10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2012

OR

¨ 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 CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	94-2712976
(State of Incorporation)	(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)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
		(Do not check if a smaller reporting company.)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

As of November 1, 2012, there were 553,408,484 shares of the registrant’s Common Stock, $.01 par value, outstanding.

LSI CORPORATION

FORM 10-Q

For the Quarter Ended September 30, 2012

INDEX

	Page          No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)		3
Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011		3
Condensed Consolidated Statements of Operations for the three and nine months ended September  30, 2012 and October 2, 2011		4
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2012 and October 2, 2011		5
Condensed Consolidated Statements of Cash Flows for the nine months ended September  30, 2012 and October 2, 2011		6
Notes to Condensed Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3. Quantitative and Qualitative Disclosures about Market Risk		28
Item 4. Controls and Procedures		28
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		29
Item 1A. Risk Factors		29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		29
Item 6. Exhibits		30
Signatures		31
Exhibit Index		32

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “estimate,” “plan,” “intend,” “expect,” “anticipate,” “believe” and similar words are intended to identify forward-looking statements. Although we believe our expectations are based on reasonable assumptions, our actual results could differ materially from those projected in the forward-looking statements. We have described in Part II, Item 1A-“Risk Factors” a number of factors that could cause our actual results to differ materially from our projections or estimates. Except where otherwise indicated, the statements made in this report are made as of the date we filed this report with the Securities and Exchange Commission and should not be relied upon as of any subsequent date. We expressly disclaim any obligation to update the information in this report, except as may otherwise be required by law.

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

LSI CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

	September 30, 2012			December 31, 2011
ASSETS
Cash and cash equivalents	$	440,507		$	779,811
Short-term investments		202,520			155,644
Accounts receivable, less allowances of $6,206 and $6,950, respectively		256,492			246,539
Inventories		209,104			180,035
Prepaid expenses and other current assets		64,526			60,659
Total current assets		1,173,149			1,422,688
Property and equipment, net		250,206			180,589
Identified intangible assets, net		516,104			433,790
Goodwill		255,838			72,377
Other assets		108,074			122,604
Total assets	$	2,303,371		$	2,232,048
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	184,358		$	175,093
Accrued salaries, wages and benefits		131,853			106,948
Other accrued liabilities		160,622			178,830
Total current liabilities		476,833			460,871
Pension and post-retirement benefit obligations		512,545			597,183
Income taxes payable — non-current		100,104			91,791
Other non-current liabilities		15,917			23,263
Total liabilities		1,105,399			1,173,108
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $.01 par value: 2,000 shares authorized; none outstanding		0			0
Common stock, $.01 par value: 1,300,000 shares authorized; 553,083 and 561,767 shares outstanding, respectively		5,531			5,618
Additional paid-in capital		5,574,076			5,623,581
Accumulated deficit		(3,863,456	)		(4,037,031	)
Accumulated other comprehensive loss		(518,179	)		(533,228	)
Total stockholders’ equity		1,197,972			1,058,940
Total liabilities and stockholders’ equity	$	2,303,371		$	2,232,048

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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LSI CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended					Nine Months Ended
	September 30, 2012		October 2, 2011			September 30, 2012			October 2, 2011
Revenues	$	623,962	$	546,910		$	1,905,959		$	1,520,818
Cost of revenues		311,311		283,065			974,508			795,179
Gross profit		312,651		263,845			931,451			725,639
Research and development		167,488		143,347			512,923			431,567
Selling, general and administrative		92,032		77,874			271,046			218,534
Restructuring of operations and other items, net		4,221		10,784			26,174			2,686
Income from operations		48,910		31,840			121,308			72,852
Interest income and other, net		5,855		7,610			30,105			18,348
Income from continuing operations before income taxes		54,765		39,450			151,413			91,200
Provision for/(benefit from) income taxes		15,100		7,800			(22,162	)		12,596
Income from continuing operations		39,665		31,650			173,575			78,604
(Loss)/income from discontinued operations (including a gain on disposal of $260,066 for the nine months ended October 2, 2011), net of taxes		0		(2,311	)		0			254,673
Net income	$	39,665	$	29,339		$	173,575		$	333,277
Basic income per share:
Income from continuing operations	$	0.07	$	0.05		$	0.31		$	0.13
(Loss)/income from discontinued operations	$	0	$	(0.00	)	$	0		$	0.43
Net income	$	0.07	$	0.05		$	0.31		$	0.56
Diluted income per share:
Income from continuing operations	$	0.07	$	0.05		$	0.30		$	0.13
(Loss)/income from discontinued operations	$	0	$	(0.00	)	$	0		$	0.42
Net income	$	0.07	$	0.05		$	0.30		$	0.55
Shares used in computing per share amounts:
Basic		555,197		567,790			561,708			592,898
Diluted		572,022		581,483			582,296			608,743

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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LSI CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30, 2012			October 2, 2011			September 30, 2012			October 2, 2011
Net income	$	39,665		$	29,339		$	173,575		$	333,277
Other comprehensive income/(loss) before tax:
Foreign currency translation adjustments		3,575			(3,107	)		178			(1,516	)
Unrealized gain/(loss) on investments for the period		754			(143	)		1,998			1,278
Reclassification adjustments for gain on investments included in net income		(401	)		(546	)		(1,814	)		(2,059	)
Unrealized gain/(loss) on investments		353			(689	)		184			(781	)
Unrealized gain/(loss) on derivatives for the period		991			(2,183	)		(358	)		(1,162	)
Reclassification adjustments for loss/(gain) on derivatives included in net income		770			(272	)		2,778			(1,244	)
Unrealized gain/(loss) on derivatives		1,761			(2,455	)		2,420			(2,406	)
Net actuarial loss		0			(1,855	)		0			(1,855	)
Amortization of transition asset, prior service cost and net actuarial loss		4,115			1,932			12,267			5,494
Defined benefit pension plans		4,115			77			12,267			3,639
Other comprehensive income/(loss) before tax		9,804			(6,174	)		15,049			(1,064	)
Income tax expense related to items of other comprehensive income/(loss)		0			0			0			0
Other comprehensive income/(loss), net of tax		9,804			(6,174	)		15,049			(1,064	)
Comprehensive income	$	49,469		$	23,165		$	188,624		$	332,213

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

5

LSI CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended
	September 30, 2012			October 2, 2011
Operating activities:
Net income	$	173,575		$	333,277
Adjustments:
Depreciation and amortization		136,318			145,843
Stock-based compensation expense		83,538			38,480
Non-cash restructuring of operations and other items, net		5,739			30,535
Gain on re-measurement of a pre-acquisition equity interest to fair value		(5,765	)		0
Gain on sale of investments		(2,550	)		0
Gain on sale of business		0			(260,066	)
Loss/(gain) on sale of property and equipment		2,574			(543	)
Unrealized foreign exchange (gain)/loss		(80	)		200
Deferred taxes		(43,246	)		(18,944	)
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combination:
Accounts receivable		931			78,215
Inventories		(4,864	)		(60,203	)
Prepaid expenses, assets held for sale and other assets		(720	)		(10,256	)
Accounts payable		4,335			(1,700	)
Accrued and other liabilities		(70,481	)		(83,479	)
Net cash provided by operating activities		279,304			191,359
Investing activities:
Purchases of debt securities available-for-sale		(94,456	)		(38,683	)
Proceeds from maturities and sales of debt securities available-for-sale		29,523			31,988
Purchases of other investments		0			(4,000	)
Proceeds from sale of other investments		2,550			0
Purchases of property and equipment		(103,285	)		(46,841	)
Proceeds from sale of property and equipment		1,626			939
Acquisition of business, net of cash acquired		(319,231	)		0
Proceeds from sale of business, net of transaction costs		0			475,150
Net cash (used in)/provided by investing activities		(483,273	)		418,553
Financing activities:
Issuances of common stock		90,643			66,060
Purchases of common stock under repurchase programs		(226,247	)		(471,787	)
Net cash used in financing activities		(135,604	)		(405,727	)
Effect of exchange rate changes on cash and cash equivalents		269			(821	)
Net change in cash and cash equivalents		(339,304	)		203,364
Cash and cash equivalents at beginning of period		779,811			521,786
Cash and cash equivalents at end of period	$	440,507		$	725,150

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

6

LSI CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Basis of Presentation

For financial reporting purposes, LSI Corporation (“LSI” or the “Company”) reports on a 13- or 14-week quarter with the year ending December 31. The third quarters of 2012 and 2011consisted of 13 weeks each and ended on September 30, 2012 and October 2, 2011, respectively. The results of operations for the quarter ended September 30, 2012 are not necessarily indicative of the results to be expected for the full year.

On January 3, 2012, the Company completed the acquisition of SandForce, Inc. (“SandForce”) for total consideration of approximately $346.4 million, net of cash acquired. SandForce was a provider of flash storage processors for enterprise and client flash solutions and solid state drives. The acquisition was accounted for under the purchase method of accounting. Accordingly, the results of operations of SandForce and the estimated fair value of the assets acquired and liabilities assumed were included in the Company’s condensed consolidated financial statements from January 3, 2012.

On May 6, 2011, the Company completed the sale of substantially all of its external storage systems business to NetApp, Inc. (“NetApp”). The results of the external storage systems business are presented as discontinued operations in the Company’s condensed consolidated statements of operations and, as such, have been excluded from all line items other than “(Loss)/income from discontinued operations” for all periods presented.

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from these estimates.

In management’s opinion, the accompanying unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary for a fair statement of the Company’s financial position, results of operations, comprehensive income and cash flows for the interim periods presented. While the Company believes that the disclosures are adequate to make the information not misleading, these financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued additional guidance on fair value measurements and related disclosures. The new guidance clarifies the application of existing guidance on fair value measurement for non-financial assets and requires the disclosure of quantitative information about the unobservable inputs used in a fair value measurement. The Company adopted this guidance in the first quarter of 2012. The adoption did not impact the Company’s results of operations or financial position.

In June 2011, the FASB issued amended guidance regarding the presentation of comprehensive income. The amended guidance gives an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amended guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The Company adopted this guidance in the first quarter of 2012. The adoption did not impact the Company’s results of operations or financial position.

Note 2 — Stock-Based Compensation Expense

In May 2012, the Company’s 2003 Equity Incentive Plan was amended to increase the number of shares available for new awards to a total of 25 million, of which 15 million shares were available for restricted stock and/or restricted stock units (“RSUs”). In addition, the period during which incentive stock options can be granted was extended to February 9, 2022, and the maximum number of shares that may be issued upon exercise of incentive stock options was set at 25 million.

7

Stock-based compensation expense included in continuing operations, net of estimated forfeitures, related to the Company’s stock options, Employee Stock Purchase Plan (“ESPP”) and restricted stock unit awards by expense category was as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In thousands)
Cost of revenues	$	2,573	$	1,460	$	9,088	$	5,324
Research and development		11,170		5,410		35,451		18,286
Selling, general and administrative		13,643		4,883		38,999		15,462
Total stock-based compensation expense	$	27,386	$	11,753	$	83,538	$	39,072

In connection with the SandForce acquisition, the Company assumed stock options and RSUs originally granted by SandForce. Stock-based compensation expense for the nine months ended September 30, 2012 included $4.5 million of expense related to the accelerated vesting of stock options and RSUs for certain SandForce employees in January 2012. Stock-based compensation expense for the three and nine months ended September 30, 2012 also includes $3.1 million and $8.8 million, respectively, related to assumed stock options and RSUs.

Stock Options

The fair value of each option grant is estimated as of the date of grant using a reduced-form calibrated binomial lattice model (“lattice model”). The following table summarizes the weighted-average assumptions that the Company applied in the lattice model:

	Three Months Ended						Nine Months Ended
	September 30, 2012			October 2, 2011			September 30, 2012			October 2, 2011
Estimated grant date fair value per share	$	2.50		$	2.37		$	2.84		$	2.14
Expected life (years)		4.46			4.48			4.46			4.51
Risk-free interest rate		1	%		1	%		1	%		2	%
Volatility		52	%		50	%		47	%		47	%

The following table summarizes changes in stock options outstanding:

	Number of Shares			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
	(In thousands)					(In years)		(In thousands)
Options outstanding at December 31, 2011		64,245		$	6.19
Assumed in SandForce acquisition		7,542		$	0.75
Granted		5,389		$	8.40
Exercised		(14,385	)	$	5.32
Canceled		(4,758	)	$	8.69
Options outstanding at September 30, 2012		58,033		$	5.70		3.91	$	102,654
Options exercisable at September 30, 2012		35,670		$	6.13		2.71	$	52,025

As of September 30, 2012, the total unrecognized compensation expense related to unvested stock options, net of estimated forfeitures, was $40.9 million and is expected to be recognized over the next 2.2 years on a weighted-average basis. The options assumed in the SandForce acquisition vest over four years from the date of the grant and have ten year terms.

Restricted Stock Units

The cost of service-based and performance-based RSUs is determined using the fair value of the Company’s common stock on the date of grant. For performance-based RSU expense, the Company also considers the probability that those RSUs will vest.

Service-based:

The vesting of service-based RSUs requires that the employees remain employed by the Company for a specified period of time.

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The following table summarizes changes in service-based RSUs outstanding:

	Number of Units			Weighted-Average Grant Date Fair Value per Share
	(In thousands)
Unvested service-based RSUs outstanding at December 31, 2011		12,085		$	5.94
Assumed in SandForce acquisition		1,576		$	6.17
Granted		7,921		$	8.23
Vested		(3,315	)	$	5.87
Forfeited		(782	)	$	6.53
Unvested service-based RSUs outstanding at September 30, 2012		17,485		$	6.98

As of September 30, 2012, the total unrecognized compensation expense related to service-based RSUs, net of estimated forfeitures, was $94.6 million and will be recognized over the next 2.8 years on a weighted-average basis.

Performance-based:

The vesting of performance-based RSUs is contingent upon the Company meeting specified performance criteria and requires that the employees remain employed by the Company for a specified period of time.

The following table summarizes changes in performance-based RSUs outstanding:

	Number of Units			Weighted-Average Grant Date Fair Value per Share
	(In thousands)
Unvested performance-based RSUs outstanding at December 31, 2011		4,729		$	5.98
Granted		2,986		$	8.52
Vested		(1,446	)	$	5.85
Forfeited		(593	)	$	6.53
Unvested performance-based RSUs outstanding at September 30, 2012		5,676		$	7.29

As of September 30, 2012, the total unrecognized compensation expense related to performance-based RSUs, net of estimated forfeitures, was $19.8 million and, if the performance conditions are fully met, will be recognized over the next 3 years.

Employee Stock Purchase Plan

Compensation expense for the ESPP is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. Under the ESPP, rights to purchase shares are granted during the second and fourth quarters of each year. The Company issued 2.8 million and 2.9 million shares under the ESPP during the three months ended July 1, 2012 and July 3, 2011, respectively. No shares related to the ESPP were issued during the three months ended September 30, 2012 or October 2, 2011. The following table summarizes the weighted-average assumptions that the Company applied in the calculation of the fair value for the May 2012 and May 2011 grants:

	2012			2011
Estimated grant date fair value per share	$	2.19		$	2.10
Expected life (years)		0.8			0.8
Risk-free interest rate		0.17	%		0.02	%
Volatility		41	%		37	%

Note 3 — Common Stock Repurchases

The Company’s board of directors authorized stock repurchases of up to $750.0 million on March 9, 2011 and an additional $500.0 million on August 1, 2012. As of September 30, 2012, $525.0 million remained available for stock repurchases. The Company repurchased 6.6 million shares for $50.1 million during the three months ended September 30, 2012 and 29.1 million shares for $226.2 million during the nine months ended September 30, 2012. The Company repurchased 11.2 million shares for $75.0 million during the three months ended October 2, 2011 and 67.5 million shares for $471.8 million during the nine months ended October 2, 2011. Repurchased shares are retired immediately after the repurchases are completed. Retirement of repurchased shares is recorded as a reduction of common stock and additional paid-in capital.

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Note 4 — Restructuring and Other Items

The following table summarizes items included in restructuring of operations and other items, net:

	Three Months Ended						Nine Months Ended
	September 30, 2012			October 2, 2011			September 30, 2012			October 2, 2011
	(In thousands)
Lease terminations (a)	$	901		$	311		$	3,716		$	3,864
Employee severance and benefits (b)		1,239			482			2,698			2,414
Asset impairment and other exit charges		3,515	(c)		6,019	(d)		3,515	(c)		6,019	(d)
Total restructuring expense		5,655			6,812			9,929			12,297
Other items, net		(1,434	)(e)		3,972	(f)		16,245	(g)		(9,611	)(h)
Total restructuring of operations and other items, net	$	4,221		$	10,784		$	26,174		$	2,686

(a) Includes changes in estimates, changes in time value and on-going expenditures related to previously vacated facilities.

(b) Relates to restructuring actions taken as the Company continued to streamline operations.

(c) Consists of a $2.7 million loss on the sale of a property in the U.S. and $0.8 million of other asset impairment and exit costs.

(d) Primarily relates to write-offs of intellectual property and software which are no longer in use.

(e) Primarily consists of a $1.7 million reversal of a sales and use tax liability as a result of concluding a state tax audit.

(f) Primarily consists of costs related to the transition service agreement associated with the sale of the external storage systems business.

(g) Primarily consists of $8.4 million of SandForce acquisition-related costs and $6.7 million of costs related to the transition service agreement associated with the sale of the external storage systems business, offset in part by a $1.7 million reversal of a sales and use tax liability as a result of concluding a state tax audit.

(h) Primarily consists of the reversal of a $14.5 million sales and use tax related liability as a result of concluding various audits, partially offset by $5.3 million of costs related to the transition service agreement associated with the sale of the external storage systems business.

The following table summarizes the significant activity within, and components of, the Company’s restructuring obligations:

	Asset Impairment and Other Exit Charges			Lease Terminations			Employee Severance and Benefits			Total
	(In thousands)
Balance at December 31, 2011	$	0		$	11,752		$	10,444		$	22,196
Expense		3,515			3,716			2,698			9,929
Utilized		(3,515	)		(7,199	)(a)		(11,794	)(a)		(22,508	)
Balance at September 30, 2012 (b)	$	0		$	8,269		$	1,348		$	9,617

(a) Represents cash payments.

(b) The balance remaining for lease terminations is expected to be paid during the remaining terms of the leases, which extend through 2013. The balance remaining for employee severance and benefits is expected to be paid by the end of 2013.

Note 5 — Business Combination

Acquisition of SandForce

On January 3, 2012, the Company completed the acquisition of SandForce. SandForce was a provider of flash storage processors for enterprise and client flash solutions and solid state drives. The Company acquired SandForce to enhance its position in storage technology solutions.

Total consideration consisted of the following (in thousands):

Cash paid, net of cash acquired	$	319,231
Fair value of partially vested equity awards		19,089
Fair value of LSI’s previous investment in SandForce		8,120
Total	$	346,440

In connection with the SandForce acquisition, the Company assumed stock options and RSUs originally granted by SandForce and converted them into LSI stock options and RSUs. The portion of the fair value of partially vested equity awards associated with prior service of SandForce employees represents a component of the total consideration for the SandForce acquisition, as presented above. Stock options assumed were valued using a binomial lattice model calibrated to the exercise behavior of LSI’s employees. RSUs were valued based on LSI’s stock price as of the acquisition date.

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Prior to the acquisition, the Company held an equity interest in SandForce. The Company determined the fair value of this equity interest by applying the per share value of the contractual cash consideration to the SandForce shares held by the Company immediately prior to the acquisition. The fair value of the Company’s pre-acquisition investment in SandForce represents a component of the total consideration, as presented above. As a result of re-measuring the pre-acquisition equity interest in SandForce to fair value, the Company recognized a gain of $5.8 million, which was included in interest income and other, net, for the nine month period ended September 30, 2012.

The allocation of the purchase price to SandForce’s tangible and identified intangible assets acquired and liabilities assumed was based on their estimated fair values.

The purchase price has been allocated as follows (in thousands):

Accounts receivable	$	10,711
Inventory		24,268
Identified intangible assets		172,400
Goodwill		183,461
Net deferred tax liabilities		(43,198	)
Other, net		(1,202	)
Total	$	346,440

The goodwill is primarily attributable to the assembled workforce of SandForce and synergies and economies of scale expected from combining the operations of LSI and SandForce. The goodwill recognized is not deductible for tax purposes.

Identified intangible assets consisted of the following:

	Fair Value		Weighted- Average Life
	(In thousands)		(In years)
Current technology	$	73,400		4.0
Customer relationships		41,700		7.0
Order backlog		4,500		0.5
Trade names		1,500		3.0
Total identified intangible assets subject to amortization		121,100		4.9
In-process research and development		51,300
Total identified intangible assets	$	172,400

The allocation of the purchase price to identified intangible assets acquired was based on the Company’s best estimate of the fair value of those assets. The fair value of acquired identified intangible assets is determined based on inputs that are unobservable and significant to the overall fair value measurement. As such, acquired intangible assets are classified as Level 3 assets.

The fair value of each of the acquired identified intangible assets was determined using a discounted cash flow methodology. The cash flows for each category of identified intangible assets represent the estimated incremental effect on the Company’s cash flows directly attributable to that intangible asset over its estimated remaining life. Estimated cash flows represent expected incremental revenues, net of returns on contributory assets and after considering estimated incremental operating costs and income taxes. Discount rates ranging from 12.9% to 17.9% were used based on the cost of capital, adjusted to reflect the specific risk associated with each of the cash flows.

Current technology represents the fair value of SandForce products that had reached technological feasibility and were a part of its product offering. Customer relationships represents the fair values of SandForce’s relationships with its customers.

In-process research and development (“IPR&D”) represents the fair value of incomplete research and development projects that had not reached technological feasibility as of the date of the acquisition. At the time of acquisition, SandForce had IPR&D related to its next generation flash storage processor (the “Griffin project”). At September 30, 2012, expected costs to complete the Griffin project are approximately $20.3 million through its anticipated completion date in 2013. Total revenues for the Griffin project are expected to extend through 2018. The acquisition date fair value of the Griffin project will be either amortized or impaired depending on whether the project is completed or abandoned.

From January 3, 2012 through September 30, 2012, the Company recognized approximately $124.1 million of revenues related to the SandForce business. In addition, during the nine months ended September 30, 2012, the Company recognized $8.4 million of acquisition-related costs included in restructuring of operations and other items, net related to SandForce. It is impracticable to

11

determine the effect on net income resulting from the SandForce acquisition for the nine months ended September 30, 2012, as the Company immediately integrated SandForce into its ongoing operations. Historical pro forma results giving effect to the acquisition have not been presented because such effect is not material to the prior period financial results.

Note 6 — Benefit Obligations

In 2007, the Company acquired Agere Systems Inc. (“Agere”). The Company has pension plans covering substantially all former Agere U.S. employees, excluding management employees hired after June 30, 2003. Retirement benefits are provided under defined benefit pension plans, which include a management plan and a represented plan. The payments under the management plan are based on an adjusted career-average-pay formula or a cash-balance program. The payments under the represented plan are based on a dollar-per-month formula. Since February 2009, there have been no active participants under the represented plan. The Company also has a non-qualified supplemental pension plan in the U.S. that principally provides benefits based on compensation in excess of amounts that can be considered under a tax qualified plan. The Company also provides post-retirement life insurance coverage under a group life insurance plan for former Agere employees excluding participants in the cash-balance program and management employees hired after June 30, 2003. The Company also has pension plans covering certain international employees.

Effective April 6, 2009, the Company froze the U.S. management defined benefit pension plan. Participants in the adjusted career-average-pay program will not earn any future service accruals after that date. Participants in the cash-balance program will not earn any future service accruals, but will continue to earn 4% interest per year on their cash-balance accounts.

The following table summarizes the components of the net periodic benefit cost or credit:

	Three Months Ended
	September 30, 2012						October 2, 2011
	Pension Benefits			Post-retirement Benefits			Pension Benefits			Post-retirement Benefits
	(In thousands)
Service cost	$	96		$	22		$	141		$	19
Interest cost		15,355			657			16,891			702
Expected return on plan assets		(17,024	)		(953	)		(17,000	)		(1,032	)
Amortization of net actuarial loss, prior service cost and transition asset		3,592			523			1,695			237
Total benefit cost/(credit)	$	2,019		$	249		$	1,727		$	(74	)

	Nine Months Ended
	September 30, 2012						October 2, 2011
	Pension Benefits			Post-retirement Benefits			Pension Benefits			Post-retirement Benefits
	(In thousands)
Service cost	$	321		$	67		$	416		$	57
Interest cost		46,090			1,950			50,670			1,948
Expected return on plan assets		(51,077	)		(2,859	)		(50,998	)		(3,097	)
Amortization of net actuarial loss, prior service cost and transition asset		10,754			1,513			5,080			414
Total benefit cost/(credit)	$	6,088		$	671		$	5,168		$	(678	)

During the nine months ended September 30, 2012, the Company contributed $80.2 million to its pension plans. The Company expects to contribute an additional $15.2 million to its pension plans during the remainder of 2012. The Company does not expect to contribute to its post-retirement benefit plan in 2012.

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Note 7 — Cash Equivalents and Investments

The following tables summarize the Company’s cash equivalents and investments measured at fair value:

	Fair Value Measurements as of September 30, 2012
	Level 1			Level 2			Total
	(In thousands)
Cash equivalents:
Money-market funds	$	338,690	(a)	$	0		$	338,690
U.S. government and agency securities		0			1,000	(b)		1,000
Total cash equivalents	$	338,690		$	1,000		$	339,690
Available-for-sale debt securities:
Asset-backed and mortgage-backed securities:
Agency securities	$	0		$	124,247	(b)	$	124,247
Non-agency securities		0			2,336	(b)		2,336
U.S. government and agency securities		13,276	(a)		45,968	(b)		59,244
Corporate debt securities		0			16,693	(b)		16,693
Total short-term investments	$	13,276		$	189,244		$	202,520
Long-term investments in equity securities:
Marketable available-for-sale equity securities	$	2,209	(c)	$	0		$	2,209

	Fair Value Measurements as of December 31, 2011
	Level 1			Level 2			Total
	(In thousands)
Cash equivalents:
Money-market funds	$	674,219	(a)	$	0		$	674,219
Available-for-sale debt securities:
Asset-backed and mortgage-backed securities:
Agency securities	$	0		$	97,408	(b)	$	97,408
Non-agency securities		0			9,989	(b)		9,989
U.S. government and agency securities		5,403	(a)		30,572	(b)		35,975
Corporate debt securities		0			12,272	(b)		12,272
Total short-term investments	$	5,403		$	150,241		$	155,644
Long-term investments in equity securities:
Marketable available-for-sale equity securities	$	1,514	(c)	$	0		$	1,514

(a) The fair value of money-market funds is determined using unadjusted prices in active markets. The fair value of Level 1 U.S. government and agency securities is determined using quoted prices in active markets.

(b) These investments are traded less frequently than Level 1 securities and are valued using inputs that include quoted prices for similar assets in active markets and inputs other than quoted prices that are observable for the asset, such as interest rates, yield curves, prepayment speeds, collateral performance, broker/dealer quotes and indices that are observable at commonly quoted intervals.

(c) The fair value of marketable equity securities is determined using quoted market prices in active markets. These amounts are included within other assets in the condensed consolidated balance sheets.

As of September 30, 2012 and December 31, 2011, the aggregate carrying value of the Company’s non-marketable securities was $41.6 million and $43.9 million, respectively.

Upon the acquisition of SandForce in January 2012, the Company recognized a gain of $5.8 million as a result of re-measuring its pre-acquisition equity interest in SandForce to estimated fair value. There were no other non-marketable securities fair-valued during the three and nine months ended September 30, 2012 or October 2, 2011.

The following tables summarize the Company’s available-for-sale securities:

	September 30, 2012
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(In thousands)
Short-term debt securities:
Asset-backed and mortgage-backed securities	$	120,326	$	6,730	$	(473	)	$	126,583
U.S. government and agency securities		58,350		895		(1	)		59,244
Corporate debt securities		16,523		170		0			16,693
Total short-term debt securities	$	195,199	$	7,795	$	(474	)	$	202,520
Long-term marketable equity securities	$	669	$	1,541	$	(1	)	$	2,209

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	December 31, 2011
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(In thousands)
Short-term debt securities:
Asset-backed and mortgage-backed securities	$	99,884	$	7,891	$	(378	)	$	107,397
U.S. government and agency securities		35,179		799		(3	)		35,975
Corporate debt securities		12,146		153		(27	)		12,272
Total short-term debt securities	$	147,209	$	8,843	$	(408	)	$	155,644
Long-term marketable equity securities	$	669	$	846	$	(1	)	$	1,514

As of September 30, 2012, there were 89 investments in an unrealized loss position. The following tables summarize the gross unrealized losses and fair values of the Company’s short-term investments that have been in a continuous unrealized loss position for less than and greater than 12 months, aggregated by investment category:

	September 30, 2012
	Less than 12 Months					Greater than 12 Months
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
Asset-backed and mortgage-backed securities	$	29,041	$	(424	)	$	2,165	$	(49	)
U.S. government and agency securities		7,099		(1	)		0		0
Total	$	36,140	$	(425	)	$	2,165	$	(49	)

	December 31, 2011
	Less than 12 Months					Greater than 12 Months
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
Asset-backed and mortgage-backed securities	$	10,645	$	(286	)	$	1,301	$	(92	)
U.S. government and agency securities		3,872		(3	)		0		0
Corporate debt securities		2,375		(27	)		505		0
Total	$	16,892	$	(316	)	$	1,806	$	(92	)

Net realized gains on sales of available-for-sale securities were not material for the three and nine months ended September 30, 2012 or October 2, 2011.

Contractual maturities of available-for-sale debt securities as of September 30, 2012 were as follows:

	Available-For-Sale Debt Securities
	(In thousands)
Due within one year	$	30,135
Due in 1-5 years		47,892
Due in 5-10 years		10,671
Due after 10 years		113,822
Total	$	202,520

The maturities of asset-backed and mortgage-backed securities were allocated based on contractual principal maturities assuming no prepayments.

Note 8 — Supplemental Financial Information

Inventories

	September 30, 2012		December 31, 2011
	(In thousands)
Raw materials	$	176	$	236
Work-in-process		52,809		78,886
Finished goods		156,119		100,913
Total inventories	$	209,104	$	180,035

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Goodwill

The following table summarizes goodwill activity for the nine months ended September 30, 2012:

	Goodwill
	(In thousands)
Balance as of December 31, 2011	$	72,377
Addition due to SandForce acquisition		183,461
Balance as of September 30, 2012	$	255,838

There was no impairment charge for goodwill during the nine months ended September 30, 2012 or October 2, 2011. The accumulated impairment loss as of September 30, 2012 was $2.4 billion.

Accumulated Other Comprehensive Loss

The following table presents the components of, and changes in, accumulated other comprehensive loss, net of taxes:

	Balance at December 31, 2011			Other Comprehensive Income		Balance at September 30, 2012
	(In thousands)
Accumulated net foreign currency translation adjustments	$	42,138		$	178	$	42,316
Accumulated net unrealized gain on investments		5,942			184		6,126
Accumulated net unrealized loss on derivatives		(2,551	)		2,420		(131	)
Accumulated actuarial loss on pension and post-retirement plans		(578,757	)		12,267		(566,490	)
Total accumulated other comprehensive loss	$	(533,228	)	$	15,049	$	(518,179	)

There was no tax effect on any item of other comprehensive income presented in the condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2012 or October 2, 2011.

Reconciliation of Basic and Diluted Shares

The following table provides a reconciliation of basic and diluted shares:

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In thousands)
Basic shares		555,197		567,790		561,708		592,898
Dilutive effect of stock options, employee stock purchase rights and restricted stock unit awards		16,825		13,693		20,588		15,845
Diluted shares		572,022		581,483		582,296		608,743

The weighted-average common share equivalents that were excluded from the computation of diluted shares because their inclusion would have had an anti-dilutive effect on net income per share were as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In thousands)
Anti-dilutive securities:
Stock options		29,181		39,924		27,694		42,978
Restricted stock unit awards		9,871		1,491		6,621		182

Note 9 — Derivative Instruments

The Company has foreign subsidiaries that operate and sell the Company’s products in various markets around the world. As a result, the Company is exposed to changes in foreign-currency exchange rates. The Company utilizes forward contracts to manage its exposure associated with net asset and liability positions denominated in non-functional currencies and to reduce the volatility of earnings and cash flows related to forecasted foreign-currency transactions. The Company does not hold derivative financial instruments for speculative or trading purposes.

15

Cash-Flow Hedges

The Company enters into forward contracts that are designated as foreign-currency cash-flow hedges of selected forecasted payments denominated in currencies other than U.S. dollars. These forward contracts generally mature within twelve months. The Company evaluates and calculates the effectiveness of each hedge at least quarterly. Changes in fair value attributable to changes in time value are excluded from the assessment of effectiveness and are recognized in interest income and other, net. The effective portion of the forward contracts’ gain or loss is recorded in other comprehensive income and, when the hedged expense is recognized, is subsequently reclassified into earnings within the same line item in the statements of operations as the impact of the hedged transaction. The ineffective portion of the gain or loss is reported in earnings immediately. As of September 30, 2012 and December 31, 2011, the total notional value of the Company’s outstanding forward contracts, designated as foreign-currency cash-flow hedges, was $38.3 million and $36.9 million, respectively.

Other Foreign-Currency Hedges

The Company enters into foreign-exchange forward contracts that are used to hedge certain foreign-currency-denominated assets or liabilities and that do not qualify for hedge accounting. These forward contracts generally mature within three months. Changes in the fair value of these forward contracts are recorded immediately in earnings to offset the changes in fair value of the assets or liabilities being hedged. As of September 30, 2012 and December 31, 2011, the total notional value of the Company’s outstanding forward contracts, not designated as hedges under hedge accounting, was $43.0 million and $37.6 million, respectively. The Company recognized net gains on other foreign-currency hedges of $2.7 million and $1.0 million, respectively, during the three and nine months ended September 30, 2012, and net losses of $2.5 million and $0.5 million, respectively, during the three and nine months ended October 2, 2011. These amounts are included in interest income and other, net in the Company’s condensed consolidated statements of operations and were substantially offset by the losses and gains on the underlying foreign-currency-denominated assets or liabilities.

Fair Value of Derivative Instruments

As of September 30, 2012 and December 31, 2011, the total fair value of derivative assets was immaterial and was recorded in prepaid expenses and other current assets in the condensed consolidated balance sheets. As of September 30, 2012 and December 31, 2011, the total fair value of derivative liabilities was $0.9 million and $3.0 million, respectively, and was recorded in other accrued liabilities in the condensed consolidated balance sheets.

Note 10 — Segment, Geographic and Product Information

The Company operates in one reportable segment — the Semiconductor segment. The Company’s chief executive officer is the chief operating decision maker (“CODM”). The Company’s CODM bears ultimate responsibility for, and is actively engaged in, the allocation of resources and the evaluation of the Company’s operating and financial results.

Information about Geographic Areas

The following table summarizes the Company’s revenues by geography based on the ordering location of the customer. Because the Company sells its products primarily to other sellers of technology products and not to end users, the information in the table below may not accurately reflect geographic end-user demand for its products.

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In thousands)
North America*	$	164,111	$	136,849	$	477,548	$	380,648
Asia		414,409		360,238		1,292,419		993,239
Europe and the Middle East		45,442		49,823		135,992		146,931
Total	$	623,962	$	546,910	$	1,905,959	$	1,520,818

* Primarily the United States.

16

Information about Product Groups

The following table presents the Company’s revenues by product groups:

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In thousands)
Storage products	$	492,600	$	403,125	$	1,515,766	$	1,098,473
Networking products		105,849		116,998		311,651		346,381
Other		25,513		26,787		78,542		75,964
Total	$	623,962	$	546,910	$	1,905,959	$	1,520,818

Note 11 — Income Taxes

The Company recorded an income tax provision of $15.1 million and an income tax benefit of $22.2 million for the three and nine months ended September 30, 2012, respectively, and income tax provisions of $7.8 million and $12.6 million for the three and nine months ended October 2, 2011, respectively.

The income tax benefit for the nine months ended September 30, 2012 included a tax benefit of approximately $43.2 million due to the release of valuation allowance resulting from the net deferred tax liabilities recorded as part of the SandForce purchase price allocation. The income tax benefit for the nine months ended September 30, 2012 also included a reversal of $10.8 million in liabilities for uncertain tax positions, which included previously unrecognized tax benefits of $5.7 million and interest and penalties of $5.1 million, as a result of the expiration of statutes of limitations in multiple jurisdictions.

The income tax provision for the nine months ended October 2, 2011 included a reversal of $9.6 million in liabilities for uncertain tax positions, which included previously unrecognized tax benefits of $5.6 million and interest and penalties of $4.0 million, as a result of the expiration of statutes of limitations in multiple jurisdictions.

The Company computes its tax provision using an estimated annual tax rate. The Company excludes certain loss jurisdictions from the computation of the estimated annual rate when no benefit can be realized on those losses. With the exception of certain foreign jurisdictions, the Company believes it is not more likely than not that the future benefit of the deferred tax assets will be realized.

As of September 30, 2012, the Company had $188.4 million of unrecognized tax benefits, for which the Company is unable to make a reasonably reliable estimate as to when cash settlement with a taxing authority may occur. It is reasonably possible that the total amount of unrecognized tax benefits will increase or decrease in the next 12 months. Such changes could occur based on the normal expiration of statutes of limitations or the possible conclusion of ongoing tax audits in various jurisdictions around the world. If those events occur within the next 12 months, the Company estimates that the unrecognized tax benefits, plus accrued interest and penalties, could decrease by up to $16.3 million.

Note 12 — Related Party Transactions

A member of the Company’s board of directors is also a member of the board of directors of Seagate Technology (“Seagate”). The Company sells semiconductors used in storage product applications to Seagate for prices comparable to those charged to an unrelated third party. Revenues from sales by the Company to Seagate were $170.3 million and $604.9 million for the three and nine months ended September 30, 2012, respectively. Revenues from sales by the Company to Seagate were $157.9 million and $375.4 million for the three and nine months ended October 2, 2011, respectively. The Company had accounts receivable from Seagate of $93.9 million and $90.3 million as of September 30, 2012 and December 31, 2011, respectively.

The Company has an equity interest in a joint venture, Silicon Manufacturing Partners Pte Ltd. (“SMP”), with GLOBALFOUNDRIES, a manufacturing foundry for integrated circuits. SMP operates an integrated circuit manufacturing facility in Singapore. The Company owns a 51% equity interest in this joint venture and accounts for its ownership position under the equity method of accounting. The Company is effectively precluded from unilaterally taking any significant action in the management of SMP due to GLOBALFOUNDRIES’ significant participatory rights under the joint venture agreement. Because of GLOBALFOUNDRIES’ approval rights, the Company cannot make any significant decisions regarding SMP without GLOBALFOUNDRIES’ approval, despite the 51% equity interest. In addition, the General Manager, who is responsible for the day-to-day management of SMP, is appointed by GLOBALFOUNDRIES, and GLOBALFOUNDRIES provides day-to-day operational support to SMP.

The Company purchased $11.6 million and $35.5 million of inventory from SMP during the three and nine months ended September 30, 2012, respectively. The Company purchased $12.9 million and $38.5 million of inventory from SMP during the three and nine months ended October 2, 2011, respectively. As of September 30, 2012 and December 31, 2011, the amounts payable to SMP were $7.7 million and $5.0 million, respectively.

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Note 13 — Commitments, Contingencies and Legal Matters

Purchase Commitments

The Company maintains purchase commitments with certain suppliers, primarily for raw materials and manufacturing services and for some non-production items. Purchase commitments for inventory materials are generally restricted to a forecasted time horizon as mutually agreed upon between the parties. This forecasted time horizon can vary for different suppliers. As of September 30, 2012, the Company had purchase commitments of $384.6 million, which are due through 2016.

The Company has a take-or-pay agreement with SMP under which it has agreed to purchase 51% of the managed wafer capacity from SMP’s integrated circuit manufacturing facility, and GLOBALFOUNDRIES has agreed to purchase the remaining managed wafer capacity. SMP determines its managed wafer capacity each year based on forecasts provided by the Company and GLOBALFOUNDRIES. If the Company fails to purchase its required commitments, it will be required to pay SMP for the fixed costs associated with the unpurchased wafers. GLOBALFOUNDRIES is similarly obligated with respect to the wafers allotted to it. The agreement may be terminated by either party upon two years written notice. The agreement may also be terminated for material breach, bankruptcy or insolvency.

Guarantees

Product Warranties:

The following table sets forth a summary of changes in product warranties:

	Accrued Warranties
	(In thousands)
Balance as of December 31, 2011	$	6,334
Accruals for warranties issued during the period		998
Adjustments to pre-existing accruals (including changes in estimates)		(470	)
Warranty liabilities assumed in SandForce acquisition		426
Settlements made during the period (in cash or in kind)		(1,234	)
Balance as of September 30, 2012	$	6,054

Standby Letters of Credit:

The Company had outstanding obligations relating to standby letters of credit of $4.4 million and $3.5 million, respectively, as of September 30, 2012 and December 31, 2011. Standby letters of credit are financial guarantees provided by third parties for leases, customs and certain self-insured risks. If the guarantees are called, the Company must reimburse the provider of the guarantee. The fair value of the letters of credit approximates the contract amounts. The standby letters of credit generally renew annually.

Indemnifications

The Company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party. These obligations arise primarily in connection with sales contracts, license agreements or agreements for the sale of assets, under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of warranties, representations and covenants related to such matters as title to assets sold, validity of certain intellectual property rights, non-infringement of third-party rights, and certain income tax-related matters. In each of these circumstances, payment by the Company is typically subject to the other party making a claim to and cooperating with the Company pursuant to the procedures specified in the particular contract. This usually allows the Company to challenge the other party’s claims or, in case of breach of intellectual property representations or covenants, to control the defense or settlement of any third-party claims brought against the other party. Further, the Company’s obligations under these agreements may be limited in terms of activity (typically to replace or correct the products or terminate the agreement with a refund to the other party), duration and/or amounts. In some instances, the Company may have recourse against third parties covering certain payments made by the Company.

Legal Matters

On December 6, 2006, Sony Ericsson Mobile Communications USA Inc. (“Sony Ericsson”) filed a lawsuit against Agere in Wake County Superior Court in North Carolina, alleging unfair and deceptive trade practices, fraud and negligent misrepresentation in connection with Agere’s engagement with Sony Ericsson to develop a wireless data card for personal computers. The complaint claimed an unspecified amount of damages and sought compensatory damages, treble damages and attorneys’ fees. In August, 2007, the case was dismissed for improper venue. On October 22, 2007, Sony Ericsson filed a lawsuit in the Supreme Court of the State of New York, New York County against LSI, raising substantially the same allegations and seeking substantially the same relief as the North Carolina proceeding. In January 2010, Sony Ericsson amended its complaint by adding claims for fraudulent concealment and gross negligence. On September 10, 2010, LSI filed a motion for summary judgment. On August 4, 2011, the court granted LSI’s motion and ordered the dismissal of all of Sony Ericsson’s claims. Sony Ericsson has appealed this decision. The Company is unable to estimate the possible loss or range of loss, if any, that may be incurred with respect to this matter.

18

On March 23, 2007, CIF Licensing, LLC, d/b/a GE Licensing (“GE”) filed a lawsuit against Agere in the United States District Court for the District of Delaware, asserting that Agere products infringe patents in a portfolio of patents GE acquired from Motorola. GE has asserted that four of the patents cover inventions relating to modems. GE is seeking monetary damages. Agere believes it has a number of defenses to the infringement claims in this action, including laches, exhaustion and its belief that it has a license to the patents. The court postponed hearing motions based on these defenses until after the trial, and did not allow Agere to present evidence on these defenses at trial. On February 17, 2009, the jury in this case returned a verdict finding that three of the four patents were invalid and that Agere products infringed the one patent found to be valid and awarding GE $7.6 million for infringement of that patent. The jury also found Agere’s infringement was willful, which means that the judge could increase the amount of damages up to three times its original amount. The court has not scheduled hearings on Agere’s post-trial motions related to its defenses. One of these motions seeks to have a mis-trial declared based on Agere’s belief that GE withheld evidence in discovery, which affected Agere’s ability to present evidence at trial. On October 6, 2010, a special master appointed by the court determined that GE’s actions were not wrongful and that the evidence withheld by GE was not material to the jury’s findings. Agere is challenging this determination. If the jury’s verdict is entered by the court, Agere would also expect to be required to pay interest from the date of infringing sales. If the verdict is entered, Agere intends to appeal the matter. On February 17, 2010, the court issued an order granting GE’s summary judgment motions seeking to bar Agere’s defenses of laches, exhaustion, and license and denying Agere’s summary judgment motions concerning the same defenses. On July 30, 2010, the court held that one of the patents found invalid by the jury was valid. The court also held that the February 17, 2010 order was not inconsistent with its previous ruling that Agere would be permitted to renew its laches, licensing, and exhaustion defenses, and that Agere has not been precluded from asserting them post-trial. The Company is unable to estimate the possible loss or range of loss, if any, that may be incurred with respect to this matter.

On December 1, 2010, Rambus Inc. (“Rambus”) filed a lawsuit against LSI in the United States District Court for the Northern District of California alleging that LSI products infringe one or more of 19 Rambus patents. These products contain either DDR-type memory controllers or certain high-speed SerDes peripheral interfaces, such as PCI Express interfaces and certain SATA and SAS interfaces. Rambus is seeking unspecified monetary damages, treble damages and costs, expenses and attorneys’ fees due to alleged willfulness, interest and permanent injunctive relief in this action. In addition, on December 1, 2010, Rambus filed an action with the International Trade Commission (“ITC”) against LSI and five of its customers alleging that LSI products infringe six of the 19 patents in the California case. Rambus also named five other companies and a number of their customers in the ITC action. Rambus sought an exclusionary order against LSI and its customers in the ITC action, which, if granted, would preclude LSI and its customers from selling these products in the U.S. The ITC held a hearing on the matter in October 2011. On March 2, 2012, an administrative law judge (“ALJ”) found that LSI infringed Rambus’ patents; however, the ALJ also found the patents invalid or unenforceable or both, and accordingly, found no violation of section 337 of the Tariff Act of 1930. On July 25, 2012, the ITC determined to terminate the investigation with a finding of no violation of section 337 of the Tariff Act of 1930. The ITC affirmed the ALJ’s conclusion that all of the asserted patent claims are invalid under 35 U.S.C. §102 or 103, except for certain asserted claims, for which they found that Rambus has not demonstrated infringement. The ITC reversed the ALJ’s determination that Rambus had demonstrated the existence of a domestic industry under 19 U.S.C. § 1337(a) for the asserted patents. The ITC affirmed the ALJ’s determination that certain patents are unenforceable under the doctrine of unclean hands. Rambus has appealed the ITC’s rulings. The lawsuit against LSI in the United States District Court for the Northern District of California is still pending. The Company is unable to estimate the possible loss or range of loss, if any, that may be incurred with respect to these proceedings.

In addition to the foregoing, the Company and its subsidiaries are parties to other litigation matters and claims in the normal course of business. The Company does not believe, based on currently available facts and circumstances, that the final outcome of these other matters, taken individually or as a whole, will have a material adverse effect on the Company’s consolidated results of operations or financial position. However, the pending unsettled lawsuits may involve complex questions of fact and law and may require the expenditure of significant funds and the diversion of other resources to defend. From time to time, the Company may enter into confidential discussions regarding the potential settlement of such lawsuits. However, there can be no assurance that any such discussions will occur or will result in a settlement. Moreover, the settlement of any pending litigation could require the Company to incur substantial costs and, in the case of the settlement of any intellectual property proceeding against the Company, may require the Company to obtain a license to a third-party’s intellectual property that could require royalty payments in the future and the Company to grant a license to certain of its intellectual property to a third party under a cross-license agreement. The results of litigation are inherently uncertain, and material adverse outcomes are possible.

The Company has not provided accruals for any legal matters in its financial statements as potential losses for such matters are not considered probable and reasonably estimable. However, because such matters are subject to many uncertainties, the ultimate outcomes are not predictable, and there can be no assurances that the actual amounts required to satisfy any liabilities arising from the matters described above will not have a material adverse effect on the Company’s consolidated results of operations, financial position or cash flows.

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Note 14 — Discontinued Operations

On May 6, 2011, the Company completed the sale of substantially all of its external storage systems business to NetApp for $480.0 million in cash. The strategic decision to exit the external storage systems business was based on the Company’s expectation that long-term shareholder value could be maximized by becoming a pure-play semiconductor company. Under the terms of the agreement, NetApp purchased substantially all the assets of the Company’s external storage systems business, which developed and delivered external storage systems products and technology to a wide range of partners who provide storage solutions to end customers. As part of the transaction, the Company provided transitional services to NetApp. The purpose of these services was to provide short-term assistance to the buyer in assuming the operations of the purchased business.

Following is selected financial information included in (loss)/income from discontinued operations for the three and nine months ended October 2, 2011:

	Three Months Ended			Nine Months Ended
	October 2, 2011			October 2, 2011
	(In thousands)
Revenues	$	2,860		$	210,225
Loss before gain on sale of external storage systems business and income taxes	$	(2,366	)	$	(24,866	)
Gain on sale of external storage systems business		0			260,066
Benefit from income taxes		(55	)		(19,473	)
(Loss)/income from discontinued operations	$	(2,311	)	$	254,673

There was no income or loss from discontinued operations for the three or nine months ended September 30, 2012.

During the three and nine months ended October 2, 2011, the Company recognized $3.0 million and $40.9 million, respectively, of restructuring expense as the Company terminated employees, closed several office locations, terminated certain contracts, discontinued various development projects and wrote off intangible assets and software due to the cancellation of development programs in connection with the exit of the external storage systems business. Further, the Company released $19.7 million of deferred tax liabilities related to tax deductible goodwill in connection with the sale of the external storage systems business during the nine months ended October 2, 2011.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This management’s discussion and analysis should be read in conjunction with the other sections of this Form 10-Q, including Part 1, Item 1-”Financial Statements.”

Where more than one significant factor contributed to changes in results from year to year, we have quantified these factors throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations where practicable and material to understanding the discussion.

OVERVIEW

We design, develop and market complex, high-performance storage and networking semiconductors. We offer a broad portfolio of capabilities including custom and standard product integrated circuits that are used in hard disk drives, solid state drives, high-speed communications systems, computer servers, storage systems and personal computers. We deliver our products to our customers as stand-alone integrated circuits as well as incorporated onto circuit boards that offer additional functionality. We also license other entities to use our intellectual property.

Our products are sold primarily to original equipment manufacturer, or OEM, companies in the storage, server and networking industries. We also sell our products through a network of resellers and distributors.

On January 3, 2012, we acquired SandForce, a provider of flash storage processors for enterprise and client flash solutions and solid state drives, for total consideration of approximately $346.4 million, net of cash acquired. This acquisition has enhanced LSI’s position in storage technology solutions.

On May 6, 2011, we sold our external storage systems business for $480.0 million in cash. That business sold external storage systems, primarily to OEMs, who resold these products to end customers under their own brand name. We have reflected the external storage systems business as discontinued operations in our condensed consolidated statements of operations and, as such, the results of that business have been excluded from all line items other than “(Loss)/income from discontinued operations” for all periods presented.

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We derive the majority of our revenues from sales of products for the hard disk and solid state drive, server and networking equipment end markets. We believe that these markets offer us attractive opportunities because of the growing demand to create, store, manage and move digital content. We believe that this growth is occurring as a result of a number of trends, including:

• The increasing popularity of mobile devices such as smart phones and media tablets, and the increasing use of the internet for streaming media, such as videos and music, which together are driving the need for more network capacity;

• Consumer and business demand for hard disks to store increasing amounts of digital data, including music, video, pictures and medical and other business records; and

• Enterprises refreshing their data centers to provide higher levels of business support and analytics, which drives demand for new servers and storage systems and associated equipment.

Our revenues depend on market demand for these types of products and our ability to compete in highly competitive markets. We face competition not only from makers of products similar to ours, but also from competing technologies.

During the third quarter of 2012, we reported revenues of $624.0 million, compared to $546.9 million for the third quarter of 2011. For the nine months ended September 30, 2012, we reported revenues of $1,906.0 million, compared to $1,520.8 million for the nine months ended October 2, 2011. For the third quarter of 2012, we reported net income of $39.7 million, or $0.07 per diluted share, compared to $29.3 million, or $0.05 per diluted share, for the third quarter of 2011. For the nine months ended September 30, 2012, we reported net income of $173.6 million, or $0.30 per diluted share, compared to $333.3 million, or $0.55 per diluted share, for the nine months ended October 2, 2011. Net income for the nine months ended October 2, 2011 included a $260.1 million gain on the sale of our external storage systems business.

Our board of directors authorized stock repurchases of up to $750.0 million on March 9, 2011 and an additional $500.0 million on August 1, 2012. As of September 30, 2012, $525.0 million remained available for stock repurchases. During the nine months ended September 30, 2012, we repurchased 29.1 million shares for $226.2 million. Purchases under the authorizations are expected to be funded with available cash, cash equivalents and short-term investments. We ended the third quarter of 2012 with cash and cash equivalents, together with short-term investments, of $643.0 million, a decline from $935.5 million at the end of 2011, primarily attributable to the cash we used for the acquisition of SandForce.

In early 2012, our shipments of semiconductors for hard disk drives benefited as the hard disk drive industry recovered from the impact of flooding in Thailand in 2011, which affected the production facilities of companies in that industry. More recently, we believe there has been a weakening of sales of personal computers, which we believe led to a decline in our revenues from semiconductors for hard disk drives in the third quarter of 2012 and which we believe will result in further reductions in sales of our products for hard disk drives in the fourth quarter. And, while we have seen significant growth in the first nine months of 2012 in sales of semiconductors for flash memory-based products such as solid state drives and server adapter cards, we believe that a weak market for personal computer sales, elevated shipments in the third quarter of semiconductors for flash-based products to support our customers’ new product launches and solid state drive-enabled personal computer rollouts being lower than anticipated, will result in a significant reduction in our sales of semiconductors for flash-based products in the fourth quarter from third quarter levels. The prices of certain commodities used in the production of semiconductors have increased in recent periods, adversely affecting our gross margins. For example, we use gold in the production of semiconductors and the market price of gold increased significantly in the second half of 2011 and remained at elevated levels through the first nine months of 2012. We do not currently enter into hedging transactions to manage our exposure to changes in the prices of gold or other commodities, although we may choose to do so in the future. Further increases in commodity costs or sustained increased prices may continue to have an adverse impact on our gross margins.

As we look forward into the remainder of 2012 and 2013, we are focused on a number of key objectives, including:

• Carefully monitoring market conditions and attempting to maintain appropriate levels of inventory;

• Attempting to maintain our gross margins and controlling operating expenses;

• Meeting or exceeding our product development, quality and delivery commitments to our customers;

• Identifying attractive opportunities for future products, particularly in areas that are adjacent to technologies where we have strong capabilities;

• Developing leading-edge new technologies; and

• Developing the skills of our workforce.

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RESULTS OF OPERATIONS

Revenues

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In millions)
Revenues	$	624.0	$	546.9	$	1,906.0	$	1,520.8

Revenues increased by $77.1 million, or 14.1%, for the three months ended September 30, 2012 as compared to the three months ended October 2, 2011, driven by higher unit sales of semiconductors used in storage applications as a result of the ramping of new products to existing customers and $49.9 million of revenue from flash storage processors due to the acquisition of SandForce. These increases were offset in part by a decrease in unit sales of semiconductors used in older networking applications.

Revenues increased by $385.2 million, or 25.3%, for the nine months ended September 30, 2012 as compared to the nine months ended October 2, 2011, driven by higher unit sales of semiconductors used in storage applications, such as hard disk drives as that industry recovered from the flooding in Thailand in late 2011, and the ramping of new products to existing customers. The increase also reflects $128.7 million of revenue from flash storage processors as a result of the acquisition of SandForce. These increases were offset in part by a decrease in unit sales of semiconductors used in older networking applications.

Significant Customers:

The following table provides information about sales to Seagate, which was our only customer that accounted for 10% or more of our consolidated revenues:

	Three Months Ended						Nine Months Ended
	September 30, 2012			October 2, 2011			September 30, 2012			October 2, 2011
Percentage of revenues		27	%		29	%		32	%		25	%

Revenues by Geography:

The following table summarizes our revenues by geography based on the ordering location of the customer. Because we sell our products primarily to other sellers of technology products and not to end users, the information in the table below may not accurately reflect geographic end-user demand for our products.

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In millions)
North America*	$	164.1	$	136.9	$	477.6	$	380.7
Asia		414.4		360.2		1,292.4		993.2
Europe and the Middle East		45.5		49.8		136.0		146.9
Total	$	624.0	$	546.9	$	1,906.0	$	1,520.8

* Primarily the United States.

Revenues in North America and Asia increased by $27.2 million, or 19.9%, and $54.2 million, or 15.0%, respectively, for the three months ended September 30, 2012 as compared to the three months ended October 2, 2011. The increases were primarily attributable to higher unit sales of semiconductors used in storage applications as a result of the ramping of new products to existing customers and higher unit sales of flash storage processors as a result of the acquisition of SandForce. The increases were offset in part by a decrease in unit sales of semiconductors used in older networking applications.

Revenues in North America and Asia increased by $96.9 million, or 25.5%, and $299.2 million, or 30.1%, respectively, for the nine months ended September 30, 2012 as compared to the nine months ended October 2, 2011. The increases were primarily attributable to higher unit sales of semiconductors used in storage applications, such as hard disk drives as that industry recovered from the flooding in Thailand in late 2011, and the ramping of new products to existing customers. The increases were also due to higher unit sales of flash storage processors as a result of the acquisition of SandForce. The increases were offset in part by a decrease in unit sales of semiconductors used in older networking applications.

Revenues in Europe and the Middle East remained relatively flat in the three and nine months ended September 30, 2012 as compared to the three and nine months ended October 2, 2011.

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Revenues by Product Groups:

The following table presents our revenues by product groups:

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In millions)
Storage products	$	492.6	$	403.1	$	1,515.8	$	1,098.4
Networking products		105.9		117.0		311.7		346.4
Other		25.5		26.8		78.5		76.0
Total	$	624.0	$	546.9	$	1,906.0	$	1,520.8

Revenues from storage products increased by $89.5 million, or 22.2%, for the three months ended September 30, 2012 as compared to the three months ended October 2, 2011. The increase was attributable to the ramping of new products to our existing customers and additional revenues from flash storage processors due to the acquisition of SandForce.

Revenues from storage products increased by $417.4 million, or 38.0%, for the nine months ended September 30, 2012 as compared to the nine months ended October 2, 2011. The increase was primarily attributable to higher unit sales of semiconductors used in hard disk drives as that industry recovered from the flooding in Thailand in late 2011 and the ramping of new products to existing customers. The increase was also the result of higher unit sales of flash storage processors due to the acquisition of SandForce.

Revenues from networking products decreased by $11.1 million, or 9.5%, and $34.7 million, or 10.0%, respectively, for the three and nine months ended September 30, 2012 as compared to the three and nine months ended October 2, 2011. The decreases were primarily the result of lower unit sales of semiconductors used in older networking applications.

Other revenues result primarily from the licensing of our intellectual property.

Gross Profit Margin

	Three Months Ended						Nine Months Ended
	September 30, 2012			October 2, 2011			September 30, 2012			October 2, 2011
	(Dollars in millions)
Gross profit margin	$	312.7		$	263.8		$	931.5		$	725.6
Percentage of revenues		50.1	%		48.2	%		48.9	%		47.7	%

Gross profit margin as a percentage of revenues increased by 1.9% for the three months ended September 30, 2012 as compared to the three months ended October 2, 2011. The increase was primarily attributable to favorable product mix, that is, more sales of higher margin products, and higher revenues enabling better absorption of fixed costs.

Gross profit margin as a percentage of revenues increased by 1.2% for the nine months ended September 30, 2012 as compared to the nine months ended October 2, 2011. The increase was primarily attributable to favorable product mix and higher revenues enabling better absorption of fixed costs, offset in part by the impact of fair valuing inventories acquired from SandForce and higher commodity costs used in manufacturing our products.

Research and Development

	Three Months Ended						Nine Months Ended
	September 30, 2012			October 2, 2011			September 30, 2012			October 2, 2011
	(Dollars in millions)
Research and development	$	167.5		$	143.3		$	512.9		$	431.6
Percentage of revenues		26.8	%		26.2	%		26.9	%		28.4	%

R&D expense increased by $24.2 million, or 16.9%, for the three months ended September 30, 2012 as compared to the three months ended October 2, 2011. The increase was primarily attributable to higher compensation-related expense, which includes stock-based compensation, resulting from headcount additions associated with the acquisition of SandForce and headcount additions to support our ongoing product development efforts, and higher performance-based compensation expense as a result of improved financial performance. As a percentage of revenues, R&D expense slightly increased in the third quarter of 2012 as compared to the third quarter of 2011.

R&D expense increased by $81.3 million, or 18.8%, for the nine months ended September 30, 2012 as compared to the nine months ended October 2, 2011. The increase was primarily attributable to higher compensation-related expense, which includes stock-based compensation, resulting from headcount additions associated with the acquisition of SandForce and headcount additions to support our ongoing product development efforts, higher performance-based compensation expense as a result of improved financial performance and increased information technology costs for R&D projects. As a percentage of revenues, R&D expense declined in the nine months ended September 30, 2012 as compared to the nine months ended October 2, 2011.

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Selling, General and Administrative

	Three Months Ended						Nine Months Ended
	September 30, 2012			October 2, 2011			September 30, 2012			October 2, 2011
	(Dollars in millions)
Selling, general and administrative	$	92.0		$	77.9		$	271.0		$	218.5
Percentage of revenues		14.7	%		14.2	%		14.2	%		14.4	%

SG&A expense increased by $14.1 million, or 18.1%, for the three months ended September 30, 2012 as compared to the three months ended October 2, 2011. The increase was primarily attributable to higher compensation-related expense, which includes stock-based compensation, resulting from headcount additions associated with the acquisition of SandForce and headcount additions to support revenue growth, along with higher performance-based compensation expense as a result of improved financial performance. As a percentage of revenues, SG&A expense increased in the third quarter of 2012 as compared to the third quarter of 2011.

SG&A expense increased by $52.5 million, or 24.0%, for the nine months ended September 30, 2012 as compared to the nine months ended October 2, 2011. The increase was primarily attributable to higher compensation-related expense, which includes stock-based compensation, resulting from headcount additions associated with the acquisition of SandForce and headcount additions to support revenue growth, along with higher performance-based compensation expense as a result of improved financial performance. As a percentage of revenues, SG&A expense remained relatively flat for the first nine months of 2012 compared to the same period in 2011.

Restructuring of Operations and Other Items, net

The following table summarizes items included in restructuring of operations and other items, net:

	Three Months Ended						Nine Months Ended
	September 30, 2012			October 2, 2011			September 30, 2012			October 2, 2011
	(In millions)
Lease terminations (a)	$	0.9		$	0.3		$	3.7		$	3.9
Employee severance and benefits (b)		1.2			0.5			2.7			2.4
Asset impairment and other exit charges		3.5	(c)		6.0	(d)		3.5	(c)		6.0	(d)
Total restructuring expense		5.6			6.8			9.9			12.3
Other items, net		(1.4	)(e)		4.0	(f)		16.3	(g)		(9.6	)(h)
Total restructuring of operations and other items, net	$	4.2		$	10.8		$	26.2		$	2.7

(a) Includes changes in estimates, changes in time value and on-going expenditures related to previously vacated facilities.

(b) Relates to restructuring actions taken as we continued to streamline operations.

(c) Consists of a $2.7 million loss on the sale of a property in the U.S. and $0.8 million of other asset impairment and exit costs.

(d) Primarily relates to write-offs of intellectual property and software which are no longer in use.

(e) Primarily consists of a $1.7 million reversal of a sales and use tax liability as a result of concluding a state tax audit.

(f) Primarily consists of costs related to the transition service agreement associated with the sale of the external storage systems business.

(g) Primarily consists of $8.4 million of SandForce acquisition-related costs and $6.7 million of costs related to the transition service agreement associated with the sale of the external storage systems business, offset in part by a $1.7 million reversal of a sales and use tax liability as a result of concluding a state tax audit.

(h) Primarily consists of the reversal of a $14.5 million sales and use tax related liability as a result of concluding various audits, partially offset by $5.3 million of costs related to the transition service agreement associated with the sale of the external storage systems business.

Interest Income and Other, net

The following table summarizes components of interest income and other, net:

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In millions)
Interest income	$	1.6	$	2.3	$	4.7	$	9.0
Other income, net		4.3		5.3		25.4		9.3
Total	$	5.9	$	7.6	$	30.1	$	18.3

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The $4.3 million decrease in interest income for the nine months ended September 30, 2012 as compared to the nine months ended October 2, 2011 primarily resulted from the absence of interest income in 2012 on a note we received in connection with the sale of a business in 2007 and lower interest rates in 2012 than in 2011.

Other income, net, for the nine months ended September 30, 2012 primarily included $6.3 million of income for transition services related to the sale of the external storage systems business, a $5.8 million gain as a result of re-measuring our pre-acquisition equity interest in SandForce to estimated fair value, $5.5 million of proceeds from insurance claims covering a portion of our losses that resulted from the Thailand flooding in late 2011 and a $2.6 million gain on the sale of certain non-marketable equity securities.

Provision for/Benefit from Income Taxes

We recorded an income tax provision of $15.1 million and an income tax benefit of $22.2 million for the three and nine months ended September 30, 2012, respectively, and income tax provisions of $7.8 million and $12.6 million for the three and nine months ended October 2, 2011, respectively.

The income tax benefit for the nine months ended September 30, 2012 included a tax benefit of approximately $43.2 million due to the release of valuation allowance resulting from the net deferred tax liabilities recorded as part of the SandForce purchase price allocation. The income tax benefit for the nine months ended September 30, 2012 also included a reversal of $10.8 million in liabilities for uncertain tax positions, which included previously unrecognized tax benefits of $5.7 million and interest and penalties of $5.1 million, as a result of the expiration of statutes of limitations in multiple jurisdictions.

The income tax provision for the nine months ended October 2, 2011 included a reversal of $9.6 million in liabilities for uncertain tax positions, which included previously unrecognized tax benefits of $5.6 million and interest and penalties of $4.0 million, as a result of the expiration of statutes of limitations in multiple jurisdictions.

We compute our tax provision using an estimated annual tax rate. We exclude certain loss jurisdictions from the computation of the estimated annual rate when no benefit can be realized on those losses. With the exception of certain foreign jurisdictions, we believe it is not more likely than not that the future benefit of the deferred tax assets will be realized.

Discontinued Operations

Following is selected financial information included in (loss)/income from discontinued operations:

	Three Months Ended			Nine Months Ended
	October 2, 2011			October 2, 2011
	(In millions)
Revenues	$	2.9		$	210.2
Loss before gain on sale of external storage systems business and income taxes	$	(2.4	)	$	(24.9	)
Gain on sale of external storage systems business		0			260.1
Benefit from income taxes		(0.1	)		(19.5	)
(Loss)/income from discontinued operations	$	(2.3	)	$	254.7

There was no income or loss from discontinued operations for the three or nine months ended September 30, 2012.

During the three and nine months ended October 2, 2011, we recognized $3.0 million and $40.9 million, respectively, of restructuring expense as we terminated employees, closed several office locations, terminated certain contracts, discontinued various development projects and wrote off intangible assets and software due to the cancellation of development programs in connection with the exit of the external storage systems business. Further, we released $19.7 million of deferred tax liabilities related to tax deductible goodwill in connection with the sale of the external storage systems business during the nine months ended October 2, 2011.

FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY

Cash, cash equivalents and short-term investments are our primary source of liquidity. We believe that our existing liquid resources and cash generated from operations will be adequate to meet our operating and capital requirements and other obligations for more than the next 12 months. We may, however, find it desirable to obtain additional debt or equity financing. Such financing may not be available to us at all or on acceptable terms if we determine that it would be desirable to obtain additional financing.

Cash, cash equivalents and short-term investments decreased to $643.0 million as of September 30, 2012 from $935.5 million as of December 31, 2011. The decrease was mainly due to $319.2 million of cash used in connection with the acquisition of SandForce and cash outflows for other investing activities and financing activities, offset in part by cash inflows generated from operating activities, as described below.

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Working Capital

Working capital decreased by $265.5 million to $696.3 million as of September 30, 2012 from $961.8 million as of December 31, 2011. The decrease was primarily attributable to following:

• Cash, cash equivalents and short-term investments decreased by $292.5 million primarily due to the use of $319.2 million in connection with the acquisition of SandForce in January 2012, the use of $226.2 million to repurchase our common stock, and the use of $101.7 million for purchases of property and equipment, net of proceeds from sales, offset in part by net cash provided by operating activities of $279.3 million;

• Accrued salaries, wages, and benefits increased by $24.9 million primarily as a result of the timing of payments for salaries, benefits and performance-based compensation; and

• Accounts payable increased by $9.3 million primarily due to an increase in inventory purchases to support new product introductions and the normal timing of invoice receipts and payments.

These decreases in working capital were offset in part by the following:

• Inventories increased by $29.1 million as a result of increased inventory purchases to support new product introductions and higher revenues in 2012 as compared to 2011;

• Other accrued liabilities decreased by $18.2 million primarily due to the utilization of restructuring reserves, payments of taxes and decreases in other accruals related to our operations; and

• Accounts receivable increased by $10.0 million primarily as a result of increased revenues in the third quarter of 2012 as compared to the fourth quarter of 2011.

Working capital increased by $185.5 million to $964.7 million as of October 2, 2011 from $779.2 million as of December 31, 2010. The increase was primarily attributable to the following:

• Cash, cash equivalents and short-term investments increased by $202.2 million primarily due to $475.2 million of proceeds from the sale of our external storage systems business in May 2011 and net cash provided by operating activities of $191.4 million, offset in part by the use of $471.8 million to repurchase our common stock;

• Inventories increased by $23.7 million primarily due to increased inventory purchases during the third quarter of 2011 in anticipation of expected increases in product demand, offset in part by inventory sold to NetApp as part of the sale of the external storage systems business;

• Accrued salaries, wages and benefits decreased by $17.6 million primarily as a result of the timing of payments for salaries, benefits and performance-based compensation, and the payout of accrued compensation-related costs to employees transferred to NetApp as part of the sale of the external storage systems business; and

• Assets held for sale increased by $16.2 million primarily as a result of the reclassification of land in Gresham, Oregon from held and used to held for sale because the held for sale criteria were met during the second quarter of 2011.

These increases in working capital were offset in part by the following:

• Accounts receivable decreased by $78.2 million primarily as a result of lower revenues from discontinued operations due to the sale of the external storage systems business.

Cash Provided by Operating Activities

During the nine months ended September 30, 2012, we generated $279.3 million of cash from operating activities as a result of the following:

• Net income adjusted for non-cash items and other non-operating adjustments, which are quantified in our condensed consolidated statements of cash flows included in Item 1;

• Offset in part by a net decrease of $70.8 million in assets and liabilities, including changes in working capital components, from December 31, 2011 to September 30, 2012, as discussed above.

During the nine months ended October 2, 2011, we generated $191.4 million of cash from operating activities as a result of the following:

• Net income adjusted for non-cash items and other non-operating adjustments, which are quantified in our condensed consolidated statements of cash flows included in Item 1;

• Offset in part by a net decrease of $77.4 million in assets and liabilities, including changes in working capital components, from December 31, 2010 to October 2, 2011, as discussed above.

26

Cash Used in/Provided by Investing Activities

Cash used in investing activities for the nine months ended September 30, 2012 was $483.3 million. The investing activities during the nine months ended September 30, 2012 were the following:

• Acquisition of SandForce, net of cash acquired, for $319.2 million;

• Purchases of property and equipment, net of proceeds from sales, totaling $101.7 million, including $45.5 million for an office building that we intend to be our new headquarters; and

• Purchases of available-for-sale debt securities and other investments, net of proceeds from maturities and sales, of $62.4 million.

Cash provided by investing activities for the nine months ended October 2, 2011 was $418.6 million. The investing activities during the nine months ended October 2, 2011 were the following:

• Proceeds from the sale of our external storage systems business, net of transaction fees, of $475.2 million;

• Purchases of property and equipment, net of proceeds from sales, totaling $45.9 million; and

• Purchases of available-for-sale debt securities and other investments, net of proceeds from maturities and sales, of $10.7 million.

We expect capital expenditures to be approximately $130.0 million in 2012, a significant portion of which relates to the office building that we intend to be our new headquarters. We have established strategic supplier alliances with foundry semiconductor manufacturers and with third-party assembly and test operations, which enables us to have access to advanced manufacturing capacity without having to increase our capital spending requirements.

Cash Used in Financing Activities

Cash used in financing activities for the nine months ended September 30, 2012 was $135.6 million. This amount included $226.2 million of repurchases of our common stock, offset in part by $90.6 million cash received from issuances of common stock under our employee stock plans.

Cash used in financing activities for the nine months ended October 2, 2011 was $405.7 million. This amount included $471.8 million to repurchase our common stock, offset in part by proceeds of $66.1 million from issuances of common stock under our employee stock plans.

We do not currently pay any cash dividends to our stockholders.

CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual obligations as of September 30, 2012:

	Payments Due by Period
	Less Than 1 Year		1-3 Years		4-5 Years		After 5 Years		Other			Total
	(In millions)
Operating lease obligations	$	36.2	$	36.6	$	11.3	$	6.4	$	0		$	90.5
Purchase commitments		350.4		25.1		9.1		0		0			384.6
Pension contributions		15.2		*		*		*		*			15.2
Uncertain tax positions		0		0		0		0		100.1	**		100.1
Total	$	401.8	$	61.7	$	20.4	$	6.4	$	100.1		$	590.4

* We have pension plans covering certain former Agere U.S. employees. We also have pension plans covering certain international employees. Although additional future contributions will be required, the amount and timing of these contributions will be affected by actuarial assumptions, the actual rate of return on plan assets, the level of market interest rates, legislation changes and the amount of voluntary contributions to the plans. The amount shown in the table represents our planned contributions to our pension plans during the remainder of 2012. Because any contributions for 2013 and later will depend on the value of the plan assets in the future and thus are uncertain, we have not included any amounts for 2013 and beyond in the above table.

** This amount represents the non-current tax payable obligation. We are unable to make a reasonably reliable estimate as to when cash settlement with a taxing authority may occur.

Operating Lease Obligations

We lease real estate and certain non-manufacturing equipment under non-cancellable operating leases. We also include non-cancellable obligations under certain software licensing arrangements in this category.

27

Purchase Commitments

We maintain purchase commitments with certain suppliers, primarily for raw materials and manufacturing services and for some non-production items. Purchase commitments for inventory materials are generally restricted to a forecasted time horizon as mutually agreed upon between the parties. This forecasted time horizon can vary for different suppliers.

Uncertain Tax Positions

As of September 30, 2012, we had $188.4 million of unrecognized tax benefits, for which we are unable to make a reasonably reliable estimate as to when cash settlement with a taxing authority may occur. It is reasonably possible that the total amount of unrecognized tax benefits will increase or decrease in the next 12 months. Such changes could occur based on the normal expiration of statutes of limitations or the possible conclusion of ongoing tax audits in various jurisdictions around the world. If those events occur within the next 12 months, we estimate that the unrecognized tax benefits, plus accrued interest and penalties, could decrease by up to $16.3 million.

Standby Letters of Credit

We had outstanding obligations relating to standby letters of credit of $4.4 million and $3.5 million, respectively, as of September 30, 2012 and December 31, 2011. Standby letters of credit are financial guarantees provided by third parties for leases, customs and certain self-insured risks. If the guarantees are called, we must reimburse the provider of the guarantee. The fair value of the letters of credit approximates the contract amounts. The standby letters of credit generally renew annually.

CRITICAL ACCOUNTING POLICIES

There have been no significant changes in our critical accounting estimates or significant accounting policies during the nine months ended September 30, 2012 as compared to the discussion in Part II, Item 7 and in Note 2 to our financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2011.

RECENT ACCOUNTING PRONOUNCEMENTS

The information contained in Note 1 to our financial statements in Item 1 under the heading “Recent Accounting Pronouncements” is incorporated by reference into this Item 2.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no significant changes in the market risk disclosures during the nine months ended September 30, 2012 as compared to the discussion in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2011.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures: The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or furnishes under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required or necessary disclosures. Our chief executive officer and chief financial officer have concluded, based on the evaluation of the effectiveness of the disclosure controls and procedures by our management with the participation of our chief executive officer and chief financial officer, as of the end of the period covered by this report, that our disclosure controls and procedures were effective for this purpose.

Changes in Internal Control: During the third quarter of 2012, we did not make any change in our internal control over financial reporting that materially affected or is reasonably likely to materially affect our internal control over financial reporting.

28

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

This information is included under the caption “Legal Matters” in Note 13 to our financial statements in Item 1 of Part I.

Item 1A. Risk Factors

Set forth below are risks and uncertainties, many of which are discussed in greater detail in our Annual Report on Form 10-K for the year ended December 31, 2011, that, if they were to occur, could materially adversely affect our business or could cause our actual results to differ materially from the results contemplated by the forward-looking statements in this report and other public statements we make:

• We depend on a small number of customers. The loss of, or a significant reduction in revenues from, any of these customers would harm our results of operations.

• We operate in intensely competitive markets, and our failure to compete effectively would harm our results of operations.

• Customer orders and ordering patterns can change quickly, making it difficult for us to predict our revenues and making it possible that our actual revenues may vary materially from our expectations, which could harm our results of operations and stock price.

• We depend on outside suppliers to manufacture, assemble, package and test our products; accordingly, any failure to secure and maintain sufficient manufacturing capacity at attractive prices or to maintain the quality of our products could harm our business and results of operations.

• Failure to qualify our semiconductor products or our suppliers’ manufacturing lines with key customers could harm our business and results of operations.

• If we fail to keep pace with technological advances, or if we pursue technologies that do not become commercially accepted, customers may not buy our products and our results of operations may be harmed.

• Any defects in our products could harm our reputation, customer relationships and results of operations.

• Our pension plans are underfunded, and may require significant future contributions, which could have an adverse impact on our business.

• We may be subject to intellectual property infringement claims and litigation, which could cause us to incur significant expenses or prevent us from selling our products.

• If we are unable to protect or assert our intellectual property rights, our business and results of operations may be harmed.

• Increases in the price of commodities used in the production of our products or lack of availability of these materials could negatively impact our operating results.

• We are exposed to legal, business, political and economic risks associated with our international operations.

• We use indirect channels of product distribution over which we have limited control.

• We may engage in acquisitions and strategic alliances, which may not be successful and could harm our business and operating results.

• The semiconductor industry is highly cyclical, which may cause our operating results to fluctuate.

• Our failure to attract, retain and motivate key employees could harm our business.

• Our operations and our suppliers’ operations are subject to natural disasters and other events outside of our control that may disrupt our business and harm our operating results.

• Laws and regulations to which we are subject, as well as customer requirements in the area of environmental protection and social responsibility, could impose substantial costs on us and may adversely affect our business.

• Our blank check preferred stock and Delaware law contain provisions that may inhibit potential acquisition bids, which may harm our stock price, discourage merger offers or prevent changes in our management.

• Class action litigation due to stock price volatility or other factors could cause us to incur substantial costs and divert our management’s attention and resources.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table contains information about the repurchases of our common stock during the quarter ended September 30, 2012.

29

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
July 2 — August 1, 2012		0	$	0		0	$	575,028,406
August 2 — September 1, 2012		5,478,981	$	7.55		5,478,981	$	533,653,042
September 2 — September 30, 2012		1,131,708	$	7.68		1,131,708	$	524,966,119
Total		6,610,689	$	7.57		6,610,689		0

On March 9, 2011, our board of directors authorized the repurchase of up to $750 million of our common stock. The repurchases reported in the table above were made pursuant to this authorization. In addition, on August 1, 2012, our board of directors authorized the repurchase of up to an additional $500 million of our common stock.

Item 6. Exhibits

See the Exhibit Index, which follows the signature page to this report.

30

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		LSI CORPORATION
		(Registrant)
Date: November 6, 2012	By	/s/ Bryon Look
		Bryon Look
		Executive Vice President, Chief Financial Officer and Chief Administrative Officer

31

EXHIBIT INDEX

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350
101.INS	XBRL instance document
101.SCH	XBRL taxonomy extension schema document
101.CAL	XBRL taxonomy extension calculation linkbase document
101.DEF	XBRL taxonomy extension definition linkbase document
101.LAB	XBRL taxonomy extension label linkbase document
101.PRE	XBRL taxonomy extension presentation linkbase document

32

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

AS ADOPTED PURSUANT TO

SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Abhijit Y. Talwalkar, certify that:

1. I have reviewed this quarterly report on Form 10-Q of LSI Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2012

By:	/s/ Abhijit Y. Talwalkar
	Name: Abhijit Y. Talwalkar
	Title: President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

AS ADOPTED PURSUANT TO

SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Bryon Look, certify that:

1. I have reviewed this quarterly report on Form 10-Q of LSI Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2012

By:	/s/ Bryon Look
	Name:	Bryon Look
	Title:	Executive Vice President, Chief Financial Officer
		and Chief Administrative Officer

EX-32.1

Exhibit 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

I, Abhijit Y. Talwalkar, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of LSI Corporation on Form 10-Q for the quarterly period ended September 30, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of LSI Corporation.

By:	/s/ Abhijit Y. Talwalkar
	Name:	Abhijit Y. Talwalkar
	Title:	President and Chief Executive Officer
	Date:	November 6, 2012

EX-32.2

Exhibit 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

I, Bryon Look, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of LSI Corporation on Form 10-Q for the quarterly period ended September 30, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of LSI Corporation.

By:	/s/ Bryon Look
	Name:	Bryon Look
	Title:	Executive Vice President, Chief Financial Officer and Chief Administrative Officer
	Date:	November 6, 2012

XML

Common Stock Repurchases - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Oct. 02, 2011	Sep. 30, 2012	Oct. 02, 2011
Date the Company's board of directors authorized a stock repurchase program			Mar. 09, 2011
Maximum amount authorized under stock repurchase program			$ 750.0
Value of shares remaining under stock repurchase program			525.0
Repurchase of shares, shares	6.6	11.2	29.1	67.5
Repurchase of shares, value	50.1	75.0	226.2	471.8
Date the Company's board of directors authorized an additional stock repurchase program	August 1, 2012		August 1, 2012
Additional repurchase of common stock, authorized amount			$ 500.0

XML

Goodwill (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Goodwill [Line Items]
Balance as of December 31, 2011	$ 255,838	$ 72,377
Addition due to SandForce acquisition	183,461
Balance as of September 30, 2012	$ 255,838	$ 72,377

XML

Company's Cash Equivalents and Investments Measured at Fair Value (Detail) (Fair Value, Measurements, Recurring [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2012		Dec. 31, 2011
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Cash equivalents measured at fair value	$ 339,690
Investments measured at fair value	202,520		155,644
Fair Value Measurements Level 1 [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Cash equivalents measured at fair value	338,690
Investments measured at fair value	13,276		5,403
Fair Value Measurements Level 2 [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Cash equivalents measured at fair value	1,000
Investments measured at fair value	189,244		150,241
Money-market funds [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Cash equivalents measured at fair value	338,690		674,219
Money-market funds [Member] | Fair Value Measurements Level 1 [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Cash equivalents measured at fair value	338,690	[1]	674,219	[1]
Money-market funds [Member] | Fair Value Measurements Level 2 [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Cash equivalents measured at fair value	0		0
Agency securities [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Investments measured at fair value	124,247		97,408
Agency securities [Member] | Fair Value Measurements Level 1 [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Investments measured at fair value	0		0
Agency securities [Member] | Fair Value Measurements Level 2 [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Investments measured at fair value	124,247	[2]	97,408	[2]
Non-agency securities [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Investments measured at fair value	2,336		9,989
Non-agency securities [Member] | Fair Value Measurements Level 1 [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Investments measured at fair value	0		0
Non-agency securities [Member] | Fair Value Measurements Level 2 [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Investments measured at fair value	2,336	[2]	9,989	[2]
U.S. government and agency securities [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Cash equivalents measured at fair value	1,000
Investments measured at fair value	59,244		35,975
U.S. government and agency securities [Member] | Fair Value Measurements Level 1 [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Cash equivalents measured at fair value	0
Investments measured at fair value	13,276	[1]	5,403	[1]
U.S. government and agency securities [Member] | Fair Value Measurements Level 2 [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Cash equivalents measured at fair value	1,000	[2]
Investments measured at fair value	45,968	[2]	30,572	[2]
Corporate debt securities [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Investments measured at fair value	16,693		12,272
Corporate debt securities [Member] | Fair Value Measurements Level 1 [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Investments measured at fair value	0		0
Corporate debt securities [Member] | Fair Value Measurements Level 2 [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Investments measured at fair value	16,693	[2]	12,272	[2]
Long-term marketable equity securities [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Investments measured at fair value	2,209		1,514
Long-term marketable equity securities [Member] | Fair Value Measurements Level 1 [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Investments measured at fair value	2,209	[3]	1,514	[3]
Long-term marketable equity securities [Member] | Fair Value Measurements Level 2 [Member]
Company's Cash Equivalents and Investments Measured at Fair Value [Line Items]
Investments measured at fair value	$ 0		$ 0

[1] The fair value of money-market funds is determined using unadjusted prices in active markets. The fair value of Level 1 U.S. government and agency securities is determined using quoted prices in active markets.

[2] These investments are traded less frequently than Level 1 securities and are valued using inputs that include quoted prices for similar assets in active markets and inputs other than quoted prices that are observable for the asset, such as interest rates, yield curves, prepayment speeds, collateral performance, broker/dealer quotes and indices that are observable at commonly quoted intervals.

[3] The fair value of marketable equity securities is determined using quoted market prices in active markets. These amounts are included within other assets in the condensed consolidated balance sheets.

XML

Supplemental Financial Information - Additional Information (Detail) (USD $) In Billions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Oct. 02, 2011	Sep. 30, 2012	Oct. 02, 2011
Goodwill [Line Items]
Impairment of goodwill			$ 0	$ 0
Accumulated impairment losses	2.4		2.4
Income tax expense related to items of other comprehensive (loss)/income	$ 0	$ 0	$ 0	$ 0

XML

Benefit Obligations - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Defined Benefit Plan Disclosure [Line Items]
Interest on cash-balance accounts for participants in the cash-balance program	4.00%
Company's contribution to pension plans	$ 80.2
Expected pension plan contributions for remainder of 2012	15.2
Expected contributions to post-retirement benefit plan in 2012	$ 0

XML

Stock-Based Compensation Expense - Additional Information (Detail) (USD $) Share data in Millions, unless otherwise specified	3 Months Ended				9 Months Ended				9 Months Ended
	Sep. 30, 2012	Jul. 01, 2012	Oct. 02, 2011	Jul. 03, 2011	Sep. 30, 2012	Oct. 02, 2011	May 09, 2012 2003 Equity incentive plan amendment.	May 09, 2012 Restricted stock and/or restricted stock units [Member] 2003 Equity incentive plan amendment.	Sep. 30, 2012 Stock options [Member]	Sep. 30, 2012 Service-based Restricted Stock Units [Member]	Sep. 30, 2012 Performance-based Restricted Stock Units [Member]	Sep. 30, 2012 Stock options and RSU's assumed from acquisition [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for issuance of new awards							25	15
Maximum shares issued upon exercise of incentive stock options							25
Description of share based payment award					In May 2012, the Company's 2003 Equity Incentive Plan was amended to increase the number of shares available for new awards to a total of 25 million, of which 15 million shares were available for restricted stock and/or restricted stock units ("RSUs"). In addition, the period during which incentive stock options can be granted was extended to February 9, 2022, and the maximum number of shares that may be issued upon exercise of incentive stock options was set at 25 million.
Expenses related to stock options and RSUs assumed	$ 3,100,000				$ 8,800,000
Stock-based compensation expense	27,386,000		11,753,000		83,538,000	39,072,000						4,500,000
Total unrecognized compensation expense related to unvested stock options, net of estimated forfeitures	40,900,000				40,900,000
Period of total unrecognized compensation expense related to stock awards, net of estimated forfeitures									2 years 2 months 12 days	2 years 9 months 18 days
Total unrecognized compensation expense related to service-based awards, net of estimated forfeitures	94,600,000				94,600,000
Total unrecognized compensation expense related to performance based awards, net of estimated forfeitures											$ 19,800,000
Recognition period for unrecognized compensation expense related to performance-based restricted stock units net of estimated forfeitures											3 years
Shares issued under ESPP		2.8		2.9

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Reconciliation of Basic and Diluted Shares (Detail) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Oct. 02, 2011	Sep. 30, 2012	Oct. 02, 2011
Reconciliation Of Basic Weighted Average Shares To Diluted Weighted Average Shares [Line Items]
Basic shares	555,197	567,790	561,708	592,898
Dilutive effect of stock options, employee stock purchase rights and restricted stock unit awards	16,825	13,693	20,588	15,845
Diluted shares	572,022	581,483	582,296	608,743

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Business Combination (Tables)

9 Months Ended

Sep. 30, 2012

Cost Consideration

Total consideration consisted of the following (in thousands):

Cash paid, net of cash acquired	$	319,231
Fair value of partially vested equity awards		19,089
Fair value of LSI’s previous investment in SandForce		8,120
Total	$	346,440

Primarily Allocation and Other Details Acquisition

The purchase price has been allocated as follows (in thousands):

Accounts receivable	$	10,711
Inventory		24,268
Identified intangible assets		172,400
Goodwill		183,461
Net deferred tax liabilities		(43,198	)
Other, net		(1,202	)
Total	$	346,440

Identified Intangible Assets

Identified intangible assets consisted of the following:

	Fair Value		Weighted- Average Life
	(In thousands)		(In years)
Current technology	$	73,400		4.0
Customer relationships		41,700		7.0
Order backlog		4,500		0.5
Trade names		1,500		3.0
Total identified intangible assets subject to amortization		121,100		4.9
In-process research and development		51,300
Total identified intangible assets	$	172,400

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Company's Available-for-Sale Securities (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Sep. 30, 2012
Asset-backed and mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost	$ 99,884	$ 120,326
Available-for-sale Securities, Gross Unrealized Gain	7,891	6,730
Available-for-sale Securities, Gross Unrealized Loss	(378)	(473)
Available-for-sale Securities, Fair Value	107,397	126,583
U.S. government and agency securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost	35,179	58,350
Available-for-sale Securities, Gross Unrealized Gain	799	895
Available-for-sale Securities, Gross Unrealized Loss	(3)	(1)
Available-for-sale Securities, Fair Value	35,975	59,244
Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost	12,146	16,523
Available-for-sale Securities, Gross Unrealized Gain	153	170
Available-for-sale Securities, Gross Unrealized Loss	(27)	0
Available-for-sale Securities, Fair Value	12,272	16,693
Short-term Debt [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost	147,209	195,199
Available-for-sale Securities, Gross Unrealized Gain	8,843	7,795
Available-for-sale Securities, Gross Unrealized Loss	(408)	(474)
Available-for-sale Securities, Fair Value	155,644	202,520
Long-term marketable equity securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost	669	669
Available-for-sale Securities, Gross Unrealized Gain	846	1,541
Available-for-sale Securities, Gross Unrealized Loss	(1)	(1)
Available-for-sale Securities, Fair Value	$ 1,514	$ 2,209

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Business Combination - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Business Combinations [Line Items]
Acquisition Date	Jan. 03, 2012
Gain recognized from re-measurement of the pre-acquisition equity	$ 5.8
Acquisition related costs	8.4
SandForce acquisition [Member]
Business Combinations [Line Items]
Revenue recognized related to SandForce business since date of acquisition	124.1
Griffin project [Member]
Business Combinations [Line Items]
Expected costs to complete	$ 20.3
Anticipated completion date of Griffin project	2013
Revenues for Griffin project is expected through	2018
Minimum [Member]
Business Combinations [Line Items]
Discount rate applied to projects	12.90%
Maximum [Member]
Business Combinations [Line Items]
Discount rate applied to projects	17.90%

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Summary of Unvested Service-Based Restricted Stock (Detail) (Service-Based Restricted Stock Units [Member], USD $) In Thousands, except Per Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Service-Based Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested restricted stock units, Beginning Balance	12,085
Assumed in Sand Force acquisition, Number of Units	1,576
Granted, Number of units	7,921
Vested, Number of Units	(3,315)
Forfeited, Number of Units	(782)
Unvested restricted stock units, Ending Balance	17,485
Unvested RSUs, Weighted-Average Grant Date Fair Value per Share, Beginning balance	$ 5.94
Assumed in Sand Force acquisition, Weighted-Average Grant Date Fair Value per Share	$ 6.17
Granted, Weighted-Average Grant Date Fair Value Per Share	$ 8.23
Vested, Weighted-Average Grant Date Fair Value per Share	$ 5.87
Forfeited, Weighted-Average Grant Date Fair Value per Share	$ 6.53
Unvested RSUs, Weighted-Average Grant Date Fair Value per Share, Ending of period	$ 6.98

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Contractual Maturities of Available-for-Sale Debt Securities (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Due within one year	$ 30,135
Due in 1-5 years	47,892
Due in 5-10 years	10,671
Due after 10 years	113,822
Total	$ 202,520	$ 155,644

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Income/(loss) from Discontinued Operations for the External Storage Systems Business (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Oct. 02, 2011	Sep. 30, 2012	Oct. 02, 2011
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenues		$ 2,860		$ 210,225
Loss before gain on sale of external storage systems business and income taxes		(2,366)		(24,866)
Gain on sale of external storage systems business		0		260,066
Benefit from income taxes		(55)		(19,473)
(Loss)/income from discontinued operations	$ 0	$ (2,311)	$ 0	$ 254,673

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Company's Revenues by Product Groups (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Oct. 02, 2011	Sep. 30, 2012	Oct. 02, 2011
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 623,962	$ 546,910	$ 1,905,959	$ 1,520,818
Storage products [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	492,600	403,125	1,515,766	1,098,473
Networking products [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	105,849	116,998	311,651	346,381
Other [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 25,513	$ 26,787	$ 78,542	$ 75,964

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Components of Net Periodic Benefit Cost/(Credit) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Oct. 02, 2011	Sep. 30, 2012	Oct. 02, 2011
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 96	$ 141	$ 321	$ 416
Interest cost	15,355	16,891	46,090	50,670
Expected return on plan assets	(17,024)	(17,000)	(51,077)	(50,998)
Amortization of net actuarial loss, prior service cost and transition asset	3,592	1,695	10,754	5,080
Total benefit cost/(credit)	2,019	1,727	6,088	5,168
Post-retirement Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	22	19	67	57
Interest cost	657	702	1,950	1,948
Expected return on plan assets	(953)	(1,032)	(2,859)	(3,097)
Amortization of net actuarial loss, prior service cost and transition asset	523	237	1,513	414
Total benefit cost/(credit)	$ 249	$ (74)	$ 671	$ (678)

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Stock-Based Compensation Expense

9 Months Ended

Sep. 30, 2012

Stock-Based Compensation Expense

Note 2 — Stock-Based Compensation Expense

In May 2012, the Company’s 2003 Equity Incentive Plan was amended to increase the number of shares available for new awards to a total of 25 million, of which 15 million shares were available for restricted stock and/or restricted stock units (“RSUs”). In addition, the period during which incentive stock options can be granted was extended to February 9, 2022, and the maximum number of shares that may be issued upon exercise of incentive stock options was set at 25 million.

Stock-based compensation expense included in continuing operations, net of estimated forfeitures, related to the Company’s stock options, Employee Stock Purchase Plan (“ESPP”) and restricted stock unit awards by expense category was as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In thousands)
Cost of revenues	$	2,573	$	1,460	$	9,088	$	5,324
Research and development		11,170		5,410		35,451		18,286
Selling, general and administrative		13,643		4,883		38,999		15,462
Total stock-based compensation expense	$	27,386	$	11,753	$	83,538	$	39,072

In connection with the SandForce acquisition, the Company assumed stock options and RSUs originally granted by SandForce. Stock-based compensation expense for the nine months ended September 30, 2012 included $4.5 million of expense related to the accelerated vesting of stock options and RSUs for certain SandForce employees in January 2012. Stock-based compensation expense for the three and nine months ended September 30, 2012 also includes $3.1 million and $8.8 million, respectively, related to assumed stock options and RSUs.

Stock Options

The fair value of each option grant is estimated as of the date of grant using a reduced-form calibrated binomial lattice model (“lattice model”). The following table summarizes the weighted-average assumptions that the Company applied in the lattice model:

	Three Months Ended						Nine Months Ended
	September 30, 2012			October 2, 2011			September 30, 2012			October 2, 2011
Estimated grant date fair value per share	$	2.50		$	2.37		$	2.84		$	2.14
Expected life (years)		4.46			4.48			4.46			4.51
Risk-free interest rate		1	%		1	%		1	%		2	%
Volatility		52	%		50	%		47	%		47	%

The following table summarizes changes in stock options outstanding:

	Number of Shares			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
	(In thousands)					(In years)		(In thousands)
Options outstanding at December 31, 2011		64,245		$	6.19		0		0
Assumed in SandForce acquisition		7,542		$	0.75		0		0
Granted		5,389		$	8.40		0		0
Exercised		(14,385	)	$	5.32		0		0
Canceled		(4,758	)	$	8.69		0		0
Options outstanding at September 30, 2012		58,033		$	5.70		3.91	$	102,654
Options exercisable at September 30, 2012		35,670		$	6.13		2.71	$	52,025

As of September 30, 2012, the total unrecognized compensation expense related to unvested stock options, net of estimated forfeitures, was $40.9 million and is expected to be recognized over the next 2.2 years on a weighted-average basis. The options assumed in the SandForce acquisition vest over four years from the date of the grant and have ten year terms.

Restricted Stock Units

The cost of service-based and performance-based RSUs is determined using the fair value of the Company’s common stock on the date of grant. For performance-based RSU expense, the Company also considers the probability that those RSUs will vest.

Service-based:

The vesting of service-based RSUs requires that the employees remain employed by the Company for a specified period of time.

The following table summarizes changes in service-based RSUs outstanding:

	Number of Units			Weighted-Average Grant Date Fair Value per Share
	(In thousands)
Unvested service-based RSUs outstanding at December 31, 2011		12,085		$	5.94
Assumed in SandForce acquisition		1,576		$	6.17
Granted		7,921		$	8.23
Vested		(3,315	)	$	5.87
Forfeited		(782	)	$	6.53
Unvested service-based RSUs outstanding at September 30, 2012		17,485		$	6.98

As of September 30, 2012, the total unrecognized compensation expense related to service-based RSUs, net of estimated forfeitures, was $94.6 million and will be recognized over the next 2.8 years on a weighted-average basis.

Performance-based:

The vesting of performance-based RSUs is contingent upon the Company meeting specified performance criteria and requires that the employees remain employed by the Company for a specified period of time.

The following table summarizes changes in performance-based RSUs outstanding:

	Number of Units			Weighted-Average Grant Date Fair Value per Share
	(In thousands)
Unvested performance-based RSUs outstanding at December 31, 2011		4,729		$	5.98
Granted		2,986		$	8.52
Vested		(1,446	)	$	5.85
Forfeited		(593	)	$	6.53
Unvested performance-based RSUs outstanding at September 30, 2012		5,676		$	7.29

As of September 30, 2012, the total unrecognized compensation expense related to performance-based RSUs, net of estimated forfeitures, was $19.8 million and, if the performance conditions are fully met, will be recognized over the next 3 years.

Employee Stock Purchase Plan

Compensation expense for the ESPP is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. Under the ESPP, rights to purchase shares are granted during the second and fourth quarters of each year. The Company issued 2.8 million and 2.9 million shares under the ESPP during the three months ended July 1, 2012 and July 3, 2011, respectively. No shares related to the ESPP were issued during the three months ended September 30, 2012 or October 2, 2011. The following table summarizes the weighted-average assumptions that the Company applied in the calculation of the fair value for the May 2012 and May 2011 grants:

	2012			2011
Estimated grant date fair value per share	$	2.19		$	2.10
Expected life (years)		0.8			0.8
Risk-free interest rate		0.17	%		0.02	%
Volatility		41	%		37	%

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Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Oct. 02, 2011	Sep. 30, 2012	Oct. 02, 2011
Income Taxes [Line Items]
Provision for/(benefit from) income taxes	$ 15,100,000	$ 7,800,000	$ (22,162,000)	$ 12,596,000
Reversal in liabilities for uncertain tax positions			10,800,000	9,600,000
Portion of income tax benefit due to release of valuation allowance			43,200,000
Unrecognized tax benefits related to uncertain tax positions			5,700,000	5,600,000
Interest and penalties related to uncertain tax positions			5,100,000	4,000,000
Unrecognized tax benefits	188,400,000		188,400,000
Estimated decrease in unrecognized tax benefits, plus accrued interest and penalties			$ 16,300,000

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Cost Consideration (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Jan. 03, 2012
Business Acquisition [Line Items]
Cash paid, net of cash acquired	$ 319,231
Fair value of partially vested equity awards	19,089
Fair value of LSI's previous investment in SandForce	8,120
Total	$ 346,440	$ 346,400

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Segment, Geographic and Product Information (Tables)

9 Months Ended

Sep. 30, 2012

Company's Revenues by Geography Based on the Ordering Location of the Customer

The following table summarizes the Company’s revenues by geography based on the ordering location of the customer. Because the Company sells its products primarily to other sellers of technology products and not to end users, the information in the table below may not accurately reflect geographic end-user demand for its products.

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In thousands)
North America*	$	164,111	$	136,849	$	477,548	$	380,648
Asia		414,409		360,238		1,292,419		993,239
Europe and the Middle East		45,442		49,823		135,992		146,931
Total	$	623,962	$	546,910	$	1,905,959	$	1,520,818

Company's Revenues by Product Groups

The following table presents the Company’s revenues by product groups:

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In thousands)
Storage products	$	492,600	$	403,125	$	1,515,766	$	1,098,473
Networking products		105,849		116,998		311,651		346,381
Other		25,513		26,787		78,542		75,964
Total	$	623,962	$	546,910	$	1,905,959	$	1,520,818

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Supplemental Financial Information (Tables)

9 Months Ended

Sep. 30, 2012

Inventories

Inventories

	September 30, 2012		December 31, 2011
	(In thousands)
Raw materials	$	176	$	236
Work-in-process		52,809		78,886
Finished goods		156,119		100,913
Total inventories	$	209,104	$	180,035

Goodwill

Goodwill

The following table summarizes goodwill activity for the nine months ended September 30, 2012:

	Goodwill
	(In thousands)
Balance as of December 31, 2011	$	72,377
Addition due to SandForce acquisition		183,461
Balance as of September 30, 2012	$	255,838

Accumulated Other Comprehensive Loss, Net of Taxes

The following table presents the components of, and changes in, accumulated other comprehensive loss, net of taxes:

	Balance at December 31, 2011			Other Comprehensive Income		Balance at September 30, 2012
	(In thousands)
Accumulated net foreign currency translation adjustments	$	42,138		$	178	$	42,316
Accumulated net unrealized gain on investments		5,942			184		6,126
Accumulated net unrealized loss on derivatives		(2,551	)		2,420		(131	)
Accumulated actuarial loss on pension and post-retirement plans		(578,757	)		12,267		(566,490	)
Total accumulated other comprehensive loss	$	(533,228	)	$	15,049	$	(518,179	)

Reconciliation of Basic and Diluted Shares

The following table provides a reconciliation of basic and diluted shares:

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In thousands)
Basic shares		555,197		567,790		561,708		592,898
Dilutive effect of stock options, employee stock purchase rights and restricted stock unit awards		16,825		13,693		20,588		15,845
Diluted shares		572,022		581,483		582,296		608,743

Weighted-Average Common Share Equivalents Excluded from Computation of Diluted Shares

The weighted-average common share equivalents that were excluded from the computation of diluted shares because their inclusion would have had an anti-dilutive effect on net income per share were as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In thousands)
Anti-dilutive securities:
Stock options		29,181		39,924		27,694		42,978
Restricted stock unit awards		9,871		1,491		6,621		182

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Accumulated Other Comprehensive Loss, Net of Taxes (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Oct. 02, 2011	Sep. 30, 2012	Oct. 02, 2011
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated net foreign currency translation adjustments, Beginning Balance			$ 42,138
Accumulated net unrealized (loss)/gain on investments, Beginning Balance			5,942
Accumulated net unrealized (loss)/gain on derivatives, Beginning Balance			(2,551)
Accumulated actuarial loss on pension and post-retirement plans, Beginning Balance			(578,757)
Total accumulated other comprehensive income, Beginning Balance			(533,228)
Accumulated net foreign currency translation adjustments, Other Comprehensive Income			178
Accumulated net unrealized (loss)/gain on investments, Other Comprehensive Income			184
Accumulated net unrealized (loss)/gain on derivatives, Other Comprehensive Income			2,420
Accumulated actuarial loss on pension and post-retirement plans, Other Comprehensive Income			12,267
Other comprehensive income/(loss), net of tax	9,804	(6,174)	15,049	(1,064)
Accumulated net foreign currency translation adjustments, Ending Balance	42,316		42,316
Accumulated net unrealized (loss)/gain on investments, Ending Balance	6,126		6,126
Accumulated net unrealized (loss)/gain on derivatives, Ending Balance	(131)		(131)
Accumulated actuarial loss on pension and post-retirement plans, Ending Balance	(566,490)		(566,490)
Total accumulated other comprehensive income, Ending Balance	$ (518,179)		$ (518,179)

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Primarily Allocation and Other Details Acquisition (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Jan. 03, 2012
Schedule Of Business Acquisitions Purchase Price Allocation [Line Items]
Accounts receivable	$ 10,711
Inventory	24,268
Identified intangible assets	172,400
Goodwill	183,461
Net deferred tax liabilities	(43,198)
Other, net	(1,202)
Total	$ 346,440	$ 346,400

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Commitments, Contingencies and Legal Matters (Tables)

9 Months Ended

Sep. 30, 2012

Summary of Changes in Product Warranties

The following table sets forth a summary of changes in product warranties:

	Accrued Warranties
	(In thousands)
Balance as of December 31, 2011	$	6,334
Accruals for warranties issued during the period		998
Adjustments to pre-existing accruals (including changes in estimates)		(470	)
Warranty liabilities assumed in SandForce acquisition		426
Settlements made during the period (in cash or in kind)		(1,234	)
Balance as of September 30, 2012	$	6,054

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Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2012

Income/(loss) from Discontinued Operations for the External Storage Systems Business

Following is selected financial information included in (loss)/income from discontinued operations for the three and nine months ended October 2, 2011:

	Three Months Ended			Nine Months Ended
	October 2, 2011			October 2, 2011
	(In thousands)
Revenues	$	2,860		$	210,225
Loss before gain on sale of external storage systems business and income taxes	$	(2,366	)	$	(24,866	)
Gain on sale of external storage systems business		0			260,066
Benefit from income taxes		(55	)		(19,473	)
(Loss)/income from discontinued operations	$	(2,311	)	$	254,673

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Basis of Presentation

9 Months Ended

Sep. 30, 2012

Basis of Presentation

Note 1 — Basis of Presentation

For financial reporting purposes, LSI Corporation (“LSI” or the “Company”) reports on a 13- or 14-week quarter with the year ending December 31. The third quarters of 2012 and 2011consisted of 13 weeks each and ended on September 30, 2012 and October 2, 2011, respectively. The results of operations for the quarter ended September 30, 2012 are not necessarily indicative of the results to be expected for the full year.

On January 3, 2012, the Company completed the acquisition of SandForce, Inc. (“SandForce”) for total consideration of approximately $346.4 million, net of cash acquired. SandForce was a provider of flash storage processors for enterprise and client flash solutions and solid state drives. The acquisition was accounted for under the purchase method of accounting. Accordingly, the results of operations of SandForce and the estimated fair value of the assets acquired and liabilities assumed were included in the Company’s condensed consolidated financial statements from January 3, 2012.

On May 6, 2011, the Company completed the sale of substantially all of its external storage systems business to NetApp, Inc. (“NetApp”). The results of the external storage systems business are presented as discontinued operations in the Company’s condensed consolidated statements of operations and, as such, have been excluded from all line items other than “(Loss)/income from discontinued operations” for all periods presented.

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from these estimates.

In management’s opinion, the accompanying unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary for a fair statement of the Company’s financial position, results of operations, comprehensive income and cash flows for the interim periods presented. While the Company believes that the disclosures are adequate to make the information not misleading, these financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued additional guidance on fair value measurements and related disclosures. The new guidance clarifies the application of existing guidance on fair value measurement for non-financial assets and requires the disclosure of quantitative information about the unobservable inputs used in a fair value measurement. The Company adopted this guidance in the first quarter of 2012. The adoption did not impact the Company’s results of operations or financial position.

In June 2011, the FASB issued amended guidance regarding the presentation of comprehensive income. The amended guidance gives an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amended guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The Company adopted this guidance in the first quarter of 2012. The adoption did not impact the Company’s results of operations or financial position.

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Basis of Presentation - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Jan. 03, 2012
Number of weeks in a quarter for financial reporting purposes	13- or 14-week quarter
Date of completion of acquisition of business	Jan. 03, 2012
Total consideration of the acquisition	$ 346,440	$ 346,400
Date of completion of sale of business	May 06, 2011

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Summary of Restructuring of Operations and Other Items Net (Detail) (USD $)	3 Months Ended				9 Months Ended
	Sep. 30, 2012		Oct. 02, 2011		Sep. 30, 2012		Oct. 02, 2011
Restructuring Expense And Other Items Net [Line Items]
Total restructuring expense	$ 5,655,000		$ 6,812,000		$ 9,929,000		$ 12,297,000
Other items, net	(1,434,000)	[1]	3,972,000	[2]	16,245,000	[3]	(9,611,000)	[4]
Total restructuring of operations and other items, net	4,221,000		10,784,000		26,174,000		2,686,000
Loss on the sale of a property	2,700,000				2,700,000
Asset impairment and exit costs	800,000				800,000
Reversal of sales and use tax liability	1,700,000				1,700,000
Acquisition related costs					8,400,000
Costs of transition service agreements					6,700,000		5,300,000
Sales and use tax liability							14,500,000
Lease Terminations [Member]
Restructuring Expense And Other Items Net [Line Items]
Total restructuring expense	901,000	[5]	311,000	[5]	3,716,000	[5]	3,864,000	[5]
Employee Severance and Benefits [Member]
Restructuring Expense And Other Items Net [Line Items]
Total restructuring expense	1,239,000	[6]	482,000	[6]	2,698,000	[6]	2,414,000	[6]
Asset impairment and other exit charges [Member]
Restructuring Expense And Other Items Net [Line Items]
Total restructuring expense	$ 3,515,000	[7]	$ 6,019,000	[8]	$ 3,515,000	[7]	$ 6,019,000	[8]

[1] Primarily consists of a $1.9 million reversal of a sales and use tax liability as a result of concluding a state tax audit.

[2] Primarily consists of costs related to the transition service agreement associated with the sale of the external storage systems business.

[3] Primarily consists of $8.4 million of SandForce acquisition-related costs and $6.7 million of costs related to the transition service agreement associated with the sale of the external storage systems business, offset in part by a $1.9 million reversal of a sales and use tax liability as a result of concluding a state tax audit.

[4] Primarily consists of the reversal of a $14.5 million sales and use tax related liability as a result of concluding various audits, partially offset by $5.3 million of costs related to the transition service agreement associated with the sale of the external storage systems business.

[5] Includes changes in estimates, changes in time value and on-going expenditures related to previously vacated facilities.

[6] Relates to restructuring actions taken as the Company continued to streamline operations.

[7] Consists of a $2.7 million loss on the sale of a property in the U.S. and $0.8 million of other asset impairment and exit costs.

[8] Primarily relates to write-offs of intellectual property and software which are no longer in use.

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Inventories (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Components Of Inventory [Line Items]
Raw materials	$ 176	$ 236
Work-in-process	52,809	78,886
Finished goods	156,119	100,913
Total inventories	$ 209,104	$ 180,035

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
ASSETS
Cash and cash equivalents	$ 440,507	$ 779,811
Short-term investments	202,520	155,644
Accounts receivable, less allowances of $6,206 and $6,950, respectively	256,492	246,539
Inventories	209,104	180,035
Prepaid expenses and other current assets	64,526	60,659
Total current assets	1,173,149	1,422,688
Property and equipment, net	250,206	180,589
Identified intangible assets, net	516,104	433,790
Goodwill	255,838	72,377
Other assets	108,074	122,604
Total assets	2,303,371	2,232,048
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	184,358	175,093
Accrued salaries, wages and benefits	131,853	106,948
Other accrued liabilities	160,622	178,830
Total current liabilities	476,833	460,871
Pension and post-retirement benefit obligations	512,545	597,183
Income taxes payable - non-current	100,104	91,791
Other non-current liabilities	15,917	23,263
Total liabilities	1,105,399	1,173,108
Commitments and contingencies (Note 13)
Stockholders' equity:
Preferred stock, $.01 par value: 2,000 shares authorized; none outstanding	0	0
Common stock, $.01 par value: 1,300,000 shares authorized; 553,083 and 561,767 shares outstanding, respectively	5,531	5,618
Additional paid-in capital	5,574,076	5,623,581
Accumulated deficit	(3,863,456)	(4,037,031)
Accumulated other comprehensive loss	(518,179)	(533,228)
Total stockholders' equity	1,197,972	1,058,940
Total liabilities and stockholders' equity	$ 2,303,371	$ 2,232,048

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Identified Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Identified intangible assets [Line items]
Fair Value	$ 121,100
Weighted- Average Life	4 years 10 months 24 days
In-process research and development	51,300
Total identified intangible assets	172,400
Current technology [Member]
Identified intangible assets [Line items]
Fair Value	73,400
Weighted- Average Life	4 years
Customer relationships [Member]
Identified intangible assets [Line items]
Fair Value	41,700
Weighted- Average Life	7 years
Order backlog [Member]
Identified intangible assets [Line items]
Fair Value	4,500
Weighted- Average Life	6 months
Trade names [Member]
Identified intangible assets [Line items]
Fair Value	$ 1,500
Weighted- Average Life	3 years

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Oct. 02, 2011	Sep. 30, 2012	Oct. 02, 2011
Net income	$ 39,665,000	$ 29,339,000	$ 173,575,000	$ 333,277,000
Other comprehensive income/(loss) before tax:
Foreign currency translation adjustments	3,575,000	(3,107,000)	178,000	(1,516,000)
Unrealized gain/(loss) on investments for the period	754,000	(143,000)	1,998,000	1,278,000
Reclassification adjustments for gain on investments included in net income	(401,000)	(546,000)	(1,814,000)	(2,059,000)
Unrealized gain/(loss) on investments	353,000	(689,000)	184,000	(781,000)
Unrealized gain/(loss) on derivatives for the period	991,000	(2,183,000)	(358,000)	(1,162,000)
Reclassification adjustments for loss/(gain) on derivatives included in net income	770,000	(272,000)	2,778,000	(1,244,000)
Unrealized gain/(loss) on derivatives	1,761,000	(2,455,000)	2,420,000	(2,406,000)
Net actuarial loss	0	(1,855,000)	0	(1,855,000)
Amortization of transition asset, prior service cost and net actuarial loss	4,115,000	1,932,000	12,267,000	5,494,000
Defined benefit pension plans	4,115,000	77,000	12,267,000	3,639,000
Other comprehensive income/(loss) before tax	9,804,000	(6,174,000)	15,049,000	(1,064,000)
Income tax expense related to items of other comprehensive income/(loss)	0	0	0	0
Other comprehensive income/(loss), net of tax	9,804,000	(6,174,000)	15,049,000	(1,064,000)
Comprehensive income	$ 49,469,000	$ 23,165,000	$ 188,624,000	$ 332,213,000

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Derivative Instruments - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Oct. 02, 2011	Sep. 30, 2012	Oct. 02, 2011	Dec. 31, 2011
Derivative [Line Items]
Total fair value of derivative liabilities	$ 0.9		$ 0.9		$ 3.0
Cash Flow Hedging [Member]
Derivative [Line Items]
Maturity period of forward contract			Within 12 months
Period to calculate and evaluate the effectiveness of each hedge			Quarterly
Total notional value of the Company's outstanding forward contracts, designated as foreign-currency cash-flow hedges	38.3		38.3		36.9
Other Foreign Currency Hedges [Member]
Derivative [Line Items]
Maturity period of forward contract			Within 3 months
Total notional value of the Company's outstanding forward contracts, not designated as hedges under hedge accounting	43.0		43.0		37.6
(Loss)/gain related to other foreign-currency hedges	$ 2.7	$ 2.5	$ 1.0	$ 0.5

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Summary of Weighted Average Assumptions in Fair Value of Option Grant (Detail) (USD $)	3 Months Ended		9 Months Ended		3 Months Ended
	Sep. 30, 2012 Employee Stock Option [Member]	Oct. 02, 2011 Employee Stock Option [Member]	Sep. 30, 2012 Employee Stock Option [Member]	Oct. 02, 2011 Employee Stock Option [Member]	Jul. 01, 2012 Employee Stock Purchase Plan [Member]	Jul. 03, 2011 Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Estimated grant date fair value per share	$ 2.50	$ 2.37	$ 2.84	$ 2.14	$ 2.19	$ 2.10
Expected life (years)	4 years 5 months 16 days	4 years 5 months 23 days	4 years 5 months 16 days	4 years 6 months 4 days	9 months 18 days	9 months 18 days
Risk-free interest rate	1.00%	1.00%	1.00%	2.00%	0.17%	0.02%
Volatility	52.00%	50.00%	47.00%	47.00%	41.00%	37.00%

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Summary of Changes in Product Warranties (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Schedule Of Product Warranty Liability [Line Items]
Balance as of December 31, 2011	$ 6,334
Accruals for warranties issued during the period	998
Adjustments to pre-existing accruals (including changes in estimates)	(470)
Warranty liabilities assumed in SandForce acquisition	426
Settlements made during the period (in cash or in kind)	(1,234)
Balance as of September 30, 2012	$ 6,054

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2012

Basis of Presentation

For financial reporting purposes, LSI Corporation (“LSI” or the “Company”) reports on a 13- or 14-week quarter with the year ending December 31. The third quarters of 2012 and 2011consisted of 13 weeks each and ended on September 30, 2012 and October 2, 2011, respectively. The results of operations for the quarter ended September 30, 2012 are not necessarily indicative of the results to be expected for the full year.

On January 3, 2012, the Company completed the acquisition of SandForce, Inc. (“SandForce”) for total consideration of approximately $346.4 million, net of cash acquired. SandForce was a provider of flash storage processors for enterprise and client flash solutions and solid state drives. The acquisition was accounted for under the purchase method of accounting. Accordingly, the results of operations of SandForce and the estimated fair value of the assets acquired and liabilities assumed were included in the Company’s condensed consolidated financial statements from January 3, 2012.

On May 6, 2011, the Company completed the sale of substantially all of its external storage systems business to NetApp, Inc. (“NetApp”). The results of the external storage systems business are presented as discontinued operations in the Company’s condensed consolidated statements of operations and, as such, have been excluded from all line items other than “(Loss)/income from discontinued operations” for all periods presented.

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from these estimates.

In management’s opinion, the accompanying unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary for a fair statement of the Company’s financial position, results of operations, comprehensive income and cash flows for the interim periods presented. While the Company believes that the disclosures are adequate to make the information not misleading, these financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued additional guidance on fair value measurements and related disclosures. The new guidance clarifies the application of existing guidance on fair value measurement for non-financial assets and requires the disclosure of quantitative information about the unobservable inputs used in a fair value measurement. The Company adopted this guidance in the first quarter of 2012. The adoption did not impact the Company’s results of operations or financial position.

In June 2011, the FASB issued amended guidance regarding the presentation of comprehensive income. The amended guidance gives an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amended guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The Company adopted this guidance in the first quarter of 2012. The adoption did not impact the Company’s results of operations or financial position.

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Summary of Changes in Stock Options Outstanding (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding at December 31, 2011, Number of shares	64,245
Assumed in SandForce acquisition, Number of shares	7,542
Granted, Number of shares	5,389
Exercised, Number of shares	(14,385)
Canceled, Number of shares	(4,758)
Options outstanding at September 30, 2012, Number of shares	58,033
Options exercisable at September 30, 2012, Number of shares	35,670
Options outstanding at December 31, 2011, Weighted-Average Exercise Price Per Share	$ 6.19
Assumed in SandForce acquisition, Weighted-Average Exercise Price Per Share	$ 0.75
Granted, Weighted-Average Exercise Price Per Share	$ 8.40
Exercised, Weighted-Average Exercise Price Per Share	$ 5.32
Canceled, Weighted-Average Exercise Price Per Share	$ 8.69
Options outstanding at September 30, 2012, Weighted-Average Exercise Price Per Share	$ 5.70
Options exercisable at September 30, 2012, Weighted-Average Exercise Price Per Share	$ 6.13
Options outstanding at September 30, 2012,Weighted-Average Remaining Contractual Term	3 years 10 months 28 days
Options exercisable at September 30, 2012,Weighted-Average Remaining Contractual Term	2 years 8 months 16 days
Options outstanding at September 30, 2012, Aggregate Intrinsic Value	$ 102,654
Options exercisable at September 30, 2012, Aggregate Intrinsic Value	$ 52,025

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Restructuring and Other Items (Tables)

9 Months Ended

Sep. 30, 2012

Summary of Restructuring of Operations and Other Items Net

The following table summarizes items included in restructuring of operations and other items, net:

	Three Months Ended						Nine Months Ended
	September 30, 2012			October 2, 2011			September 30, 2012			October 2, 2011
	(In thousands)
Lease terminations (a)	$	901		$	311		$	3,716		$	3,864
Employee severance and benefits (b)		1,239			482			2,698			2,414
Asset impairment and other exit charges		3,515	(c)		6,019	(d)		3,515	(c)		6,019	(d)
Total restructuring expense		5,655			6,812			9,929			12,297
Other items, net		(1,434	)(e)		3,972	(f)		16,245	(g)		(9,611	)(h)
Total restructuring of operations and other items, net	$	4,221		$	10,784		$	26,174		$	2,686

(a) Includes changes in estimates, changes in time value and on-going expenditures related to previously vacated facilities.

(b) Relates to restructuring actions taken as the Company continued to streamline operations.

(c) Consists of a $2.7 million loss on the sale of a property in the U.S. and $0.8 million of other asset impairment and exit costs.

(d) Primarily relates to write-offs of intellectual property and software which are no longer in use.

(e) Primarily consists of a $1.7 million reversal of a sales and use tax liability as a result of concluding a state tax audit.

(f) Primarily consists of costs related to the transition service agreement associated with the sale of the external storage systems business.

(g) Primarily consists of $8.4 million of SandForce acquisition-related costs and $6.7 million of costs related to the transition service agreement associated with the sale of the external storage systems business, offset in part by a $1.7 million reversal of a sales and use tax liability as a result of concluding a state tax audit.

(h) Primarily consists of the reversal of a $14.5 million sales and use tax related liability as a result of concluding various audits, partially offset by $5.3 million of costs related to the transition service agreement associated with the sale of the external storage systems business.

Summary of Activities Affecting Restructuring Obligations

The following table summarizes the significant activity within, and components of, the Company’s restructuring obligations:

	Asset Impairment and Other Exit Charges			Lease Terminations			Employee Severance and Benefits			Total
	(In thousands)
Balance at December 31, 2011	$	0		$	11,752		$	10,444		$	22,196
Expense		3,515			3,716			2,698			9,929
Utilized		(3,515	)		(7,199	)(a)		(11,794	)(a)		(22,508	)
Balance at September 30, 2012 (b)	$	0		$	8,269		$	1,348		$	9,617

(a) Represents cash payments.

(b) The balance remaining for lease terminations is expected to be paid during the remaining terms of the leases, which extend through 2013. The balance remaining for employee severance and benefits is expected to be paid by the end of 2013.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Oct. 02, 2011
Operating activities:
Net income	$ 173,575	$ 333,277
Adjustments:
Depreciation and amortization	136,318	145,843
Stock-based compensation expense	83,538	38,480
Non-cash restructuring of operations and other items, net	5,739	30,535
Gain on re-measurement of a pre-acquisition equity interest to fair value	(5,765)	0
Gain on sale of investments	(2,550)	0
Gain on sale of business	0	(260,066)
Loss/(gain) on sale of property and equipment	2,574	(543)
Unrealized foreign exchange (gain)/loss	(80)	200
Deferred taxes	(43,246)	(18,944)
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combination:
Accounts receivable	931	78,215
Inventories	(4,864)	(60,203)
Prepaid expenses, assets held for sale and other assets	(720)	(10,256)
Accounts payable	4,335	(1,700)
Accrued and other liabilities	(70,481)	(83,479)
Net cash provided by operating activities	279,304	191,359
Investing activities:
Purchases of debt securities available-for-sale	(94,456)	(38,683)
Proceeds from maturities and sales of debt securities available-for-sale	29,523	31,988
Purchases of other investments	0	(4,000)
Proceeds from sale of other investments	2,550	0
Purchases of property and equipment	(103,285)	(46,841)
Proceeds from sale of property and equipment	1,626	939
Acquisition of business, net of cash acquired	(319,231)	0
Proceeds from sale of business, net of transaction costs	0	475,150
Net cash (used in)/provided by investing activities	(483,273)	418,553
Financing activities:
Issuances of common stock	90,643	66,060
Purchases of common stock under repurchase programs	(226,247)	(471,787)
Net cash used in financing activities	(135,604)	(405,727)
Effect of exchange rate changes on cash and cash equivalents	269	(821)
Net change in cash and cash equivalents	(339,304)	203,364
Cash and cash equivalents at beginning of period	779,811	521,786
Cash and cash equivalents at end of period	$ 440,507	$ 725,150

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Allowances for accounts receivable	$ 6,206	$ 6,950
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	2,000	2,000
Preferred stock, shares outstanding
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,300,000	1,300,000
Common stock, shares outstanding	553,083	561,767

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Segment, Geographic and Product Information

9 Months Ended

Sep. 30, 2012

Segment, Geographic and Product Information

Note 10 — Segment, Geographic and Product Information

The Company operates in one reportable segment — the Semiconductor segment. The Company’s chief executive officer is the chief operating decision maker (“CODM”). The Company’s CODM bears ultimate responsibility for, and is actively engaged in, the allocation of resources and the evaluation of the Company’s operating and financial results.

Information about Geographic Areas

The following table summarizes the Company’s revenues by geography based on the ordering location of the customer. Because the Company sells its products primarily to other sellers of technology products and not to end users, the information in the table below may not accurately reflect geographic end-user demand for its products.

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In thousands)
North America*	$	164,111	$	136,849	$	477,548	$	380,648
Asia		414,409		360,238		1,292,419		993,239
Europe and the Middle East		45,442		49,823		135,992		146,931
Total	$	623,962	$	546,910	$	1,905,959	$	1,520,818

* Primarily the United States.

Information about Product Groups

The following table presents the Company’s revenues by product groups:

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In thousands)
Storage products	$	492,600	$	403,125	$	1,515,766	$	1,098,473
Networking products		105,849		116,998		311,651		346,381
Other		25,513		26,787		78,542		75,964
Total	$	623,962	$	546,910	$	1,905,959	$	1,520,818

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 01, 2012
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Trading Symbol	LSI
Entity Registrant Name	LSI CORP
Entity Central Index Key	0000703360
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		553,408,484

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Income Taxes

9 Months Ended

Sep. 30, 2012

Income Taxes

Note 11 — Income Taxes

The Company recorded an income tax provision of $15.1 million and an income tax benefit of $22.2 million for the three and nine months ended September 30, 2012, respectively, and income tax provisions of $7.8 million and $12.6 million for the three and nine months ended October 2, 2011, respectively.

The income tax benefit for the nine months ended September 30, 2012 included a tax benefit of approximately $43.2 million due to the release of valuation allowance resulting from the net deferred tax liabilities recorded as part of the SandForce purchase price allocation. The income tax benefit for the nine months ended September 30, 2012 also included a reversal of $10.8 million in liabilities for uncertain tax positions, which included previously unrecognized tax benefits of $5.7 million and interest and penalties of $5.1 million, as a result of the expiration of statutes of limitations in multiple jurisdictions.

The income tax provision for the nine months ended October 2, 2011 included a reversal of $9.6 million in liabilities for uncertain tax positions, which included previously unrecognized tax benefits of $5.6 million and interest and penalties of $4.0 million, as a result of the expiration of statutes of limitations in multiple jurisdictions.

The Company computes its tax provision using an estimated annual tax rate. The Company excludes certain loss jurisdictions from the computation of the estimated annual rate when no benefit can be realized on those losses. With the exception of certain foreign jurisdictions, the Company believes it is not more likely than not that the future benefit of the deferred tax assets will be realized.

As of September 30, 2012, the Company had $188.4 million of unrecognized tax benefits, for which the Company is unable to make a reasonably reliable estimate as to when cash settlement with a taxing authority may occur. It is reasonably possible that the total amount of unrecognized tax benefits will increase or decrease in the next 12 months. Such changes could occur based on the normal expiration of statutes of limitations or the possible conclusion of ongoing tax audits in various jurisdictions around the world. If those events occur within the next 12 months, the Company estimates that the unrecognized tax benefits, plus accrued interest and penalties, could decrease by up to $16.3 million.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Oct. 02, 2011	Sep. 30, 2012	Oct. 02, 2011
Revenues	$ 623,962	$ 546,910	$ 1,905,959	$ 1,520,818
Cost of revenues	311,311	283,065	974,508	795,179
Gross profit	312,651	263,845	931,451	725,639
Research and development	167,488	143,347	512,923	431,567
Selling, general and administrative	92,032	77,874	271,046	218,534
Restructuring of operations and other items, net	4,221	10,784	26,174	2,686
Income from operations	48,910	31,840	121,308	72,852
Interest income and other, net	5,855	7,610	30,105	18,348
Income from continuing operations before income taxes	54,765	39,450	151,413	91,200
Provision for/(benefit from) income taxes	15,100	7,800	(22,162)	12,596
Income from continuing operations	39,665	31,650	173,575	78,604
(Loss)/income from discontinued operations (including a gain on disposal of $260,066 for the nine months ended October 2, 2011), net of taxes	0	(2,311)	0	254,673
Net income	$ 39,665	$ 29,339	$ 173,575	$ 333,277
Basic income per share:
Income from continuing operations	$ 0.07	$ 0.05	$ 0.31	$ 0.13
(Loss)/income from discontinued operations	$ 0.00	$ 0.00	$ 0.00	$ 0.43
Net income	$ 0.07	$ 0.05	$ 0.31	$ 0.56
Diluted income per share:
Income from continuing operations	$ 0.07	$ 0.05	$ 0.30	$ 0.13
(Loss)/income from discontinued operations	$ 0.00	$ 0.00	$ 0.00	$ 0.42
Net income	$ 0.07	$ 0.05	$ 0.30	$ 0.55
Shares used in computing per share amounts:
Basic	555,197	567,790	561,708	592,898
Diluted	572,022	581,483	582,296	608,743

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Business Combination

9 Months Ended

Sep. 30, 2012

Business Combination

Note 5 — Business Combination

Acquisition of SandForce

On January 3, 2012, the Company completed the acquisition of SandForce. SandForce was a provider of flash storage processors for enterprise and client flash solutions and solid state drives. The Company acquired SandForce to enhance its position in storage technology solutions.

Total consideration consisted of the following (in thousands):

Cash paid, net of cash acquired	$	319,231
Fair value of partially vested equity awards		19,089
Fair value of LSI’s previous investment in SandForce		8,120
Total	$	346,440

In connection with the SandForce acquisition, the Company assumed stock options and RSUs originally granted by SandForce and converted them into LSI stock options and RSUs. The portion of the fair value of partially vested equity awards associated with prior service of SandForce employees represents a component of the total consideration for the SandForce acquisition, as presented above. Stock options assumed were valued using a binomial lattice model calibrated to the exercise behavior of LSI’s employees. RSUs were valued based on LSI’s stock price as of the acquisition date.

Prior to the acquisition, the Company held an equity interest in SandForce. The Company determined the fair value of this equity interest by applying the per share value of the contractual cash consideration to the SandForce shares held by the Company immediately prior to the acquisition. The fair value of the Company’s pre-acquisition investment in SandForce represents a component of the total consideration, as presented above. As a result of re-measuring the pre-acquisition equity interest in SandForce to fair value, the Company recognized a gain of $5.8 million, which was included in interest income and other, net, for the nine month period ended September 30, 2012.

The allocation of the purchase price to SandForce’s tangible and identified intangible assets acquired and liabilities assumed was based on their estimated fair values.

The purchase price has been allocated as follows (in thousands):

Accounts receivable	$	10,711
Inventory		24,268
Identified intangible assets		172,400
Goodwill		183,461
Net deferred tax liabilities		(43,198	)
Other, net		(1,202	)
Total	$	346,440

The goodwill is primarily attributable to the assembled workforce of SandForce and synergies and economies of scale expected from combining the operations of LSI and SandForce. The goodwill recognized is not deductible for tax purposes.

Identified intangible assets consisted of the following:

	Fair Value		Weighted- Average Life
	(In thousands)		(In years)
Current technology	$	73,400		4.0
Customer relationships		41,700		7.0
Order backlog		4,500		0.5
Trade names		1,500		3.0
Total identified intangible assets subject to amortization		121,100		4.9
In-process research and development		51,300
Total identified intangible assets	$	172,400

The allocation of the purchase price to identified intangible assets acquired was based on the Company’s best estimate of the fair value of those assets. The fair value of acquired identified intangible assets is determined based on inputs that are unobservable and significant to the overall fair value measurement. As such, acquired intangible assets are classified as Level 3 assets.

The fair value of each of the acquired identified intangible assets was determined using a discounted cash flow methodology. The cash flows for each category of identified intangible assets represent the estimated incremental effect on the Company’s cash flows directly attributable to that intangible asset over its estimated remaining life. Estimated cash flows represent expected incremental revenues, net of returns on contributory assets and after considering estimated incremental operating costs and income taxes. Discount rates ranging from 12.9% to 17.9% were used based on the cost of capital, adjusted to reflect the specific risk associated with each of the cash flows.

Current technology represents the fair value of SandForce products that had reached technological feasibility and were a part of its product offering. Customer relationships represents the fair values of SandForce’s relationships with its customers.

In-process research and development (“IPR&D”) represents the fair value of incomplete research and development projects that had not reached technological feasibility as of the date of the acquisition. At the time of acquisition, SandForce had IPR&D related to its next generation flash storage processor (the “Griffin project”). At September 30, 2012, expected costs to complete the Griffin project are approximately $20.3 million through its anticipated completion date in 2013. Total revenues for the Griffin project are expected to extend through 2018. The acquisition date fair value of the Griffin project will be either amortized or impaired depending on whether the project is completed or abandoned.

From January 3, 2012 through September 30, 2012, the Company recognized approximately $124.1 million of revenues related to the SandForce business. In addition, during the nine months ended September 30, 2012, the Company recognized $8.4 million of acquisition-related costs included in restructuring of operations and other items, net related to SandForce. It is impracticable to determine the effect on net income resulting from the SandForce acquisition for the nine months ended September 30, 2012, as the Company immediately integrated SandForce into its ongoing operations. Historical pro forma results giving effect to the acquisition have not been presented because such effect is not material to the prior period financial results.

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Restructuring and Other Items

9 Months Ended

Sep. 30, 2012

Restructuring and Other Items

Note 4 — Restructuring and Other Items

The following table summarizes items included in restructuring of operations and other items, net:

	Three Months Ended						Nine Months Ended
	September 30, 2012			October 2, 2011			September 30, 2012			October 2, 2011
	(In thousands)
Lease terminations (a)	$	901		$	311		$	3,716		$	3,864
Employee severance and benefits (b)		1,239			482			2,698			2,414
Asset impairment and other exit charges		3,515	(c)		6,019	(d)		3,515	(c)		6,019	(d)
Total restructuring expense		5,655			6,812			9,929			12,297
Other items, net		(1,434	)(e)		3,972	(f)		16,245	(g)		(9,611	)(h)
Total restructuring of operations and other items, net	$	4,221		$	10,784		$	26,174		$	2,686

(a) Includes changes in estimates, changes in time value and on-going expenditures related to previously vacated facilities.

(b) Relates to restructuring actions taken as the Company continued to streamline operations.

(c) Consists of a $2.7 million loss on the sale of a property in the U.S. and $0.8 million of other asset impairment and exit costs.

(d) Primarily relates to write-offs of intellectual property and software which are no longer in use.

(e) Primarily consists of a $1.7 million reversal of a sales and use tax liability as a result of concluding a state tax audit.

(f) Primarily consists of costs related to the transition service agreement associated with the sale of the external storage systems business.

(g) Primarily consists of $8.4 million of SandForce acquisition-related costs and $6.7 million of costs related to the transition service agreement associated with the sale of the external storage systems business, offset in part by a $1.7 million reversal of a sales and use tax liability as a result of concluding a state tax audit.

(h) Primarily consists of the reversal of a $14.5 million sales and use tax related liability as a result of concluding various audits, partially offset by $5.3 million of costs related to the transition service agreement associated with the sale of the external storage systems business.

The following table summarizes the significant activity within, and components of, the Company’s restructuring obligations:

	Asset Impairment and Other Exit Charges			Lease Terminations			Employee Severance and Benefits			Total
	(In thousands)
Balance at December 31, 2011	$	0		$	11,752		$	10,444		$	22,196
Expense		3,515			3,716			2,698			9,929
Utilized		(3,515	)		(7,199	)(a)		(11,794	)(a)		(22,508	)
Balance at September 30, 2012 (b)	$	0		$	8,269		$	1,348		$	9,617

(a) Represents cash payments.

(b) The balance remaining for lease terminations is expected to be paid during the remaining terms of the leases, which extend through 2013. The balance remaining for employee severance and benefits is expected to be paid by the end of 2013.

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Stock-Based Compensation Expense (Tables)

9 Months Ended

Sep. 30, 2012

Stock-Based Compensation Expense Included in Continuing Operations, Net of Estimated Forfeitures

Stock-based compensation expense included in continuing operations, net of estimated forfeitures, related to the Company’s stock options, Employee Stock Purchase Plan (“ESPP”) and restricted stock unit awards by expense category was as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In thousands)
Cost of revenues	$	2,573	$	1,460	$	9,088	$	5,324
Research and development		11,170		5,410		35,451		18,286
Selling, general and administrative		13,643		4,883		38,999		15,462
Total stock-based compensation expense	$	27,386	$	11,753	$	83,538	$	39,072

Summary of Changes in Stock Options Outstanding

The following table summarizes changes in stock options outstanding:

	Number of Shares			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
	(In thousands)					(In years)		(In thousands)
Options outstanding at December 31, 2011		64,245		$	6.19		0		0
Assumed in SandForce acquisition		7,542		$	0.75		0		0
Granted		5,389		$	8.40		0		0
Exercised		(14,385	)	$	5.32		0		0
Canceled		(4,758	)	$	8.69		0		0
Options outstanding at September 30, 2012		58,033		$	5.70		3.91	$	102,654
Options exercisable at September 30, 2012		35,670		$	6.13		2.71	$	52,025

Summary of Unvested Service-Based Restricted Stock

The following table summarizes changes in service-based RSUs outstanding:

	Number of Units			Weighted-Average Grant Date Fair Value per Share
	(In thousands)
Unvested service-based RSUs outstanding at December 31, 2011		12,085		$	5.94
Assumed in SandForce acquisition		1,576		$	6.17
Granted		7,921		$	8.23
Vested		(3,315	)	$	5.87
Forfeited		(782	)	$	6.53
Unvested service-based RSUs outstanding at September 30, 2012		17,485		$	6.98

Summary of Unvested Performance-Based Restricted Stock

The following table summarizes changes in performance-based RSUs outstanding:

	Number of Units			Weighted-Average Grant Date Fair Value per Share
	(In thousands)
Unvested performance-based RSUs outstanding at December 31, 2011		4,729		$	5.98
Granted		2,986		$	8.52
Vested		(1,446	)	$	5.85
Forfeited		(593	)	$	6.53
Unvested performance-based RSUs outstanding at September 30, 2012		5,676		$	7.29

Employee Stock Option [Member]

Summary of Weighted Average Assumptions in Fair Value of Option Grant

The fair value of each option grant is estimated as of the date of grant using a reduced-form calibrated binomial lattice model (“lattice model”). The following table summarizes the weighted-average assumptions that the Company applied in the lattice model:

	Three Months Ended						Nine Months Ended
	September 30, 2012			October 2, 2011			September 30, 2012			October 2, 2011
Estimated grant date fair value per share	$	2.50		$	2.37		$	2.84		$	2.14
Expected life (years)		4.46			4.48			4.46			4.51
Risk-free interest rate		1	%		1	%		1	%		2	%
Volatility		52	%		50	%		47	%		47	%

Employee Stock Purchase Plan [Member]

Summary of Weighted Average Assumptions in Fair Value of Option Grant

The following table summarizes the weighted-average assumptions that the Company applied in the calculation of the fair value for the May 2012 and May 2011 grants:

	2012			2011
Estimated grant date fair value per share	$	2.19		$	2.10
Expected life (years)		0.8			0.8
Risk-free interest rate		0.17	%		0.02	%
Volatility		41	%		37	%

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Related Party Transactions

9 Months Ended

Sep. 30, 2012

Related Party Transactions

Note 12 — Related Party Transactions

A member of the Company’s board of directors is also a member of the board of directors of Seagate Technology (“Seagate”). The Company sells semiconductors used in storage product applications to Seagate for prices comparable to those charged to an unrelated third party. Revenues from sales by the Company to Seagate were $170.3 million and $604.9 million for the three and nine months ended September 30, 2012, respectively. Revenues from sales by the Company to Seagate were $157.9 million and $375.4 million for the three and nine months ended October 2, 2011, respectively. The Company had accounts receivable from Seagate of $93.9 million and $90.3 million as of September 30, 2012 and December 31, 2011, respectively.

The Company has an equity interest in a joint venture, Silicon Manufacturing Partners Pte Ltd. (“SMP”), with GLOBALFOUNDRIES, a manufacturing foundry for integrated circuits. SMP operates an integrated circuit manufacturing facility in Singapore. The Company owns a 51% equity interest in this joint venture and accounts for its ownership position under the equity method of accounting. The Company is effectively precluded from unilaterally taking any significant action in the management of SMP due to GLOBALFOUNDRIES’ significant participatory rights under the joint venture agreement. Because of GLOBALFOUNDRIES’ approval rights, the Company cannot make any significant decisions regarding SMP without GLOBALFOUNDRIES’ approval, despite the 51% equity interest. In addition, the General Manager, who is responsible for the day-to-day management of SMP, is appointed by GLOBALFOUNDRIES, and GLOBALFOUNDRIES provides day-to-day operational support to SMP.

The Company purchased $11.6 million and $35.5 million of inventory from SMP during the three and nine months ended September 30, 2012, respectively. The Company purchased $12.9 million and $38.5 million of inventory from SMP during the three and nine months ended October 2, 2011, respectively. As of September 30, 2012 and December 31, 2011, the amounts payable to SMP were $7.7 million and $5.0 million, respectively.

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Supplemental Financial Information

9 Months Ended

Sep. 30, 2012

Supplemental Financial Information

Note 8 — Supplemental Financial Information

Inventories

	September 30, 2012		December 31, 2011
	(In thousands)
Raw materials	$	176	$	236
Work-in-process		52,809		78,886
Finished goods		156,119		100,913
Total inventories	$	209,104	$	180,035

Goodwill

The following table summarizes goodwill activity for the nine months ended September 30, 2012:

	Goodwill
	(In thousands)
Balance as of December 31, 2011	$	72,377
Addition due to SandForce acquisition		183,461
Balance as of September 30, 2012	$	255,838

There was no impairment charge for goodwill during the nine months ended September 30, 2012 or October 2, 2011. The accumulated impairment loss as of September 30, 2012 was $2.4 billion.

Accumulated Other Comprehensive Loss

The following table presents the components of, and changes in, accumulated other comprehensive loss, net of taxes:

	Balance at December 31, 2011			Other Comprehensive Income		Balance at September 30, 2012
	(In thousands)
Accumulated net foreign currency translation adjustments	$	42,138		$	178	$	42,316
Accumulated net unrealized gain on investments		5,942			184		6,126
Accumulated net unrealized loss on derivatives		(2,551	)		2,420		(131	)
Accumulated actuarial loss on pension and post-retirement plans		(578,757	)		12,267		(566,490	)
Total accumulated other comprehensive loss	$	(533,228	)	$	15,049	$	(518,179	)

There was no tax effect on any item of other comprehensive income presented in the condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2012 or October 2, 2011.

Reconciliation of Basic and Diluted Shares

The following table provides a reconciliation of basic and diluted shares:

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In thousands)
Basic shares		555,197		567,790		561,708		592,898
Dilutive effect of stock options, employee stock purchase rights and restricted stock unit awards		16,825		13,693		20,588		15,845
Diluted shares		572,022		581,483		582,296		608,743

The weighted-average common share equivalents that were excluded from the computation of diluted shares because their inclusion would have had an anti-dilutive effect on net income per share were as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2012		October 2, 2011		September 30, 2012		October 2, 2011
	(In thousands)
Anti-dilutive securities:
Stock options		29,181		39,924		27,694		42,978
Restricted stock unit awards		9,871		1,491		6,621		182

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Company's Revenues by Geography Based on the Ordering Location of the Customer (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2012		Oct. 02, 2011		Sep. 30, 2012		Oct. 02, 2011
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 623,962		$ 546,910		$ 1,905,959		$ 1,520,818
North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	164,111	[1]	136,849	[1]	477,548	[1]	380,648	[1]
Asia [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	414,409		360,238		1,292,419		993,239
Europe And Middle East [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 45,442		$ 49,823		$ 135,992		$ 146,931

[1] Primarily the United States.

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Benefit Obligations

9 Months Ended

Sep. 30, 2012

Benefit Obligations

Note 6 — Benefit Obligations

In 2007, the Company acquired Agere Systems Inc. (“Agere”). The Company has pension plans covering substantially all former Agere U.S. employees, excluding management employees hired after June 30, 2003. Retirement benefits are provided under defined benefit pension plans, which include a management plan and a represented plan. The payments under the management plan are based on an adjusted career-average-pay formula or a cash-balance program. The payments under the represented plan are based on a dollar-per-month formula. Since February 2009, there have been no active participants under the represented plan. The Company also has a non-qualified supplemental pension plan in the U.S. that principally provides benefits based on compensation in excess of amounts that can be considered under a tax qualified plan. The Company also provides post-retirement life insurance coverage under a group life insurance plan for former Agere employees excluding participants in the cash-balance program and management employees hired after June 30, 2003. The Company also has pension plans covering certain international employees.

Effective April 6, 2009, the Company froze the U.S. management defined benefit pension plan. Participants in the adjusted career-average-pay program will not earn any future service accruals after that date. Participants in the cash-balance program will not earn any future service accruals, but will continue to earn 4% interest per year on their cash-balance accounts.

The following table summarizes the components of the net periodic benefit cost or credit:

	Three Months Ended
	September 30, 2012						October 2, 2011
	Pension Benefits			Post-retirement Benefits			Pension Benefits			Post-retirement Benefits
	(In thousands)
Service cost	$	96		$	22		$	141		$	19
Interest cost		15,355			657			16,891			702
Expected return on plan assets		(17,024	)		(953	)		(17,000	)		(1,032	)
Amortization of net actuarial loss, prior service cost and transition asset		3,592			523			1,695			237
Total benefit cost/(credit)	$	2,019		$	249		$	1,727		$	(74	)

	Nine Months Ended
	September 30, 2012						October 2, 2011
	Pension Benefits			Post-retirement Benefits			Pension Benefits			Post-retirement Benefits
	(In thousands)
Service cost	$	321		$	67		$	416		$	57
Interest cost		46,090			1,950			50,670			1,948
Expected return on plan assets		(51,077	)		(2,859	)		(50,998	)		(3,097	)
Amortization of net actuarial loss, prior service cost and transition asset		10,754			1,513			5,080			414
Total benefit cost/(credit)	$	6,088		$	671		$	5,168		$	(678	)

During the nine months ended September 30, 2012, the Company contributed $80.2 million to its pension plans. The Company expects to contribute an additional $15.2 million to its pension plans during the remainder of 2012. The Company does not expect to contribute to its post-retirement benefit plan in 2012.

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Cash Equivalents and Investments

9 Months Ended

Sep. 30, 2012

Cash Equivalents and Investments

Note 7 — Cash Equivalents and Investments

The following tables summarize the Company’s cash equivalents and investments measured at fair value:

	Fair Value Measurements as of September 30, 2012
	Level 1			Level 2			Total
	(In thousands)
Cash equivalents:
Money-market funds	$	338,690	(a)	$	0		$	338,690
U.S. government and agency securities		0			1,000	(b)		1,000
Total cash equivalents	$	338,690		$	1,000		$	339,690
Available-for-sale debt securities:
Asset-backed and mortgage-backed securities:
Agency securities	$	0		$	124,247	(b)	$	124,247
Non-agency securities		0			2,336	(b)		2,336
U.S. government and agency securities		13,276	(a)		45,968	(b)		59,244
Corporate debt securities		0			16,693	(b)		16,693
Total short-term investments	$	13,276		$	189,244		$	202,520
Long-term investments in equity securities:
Marketable available-for-sale equity securities	$	2,209	(c)	$	0		$	2,209

	Fair Value Measurements as of December 31, 2011
	Level 1			Level 2			Total
	(In thousands)
Cash equivalents:
Money-market funds	$	674,219	(a)	$	0		$	674,219
Available-for-sale debt securities:
Asset-backed and mortgage-backed securities:
Agency securities	$	0		$	97,408	(b)	$	97,408
Non-agency securities		0			9,989	(b)		9,989
U.S. government and agency securities		5,403	(a)		30,572	(b)		35,975
Corporate debt securities		0			12,272	(b)		12,272
Total short-term investments	$	5,403		$	150,241		$	155,644
Long-term investments in equity securities:
Marketable available-for-sale equity securities	$	1,514	(c)	$	0		$	1,514

(a) The fair value of money-market funds is determined using unadjusted prices in active markets. The fair value of Level 1 U.S. government and agency securities is determined using quoted prices in active markets.

(b) These investments are traded less frequently than Level 1 securities and are valued using inputs that include quoted prices for similar assets in active markets and inputs other than quoted prices that are observable for the asset, such as interest rates, yield curves, prepayment speeds, collateral performance, broker/dealer quotes and indices that are observable at commonly quoted intervals.

(c) The fair value of marketable equity securities is determined using quoted market prices in active markets. These amounts are included within other assets in the condensed consolidated balance sheets.

As of September 30, 2012 and December 31, 2011, the aggregate carrying value of the Company’s non-marketable securities was $41.6 million and $43.9 million, respectively.

Upon the acquisition of SandForce in January 2012, the Company recognized a gain of $5.8 million as a result of re-measuring its pre-acquisition equity interest in SandForce to estimated fair value. There were no other non-marketable securities fair-valued during the three and nine months ended September 30, 2012 or October 2, 2011.

The following tables summarize the Company’s available-for-sale securities:

	September 30, 2012
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(In thousands)
Short-term debt securities:
Asset-backed and mortgage-backed securities	$	120,326	$	6,730	$	(473	)	$	126,583
U.S. government and agency securities		58,350		895		(1	)		59,244
Corporate debt securities		16,523		170		0			16,693
Total short-term debt securities	$	195,199	$	7,795	$	(474	)	$	202,520
Long-term marketable equity securities	$	669	$	1,541	$	(1	)	$	2,209

	December 31, 2011
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(In thousands)
Short-term debt securities:
Asset-backed and mortgage-backed securities	$	99,884	$	7,891	$	(378	)	$	107,397
U.S. government and agency securities		35,179		799		(3	)		35,975
Corporate debt securities		12,146		153		(27	)		12,272
Total short-term debt securities	$	147,209	$	8,843	$	(408	)	$	155,644
Long-term marketable equity securities	$	669	$	846	$	(1	)	$	1,514

As of September 30, 2012, there were 89 investments in an unrealized loss position. The following tables summarize the gross unrealized losses and fair values of the Company’s short-term investments that have been in a continuous unrealized loss position for less than and greater than 12 months, aggregated by investment category:

	September 30, 2012
	Less than 12 Months					Greater than 12 Months
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
Asset-backed and mortgage-backed securities	$	29,041	$	(424	)	$	2,165	$	(49	)
U.S. government and agency securities		7,099		(1	)		0		0
Total	$	36,140	$	(425	)	$	2,165	$	(49	)

	December 31, 2011
	Less than 12 Months					Greater than 12 Months
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
Asset-backed and mortgage-backed securities	$	10,645	$	(286	)	$	1,301	$	(92	)
U.S. government and agency securities		3,872		(3	)		0		0
Corporate debt securities		2,375		(27	)		505		0
Total	$	16,892	$	(316	)	$	1,806	$	(92	)

Net realized gains on sales of available-for-sale securities were not material for the three and nine months ended September 30, 2012 or October 2, 2011.

Contractual maturities of available-for-sale debt securities as of September 30, 2012 were as follows:

	Available-For-Sale Debt Securities
	(In thousands)
Due within one year	$	30,135
Due in 1-5 years		47,892
Due in 5-10 years		10,671
Due after 10 years		113,822
Total	$	202,520

The maturities of asset-backed and mortgage-backed securities were allocated based on contractual principal maturities assuming no prepayments.

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Derivative Instruments

9 Months Ended

Sep. 30, 2012

Derivative Instruments

Note 9 — Derivative Instruments

The Company has foreign subsidiaries that operate and sell the Company’s products in various markets around the world. As a result, the Company is exposed to changes in foreign-currency exchange rates. The Company utilizes forward contracts to manage its exposure associated with net asset and liability positions denominated in non-functional currencies and to reduce the volatility of earnings and cash flows related to forecasted foreign-currency transactions. The Company does not hold derivative financial instruments for speculative or trading purposes.

Cash-Flow Hedges

The Company enters into forward contracts that are designated as foreign-currency cash-flow hedges of selected forecasted payments denominated in currencies other than U.S. dollars. These forward contracts generally mature within twelve months. The Company evaluates and calculates the effectiveness of each hedge at least quarterly. Changes in fair value attributable to changes in time value are excluded from the assessment of effectiveness and are recognized in interest income and other, net. The effective portion of the forward contracts’ gain or loss is recorded in other comprehensive income and, when the hedged expense is recognized, is subsequently reclassified into earnings within the same line item in the statements of operations as the impact of the hedged transaction. The ineffective portion of the gain or loss is reported in earnings immediately. As of September 30, 2012 and December 31, 2011, the total notional value of the Company’s outstanding forward contracts, designated as foreign-currency cash-flow hedges, was $38.3 million and $36.9 million, respectively.

Other Foreign-Currency Hedges

The Company enters into foreign-exchange forward contracts that are used to hedge certain foreign-currency-denominated assets or liabilities and that do not qualify for hedge accounting. These forward contracts generally mature within three months. Changes in the fair value of these forward contracts are recorded immediately in earnings to offset the changes in fair value of the assets or liabilities being hedged. As of September 30, 2012 and December 31, 2011, the total notional value of the Company’s outstanding forward contracts, not designated as hedges under hedge accounting, was $43.0 million and $37.6 million, respectively. The Company recognized net gains on other foreign-currency hedges of $2.7 million and $1.0 million, respectively, during the three and nine months ended September 30, 2012, and net losses of $2.5 million and $0.5 million, respectively, during the three and nine months ended October 2, 2011. These amounts are included in interest income and other, net in the Company’s condensed consolidated statements of operations and were substantially offset by the losses and gains on the underlying foreign-currency-denominated assets or liabilities.

Fair Value of Derivative Instruments

As of September 30, 2012 and December 31, 2011, the total fair value of derivative assets was immaterial and was recorded in prepaid expenses and other current assets in the condensed consolidated balance sheets. As of September 30, 2012 and December 31, 2011, the total fair value of derivative liabilities was $0.9 million and $3.0 million, respectively, and was recorded in other accrued liabilities in the condensed consolidated balance sheets.

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Commitments, Contingencies and Legal Matters - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended	9 Months Ended
	Feb. 28, 2009	Sep. 30, 2012	Dec. 31, 2011
Contingencies And Commitments [Line Items]
Total purchase commitments due through 2016		$ 384.6
Company's percentage of take-or-pay agreement with SMP		51.00%
Terms in which take-or-pay agreement may be terminated by either party		Upon two years written notice
Outstanding obligation related to standby letters of credit		4.4	3.5
Jury award to GE for patent infringement	$ 7.6

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Discontinued Operations - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended		9 Months Ended
	May 06, 2011	Sep. 30, 2012	Oct. 02, 2011	Sep. 30, 2012	Oct. 02, 2011
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Date of completion of sale of business				May 06, 2011
Cash consideration received for sale of ESG business	$ 480,000,000
Income from discontinued operations		0	(2,311,000)	0	254,673,000
Restructuring expenses related to the exit of the ESG business			3,000,000		40,900,000
Released deferred tax liabilities related to sale of external storage systems business			$ 19,700,000		$ 19,700,000

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Related Party Transactions - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Oct. 02, 2011	Sep. 30, 2012	Oct. 02, 2011	Dec. 31, 2011
Silicon Manufacturing Partners Pte Ltd. [Member]
Related Party Transaction [Line Items]
Company's equity interest in SMP joint venture	51.00%		51.00%
Purchase of inventory from SMP	$ 11.6	$ 12.9	$ 35.5	$ 38.5
Amounts payable to SMP	7.7		7.7		5.0
Seagate Technology [Member]
Related Party Transaction [Line Items]
Revenues from sales to Seagate	170.3	157.9	604.9	375.4
Accounts receivable from Seagate	$ 93.9		$ 93.9		$ 90.3

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Stock-Based Compensation Expense Included in Continuing Operations, Net of Estimated Forfeitures (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Oct. 02, 2011	Sep. 30, 2012	Oct. 02, 2011
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 27,386	$ 11,753	$ 83,538	$ 39,072
Cost of revenues [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	2,573	1,460	9,088	5,324
Research and development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	11,170	5,410	35,451	18,286
Selling, general and administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 13,643	$ 4,883	$ 38,999	$ 15,462

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Gross Unrealized Losses and Fair Values of the Company's Short-Term Investments (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value	$ 36,140	$ 16,892
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	(425)	(316)
Available-for-sale Securities, Continuous Unrealized Loss Position, Greater than 12 Months, Fair Value	2,165	1,806
Available-for-sale Securities, Continuous Unrealized Loss Position, Greater than 12 Months, Unrealized Losses	(49)	(92)
Asset-backed and mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value	29,041	10,645
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	(424)	(286)
Available-for-sale Securities, Continuous Unrealized Loss Position, Greater than 12 Months, Fair Value	2,165	1,301
Available-for-sale Securities, Continuous Unrealized Loss Position, Greater than 12 Months, Unrealized Losses	(49)	(92)
U.S. government and agency securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value	7,099	3,872
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	(1)	(3)
Available-for-sale Securities, Continuous Unrealized Loss Position, Greater than 12 Months, Fair Value	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Greater than 12 Months, Unrealized Losses	0	0
Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value		2,375
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses		(27)
Available-for-sale Securities, Continuous Unrealized Loss Position, Greater than 12 Months, Fair Value		505
Available-for-sale Securities, Continuous Unrealized Loss Position, Greater than 12 Months, Unrealized Losses		$ 0

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Discontinued Operations

9 Months Ended

Sep. 30, 2012

Discontinued Operations

Note 14 — Discontinued Operations

On May 6, 2011, the Company completed the sale of substantially all of its external storage systems business to NetApp for $480.0 million in cash. The strategic decision to exit the external storage systems business was based on the Company’s expectation that long-term shareholder value could be maximized by becoming a pure-play semiconductor company. Under the terms of the agreement, NetApp purchased substantially all the assets of the Company’s external storage systems business, which developed and delivered external storage systems products and technology to a wide range of partners who provide storage solutions to end customers. As part of the transaction, the Company provided transitional services to NetApp. The purpose of these services was to provide short-term assistance to the buyer in assuming the operations of the purchased business.

Following is selected financial information included in (loss)/income from discontinued operations for the three and nine months ended October 2, 2011:

	Three Months Ended			Nine Months Ended
	October 2, 2011			October 2, 2011
	(In thousands)
Revenues	$	2,860		$	210,225
Loss before gain on sale of external storage systems business and income taxes	$	(2,366	)	$	(24,866	)
Gain on sale of external storage systems business		0			260,066
Benefit from income taxes		(55	)		(19,473	)
(Loss)/income from discontinued operations	$	(2,311	)	$	254,673

There was no income or loss from discontinued operations for the three or nine months ended September 30, 2012.

During the three and nine months ended October 2, 2011, the Company recognized $3.0 million and $40.9 million, respectively, of restructuring expense as the Company terminated employees, closed several office locations, terminated certain contracts, discontinued various development projects and wrote off intangible assets and software due to the cancellation of development programs in connection with the exit of the external storage systems business. Further, the Company released $19.7 million of deferred tax liabilities related to tax deductible goodwill in connection with the sale of the external storage systems business during the nine months ended October 2, 2011.

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Benefit Obligations (Tables)

9 Months Ended

Sep. 30, 2012

Components of Net Periodic Benefit Cost/(Credit)

The following table summarizes the components of the net periodic benefit cost or credit:

	Three Months Ended
	September 30, 2012						October 2, 2011
	Pension Benefits			Post-retirement Benefits			Pension Benefits			Post-retirement Benefits
	(In thousands)
Service cost	$	96		$	22		$	141		$	19
Interest cost		15,355			657			16,891			702
Expected return on plan assets		(17,024	)		(953	)		(17,000	)		(1,032	)
Amortization of net actuarial loss, prior service cost and transition asset		3,592			523			1,695			237
Total benefit cost/(credit)	$	2,019		$	249		$	1,727		$	(74	)

	Nine Months Ended
	September 30, 2012						October 2, 2011
	Pension Benefits			Post-retirement Benefits			Pension Benefits			Post-retirement Benefits
	(In thousands)
Service cost	$	321		$	67		$	416		$	57
Interest cost		46,090			1,950			50,670			1,948
Expected return on plan assets		(51,077	)		(2,859	)		(50,998	)		(3,097	)
Amortization of net actuarial loss, prior service cost and transition asset		10,754			1,513			5,080			414
Total benefit cost/(credit)	$	6,088		$	671		$	5,168		$	(678	)

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Cash Equivalents and Investments - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended
	Oct. 02, 2011	Sep. 30, 2012 Investment	Oct. 02, 2011	Dec. 31, 2011
Cash Equivalents And Investments [Line Items]
Carrying value of the company's non-marketable equity securities		$ 41.6		$ 43.9
Gain Recognized from remeasurement of pre-acquisition equity interest to estimated fair value		$ 5.8
Non Marketable Securities Fair Valued	0		0
Number of investments in an unrealized loss position		89

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Summary of Activities Affecting Restructuring Obligations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended			9 Months Ended
	Sep. 30, 2012		Oct. 02, 2011	Sep. 30, 2012		Oct. 02, 2011
Balance at December 31, 2011				$ 22,196
Expense	5,655		6,812	9,929		12,297
Utilized				(22,508)
Balance at September 30, 2012	9,617	[1]		9,617	[1]
Lease Terminations [Member]
Balance at December 31, 2011				11,752
Expense				3,716
Utilized				(7,199)	[2]
Balance at September 30, 2012	8,269	[1]		8,269	[1]
Restructuring and Related Activities, Completion Date				Dec. 31, 2013
Employee Severance and Benefits [Member]
Balance at December 31, 2011				10,444
Expense				2,698
Utilized				(11,794)	[2]
Balance at September 30, 2012	1,348	[1]		1,348	[1]
Restructuring and Related Activities, Completion Date				Dec. 31, 2013
Asset impairment and other exit charges [Member]
Balance at December 31, 2011				0
Expense				3,515
Utilized				(3,515)
Balance at September 30, 2012	$ 0	[1]		$ 0	[1]

[1] The balance remaining for lease terminations is expected to be paid during the remaining terms of the leases, which extend through 2013. The balance remaining for employee severance and benefits is expected to be paid by the end of 2013.

[2] Represents cash payments.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Oct. 02, 2011
Gain on sale of business	$ 0	$ 260,066

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Common Stock Repurchases

9 Months Ended

Sep. 30, 2012

Common Stock Repurchases

Note 3 — Common Stock Repurchases

The Company’s board of directors authorized stock repurchases of up to $750.0 million on March 9, 2011 and an additional $500.0 million on August 1, 2012. As of September 30, 2012, $525.0 million remained available for stock repurchases. The Company repurchased 6.6 million shares for $50.1 million during the three months ended September 30, 2012 and 29.1 million shares for $226.2 million during the nine months ended September 30, 2012. The Company repurchased 11.2 million shares for $75.0 million during the three months ended October 2, 2011 and 67.5 million shares for $471.8 million during the nine months ended October 2, 2011. Repurchased shares are retired immediately after the repurchases are completed. Retirement of repurchased shares is recorded as a reduction of common stock and additional paid-in capital.

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Weighted-Average Common Share Equivalents Excluded from Computation of Diluted Shares (Detail) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Oct. 02, 2011	Sep. 30, 2012	Oct. 02, 2011
Stock options [Member]
Weighted-average common share equivalents excluded from the computation of diluted shares
Anti-dilutive securities	29,181	39,924	27,694	42,978
Restricted stock and/or restricted stock units [Member]
Weighted-average common share equivalents excluded from the computation of diluted shares
Anti-dilutive securities	9,871	1,491	6,621	182

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Cash Equivalents and Investments (Tables)

9 Months Ended

Sep. 30, 2012

Company's Cash Equivalents and Investments Measured at Fair Value

The following tables summarize the Company’s cash equivalents and investments measured at fair value:

	Fair Value Measurements as of September 30, 2012
	Level 1			Level 2			Total
	(In thousands)
Cash equivalents:
Money-market funds	$	338,690	(a)	$	0		$	338,690
U.S. government and agency securities		0			1,000	(b)		1,000
Total cash equivalents	$	338,690		$	1,000		$	339,690
Available-for-sale debt securities:
Asset-backed and mortgage-backed securities:
Agency securities	$	0		$	124,247	(b)	$	124,247
Non-agency securities		0			2,336	(b)		2,336
U.S. government and agency securities		13,276	(a)		45,968	(b)		59,244
Corporate debt securities		0			16,693	(b)		16,693
Total short-term investments	$	13,276		$	189,244		$	202,520
Long-term investments in equity securities:
Marketable available-for-sale equity securities	$	2,209	(c)	$	0		$	2,209

	Fair Value Measurements as of December 31, 2011
	Level 1			Level 2			Total
	(In thousands)
Cash equivalents:
Money-market funds	$	674,219	(a)	$	0		$	674,219
Available-for-sale debt securities:
Asset-backed and mortgage-backed securities:
Agency securities	$	0		$	97,408	(b)	$	97,408
Non-agency securities		0			9,989	(b)		9,989
U.S. government and agency securities		5,403	(a)		30,572	(b)		35,975
Corporate debt securities		0			12,272	(b)		12,272
Total short-term investments	$	5,403		$	150,241		$	155,644
Long-term investments in equity securities:
Marketable available-for-sale equity securities	$	1,514	(c)	$	0		$	1,514

(a) The fair value of money-market funds is determined using unadjusted prices in active markets. The fair value of Level 1 U.S. government and agency securities is determined using quoted prices in active markets.

(b) These investments are traded less frequently than Level 1 securities and are valued using inputs that include quoted prices for similar assets in active markets and inputs other than quoted prices that are observable for the asset, such as interest rates, yield curves, prepayment speeds, collateral performance, broker/dealer quotes and indices that are observable at commonly quoted intervals.

(c) The fair value of marketable equity securities is determined using quoted market prices in active markets. These amounts are included within other assets in the condensed consolidated balance sheets.

Company's Available-for-Sale Securities

The following tables summarize the Company’s available-for-sale securities:

	September 30, 2012
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(In thousands)
Short-term debt securities:
Asset-backed and mortgage-backed securities	$	120,326	$	6,730	$	(473	)	$	126,583
U.S. government and agency securities		58,350		895		(1	)		59,244
Corporate debt securities		16,523		170		0			16,693
Total short-term debt securities	$	195,199	$	7,795	$	(474	)	$	202,520
Long-term marketable equity securities	$	669	$	1,541	$	(1	)	$	2,209

	December 31, 2011
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(In thousands)
Short-term debt securities:
Asset-backed and mortgage-backed securities	$	99,884	$	7,891	$	(378	)	$	107,397
U.S. government and agency securities		35,179		799		(3	)		35,975
Corporate debt securities		12,146		153		(27	)		12,272
Total short-term debt securities	$	147,209	$	8,843	$	(408	)	$	155,644
Long-term marketable equity securities	$	669	$	846	$	(1	)	$	1,514

Gross Unrealized Losses and Fair Values of the Company's Short-Term Investments

The following tables summarize the gross unrealized losses and fair values of the Company’s short-term investments that have been in a continuous unrealized loss position for less than and greater than 12 months, aggregated by investment category:

	September 30, 2012
	Less than 12 Months					Greater than 12 Months
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
Asset-backed and mortgage-backed securities	$	29,041	$	(424	)	$	2,165	$	(49	)
U.S. government and agency securities		7,099		(1	)		0		0
Total	$	36,140	$	(425	)	$	2,165	$	(49	)

	December 31, 2011
	Less than 12 Months					Greater than 12 Months
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
Asset-backed and mortgage-backed securities	$	10,645	$	(286	)	$	1,301	$	(92	)
U.S. government and agency securities		3,872		(3	)		0		0
Corporate debt securities		2,375		(27	)		505		0
Total	$	16,892	$	(316	)	$	1,806	$	(92	)

Contractual Maturities of Available-for-Sale Debt Securities

Contractual maturities of available-for-sale debt securities as of September 30, 2012 were as follows:

	Available-For-Sale Debt Securities
	(In thousands)
Due within one year	$	30,135
Due in 1-5 years		47,892
Due in 5-10 years		10,671
Due after 10 years		113,822
Total	$	202,520

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Summary of Unvested Performance-Based Restricted Stock (Detail) (Performance-based Restricted Stock Units [Member], USD $) In Thousands, except Per Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Performance-based Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested restricted stock units, Beginning Balance	4,729
Granted, Number of units	2,986
Vested, Number of Units	(1,446)
Forfeited, Number of Units	(593)
Unvested restricted stock units, Ending Balance	5,676
Unvested RSUs, Weighted-Average Grant Date Fair Value per Share, Beginning balance	$ 5.98
Granted, Weighted-Average Grant Date Fair Value Per Share	$ 8.52
Vested, Weighted-Average Grant Date Fair Value per Share	$ 5.85
Forfeited, Weighted-Average Grant Date Fair Value per Share	$ 6.53
Unvested RSUs, Weighted-Average Grant Date Fair Value per Share, Ending of period	$ 7.29

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Commitments, Contingencies and Legal Matters

9 Months Ended

Sep. 30, 2012

Commitments, Contingencies and Legal Matters

Note 13 — Commitments, Contingencies and Legal Matters

Purchase Commitments

The Company maintains purchase commitments with certain suppliers, primarily for raw materials and manufacturing services and for some non-production items. Purchase commitments for inventory materials are generally restricted to a forecasted time horizon as mutually agreed upon between the parties. This forecasted time horizon can vary for different suppliers. As of September 30, 2012, the Company had purchase commitments of $384.6 million, which are due through 2016.

The Company has a take-or-pay agreement with SMP under which it has agreed to purchase 51% of the managed wafer capacity from SMP’s integrated circuit manufacturing facility, and GLOBALFOUNDRIES has agreed to purchase the remaining managed wafer capacity. SMP determines its managed wafer capacity each year based on forecasts provided by the Company and GLOBALFOUNDRIES. If the Company fails to purchase its required commitments, it will be required to pay SMP for the fixed costs associated with the unpurchased wafers. GLOBALFOUNDRIES is similarly obligated with respect to the wafers allotted to it. The agreement may be terminated by either party upon two years written notice. The agreement may also be terminated for material breach, bankruptcy or insolvency.

Guarantees

Product Warranties:

The following table sets forth a summary of changes in product warranties:

	Accrued Warranties
	(In thousands)
Balance as of December 31, 2011	$	6,334
Accruals for warranties issued during the period		998
Adjustments to pre-existing accruals (including changes in estimates)		(470	)
Warranty liabilities assumed in SandForce acquisition		426
Settlements made during the period (in cash or in kind)		(1,234	)
Balance as of September 30, 2012	$	6,054

Standby Letters of Credit:

The Company had outstanding obligations relating to standby letters of credit of $4.4 million and $3.5 million, respectively, as of September 30, 2012 and December 31, 2011. Standby letters of credit are financial guarantees provided by third parties for leases, customs and certain self-insured risks. If the guarantees are called, the Company must reimburse the provider of the guarantee. The fair value of the letters of credit approximates the contract amounts. The standby letters of credit generally renew annually.

Indemnifications

The Company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party. These obligations arise primarily in connection with sales contracts, license agreements or agreements for the sale of assets, under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of warranties, representations and covenants related to such matters as title to assets sold, validity of certain intellectual property rights, non-infringement of third-party rights, and certain income tax-related matters. In each of these circumstances, payment by the Company is typically subject to the other party making a claim to and cooperating with the Company pursuant to the procedures specified in the particular contract. This usually allows the Company to challenge the other party’s claims or, in case of breach of intellectual property representations or covenants, to control the defense or settlement of any third-party claims brought against the other party. Further, the Company’s obligations under these agreements may be limited in terms of activity (typically to replace or correct the products or terminate the agreement with a refund to the other party), duration and/or amounts. In some instances, the Company may have recourse against third parties covering certain payments made by the Company.

Legal Matters

On December 6, 2006, Sony Ericsson Mobile Communications USA Inc. (“Sony Ericsson”) filed a lawsuit against Agere in Wake County Superior Court in North Carolina, alleging unfair and deceptive trade practices, fraud and negligent misrepresentation in connection with Agere’s engagement with Sony Ericsson to develop a wireless data card for personal computers. The complaint claimed an unspecified amount of damages and sought compensatory damages, treble damages and attorneys’ fees. In August, 2007, the case was dismissed for improper venue. On October 22, 2007, Sony Ericsson filed a lawsuit in the Supreme Court of the State of New York, New York County against LSI, raising substantially the same allegations and seeking substantially the same relief as the North Carolina proceeding. In January 2010, Sony Ericsson amended its complaint by adding claims for fraudulent concealment and gross negligence. On September 10, 2010, LSI filed a motion for summary judgment. On August 4, 2011, the court granted LSI’s motion and ordered the dismissal of all of Sony Ericsson’s claims. Sony Ericsson has appealed this decision. The Company is unable to estimate the possible loss or range of loss, if any, that may be incurred with respect to this matter.

On March 23, 2007, CIF Licensing, LLC, d/b/a GE Licensing (“GE”) filed a lawsuit against Agere in the United States District Court for the District of Delaware, asserting that Agere products infringe patents in a portfolio of patents GE acquired from Motorola. GE has asserted that four of the patents cover inventions relating to modems. GE is seeking monetary damages. Agere believes it has a number of defenses to the infringement claims in this action, including laches, exhaustion and its belief that it has a license to the patents. The court postponed hearing motions based on these defenses until after the trial, and did not allow Agere to present evidence on these defenses at trial. On February 17, 2009, the jury in this case returned a verdict finding that three of the four patents were invalid and that Agere products infringed the one patent found to be valid and awarding GE $7.6 million for infringement of that patent. The jury also found Agere’s infringement was willful, which means that the judge could increase the amount of damages up to three times its original amount. The court has not scheduled hearings on Agere’s post-trial motions related to its defenses. One of these motions seeks to have a mis-trial declared based on Agere’s belief that GE withheld evidence in discovery, which affected Agere’s ability to present evidence at trial. On October 6, 2010, a special master appointed by the court determined that GE’s actions were not wrongful and that the evidence withheld by GE was not material to the jury’s findings. Agere is challenging this determination. If the jury’s verdict is entered by the court, Agere would also expect to be required to pay interest from the date of infringing sales. If the verdict is entered, Agere intends to appeal the matter. On February 17, 2010, the court issued an order granting GE’s summary judgment motions seeking to bar Agere’s defenses of laches, exhaustion, and license and denying Agere’s summary judgment motions concerning the same defenses. On July 30, 2010, the court held that one of the patents found invalid by the jury was valid. The court also held that the February 17, 2010 order was not inconsistent with its previous ruling that Agere would be permitted to renew its laches, licensing, and exhaustion defenses, and that Agere has not been precluded from asserting them post-trial. The Company is unable to estimate the possible loss or range of loss, if any, that may be incurred with respect to this matter.

On December 1, 2010, Rambus Inc. (“Rambus”) filed a lawsuit against LSI in the United States District Court for the Northern District of California alleging that LSI products infringe one or more of 19 Rambus patents. These products contain either DDR-type memory controllers or certain high-speed SerDes peripheral interfaces, such as PCI Express interfaces and certain SATA and SAS interfaces. Rambus is seeking unspecified monetary damages, treble damages and costs, expenses and attorneys’ fees due to alleged willfulness, interest and permanent injunctive relief in this action. In addition, on December 1, 2010, Rambus filed an action with the International Trade Commission (“ITC”) against LSI and five of its customers alleging that LSI products infringe six of the 19 patents in the California case. Rambus also named five other companies and a number of their customers in the ITC action. Rambus sought an exclusionary order against LSI and its customers in the ITC action, which, if granted, would preclude LSI and its customers from selling these products in the U.S. The ITC held a hearing on the matter in October 2011. On March 2, 2012, an administrative law judge (“ALJ”) found that LSI infringed Rambus’ patents; however, the ALJ also found the patents invalid or unenforceable or both, and accordingly, found no violation of section 337 of the Tariff Act of 1930. On July 25, 2012, the ITC determined to terminate the investigation with a finding of no violation of section 337 of the Tariff Act of 1930. The ITC affirmed the ALJ’s conclusion that all of the asserted patent claims are invalid under 35 U.S.C. §102 or 103, except for certain asserted claims, for which they found that Rambus has not demonstrated infringement. The ITC reversed the ALJ’s determination that Rambus had demonstrated the existence of a domestic industry under 19 U.S.C. § 1337(a) for the asserted patents. The ITC affirmed the ALJ’s determination that certain patents are unenforceable under the doctrine of unclean hands. Rambus has appealed the ITC’s rulings. The lawsuit against LSI in the United States District Court for the Northern District of California is still pending. The Company is unable to estimate the possible loss or range of loss, if any, that may be incurred with respect to these proceedings.

In addition to the foregoing, the Company and its subsidiaries are parties to other litigation matters and claims in the normal course of business. The Company does not believe, based on currently available facts and circumstances, that the final outcome of these other matters, taken individually or as a whole, will have a material adverse effect on the Company’s consolidated results of operations or financial position. However, the pending unsettled lawsuits may involve complex questions of fact and law and may require the expenditure of significant funds and the diversion of other resources to defend. From time to time, the Company may enter into confidential discussions regarding the potential settlement of such lawsuits. However, there can be no assurance that any such discussions will occur or will result in a settlement. Moreover, the settlement of any pending litigation could require the Company to incur substantial costs and, in the case of the settlement of any intellectual property proceeding against the Company, may require the Company to obtain a license to a third-party’s intellectual property that could require royalty payments in the future and the Company to grant a license to certain of its intellectual property to a third party under a cross-license agreement. The results of litigation are inherently uncertain, and material adverse outcomes are possible.

The Company has not provided accruals for any legal matters in its financial statements as potential losses for such matters are not considered probable and reasonably estimable. However, because such matters are subject to many uncertainties, the ultimate outcomes are not predictable, and there can be no assurances that the actual amounts required to satisfy any liabilities arising from the matters described above will not have a material adverse effect on the Company’s consolidated results of operations, financial position or cash flows.