1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE JULY 26, 2001
Investor Relations Contact: Media Relations Contact:
Diana Matley Kevin Brett
408-433-4365 408-433-7150
diana@lsil.com kbrett@lsil.com
CC01-78
LSI LOGIC REPORTS 2001 SECOND QUARTER FINANCIAL RESULTS
The LSI Logic 2001 second quarter news release follows this summary:
- Second Quarter Revenues of $465 million.
- Net EBG* loss of $20.9 million.
- Diluted per share EBG loss of 6 cents, compared to First Call consensus
estimate of loss of 7 cents.
- Cash and short-term investments increased $82 million to $1.14 billion.
* Earnings before goodwill amortization and other special items.
2
LSI LOGIC PREPARES FOR RESUMPTION OF GROWTH;
REDUCES COSTS IN RESPONSE TO GLOBAL SEMICONDUCTOR INDUSTRY DOWNTURN
MILPITAS, CALIFORNIA -- LSI Logic Corporation (NYSE: LSI) today reported 2001
second quarter revenues of $465 million, a 10 percent decrease from the $517
million reported in the first quarter, and 28 percent lower than the $644
million recorded in the second quarter of 2000.
The second quarter 2001 net loss, before amortization of goodwill and other
special items (EBG), was $20.9 million or minus 6 cents a diluted share,
compared to first quarter net income of $9.5 million or 3 cents a diluted share,
and second quarter 2000 net income of $98 million or 29 cents a diluted share.
Cash and short-term investments increased $82 million to $1.14 billion.
"Our second quarter financial results reflected the continuation of the
widespread inventory correction in the supply chain and weakened end-demand in
global communications and storage markets," said Wilfred J. Corrigan, LSI Logic
chairman and chief executive officer. "We expect our business to bottom in the
third quarter and anticipate revenue growth in the fourth quarter."
"During the second quarter, we completed the strategic acquisition of
consumer-products leader C-Cube and announced the purchase of AMI's RAID
business to expand our customer offerings in the storage components space. We
announced the closure of our Colorado Springs manufacturing facility and took
further steps to align our costs to the current business climate. We are
prepared to be an even stronger competitor in our targeted vertical markets when
the industry rebounds in 2002."
Bryon Look, LSI Logic executive vice president and chief financial officer, said
the company is taking approximately $292 million in charges, net of taxes. These
charges include: in-process research and development, amortization of
intangibles and non-cash deferred stock compensation, additional excess
inventory, restructuring of operations and other non-recurring and special items
resulting from the C-Cube transaction, earlier acquisitions, the closure of the
Colorado Springs manufacturing facility and a recent reduction in force.
"LSI Logic has taken necessary prudent actions in direct response to the global
semiconductor industry downturn," said Look. "We believe our cost-containment
actions, our strategic acquisitions and our advanced technology development
efforts put LSI Logic in a strong position to capitalize on the eventual
resumption of growth, driven by the communications, consumer and storage
markets."
3
LSI LOGIC BUSINESS OUTLOOK
LSI Logic expects 2001 Q3 revenues to decline approximately 10-15 percent
sequentially from the $465 million reported in the second quarter.
The company anticipates reporting a third quarter loss of about 31 cents a
diluted share on an EBG basis and a gross margin of approximately 30-32 percent,
reflecting a simultaneous bottoming in both revenues and factory utilization.
The company does not anticipate selling any equity investments in the third
quarter.
The 2001 tax rate is expected to be 0 percent.
Capital spending for 2001 is anticipated to be approximately $400 million.
Third quarter depreciation is projected to be about $83 million.
The third quarter diluted common share count will be approximately 365 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. The company assumes no obligation to update the information
contained in this news release.
LSI LOGIC ANNOUNCEMENTS
- LSI Logic completed its $844 million purchase of C-Cube Microsystems Inc.
(Nasdaq: CUBE), a strategic acquisition that combines the product lines, sales
channels and technology development strengths of two consumer and communications
market leaders.
http://www.lsilogic.com/news/corporate_news/cr20010611.html
- LSI Logic and American Megatrends, Inc. announced an agreement in which LSI
Logic will acquire AMI's RAID (Redundant Array of Independent Disks) business,
engineering teams and technology in order to expand LSI Logic's storage solution
offerings.
http://www.lsilogic.com/news/financial_news/cr20010529.html
4
- LSI Logic announced the immediate availability of the LiquidLogic(TM) core, an
embedded programmable logic technology that can be used in both ASIC and
standard product system-on-a-chip designs.
http://www.lsilogic.com/news/product_news/pr20010611a.html
- LSI Logic added two new high-performance, industry-standard microprocessor
cores from MIPS Technologies, Inc. for leading-edge customers in the broadband,
networking, printing, storage and digital-consumer markets.
http://www.lsilogic.com/news/product_news/pr20010611b.html
- LSI Logic announced the commercial availability of the company's Ultra320 SCSI
controller, which can be incorporated into enterprise class servers, RAID in
storage networking environments and high performance workstations.
http://www.lsilogic.com/news/product_news/pr20010604a.html
- LSI Logic Storage Systems, Inc. announced ContinuStor(TM) Director, a system
enabling storage administrators to increase storage capacity while managing up
to 60 percent greater storage efficiency within a heterogeneous computing
environment from a single administrative interface.
http://www.lsilogic.com/news/product_news/pr20010611d.html
- LSI Logic Storage Systems, Inc. announced TotalNet Advanced Server 6.1 for the
next generation enterprise server environment enabling desktop computers and
servers to securely share files, printers and other resources.
http://www.lsilogic.com/news/product_news/pr20010611c.html
- LSI Logic announced the industry's first successful validation of Ultra320
SCSI interoperability and packetized protocol in collaboration with leading disk
drive makers IBM, Quantum (now Maxtor) and Seagate.
http://www.lsilogic.com/news/product_news/pr20010503.html
- LSI Logic introduced its newest packaging innovation, flxI/O(TM) flip chip for
high-performance products in the communications and storage markets. The new
packaging technology offers ASIC and system-on-a-chip designers improvements in
signal I/O density, electrical performance and significant reductions in die
sizes.
http://www.lsilogic.com/news/product_news/pr20010507.html
5
- ARM licensed LSI Logic its newest embedded RISC microprocessor core
(ARM926EJ-S(TM)), featuring a Memory Management Unit and dedicated hardware
support for Java(TM) for customers in global communications and storage markets.
http://www.lsilogic.com/news/product_news/pr20010604b.html
6
- LSI Logic and ANT Limited announced the availability of LSI Logic's software
development platform for the SC2000 digital set-top box chip featuring ANT's
embedded Fresco(TM) browser.
http://www.lsilogic.com/news/product_news/pr20010521.html
LSI Logic Conference Call Information: LSI Logic will hold a conference call
today at 2 p.m. PDT to discuss second quarter financial results. The access
number is 1-212-896-6011. 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 19229111. The replay
will also be available over the Internet at the StreetFusion website. The
StreetFusion replay will be available until August 2.
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 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, consumer 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.
7
LSI LOGIC CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended Six Months Ended
----------------------------- -----------------------------
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
----------- ----------- ----------- -----------
Revenues $ 465,219 $ 644,328 $ 982,418 $ 1,259,514
----------- ----------- ----------- -----------
Costs and expenses:
Cost of revenues 284,759 367,978 595,904 722,378
Research and development 127,412 86,801 246,179 167,030
Selling, general and administrative 77,480 75,079 156,451 145,319
----------- ----------- ----------- -----------
Total costs and expenses 489,651 529,858 998,534 1,034,727
----------- ----------- ----------- -----------
(Loss)/ income from operations (24,432) 114,470 (16,116) 224,787
Interest expense (9,864) (10,323) (19,804) (20,027)
Interest income and other, net 10,269 11,507 19,248 18,636
Recurring investment income -- 15,314 5,302 24,814
----------- ----------- ----------- -----------
(Loss)/ income before income taxes (24,027) 130,968 (11,370) 248,210
(Benefit)/ provision for income taxes (3,164) 32,742 -- 62,053
----------- ----------- ----------- -----------
Pro forma net (loss)/ income $ (20,863) $ 98,226 $ (11,370) $ 186,157
----------- ----------- ----------- -----------
Pro forma (loss)/ earnings per share:
Basic $ (0.06) $ 0.32 $ (0.03) $ 0.61
----------- ----------- ----------- -----------
Diluted $ (0.06) $ 0.29 $ (0.03) $ 0.55
----------- ----------- ----------- -----------
Shares used in computing per share amounts:
Basic 344,873 308,275 332,728 305,464
----------- ----------- ----------- -----------
Diluted 344,873 353,120 332,728 351,155
----------- ----------- ----------- -----------
Pro forma statements of operations are intended to present the Company's
operating results, excluding special items described below, for the periods
presented.
During the three and six month periods ended June 30, 2001, the special items
represented additional excess inventory charges, acquired in-process research
and development, amortization of acquisition related items including intangibles
and non-cash deferred stock compensation, restructuring of operations and other
non-recurring items, net, and other special items. The other special items
consisted of a write down of certain marketable equity securities during the
quarter.
During the three month period ended June 30, 2000, the special items represented
acquired in-process research and development and amortization of intangibles
related to acquisitions.
During the six month period ended June 30, 2000, the special items represented
additional excess inventory charges, acquired in-process research and
development, amortization of intangibles, restructuring of operations and other
non-recurring items, net, and other special items. The other special items
consisted of an unplanned gain on sale of equity securities and the write-off of
debt issuance costs resulting from repayment of bank debt during the quarter.
For the three and six month periods ended June 30, 2001, the pro forma
statements are prepared using the Company's calculated tax rate of 13.17% and
0%, respectively, when excluding special items.
In computing diluted pro forma earnings per share for the three and six month
periods ended June 30, 2000, pro forma net income was increased by $2,750 and
$5,498 for interest, respectively, net of taxes, on the $345 million convertible
notes considered dilutive common stock equivalents.
A reconciliation from pro forma net income to the reported results is presented
on the following page.
The format presented above is not intended to be in accordance with Generally
Accepted Accounting Principles.
8
LSI LOGIC CORPORATION
RECONCILIATION OF PRO FORMA NET INCOME TO REPORTED RESULTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended Six Months Ended
------------------------- --------------------------
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
--------- --------- --------- ---------
Pro forma net (loss)/ income $ (20,863) $ 98,226 $ (11,370) $ 186,157
--------- --------- --------- ---------
Special items:
Additional excess inventory charges (108,026) -- (108,026) (11,100)
Amortization of acquisition related items including
intangibles and non-cash deferred stock compensation (71,309) (13,820) (119,665) (25,656)
Acquired in-process research and development (77,500) (16,333) (77,500) (16,333)
Restructuring of operations and other non-recurring items, net (59,839) -- (59,839) (2,781)
Other special items (6,527) -- (6,527) 23,483
Tax provision 31,583 2,503 39,198 3,049
--------- --------- --------- ---------
Total special items (291,618) (27,650) (332,359) (29,338)
--------- --------- --------- ---------
Net (loss)/ income $(312,481) $ 70,576 $(343,729) $ 156,819
--------- --------- --------- ---------
Basic (loss)/ earnings per share:
Pro forma net (loss)/ income $ (0.06) $ 0.32 $ (0.03) $ 0.61
Special items ** (0.85) (0.09) (1.00) (0.10)
--------- --------- --------- ---------
Net (loss)/ income $ (0.91) $ 0.23 $ (1.03) $ 0.51
--------- --------- --------- ---------
Diluted (loss)/ earnings per share*:
Pro forma net (loss)/ income $ (0.06) $ 0.29 $ (0.03) $ 0.55
Special items ** (0.85) (0.08) (1.00) (0.09)
--------- --------- --------- ---------
Net (loss)/ income $ (0.91) $ 0.21 $ (1.03) $ 0.46
--------- --------- --------- ---------
Shares used in computing per share amounts:
Basic 344,873 308,275 332,728 305,464
--------- --------- --------- ---------
Diluted 344,873 353,120 332,728 351,155
--------- --------- --------- ---------
* In computing diluted loss per share for the three and six month periods
ended June 30, 2001, common stock equivalents were excluded from the
computation of diluted loss per share as a result of their antidilutive
effect.
* In computing diluted earnings per share for the three month period ended
June 30, 2000, net income was increased by $2,750 for interest, net of
taxes, on the $345 million convertible notes considered dilutive common
stock equivalents. In computing diluted earnings per share for the six
month period ended June 30, 2000, net income was increased by $5,498 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.
9
LSI LOGIC CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended Six Months Ended
--------------------------- ---------------------------
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
----------- ----------- ----------- -----------
Revenues $ 465,219 $ 644,328 $ 982,418 $ 1,259,514
----------- ----------- ----------- -----------
Costs and expenses:
Cost of revenues:
Cost of revenues 284,759 367,978 595,904 722,378
Additional excess inventory charges 108,026 -- 108,026 11,100
Research and development 127,412 86,801 246,179 167,030
Selling, general and administrative 77,480 75,079 156,451 145,319
Acquired in-process research and development 77,500 16,333 77,500 16,333
Restructuring of operations and other non-recurring items, net 59,839 -- 59,839 2,781
Amortization of acquisition related items including
intangibles and non-cash deferred stock compensation * 71,309 13,820 119,665 25,656
----------- ----------- ----------- -----------
Total costs and expenses 806,325 560,011 1,363,564 1,090,597
----------- ----------- ----------- -----------
(Loss)/ income from operations (341,106) 84,317 (381,146) 168,917
Interest expense (9,864) (10,323) (19,804) (21,216)
Interest income and other, net 3,742 11,507 12,721 18,636
Gain on sale of equity securities -- 15,314 5,302 49,486
----------- ----------- ----------- -----------
(Loss)/ income before income taxes (347,228) 100,815 (382,927) 215,823
(Benefit)/ provision for income taxes (34,747) 30,239 (39,198) 59,004
----------- ----------- ----------- -----------
Net (loss)/ income $ (312,481) $ 70,576 $ (343,729) $ 156,819
----------- ----------- ----------- -----------
(Loss)/ earnings per share:
Basic $ (0.91) $ 0.23 $ (1.03) $ 0.51
----------- ----------- ----------- -----------
Diluted ** $ (0.91) $ 0.21 $ (1.03) $ 0.46
----------- ----------- ----------- -----------
Shares used in computing per share amounts:
Basic 344,873 308,275 332,728 305,464
----------- ----------- ----------- -----------
Diluted 344,873 353,120 332,728 351,155
----------- ----------- ----------- -----------
* The amortization of acquisition related items including intangibles and
non-cash deferred stock compensation for the quarter ended June 30, 2001
are comprised of the following items:
Amortization of continuing intangibles $27,062
Amortization of newly purchased intangibles 16,407
Amortization of non-cash deferred stock compensation 27,840
-------
$71,309
=======
** In computing diluted loss per share for the three and six month periods
ended June 30, 2001, common stock equivalents were excluded from the
computation of diluted loss per share as a result of their antidilutive
effect.
In computing diluted earnings per share for the three month period ended
June 30, 2000, net income was increased by $2,750 for interest, net of
taxes, on the $345 million convertible notes considered dilutive common
stock equivalents. In computing diluted earnings per share for the six
month period ended June 30, 2000, net income was increased by $5,498 for
interest, net of taxes, on the $345 million convertible notes considered
dilutive common stock equivalents.
10
LSI LOGIC CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN MILLIONS)
(UNAUDITED)
June 30, December 31,
ASSETS 2001 2000
-------- --------
Current assets:
Cash and short-term investments $1,141.7 $1,133.2
Accounts receivable, net 301.2 522.7
Inventories 355.7 290.4
Prepaid expenses and other current assets 241.7 125.9
-------- --------
Total current assets 2,040.3 2,072.2
Property and equipment, net 1,133.9 1,278.7
Goodwill and other intangibles 1,232.2 580.9
Other assets 318.7 265.7
-------- --------
Total assets $4,725.1 $4,197.5
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current liabilities $ 570.8 $ 626.0
Current portion of long-term debt, capital lease
obligations and short-term borrowings 0.4 1.0
-------- --------
Total current liabilities 571.2 627.0
Long-term debt, capital lease obligations and
other noncurrent liabilities 1,098.0 1,066.7
-------- --------
Total liabilities 1,669.2 1,693.7
Minority interest in consolidated subsidiaries 5.7 5.7
-------- --------
Stockholders' equity:
Common stock 2,856.1 1,934.7
Deferred stock compensation (163.2) (163.0)
Retained earnings 328.5 672.2
Accumulated other comprehensive income 28.8 54.2
-------- --------
Total stockholders' equity 3,050.2 2,498.1
-------- --------
Total liabilities and stockholders' equity $4,725.1 $4,197.5
-------- --------
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LSI LOGIC CORPORATION
SELECTED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT WHERE NOTED)
(UNAUDITED)
Three Months Ended
--------------------------------------------
June 30, March 31, June 30,
2001 2001 2000
---------- ---------- ----------
Semiconductor revenues $ 413.9 $ 455.0 $ 547.3
SAN Systems revenues $ 51.3 $ 62.2 $ 97.0
Total revenues $ 465.2 $ 517.2 $ 644.3
Percentage change in revenues-qtr./qtr. (a) -10.1% -31.1% 4.7%
Percentage change in revenues-yr./yr. (b) -27.8% -15.9% 28.5%
Capital additions $ 94.1 $ 186.8 $ 139.1
Depreciation / amortization (c) $ 83.9 $ 89.5 $ 81.9
Days sales outstanding 58 63 56
Days of inventory (d) 112 104 70
Current ratio 3.6 3.4 3.9
Quick ratio 2.5 2.5 2.9
R&D as a percentage of revenues 27.4% 23.0% 13.5%
SG&A as a percentage of revenues 16.7% 15.3% 11.7%
Gross margin as a percentage of revenues (d) 38.8% 39.8% 42.9%
Employees (e) 7,526 7,298 6,820
Revenues per employee (in thousands) (f) $ 247.3 $ 283.5 $ 377.9
Diluted shares (in thousands) (g) 344,873 330,384 353,120
(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) Based on pro forma cost of revenues.
(e) Actual number of employees at the end of each period presented.
(f) Revenue per employee is calculated by annualizing revenue for each quarter
presented and dividing it by the number of employees.
(g) Shares used in determining pro forma diluted (loss)/ earnings per share.