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EXHIBIT 99.1
FOR IMMEDIATE RELEASE April 24, 2001
Contacts:
Investor Relations Media Relations
Diana Matley Kevin Brett
408-433-4365 408-433-7150
diana@lsil.com kbrett@lsil.com
CC01-42
LSI LOGIC REPORTS FIRST QUARTER 2001 REVENUES AND PROFITS
The LSI Logic 2001 first quarter news release follows this summary
- - First Quarter Revenues of $517 million.
- - Net income EBG* of $9.5 million.
- - Diluted per share EBG of 3 cents; compared to First Call consensus
estimate of 3 cents.
- - Cash and short-term investments of $1.1 billion.
* Earnings before goodwill amortization and other special items.
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LSI LOGIC TAKES STEPS TO REDUCE EXPENDITURES AND
ENHANCE COMPETITIVE POSITION FOR FUTURE GROWTH
MILPITAS, CALIFORNIA -- LSI Logic Corporation (NYSE:LSI) today reported 2001
first quarter revenues of $517 million, a 31 percent decrease from the $751
million reported in the fourth quarter, and 16 percent lower than the $615
million recorded in the first quarter of 2000.
First quarter 2001 net income, before amortization of goodwill and other special
items (EBG), was $9.5 million or 3 cents a diluted share, compared to $116
million or 34 cents a diluted share in the fourth quarter, and $88 million or 26
cents a diluted share in the first quarter of 2000.
"Our first quarter financial results were impacted by the abrupt decline of the
U.S. economy, weakened end-demand and the widespread accumulation of inventory
in the supply chain," said Wilfred J. Corrigan, LSI Logic chairman and chief
executive officer. "While our visibility is limited, there are indicators that
point to the resumption of revenue growth in the second half of the year.
"We announced an accretive transaction to acquire C-Cube Microsystems to expand
our position in global communications and consumer markets. We signed a process
technology collaboration agreement with TSMC, allowing us to more rapidly
deliver advanced products to the marketplace and to reduce our development
costs. We also announced the closure of our Colorado Springs facility,
consolidating our manufacturing to our world-class Gresham and Tsukuba fabs. LSI
Logic will compete from a position of strength when the industry rebounds with
leading-edge technology for the communications, storage and consumer markets."
Bryon Look, LSI Logic executive vice president and chief financial officer, said
the company will take a $120 million to $150 million charge for fixed asset
write-downs, severance, direct exit costs and other expenses associated with the
August closure of the company's Colorado Springs manufacturing facility. The
restructuring charge will be incurred in the second quarter, and other related
charges will be recorded in the second and third quarters of 2001.
"LSI Logic has responded aggressively to rapidly changing economic conditions,"
said Look. "We have taken action to reduce expenditures, invest in our future
and strengthen our balance sheet. We are prepared for the anticipated resumption
of growth in our targeted vertical markets."
LSI Logic also learned today that the Federal Trade Commission has granted early
termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act with respect to its exchange offer for all of the outstanding
shares of C-Cube common stock. In addition, LSI Logic anticipates that its
registration statement filed in connection with the exchange offer will be
declared effective by the Securities and Exchange Commission on April 26. The
exchange offer commenced on April 13, and is scheduled to expire at midnight EDT
on May 10, unless extended.
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LSI LOGIC BUSINESS OUTLOOK
LSI Logic expects 2001 Q2 revenues to decline approximately 10-15 percent
sequentially from the $517 million reported in the first quarter.
The company anticipates reporting a second quarter loss of 7 cents a diluted
share on an EBG basis.
Second quarter gross margin is expected to be approximately 38 percent.
The company does not anticipate selling any equity investments in the second
quarter.
The 2001 tax rate is expected to be 25 percent.
Capital spending for 2001 is anticipated to be approximately $500 million.
Second quarter depreciation is projected to be about $99 million.
NOTE: The company's financial guidance will be limited to the comments made on
today's public conference call and contained in the Business Outlook section of
this news release.
LSI LOGIC ANNOUNCEMENTS
- - LSI Logic Corporation and C-Cube Microsystems Inc. announced a definitive
merger agreement in which LSI Logic has agreed to acquire C-Cube in a
stock-for-stock transaction valued at approximately $878 million. The
transaction is expected to be accretive to LSI Logic earnings (EBG) in 2001.
http://www.lsilogic.com/news/financial_news/fr20010326.html
- - LSI Logic and Taiwan Semiconductor Manufacturing Company announced an
agreement to combine their efforts for development of advanced process
technologies and to collaborate on state-of-the-art manufacturing.
http://www.lsilogic.com/news/corporate_news/cr20010404.html
- - LSI Logic announced plans to close its Colorado Springs manufacturing facility
in August, taking a $120 million to $150 million charge for fixed asset
write-downs, severance, direct exit costs and other closure-related expenses.
http://www.lsilogic.com/news/corporate_news/cr20010411.html
- - BBC Research & Development and LSI Logic received the Queen's Award for
Industry in the "Innovation" category for the jointly developed single-chip
terrestrial television (DTT) demodulator.
http://www.lsilogic.com/news/corporate_news/cr20010423.html
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- - LSI Logic licensed NewLogic Technology's Bluetooth intellectual property core
in order to offer this capability for integration into custom and standard chips
for next-generation communications products.
http://www.lsilogic.com/news/corporate_news/cr20010416.html
- - LSI Logic introduced the LSI403Z digital signal processor, intended for the
Small Office Home Office (SOHO) and residential gateway applications.
http://www.lsilogic.com/news/product_news/pr20010306.html
- - LSI Logic introduced the newest product in the company's SignalSphere(TM)
wireless family, the CBP 4.0, a highly integrated single-chip CDMA baseband
processor supporting the 3G standard.
http://www.lsilogic.com/news/product_news/pr20010319.html
- - Conexant Systems Inc. licensed LSI Logic's ZSP(TM)400 digital signal processor
(DSP) core for integration across its product lines supporting wireless mobile
and communications applications. Broadcom, Brecis Communications, Virata and IBM
also to license LSI Logic's open architecture DSP core.
http://www.lsilogic.com/news/corporate_news/cr20010316.html
- - LSI Logic announced two products in the SpeedREACH(TM) family, designed to
fuel the growth of the consumer ADSL market by providing better performance at a
lower cost for both central office and customer premise equipment applications.
http://www.lsilogic.com/news/product_news/pr20010129.html
- - LSI Logic announced the availability of its Fusion-MPT(TM) architecture
integrated mirroring for servers and high-end workstations. The new integrated
mirroring feature provides fault-tolerant solutions for NAS (Network Attached
Storage) connected servers.
http://www.lsilogic.com/news/product_news/pr20010316.html
- - LSI Logic introduced a set of environmentally friendly, lead-free ball grid
array packages widely used in communications and storage products. These
advanced lead-free packaging solutions comply with government directives and
environmental regulations in the United States, Europe and Japan.
http://www.lsilogic.com/news/product_news/pr20010314.html
- - LSI Logic announced the first fully integrated Ethernet switch for HP Procurve
Networking 10/100/1000 switches that achieves the highest level of integration
in the industry today. http://www.lsilogic.com/news/product_news/pr20010115.html
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LSI Logic Conference Call Information: LSI Logic will hold a conference call
today at 2 p.m. PDT to discuss first quarter financial results. The access
number is 1-212-346-0184. The call will be webcast real time through
www.StreetFusion.com. A replay of the call will be available today at
approximately 5 p.m. PDT and will be available for 48 hours. The number is
1-800-633-8284, (1-858-812-6440, international) access code 18521690. The replay
will also be available over the Internet at the StreetFusion website. The
StreetFusion replay will be available until May 1
LSI Logic has filed a Registration Statement on Form S-4 and a Schedule TO.
C-Cube has filed a Solicitation/Recommendation Statement on Schedule 14D-9 with
the Securities and Exchange Commission in connection with LSI Logic's exchange
offer for the outstanding shares of C-Cube. LSI Logic and C-Cube have mailed a
prospectus, the Schedule 14D-9 and related tender offer materials to
shareholders of C-Cube. These documents contain important information about the
transaction. Investors and security holders are urged to read these documents
carefully. Investors and security holders can obtain free copies of these
documents through the website maintained by the U.S. Securities and Exchange
Commission at http://www.sec.gov. In addition to the Registration Statement,
Schedule TO, Prospectus and Schedule 14D-9, LSI Logic and C-Cube file annual,
quarterly and special reports, proxy statements and other information with the
Securities and Exchange Commission. You may read and copy any reports,
statements or other information filed by LSI Logic or C-Cube at the SEC public
reference room at 450 Fifth Street, N.W., Washington, DC 20549 or at any of the
commission's other public reference rooms in New York, N.Y. or Chicago, Ill.
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the public reference rooms. LSI Logic's and C-Cube's filings with
the Securities and Exchange Commission are also available to the public from
commercial document-retrieval services and at the website maintained by the
commission, http://www.sec.gov.
SAFE HARBOR FOR FORWARD LOOKING STATEMENTS: The statements by LSI Logic
management and the above statements regarding acceleration or deceleration of
future bookings, revenues and earnings, gross margins, gains from investment
income, tax rates, capital spending, and future depreciation estimates made in
this news release include forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities and Exchange Act of 1934, as amended. The company's actual results in
future periods may be materially different from any performance suggested in
this news release. Risks and uncertainties to which the company is subject may
include, but may not necessarily be limited to fluctuations in the timing and
volumes of customer demand, the rate of depletion of customer inventory buildup,
and the company's achievement of revenue objectives and other financial targets.
Other risks and uncertainties include, but are not necessarily limited to the
timing and success of new product introductions, the continued availability of
appropriate levels of manufacturing capacity and the realization of benefits
from the company's strategic relationships and investments. The extent to which
the company's plans for future cost reductions are realized may also impact its
future performance. The company operates in an industry sector where securities'
values are highly volatile and may be influenced by economic and other factors
beyond the company's control. In the context of forward-looking information
provided in this news release, reference is made to the discussion of risk
factors detailed in the
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company's filings from time to time with the Securities and Exchange Commission,
including but not limited to filings made during the past 12 months.
LSI Logic Corporation (NYSE: LSI) is a leading designer and manufacturer of
communications and storage semiconductors for applications that access,
interconnect and store data, voice and video. In addition, the company supplies
storage network solutions for the enterprise. LSI Logic is headquartered at 1551
McCarthy Boulevard, Milpitas, CA 95035, 866-574-5741 (within U.S.), 719-533-7679
(outside U.S.), http://www.lsilogic.com.
# # #
Editor's Notes:
1. All LSI Logic news releases (financial, acquisitions, manufacturing,
products, technology etc.) are issued exclusively by PR Newswire and are
immediately thereafter posted on the company's external website,
http://www.lsilogic.com.
2. The LSI Logic logo design is a registered trademark of LSI Logic
Corporation.
3. All other brand or product names may be trademarks or registered
trademarks of their respective companies.
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LSI LOGIC CORPORATION
RECONCILIATION OF PRO FORMA NET INCOME TO REPORTED RESULTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended
----------------------------
March 31, March 31,
2001 2000
--------- ---------
Pro forma net income $ 9,493 $ 87,931
--------- ---------
Special items:
Amortization of acquisition related items including
intangibles and non-cash deferred stock compensation (48,356) (11,836)
Restructuring of operations and other non-recurring items, net -- (2,781)
Other special items -- 12,383
Tax benefit 7,615 546
--------- ---------
Total special items (40,741) (1,688)
--------- ---------
Net (loss)/ income $ (31,248) $ 86,243
========= =========
Basic earnings per share:
Pro forma net income $ 0.03 $ 0.29
Special items ** (0.13) (0.01)
--------- ---------
Net (loss)/ income $ (0.10) $ 0.28
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Diluted earnings per share*:
Pro forma net income $ 0.03 $ 0.26
Special items ** (0.13) (0.01)
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Net (loss)/ income $ (0.10) $ 0.25
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Shares used in computing per share amounts:
Basic 320,369 302,682
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Diluted 320,369 349,159
========= =========
* In computing diluted earnings per share for the three month period ended
March 31, 2001, common stock equivalents were excluded from the
computation of diluted earnings per share as a result of their
antidilutive effect. In computing diluted earnings per share for the
three month period ended March 31, 2000, net income was increased by
$2,750 for interest, net of taxes, on the $345 million convertible notes
considered dilutive common stock equivalents.
** This line item includes rounding adjustments and the difference in
diluted shares for pro forma purposes as compared to GAAP.
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LSI LOGIC CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended
----------------------------
March 31, March 31,
2001 2000
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Revenues $ 517,199 $ 615,186
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Costs and expenses:
Cost of revenues 311,145 365,500
Research and development 118,767 80,229
Selling, general and administrative 78,971 70,240
Restructuring of operations and other non-recurring items, net -- 2,781
Amortization of acquisition related items including
intangibles and non-cash deferred stock compensation * 48,356 11,836
--------- ---------
Total costs and expenses 557,239 530,586
--------- ---------
(Loss)/ income from operations (40,040) 84,600
Interest expense (9,940) (10,893)
Interest income and other, net 8,979 7,129
Gain on sale of equity securities 5,302 34,172
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(Loss)/ income before income taxes (35,699) 115,008
(Benefit)/ provision for income taxes (4,451) 28,765
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Net (loss)/ income $ (31,248) $ 86,243
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(Loss)/ earnings per share:
Basic $ (0.10) $ 0.28
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Diluted *** $ (0.10) $ 0.25
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Shares used in computing per share amounts:
Basic 320,369 302,682
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Diluted 320,369 349,159
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* The amortization of acquisition related items including intangibles and
non-cash deferred stock compensation for the quarter ended March 31,
2001 are comprised of the following items:
Amortization of continuing intangibles $ 27,089
Amortization of non-cash deferred stock compensation ** 21,267
--------
$ 48,356
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** On July 1, 2000, FASB Interpretation ("FIN") No. 44, " Accounting For
Certain Transactions Involving Stock Compensation" was adopted by the
Company. The acquisition of DataPath Systems, Inc. closed on July 14,
2000 and Syntax Systems, Inc. closed on November 29, 2000, after the
effective date of the new interpretation. In accordance with FIN No. 44,
the intrinsic value of the options and restricted stock awards assumed
as part of the transaction and not vested as of the closing date was
recorded as deferred compensation and included as a component of
stockholders' equity. The deferred compensation is being amortized over
the respective vesting periods of the options and awards.
*** In computing diluted earnings per share for the three month period ended
March 31, 2001, common stock equivalents were excluded from the
computation of diluted earnings per share as a result of their
antidilutive effect. In computing diluted earnings per share for the
three month period ended March 31, 2000, net income was increased by
$2,750 for interest, net of taxes, on the $345 million convertible notes
considered dilutive common stock equivalents.
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LSI LOGIC CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN MILLIONS)
(UNAUDITED)
March 31, December 31,
2001 2000
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ASSETS
Current assets:
Cash and short-term investments $1,059.6 $1,133.2
Accounts receivable, net 359.6 522.7
Inventories 358.9 290.4
Prepaid expenses and other current assets 133.3 125.9
-------- --------
Total current assets 1,911.4 2,072.2
Property and equipment, net 1,333.9 1,278.7
Goodwill and other intangibles 554.4 580.9
Other assets 282.9 265.7
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Total assets $4,082.6 $4,197.5
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current liabilities $ 558.1 $ 626.0
Current portion of long-term debt, capital lease
obligations and short-term borrowings 0.6 1.0
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Total current liabilities 558.7 627.0
Long-term debt, capital lease obligations and
other noncurrent liabilities 1,055.0 1,066.7
-------- --------
Total liabilities 1,613.7 1,693.7
Minority interest in consolidated subsidiaries 5.6 5.7
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Stockholders' equity:
Common stock 1,946.9 1,934.7
Deferred stock compensation (141.7) (163.0)
Retained earnings 641.0 672.2
Accumulated other comprehensive income 17.1 54.2
-------- --------
Total stockholders' equity 2,463.3 2,498.1
-------- --------
Total liabilities and stockholders' equity $4,082.6 $4,197.5
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LSI LOGIC CORPORATION
SELECTED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT WHERE NOTED)
(UNAUDITED)
Three Months Ended
--------------------------------------------------
March 31, Dec. 31, March 31,
2001 2000 2000
---------- ---------- ----------
Semiconductor revenues $ 455.0 $ 642.5 $ 530.4
SAN Systems revenues $ 62.2 $ 108.1 $ 84.8
Total revenues $ 517.2 $ 750.6 $ 615.2
Percentage change in revenues-qtr./qtr. (a) -31.1% 3.2% 5.2%
Percentage change in revenues-yr./yr. (b) -15.9% 28.3% 32.7%
Capital additions $ 186.8 $ 247.9 $ 80.7
Depreciation / amortization (c) $ 89.5 $ 87.8 $ 80.3
Days sales outstanding 63 63 58
Days of inventory 104 62 63
Current ratio 3.4 3.3 3.8
Quick ratio 2.5 2.6 2.9
R&D as a percentage of revenues 23.0% 14.7% 13.0%
SG&A as a percentage of revenues 15.3% 11.0% 11.4%
Gross margin as a percentage of revenues 39.8% 43.8% 40.6%
Employees (d) 7,298 7,221 6,557
Revenues per employee (in thousands) (e) $ 283.5 $ 415.8 $ 375.3
Diluted shares (in thousands) (f) 330,384 353,408 349,159
(a) Represents sequential quarter growth in revenues.
(b) Represents growth in revenues in the quarter presented as compared to
the same quarter of the previous year.
(c) Excludes amortization of acquisition related intangibles and non-cash
deferred stock compensation.
(d) Actual number of employees at the end of each period presented.
(e) Revenue per employee is calculated by annualizing revenue for each
quarter presented and dividing it by the number of employees.
(f) Shares used in determining pro forma diluted earnings per share.