Exhibit 99.2
FOR IMMEDIATE RELEASE JANUARY 23, 2002
INVESTOR RELATIONS CONTACT: MEDIA RELATIONS CONTACT:
DIANA MATLEY KEVIN BRETT
408-433-4365 408-433-7150
diana@lsil.com kbrett@lsil.com
CC02-23
LSI Logic Reports 2001 and Q4 Financial Results
MILPITAS, CALIFORNIA - LSI Logic Corporation (NYSE: LSI) today reported $406
million in revenues in the 2001 fourth quarter, a 2.3 percent increase over the
$397 million reported in the third quarter and a 46 percent decrease from the
$751 million reported in the fourth quarter of 2000.
Pro forma 2001 fourth quarter net loss was $74 million or 20 cents a diluted
share, a $30 million improvement over the pro forma third quarter net loss of
$104 million or 29 cents a diluted share. The company reported pro forma net
income of $116 million or 34 cents a diluted share in the fourth quarter of
2000. Cash and short-term investments increased $239 million in the fourth
quarter to $1.01 billion.
"The combination of a sequential revenue increase and reduced operating expenses
enabled LSI Logic to meet its guidance for top-line growth and exceed
expectations for improvement of its bottom line in the fourth quarter," said
Wilfred J. Corrigan, LSI Logic chairman and chief executive officer. "We have
already taken significant steps this month to reduce our operating expenses,
thus lowering our break-even point.
"We anticipate growth in our communications, storage components and storage
systems businesses in the first quarter. Overall, we expect modest sequential
revenue growth in the first quarter, despite normal seasonality in our consumer
electronics business. We also anticipate returning to profitability in the
second half of 2002."
LSI Logic recorded 2001 revenues of $1.78 billion, a 35 percent decrease from
the $2.74 billion in 2000.
Pro forma 2001 net loss, before amortization of goodwill and other special
items, was $190 million or a loss of 54 cents a diluted share. Pro forma 2000
net income was $417 million or $1.21 a diluted share. Cash and short-term
investments decreased slightly to $1.01 billion at the end of 2001 from the
$1.13 billion at the end of 2000.
"We improved both our top-line and bottom-line performance and we have been
aggressive about reducing costs," said Bryon Look, LSI Logic executive vice
president and chief financial officer. "We are targeting to generate positive
cash flow in the second quarter. We are positioned to fully capitalize on the
coming recovery of our targeted communications, consumer and storage markets."
LSI LOGIC BUSINESS OUTLOOK
LSI Logic expects 2002 Q1 revenues to grow between 0 to 3 percent sequentially
from the $406 million reported in the fourth quarter.
The company anticipates reporting a pro forma first quarter loss of about 14
cents a diluted share and gross margin in the range of 32-34 percent.
The company does not anticipate selling any equity investments in the first
quarter.
The first quarter pro forma tax provision is expected to be a charge in the
range of $3 million to $5 million.
Capital spending is expected to be less than $40 million in the first quarter
and under $200 million for 2002.
First quarter depreciation is projected to be about $70 million.
The first quarter diluted common share count will be approximately 370 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 TECHNOLOGY AND PRODUCT ANNOUNCEMENTS
- - LSI Logic Storage Systems, Inc. and Storage Technology Corp. announced a
strategic alliance, leveraging LSI Logic's manufacturing and engineering
expertise and StorageTek's worldwide distribution, support and professional
services, for the open systems storage market.
http://www.lsilogic.com/news/product_news/pr20020122a.html
- - LSI Logic announced four Ultra320 SCSI design wins with leading OEM providers,
including Dell Computer, which are expected to exceed $250 million in revenues
over the next three years.
http://www.lsilogic.com/news/product_news/pr20011112a.html
- - LSI Logic introduced the first single-chip DVD recorder systems processor, the
DiMeNsion(TM)-8600, supporting all DVD recording and playback formats, enabling
feature-rich DVD recorder solutions and reducing system-level costs and design
complexity for consumer electronics manufacturers.
http://www.lsilogic.com/news/product_news/pr20020107a.html
- - LSI Logic Storage Components and Storage Systems, Inc. teamed with Brocade to
deliver an end-to-end two-gigabit Fibre Channel storage solution. This solution
can deliver data up to four times faster in high throughput applications
compared to previous generation one-gigabit systems.
http://www.lsilogic.com/news/product_news/pr20020108.html
http://www.lsilogic.com/news/product_news/pr20011221.html
- - LSI Logic announced the availability of the industry's first ARM946E-S(TM)
processor core to run at 200MHz, a significant performance enhancement to
earlier implementations of the intellectual property core. LSI Logic has already
won a number of key-customer SoC designs with the new implementation of the
ARM946E-S core.
http://www.lsilogic.com/news/product_news/pr20011031a.html
- - NEC selected LSI Logic's intelligent IDE RAID storage adapter for its market
leading IDE RAID servers. The NEC design win underscores market demand for the
MegaRAID i4, the world's first intelligent half-size, four channel PCI IDE RAID
solution. http://www.lsilogic.com/news/product_news/pr20011031a.html
- - Compagnie Generale de Geophysique (CGG), a global oilfield services company,
installed 100 terabytes of LSI Logic Storage Systems, Inc.'s MetaStor(R) E4600
storage as part of Europe's first two gigabit per second Fibre Channel SAN.
http://www.lsilogic.com/news/product_news/pr20011217.html
- - LSI Logic introduced its new thermally enhanced EPBGA-T package, designed to
provide 20 percent lower thermal resistance than standard plastic ball grid
array packages. The thermally enhanced plastic ball grid array targets
cost-sensitive, performance-driven communications, consumer and storage
applications.
http://lsilogic.com/news/product_news/pr20011204.html
- - LSI Logic Storage Systems, Inc. announced the MetaStor(R) E4600HPCx storage
system, designed expressly for high throughput applications such as complex
modeling, seismic processing and steaming video.
http://www.lsilogic.com/news/product_news/pr20011113a.html
- - LSI Logic Storage Systems, Inc. announced the general availability of the new
36 gigabyte, 15000-RPM disk drive for its MetaStor(R) E-Series family of storage
systems, enabling up to 40 percent more input/output operations per second.
http://www.lsilogic.com/news/product_news/pr20011218.html
- - ISG Broadband Inc. became the first company to adopt LSI Logic's Hi-IQ(TM) RF
tuner, reducing the power and form factor of ISG's RF receiver modules. LSI
Logic's Hi-IQ tuner enables the industry's first 3.3-volt, highly integrated
cable receiver module series.
http://www.lsilogic.com/news/product_news/pr20011218.html
- - LSI Logic announced that VMIC has selected LSI Logic's dual-channel PCI to
Fibre Channel controller to power VMIC's first-ever 2 Gbits host bus adapters
for storage area networks (SANs), clustering, video editing and date
warehousing.
http://www.lsilogic.com/news/product_news/pr20011031b.html
- - LSI Logic and Pinnacle Systems, Inc. announced plans to develop a complete
low-cost analog and digital video editing and authoring solution based on LSI
Logic's iDVx(TM) single-chip DV/MPEG codec. Pinnacle's new consumer product will
support both analog and DV camcorder video input and will provide
theater-quality video to tape, CD, DVD or Internet video streams.
http://www.lsilogic.com/news/product_news/pr20011112d.html
LSI Logic Conference Call Information: LSI Logic will hold a conference call
today at 2 p.m. PDT to discuss fourth quarter and 2001 financial results. The
access number is 1-785-832-1077. Internet users can access the conference call
by visiting www.videonewswire.com/event.asp?id=2540. 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 1-800-374-1216. The webcast replay will be available until
January 30.
SAFE HARBOR FOR FORWARD LOOKING STATEMENTS: This news release and the statements
by LSI Logic management 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. Readers are cautioned that
these forward-looking statements are only predictions and may differ materially
from the actual future events or results. Readers are referred to the documents
filed by LSI Logic with the SEC, and specifically the most recent reports on
Form 10-K, 10-Q and 8-K. Forward-looking statements include the efficacy of cost
reduction measures and reduction of operating expenses, projections of growth in
the communications, storage components and storage systems businesses, estimates
of revenue growth, earnings, gross margins, gains from investment income, tax
rates, capital spending and depreciation made in this news release. 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 that may
affect the company's actual results include, but are not necessarily limited to
the timing and success of new product introductions, the continued availability
of appropriate levels of manufacturing capacity, the realization of benefits
from the company's strategic relationships, and investments and disruptions in
general economic activity caused by the effects of terrorist activities and
armed conflict. The extent to which the company may not realize the cost savings
it expects from the reduction in operating expenses may also impact its future
performance. The company operates in an industry sector where securities' values
are highly volatile and may be influenced by the cyclical nature of the
industry, the unpredictability of the economy 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:
3. 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.
4. 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.
LSI LOGIC CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended Year Ended
---------------------------- ----------------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2001 2000 2001 2000
----------- ----------- ----------- -----------
Revenues $ 405,830 $ 750,575 $ 1,784,923 $ 2,737,667
----------- ----------- ----------- -----------
Costs and expenses:
Cost of revenues 277,888 422,046 1,160,432 1,557,232
Research and development 121,295 110,237 503,108 378,936
Selling, general and administrative 70,731 82,544 307,310 306,962
----------- ----------- ----------- -----------
Total costs and expenses 469,914 614,827 1,970,850 2,243,130
----------- ----------- ----------- -----------
(Loss)/ income from operations (64,084) 135,748 (185,927) 494,537
Interest expense (14,737) (10,181) (44,578) (40,384)
Interest income and other, net 4,429 14,230 35,275 45,837
Recurring investment income -- 15,305 5,302 55,428
----------- ----------- ----------- -----------
(Loss)/ income before income taxes (74,392) 155,102 (189,928) 555,418
Provision for income taxes -- 38,776 -- 138,856
----------- ----------- ----------- -----------
Pro forma net (loss)/ income $ (74,392) $ 116,326 $ (189,928) $ 416,562
=========== =========== =========== ===========
Pro forma (loss)/ earnings per share:
Basic $ (0.20) $ 0.37 $ (0.54) $ 1.34
=========== =========== =========== ===========
Diluted $ (0.20) $ 0.34 $ (0.54) $ 1.21
=========== =========== =========== ===========
Shares used in computing per share amounts:
Basic 365,998 317,976 349,280 310,813
=========== =========== =========== ===========
Diluted 365,998 353,408 349,280 354,337
=========== =========== =========== ===========
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 month period ended December 31, 2001, the special items
represented additional excess inventory and related charges, 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 net write down
of certain equity securities and the write-off of debt issuance costs associated
with the repayment of bank debt during the quarter. During the year ended
December 31, 2001, the special items consisted of the items above and acquired
in-process research and development. The other special items consisted of the
items above and the write-off of debt issuance costs associated with the
restructuring of a master lease and security agreement.
During the three month period ended December 31, 2000, the special items
represented acquired in-process research and development and amortization of
acquisition related items including intangibles and non-cash deferred stock
compensation.
During the year ended December 31, 2000, the special items represented those in
the previous paragraph, additional excess inventory and related charges,
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, a gain on the sale of a U.S. facility and the write-off of debt
issuance costs resulting from the repayment of bank debt.
For the three and twelve month periods ended December 31, 2001, the pro forma
statements are prepared using the Company's calculated tax rate of 0% when
excluding special items. For the three and twelve month periods ended December
31, 2000, the pro forma statements are prepared using the Company's calculated
tax rate of 25% when excluding special items.
In computing diluted pro forma earnings per share for the three and twelve month
periods ended December 31, 2000, pro forma net income was increased by $2,750
and $10,997 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.
LSI LOGIC CORPORATION
RECONCILIATION OF PRO FORMA NET INCOME TO REPORTED RESULTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended Year Ended
------------------------ ------------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2001 2000 2001 2000
--------- --------- --------- ---------
Pro forma net (loss)/ income $ (74,392) $ 116,326 $(189,928) $ 416,562
--------- --------- --------- ---------
Special items:
Additional excess inventory and related charges (52,500) -- (210,564) (11,100)
Amortization of acquisition related items including
intangibles and non-cash deferred stock compensation (88,683) (46,949) (292,878) (113,761)
Acquired in-process research and development -- (6,950) (96,600) (77,438)
Restructuring of operations and other non-recurring items, net (27,269) -- (219,639) (2,781)
Other special items (7,300) -- (21,544) 29,221
Tax (provision)/ benefit -- (742) 39,198 (4,103)
--------- --------- --------- ---------
Total special items (175,752) (54,641) (802,027) (179,962)
--------- --------- --------- ---------
Net (loss)/ income $(250,144) $ 61,685 $(991,955) $ 236,600
========= ========= ========= =========
Basic (loss)/ earnings per share:
Pro forma net (loss)/ income $ (0.20) $ 0.37 $ (0.54) $ 1.34
Special items ** (0.48) (0.18) (2.30) (0.58)
--------- --------- --------- ---------
Net (loss)/ income $ (0.68) $ 0.19 $ (2.84) $ 0.76
========= ========= ========= =========
Diluted (loss)/ earnings per share*:
Pro forma net (loss)/ income $ (0.20) $ 0.34 $ (0.54) $ 1.21
Special items ** (0.48) (0.16) (2.30) (0.51)
--------- --------- --------- ---------
Net (loss)/ income $ (0.68) $ 0.18 $ (2.84) $ 0.70
========= ========= ========= =========
Shares used in computing per share amounts:
Basic 365,998 317,976 349,280 310,813
========= ========= ========= =========
Diluted 365,998 353,408 349,280 354,337
========= ========= ========= =========
* In computing diluted loss per share for the three and twelve month periods
ended December 31, 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
December 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. In computing diluted earnings per share for the year
ended December 31, 2000, net income was increased by $10,997 for interest,
net of taxes, on the $345 million convertible notes considered dilutive
common stock equivalents.
** This line item includes rounding adjustments.
LSI LOGIC CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended Year Ended
--------------------------- ---------------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2001 2000 2001 2000
----------- ----------- ----------- -----------
Revenues $ 405,830 $ 750,575 $ 1,784,923 $ 2,737,667
----------- ----------- ----------- -----------
Costs and expenses:
Cost of revenues:
Cost of revenues 277,888 422,046 1,160,432 1,557,232
Additional excess inventory and related charges 52,500 -- 210,564 11,100
Research and development 121,295 110,237 503,108 378,936
Selling, general and administrative 70,731 82,544 307,310 306,962
Acquired in-process research and development -- 6,950 96,600 77,438
Restructuring of operations and other non-recurring items, net 27,269 -- 219,639 2,781
Amortization of acquisition related items including
intangibles and non-cash deferred stock compensation * 88,683 46,949 292,878 113,761
----------- ----------- ----------- -----------
Total costs and expenses 638,366 668,726 2,790,531 2,448,210
----------- ----------- ----------- -----------
(Loss)/ income from operations (232,536) 81,849 (1,005,608) 289,457
Interest expense (14,737) (10,181) (44,578) (41,573)
Interest income and other, net (2,871) 14,230 13,731 51,575
Gain on sale of equity securities -- 15,305 5,302 80,100
----------- ----------- ----------- -----------
(Loss)/ income before income taxes (250,144) 101,203 (1,031,153) 379,559
Provision/ (benefit) for income taxes -- 39,518 (39,198) 142,959
----------- ----------- ----------- -----------
Net (loss)/ income $ (250,144) $ 61,685 $ (991,955) $ 236,600
=========== =========== =========== ===========
(Loss)/ earnings per share:
Basic $ (0.68) $ 0.19 $ (2.84) $ 0.76
=========== =========== =========== ===========
Diluted ** $ (0.68) $ 0.18 $ (2.84) $ 0.70
=========== =========== =========== ===========
Shares used in computing per share amounts:
Basic 365,998 317,976 349,280 310,813
=========== =========== =========== ===========
Diluted 365,998 353,408 349,280 354,337
=========== =========== =========== ===========
* The amortization of acquisition related items including intangibles and
non-cash deferred stock compensation for the three month period ended
December 31, 2001 are comprised of the following items:
Amortization of continuing intangibles $ 59,969
Amortization of newly purchased intangibles --
Amortization of non-cash deferred stock compensation 28,714
---------
$ 88,683
** In computing diluted loss per share for the three and twelve month periods
ended December 31, 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
December 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. In computing diluted earnings per share for the year
ended December 31, 2000, net income was increased by $10,997 for interest,
net of taxes, on the $345 million convertible notes considered dilutive
common stock equivalents.
LSI LOGIC CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN MILLIONS)
(UNAUDITED)
December 31, December 31,
ASSETS 2001 2000
---------- ----------
Current assets:
Cash and short-term investments $ 1,013.3 $ 1,133.2
Accounts receivable, net 191.7 522.7
Inventories 256.6 290.4
Prepaid expenses and other current assets 307.3 125.9
---------- ----------
Total current assets 1,768.9 2,072.2
Property and equipment, net 944.4 1,278.7
Goodwill and other intangibles 1,319.8 580.9
Other assets 592.7 265.7
---------- ----------
Total assets $ 4,625.8 $ 4,197.5
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current liabilities $ 509.7 $ 626.0
Current portion of long-term debt, capital lease
obligations and short-term borrowings 0.3 1.0
---------- ----------
Total current liabilities 510.0 627.0
Long-term debt, capital lease obligations and
other noncurrent liabilities 1,630.0 1,066.7
---------- ----------
Total liabilities 2,140.0 1,693.7
Minority interest in consolidated subsidiaries 5.9 5.7
---------- ----------
Stockholders' equity:
Common stock 2,909.3 1,934.7
Deferred stock compensation (124.1) (163.0)
Accumulated (deficit)/ earnings (319.8) 672.2
Accumulated other comprehensive income 14.5 54.2
---------- ----------
Total stockholders' equity 2,479.9 2,498.1
---------- ----------
Total liabilities and stockholders' equity $ 4,625.8 $ 4,197.5
========== ==========
LSI LOGIC CORPORATION
SELECTED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT WHERE NOTED)
(UNAUDITED)
Three Months Ended
------------------------------------------
Dec. 31, Sept. 30, Dec. 31,
2001 2001 2000
---------- ---------- ----------
Semiconductor revenues $ 353.4 $ 351.4 $ 642.5
SAN Systems revenues $ 52.4 $ 45.3 $ 108.1
Total revenues $ 405.8 $ 396.7 $ 750.6
Percentage change in revenues-qtr./qtr. (a) 2.3% -14.7% 3.2%
Percentage change in revenues-yr./yr. (b) -45.9% -45.5% 28.3%
Capital additions $ 43.9 $ 59.5 $ 247.9
Depreciation / amortization (c) $ 72.5 $ 82.7 $ 87.8
Days sales outstanding 43 51 63
Days of inventory (d) 83 97 62
Current ratio 3.5 2.1 3.3
Quick ratio 2.4 1.4 2.6
R&D as a percentage of revenues 29.9% 34.2% 14.7%
SG&A as a percentage of revenues 17.4% 20.2% 11.0%
Gross margin as a percentage of revenues (d) 31.5% 27.7% 43.8%
Employees (e) 6,742 7,352 7,221
Revenues per employee (in thousands) (f) $ 240.8 $ 215.8 $ 415.8
Diluted shares (in thousands) (g) 365,998 364,441 353,408
(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.