increased efficiencies in
    manufacturing and operating expenses. We expect the combined
    company to achieve benefits from exercising greater purchasing
    power with its suppliers, and consolidation and reduction of
    areas of overlap in operating expenses, including the expenses
    of maintaining two separate public companies.
    Stronger Financial Position.  The combined
    company will have greater scale and financial resources. We
    expect that this stronger financial position will improve the
    combined companys ability to support product development
    strategies; to respond more quickly and effectively to customer
    needs, technological change, increased competition and shifting
    market demand; and to pursue strategic growth opportunities in
    the future, including acquisitions.
    Stock-for-Stock
    Transaction with Fixed Exchange Ratio.  The
    stockholders of each of LSI and Agere will share in the benefits
    expected from the synergies and cost savings the combined
    company will generate. The fact that the merger consideration is
    based on a fixed exchange ratio provides certainty as to the
    number of shares of LSI common stock that will be issued to
    Agere stockholders.  Form S-4 www.sec.gov. www.agere.com www.lsi.com. Form 10-K,
  Announcement of Stock Repurchase Program.
  Pending Acquisition of SiliconStor, Inc.
 5




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Business
    Strategy
    Semiconductor
    Business Strategy
    
    Target Growth Markets and Customers.  We
    concentrate our sales and marketing efforts on leading OEM
    customers in targeted growth markets. Our engineering expertise
    is focused on developing technologies that will meet the product
    and service needs of our customers in order to succeed in these
    market areas.
    Promote Highly Integrated Design
    Technology.  We use proprietary and leading
    third-party electronic design automation, or EDA, software
    design tools. We continually evaluate and, as appropriate,
    develop expertise with third-party EDA tools from leading and
    emerging suppliers of such products.
    Provide Flexibility in Design Engineering.  We
    engage with customers of our semiconductor products under
    various arrangements whereby the extent of the engineering
    support we provide will be determined in accordance with the
    customers requirements. For example, a customer may
    primarily use its own engineers for substantial development of
    its product design and retain our support for silicon-specific
    engineering work. We also enter into engineering design
    projects, including those on a turn-key basis.
    Deploy a Fabless Semiconductor Manufacturing
    Model.  On September 13, 2005, we announced
    our intention to sell our Gresham, Oregon manufacturing facility
    as part of our strategy to transition to a fabless semiconductor
    manufacturing model. We completed the sale of this facility to
    Semiconductor Components Industries, LLC, a wholly owned
    subsidiary of ON Semiconductor Corporation (ON
    Semiconductor), on May 15, 2006. Since announcing our
    intention to sell this facility, our wafer manufacturing
    strategy has been to expand our working relationships with major
    foundry partners and to adopt a roadmap leading to the
    production of advanced semiconductors utilizing 65-nanometer and
    below process technology on
    300-mm or
    12-inch
    wafers. This model enables us to focus on developing innovative
    intellectual property and products, while reducing capital and
    operating infrastructure requirements. We perform substantially
    all of our packaging, assembly and final test operations through
    subcontractors in Asia. If we complete our proposed merger with
    Agere, we will acquire Ageres 51% equity interest in
    Silicon Manufacturing Partners, a joint venture with Chartered
    Semiconductor Manufacturing Ltd. that operates a semiconductor
    wafer manufacturing facility in Singapore, as well as
    Ageres assembly and test facilities in Asia.
    Leverage Alliances with Key Partners.  We are
    continually seeking to establish relationships with key partners
    in a diverse range of technologies to promote new products,
    services, operating standards and manufacturing capabilities and
    to avail ourselves of cost efficiencies that may be obtained
    through collaborative development.
    Forge Successful Partnerships with Leading Distribution
    Partners.  Our partner program is designed to
    effectively market our host bus adapter product families and
    integrated circuit products utilizing distribution and reseller
    partnerships. Such partnerships help us to provide an extended
    range of customers with the full spectrum of product offerings,
    services and support needed to enable their success.
    Develop and Drive Industry Standards to Achieve Market
    Advantage.  We are a leader in developing and
    promoting important industry standard architectures, functions,
    protocols and interfaces. We believe that this leadership will
    enable us to quickly launch new standard-based products,
    allowing our customers to achieve
    time-to-market
    and other competitive advantages.
    Operate Worldwide.  We market our products and
    engage with our customers on a worldwide basis through direct
    sales, marketing and field technical staff and through
    independent sales representatives and 6




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distributors. Our network of design centers located in major
    markets allows us to provide customers with highly experienced
    engineers, to interact with customer engineering management and
    system architects, to develop designs for new products and to
    provide continuing after-sale customer support.  Storage
    Systems Business Strategy
  sub-assemblies.
  
    Continuing to Innovate and Extend Our Product
    Offering.  We intend to adopt and implement
    innovative storage system technologies, interfaces, features and
    customer requirements. In addition, we intend to define, design
    and develop products that enable our channel customers to offer
    a broad storage system product line, which incorporates their
    own intellectual property, to address multiple markets. In this
    manner, we intend to continue to expand our product offerings in
    the mid-range markets and further into the entry-level markets.
    Adding Feature Functionality to Meet Expanding Enterprise
    Requirements.  Implementation and management of
    storage systems within the enterprise is increasingly complex.
    To address this increasing complexity, we plan to develop or
    acquire additional premium software management and hardware
    system features to enhance reliability, data availability and
    serviceability of our products. For example, in November 2006,
    we acquired StoreAge Networking Technologies Ltd. (together with
    its subsidiaries collectively referred to as
    StoreAge), a privately held company based in Nesher,
    Israel that provides SAN storage management and multi-tiered
    data protection software for enterprises. We also intend to
    expand our LSI Storage Solutions program, which is designed to
    help our customers rapidly implement our products for specific
    business applications.
    Enhancing Interoperability Among Our Products, Our
    Customers Products and Other Leading Enterprise
    Products.  We provide significant value to our
    channel customers and enterprises by testing and certifying our
    products with the products of other leading enterprise
    information technology vendors to ensure broad interoperability
    and compatibility. We intend to work closely with our channel
    customers and enterprises to extend and enhance the capabilities
    of our storage
    sub-assemblies
    and storage management software. We also seek to enhance our
    position in the storage industry by actively participating in a
    variety of organizations focused on developing standards for
    emerging technologies and facilitating industry-wide
    interoperability.
    Obtaining New Channel Customers.  Our channel
    customers sell storage solutions based on or incorporating our
    products and technology through their direct sales forces and
    other channels. We will continue to seek new customers in
    domestic and international markets in order to expand the total
    marketing and sales resources that are focused on our products.
    In this manner, we intend to increase the market addressable by
    our products.
    Expanding Our Joint Marketing and Sales Efforts With Existing
    and New Channel Customers.  We seek to add value
    to our customers sales, marketing and support initiatives
    through the provision of extensive training, customized
    go-to-market
    campaigns, product positioning, marketing materials, competitive
    analysis and product support infrastructure. We maintain 16
    Experience Centers worldwide, which allow our channel customers
    to demonstrate to enterprise users the performance and benefits
    of storage deployments incorporating our products. We plan to
    continue to add additional demonstration capabilities to reach a
    broader customer base in the future.
    Promoting Our Brand.  We believe that a strong
    association of our brand with innovation and integrity is
    valuable in achieving increased scale, market leadership and OEM
    acceptance within our industry. Furthermore, we believe that
    brand recognition and reputation will become more important as
    OEMs increasingly outsource their storage system offerings and
    their customers focus on the performance and reliability of the
    storage systems or
    sub-assemblies
    integrated into OEM storage solutions. We intend to continue to
    promote our brand and build brand equity to establish and
    bolster our position in the disk storage systems and related
    storage management software markets. 7




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Products
    and Services
  Semiconductor
    Products
      Storage Components.
  
    Storage Standard Products.  Our standard
    product solutions include Fibre Channel, Serial-Attached SCSI
    (SAS), Serial ATA (SATA) and SCSI
    standard products, including host adapter ICs for motherboard
    and adapter applications, SCSI and SAS expander ICs, storage
    adapter boards and our own
    Fusion-MPTtm
    software drivers for these product families. We are an industry
    leader in the on-going development of new storage interface
    standards and products, including SAS. In February 2007, we
    entered into an agreement to acquire SiliconStor, a privately
    held company that provides storage technology focused on the
    SATA and SAS markets and is shipping patent-pending products
    that improve the performance, reliability, and manageability of
    SATA drives when used in a SAS environment.
    Storage Custom Solutions.  We also offer custom
    solutions to customers who develop Fibre Channel storage area
    network (SAN) switches and host adapters, storage
    systems, hard disk drives and tape peripherals. Through
    leveraging our extensive experience in providing solutions for
    these applications, we have developed a full portfolio of
    high-speed interface
    CoreWare®
    that is employed for custom solution platforms that provide a
    connection to the network, the SAN, memory and host buses. Using
    these pre-verified interfaces, our customers reduce development
    risk and achieve quicker time to market. Our
    CoreWare®
    offerings include the
    GigaBlaze®
    high performance SerDes Core supporting Fibre Channel, SATA,
    Gigabit Ethernet, Infiniband, SAS, Serial RapidIO and
    PCI-Express industry standards and a family of high-performance
    Fibre Channel, RapidIO, PCI-E, SAS and SATA protocol controllers.  Consumer Products.
  
    Consumer Standard Products.  We design,
    develop, manufacture and market semiconductor devices, along
    with enabling software and reference system designs to enable a
    variety of digital video and audio applications utilizing our
    core competency in media processing. We are focused on providing
    solutions for high-growth applications such as DVD recorders,
    digital set-top boxes, and a variety of combination products
    such as DVD recorder /VCR, DVD recorder/PVR and DVD
    recorder/digital set-top box as well as broadcast encoders. At
    the center of our standard product strategy is our industry
    leading
    DoMiNo®
    architecture. Products based on this flexible architecture
    provide software programmable, cost-effective solutions to our
    customers in our target markets.
    Consumer Custom Solutions.  We offer
    system-on-a-chip
    solutions for consumer applications. We focus on consumer market
    segments employing our intellectual property portfolio, media
    processing expertise, system level knowledge, design methodology
    and turn-key product offerings to provide customized solutions
    to our customers. We are focused on providing solutions to
    portable consumer appliances such as digital audio players,
    portable media players, global positioning systems, edutainment
    and electronic toys and other emerging multimedia applications
    utilizing in many cases our
    Zeviotm
    architecture. 8




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Communications Products. system-on-a-chip
  Storage
    Systems Products
  sub-assemblies sub-assemblies
  sub-assemblies e-commerce,
  ®
    Semiconductor
    Design Services
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Marketing
    and Distribution
  Semiconductor
    Marketing and Distribution
        Storage
    Systems Marketing and Distribution
    go-to-market
  Customers
   10




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Semiconductor
    Customers
    Storage
    Systems Customers
    Manufacturing
  Semiconductor
    Manufacturing
    sub-micron
  300-mm 12-inch
 11




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system-on-a-chip
  Storage
    Systems Manufacturing
    sub-assemblies build-to-order, configure-to-order,
  sub-assemblies
  Backlog
  Semiconductor
    Backlog
    Storage
    Systems Backlog
   12




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Competition
  Semiconductor
    Competitors
        
    design capabilities;
    differentiating product features;
    product performance characteristics;
    time to market;
    price; and
    utilization of emerging industry standards.      Storage
    Systems Competitors
      
    features and functionality;
    product performance and price;
    reliability, scalability and data availability; 13




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
    interoperability with other networking devices;
    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
           14




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Research
    and Development
        Year

Amount


Percent of Revenue2006

$
413,432



21%2005

$
399,685



21%2004

$
427,805



25%     Working
    Capital
    Financial
    Information about Segments and Geographic Areas
      Environmental
    Regulation
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2002/95/EC
  
    the need for additional capital improvements to comply with such
    regulations or to restrict discharges;
    liability to our employees
    and/or third
    parties; and/or
    business interruptions as a consequence of permit suspensions or
    revocations or as a consequence of the granting of injunctions
    requested by governmental agencies or private parties.  Employees
      Seasonality
   
  Item 1A.
    Risk
    Factors.  We are subject to a number of risks. Some of the risks that
    we face are endemic to the semiconductor industry, but the fact
    that certain risks are endemic to our industry does not lessen
    the significance of these risks. You should carefully consider
    all of the following risk factors and the other information in
    this Annual Report on
    Form 10-K
    in evaluating our business.
  We are subject to a number of risks associated with our
    pending merger with Agere. On December 3, 2006, we entered
    into a merger agreement with Agere and we publicly announced the
    signing of the merger agreement on December 4, 2006.
    Pursuant to the terms and subject to the conditions set forth in
    the merger agreement, at the effective time of the proposed
    merger a wholly owned subsidiary of LSI will merge with and into
    Agere, with Agere continuing as the surviving corporation of the
    merger and becoming a wholly-owned subsidiary of LSI. Upon
    completion of the merger, each share of Agere common stock that
    is outstanding at the effective time of the merger will be
    converted into the right to receive 2.16 (the Exchange
    Ratio) shares of common stock of LSI. Each outstanding
    option to purchase Agere common stock, whether or not then
    vested or exercisable, shall be assumed by LSI and will be
    exercisable for a number of shares of LSI common stock at an
    exercise price adjusted to reflect the Exchange Ratio. The
    completion of the proposed merger is subject to various
    customary conditions, including (i) obtaining the approval
    of the LSI and Agere stockholders, (ii) absence of any
    applicable law prohibiting the merger, (iii) certain
    regulatory approvals, (iv) subject to certain exceptions,
    the accuracy of the representations and warranties of each
    party, and (v) performance in all material respects by each
    party of its obligations under the merger agreement. Our pending
    merger with Agere is described in detail in the Registration
    Statement on
    Form S-4
    that we have filed with the SEC in connection with the merger
    and in the joint proxy statement/prospectus included in such
    registration statement. You should read and consider the
    information in such registration statement and joint proxy
    statement/prospectus.
  As a result of the many risks that we face, our business,
    financial condition or results of operations could be materially
    and adversely affected. This could cause the trading price of
    our common stock to decline, and stockholders might lose some or
    all of their investment.
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Please consider the following risk factors when you read
    forward-looking statements elsewhere in this Annual
    Report on
    Form 10-K
    and in the information incorporated herein by reference.
    Forward-looking statements are statements that relate to our
    expectations for future events and time periods. Generally, the
    words, anticipate, expect,
    intend and similar expressions identify
    forward-looking statements. Forward-looking statements involve
    risks and uncertainties, and actual results could differ
    materially from those anticipated in the forward-looking
    statements.
  Risk
    Factors Relating to our Proposed Merger with Agere
  The
    issuance of shares of LSI common stock to Agere stockholders in
    the proposed merger with Agere will substantially reduce the
    percentage interests of LSI stockholders.
    The
    proposed merger with Agere is subject to the receipt of consents
    and approvals from government entities that may impose
    conditions that could have an adverse effect on LSI or Agere or
    could cause abandonment of the merger.
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The
    proposed merger with Agere may not be completed, and any delay
    in completing the proposed merger with Agere may significantly
    reduce the benefits expected to be obtained from the
    merger.
    Customer
    uncertainties related to the proposed merger with Agere could
    adversely affect our business, revenues and gross
    margins.
    Provisions
    of the merger agreement may deter alternative business
    combinations and could negatively affect our stock price if the
    merger agreement is terminated in certain
    circumstances.
      If the
    proposed merger with Agere is not completed, we will have
    incurred substantial costs that may adversely affect our results
    of operations and the market price of our common
    stock.
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Risk
    Factors Relating to our Business and Risk Factors Relating to
    the Business of the Combined Company if our Proposed Merger with
    Agere is completed
  We may
    fail to realize the benefits expected from the proposed merger
    with Agere, which could adversely affect the value of our common
    stock.
      
    Demonstrating to customers of LSI and Agere that the merger will
    not result in adverse changes to the ability of the combined
    company to address the needs of customers or the loss of
    attention or business focus;
    Coordinating and integrating independent research and
    development teams across technologies and product platforms to
    enhance product development while reducing costs;
    Combining product offerings;
    Consolidating and integrating corporate, information technology,
    finance, and administrative infrastructures;
    Coordinating sales and marketing efforts to effectively position
    the capabilities of the combined company and the direction of
    product development; and
    Minimizing the diversion of management attention from important
    business objectives.   19




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We
    must attract and retain key employees in a highly competitive
    environment; uncertainties associated with the proposed merger
    with Agere may cause a loss of employees and may otherwise
    materially adversely affect the businesses of LSI and Agere, and
    the future business and operations of the combined
    company.
    The
    industries in which we operate are highly cyclical, and our
    operating results may fluctuate.
    General
    economic weakness and geopolitical factors may harm our
    operating results and financial condition.
    We are
    dependent upon a limited number of customers.
    We
    depend upon independent foundry subcontractors to manufacture
    our semiconductor products; accordingly, any failure to secure
    and maintain sufficient foundry capacity could materially and
    adversely affect our business.
    
    a manufacturer may be unwilling to devote adequate capacity to
    production of our products or may be unable to produce our
    products; 20




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
    a manufacturer may not be able to develop manufacturing methods
    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 our suppliers; and
    we may have reduced control over delivery schedules, quality,
    manufacturing yields and costs of products.    state-of-the-art
  We
    operate in intensely competitive markets.
  and/or
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Our
    target markets are characterized by rapid technological
    change.
      Order
    or shipment cancellations or deferrals could cause our revenue
    to decline or fluctuate.
    We
    design and develop highly complex products that require
    significant investments.
    Our
    products may contain defects.
    
    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.   22




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Our
    manufacturing facilities have high fixed costs and involve
    highly complex and precise processes.
    start-up
  Failure
    to qualify our products or our suppliers manufacturing
    lines may adversely affect our results of
    operations.
    We
    depend upon third-party subcontractors to assemble, obtain
    packaging materials for, and test certain
    products.
    A
    widespread outbreak of an illness or other health issue could
    negatively affect our manufacturing, assembly and test, design
    or other operations.
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and/or and/or
  We
    procure parts and raw materials from a limited number of
    domestic and foreign sources.
    If our
    new product development and expansion efforts are not
    successful, our results of operations may be adversely
    affected.
    We may
    engage in acquisitions and alliances giving rise to financial
    and technological risks.
  system-on-chip
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The
    semiconductor industry is prone to intellectual property
    litigation.
    We may
    not be able to adequately protect or enforce our intellectual
    property rights, which could harm our competitive
    position.
    A
    decline in the revenue that we expect to derive from the
    licensing of intellectual property could have a significant
    impact on net income.
    We
    conduct a significant amount of activity outside of the United
    States, and are exposed to legal, business, political and
    economic risks associated with our international
    operations.
  non-U.S. suppliers
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
    political, social and economic instability;
    fluctuations in foreign currency exchange rates;
    exposure to different legal standards, particularly with respect
    to intellectual property;
    natural disasters 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;
    difficulties in collecting receivables from foreign entities or
    delayed revenue recognition; and
    potentially adverse tax consequences.  We may
    rely on the capital markets
    and/or bank
    markets to provide financing.
  and/or
  We
    utilize indirect channels of distribution over which we will
    have limited control.
    We may
    not be able to collect all of our accounts receivable from
    customers.
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The
    price of our securities may be subject to wide
    fluctuations.
      Future
    changes in financial accounting standards or practices or
    existing taxation rules or practices may cause adverse
    unexpected fluctuations and affect reported results of
    operations.
  and/or SFAS 123-R. SFAS 123-R
    We
    face uncertainties related to the effectiveness of internal
    controls.
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Internal
    control deficiencies or weaknesses that are not yet identified
    could emerge.
   
  Item 1B.
    Unresolved
    Staff Comments   
  Item 2.
    Properties             
  Item 3.
    Legal
    Proceedings   
  Item 4.
    Submission
    of Matters to a Vote of Security Holders   28




---



##### Table of Contents



Executive
    Officers of LSI
    Name

Age

PositionAbhijit Y. Talwalkar


42


President and Chief Executive
    OfficerPhilip G. Brace


36


Senior Vice President, Corporate
    Planning and MarketingPhilip W. Bullinger


42


Senior Vice President, Engenio
    Storage GroupDonald J. Esses


55


Executive Vice President,
    Worldwide OperationsJon R. Gibson


60


Vice President, Human ResourcesAndrew S. Hughes


41


Vice President, General Counsel
    and Corporate SecretaryBryon Look


53


Executive Vice President and Chief
    Financial OfficerUmesh Padval


49


Executive Vice President, Consumer
    Products GroupD. Jeffrey Richardson


42


Executive Vice President, Custom
    Solutions GroupFlavio Santoni


48


Executive Vice President,
    Worldwide Storage Sales and MarketingWilliam J. Wuertz


49


Senior Vice President, Storage
    Components Group          29




---



##### Table of Contents



21-year
            Form 10-K,
 30




---



##### Table of Contents



PART II
 
  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities    2006


2005High  Low


High  LowFirst Quarter

$
11.56  8.16


$
6.47  5.02Second Quarter

$
11.66  8.46


$
8.69  5.11Third Quarter

$
9.06  7.46


$
10.48  9.12Fourth Quarter

$
10.94  8.05


$
9.91  7.70Year

$
11.66  7.46


$
10.48  5.02       Equity
    Compensation Plan Information
    As of December 31, 2006
  (c)(a)





Number ofNumber of





SecuritiesSecurities to be


(b)


Remaining AvailableIssued upon


Weighted-average


for Future IssuanceExercise of


Exercise Price of


Under EquityOutstanding


Outstanding


Compensation PlansOptions, Warrants


Options, Warrants


(Excluding SecuritiesPlan Category

and Rights


and Rights


Reflected in Column (a))Equity compensation plans approved
    by security holders(1)


23,321,780


$
12.94



62,498,682
(3)Equity compensation plans not
    approved by security holders(2)


35,338,159


$
11.28



15,094,715Total


58,659,939


$
11.94



77,593,397     (1)
    Equity compensation plans approved by security holders are the
    following:  12-month
   31




---



##### Table of Contents



(2)
    Equity compensation plans not previously approved by security
    holders are the following:        12-month
  (3)
    Of the 62,498,682 securities remaining available for future
    issuance under equity compensation plans approved by security
    holders, up to 5,691,593 could be issued in the form of
    restricted stock awards (the number of securities that remain
    available for issuance under the 2003 Plan, subject to the plan
    limits on individual grants. See footnote (1)(ii) above.   32




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##### Table of Contents



PERFORMANCE
    GRAPH
  Comparison
    of Five-year Cumulative Total Return
    among LSI Logic Corporation, the S&P 500 Index
    and the Philadelphia Semiconductor Index
    CUMULATIVE
    TOTAL RETURN
    Based upon initial investment of $100 on December 31,
    2001
    with dividends reinvested
  
  Dec 31, 2001


Dec 31, 2002


Dec 31, 2003


Dec 31, 2004


Dec 31, 2005


Dec 31, 2006LSI Logic Corporation


$
100



$
37



$
56



$
35



$
51



$
57S&P
    500®


$
100



$
78



$
100



$
111



$
117



$
135Philadelphia Semiconductor Index


$
100



$
55



$
98



$
84



$
93



$
91  33




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Five-Year
    Consolidated Summary
  Year Ended December 31,2006


2005


2004


2003


2002(In thousands, except per share amounts)Revenues

$
1,982,148


$
1,919,250


$
1,700,164


$
1,693,070


$
1,816,938Cost of revenues


1,126,894



1,087,558



964,754



1,016,311



1,124,216Additional excess inventory and
    related charges


















45,526Total cost of revenues


1,126,894



1,087,558



964,754



1,016,311



1,169,742Gross profit


855,254



831,692



735,410



676,759



647,196Research and development


413,432



399,685



427,805



453,107



515,974Selling, general and administrative


255,569



238,265



245,460



239,319



247,362Acquired in-process research and
    development


4,284















2,920Restructuring of operations and
    other items, net


(8,427
)


119,052



423,444



180,597



67,136Amortization of intangibles


32,089



62,484



75,050



76,352



78,617Income/(loss) from operations


158,307



12,206



(436,349
)


(272,616
)


(264,813
)Interest expense


(24,263
)


(25,283
)


(25,320
)


(30,703
)


(51,977
)Interest income and other, net


51,277



34,000



22,170



18,933



26,386Income/(loss) before income taxes
    and minority interest


185,321



20,923



(439,499
)


(284,386
)


(290,404
)Provision for income taxes


15,682



26,540



24,000



24,000



1,750Income/(loss) before minority
    interest


169,639



(5,617
)


(463,499
)


(308,386
)


(292,154
)Minority interest in net income of
    subsidiary


1



6



32



161



286Net income/(loss)


169,638


$
(5,623
)

$
(463,531
)

$
(308,547
)

$
(292,440
)Basic net income/(loss) per share

$
0.43


$
(0.01
)

$
(1.21
)

$
(0.82
)

$
(0.79
)Diluted net income/(loss) per share

$
0.42


$
(0.01
)

$
(1.21
)

$
(0.82
)

$
(0.79
)Year-end status:Total assets

$
2,852,144


$
2,796,066


$
2,874,001


$
3,447,901


$
4,012,736Long-term obligations

$
429,400


$
699,050


$
859,545


$
1,007,079


$
1,315,557Stockholders equity

$
1,895,738


$
1,627,950


$
1,618,046


$
2,042,450


$
2,300,355        34




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Statements in this discussion and analysis include
    forward-looking information within the meaning of
    Section 27A of the Securities Act of 1933, as amended, and
    Section 21E of the Securities Exchange Act of 1934, as
    amended. All forward-looking statements included in this
    discussion and analysis are based on information available to us
    on the date of filing of this Annual Report on
    Form 10-K,
    and we assume no obligation to update any such forward-looking
    statements. These statements involve known and unknown risks and
    uncertainties. Our actual results in future periods may be
    significantly different from any future performance suggested in
    this report. In some cases, you can identify forward-looking
    statements by terminology such as may,
    will, expects, plans,
    anticipates, believes,
    estimates, intends,
    projects, predicts, or similar
    expressions. For such statements, we claim the protection under
    the safe harbor for forward-looking statements contained in the
    Private Securities Litigation Reform Act of 1995. Although we
    believe that the expectations reflected in the forward-looking
    statements are reasonable, we cannot guarantee future results,
    levels of activity, performance or achievements. For a detailed
    discussion of risk factors, refer to the Risk
    Factors section set forth in Part I, Item 1A of
    this Annual Report on
    Form 10-K,
    which is incorporated by reference into this Part II,
    Item 7.
  While management believes that the discussion and analysis in
    this report is adequate for a fair presentation of the
    information, we recommend that you read this discussion and
    analysis in conjunction with the remainder of this Annual Report
    on
    Form 10-K.
  OVERVIEW
  silicon-to-system
       35




---



##### Table of Contents



Acquisitions.
    Fair Value ofTangible NetTotal





Assets/




Amortizable


In-ProcessEntity Name;  Segment Included in;

Acquisition

Purchase


Type of


(Liabilities)




Intangible


Research andDescription of Acquired Business

Date

Price


Consideration


Acquired


Goodwill

Assets


DevelopmentStoreAge Networking Technologies,
    Ltd.; Storage segment; SAN storage management and multi-tiered
    data protection software applications

November 21,
    2006

$
47.4


$
47.4 cash



$(4.6
)

$6.1

$
43.5


$
2.4Metta Technology; Semiconductor
    segment; Next generation digital video

November 10,
    2006

$
6.7


$
6.7 cash



$(0.6
)

Not
    applicable 
    asset
    purchase

$
5.4


$
1.9   Proposed Merger with Agere.
     36




---



##### Table of Contents



Form S-4
  RESULTS
    OF OPERATIONS
    Revenues:
  Year Ended December 31,2006


2005


2004(In millions)Semiconductor segment

$
1,223.1


$
1,244.3


$
1,095.1Storage Systems segment


759.0



675.0



605.1Consolidated

$
1,982.1


$
1,919.3


$
1,700.2     2006
    compared to 2005
    Semiconductor
    segment:
        Storage
    Systems segment:
     37




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##### Table of Contents



2005
    compared to 2004
    Semiconductor
    segment:
    
    An increase in revenues for semiconductors used in consumer
    product applications as a result of increased demand for digital
    audio players, DVD-recorders and cable set-top box solutions,
    offset in part by decreases in demand for semiconductors used in
    video game products; and
    An increase in revenues for semiconductors used in storage
    product applications, primarily attributable to higher demand
    for custom silicon used in hard disk drives.    Storage
    Systems segment:
    Significant Customers.
  Year Ended December 31,2006


2005


2004Semiconductor segment:Number of significant customers


1



1



1Percentage of segment revenues


19
%


17
%


11
%Storage Systems segment:Number of significant customers


2



2



3Percentage of segment revenues


47%, 15
%


44%, 12
%


41%, 15%, 11
%Consolidated:Number of significant customers


2



2



1Percentage of consolidated revenues


19%, 12
%


16%, 11
%


16
%   Revenues by geography.
  Year Ended December 31,2006


2005


2004(In millions)Revenues:North America*

$
956.7


$
932.2


$
852.5Asia, including Japan


797.1



756.0



655.1EMEA**


228.3



231.1



192.6Total

$
1,982.1


$
1,919.3


$
1,700.2     *
    
    Revenues by geography are accumulated based on the revenues
    generated by our subsidiaries located within the three
    geographic areas noted in the above table. In the second half of
    2005, Engenio formed new subsidiaries 38




---



##### Table of Contents



within EMEA. As a result, the amounts in the table reflect that
    change as of June 21, 2005 and prior to that all revenues
    generated by Engenio EMEA were previously reported in North
    America.**
    
    EMEA refers to Europe, Middle East and Africa. Our business is
    in Europe and the Middle East.  2006
    compared to 2005
    2005
    compared to 2004
    Operating costs and expenses.
  Gross
    profit margin:
  Year Ended December 31,2006


2005


2004(In millions)Semiconductor segment

$
588.2


$
589.4


$
511.9Percentage of segment revenues


48.1
%


47.4
%


46.7
%Storage Systems segment

$
267.1


$
242.3


$
223.5Percentage of segment revenues


35.2
%


35.9
%


36.9
%Consolidated

$
855.3


$
831.7


$
735.4Percentage of revenues


43.2
%


43.3
%


43.3
%  39




---



##### Table of Contents



2006
    compared to 2005
    Semiconductor
    segment:
    
    A favorable shift in product mix toward more high-margin
    semiconductors used in storage and communication product
    applications and lower prices from our foundry partners.    
    Higher scrap costs in early 2006, mainly due to a manufacturing
    issue with a vendor; and
    Stock-based compensation expense associated with the adoption of
    SFAS 123R as of January 1, 2006. (See Note 3 of
    the Notes.)  Storage
    Systems segment:
    
    Higher product costs associated with the ramp of new integrated
    storage products and drive modules beginning in mid 2006;
    Higher expedite fees in the fourth quarter of 2006 as the result
    of orders coming in later than expected; and
    Stock-based compensation expense associated with the adoption of
    SFAS 123R on January 1, 2006.    2005
    compared to 2004
    Semiconductor
    segment:
    Storage
    Systems segment:
   40




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##### Table of Contents



Research
    and development:
  Year Ended December 31,2006


2005


2004(In millions)Semiconductor segment

$
315.9


$
307.7


$
346.0Percentage of segment revenues


25.8
%


24.7
%


31.6
%Storage Systems segment

$
97.5


$
92.0


$
81.8Percentage of segment revenues


12.8
%


13.6
%


13.5
%Consolidated

$
413.4


$
399.7


$
427.8Percentage of revenues


20.9
%


20.8
%


25.2
%   2006
    compared to 2005
    Semiconductor
    segment:
        Storage
    Systems segment:
      2005
    compared to 2004
    Semiconductor
    segment:
   41




---



##### Table of Contents



Storage
    Systems segment:
    Selling,
    general and administrative:
  Year Ended December 31,2006


2005


2004(In millions)Semiconductor segment

$
157.4


$
150.6


$
150.7Percentage of segment revenues


12.9
%


12.1
%


13.8
%Storage Systems segment

$
98.2


$
87.7


$
94.8Percentage of segment revenues


12.9
%


13.0
%


15.7
%Consolidated

$
255.6


$
238.3


$
245.5Percentage of revenues


12.9
%


12.4
%


14.4
%   2006
    compared to 2005
    Semiconductor
    segment:
    Storage
    Systems segment:
      2005
    compared to 2004
   42




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##### Table of Contents



Semiconductor
    segment:
    Storage
    Systems segment:
  set-up
  Acquired
    in-process research and development:
        Revenue ProjectionsCompany

Acquisition Date

IPR&D


Discount Rate

Extend Through(Dollar amounts in millions)StoreAge

November 2006

$
2.4


28%

2013Metta

November 2006

$
1.9


Not applicable, used a variation
    of the Cost Approach

Not applicable, used a variation
    of the Cost Approach     Project
    descriptions and estimates of completion by
    acquisition.
  StoreAge Networking Technologies Ltd.
  Metta Technology.
  Restructuring
    of operations and other items, net:
  2006
     43




---



##### Table of Contents



2005
      2004
    Stock-based
    compensation:
        Amortization
    of intangibles:
     44




---



##### Table of Contents



Interest
    expense:
        Interest
    income and other, net:
      
    A pre-tax gain of $6.7 million on sale of certain
    marketable
    available-for-sale
    equity securities (see Note 7 of the Notes);
    A $2.0 million gain related to a cash insurance settlement
    originally associated with a manufacturing issue with a supplier
    during the third quarter of 2006; and
    A $4.7 million expense for points on foreign currency
    forward contracts, which was offset in part by other
    miscellaneous items.      
    A pre-tax gain of $8.0 million on sale of certain
    marketable
    available-for-sale
    equity securities (see Note 7 of the Notes);
    A pre-tax gain of $1.4 million associated with marketable
    available-for-sale
    equity securities of a certain technology company that was
    acquired by another technology company (see Note 7 of the
    Notes);
    A pre-tax gain of $4.1 million on the repurchase of the
    2001 Convertible Notes (see Note 10 of the Notes);
    A pre-tax loss of $2.4 million on impairment of certain
    non-marketable
    available-for-sale
    equity securities. Management considered the impairment to be
    other than temporary (see Note 7 of the Notes); and 45




---



##### Table of Contents




    A $3.0 million expense for points on foreign currency
    forward contracts, which was offset in part by other
    miscellaneous items.    
    A pre-tax gain of $3.0 million associated with our
    investment in marketable
    available-for-sale
    equity securities of a certain technology company that was
    acquired by another publicly traded technology company;
    A pre-tax gain of $5.1 million on sales of certain
    marketable
    available-for-sale
    equity securities;
    A pre-tax gain of $1.8 million on repurchase of 2001
    Convertible Notes; and
    A pre-tax loss of $6.2 million on impairment of our
    investment in certain marketable and non-marketable
    available-for-sale
    equity securities and other miscellaneous items. Management
    considered the impairments to be other than temporary.    Provision
    for income taxes:
            Minority
    interest in net income of subsidiary:
   46




---



##### Table of Contents



FINANCIAL
    CONDITION, CAPITAL RESOURCES AND LIQUIDITY
    Working capital.
  
    Cash, cash equivalents and short-term investments increased by
    $70.0 million.
    Accounts receivable increased by $25.3 million to
    $348.6 million as of December 31, 2006 from
    $323.3 million at December 31, 2005. The increase is
    mainly attributable to higher revenues in the fourth quarter of
    2006.
    Inventories increased by $14.7 million to
    $209.5 million as of December 31, 2006, from
    $194.8 million as of December 31, 2005. The increase
    in inventory was required to meet the ramp up of new products in
    early 2007 that were not in production in early 2006.
    Current portion of long-term debt decreased by
    $273.9 million due to the payment of the Convertible
    Subordinated Notes on November 1, 2006.    
    Prepaid expenses and other current assets decreased by
    $94.4 million primarily due to decreases in assets held for
    sale due to the sale of our Gresham, Oregon manufacturing
    facility and two Colorado facilities, and a decrease in prepaid
    software maintenance.
    Accounts payable increased by $28.6 million due to the
    timing of payments.
    Other accrued liabilities increased by $15.8 million due to
    an increase in deferred tax liabilities, deferred revenues and
    other miscellaneous items, offset in part by a decrease in the
    restructuring reserve.
    Income taxes payable increased by $9.0 million due to the
    timing of income tax payments made and the income tax provision
    recorded during 2006.
    Accrued salaries, wages and benefits increased by
    $4.6 million primarily due to timing differences in payment
    of salaries, benefits and performance-based compensation.  Cash and cash equivalents generated from operating
    activities.
  
    Net income adjusted for non-cash transactions. The non-cash
    items and other non-operating adjustments are quantified in our
    Consolidated Statements of Cash Flows included in this Annual
    Report on
    Form 10-K;
    A net decrease in assets and liabilities, net of assets acquired
    and liabilities assumed in business combinations, including
    changes in working capital components from December 31,
    2006 as compared to December 31, 2005 as discussed above.  Cash and cash equivalents provided by/ (used in) investing
    activities.
  
    Purchases of debt and equity securities available for sale, net
    of sales and maturities;
    Proceeds from the sale of the Gresham, Oregon manufacturing
    facility, two Colorado facilities and intellectual property, net
    of purchases of property, equipment and software.
    Acquisition of companies;
    The receipt of income tax refunds for pre-acquisition tax
    matters associated with an acquisition in 2001. 47




---



##### Table of Contents



Cash and cash equivalents used in financing
    activities.
  
    The issuance of common stock under our employee stock option and
    purchase plans; and
    The repayment of debt obligations.        CONTRACTUAL
    OBLIGATIONS
    Payments Due by PeriodContractual Obligations

Less Than 1 Year


1-3 Years


4-5 Years


After 5 Years


Total(In millions)Convertible Subordinated Notes

$



$



$
350.0


$



$
350.0Operating lease obligations


49.7



77.3



33.4



9.3



169.7Purchase commitments


392.2



31.3











423.5Total

$
441.9


$
108.6


$
383.4


$
9.3


$
943.2   Convertible
    Subordinated Notes
   48




---



##### Table of Contents



Operating
    Lease Obligations
    Purchase
    Commitments
        Standby
    letters of credit
    CRITICAL
    ACCOUNTING ESTIMATES
      Stock-Based Compensation.
 49




---



##### Table of Contents



Stock
    Options:
    Employee Stock Options Granted

2006Weighted average estimated grant
    date fair value per share

$
3.30Weighted average assumptions in
    calculation:Expected life (years)


4.33Risk-free interest rate


4.78
%Volatility


48
%Dividend yield


     near-the-money
    in-the-money.
    Employee
    Stock Purchase Plans
  12-month
 50




---



##### Table of Contents



Year EndedGrants under Employee Stock Purchase Plans

December 31, 2006Weighted average estimated grant
    date fair value per share

$
2.92Weighted average assumptions in
    calculation:Expected life (years)


0.7Risk-free interest rate


5
%Volatility


35
%Dividend yield


   Restricted
    Stock Awards
      Inventory Valuation Methodology. first-in,
      Valuation of long-lived assets, intangible assets and
    goodwill.
 51




---



##### Table of Contents



Restructuring reserves.
  Income taxes.
    Recent
    Accounting Pronouncements
   52




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk  Interest
    rate sensitivity
          Foreign currency exchange risk.
    Equity price risk. available-for-sale
  available-for-sale available-for-sale
 53




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  LSI Logic
    Corporation
  Consolidated Balance Sheets
  December 31,2006


2005(In thousands, except per share amounts)ASSETSCash and cash equivalents

$
327,800


$
264,649Short-term investments


681,137



674,260Accounts receivable, less
    allowances of $13,871 and $15,328


348,638



323,310Inventories


209,470



194,814Prepaid expenses and other current
    assets


68,692



163,086Total current assets


1,635,737



1,620,119Property and equipment, net


86,045



98,285Other intangible assets, net


59,484



45,974Goodwill


932,323



928,542Other assets


138,555



103,146Total assets

$
2,852,144


$
2,796,066LIABILITIES AND
    STOCKHOLDERS EQUITYAccounts payable

$
200,189


$
171,632Accrued salaries, wages and
    benefits


82,292



77,713Other accrued liabilities


155,986



140,194Income taxes payable


88,304



79,290Current portion of long-term debt






273,940Total current liabilities


526,771



742,769Long-term debt


350,000



350,000Tax-related liabilities and other


79,400



75,110Total long-term obligations and
    other liabilities


429,400



425,110Commitments and contingencies
    (Note 12)Minority interest in subsidiary


235



237Stockholders equity:Preferred shares; $.01 par
    value; 2,000 shares authorized; none outstanding






Common stock; $.01 par value;
    1,300,000 shares authorized; 403,680 and
    394,015 shares outstanding


4,037



3,940Additional paid-in capital


3,102,178



2,996,102Accumulated deficit


(1,220,306
)


(1,389,944
)Accumulated other comprehensive
    income


9,829



17,852Total stockholders equity


1,895,738



1,627,950Total liabilities and
    stockholders equity

$
2,852,144


$
2,796,066    54




---



##### Table of Contents



LSI Logic
    Corporation
  Consolidated Statements of Operations
  Year Ended December 31,2006


2005


2004(In thousands, except per share amounts)Revenues

$
1,982,148


$
1,919,250


$
1,700,164Cost of revenues


1,126,894



1,087,558



964,754Gross profit


855,254



831,692



735,410Research and development


413,432



399,685



427,805Selling, general and administrative


255,569



238,265



245,460Restructuring of operations and
    other items, net


(8,427
)


119,052



423,444Acquired in-process research and
    development


4,284







Amortization of intangibles


32,089



62,484



75,050Income/(loss) from operations


158,307



12,206



(436,349
)Interest expense


(24,263
)


(25,283
)


(25,320
)Interest income and other, net


51,277



34,000



22,170Income/(loss) before income taxes
    and minority interest


185,321



20,923



(439,499
)Provision for income taxes


15,682



26,540



24,000Income/(loss) before minority
    interest


169,639



(5,617
)


(463,499
)Minority interest in net income of
    subsidiary


1



6



32Net income/(loss)

$
169,638


$
(5,623
)

$
(463,531
)Net income/(loss) loss per share:Basic

$
0.43


$
(0.01
)

$
(1.21
)Diluted

$
0.42


$
(0.01
)

$
(1.21
)Shares used in computing per share
    amounts:Basic


398,551



390,135



384,070Diluted


405,163



390,135



384,070    55




---



##### Table of Contents



LSI Logic
    Corporation
  Consolidated Statements of Stockholders Equity
  AccumulatedAdditional








OtherCommon Stock


Paid-in


Deferred Stock





ComprehensiveShares


Amount


Capital


Compensation


Accumulated Deficit


Income/(Loss)


Total(In thousands)Balances at December 31, 2003


381,491


$
3,815


$
2,950,051


$
(24,839
)

$
(920,790
)

$
34,213


$
2,042,450Net loss


















(463,531
)Change in foreign currency
    translation adjustments






















1,948Change in unrealized gain on
    available-for-sale
    Securities






















3,784Change in unrealized loss on
    derivative instruments designated and qualifying as cash-flow
    hedges






















(1,995
)Total comprehensive loss


























(459,794
)Issuance to employees under stock
    option and purchase plans


5,852



59



27,928















27,987Issuance or return from escrow of
    common stock in conjunction with acquisitions (Note 4)


147



1



(414
)














(413
)Grants of restricted shares
    (Note 3)










6,401



(6,401
)










Forfeiture of restricted shares and
    stock options assumed in an acquisition (Note 3)










(14,488
)


14,488











Amortization of deferred stock
    compensation














7,816











7,816Balances at December 31, 2004


387,490



3,875



2,969,478



(8,936
)


(1,384,321
)


37,950



1,618,046Net loss


















(5,623
)Change in foreign currency
    translation adjustments






















(12,976
)Change in unrealized loss on
    available-for-sale
    Securities






















(7,122
)Total comprehensive loss


























(25,721
)Issuance to employees under stock
    option and purchase plans


6,369



64



30,797















30,861Issuance or return from escrow of
    common stock in conjunction with acquisitions (Note 4)


156



1



(686
)














(685
)Grants of restricted shares
    (Note 3)










13,427



(13,427
)










Forfeiture of restricted shares and
    stock options assumed in an acquisition (Note 3)










(6,739
)


6,739











Engenio stock option exchange
    (Note 3)










3,889



(3,889
)










Amortization of deferred stock
    compensation














5,449











5,449Balances at December 31, 2005


394,015



3,940



3,010,166



(14,064
)


(1,389,944
)


17,852



1,627,950Net income


















169,638Change in foreign currency
    translation adjustments






















276Change in unrealized loss on
    available-for-sale
    securities






















(8,299
)Total comprehensive income


























161,615Adoption of
    FAS 123R  reclassification of Deferred Stock
    Compensation










(14,064
)


14,064











Tax effect of FAS 123R on
    foreign entities










129















129Issuance to employees under stock
    option and purchase plans


8,944



90



60,923















61,013Issuance of common stock pursuant
    to restricted stock awards, net


721



7



(3,250
)














(3,243
)Amortization of stock-based
    compensation related to restricted shares










6,094















6,094Amortization of stock-based
    compensation related to employee stock options










31,338















31,338Amortization of stock-based
    compensation related to employee stock purchases










10,842















10,842Balances at December 31, 2006


403,680


$
4,037


$
3,102,178


$



$
(1,220,306
)

$
9,829


$
1,895,738   The accompanying notes are an
    integral part of these Consolidated Financial Statements.
 56




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##### Table of Contents



LSI Logic
    Corporation
  Consolidated Statements of Cash Flows
  Year Ended December 31,2006


2005


2004(In thousands)Operating activities:Net income/(loss)

$
169,638


$
(5,623
)

$
(463,531
)Adjustments:Depreciation and amortization


82,263



146,169



176,606Stock-based compensation expense


47,049



5,449



8,449Non-cash restructuring and other
    items


(713
)


88,224



401,058Acquired in-process research and
    development


4,284







Gain on sale of intellectual
    property


(15,000
)






Gain on sale of Gresham
    manufacturing facility and associated intellectual property


(12,553
)






Write-off of intangible assets
    acquired in a purchase business combination


3,325







Non-cash foreign exchange
    (gain)/loss


(1,089
)


(11,491
)


3,322Gain on sale of equity securities


(6,727
)


(6,475
)


(1,913
)Gain on repurchase of Convertible
    Subordinated Notes






(4,123
)


(1,767
)Gain/(loss) on sale of property and
    equipment, including assets
    held-for-sale


(252
)


27



(6,348
)Changes in deferred tax assets and
    liabilities


(98
)


14,220



4,895Changes in assets and liabilities,
    net of assets acquired and liabilities assumed in business
    combinations:Accounts receivable, net


(24,617
)


(51,305
)


(40,076
)Inventories


(18,062
)


24,086



(20,660
)Prepaid expenses and other assets


(24,858
)


(22,582
)


20,055Accounts payable


23,338



46,998



21,056Accrued and other liabilities


21,223



25,129



(10,329
)Net cash provided by operating
    activities


247,151



248,703



90,817Investing activities:Purchase of debt securities
    available-for-sale


(603,624
)


(550,912
)


(747,096
)Proceeds from maturities and sales
    of debt securities
    available-for-sale


595,135



462,530



679,483Purchases of equity securities


(8,150
)


(150
)


(2,250
)Proceeds from sales of equity
    securities


11,876



11,105



10,518Purchases of property, equipment
    and software


(58,671
)


(48,055
)


(52,776
)Proceeds from sale of property and
    equipment


118



4,894



10,936Adjustment to goodwill acquired in
    a prior year for resolution of a pre-acquisition income tax
    contingency


2,282



36,307



Buyout of equipment operating lease










(332,396
)Increase in non-current assets and
    deposits










(313,013
)Decrease in non-current assets and
    deposits










688,994Acquisitions of companies, net of
    cash acquired


(55,328
)






(32,025
)Proceeds from sale of intellectual
    property


22,670







Proceeds from sale of
    Fort Collins facility


10,998







Proceeds from sale of Colorado
    Springs facility


7,029







Proceeds from sale of Gresham
    manufacturing facility


96,426







Proceeds from sale of Gresham
    manufacturing facility associated
    intellectual          property


5,100







Net cash provided by/(used in)
    investing activities


25,861



(84,281
)


(89,625
)Financing activities:Repurchase of Convertible
    Subordinated Notes






(148,126
)


(68,117
)Issuance of common stock


61,014



30,862



27,988Repayment of debt obligations


(271,848
)


(129
)


(438
)Purchase of minority interest in
    subsidiary










(8,020
)Net cash used in financing
    activities


(210,834
)


(117,393
)


(48,587
)Effect of exchange rate changes on
    cash and cash equivalents


973



(1,103
)


(3,564
)Increase/(decrease) in cash and
    cash equivalents


63,151



45,926



(50,959
)Cash and cash equivalents at
    beginning of year


264,649



218,723



269,682Cash and cash equivalents at end of
    year

$
327,800


$
264,649


$
218,723    57




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##### Table of Contents



LSI Logic
    Corporation

    
    Notes to Consolidated Financial Statements
  Note 1 
    Significant
    Accounting policies  Nature of the business. silicon-to-system
      Basis of presentation.
      Use of estimates.
  Acquisitions.
  Revenue recognition.
 58




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
    03-05
    Earnings per share.
  Year Ended December 31,2006


2005


2004Per-Share








Per-Share








Per-ShareIncome*


Shares+


Amount


(Loss)*


Shares+


Amount


(Loss)*


Shares+


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

$
169,638



398,551


$
0.43


$
(5,623
)


390,135


$
(0.01
)

$
(463,531
)


384,070


$
(1.21
)Stock options, employee stock
    purchase rights and restricted stock awards






6,612



























Diluted EPS:Net income/(loss) available to
    common stockholders

$
169,638



405,163


$
0.42


$
(5,623
)


390,135


$
(0.01
)

$
(463,531
)


384,070


$
(1.21
)     *
    
    Numerator+
    
    Denominator 59




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
       Stock-Based Compensation Expense.
  Advertising.
  Cash equivalents.
  Accounts receivable and allowance for doubtful
    accounts.
  Investments. Available-for-sale
    Inventories. first-in, work-in-process
 60




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
    Property and equipment.
  Buildings and improvements


20 - 40 yearsEquipment


3 - 5 yearsFurniture and fixtures


5 years     Software. and/or 24-month
  Impairment of long-lived assets.
  Goodwill.
  Fair value disclosures of financial
    instruments. and/or
 61




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
    Derivative instruments.
        Concentration of credit risk of financial
    instruments.
 62




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
    Product warranties.
  Litigation and Settlement Costs.
  Income Taxes.
    Related party transactions.
  Recent
    accounting pronouncements.
   63




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
    No. 06-2 06-02), 06-02 06-02 06-02
    Fair Value Measurements
  Note 2
    
    Restructuring and other items  2006
    Restructuring
    and impairment of long- lived assets:
  First
    quarter of 2006:
   64




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
  change-in-time
  Second
    quarter of 2006:
    
    $12.5 million net gain recorded for the sale of Gresham,
    Oregon manufacturing facility and certain related manufacturing
    process intellectual property to ON Semiconductor;
    $15.0 million gain recorded for the sale of certain
    intellectual property to a third party based on the sale of zero
    basis intellectual property for $15.0 million in cash
    proceeds;
    $7.4 million gain recorded for the sale of the
    Companys ZSP digital signal processor intellectual
    technology;
    $8.6 million charge recorded for severance and termination
    benefits for employees primarily related to the broad-based
    reorganization that was announced in August 2005;
    $3.3 million charge recorded for the write-off of certain
    intangible assets acquired in a purchase business
    combination; and
    $1.4 million net charge recorded primarily for changes in
    sublease assumptions for certain previously accrued facility
    lease termination costs.  Sale
    of the Gresham facility:
       65




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
    Third
    quarter of 2006:
    
    $1.7 million charge recorded for severance and termination
    benefits for employees primarily related to the broad-based
    reorganization that was announced in August 2005;
    $0.4 million net charge recorded primarily for changes in
    sublease assumptions for certain previously accrued facility
    lease termination costs and additional $0.4 million
    recorded to reflect the
    change-in-time
    value of accruals for facility lease termination costs; and
    $0.1 million net charge recorded for other exit costs,
    mainly related to the contract termination costs related to the
    Companys strategic realignment of the sales function.  Fourth
    quarter of 2006:
    
    $1.3 million charge recorded for a write-down of leasehold
    improvements, $0.6 million loss recorded from sale of
    assets;
    $1.5 million net charge recorded primarily for changes in
    sublease assumptions for certain previously accrued facility
    lease termination costs and an additional $0.4 million
    recorded to reflect the
    change-in-time
    value of accruals for facility lease termination costs; and
    $1.1 million charge recorded for severance and termination
    benefits for employees primarily related to the broad-based
    reorganization that was announced in August 2005.  held-for-sale
 66




---



##### Table of Contents



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


Restructuring





Utilized


Balance atDecember 31,


Expense


Release of


During


December 31,2005


2006


Reserve


2006


2006(In thousands)Write-down of excess assets and
    decommissioning costs(a)

$
4,993


$
(34,390
)

$
(188
)

$
29,585


$
Lease terminations and maintenance
    contracts(b)


22,287



7,462







(6,580
)


23,169Facility closure and other exit
    costs(c)






1,510







(1,510
)


Payments to employees for
    severance(d)


5,395



16,991



(422
)


(21,622
)


342Total

$
32,675


$
(8,427
)

$
(610
)

$
(127
)

$
23,511     (a)
    
    The credit includes the gain from the sale of the Gresham
    facility, which is described above. The remaining balance was
    utilized during the third quarter of 2006.(b)
    
    Amounts utilized represent cash payments. The balance remaining
    for real estate lease terminations will be paid during the
    remaining terms of these contracts, which extend through 2011.(c)
    
    Amounts utilized represent cash payments.(d)
    
    Amounts utilized represent (i) cash severance payments to
    190 employees during the year ended December 31, 2006 and
    (ii) cash payments for one-time termination benefits for
    512 employees associated with the sale of the Gresham
    manufacturing facility.  2005
    Restructuring
    and impairment of long-lived assets:
  First
    quarter of 2005:
    Second
    quarter of 2005:
   67




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
    Third
    quarter of 2005:
        Fourth
    quarter of 2005:
       68




---



##### Table of Contents



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


Restructuring





Utilized


Balance atDecember 31,


Expense


Release of


During


December 31,2004


2005


Reserve


2005


2005(In thousands)Write-down of excess assets and
    decommissioning costs(a)

$
1,207


$
92,421


$
(518
)

$
(88,117
)

$
4,993Lease terminations and maintenance
    contracts(b)


20,065



12,241







(10,019
)


22,287Facility closure and other exit
    costs(c)


543



1,427







(1,970
)


Payments to employees for
    severance(d)


7,408



7,527



(284
)


(9,256
)


5,395Total

$
29,223


$
113,616


$
(802
)

$
(109,362
)

$
32,675     (a)
    
    The amounts utilized in 2005 reflect non-cash write-downs of
    long-lived assets in the U.S. due to impairment, primarily
    related to the impairment charge for the Gresham facility of
    $85.2 million, other asset write-downs of
    $2.8 million, cash payments to decommission and sell assets
    of $0.5 million and a credit of $0.4 million of net of
    other miscellaneous items. The write-downs of long-lived assets
    were accounted for as a reduction of the assets and did not
    result in a liability. The $5.0 million balance as of
    December 31, 2005, related to estimates for selling costs
    for assets held for sale and was utilized during 2006.(b)
    
    Amounts utilized represent cash payments. The balance remaining
    for real estate lease terminations will be paid during the
    remaining terms of these contracts, which extend through 2011.(c)
    
    Amounts utilized represent cash payments.(d)
    
    Amounts utilized represent cash severance payments to 126
    employees during the year ended December 31, 2005 for the
    action announced in the third quarter of 2004. Amounts utilized
    also include cash severance payments for 124 employees for the
    action announced in the third quarter of 2005 for the year ended
    December 31, 2005. The balance remaining for severance was
    paid by the end of 2006.  Other
    Items:
  Second
    quarter of 2005:
     69




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
   2004
    Restructuring
    and impairment of long-lived assets:
  First
    quarter of 2004:
      Second
    quarter of 2004:
      Third
    quarter of 2004:
           70




---



##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
    Fourth
    quarter of 2004:
               71




---



##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
   Other
    Items
        Note 3 
    Common Stock, Stock-Based Compensation and Other Employee
    Compensation Plans
    Description
    of the Companys equity compensation plans:
  The 2003 Equity Incentive Plan (the 2003
    Plan):
  The 1991 Equity Incentive Plan (the 1991
    Plan):
  The 1995 Director Option Plan (1995 Director
    Plan):
 72




---



##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
   The 1999 Nonstatutory Stock Option Plan (the 1999
    Plan):
  The Employee Stock Purchase Plan, as amended and restated
    (US ESPP): 12-month
      International Employee Stock Purchase Plan
    (IESPP): 12-month
  Stock-based
    compensation expense under SFAS 123R:
        73




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##### Table of Contents



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

2006


2005


2004(In thousands)Cost of revenues

$
6,903


$
744


$
198Research and development


17,397



2,373



6,289Selling, general and administrative


22,749



2,332



1,962Total stock-based compensation
    expense

$
47,049


$
5,449


$
8,449   Stock
    Options
    Employee Stock Options Granted

2006Weighted average estimated grant
    date fair value per share

$
3.30Weighted average assumptions in
    calculation:Expected life (years)


4.33Risk-free interest rate


4.78
%Volatility


48
%Dividend yield


     near-the-money
    in-the-money.
   74




---



##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
     2006


2005


2004Weighted 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,


70,618


$
13.21



67,733


$
14.57



69,166


$
15.17Options canceled


(16,130
)


(18.02
)


(11,555
)


(14.63
)


(7,993
)


(14.01
)Options granted


7,781



9.17



16,493



7.67



7,450



7.39Options exercised


(5,519
)


(6.71
)


(2,053
)


(5.68
)


(890
)


(5.87
)Options outstanding at
    December 31,


56,750


$
11.92



70,618


$
13.21



67,733


$
14.57Options exercisable at
    December 31,


35,638


$
14.29



44,489


$
16.52



44,301


$
17.54          75




---



##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
   Employee
    Stock Purchase Plans
    Year EndedDecember 31,Grants under Employee Stock Purchase Plans

2006Weighted average estimated grant
    date fair value per share

$
2.92Weighted average assumptions in
    calculation:Expected life (years)


0.7Risk-free interest rate


5
%Volatility


35
%Dividend yield


   Restricted
    Stock Awards
      Number ofShares(In thousands)Non-vested shares at
    January 1, 2006


2,375Granted


733Vested


(928
)Forfeited


(270
)Non-vested shares at
    December 31, 2006


1,910     2006

2005

2004Weighted 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 awards granted


733


$
9.45



2,125


$
6.32



892


$
6.75    76




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
     Income
    taxes
  No. FAS 123R-3,
    Earnings
    per share
    Pro
    Forma Information under SFAS 123 for Periods Prior to
    January 1, 2006:
    Year Ended December 31,2005


2004(In thousands, except per share amountsNet loss, as reported

$
(5,623
)

$
(463,531
)Add: Amortization of non-cash
    deferred stock compensation determined under the intrinsic value
    method as reported in net income, net of related tax effects *


638



3,494Deduct: Total stock-based employee
    compensation expense determined under fair value method for all
    awards, net of related tax effects*


(70,028
)


(120,265
)Pro forma net loss

$
(75,013
)

$
(580,302
)Loss per share:Basic and diluted as reported

$
(0.01
)

$
(1.21
)Basic and diluted pro forma

$
(0.19
)

$
(1.51
)     *
    
    This amount excludes amortization of stock-based compensation on
    restricted stock awards. 77




---



##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
    Employee Stock Options Granted

2005


2004Weighted average estimated grant
    date fair value per share

$
3.98


$
4.39Weighted average assumptions in
    calculation:Expected life (years)


3.88



3.90Risk-free interest rate


3.30
%


3.03
%Volatility


67.75
%


79.72
%Dividend yield






   Engenio Stock Option Exchange Program.
  Stock repurchase program.
  Stock purchase rights.
  LSI 401(k) Defined Contribution Plan.
  Note 4 
    Business Combinations
     78




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
    2006
  Fair Value ofTangible NetEntity Name;




Total





Assets/







In-ProcessSegment Included in;




Purchase


Type of


(Liabilities)




Amortizable


Research andDescription of Acquired Business

Acquisition Date


Price


Consideration


Acquired


Goodwill

Intangible Assets


DevelopmentStoreAge Networking Technologies,
    Ltd.; Storage segment; SAN storage management and multi-tiered
    data protection software applications


November 21, 2006


$
47.4


$
47.4 cash


$
(4.6
)

$6.1

$
43.5


$
2.4Metta Technology; Semiconductor
    segment; Next generation digital video


November 10, 2006


$
6.7


$
6.7 cash


$
(0.6
)

Not applicable 
    asset purchase

$
5.4


$
1.9   2005
    2004
  Fair Value ofEntity Name;








Tangible NetSegment Included in;



Total




Assets/








In-Process


DeferredDescription of Acquired



Purchase


Type of

(Liabilities)





Amortizable


Research and


StockBusiness

Acquisition Date

Price


Consideration

Acquired


Goodwill


Intangible Assets


Development


CompensationAcerant Inc.;
    Semiconductor segment;
    Consumer product applications

May 11, 2004

$
15.9


$14.1 cash,
    234,000 restricted
    common shares

$



$
8.0


$
6.1


$



$
1.8Velio Communications;
    Semiconductor segment; High
    speed interconnect and switch
    fabric application
    specific standard products

April 2, 2004

$
20.8


$19.8 cash;
    100,000 restricted
    common shares

$
1.5


$



$
18.3


$



$
1.0   Acquired in-process research and
    development.
  79




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
  Revenue ProjectionsEntity Name

IPR&D


Discount Rate

Extended ThroughStoreAge Networking Technologies,
    Ltd.

$
2.4


28%

2013Metta Technology

$
1.9


Not applicable, used Cost  Approach

Not applicable, used Cost
    Approach         and/or
   80




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
   Note 5 
    Balance Sheet Detail
  December 31,2006


2005(In thousands)Inventories:Raw materials

$
44,151


$
30,541Work-in-process


52,497



62,167Finished goods


112,822



102,106$
209,470


$
194,814Prepaid expenses and other current
    assets:Assets held for sale

$
20,120


$
105,849Prepaid expense and other current
    assets


48,572



57,237$
68,692


$
163,086Property and equipment:Land

$
6,040


$
6,128Buildings and improvements


39,519



105,256Equipment


315,672



403,696Furniture and fixtures


24,391



29,787Leasehold improvements


34,700



31,958Construction in progress


8,198



7,812428,520



584,637Accumulated depreciation and
    amortization


(342,475
)


(486,352
)$
86,045


$
98,285     December 31,2006


2005(In thousands)Tax related liabilities and other:Other long-term tax-related
    liabilities

$
77,572


$
74,738Other long-term liabilities


1,828



372$
79,400


$
75,110Accumulated other comprehensive
    income:Net unrealized (loss)/gains on
    available-for-sale
    securities, net of tax of $0 and $2,394

$
(3,854
)

$
4,445Foreign currency translation
    adjustments


13,683



13,407$
9,829


$
17,852  81




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
  Note 6 
    Intangible Assets and Goodwill
    December 31, 2006


December 31, 2005Gross


Accumulated


Gross


AccumulatedCarrying Amount


Amortization


Carrying Amount


AmortizationSemiconductor:Current technology

$
240,458


$
(232,716
)

$
244,301


$
(213,671
)Trademarks


26,285



(25,446
)


26,285



(22,258
)Customer base


8,788



(4,394
)


8,788



(2,796
)Non-compete agreements


849



(625
)


849



(476
)Existing purchase orders


200



(200
)


200



(200
)Workforce


3,567



(65
)






Subtotal


280,147



(263,446
)


280,423



(239,401
)Storage
    Systems:Current technology


164,339



(124,618
)


124,139



(120,909
)Trademarks


7,150



(7,120
)


7,150



(6,189
)Customer base


5,010



(5,010
)


5,010



(4,249
)Supply agreement


8,147



(7,472
)


7,247



(7,247
)Non-compete agreements


1,600



(33
)






Trade Names


800



(10
)






Subtotal


187,046



(144,263
)


143,546



(138,594
)Total

$
467,193


$
(407,709
)

$
423,969


$
(377,995
)       WeightedAverage Lives


Year Ended December 31,(In Months)


2006


2005


2004(In thousands)Current technology


80


$
25,129


$
53,185


$
65,153Trademarks


83



4,119



5,001



5,007Customer base


68



2,359



2,427



2,078Supply agreement


32



225



1,590



2,417Non-compete agreements


28



182



281



195Existing purchase orders


9











200Workforce


72



65







Trade Names


84



10







Total


79


$
32,089


$
62,484


$
75,050  82




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
    Fiscal Year:

Amount:2007

$
14,1792008


10,4992009


9,2352010


6,7772011 and thereafter


18,794$
59,484     Semiconductor


Storage SystemsSegment


Segment


TotalBalance as of December 31,
    2004

$
801,272


$
171,858


$
973,130Goodwill acquired during the yearAdjustment to goodwill recorded in
    a prior year for the resolution of a pre-acquisition income tax
    contingency


(36,307
)






(36,307
)Adjustment to goodwill recorded in
    prior periods *


(5,984
)


(2,297
)


(8,281
)Balance as of December 31,
    2005

$
758,981


$
169,561


$
928,542Goodwill acquired during the year
    **






6,063



6,063Adjustment to goodwill recorded in
    a prior year for cash received from the resolution of a
    pre-acquisition income tax contingency


(2,282
)






(2,282
)Balance as of December 31,
    2006

$
756,699


$
175,624


$
932,323     *
    
    In 2005, the provision for income taxes was increased by a
    $5.4 million charge related to the correction of an error
    in a prior period associated with the carrying value of
    $8.3 million in deferred tax liabilities that should have
    been reclassified to goodwill upon adoption of
    SFAS No. 142, Goodwill and Intangible
    Assets, in 2002. The deferred tax liabilities were instead
    used as a reduction of the Companys required valuation
    allowance in 2002. This was offset by tax-related liabilities of
    $2.9 million originally recorded in connection with these
    deferred tax balances, which are no longer required. The Company
    believes that this amount is not material to previously reported
    financial statements and has concluded that correcting such
    amounts in the fourth quarter of 2005 and the 2005 fiscal year,
    as opposed to restating prior periods, is appropriate in the
    circumstances.**
    
    During the year ended December 31, 2006, the Company
    recorded $6.1 million of goodwill in connection with the
    acquisition of StoreAge in the Storage Systems segment. See
    Note 4 of the Notes.   83




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
   Note 7 
    Cash, Cash Equivalents and Investments
  December 31,2006


2005(In thousands)Cash and cash
    equivalentsCash in financial institutions

$
50,478


$
85,641Cash equivalents:Overnight deposits and money
    market funds


234,287



148,665Commercial paper


39,809



17,473Asset-backed securities


3,226



U.S. government and agency
    securities






10,870Certificates of deposit






2,000Total cash equivalents


277,322



179,008Total cash and cash equivalents

$
327,800


$
264,649Available-for-sale
    debt securitiesAsset and mortgage-backed
    securities

$
363,723


$
335,495U.S. government and agency
    securities


272,287



266,077Corporate and municipal debt
    securities


45,127



72,688Total short-term investments

$
681,137


$
674,260Long-term investments in equity
    securitiesMarketable equity securities

$
2,827


$
18,769Non-marketable equity securities


12,973



7,070Total long-term investments in
    equity securities

$
15,800


$
25,839   available-for-sale
  Due within one year

$
134,395Due in 1-5 years


336,504Due in 5-10 years


78,193Due after 10 years


132,045Total

$
681,137     available-for-sale
  available-for-sale
 84




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
     
    A $7.6 million pre-tax gain related to the sale of certain
    marketable
    available-for-sale
    equity securities in the second and fourth quarters of 2005; and
    A $1.4 million pre-tax gain associated with marketable
    available-for-sale
    equity securities of a certain technology company that was
    acquired by another technology company in the second quarter of
    2005.    Investments
    in
    available-for-sale
    securities
  Gross Unrealized


Gross Unrealized


EstimatedAdjusted Cost


Gains


Losses


Fair Value(In thousands)December 31,
    2006Short-term debt securities

$
686,705


$
640


$
(6,208
)

$
681,137Long-term marketable equity
    securities


1,117



1,710







2,827December 31,
    2005Short-term debt securities

$
682,524


$
398


$
(8,662
)

$
674,260Long-term marketable equity
    securities


3,669



15,100







18,769     Less than 12 Months


Greater than 12 MonthsFair Value


Unrealized Losses


Fair Value


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

$
106,099


$
468


$
127,454


$
2,647U.S. government and agency
    securities


74,800



193



153,880



2,429Corporate and municipal debt
    securities


4,000



1



25,809



470$
184,899


$
662


$
307,143


$
5,546     Note 8 
    Segment and Geographic Information
   85




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
   Information about profit or loss and
    assets.
  Year Ended December 31,2006


2005


2004(In thousands)Revenues:Semiconductor

$
1,223,130


$
1,244,248


$
1,095,091Storage Systems


759,018



675,002



605,073Total

$
1,982,148


$
1,919,250


$
1,700,164Income/(loss) from
    operations:Semiconductor

$
96,162


$
(25,721
)

$
(447,988
)Storage Systems


62,145



37,927



11,639Total

$
158,307


$
12,206


$
(436,349
)       December 31,2006


2005(In thousands)Total assets:Semiconductor

$
2,212,711


$
2,285,913Storage Systems


639,433



510,153Total

$
2,852,144


$
2,796,066   Significant Customers.
  Year Ended December 31,2006


2005


2004Semiconductor segment:Number of significant customers


1



1



1Percentage of segment revenues


19
%


17
%


11
%Storage Systems segment:Number of significant customers


2



2



3Percentage of segment revenues


47%, 15
%


44%, 12
%


41%, 15%, 11
%Consolidated:Number of significant customers


2



2



1Percentage of consolidated revenues


19%, 12
%


16%, 11
%


16
%  86




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
  Information about geographic areas.
  Year Ended December 31,2006


2005


2004(In thousands)Revenues:North America*

$
956,696


$
932,190


$
852,453Asia, including Japan


797,174



755,960



655,077EMEA


228,278



231,100



192,634Total

$
1,982,148


$
1,919,250


$
1,700,164   December 31,2006


2005(In thousands)Long-lived assets:North America

$
166,034


$
163,226Asia, including Japan


36,990



34,833EMEA


2,831



2,785Total

$
205,855


$
200,844     *
    
    Revenues by geography are accumulated based on the revenues
    generated by the Companys company located within the three
    geographic areas noted in the above table. In the second half of
    2005, Engenio formed new subsidiaries within EMEA. As a result,
    the amounts in the table reflect that change as of June 21,
    2005 and prior to that all revenues generated by Engenio EMEA
    were previously reported in North America.    Note 9 
    Derivative Instruments
  Foreign
    currency risk
       87




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
   Interest
    rate risk
          Note 10  Debt
  Interest


Conversion


December 31,Maturity


Rate*


Price


2006


2005(In thousands)2003 Convertible Subordinated Notes


2010



4.00
%

$
13.4200


$
350,000


$
350,0002001 Convertible Subordinated Notes


2006



4.00
%

$
26.3390







271,848Deferred gain on terminated swap


















2,092350,000



623,940Current portion of long-term debt


















(273,940
)Long-term debt













$
350,000


$
350,000     *
    
    The weighted average interest rate on the Convertible Notes was
    4.00% for the years ended December 31, 2006 and 2005. See
    Note 9 for further discussion of deferred gain on
    terminated swap.   88




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
          No. 00-19,
   89




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
   Note 11 
    Income Taxes
    Year Ended December 31,2006


2005


2004(In thousands)Current:Federal

$
220


$
(70
)

$
3,815State


551



451



615Foreign


16,765



14,861



14,689Total


17,536



15,242



19,119Deferred:Federal






4,369



State






985



Foreign


(1,854
)


5,944



4,881Total


(1,854
)


11,298



4,881Total

$
15,682


$
26,540


$
24,000     Year Ended December 31,2006


2005


2004(In thousands)Domestic

$
61,382


$
(55,140
)

$
(392,070
)Foreign


123,939



76,063



(47,429
)Income/(loss) before income taxes
    and minority interest

$
185,321


$
20,923


$
(439,499
)  90




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
    December 31,2006


2005(In thousands)Deferred tax assets:Tax credit carryovers

$
335,152


$
329,529Net operating loss carryforwards


109,395



108,882Future deductions for purchased
    intangible assets


45,660



82,352Depreciation and amortization


18,975



65,531Future deductions for reserves and
    other


75,701



50,214Future deductions for inventory
    reserves


13,623



17,479Total deferred tax assets


598,506



653,987Valuation allowance


(592,185
)


(649,220
)Net deferred tax assets


6,321



4,767Deferred tax
    liabilities:Gain on unrealized investments






(2,394
)Total net deferred tax assets

$
6,321


$
2,373     available-for-sale
   91




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
     Year Ended December 31,2006


2005


2004(In thousands)Federal statutory rate

$
64,864



35
%

$
7,324



35
%

$
(153,825
)


(35
)%State taxes, net of federal benefit


358



0
%


294



1
%


400



Foreign earnings taxed in the
    U.S.


31,069



17
%


29,904



143
%


6,191



1
%Benefit of net operating losses
    and deferred tax assets not previously recognized


(56,708
)


(31
)%


(11,067
)


(53
)%


(854
)


Change in valuation allowance from
    the correction of prior period errors*






0
%


5,354



26
%






Difference between U.S. and
    foreign tax rates


(25,993
)


(14
)%


(3,206
)


(15
)%


35,148



8
%State tax refund, net of federal
    effect






(0
)%


(2,837
)


(14
)%






Release of domestic/foreign income
    withholding taxes previously accrued


(3,593
)


(2
)%


(2,500
)


(12
)%






Net impact of federal income tax
    audit not previously accrued






0
%


2,345



11
%






Alternative minimum tax






0
%


302



1
%






Nondeductible expenses










(14
)






10,054



2
%Net operating loss and future
    deductions not currently benefited


















122,423



28
%Other


5,685



3
%


641



4
%


4,463



1
%Effective tax rate

$
15,682



8
%

$
26,540



127
%

$
24,000



5
%     *
    
    In 2005, the provision for income taxes was increased by a
    $5.4 million charge related to the correction of an error
    in a prior period associated with the carrying value of
    $8.3 million in deferred tax liabilities that should have
    been reclassified to goodwill upon adoption of
    SFAS No. 142 Goodwill and Intangible
    Assets in 2002. The deferred tax liabilities were instead
    used as a reduction of the Companys required valuation
    allowance in 2002. This was offset by tax-related liabilities of
    $2.9 million originally recorded in connection with these
    deferred tax balances which are no longer required. The Company
    believes that this amount is not material to previously reported
    financial statements and has concluded that correcting such
    amounts in the fourth quarter of 2005 and the 2005 fiscal year,
    as opposed to restating prior periods, is appropriate in the
    circumstances.           92




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
   Note 12 
    Commitments and Contingencies
  Operating
    Leases
      Indemnifications
  and/or and/or
  Guarantees
  Product
    warranties
  Year Ended December 31,2006


2005(In thousands)Balance at the beginning of the
    period

$
11,074


$
10,040Accruals for warranties issued
    during the period


12,750



13,060Accruals related to pre-existing
    warranties (including changes in estimates)






(967
)Settlements made during the period
    (in cash or in kind)


(12,499
)


(11,059
)Balance at the end of the period

$
11,325


$
11,074   Standby letters of credit.
  Purchase commitments.
 93




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##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
    Legal Matters.
    Note 13 
    Subsequent
    Events       94




---



##### Table of Contents



LSI Logic
    Corporation
  Notes to
    Consolidated Financial Statements 
    (continued)
     95




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
       Consolidated
    financial statements and financial statement
    schedule
      Internal
    control over financial reporting
  Internal Control  Integrated Framework Internal Control 
    Integrated Framework
   96




---



##### Table of Contents



97




---



##### Table of Contents



Supplementary
    Financial Data
  Interim
    Financial Information (Unaudited)
  QuarterFirst


Second


Third


Fourth(In thousands, except per share amounts)Year Ended December 31,
    2006Revenues

$
475,884


$
489,635


$
492,978


$
523,651Gross profit


204,489



209,207



214,534



227,024Net income


13,168



53,847



43,610



59,013Basic income per share:

$
0.03


$
0.14


$
0.11


$
0.15Diluted income per share:

$
0.03


$
0.13


$
0.11


$
0.14Year Ended December 31,
    2005Revenues

$
450,007


$
481,292


$
481,716


$
506,235Gross profit


190,106



211,597



210,019



219,970Net income/(loss)


4,719



25,262



(73,394
)


37,790Basic income/(loss) per share:

$
0.01


$
0.06


$
(0.19
)

$
0.10Diluted income/(loss) per share:

$
0.01


$
0.06


$
(0.19
)

$
0.09        
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure   
  Item 9A.
    Controls
    and Procedures  Evaluation of Disclosure Controls and
    Procedures:
 98




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##### Table of Contents



Managements Report on Internal Control Over Financial
    Reporting: Rule 13a-15(f)
  Internal Control  Integrated
    Framework
  Form 10-K.
  Changes in Internal Controls:
 
  Item 9B.
    Other
    Information   99




---



##### Table of Contents



PART III
   
  Item 10.
    Directors,
    Executive Officers and Corporate Governance.  Form 10-K.
          www.lsi.com.
 
  Item 11.
    Executive
    Compensation.       
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.  Form 10-K.
   
  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.     100




---



##### Table of Contents



Item 14.
    Principal
    Accounting Fees and Services.   101




---



##### 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, 2006 and 2005


54Consolidated Statements of
    Operations  For the Three Years Ended
    December 31, 2006, 2005 and 2004


55Consolidated Statements of
    Stockholders Equity  For the Three Years Ended
    December 31, 2006, 2005 and 2004


56Consolidated Statements of Cash
    Flows  For the Three Years Ended December 31,
    2006, 2005 and 2004


57Notes to Consolidated Financial
    Statements


58Report of Independent Registered
    Public Accounting Firm


96   52-week
 102




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##### Table of Contents



SCHEDULE II
  VALUATION
    AND QUALIFYING ACCOUNTS
 (In
    millions)
  Column B


Column C





Column EBalance at


Additions Charged to





Balance atColumn A

Beginning of


Costs, Expenses


Column D


End ofDescription

Period


or Other Accounts


Deductions*


Period2006Allowances

$
15


$
13


$
(14
)

$
142005Allowances

$
10


$
9


$
(4
)

$
152004Allowances

$
7


$
8


$
(5
)

$
10     *
    
    Deductions include write-offs of uncollectable accounts and
    collections of amounts previously reserved. 103




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##### Table of Contents



2
.1

Agreement and Plan of
    Reorganization dated March 26, 2001 by and among
    Registrant, Clover Acquisition Corporation and C-Cube
    Microsystems Inc. Incorporated by reference to exhibits filed
    with the Registrants Registration Statement on
    Form S-4
    (No. 333-58862)
    on April 13, 2001.2
.2

Agreement and Plan of Merger dated
    as of December 3, 2006 by and among Registrant, Atlas
    Acquisition Corp. and Agere Systems Inc. Incorporated by
    reference to exhibits filed with the Registrants
    Registration Statement on
    Form S-4
    (No. 333-139642)
    on December 22, 2006.3
.1

Restated Certificate of
    Incorporation of Registrant. Incorporated by reference to
    exhibits filed with the Registrants Registration Statement
    on
    Form S-8
    (No. 333-46436)
    on September 22, 2000.3
.2

By-laws of Registrant.
    Incorporated by reference to exhibits filed with the
    Registrants Current Report on
    Form 8-K
    filed on September 3, 2004.4
.1

Indenture dated as of May 16,
    2003, between LSI Logic Corporation and U.S. Bank, N.A., as
    Trustee relating to 2003 Convertible Notes. Incorporated by
    reference to exhibits filed with Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended June 30, 2003.4
.2

Amended and Restated Preferred
    Shares Rights Agreement, dated as of November 20, 1998, between
    LSI Logic Corporation and BankBoston N.A. Incorporated by
    reference to exhibits filed with the Registrants Report on
    Form 8-A/A filed on December 8, 1998.4
.3

Amendment No. 1 to Amended and
    Restated Preferred Shares Rights Agreement, dated as of February
    19, 1999, between LSI Logic Corporation and BankBoston N.A.
    Incorporated by reference to exhibits filed with the
    Registrants Report on Form 8-A/A filed on June 17, 2003.4
.4

Amendment to Amended and Restated
    Preferred Shares Rights Agreement, dated as of August 16, 2001,
    by and among LSI Logic Corporation, Fleet bank f/k/a BankBoston
    N.A. and EquiServe Trust Company, N.A.  Incorporated by
    reference to exhibits filed with the Registrants Report on
    Form 8-A/A filed on June 17, 2003.4
.5

See Exhibit 3.1.10
.1

Form of Indemnification Agreement
    between Registrant and our officers, directors and certain key
    employees. Incorporated by reference to exhibits filed with the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 1987.*10
.2

Amended and Restated LSI Logic
    Corporation 1991 Equity Incentive Plan. Incorporated by
    reference to exhibits filed with Registrants Registration
    Statement on
    Form S-8
    (No. 333-96543)
    on July 16, 2002. *10
.3

1995 Director Option Plan.
    Incorporated by reference to exhibits filed with the
    Registrants Registration Statement on
    Form S-8
    (No. 333-106205)
    on June 17, 2003.*10
.4

LSI Logic Corporation
    International Employee Stock Purchase Plan. Incorporated by
    reference to exhibits filed with the Registrants
    Registration Statement on
    Form S-8
    (No. 333-115762)
    on May 21, 2004.*10
.5

Form of LSI Logic Corporation
    Change of Control Severance Agreement between LSI Logic
    Corporation and each of its executive officers. Incorporated by
    reference to exhibits filed with the Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 2003.*10
.6

Technology Transfer Agreement
    between LSI Logic Corporation and Wafer Technology (Malaysia)
    Sdn. Bhd., dated September 8, 1999. Incorporated by
    reference to exhibits filed with the Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended September 30, 1999.+10
.7

Mint Technology, Inc. Amended 1996
    Stock Option Plan. Incorporated by reference to exhibits filed
    with the Registrants Registration Statement on
    Form S-8
    (No. 333-34285)
    on August 25, 1997.*10
.8

Registrants Amended and
    Restated Employee Stock Purchase Plan. Incorporated by reference
    to exhibits filed with the Registrants Registration
    Statement on
    Form S-8
    (No. 333-115762)
    on May 21, 2004.*10
.9

Symbios Logic, Inc. 1995 Stock
    Plan. Incorporated by reference to exhibits filed with the
    Registrants Registration Statement on
    Form S-8
    (No. 333-62159)
    on August 25, 1998.10
.10

LSI Logic Corporation 1999
    Nonstatutory Stock Option Plan. Incorporated by reference to
    exhibits filed with the Registrants Registration Statement
    on
    Form S-8
    (No. 333-96549)
    on July 16, 2002.*10
.11

SEEQ Technology, Inc. Amended and
    Restated 1982 Stock Option Plan. Incorporated by reference to
    exhibits filed with the Registrants Registration Statement
    on
    Form S-8
    (No. 333-81435)
    on June 24, 1999.*10
.12

IntraServer Technology, Inc. 1998
    Stock Option Plan. Incorporated by reference to exhibits filed
    with Registrants Registration Statement on
    Form S-8
    (No. 333-38746)
    on June 7, 2000. 104




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10
.13

DataPath Systems, Inc. Amended
    1994 Stock Option Plan. Incorporated by reference to exhibits
    filed with Registrants Registration Statement on
    Form S-8
    (No. 333-42888)
    on August 2, 2000.*10
.14

DataPath Systems, Inc. Amended and
    Restated 1997 Stock Option Plan. Incorporated by reference to
    exhibits filed with Registrants Registration Statement on
    Form S-8
    (No. 333-42888)
    on August 2, 2000.*10
.15

Syntax Systems, Inc. Restated
    Stock Option Plan of January 5, 1999. Incorporated by
    reference to exhibits filed with Registrants Registration
    Statement on
    Form S-8
    (No. 333-52050)
    on December 18, 2000.*10
.16

C-Cube Microsystems Inc. 2000
    Stock Plan. Incorporated by reference to exhibits filed with
    Registrants Registration Statement on
    Form S-8
    (No. 333-62960)
    on June 14, 2001.10
.17

Wilfred J. Corrigan Employment
    Agreement dated as of September 20, 2001. Incorporated by
    reference to exhibits filed with the Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 2001.*10
.18

Manufacturing Technology Joint
    Development and Foundry Supply Agreement dated as of
    March 30, 2001 by and between the Registrant and Taiwan
    Semiconductor Manufacturing Co., Ltd. Incorporated by reference
    to exhibits filed with the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2002.+10
.19

LSI Logic Corporation 2003 Equity
    Incentive Plan. Incorporated by reference to exhibit filed with
    the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended October 1, 2006.*10
.20

Registration Rights Agreement
    between LSI Logic Corporation and Morgan Stanley & Co.,
    Inc., dated May 16, 2003. Incorporated by reference to
    exhibits filed with Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2003.10
.21

LSI Logic Corporation 1991 Equity
    Incentive Plan Nonqualified Stock Option Agreement. Incorporated
    by reference to exhibits filed with the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended October 3, 2004.*10
.22

Form of Notice of Grant under LSI
    Logic Corporation Nonqualified Stock Option Agreement.
    Incorporated by reference to exhibits filed with the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended October 3, 2004.*10
.23

LSI Logic Corporation 2003 Equity
    Incentive Plan Restricted Stock Unit Agreement. Incorporated by
    reference to exhibits filed with the Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended October 3, 2004.*10
.24

Engenio Information Technologies,
    Inc. Amended and Restated 2004 Equity Incentive Plan.
    Incorporated by reference to exhibits filed with the
    Registrants Current Report on
    Form 8-K
    on November 4, 2004.*10
.25

Engenio Information Technologies,
    Inc. 2004 Equity Incentive Plan Nonqualified Stock Option
    Agreement. Incorporated by reference to exhibits filed with the
    Registrants Current Report on
    Form 8-K
    on November 4, 2004.*10
.26

Form of Notice of Grant under
    Engenio Information Technologies, Inc. 2004 Equity Incentive
    Plan Nonqualified Stock Option Agreement. Incorporated by
    reference to exhibits filed with the Registrants Current
    Report on
    Form 8-K
    on November 4, 2004.*10
.27

Lease Agreement dated
    June 30, 2004, for 670 N. McCarthy Boulevard,
    Milpitas, California, between Engenio Information Technologies,
    Inc. and The Irvine Company. Incorporated by reference to
    exhibit filed with the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.10
.28

First Amendment, dated
    October 28, 2004, to the Lease Agreement (dated
    June 30, 2004), for 670 N. McCarthy Boulevard,
    Milpitas, California, between Engenio Information Technologies,
    Inc. and The Irvine Company. Incorporated by reference to
    exhibits filed with the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.10
.29

Lease Agreement dated
    December 31, 2003, for 1621 Barber Lane, Milpitas,
    California, between the Registrant and Limar Realty
    Corp. #9. Incorporated by reference to exhibits filed with
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.10
.30

Lease Agreement dated
    December 31, 2003, for 765 Sycamore Drive, Milpitas,
    California, between the Registrant and Limar Realty
    Corp. #4. Incorporated by reference to exhibits filed with
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.10
.31

Lease Agreement dated
    December 31, 2003, for 1501 McCarthy Boulevard, Milpitas,
    California, between the Registrant and Limar Realty
    Corp. #4. Incorporated by reference to exhibits filed with
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004. 105




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10
.32

Lease Agreement dated
    February 20, 2004, for 1855 Barber Lane, Milpitas,
    California, between the Registrant and TriNet Milpitas
    Associates, LLC. Incorporated by reference to exhibits filed
    with Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.10
.33

Lease Agreement dated
    February 20, 2004, for 560 Cottonwood Drive, Milpitas,
    California, between the Registrant and TriNet Milpitas
    Associates, LLC. Incorporated by reference to exhibits filed
    with Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.10
.34

Assignment and Assumption of Lease
    dated May 27, 2004, for 5400 Airport Boulevard, Suites 100
    and 200, Boulder, Colorado, between LakeCentre Plaza Limited,
    Ltd., LLLP and Engenio Information Technologies, Inc.
    Incorporated by reference to exhibits filed with
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.10
.35

Lease Modification Agreement dated
    June 21, 2004, for 5400 Airport Boulevard, Suites 100 and
    200, Boulder, Colorado, between LakeCentre Plaza Limited, Ltd.,
    LLLP and Engenio Information Technologies, Inc. Incorporated by
    reference to exhibits filed with Registrants Annual Report
    on
    Form 10-K
    for the year ended December 31, 2004.10
.36

Form of Notice of Grant of
    Restricted Stock Units under LSI Logic Corporation 2003 Equity
    Incentive Plan. Incorporated by reference to exhibits filed with
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.*10
.37

LSI Logic Corporation 2004 16(b)
    Executive Officer Incentive Plan. Incorporated by reference to
    exhibit filed with the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.*10
.38

Summary Description of the Engenio
    Information Technologies, Inc. 2004 Incentive Plan. Incorporated
    by reference to exhibit filed with the Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 2004.*10
.39

Summary Description of LSI Logic
    Corporation 2005 Semiconductor Incentive Plan. . Incorporated by
    reference to exhibits filed with Registrants Current
    Report on
    Form 8-K
    on April 7, 2005.*10
.40

Summary Description of Engenio
    Technologies, Inc. 2005 Incentive Plan. Incorporated by
    reference to exhibits filed with Registrants Current
    Report on
    Form 8-K
    on April 7, 2005.*10
.41

Form of Annual Director Option
    Agreement. Incorporated by reference to exhibits filed with
    Registrants Current Report on
    Form 8-K
    on April 7, 2005.*10
.42

Form of Notice of Grant of Stock
    Options and Option Agreement. Incorporated by reference to
    exhibits filed with Registrants Current Report on
    Form 8-K
    on April 7, 2005.*10
.43

Employment Agreement with Abhijit
    Y. Talwalkar, effective as of May 23, 2005. Incorporated by
    reference to exhibits filed with Registrants Current
    Report on
    Form 8-K
    on May 24, 2005.*10
.44

Amendment No. 1 to the LSI
    Logic Corporation 1991 Equity Incentive Stock Option Agreement
    dated August 15, 1997 with Wilfred J. Corrigan.
    Incorporated by reference to exhibits filed with
    Registrants Current Report on
    Form 8-K
    on June 17, 2005.*10
.45

Amendment No. 1 to the LSI
    Logic Corporation 1991 Equity Incentive Stock Option Agreement
    dated November 20, 1998 with Wilfred J. Corrigan.
    Incorporated by reference to exhibits filed with
    Registrants Current Report on
    Form 8-K
    on June 17, 2005.*10
.46

Standalone Stock Option Agreement
    issued to Abhijit Y. Talwalkar. Incorporated by reference to
    exhibits filed with Registrants Registration Statement on
    Form S-8
    (No. 333-126594)
    on July 14, 2005.*10
.47

Abhijit Y. Talwalkar LSI Logic
    Corporation 2003 Equity Incentive Plan Nonqualified Stock Option
    Agreement, effective as of June 1, 2005. Incorporated by
    reference to exhibits filed with Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended July 3, 2005. *10
.48

Abhijit Y. Talwalkar Notice of
    Grant under LSI Logic Corporation 2003 Equity Incentive Plan
    Nonqualified Stock Option Agreement, effective as of
    June 1, 2005. Incorporated by reference to exhibits filed
    with Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended July 3, 2005.*+10
.49

LSI Logic Corporation 2003 Equity
    Incentive Plan Nonqualified Stock Option Agreement.
    Incorporated by reference to exhibits filed with
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended July 3, 2005.*10
.50

LSI Logic Corporation Form of
    Notice of Grant of Stock Options under the 2003 Equity Incentive
    Plan. Incorporated by reference to exhibits filed with
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended July 3, 2005.* 106




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##### Table of Contents



10
.51

Separation Agreement with W.
    Richard Marz, effective October 5, 2005. Incorporated by
    reference to exhibits filed with Registrants Current
    Report on
    Form 8-K
    on October 11, 2005.*10
.52

Asset Purchase Agreement between
    the Registrant and Semiconductor Components Industries, LLC,
    dated as of April 5, 2006. Incorporated by reference to
    exhibits filed by ON Semiconductor Corporation with its
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2007.+10
.53

Written Description of 2006
    Incentive Plan. Incorporated by reference to exhibit filed with
    Registrants Current Report on
    Form 8-K
    on February 15, 2006.*10
.54

LSI Logic Corporation Incentive
    Plan, as amended and restated on March 10, 2004.
    Incorporated by reference to exhibit filed with
    Registrants Current Report on
    Form 8-K
    on February 15, 2006.*10
.55

Wafer Supply and Test Services
    Agreement between the Registrant and Semiconductor Components
    Industries, LLC, dated as of May 16, 2006. Incorporated by
    reference to exhibits filed with Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended October 1, 2006.+10
.56

Letter Agreement dated
    June 13, 2005 between the Registrant and Wilfred J.
    Corrigan. Incorporated by reference to exhibits filed with
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended July 2, 2006.*10
.57

Agreement dated August 14,
    2006, between LSI Logic Corporation and Joseph M. Zelayeta.
    Incorporated by reference to exhibits filed with
    Registrants Current Report on
    Form 8-K
    on August 14, 2006.*14
.1

Code of Ethics for Principal
    Executive and Senior Financial Officers of LSI Logic
    Corporation. Incorporated by reference to exhibits filed with
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2005.21
.1

List of Subsidiaries.23
.1

Consent of Independent Registered
    Public Accounting Firm.24
.1

Power of Attorney (included on the
    signature page in this Annual Report on
    Form 10-K).31
.1

Certification of the Chief
    Executive Officer pursuant to Securities and Exchange Act
    Rules 13a-15(e)
    and
    15d-1(e), as
    adopted pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.31
.2

Certification of the Chief
    Financial Officer pursuant to Securities and Exchange Act
    Rules 13a-15(e)
    and
    15de-1(e),
    as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.32
.1

Certification of the Chief
    Executive Officer pursuant to 18 U.S.C. Section 1350,
    as adopted pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002.**32
.2

Certification of the Chief
    Financial Officer pursuant to 18 U.S.C. Section 1350,
    as adopted pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002.**     *
    
    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.          TRADEMARK
    ACKNOWLEDGMENTS
  Fusion-MPT
   107




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##### Table of Contents



SIGNATURES
      By:
    /s/  Abhijit
    Y. Talwalkar      
  POWER OF
    ATTORNEY
  attorneys-in-fact, Form 10-K, attorneys-in-fact,
    Signature

Title

Date/s/  Abhijit
    Y.
    Talwalkar(Abhijit
    Y. Talwalkar)

President and Chief Executive
    Officer and Director

February 27, 2007/s/  Bryon
    Look(Bryon
    Look)

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

February 26, 2007/s/  Timothy
    Y. Chen(Timothy
    Y. Chen)

Director

February 26, 2007/s/  Malcolm
    R. Currie(Malcolm
    R. Currie)

Director

February 27, 2007/s/  Charles
    A. Haggerty(Charles
    A. Haggerty)

Director

February 28, 2007/s/  James
    H. Keyes(James
    H. Keyes)

Director

February 27, 2007/s/  John
    H. F. Miner(John
    H. F. Miner)

Director

February 26, 2007 108




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Signature

Title

Date/s/  R.
    Douglas
    Norby(R.
    Douglas Norby)

Director

February 27, 2007/s/  Matthew
    J.
    ORourke(Matthew
    J. ORourke)

Director

February 26, 2007/s/  Gregorio
    Reyes(Gregorio
    Reyes)

Director

March 1, 2007  109




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##### Table of Contents



INDEX TO
    EXHIBITS
  2
.1

Agreement and Plan of
    Reorganization dated March 26, 2001 by and among
    Registrant, Clover Acquisition Corporation and C-Cube
    Microsystems Inc. Incorporated by reference to exhibits filed
    with the Registrants Registration Statement on
    Form S-4
    (No. 333-58862)
    on April 13, 2001.2
.2

Agreement and Plan of Merger dated
    as of December 3, 2006 by and among Registrant, Atlas
    Acquisition Corp. and Agere Systems Inc. Incorporated by
    reference to exhibits filed with the Registrants
    Registration Statement on
    Form S-4
    (No. 333-139642)
    on December 22, 2006.3
.1

Restated Certificate of
    Incorporation of Registrant. Incorporated by reference to
    exhibits filed with the Registrants Registration Statement
    on
    Form S-8
    (No. 333-46436)
    on September 22, 2000.3
.2

By-laws of Registrant.
    Incorporated by reference to exhibits filed with the
    Registrants Current Report on
    Form 8-K
    filed on September 3, 2004.4
.1

Indenture dated as of May 16,
    2003, between LSI Logic Corporation and U.S. Bank, N.A., as
    Trustee relating to 2003 Convertible Notes. Incorporated by
    reference to exhibits filed with Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended June 30, 2003.4
.2

Amended and Restated Preferred
    Shares Rights Agreement, dated as of November 20, 1998, between
    LSI Logic Corporation and BankBoston N.A. Incorporated by
    reference to exhibits filed with the Registrants Report on
    Form 8-A/A filed on December 8, 1998.4
.3

Amendment No. 1 to Amended and
    Restated Preferred Shares Rights Agreement, dated as of February
    19, 1999, between LSI Logic Corporation and BankBoston N.A.
    Incorporated by reference to exhibits filed with the
    Registrants Report on Form 8-A/A filed on June 17, 2003.4
.4

Amendment to Amended and Restated
    Preferred Shares Rights Agreement, dated as of August 16, 2001,
    by and among LSI Logic Corporation, Fleet bank f/k/a BankBoston
    N.A. and EquiServe Trust Company, N.A.  Incorporated by
    reference to exhibits filed with the Registrants Report on
    Form 8-A/A filed on June 17, 2003.4
.5

See Exhibit 3.1.10
.1

Form of Indemnification Agreement
    between Registrant and our officers, directors and certain key
    employees. Incorporated by reference to exhibits filed with the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 1987.*10
.2

Amended and Restated LSI Logic
    Corporation 1991 Equity Incentive Plan. Incorporated by
    reference to exhibits filed with Registrants Registration
    Statement on
    Form S-8
    (No. 333-96543)
    on July 16, 2002.*10
.3

1995 Director Option Plan.
    Incorporated by reference to exhibits filed with the
    Registrants Registration Statement on
    Form S-8
    (No. 333-106205)
    on June 17, 2003.*10
.4

LSI Logic Corporation
    International Employee Stock Purchase Plan. Incorporated by
    reference to exhibits filed with the Registrants
    Registration Statement on
    Form S-8
    (No. 333-115762)
    on May 21, 2004.*10
.5

Form of LSI Logic Corporation
    Change of Control Severance Agreement between LSI Logic
    Corporation and each of its executive officers. Incorporated by
    reference to exhibits filed with the Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 2003.*10
.6

Technology Transfer Agreement
    between LSI Logic Corporation and Wafer Technology (Malaysia)
    Sdn. Bhd., dated September 8, 1999. Incorporated by
    reference to exhibits filed with the Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended September 30, 1999.+10
.7

Mint Technology, Inc. Amended 1996
    Stock Option Plan. Incorporated by reference to exhibits filed
    with the Registrants Registration Statement on
    Form S-8
    (No. 333-34285)
    on August 25, 1997.*10
.8

Registrants Amended and
    Restated Employee Stock Purchase Plan. Incorporated by reference
    to exhibits filed with the Registrants Registration
    Statement on
    Form S-8
    (No. 333-115762)
    on May 21, 2004.*10
.9

Symbios Logic, Inc. 1995 Stock
    Plan. Incorporated by reference to exhibits filed with the
    Registrants Registration Statement on
    Form S-8
    (No. 333-62159)
    on August 25, 199810
.10

LSI Logic Corporation 1999
    Nonstatutory Stock Option Plan. Incorporated by reference to
    exhibits filed with the Registrants Registration Statement
    on
    Form S-8
    (No. 333-96549)
    on July 16, 2002.*10
.11

SEEQ Technology, Inc. Amended and
    Restated 1982 Stock Option Plan. Incorporated by reference to
    exhibits filed with the Registrants Registration Statement
    on
    Form S-8
    (No. 333-81435)
    on June 24, 1999.*10
.12

IntraServer Technology, Inc. 1998
    Stock Option Plan. Incorporated by reference to exhibits filed
    with Registrants Registration Statement on
    Form S-8
    (No. 333-38746)
    on June 7, 2000.10
.13

DataPath Systems, Inc. Amended
    1994 Stock Option Plan. Incorporated by reference to exhibits
    filed with Registrants Registration Statement on
    Form S-8
    (No. 333-42888)
    on August 2, 2000.*




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##### Table of Contents



10
.14

DataPath Systems, Inc. Amended and
    Restated 1997 Stock Option Plan. Incorporated by reference to
    exhibits filed with Registrants Registration Statement on
    Form S-8
    (No. 333-42888)
    on August 2, 2000.*10
.15

Syntax Systems, Inc. Restated
    Stock Option Plan of January 5, 1999. Incorporated by
    reference to exhibits filed with Registrants Registration
    Statement on
    Form S-8
    (No. 333-52050)
    on December 18, 2000.*10
.16

C-Cube Microsystems Inc. 2000
    Stock Plan. Incorporated by reference to exhibits filed with
    Registrants Registration Statement on
    Form S-8
    (No. 333-62960)
    on June 14, 2001.10
.17

Wilfred J. Corrigan Employment
    Agreement dated as of September 20, 2001. Incorporated by
    reference to exhibits filed with the Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 2001.*10
.18

Manufacturing Technology Joint
    Development and Foundry Supply Agreement dated as of
    March 30, 2001 by and between the Registrant and Taiwan
    Semiconductor Manufacturing Co., Ltd. Incorporated by reference
    to exhibits filed with the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2002.+10
.19

LSI Logic Corporation 2003 Equity
    Incentive Plan. Incorporated by reference to exhibit filed with
    the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended October 1, 2006.*10
.20

Registration Rights Agreement
    between LSI Logic Corporation and Morgan Stanley & Co.,
    Inc., dated May 16, 2003. Incorporated by reference to
    exhibits filed with Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2003.10
.21

LSI Logic Corporation 1991 Equity
    Incentive Plan Nonqualified Stock Option Agreement. Incorporated
    by reference to exhibits filed with the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended October 3, 2004.*10
.22

Form of Notice of Grant under LSI
    Logic Corporation Nonqualified Stock Option Agreement.
    Incorporated by reference to exhibits filed with the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended October 3, 2004.*10
.23

LSI Logic Corporation 2003 Equity
    Incentive Plan Restricted Stock Unit Agreement. Incorporated by
    reference to exhibits filed with the Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended October 3, 2004.*10
.24

Engenio Information Technologies,
    Inc. Amended and Restated 2004 Equity Incentive Plan.
    Incorporated by reference to exhibits filed with the
    Registrants Current Report on
    Form 8-K
    on November 4, 2004.*10
.25

Engenio Information Technologies,
    Inc. 2004 Equity Incentive Plan Nonqualified Stock Option
    Agreement. Incorporated by reference to exhibits filed with the
    Registrants Current Report on
    Form 8-K
    on November 4, 2004.*10
.26

Form of Notice of Grant under
    Engenio Information Technologies, Inc. 2004 Equity Incentive
    Plan Nonqualified Stock Option Agreement. Incorporated by
    reference to exhibits filed with the Registrants Current
    Report on
    Form 8-K
    on November 4, 2004.*10
.27

Lease Agreement dated
    June 30, 2004, for 670 N. McCarthy Boulevard,
    Milpitas, California, between Engenio Information Technologies,
    Inc. and The Irvine Company. Incorporated by reference to
    exhibit filed with the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.10
.28

First Amendment, dated
    October 28, 2004, to the Lease Agreement (dated
    June 30, 2004), for 670 N. McCarthy Boulevard,
    Milpitas, California, between Engenio Information Technologies,
    Inc. and The Irvine Company. Incorporated by reference to
    exhibits filed with the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.10
.29

Lease Agreement dated
    December 31, 2003, for 1621 Barber Lane, Milpitas,
    California, between the Registrant and Limar Realty
    Corp. #9. Incorporated by reference to exhibits filed with
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.10
.30

Lease Agreement dated
    December 31, 2003, for 765 Sycamore Drive, Milpitas,
    California, between the Registrant and Limar Realty
    Corp. #4. Incorporated by reference to exhibits filed with
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.10
.31

Lease Agreement dated
    December 31, 2003, for 1501 McCarthy Boulevard, Milpitas,
    California, between the Registrant and Limar Realty
    Corp. #4. Incorporated by reference to exhibits filed with
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.10
.32

Lease Agreement dated
    February 20, 2004, for 1855 Barber Lane, Milpitas,
    California, between the Registrant and TriNet Milpitas
    Associates, LLC. Incorporated by reference to exhibits filed
    with Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.




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##### Table of Contents



10
.33

Lease Agreement dated
    February 20, 2004, for 560 Cottonwood Drive, Milpitas,
    California, between the Registrant and TriNet Milpitas
    Associates, LLC. Incorporated by reference to exhibits filed
    with Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.10
.34

Assignment and Assumption of Lease
    dated May 27, 2004, for 5400 Airport Boulevard, Suites 100
    and 200, Boulder, Colorado, between LakeCentre Plaza Limited,
    Ltd., LLLP and Engenio Information Technologies, Inc.
    Incorporated by reference to exhibits filed with
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.10
.35

Lease Modification Agreement dated
    June 21, 2004, for 5400 Airport Boulevard, Suites 100 and
    200, Boulder, Colorado, between LakeCentre Plaza Limited, Ltd.,
    LLLP and Engenio Information Technologies, Inc. Incorporated by
    reference to exhibits filed with Registrants Annual Report
    on
    Form 10-K
    for the year ended December 31, 2004.10
.36

Form of Notice of Grant of
    Restricted Stock Units under LSI Logic Corporation 2003 Equity
    Incentive Plan. Incorporated by reference to exhibits filed with
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.*10
.37

LSI Logic Corporation 2004 16(b)
    Executive Officer Incentive Plan. Incorporated by reference to
    exhibit filed with the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.*10
.38

Summary Description of the Engenio
    Information Technologies, Inc. 2004 Incentive Plan. Incorporated
    by reference to exhibit filed with the Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 2004.*10
.39

Summary Description of LSI Logic
    Corporation 2005 Semiconductor Incentive Plan. . Incorporated by
    reference to exhibits filed with Registrants Current
    Report on
    Form 8-K
    on April 7, 2005.*10
.40

Summary Description of Engenio
    Technologies, Inc. 2005 Incentive Plan. Incorporated by
    reference to exhibits filed with Registrants Current
    Report on
    Form 8-K
    on April 7, 2005.*10
.41

Form of Annual Director Option
    Agreement. Incorporated by reference to exhibits filed with
    Registrants Current Report on
    Form 8-K
    on April 7, 2005.*10
.42

Form of Notice of Grant of Stock
    Options and Option Agreement. Incorporated by reference to
    exhibits filed with Registrants Current Report on
    Form 8-K
    on April 7, 2005.*10
.43

Employment Agreement with Abhijit
    Y. Talwalkar, effective as of May 23, 2005. Incorporated by
    reference to exhibits filed with Registrants Current
    Report on
    Form 8-K
    on May 24, 2005.*10
.44

Amendment No. 1 to the LSI
    Logic Corporation 1991 Equity Incentive Stock Option Agreement
    dated August 15, 1997 with Wilfred J. Corrigan.
    Incorporated by reference to exhibits filed with
    Registrants Current Report on
    Form 8-K
    on June 17, 2005.*10
.45

Amendment No. 1 to the LSI
    Logic Corporation 1991 Equity Incentive Stock Option Agreement
    dated November 20, 1998 with Wilfred J. Corrigan.
    Incorporated by reference to exhibits filed with
    Registrants Current Report on
    Form 8-K
    on June 17, 2005.*10
.46

Standalone Stock Option Agreement
    issued to Abhijit Y. Talwalkar. Incorporated by reference to
    exhibits filed with Registrants Registration Statement on
    Form S-8
    (No. 333-126594)
    on July 14, 2005.*10
.47

Abhijit Y. Talwalkar LSI Logic
    Corporation 2003 Equity Incentive Plan Nonqualified Stock Option
    Agreement, effective as of June 1, 2005. Incorporated by
    reference to exhibits filed with Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended July 3, 2005.*10
.48

Abhijit Y. Talwalkar Notice of
    Grant under LSI Logic Corporation 2003 Equity Incentive Plan
    Nonqualified Stock Option Agreement, effective as of
    June 1, 2005. Incorporated by reference to exhibits filed
    with Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended July 3, 2005.*+10
.49

LSI Logic Corporation 2003 Equity
    Incentive Plan Nonqualified Stock Option Agreement.
    Incorporated by reference to exhibits filed with
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended July 3, 2005.*10
.50

LSI Logic Corporation Form of
    Notice of Grant of Stock Options under the 2003 Equity Incentive
    Plan. Incorporated by reference to exhibits filed with
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended July 3, 2005.*10
.51

Separation Agreement with W.
    Richard Marz, effective October 5, 2005. Incorporated by
    reference to exhibits filed with Registrants Current
    Report on
    Form 8-K
    on October 11, 2005.*10
.52

Asset Purchase Agreement between
    the Registrant and Semiconductor Components Industries, LLC,
    dated as of April 5, 2006. Incorporated by reference to
    exhibits filed by ON Semiconductor Corporation with its
    Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2007.+




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##### Table of Contents



10
.53

Written Description of 2006
    Incentive Plan. Incorporated by reference to exhibit filed with
    Registrants Current Report on
    Form 8-K
    on February 15, 2006.*10
.54

LSI Logic Corporation Incentive
    Plan, as amended and restated on March 10, 2004.
    Incorporated by reference to exhibit filed with
    Registrants Current Report on
    Form 8-K
    on February 15, 2006.*10
.55

Wafer Supply and Test Services
    Agreement between the Registrant and Semiconductor Components
    Industries, LLC, dated as of May 16, 2006. Incorporated by
    reference to exhibits filed with Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended October 1, 2006.+10
.56

Letter Agreement dated
    June 13, 2005 between the Registrant and Wilfred J.
    Corrigan. Incorporated by reference to exhibits filed with
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended July 2, 2006.*10
.57

Agreement dated August 14,
    2006, between LSI Logic Corporation and Joseph M. Zelayeta.
    Incorporated by reference to exhibits filed with
    Registrants Current Report on
    Form 8-K
    on August 14, 2006.*14
.1

Code of Ethics for Principal
    Executive and Senior Financial Officers of LSI Logic
    Corporation. Incorporated by reference to exhibits filed with
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2005.21
.1

List of Subsidiaries.23
.1

Consent of Independent Registered
    Public Accounting Firm.24
.1

Power of Attorney (included on the
    signature page in this Annual Report on
    Form 10-K).31
.1

Certification of the Chief
    Executive Officer pursuant to Securities and Exchange Act
    Rules 13a-15(e)
    and
    15d-1(e), as
    adopted pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.31
.2

Certification of the Chief
    Financial Officer pursuant to Securities and Exchange Act
    Rules 13a-15(e)
    and
    15de-1(e),
    as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.32
.1

Certification of the Chief
    Executive Officer pursuant to 18 U.S.C. Section 1350,
    as adopted pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002.**32
.2

Certification of the Chief
    Financial Officer pursuant to 18 U.S.C. Section 1350,
    as adopted pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002.**     *
    
    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.