LSI Logic Reports Strong Q2 Revenue and Profit Growth

Second Quarter News Release Summary

•  Revenues of $481 million, up 7 percent sequentially.
•  Revenues up 7 percent compared to Q2 2004.
•  GAAP* net income of 6 cents per diluted share, compared to 2 cents in Q2 2004.
•  Net income, excluding special items**, of 11 cents per diluted share, compared to 7 cents in Q2 2004.
•  Gross margin expands to 44 percent.
•  Generated positive operating cash flow for 13th consecutive quarter.

Third Quarter Business Outlook

•  Projected revenue of $470 million to $500 million.
•  GAAP* net income range of 5 - 7 cents per diluted share.
•  Net income, excluding special items**, in the range of 10 - 12 cents per diluted share.

* Generally Accepted Accounting Principles.
** Acquisition-related amortization, restructuring and other special items.

Storage Components and Storage Systems Lead LSI Logic Q2 Revenue Growth

MILPITAS, Calif., July 27 -- LSI Logic Corporation (NYSE: LSI) today reported second quarter 2005 revenues of $481 million, a 7 percent sequential increase compared to the $450 million reported in the first quarter of 2005, and a 7 percent increase compared to the $448 million reported in the second quarter of 2004.

Second quarter 2005 GAAP* net income improved to $25 million or 6 cents per diluted share compared to first quarter 2005 GAAP net income of $5 million or 1 cent per diluted share. Second quarter 2004 GAAP net income was $7 million or 2 cents per diluted share.

Second quarter 2005 net income, excluding special items**, increased to $45 million or 11 cents per diluted share compared to first quarter 2005 net income, excluding special items, of $25 million or 6 cents per diluted share. Excluding special items, second quarter 2004 net income was $28 million or 7 cents per diluted share.

"Increased customer demand for LSI Logic's Storage Components and Storage Systems product offerings provided the momentum for LSI Logic to report a solid second quarter," said Abhi Talwalkar, LSI Logic president and chief executive officer. "Storage Components, comprised of Storage ASICs, Storage Standard Products and RAID Storage Adapters, set the pace for the company with a record second quarter. Our Engenio storage systems subsidiary benefited from the successful introduction of its higher-end product line. Growth in Communications reflected stronger than anticipated demand from enterprise networking customers. In Consumer, we were pleased with the revenue strength in DoMiNo(R) -based DVD-recorder and cable set-top box markets, as well as digital audio products, which was balanced by the seasonal decline in game console revenues."

"LSI Logic generated significant sequential and year-over-year revenue growth," said Bryon Look, LSI Logic chief financial officer. "Our gross margins increased over the prior quarter. Profitability improved, both on a GAAP and excluding special items basis. We generated $60 million in cash from operations, reduced convertible debt by $150 million and ended the second quarter of 2005 with $782 million in cash and short-term investments."

LSI Logic Third Quarter Business Outlook
                                                        

	GAAP*	Special Items**	Excluding Special Items
Revenues	$470 million to $500 million		$470 million to$500 million
Gross Margin	43-44 percent		43-44 percent
Operating Expenses	$175 million to $179 million	Approximately $19 million**	$156 million to$160 million
Net Other Income / (Expense)	$(2) to $(3) million		$(2) to $(3) million
Tax Provision	$6.25 million		$6.25 million
Net Income Per Share	$0.05 to $0.07	Approximately $0.05	$0.10 to $0.12
Diluted Share Count	406 million		406 million

Capital spending is projected to be around $20 million in the third quarter, and approximately $60 million in total for 2005.

Third quarter depreciation and software amortization is expected to be approximately $23 million.

* Generally Accepted Accounting Principles
** Acquisition-related amortization, restructuring and other special items.

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

Financial Tables

Click here to read financial tables

LSI Logic Conference Call Information

LSI Logic will hold a conference call today at 2 p.m. PDT to discuss second quarter financial results and the third quarter business outlook. The number is 1-303-262-2052. Internet users can access the conference call by visiting http://www.lsilogic.com/investors . A replay of the call will be available today at approximately 4:30 p.m. PDT and will be available for 48 hours. The replay access numbers are 1-800-405-2236 within the U.S. and 1-303-590-3000 for all other locations, passcode 11034680#.

About LSI Logic

LSI Logic Corporation focuses on the design and production of high- performance semiconductors for Consumer, Communications and Storage applications that access, interconnect and store data, voice and video. LSI Logic engineers incorporate reusable, industry-standard intellectual property building blocks that serve as the heart of leading-edge systems. LSI Logic serves its global OEM, channel and distribution customers with standard-cell ASICs, Platform ASICs, standard products, host bus adapters, RAID controllers and software. In addition, the company supplies storage network solutions for the enterprise. LSI Logic is headquartered at 1621 Barber Lane, Milpitas, CA 95035. http://www.lsilogic.com .

Safe Harbor for Forward-Looking Statements: This news release contains forward-looking statements, which include the following: projected revenues for the third quarter of 2005, projected GAAP net income for the third quarter of 2005, projected net income, excluding special items, for the third quarter of 2005, projected capital spending in the third quarter of 2005 and for the year, and expected third quarter of 2005 depreciation and software amortization. Forward-looking statements also include projections of gross margins, operating expenses, net other income / (expense), tax provisions, earnings per share and diluted share count. These forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could cause LSI Logic's actual results to differ materially from those set forth in the forward-looking statements include, but are not limited to: fluctuations in the timing and volumes of customer demand, the company's ability to achieve revenue objectives, the company's ability to meet financial targets and failure to execute on its financial plan, the company's ability to generate positive operating cash flow, control operating expenses or drive sustained revenue growth, the company's ability to leverage technology marketplace advantages and the availability of appropriate levels of manufacturing capacity. For additional information, readers are referred to the documents filed by LSI Logic with the SEC, and specifically the risk factors set forth in the company's most recent reports on Form 10-K, 10-Q and 8-K.