LSI Logic Reports Q4 Revenue Increase of 21% Year-Over-Year

• Revenues of $506 million; up 5% sequentially
• GAAP* net income of 9 cents per diluted share
• Net income, excluding special items**, of 13 cents per diluted share
• Gross margin of 43.5%
• 2005 revenues of $1.92 billion; up 13% compared to $1.7 billion for 2004
• Net cash from operations grows 186% to $260 million for 2005 First Quarter 2006 Business Outlook
• Projected revenue of $465 million to $490 million
• GAAP* net income range of 1 - 3 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.

Strong Demand for Storage and Consumer Products Drives Growth

MILPITAS, Calif., Jan. 25, 2006 -- LSI Logic Corporation (NYSE: LSI) today reported fourth quarter 2005 revenues of $506 million, a sequential increase of 5% compared to the $482 million reported in the third quarter of 2005, and a 21% increase compared to the $420 million reported in the fourth quarter of 2004.

The company generated $63 million in cash from operations in the fourth quarter of 2005, representing the 15th consecutive quarter of positive operating cash flow. Net cash from operations nearly tripled to $260 million for 2005 compared to $91 million for 2004. Cash and short-term investments grew 15% to $939 million in 2005 from $815 million in 2004.

Fourth quarter 2005 GAAP* net income was $38 million or 9 cents per diluted share, compared to third quarter GAAP net loss of $73 million or 19 cents per diluted share, which included a $91 million restructuring charge associated with the planned sale of the company's Gresham, Oregon manufacturing facility. Fourth quarter 2004 GAAP net loss was $197 million or 51 cents per diluted share, which included a $178 million non-cash charge associated with the Gresham facility.

Fourth quarter 2005 net income, excluding special items**, was $51 million or 13 cents per diluted share compared to a net income, excluding special items, of $45 million or 11 cents per diluted share in the third quarter. Excluding special items, fourth quarter 2004 net income was $15 million or 4 cents per diluted share.

"A strong 2005 performance in our Storage and Consumer businesses was capped off by record fourth quarter and full year revenues for our Engenio Storage Group, fueled by the continuing demand for high-performance 4Gb/sec. Fibre Channel systems," said Abhi Talwalkar, LSI president and chief executive officer. "Revenues from our storage semiconductors grew in the fourth quarter and we extended our lead in SAS (serial attached SCSI) by introducing a number of new products. Consumer revenues met our fourth quarter expectations and grew 34% for the full year 2005.

"Entering 2006, our strong position in enterprise storage and the industry-projected growth of consumer electronics products are expected to be the primary growth drivers for the company. We are well positioned to capitalize on these opportunities with our leadership technology."

LSI recorded 2005 revenues of $1.92 billion, a 13% increase compared to $1.70 billion in 2004.

The company reported GAAP 2005 net loss of $6 million or 1 cent per diluted share, which includes $91 million in charges associated with the planned sale of the Gresham manufacturing facility. The 2004 GAAP net loss was $464 million or $1.21 per diluted share, which included a $384 million non- cash charge associated with the impairment of the Gresham manufacturing facility.

Net income for 2005, excluding special items, grew to $166 million or 42 cents per diluted share compared to 2004 net income, excluding special items, of $43 million or 11 cents per diluted share.

LSI reduced its convertible debt to $624 million in 2005 through open market purchases, compared to convertible debt of $782 million in 2004.

"During 2005, we grew revenues significantly, reduced operating expenses by $28 million compared to the previous year and nearly quadrupled net profit, excluding special items," said Bryon Look, LSI chief financial officer. "Building on our balance sheet strength, our net cash to debt position increased to $315 million."

Capital spending is projected to be around $18 million in the first quarter and approximately $60 million in total for 2006.

First quarter depreciation and software amortization is expected to be approximately $12 million.

* Generally Accepted Accounting Principles
** Acquisition-related amortization, restructuring and other special items.
*** Includes approximately $15M in employee stock option expensing.

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About LSI Logic

LSI Logic Corporation is a leading provider of silicon-to-system solutions that are used at the core of products that create, move and store digital content. LSI offers a broad portfolio of capabilities including custom and standard product ICs, host bus and RAID adapters, storage area network solutions and software applications. LSI products enable leading technology companies in the Consumer, Communications and Storage markets to deliver some of the most advanced and well-known electronic systems in the market today. More information is available at www.lsi.com.