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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended July 3, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from _______ to ________
 Commission File Number: 1-10317
 
 LSI LOGIC CORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware
(State of Incorporation)
    
    94-2712976
(I.R.S. Employer Identification Number)
 1621 Barber Lane
Milpitas, California 95035
(Address of principal executive offices)
(Zip code)
 (408) 433-8000
(Registrants telephone number, including area code)
 
  þ o
 þ o




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LSI LOGIC CORPORATION
 Form 10-Q
For the Quarter Ended June 30, 2005
INDEX
  
 PageNo.PART I. FINANCIAL INFORMATIONItem 1
    
    Financial StatementsConsolidated
Condensed Balance Sheets  as of  June 30, 2005 (unaudited) and December 31, 2004
    
    
    3Consolidated
Condensed Statements of Operations  for the Three and Six Months Ended June 30, 2005 and 2004 (unaudited)
    
    
    4Consolidated
Condensed Statements of Cash Flows  for the Six Months Ended June 30, 2005 and 2004 (unaudited)
    
    
    5Notes to Unaudited Consolidated Condensed Financial Statements
    
    
    6Item 2
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    38Item 4
    
    Controls and Procedures
    
    
    38PART II. OTHER INFORMATIONItem 1
    
    Legal Proceedings
    
    
    38Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    38Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    39Item 5
    
    Other Information
    
    
    39Item 6
    
    Exhibits
    
    
    40Signatures
    
    
    41Index to Exhibits
    
    
    42EXHIBIT 10.47EXHIBIT 10.48EXHIBIT 10.49EXHIBIT 10.50EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 LSI LOGIC CORPORATION
 
 CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
 June 30,
    
    December 31,2005
    
    2004(In thousands, except per-share amounts)AssetsCash and cash equivalents
    
    $
    211,456
    
    
    $
    218,723Short-term investments
    
    
    570,563
    
    
    
    595,862Accounts receivable, less allowances of $10,445 and $12,545
    
    
    284,897
    
    
    
    272,065Inventories
    
    
    185,740
    
    
    
    218,900Deferred tax assets
    
    
    5,649
    
    
    
    5,661Prepaid expenses and other current assets
    
    
    55,316
    
    
    
    54,076Total current assets
    
    
    1,313,621
    
    
    
    1,365,287Property and equipment, net
    
    
    288,513
    
    
    
    311,916Intangibles, net
    
    
    73,232
    
    
    
    108,457Goodwill
    
    
    965,468
    
    
    
    973,130Deferred tax assets
    
    
    5,002
    
    
    
    5,044Other assets
    
    
    101,673
    
    
    
    110,167Total assets
    
    $
    2,747,509
    
    
    $
    2,874,001Liabilities and Stockholders EquityAccounts payable
    
    $
    121,285
    
    
    $
    122,422Accrued salaries, wages and benefits
    
    
    65,161
    
    
    
    58,516Other accrued liabilities
    
    
    125,644
    
    
    
    142,278Income taxes payable
    
    
    82,408
    
    
    
    72,935Current portion of long-term obligations
    
    
    
    
    
    
    129Total current liabilities
    
    
    394,498
    
    
    
    396,280Long-term debt
    
    
    625,956
    
    
    
    781,846Tax related liabilities and other
    
    
    75,280
    
    
    
    77,570Total long-term obligations and other liabilities
    
    
    701,236
    
    
    
    859,416Commitments and contingencies (Notes 10 and 11)Minority interest in subsidiary
    
    
    247
    
    
    
    259Stockholders equity:Preferred shares; $.01 par value; 2,000 shares authorized, none outstanding
    
    
    
    
    
    
    Common stock; $.01 par value; 1,300,000 shares authorized; 390,306 and
387,490 shares outstanding
    
    
    3,903
    
    
    
    3,875Additional paid-in capital
    
    
    2,986,207
    
    
    
    2,969,478Deferred stock compensation
    
    
    (10,594
    )
    
    
    (8,936
    )Accumulated deficit
    
    
    (1,354,340
    )
    
    
    (1,384,321
    )Accumulated other comprehensive income
    
    
    26,352
    
    
    
    37,950Total stockholders equity
    
    
    1,651,528
    
    
    
    1,618,046Total liabilities and stockholders equity
    
    $
    2,747,509
    
    
    $
    2,874,001
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LSI LOGIC CORPORATION
 
 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(In thousands, except per share amounts)Revenues
    
    $
    481,292
    
    
    $
    447,897
    
    
    $
    931,299
    
    
    $
    900,254Cost of revenues
    
    
    269,531
    
    
    
    239,081
    
    
    
    529,271
    
    
    
    490,006Gross profit
    
    
    211,761
    
    
    
    208,816
    
    
    
    402,028
    
    
    
    410,248Research and development
    
    
    99,659
    
    
    
    110,098
    
    
    
    198,896
    
    
    
    219,039Selling, general and administrative
    
    
    59,872
    
    
    
    63,757
    
    
    
    118,012
    
    
    
    124,915Restructuring of operations and other items, net
    
    
    7,156
    
    
    
    3,029
    
    
    
    8,689
    
    
    
    2,431Amortization of non-cash deferred stock
compensation (*)
    
    
    1,172
    
    
    
    2,003
    
    
    
    2,627
    
    
    
    3,829Amortization of intangibles
    
    
    17,613
    
    
    
    19,398
    
    
    
    35,226
    
    
    
    37,672Income from operations
    
    
    26,289
    
    
    
    10,531
    
    
    
    38,578
    
    
    
    22,362Interest expense
    
    
    (6,320
    )
    
    
    (6,067
    )
    
    
    (13,030
    )
    
    
    (11,979
    )Interest income and other, net
    
    
    11,543
    
    
    
    8,778
    
    
    
    16,933
    
    
    
    17,944Income before income taxes
    
    
    31,512
    
    
    
    13,242
    
    
    
    42,481
    
    
    
    28,327Provision for income taxes
    
    
    6,250
    
    
    
    6,000
    
    
    
    12,500
    
    
    
    12,000Net income
    
    $
    25,262
    
    
    $
    7,242
    
    
    $
    29,981
    
    
    $
    16,327Net income per share:Basic
    
    $
    0.06
    
    
    $
    0.02
    
    
    $
    0.08
    
    
    $
    0.04Diluted
    
    $
    0.06
    
    
    $
    0.02
    
    
    $
    0.08
    
    
    $
    0.04Shares used in computing per share amounts:Basic
    
    
    389,088
    
    
    
    383,522
    
    
    
    388,371
    
    
    
    382,571Diluted
    
    
    393,427
    
    
    
    388,586
    
    
    
    391,954
    
    
    
    389,102
 
 (*)
    
    Amortization of non-cash deferred stock compensation, if not shown separately, would
have been included in cost of revenues, research and development and selling, general and
administrative expenses as shown below: Three months ended June 30,
    
    Six months ended June 30,2005
    
    2004
    
    2005
    
    2004(In thousands)Cost of revenues
    
    $
    164
    
    
    $
    46
    
    
    $
    325
    
    
    $
    96Research and development
    
    
    570
    
    
    
    1,530
    
    
    
    1,405
    
    
    
    2,711Selling, general and administrative
    
    
    438
    
    
    
    427
    
    
    
    897
    
    
    
    1,022Total
    
    $
    1,172
    
    
    $
    2,003
    
    
    $
    2,627
    
    
    $
    3,829
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LSI LOGIC CORPORATION
 
 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Six Months EndedJune 30,2005
    
    2004(In thousands)Operating activities:Net income
    
    $
    29,981
    
    
    $
    16,327Adjustments:Depreciation and amortization
    
    
    82,293
    
    
    
    92,441Amortization of non-cash deferred stock compensation
    
    
    2,627
    
    
    
    3,829Non-cash restructuring and other items
    
    
    1,350
    
    
    
    6,385Gain on sale and exchange of equity securities
    
    
    (2,311
    )
    
    
    (8,104
    )Gain on repurchase of Convertible Subordinated Notes
    
    
    (4,123
    )
    
    
    Gain on sale of property and equipment
    
    
    (3
    )
    
    
    (3,937
    )Changes in deferred tax assets and liabilities
    
    
    54
    
    
    
    625Changes in assets and liabilities, net of assets acquired and liabilities
assumed in business combinations:Accounts receivable
    
    
    (12,853
    )
    
    
    (56,980
    )Inventories
    
    
    33,160
    
    
    
    (11,701
    )Prepaid expenses and other assets
    
    
    (8,160
    )
    
    
    (5,777
    )Accounts payable
    
    
    (2,378
    )
    
    
    10,263Accrued and other liabilities
    
    
    (493
    )
    
    
    (5,178
    )Net cash provided by operating activities
    
    
    119,144
    
    
    
    38,193Investing activities:Purchase of debt securities available-for-sale
    
    
    (262,532
    )
    
    
    (454,756
    )Maturities and sales of debt securities available-for-sale
    
    
    283,183
    
    
    
    339,458Purchases of equity securities
    
    
    
    
    
    
    (2,250
    )Proceeds from sales of equity securities
    
    
    3,871
    
    
    
    10,518Purchases of property, equipment and software
    
    
    (19,420
    )
    
    
    (25,218
    )Proceeds from sale of property and equipment
    
    
    3,215
    
    
    
    5,836Adjustment to goodwill acquired in a prior year for resolution of
a pre-acquisition income tax contingency
    
    
    7,662
    
    
    
    4,462Increase in non-current assets and deposits
    
    
    
    
    
    
    (40
    )Decrease in non-current assets and deposits
    
    
    
    
    
    
    39,633Acquisition of companies, net of cash acquired
    
    
    
    
    
    
    (36,487
    )Net cash provided by/(used in) investing activities
    
    
    15,979
    
    
    
    (118,844
    )Financing activities:Repurchase of Convertible Subordinated Notes
    
    
    (148,126
    )
    
    
    Issuance of common stock
    
    
    12,826
    
    
    
    17,810Purchase of minority interest in subsidiary
    
    
    
    
    
    
    (7,453
    )Repayment of debt obligations
    
    
    (129
    )
    
    
    (216
    )Net cash (used in)/provided by financing activities
    
    
    (135,429
    )
    
    
    10,141Effect of exchange rate changes on cash and cash equivalents
    
    
    (6,961
    )
    
    
    (769
    )Decrease in cash and cash equivalents
    
    
    (7,267
    )
    
    
    (71,279
    )Cash and cash equivalents at beginning of period
    
    
    218,723
    
    
    
    269,682Cash and cash equivalents at end of period
    
    $
    211,456
    
    
    $
    198,403
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LSI LOGIC CORPORATION
 
 NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 NOTE 1  BASIS OF PRESENTATION
    Recent Accounting Pronouncements
  6




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NOTE 2  STOCK-BASED COMPENSATION
  Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(In thousands, except per share amounts)Net income, as reported
    
    $
    25,262
    
    
    $
    7,242
    
    
    $
    29,981
    
    
    $
    16,327Add: Amortization of
non-cash deferred stock
compensation determined
under the intrinsic
value method as
reported in net income,
net of related tax
effects *
    
    
    
    
    
    
    748
    
    
    
    296
    
    
    
    2,022Deduct: Total
stock-based employee
compensation expense
determined under fair
value method for all
awards, net of related
tax effects
    
    
    (25,475
    )
    
    
    (32,756
    )
    
    
    (43,514
    )
    
    
    (70,597
    )Pro forma net loss
    
    $
    (213
    )
    
    $
    (24,766
    )
    
    $
    (13,237
    )
    
    $
    (52,248
    )Income/(loss) per share:Basic-as reported
    
    $
    0.06
    
    
    $
    0.02
    
    
    $
    0.08
    
    
    $
    0.04Basic-pro forma
    
    $
    
    
    
    $
    (0.06
    )
    
    $
    (0.03
    )
    
    $
    (0.14
    )Diluted-as reported
    
    $
    0.06
    
    
    $
    0.02
    
    
    $
    0.08
    
    
    $
    0.04Diluted-pro forma
    
    $
    
    
    
    $
    (0.06
    )
    
    $
    (0.03
    )
    
    $
    (0.14
    )
 
 *
    
    This amount excludes amortization of non-cash deferred stock compensation on restricted stock
awards.  8




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NOTE 3  RESTRUCTURING AND OTHER ITEMS
  Restructuring and impairment of long-lived assets:
 First quarter of 2005:
  Second quarter of 2005:
    9




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Utilized
    
    
    
    
    
    
    
    
    
    
    
    
    
    BalanceBalance at
    
    Restructuring
    
    during
    
    Balance at
    
    Restructuring
    
    Utilized
    
    atDecember
    
    Expense
    
    Q1,
    
    March 31,
    
    Expense
    
    during
    
    June 30,31, 2004
    
    Q1, 2005
    
    2005
    
    2005
    
    Q2, 2005
    
    Q2, 2005
    
    2005(In thousands)Write-down of
excess assets and
decommissioning costs
(a)
    
    $
    1,207
    
    
    $
    796
    
    
    $
    (1,271
    )
    
    $
    732
    
    
    $
    429
    
    
    $
    (451
    )
    
    $
    710Lease terminations (b)
    
    
    20,065
    
    
    
    738
    
    
    
    (2,691
    )
    
    
    18,112
    
    
    
    727
    
    
    
    (2,674
    )
    
    
    16,165Facility closure and
other exit costs (c)
    
    
    543
    
    
    
    
    
    
    
    (476
    )
    
    
    67
    
    
    
    404
    
    
    
    (462
    )
    
    
    9Payments to employees
for severance (d)
    
    
    7,408
    
    
    
    (1
    )
    
    
    (4,250
    )
    
    
    3,157
    
    
    
    160
    
    
    
    (1,850
    )
    
    
    1,467Total
    
    $
    29,223
    
    
    $
    1,533
    
    
    $
    (8,688
    )
    
    $
    22,068
    
    
    $
    1,720
    
    
    $
    (5,437
    )
    
    $
    18,351
 
 (a)
    
    The amounts utilized in 2005 reflect $1.2 million of non-cash write-downs of long-lived
assets in the U.S. due to impairment and $0.5 million in cash payments to decommission and
sell assets. The write-downs of long-lived assets were accounted for as a reduction of the
assets and did not result in a liability. The $0.7 million balance as of June 30, 2005,
relates to machinery and equipment decommissioning costs in the U.S. and estimates for selling
costs for assets held for sale and is expected to be utilized during 2005.(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. The balance remaining for facility closure and
other exit costs will be paid during 2005.(d)
    
    Amounts utilized represent cash severance payments to 123 employees during the six months
ended June 30, 2005. The balance remaining for severance is expected to be paid by the end of
2005. Other Items:
  NOTE 4
 INVESTMENTS
 June 30,
    
    December 31,2005
    
    2004(In thousands)Available-for-sale debt securitiesAsset and mortgage-backed securities
    
    $
    264,945
    
    
    $
    292,898U.S. government and agency securities
    
    
    225,959
    
    
    
    234,787Corporate and municipal debt securities
    
    
    79,659
    
    
    
    68,177Total short-term investments
    
    $
    570,563
    
    
    $
    595,862Long-term investments in equity securitiesMarketable equity securities
    
    $
    20,649
    
    
    $
    28,372Non-marketable equity securities
    
    
    9,307
    
    
    
    9,307Total long-term investments in equity securities
    
    $
    29,956
    
    
    $
    37,679
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 A $1 million pre-tax gain related to the sale of certain marketable available-for-sale equity
securities in the second quarter of 2005; and A $1 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.The Company realized pre-tax gains of $8 million related to the following for the six months
ended June 30, 2004: A $5 million pre-tax gain related to the sales of certain marketable available-for-sale equity
securities in the second quarter of 2004; and A $3 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 first quarter of
2004.
  Non-marketable
    
    Marketableequity
    
    equityinvestments
    
    investments(in millions)Pre-tax loss:Three months ended June 30, 2005
    
    $
    
    
    
    $
    Six months ended June 30, 2005
    
    
    
    
    
    
    Pre-tax loss:Three months ended June 30, 2004
    
    $
    0.1
    
    
    $
    Six months ended June 30, 2004
    
    
    1.2
    
    
    
    Total carrying value of impaired investments as
of June 30, 2005
    
    $
    2.4
    
    
    $
    
 NOTE 5  BALANCE SHEET DETAIL
 June 30,
    
    December 31,2005
    
    2004(In thousands)Cash and cash equivalents:Cash in financial institutions
    
    $
    31,252
    
    
    $
    51,172Cash equivalents
    
    
    180,204
    
    
    
    167,551$
    211,456
    
    
    $
    218,723Inventories:Raw materials
    
    $
    17,602
    
    
    $
    20,022Work-in-process
    
    
    83,241
    
    
    
    106,818Finished goods
    
    
    84,897
    
    
    
    92,060$
    185,740
    
    
    $
    218,900
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Semiconductor
    
    Storage SystemsSegment
    
    segment
    
    TotalBalance as of December 31, 2004
    
    $
    892,497
    
    
    $
    80,633
    
    
    $
    973,130Adjustment to goodwill acquired in
a prior year
for cash received from the
resolution of a pre-acquisition
income tax contingency
    
    
    (7,662
    )
    
    
    
    
    
    
    (7,662
    )Balance as of June 30, 2005
    
    $
    884,835
    
    
    $
    80,633
    
    
    $
    965,468
  NOTE 6  DEBT
 Conversion
    
    June 30,
    
    December 31,Maturity
    
    Interest Rate
    
    Price
    
    2005
    
    2004(In thousands)2003 Convertible Subordinated Notes
    
    May 2010
    
    
    4
    %
    
    $
    13.4200
    
    
    $
    350,000
    
    
    $
    350,0002001 Convertible Subordinated Notes
    
    November 2006
    
    
    4
    %
    
    $
    26.3390
    
    
    
    271,848
    
    
    
    421,500Deferred gain on terminated swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,108
    
    
    
    10,346Capital lease obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    129625,956
    
    
    
    781,975Current portion of long-term obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (129
    )Long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    625,956
    
    
    $
    781,846
  NOTE 7  RECONCILIATION OF BASIC AND DILUTED INCOME PER SHARE
  12




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Three Months Ended June 30,2005
    
    2004Per-Per-Share
    
    
    
    
    
    
    
    
    
    ShareIncome*
    
    Shares+
    
    Amount
    
    Income*
    
    Shares+
    
    Amount(In thousands except per share amounts)Basic EPS:Net income available to common stockholders
    
    $
    25,262
    
    
    
    389,088
    
    
    $
    0.06
    
    
    $
    7,242
    
    
    
    383,522
    
    
    $
    0.02Stock options and restricted stock awards
    
    
    
    
    
    
    4,339
    
    
    
    
    
    
    
    
    
    
    
    5,064
    
    
    
    Diluted EPS:Net income available to common stockholders
    
    $
    25,262
    
    
    
    393,427
    
    
    $
    0.06
    
    
    $
    7,242
    
    
    
    388,586
    
    
    $
    0.02
 Six Months Ended June 30,2005
    
    2004Per-Share
    
    
    
    
    
    
    
    
    
    Per-ShareIncome*
    
    Shares+
    
    Amount
    
    Income*
    
    Shares+
    
    Amount(In thousands except per share amounts)Basic EPS:Net income available to common stockholders
    
    $
    29,981
    
    
    
    388,371
    
    
    $
    0.08
    
    
    $
    16,327
    
    
    
    382,571
    
    
    $
    0.04Stock options and restricted stock awards
    
    
    
    
    
    
    3,583
    
    
    
    
    
    
    
    
    
    
    
    6,531
    
    
    
    Diluted EPS:Net income available to common stockholders
    
    $
    29,981
    
    
    
    391,954
    
    
    $
    0.08
    
    
    $
    16,327
    
    
    
    389,102
    
    
    $
    0.04
 
 *
    
    Numerator+
    
    Denominator    NOTE 8  COMPREHENSIVE INCOME/(LOSS)
  13




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##### Table of Contents



Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(In thousands)Net income
    
    $
    25,262
    
    
    $
    7,242
    
    
    $
    29,981
    
    
    $
    16,327Change in unrealized gain/loss on derivative
instruments
designated as and qualifying as cash-flow hedges
    
    
    (369
    )
    
    
    2,373
    
    
    
    (535
    )
    
    
    1,470Change in unrealized gain/loss on available-for-sale
securities
    
    
    (1,450
    )
    
    
    (10,716
    )
    
    
    (4,273
    )
    
    
    (11,412
    )Change in foreign currency translation adjustments
    
    
    (3,341
    )
    
    
    (9,653
    )
    
    
    (6,790
    )
    
    
    (4,480
    )Comprehensive income/(loss)
    
    $
    20,102
    
    
    $
    (10,754
    )
    
    $
    18,383
    
    
    $
    1,905
 NOTE 9  SEGMENT REPORTING
   Three months ended June 30,
    
    Six months ended June 30,2005
    
    2004
    
    2005
    
    2004(In thousands)Revenues:Semiconductor
    
    $
    362,422
    
    
    $
    335,626
    
    
    $
    706,004
    
    
    $
    672,524Storage Systems
    
    
    118,870
    
    
    
    112,271
    
    
    
    225,295
    
    
    
    227,730Total
    
    $
    481,292
    
    
    $
    447,897
    
    
    $
    931,299
    
    
    $
    900,254Income from operations:Semiconductor
    
    $
    23,807
    
    
    $
    3,992
    
    
    $
    38,006
    
    
    $
    5,166Storage Systems
    
    
    2,482
    
    
    
    6,539
    
    
    
    572
    
    
    
    17,196Total
    
    $
    26,289
    
    
    $
    10,531
    
    
    $
    38,578
    
    
    $
    22,362
  14




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##### Table of Contents



Significant Customers.
 Three months ended June 30,
    
    Six months ended June 30,2005
    
    2004
    
    2005
    
    2004Semiconductor segment:Number of significant customers
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    Percentage of segment revenues
    
    
    16
    %
    
    
    
    
    
    
    15
    %
    
    
    Storage Systems segment:Number of significant customers
    
    
    3
    
    
    
    2
    
    
    
    3
    
    
    
    3Percentage of segment revenues
    
    
    57%, 13%, 12
    %
    
    
    55%, 14
    %
    
    
    55%, 15%, 13
    %
    
    
    53%, 14%, 11
    %Consolidated:Number of significant customers
    
    
    2
    
    
    
    1
    
    
    
    2
    
    
    
    1Percentage of consolidated revenues
    
    
    15%, 12
    %
    
    
    16
    %
    
    
    14%, 11
    %
    
    
    15
    %
  June 30,
    
    December 31,2005
    
    2004(In thousands)Total assets:Semiconductor
    
    $
    2,439,260
    
    
    $
    2,549,016Storage Systems
    
    
    308,249
    
    
    
    324,985Total
    
    $
    2,747,509
    
    
    $
    2,874,001
   NOTE
10 COMMITMENTS AND CONTINGENCIES
  15




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##### Table of Contents



NOTE 11  LEGAL MATTERS
    16




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  OVERVIEW
       17




---



##### Table of Contents



RESULTS OF OPERATIONS
 Revenues:
 Three months ended
    
    Six months endedJune 30, 2005
    
    March 31, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004(in millions)Semiconductor segment
    
    $
    362.4
    
    
    $
    343.6
    
    
    $
    335.6
    
    
    $
    706.0
    
    
    $
    672.5Storage Systems segment
    
    
    118.9
    
    
    
    106.4
    
    
    
    112.3
    
    
    
    225.3
    
    
    
    227.8Consolidated
    
    $
    481.3
    
    
    $
    450.0
    
    
    $
    447.9
    
    
    $
    931.3
    
    
    $
    900.3
  Second quarter of 2005 compared to the first quarter of 2005
  Semiconductor segment
  
    
    Revenues increased for semiconductors used in storage product applications primarily
due to higher demand for ASICs used in hard disk drives and Host Bus Adapters (HBA)
along with storage standard products, including our Fibre Channel, Serial Attached SCSI
(SAS) controller product and Ultra320 SCSI products; and
    
    Revenues increased for semiconductors used in communications product applications
primarily due to an increase in demand for enterprise and wireless products.
  Storage Systems segment
  18




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##### Table of Contents



Three and six months ended June 30, 2005 compared to the same period of 2004
  Semiconductor segment
  
    
    An increase in revenues for semiconductors used in storage product applications
primarily due to higher demand for ASICs used in hard disk drives and
HBAs; and
    
    An increase in revenues for semiconductors used in consumer product applications
primarily a result of increased demand for digital audio players, video games, cable
and set-top box solutions. These increases were offset in part by decreases in demand
for semiconductors used in DVD products.
   
    
    An increase in revenues for semiconductors used in storage product applications
primarily due to higher demand for ASICs used in hard disk drives. This increase was
partially offset by decreased demand for semiconductors used in HBAs, server products
and for storage standard products as excess inventory in the supply chain from the
prior year was depleted; and
    
    An increase in revenues for semiconductors used in consumer product applications
primarily a result of increased demand for video games, digital audio players, cable
and set-top box solutions. These increases were offset in part by decreases in demand
for semiconductors used in DVD products.
  Storage Systems segment
   Significant Customers.
 19




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##### Table of Contents



Three months ended June 30,
    
    Six months ended June 30,2005
    
    2004
    
    2005
    
    2004Semiconductor segment:Number of significant customers
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    Percentage of segment revenues
    
    
    16
    %
    
    
    
    
    
    
    15
    %
    
    
    Storage Systems segment:Number of significant customers
    
    
    3
    
    
    
    2
    
    
    
    3
    
    
    
    3Percentage of segment revenues
    
    
    57%, 13%,12
    %
    
    
    55%, 14
    %
    
    
    55%, 15%, 13
    %
    
    
    53%, 14%, 11
    %Consolidated:Number of significant customers
    
    
    2
    
    
    
    1
    
    
    
    2
    
    
    
    1Percentage of consolidated revenues
    
    
    15%,12
    %
    
    
    16
    %
    
    
    14%,11
    %
    
    
    15
    %
 Revenues by geography.
 Three months ended
    
    Six months endedJune 30, 2005
    
    March 31, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004(in millions)Revenues:North America *
    
    $
    228.1
    
    
    $
    207.5
    
    
    $
    226.8
    
    
    $
    435.6
    
    
    $
    459.1Asia, including Japan
    
    
    195.4
    
    
    
    195.3
    
    
    
    164.9
    
    
    
    390.7
    
    
    
    329.6Europe *
    
    
    57.8
    
    
    
    47.2
    
    
    
    56.2
    
    
    
    105.0
    
    
    
    111.6Total
    
    $
    481.3
    
    
    $
    450.0
    
    
    $
    447.9
    
    
    $
    931.3
    
    
    $
    900.3
 
 *
    
    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 2004, Engenio formed new subsidiaries within Europe. As a result, the amounts
in the table above have been restated. All revenues generated by Engenio Europe were
previously reported in North America. Second quarter of 2005 compared to the first quarter of 2005
  Three and six months ended June 30, 2005 compared to the same periods of 2004
  20




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Operating costs and expenses.
 Gross profit margin:
 Three months ended
    
    Six months endedJune 30, 2005
    
    March 31, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004(in millions)Semiconductor segment
    
    $
    172.9
    
    
    $
    158.4
    
    
    $
    166.5
    
    
    $
    331.3
    
    
    $
    322.7Percentage of
revenues
    
    
    48
    %
    
    
    46
    %
    
    
    50
    %
    
    
    47
    %
    
    
    48
    %Storage Systems segment
    
    $
    38.8
    
    
    $
    31.9
    
    
    $
    42.3
    
    
    $
    70.7
    
    
    $
    87.5Percentage of revenues
    
    
    33
    %
    
    
    30
    %
    
    
    38
    %
    
    
    31
    %
    
    
    38
    %Consolidated
    
    $
    211.7
    
    
    $
    190.3
    
    
    $
    208.8
    
    
    $
    402.0
    
    
    $
    410.2Percentage of revenues
    
    
    44
    %
    
    
    42
    %
    
    
    47
    %
    
    
    43
    %
    
    
    46
    %
 Second quarter of 2005 compared to the first quarter of 2005
  Semiconductor segment:
  Storage Systems segment:
   21




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Three and six months ended June 30, 2005 compared to the same periods of 2004
  Semiconductor segment:
  
    
    Lower average selling prices for semiconductors used in consumer product
applications and in storage component applications such as hard disk drives and RAID
storage adapters; and
    
    Higher inventory charges in 2005 for consumer product applications such as DVD
products.
   
    
    Lower average selling prices for semiconductors used in consumer product applications
and in Storage Component applications such as hard disk drives and RAID storage
adapters; and
    
    Higher inventory charges in 2005 for consumer product applications such as DVD
products.
  
    
    Improved operating efficiencies and lower operating costs at the Gresham
manufacturing facility as a result of the restructuring actions taken in the second
half of 2004; and
    
    A favorable shift in product mix for semiconductors used in consumer product
applications.
 Storage Systems segment:
  Factors that may affect gross profit margins
  22




---



##### Table of Contents




    
    Competitive pricing pressures;
    
    Product mix;
    
    Factory capacity and utilization;
    
    Geographic location of manufacturing;
    
    Manufacturing yields;
    
    Availability of certain raw materials;
    
    Implementation of new process technologies;
    
    Adoption of new industry standards;
    
    Terms negotiated with third-party subcontractors; and
    
    Foreign currency fluctuations.
  Research and development:
 Three months ended
    
    Six months endedJune 30, 2005
    
    March 31, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004(in millions)Semiconductor segment
    
    $
    82.7
    
    
    $
    84.1
    
    
    $
    96.1
    
    
    $
    166.8
    
    
    $
    190.9Percentage of revenues
    
    
    23
    %
    
    
    24
    %
    
    
    29
    %
    
    
    24
    %
    
    
    28
    %Storage Systems segment
    
    $
    17.0
    
    
    $
    15.1
    
    
    $
    14.0
    
    
    $
    32.1
    
    
    $
    28.1Percentage of revenues
    
    
    14
    %
    
    
    14
    %
    
    
    12
    %
    
    
    14
    %
    
    
    12
    %Consolidated
    
    $
    99.7
    
    
    $
    99.2
    
    
    $
    110.1
    
    
    $
    198.9
    
    
    $
    219.0Percentage of revenues
    
    
    21
    %
    
    
    22
    %
    
    
    25
    %
    
    
    21
    %
    
    
    24
    %
 Second quarter of 2005 compared to the first quarter of 2005
  Semiconductor segment:
  23




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Storage Systems segment:
  Three and six months ended June 30, 2005 compared to the same periods of 2004
  Semiconductor segment:
  Storage Systems segment
  Selling, general and administrative:
 Three months ended
    
    Six months endedJune 30, 2005
    
    March 31, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004(in millions)Semiconductor segment
    
    $
    42.9
    
    
    $
    41.8
    
    
    $
    45.2
    
    
    $
    84.7
    
    
    $
    89.1Percentage of revenue
    
    
    12
    %
    
    
    12
    %
    
    
    13
    %
    
    
    12
    %
    
    
    13
    %Storage Systems segment
    
    $
    17.0
    
    
    $
    16.3
    
    
    $
    18.6
    
    
    $
    33.3
    
    
    $
    35.9Percentage of revenue
    
    
    14
    %
    
    
    15
    %
    
    
    17
    %
    
    
    15
    %
    
    
    16
    %Consolidated
    
    $
    59.9
    
    
    $
    58.1
    
    
    $
    63.8
    
    
    $
    118.0
    
    
    $
    125.0Percentage of revenue
    
    
    12
    %
    
    
    13
    %
    
    
    14
    %
    
    
    13
    %
    
    
    14
    %
 Second quarter of 2005 compared to the first quarter of 2005
  24




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Semiconductor segment:
  Storage Systems segment:
  Three and six months ended June 30, 2005 compared to the same periods of 2004
  Semiconductor segment:
  Storage Systems segment:
   Restructuring of operations and other items:
 Restructuring and impairment of long-lived assets:
 First quarter of 2005:
  25




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Second quarter of 2005:
    Utilized
    
    
    
    
    
    
    
    
    
    
    
    
    
    BalanceBalance at
    
    Restructuring
    
    during
    
    Balance at
    
    Restructuring
    
    Utilized
    
    atDecember
    
    Expense
    
    Q1,
    
    March 31,
    
    Expense
    
    during
    
    June 30,(In thousands)
    
    31, 2004
    
    Q1, 2005
    
    2005
    
    2005
    
    Q2, 2005
    
    Q2, 2005
    
    2005Write-down of excess
assets and
decommissioning costs
(a)
    
    $
    1,207
    
    
    $
    796
    
    
    $
    (1,271
    )
    
    $
    732
    
    
    $
    429
    
    
    $
    (451
    )
    
    $
    710Lease terminations (b)
    
    
    20,065
    
    
    
    738
    
    
    
    (2,691
    )
    
    
    18,112
    
    
    
    727
    
    
    
    (2,674
    )
    
    
    16,165Facility closure and
other exit costs (c)
    
    
    543
    
    
    
    
    
    
    
    (476
    )
    
    
    67
    
    
    
    404
    
    
    
    (462
    )
    
    
    9Payments to employees
for severance (d)
    
    
    7,408
    
    
    
    (1
    )
    
    
    (4,250
    )
    
    
    3,157
    
    
    
    160
    
    
    
    (1,850
    )
    
    
    1,467Total
    
    $
    29,223
    
    
    $
    1,533
    
    
    $
    (8,688
    )
    
    $
    22,068
    
    
    $
    1,720
    
    
    $
    (5,437
    )
    
    $
    18,351
 
 (a)
    
    The amounts utilized in 2005 reflect $1.2 million of non-cash write-downs of long-lived
assets in the U.S. due to impairment and $0.5 million in cash payments to decommission and
sell assets. The write-downs of long-lived assets were accounted for as a reduction of the
assets and did not result in a liability. The $0.7 million balance as of June 30, 2005,
relates to machinery and equipment decommissioning costs in the U.S. and estimates for selling
costs for assets held for sale that is expected to be utilized during 2005.(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. The balance remaining for facility closure and
other exit costs will be paid during 2005.(d)
    
    Amounts utilized represent cash severance payments to 123 employees during the six months
ended June 30, 2005. The balance remaining for severance is expected to be paid by the end of
2005. 26




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##### Table of Contents



Other Items:
  Amortization of non-cash deferred stock compensation:
 Amortization of intangibles:
  Interest expense:
 Interest income and other, net:
   27




---



##### Table of Contents



Provision for income taxes:
 FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY
  Working capital.
 
    
    Inventories decreased by $33.2 million to $185.7 million as of June 30, 2005, from $218.9
million as of December 31, 2004. The decline in inventory levels reflects our continued
focus on supply chain management.
    
    Cash, cash equivalents and short-term investments decreased by $32.6 million.
    
    Income taxes payable increased by $9.5 million due to the timing of tax payments made and
the income tax provision recorded in the first six months of 2005.
    
    Accrued salaries, wages and benefits increased by $6.6 million primarily due to the
timing differences in payment of salaries, benefits and performance based compensation.The decrease in working capital was offset, in part, by the following:
    
    Other accrued liabilities decreased by $16.6 million primarily due to a decrease of $10.9
million in restructuring reserves mainly for payments for severance and previously exited
leases and a consumption tax payment of approximately $7.8 million in the first quarter of
2005.
    
    Accounts receivable increased by $12.8 million. The increase is mainly attributable to
higher revenues in the second quarter of 2005 as compared to the fourth quarter of 2004 and
the timing of sales in the last month of the second quarter of 2005 as compared to the last
month of the fourth quarter of 2004.
    
    Prepaid expenses and other current assets increased by $1.2 million primary attributable
to $4.7 million increase in prepaid software maintenance and other miscellaneous items,
offset in part by $3.5 million decrease in assets held for sale due to sales and retirements
(see note 3 of the Notes).
    
    Accounts payable decreased by $1.1 million primarily due to the timing of invoice receipt
and payments.
 28




---



##### Table of Contents



Cash and cash equivalents generated from operating activities.
 
    
    Income (before depreciation and amortization, non-cash restructuring and other items,
amortization of non-cash deferred stock compensation, gain on sale and exchange of equity
securities, and gain on repurchase of convertible
subordinated notes). The non-cash items and other non-operating adjustments are quantified in
our Consolidated Statements of Cash Flows included in this Form 10-Q; and
    
    A net increase from assets and liabilities, net of assets acquired and liabilities
assumed in business combinations including changes in working capital components from
December 31, 2004 to June 30, 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;
    
    Purchases of property, equipment and software;
    
    Proceeds from the sale of property and equipment; and
    
    Receipt of an income tax refund for pre-acquisition tax matters associated with C-Cube
Microsystems Inc. (we acquired C-Cube Microsystems in May 2001).
  Cash and cash equivalents (used in)/provided by financing activities
 
    
    The repurchase of a portion of the Convertible Notes due in 2006;
    
    The issuance of common stock under our employee stock option and purchase plans; and
    
    The repayment of debt obligations.
  Contractual Obligations
  29




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##### Table of Contents



Payments due by periodAfter 5Contractual Obligations
    
    Less than 1 year
    
    1  3 years
    
    4  5 years
    
    years
    
    Total(in millions)Convertible Subordinated
Notes
    
    $
    
    
    
    $
    271.8
    
    
    $
    350.0
    
    
    $
    
    
    
    $
    621.8Operating lease obligations
    
    
    62.4
    
    
    
    61.5
    
    
    
    36.7
    
    
    
    28.5
    
    
    
    189.1Purchase commitments
    
    
    278.3
    
    
    
    11.6
    
    
    
    1.5
    
    
    
    
    
    
    
    291.4Total
    
    $
    340.7
    
    
    $
    344.9
    
    
    $
    388.2
    
    
    $
    28.5
    
    
    $
    1,102.3
 Convertible Subordinated Notes
   Operating Lease Obligations
  Purchase Commitments
  Critical Accounting Policies
   30




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##### Table of Contents



Recent Accounting Pronouncements
  FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
   A general economic weakness may reduce our revenues .
 We operate in highly competitive markets .
  We are dependent on a limited number of customers .
 31




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##### Table of Contents



Our new products may not achieve market acceptance .
 The manufacturing facilities we operate are highly complex and require high fixed costs .
      We outsource a substantial portion of wafers manufactured .
 We have capital requirements to maintain and grow our business .
  We are exposed to fluctuations in foreign currency exchange rates .
 32




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##### Table of Contents



We procure parts and raw materials from limited domestic and foreign sources .
 We utilize indirect channels of distribution over which we have limited control .
 Our operations are affected by cyclical fluctuations.
 We engage in acquisitions and alliances giving rise to economic and technological risks .
  The price of our securities may be subject to wide fluctuations .
 We may rely on capital and bank markets to provide liquidity.
 33




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##### Table of Contents



We design and develop highly complex cell-based ASICs .
 Our global operations expose us to numerous international business risks .
  The high technology industry in which we operate is prone to intellectual property litigation .
   Our manufacturing facilities are subject to disruption
 We depend on independent foundry subcontractors to manufacture a portion of our current
products, and any failure to secure and maintain sufficient foundry capacity could materially and
adversely affect our business .
 34




---



##### Table of Contents




    
    a lack of guaranteed wafer supply and potential wafer shortages and higher wafer prices;
    
    limited control over delivery schedules, quality assurance, manufacturing yields and production costs; and
    
    the unavailability of, or potential delays in obtaining access to, key process technologies.
    We depend on third-party subcontractors to assemble, obtain packaging materials for, and test
substantially all of our current products. If we lose the services of any of our subcontractors or
if these subcontractors are unable to attain sufficient packaging materials, shipments of our
products may be disrupted, which could harm our customer relationships and adversely affect our net
sales .
  35




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##### Table of Contents



We are increasingly exposed to various legal, business, political and economic risks
associated with our international operations.
 
    
    political, social and economic instability;
    
    exposure to different legal standards, particularly with respect to intellectual property;
    
    natural disasters and public health emergencies;
    
    nationalization of business and blocking of cash flows;
    
    trade and travel restrictions;
    
    the imposition of governmental controls and restrictions;
    
    burdens of complying with a variety of foreign laws;
    
    import and export license requirements and restrictions of the United States and each
other country in which we operate;
    
    unexpected changes in regulatory requirements;
    
    foreign technical standards;
    
    changes in tariffs;
    
    difficulties in staffing and managing international operations;
    
    fluctuations in currency exchange rates;
    
    difficulties in collecting receivables from foreign entities or delayed revenue recognition; and
    
    potentially adverse tax consequences.
   We must attract and retain key employees in a highly competitive environment .
 Engenio Information Technologies, Inc. represents a significant portion of our business, and
an initial public offering, sale or spin-off of the Storage Systems segment, may cause our
operating results to suffer and may cause net revenues and income to decline .
  36




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##### Table of Contents



The separation and possible initial public offering, sale or spin-off of Engenio Information
Technologies, Inc. from us is a substantial undertaking that may disrupt our ongoing business and
may increase expenses, which may affect our results of operations or financial condition .
 Future changes in financial accounting standards or practices or existing taxation rules or
practices may cause adverse unexpected fluctuations and affect our reported results of operations .
  We face uncertainties related to the effectiveness of internal controls .
 Internal control deficiencies or weaknesses that are not yet identified could emerge .
 Internal control issues that appear minor now may later become reportable conditions .
 37




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
   
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  ISSUER PURCHASES OF SECURITIES
 (c)
    
    (d)(a)
    
    (b)
    
    Total Number of
    
    Maximum Number (orTotal Number
    
    Average Price
    
    Shares (or Units)
    
    Approximate Dollar Value) ofof Shares (or
    
    Paid per
    
    Purchased as Part of
    
    Shares (or Units) that May YetUnits)
    
    Share (or
    
    Publicly Announced
    
    Be Purchased Under the PlansPeriod
    
    Purchased
    
    Unit)
    
    Plans or Programs
    
    or ProgramsMay 2005
    
    149,652 units
    
    
    0.98980

    
    
    n/a
    
    n/a
  38




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holder
  Proposal 1.
    
    To elect eight directors to serve for the ensuing year and until their
successors are elected.
 Director
    
    Votes For
    
    Votes WithheldT.Z. Chu
    
    
    313,488,144
    
    
    
    11,669,076Wilfred J. Corrigan
    
    
    313,470,221
    
    
    
    11,686,999Malcolm R. Currie
    
    
    313,420,563
    
    
    
    11,736,657James H. Keyes
    
    
    313,499,561
    
    
    
    11,657,659R. Douglas Norby
    
    
    291,988,464
    
    
    
    33,168,756Matthew J. ORourke
    
    
    314,659,070
    
    
    
    10,498,150Gregorio Reyes
    
    
    314,949,813
    
    
    
    10,207,407Larry W. Sonsini
    
    
    259,842,214
    
    
    
    65,315,006
 Proposal 2.
    
    To ratify the appointment of PricewaterhouseCoopers LLP as the independent
registered public accounting firm of the Company for its 2005 fiscal year.
 Votes For
    
    Votes Against
    
    Abstentions317,549,045
    
    
    4,884,100
    
    
    
    2,724,075
 
 Item 5. Other Information
  39




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##### Table of Contents



Item 6. Exhibits
 10.40
    
    Summary Description of LSI Logic Corporation 2005 Semiconductor
Incentive Plan. Incorporated by reference to exhibits filed with
the Current Report on Form 8-K on April 7, 2005.*10.41
    
    Summary Description of 2005 Engenio Information Technologies, Inc.
Incentive Plan. Incorporated by reference to exhibits filed with
the Current Report on Form 8-K on April 7, 2005.*10.42
    
    Form of LSI Logic Corporation Annual Director Option Agreement.
Incorporated by reference to exhibits filed with the Current Report
on Form 8-K on April 7, 2005.*10.43
    
    Form of Notice of Grant under LSI Logic Corporation Annual Director
Option Agreement. Incorporated by reference to exhibits filed with
the Current Report on Form 8-K on April 7, 2005.*10.44
    
    Employment Agreement with Abhijit Y. Talwalkar, effective as of May
23, 2005. Incorporated by reference to exhibits filed with the
Current Report on Form 8-K on May 24, 2005.*10.45
    
    Amendment No. 1 to the LSI Logic Corporation 1991 Equity Incentive
Plan Stock Option Agreement dated August 15, 1997 with Wilfred J.
Corrigan. Incorporated by reference to exhibits filed with the
Current Report on Form 8-K on June 17, 2005.*10.46
    
    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 the
Current Report on Form 8-K on June 17, 2005.*10.47
    
    Form of LSI Logic Corporation 2003 Equity Incentive Plan
Nonqualified Stock Option Agreement.*10.48
    
    Form of Notice of Grant under LSI Logic Corporation 2003 Equity
Incentive Plan Nonqualified Stock Option Agreement.*10.49
    
    Abhijit Y. Talwalkar LSI Logic Corporation 2003 Equity Incentive
Plan Nonqualified Stock Option Agreement, effective as of June 1,
2005.*10.50
    
    Abhijit Y. Talwalkar Notice of Grant under LSI Logic Corporation
2003 Equity Incentive Plan Nonqualified Stock Option Agreement,
effective as of June 1 2005.*+31.1
    
    Certification of the Chief Executive Officer pursuant to Securities
Exchange Act Rules 13a-15(e) and 15d-1(e), as adopted pursuant to
Section 302 of the Sarbarnes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer pursuant to Securities
Exchange Act Rules 13a-15(e) and 15d-1(e), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of 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 Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.**
 
 
 
  40




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##### Table of Contents



SIGNATURES
  LSI LOGIC CORPORATION
(Registrant)Date: August 11, 2005
    By
    
    /s/ Bryon LookBryon LookExecutive Vice President &
Chief Financial Officer 41




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##### Table of Contents



INDEX TO EXHIBITS
 10.40
    
    Summary Description of LSI Logic Corporation 2005 Semiconductor Incentive Plan. Incorporated
by reference to exhibits filed with the Current Report on Form 8-K on April 7, 2005.*10.41
    
    Summary Description of 2005 Engenio Information Technologies, Inc. Incentive Plan.
Incorporated by reference to exhibits filed with the Current Report on Form 8-K on April 7,
2005.*10.42
    
    Form of LSI Logic Corporation Annual Director Option Agreement. Incorporated by reference to
exhibits filed with the Current Report on Form 8-K on April 7, 2005.*10.43
    
    Form of Notice of Grant under LSI Logic Corporation Annual Director Option Agreement.
Incorporated by reference to exhibits filed with the Current Report on Form 8-K on April 7,
2005.*10.44
    
    Employment Agreement with Abhijit Y. Talwalkar, effective as of May 23, 2005. Incorporated
by reference to exhibits filed with the Current Report on Form 8-K on May 24, 2005.*10.45
    
    Amendment No. 1 to the LSI Logic Corporation 1991 Equity Incentive Plan Stock Option
Agreement dated August 15, 1997 with Wilfred J. Corrigan. Incorporated by reference to
exhibits filed with the Current Report on Form 8-K on June 17, 2005.*10.46
    
    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 the Current Report on Form 8-K on June 17, 2005.*10.47
    
    Form of LSI Logic Corporation 2003 Equity Incentive Plan Nonqualified Stock Option Agreement.*10.48
    
    Form of Notice of Grant under LSI Logic Corporation 2003 Equity Incentive Plan Nonqualified
Stock Option Agreement.*10.49
    
    Abhijit Y. Talwalkar LSI Logic Corporation 2003 Equity Incentive Plan Nonqualified Stock
Option Agreement, effective as of June 1, 2005.*10.50
    
    Abhijit Y. Talwalkar Notice of Grant under LSI Logic Corporation 2003 Equity Incentive Plan
Nonqualified Stock Option Agreement, effective as of June 1 2005.*+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
13-15(e) and 15d-1(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of 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 Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
 
    42