703360--3/1/2007--LSI_LOGIC

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Risk Factors Relating to our Proposed Merger with Agere The issuance of shares of LSI common stock to Agere stockholders in the proposed merger with Agere will substantially reduce the percentage interests of LSI stockholders. The proposed merger with Agere is subject to the receipt of consents and approvals from government entities that may impose conditions that could have an adverse effect on LSI or Agere or could cause abandonment of the merger. The proposed merger with Agere may not be completed, and any delay in completing the proposed merger with Agere may significantly reduce the benefits expected to be obtained from the merger. Customer uncertainties related to the proposed merger with Agere could adversely affect our business, revenues and gross margins. Provisions of the merger agreement may deter alternative business combinations and could negatively affect our stock price if the merger agreement is terminated in certain circumstances. If the proposed merger with Agere is not completed, we will have incurred substantial costs that may adversely affect our results of operations and the market price of our common stock. Risk Factors Relating to our Business and Risk Factors Relating to the Business of the Combined Company if our Proposed Merger with Agere is completed We may fail to realize the benefits expected from the proposed merger with Agere, which could adversely affect the value of our common stock. We must attract and retain key employees in a highly competitive environment; uncertainties associated with the proposed merger with Agere may cause a loss of employees and may otherwise materially adversely affect the businesses of LSI and Agere, and the future business and operations of the combined company. The industries in which we operate are highly cyclical, and our operating results may fluctuate. General economic weakness and geopolitical factors may harm our operating results and financial condition. We are dependent upon a limited number of customers. We depend upon independent foundry subcontractors to manufacture our semiconductor products; accordingly, any failure to secure and maintain sufficient foundry capacity could materially and adversely affect our business. We operate in intensely competitive markets. Our target markets are characterized by rapid technological change. Order or shipment cancellations or deferrals could cause our revenue to decline or fluctuate. We design and develop highly complex products that require significant investments. Our products may contain defects. Our manufacturing facilities have high fixed costs and involve highly complex and precise processes. Failure to qualify our products or our suppliers manufacturing lines may adversely affect our results of operations. We depend upon third-party subcontractors to assemble, obtain packaging materials for, and test certain products. A widespread outbreak of an illness or other health issue could negatively affect our manufacturing, assembly and test, design or other operations. We procure parts and raw materials from a limited number of domestic and foreign sources. If our new product development and expansion efforts are not successful, our results of operations may be adversely affected. We may engage in acquisitions and alliances giving rise to financial and technological risks. The semiconductor industry is prone to intellectual property litigation. We may not be able to adequately protect or enforce our intellectual property rights, which could harm our competitive position. A decline in the revenue that we expect to derive from the licensing of intellectual property could have a significant impact on net income. We conduct a significant amount of activity outside of the United States, and are exposed to legal, business, political and economic risks associated with our international operations. We may rely on the capital markets and/or bank markets to provide financing. We utilize indirect channels of distribution over which we will have limited control. We may not be able to collect all of our accounts receivable from customers. The price of our securities may be subject to wide fluctuations. Future changes in financial accounting standards or practices or existing taxation rules or practices may cause adverse unexpected fluctuations and affect reported results of operations. We face uncertainties related to the effectiveness of internal controls.

Full 10-K form ▸

703360--3/1/2007--LSI_LOGIC_CORP