EXHIBIT 99.1
FOR IMMEDIATE RELEASE JULY 24, 2002
INVESTOR RELATIONS CONTACT: MEDIA RELATIONS CONTACT:
DIANA MATLEY KEVIN BRETT
408-433-4365 408-433-7150
diana@lsil.com kbrett@lsil.com
CC02-110
LSI LOGIC REPORTS Q2 2002 FINANCIAL RESULTS
The LSI Logic 2002 second quarter news release follows this summary
SECOND QUARTER NEWS RELEASE HIGHLIGHTS
- - Revenues advanced 6 percent to $438 million, high end of prior guidance.
- - Lower per share GAAP* net loss of 17 cents compared to Q1 net loss of 47
cents per share.
- - Reduced per share pro forma**net loss to 6 cents compared to First Call
consensus pro forma net loss estimate of 9 cents.
- - Positive operating cash flow in the second quarter.
- - Bookings increased 23 percent sequentially.
- - Third quarter revenue expected to increase about 10 percent.
- - Anticipated third quarter bottom line improvement to a pro forma net loss of
about 2 cents.
* Generally Accepted Accounting Principles.
** Earnings before acquisition-related amortization and other special items.
LSI LOGIC EXCEEDS Q2 REVENUE AND EARNINGS EXPECTATIONS;
GENERATES POSITIVE CASH FLOW
Revenues increase for third sequential quarter;
Bookings grow for fourth consecutive quarter
Milpitas, California - LSI Logic Corporation (NYSE: LSI) today reported $438
million in revenues in the second quarter of 2002, a 6 percent sequential
increase over the $413 million reported in the first quarter, and a 6 percent
decrease from the $465 million reported in the second quarter of 2001.
"Our second quarter results demonstrate that LSI Logic continues to gain
momentum as all of our key metrics - revenues, gross margin and the bottom line
- - are moving up and to the right," said Wilfred J. Corrigan, LSI Logic chairman
and chief executive officer. "Our bookings increased sequentially each quarter
for the past four quarters. We achieved positive operating cash flow in the
second quarter. We are on target to return to pro forma profitability in the
second half of the year.
"The performance of our Storage Systems and Consumer businesses more than
compensated for the weakness in the server and telecom sectors. During the
quarter, our Storage Systems business produced strong results in both OEM and
co-branded product sales. Our Storage Components Group recorded key design wins
in the second quarter. Our Consumer business rebounded from first quarter
seasonality and was driven by strong video game and DVD markets. In
Communications, the enterprise sector continued its recovery and is expected to
continue its growth trend."
The 2002-second quarter GAAP net loss was reduced to $62 million or 17 cents a
diluted share, a $109 million improvement over the first quarter. The lower
2002-second quarter GAAP net loss represented a $250 million improvement over
the 2001-second quarter net loss. Cash and short-term investments grew $41
million sequentially and totaled $1.01 billion at the end of the second quarter.
Pro forma 2002 second quarter net loss was $21 million or 6 cents a diluted
share, a $21 million improvement over the pro forma first quarter 2002 net loss.
The company reported a pro forma net loss of $21 million or 6 cents a diluted
share in the second quarter of 2001.
"LSI Logic continued its progress in executing its financial plan in Q2 and
entered the second half of 2002 in a strong position both in terms of cash and
short-term investments, and a healthy balance sheet," said Bryon Look, LSI Logic
chief financial officer.
LSI LOGIC BUSINESS OUTLOOK
LSI Logic expects 2002 Q3 revenues to grow about 10 percent sequentially from
the $438 million reported in the second quarter.
The company anticipates reporting a pro forma third quarter loss of about 2
cents a diluted share and gross margin of approximately 39 percent.
The third quarter tax provision is expected to be a charge of approximately $6
million.
Capital spending is expected to be about $25 million in the third quarter and
under $100 million for 2002.
Third quarter depreciation is projected to be about $60 million.
The third quarter diluted common share count will be approximately 373 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 BUSINESS, TECHNOLOGY AND PRODUCT ANNOUNCEMENTS
- - LSI Logic signed an agreement with IBM Corporation calling for LSI Logic to
acquire the assets of IBM's Mylex business unit, including its RAID
technology, storage products and engineering teams. The cash transaction is
anticipated to close in LSI Logic's third quarter ending September 30 and is
expected to be accretive to LSI Logic earnings.
http://www.lsilogic.com/news/corporate_news/cr20020702.html
- - LSI Logic announced that its cable modem models featuring its single-chip
demodulator received DOCSIS(TM) 1.1 (data over cable service interface
specification) and DOCSIS 1.0 certification from CableLabs. The development
and certification is a direct result of LSI Logic's system-on-a-chip
expertise and its strategic relationship with Correlant, the top OEM supplier
of DOCSIS cable modems.
http://www.lsilogic.com/news/product_news/pr20020620.html
- - LSI Logic secured a key storage components design win with IBM, calling for
LSI Logic to supply its Ultra320 SCSI controller for IBM's new eServer x235
system. LSI Logic expects its Ultra320 SCSI market share will be above 65
percent as IBM and other OEMs announce products that incorporate LSI Logic's
SCSI solution.
http://www.lsilogic.com/news/product_news/pr20020611.html
- - LSI Logic announced the availability of a single-chip standard product, the
StreamPack(TM) managed Ethernet switch platform for manufacturers of desktop,
enterprise, LAN, WAN and Voice over IP applications. StreamPack is
manufactured using the company's 0.18-micron process technology and
integrates 24 10/100 ports, two 10/100/1000 Gigabit ports and operates at 1.8
volts.
http://www.lsilogic.com/news/product_news/pr20020603a.html
- - LSI Logic became the first System-on-Chip (SOC) provider to offer the
MIPS64(TM) 5Kf(TM) microprocessor core for single-chip customer designs
utilizing LSI Logic's high performance Gflx(TM) 0.11-micron (drawn) process
technology. The MIPS64 intellectual property core operates at clock speeds up
to 333 MHz.
http://www.lsilogic.com/news/product_news/pr20020502.html
- - LSI Logic announced the combination of the company's Ultra320 SCSI
technology, the dual-channel LSI53C1030 controller, with Intel's Itanium(R) 2
processor to deliver high-performance storage solutions. LSI Logic's Ultra320
SCSI controllers will be used in several platforms expected to be available
later this year.
http://www.lsilogic.com/news/product_news/pr20020708a.html
- - LSI Logic reported that it has delivered 13 million MPEG decoder and QPSK
demodulator chips that have been incorporated into 7 million satellite
set-top boxes (STBs) shipped during the past year. Industry leaders Canal+
and EchoStar Communications Corporation (DISH Network) design, build and
deploy digital satellite STBs that utilize these LSI Logic silicon solutions.
http://www.lsilogic.com/news/product_news/pr20020528.html
- - LSI Logic introduced its ComCentrix(R) standard product, a single-chip
communication I/O solution for advanced networked peripherals. ComCentrix
integrates Universal Serial Bus (USB) 2.0 functionality and the USB 2.0
Transceiver Macrocell Interface (UTMI) with a comprehensive set of standard
I/Os.
http://www.lsilogic.com/news/product_news/pr20020610.html
- - LSI Logic shipped its first production samples of the industry's first PCI
SCSI RAID storage adapters with Ultra320 SCSI support. The company is the
leading supplier of host-based RAID to global PC and server markets with
nearly two million RAID solutions shipped to OEMs.
http://www.lsilogic.com/news/product_news/pr20020603b.html
- - LSI Logic announced the availability of a transceiver core technology to
support next generation broadband transmission and networking ASICs. In a
single chip, the Ultra HyperPHY(TM) is a system-level ASIC solution that
combines high performance with low power to provide cost advantages for
customers who are also addressing a time-to-market need.
http://www.lsilogic.com/news/product_news/pr20020501a.html
- - LSI Logic Storage Systems, Inc. addressed customer concerns about data
protection with the addition of replication features to its SANtricity(TM)
Storage Manager, a software capability that enables centralized
administration consolidation and online management of storage.
http://www.lsilogic.com/news/product_news/pr20020528b.html
- - LSI Logic Storage Systems, Inc. announced that an independent benchmark study
by the Storage Performance Council (SPC) confirmed that LSI Logic storage
systems demonstrated clear leadership in a price/performance comparison with
other storage systems. The study confirmed that customers using LSI Logic
storage systems will realize a faster return on storage investments through
increased productivity.
http://www.lsilogic.com/news/product_news/pr20020501d.html
- - LSI Logic announced the availability of MegaRAID(R) Serial ATA samples that
will enable system builders an easier upgrade to storage devices,
point-to-point configuration, hot-plug drive support and improved power
management.
http://www.lsilogic.com/news/product_news/pr20020708b.html
- - LSI Logic became the first company to demonstrate over 100,000 I/Os per
second performance from a single-chip Ultra320 SCSI controller. Collaborating
with industry-leading drive manufacturers, LSI Logic's first-to-market
Ultra320 technology enables enterprise customers to have access to faster,
more reliable data transfer rates.
http://www.lsilogic.com/news/product_news/pr20020514.html
- - LSI Logic reported that it has shipped one million cable transceivers for
DOCSIS(TM) cable modems. In addition, the company introduced a new cable
modem product for Voice-over-IP (VoIP) applications building a leadership
position in the cable modem market.
http://www.lsilogic.com/news/product_news/pr20020716.html
LSI LOGIC CONFERENCE CALL INFORMATION
LSI Logic will hold a conference call today at 2 p.m. PDT to discuss 2002-second
quarter financial results. The number is 1-785-832-1523. Internet users can
access the conference call by visiting www.videonewswire.com/event.asp?id=6179.
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 1-800-945-0830. (International,
1-402-220-0669). The webcast replay will be available until July 31.
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 projections of growth in
the communications, consumer, storage components and storage systems businesses,
estimates of revenue growth, earnings, gross margins, gains from investment
income, tax rates, capital spending, depreciation and common share count 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 due to worsening global
business conditions or 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.
ABOUT LSI LOGIC
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 1621 Barber Lane, Milpitas, CA 95035, 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.
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,
2002 2001 2002 2001
--------- --------- --------- ---------
Revenues $ 437,768 $ 465,219 $ 850,277 $ 982,418
========= ========= ========= =========
Costs and expenses:
Cost of revenues 269,632 284,759 535,541 595,904
Research and development 112,833 127,412 227,176 246,179
Selling, general and administrative 57,366 77,480 115,546 156,451
--------- --------- --------- ---------
Total costs and expenses 439,831 489,651 878,263 998,534
--------- --------- --------- ---------
Loss from operations (2,063) (24,432) (27,986) (16,116)
Interest expense (15,486) (9,864) (31,320) (19,804)
Interest income and other, net 2,621 10,269 6,267 24,550
--------- --------- --------- ---------
Loss before income taxes (14,928) (24,027) (53,039) (11,370)
Provision/ (benefit) for income taxes 6,000 (3,164) 10,250 --
--------- --------- --------- ---------
Pro forma net loss $ (20,928) $ (20,863) $ (63,289) $ (11,370)
========= ========= ========= =========
Pro forma loss per share:
Basic $ (0.06) $ (0.06) $ (0.17) $ (0.03)
========= ========= ========= =========
Diluted $ (0.06) $ (0.06) $ (0.17) $ (0.03)
========= ========= ========= =========
Shares used in computing per share amounts:
Basic 369,672 344,873 368,769 332,728
========= ========= ========= =========
Diluted 369,672 344,873 368,769 332,728
========= ========= ========= =========
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, 2002, 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 a $22 million tax benefit as a result of changes in the tax laws in the
first quarter of 2002.
During the three and six month periods ended June 30, 2001, the special items
represented additional excess inventory and related 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 three months ended June 30, 2001.
For the three and six month periods ended June 30, 2002, the pro forma
statements are prepared using the Company's calculated tax expense of $6,000 and
$10,250, respectively, when excluding special items. 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 loss per share for the three and six month
periods ended June 30, 2002 and 2001, common stock equivalents were excluded
from the computation of diluted loss per share as a result of their antidilutive
effect.
A reconciliation from pro forma net loss 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 LOSS TO REPORTED RESULTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended Six Months Ended
----------------------- -----------------------
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
--------- --------- --------- ---------
Pro forma net loss $ (20,928) $ (20,863) $ (63,289) $ (11,370)
========= ========= ========= =========
Special items:
Additional excess inventory and related charges (4,772) (108,026) (45,526) (108,026)
Amortization of acquisition related items including
intangibles and non-cash deferred stock compensation (42,996) (71,309) (89,074) (119,665)
Acquired in-process research and development -- (77,500) -- (77,500)
Restructuring of operations and other non-recurring items, net 6,405 (59,839) (58,655) (59,839)
Other special items -- (6,527) -- (6,527)
Tax benefit -- 31,583 22,500 39,198
--------- --------- --------- ---------
Total special items (41,363) (291,618) (170,755) (332,359)
--------- --------- --------- ---------
Net loss $ (62,291) $(312,481) $(234,044) $(343,729)
========= ========= ========= =========
Basic loss per share:
Pro forma net loss $ (0.06) $ (0.06) $ (0.17) $ (0.03)
Special items ** (0.11) (0.85) (0.46) (1.00)
========= ========= ========= =========
Net loss $ (0.17) $ (0.91) $ (0.63) $ (1.03)
========= ========= ========= =========
Diluted loss per share*:
Pro forma net loss $ (0.06) $ (0.06) $ (0.17) $ (0.03)
Special items ** (0.11) (0.85) (0.46) (1.00)
========= ========= ========= =========
Net loss $ (0.17) $ (0.91) $ (0.63) $ (1.03)
========= ========= ========= =========
Shares used in computing per share amounts:
Basic 369,672 344,873 368,769 332,728
========= ========= ========= =========
Diluted 369,672 344,873 368,769 332,728
========= ========= ========= =========
* In computing diluted loss per share for the three and six month periods
ended June 30, 2002 and 2001, common stock equivalents were excluded from
the computation of diluted loss per share as a result of their antidilutive
effect.
** This line item includes rounding adjustments.
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,
2002 2001 2002 2001
--------- --------- ----------- -----------
Revenues $ 437,768 $ 465,219 $ 850,277 $ 982,418
========= ========= =========== ===========
Costs and expenses:
Cost of revenues:
Cost of revenues 269,632 284,759 535,541 595,904
Additional excess inventory and related charges 4,772 108,026 45,526 108,026
Research and development 112,833 127,412 227,176 246,179
Selling, general and administrative 57,366 77,480 115,546 156,451
Acquired in-process research and development -- 77,500 -- 77,500
Restructuring of operations and other non-recurring items, net (6,405) 59,839 58,655 59,839
Amortization of acquisition related items including
intangibles and non-cash deferred stock compensation* 42,996 71,309 89,074 119,665
--------- --------- ----------- -----------
Total costs and expenses 481,194 806,325 1,071,518 1,363,564
--------- --------- ----------- -----------
Loss from operations (43,426) (341,106) (221,241) (381,146)
Interest expense (15,486) (9,864) (31,320) (19,804)
Interest income and other, net 2,621 3,742 6,267 18,023
--------- --------- ----------- -----------
Loss before income taxes (56,291) (347,228) (246,294) (382,927)
Provision/ (benefit) for income taxes 6,000 (34,747) (12,250) (39,198)
--------- --------- ----------- -----------
Net loss $ (62,291) $(312,481) $ (234,044) $ (343,729)
========= ========= =========== ===========
Loss per share:
Basic $ (0.17) $ (0.91) $ (0.63) $ (1.03)
========= ========= =========== ===========
Diluted ** $ (0.17) $ (0.91) $ (0.63) $ (1.03)
========= ========= =========== ===========
Shares used in computing per share amounts:
Basic 369,672 344,873 368,769 332,728
========= ========= =========== ===========
Diluted 369,672 344,873 368,769 332,728
========= ========= =========== ===========
* The amortization of acquisition related items including intangibles and
non-cash deferred stock compensation for the three month period ended June
30, 2002 are comprised of the following items:
Amortization of intangibles $ 19,147
Amortization of non-cash deferred stock compensation 23,849
--------
$ 42,996
========
On January 1, 2002, we adopted Statement of Financial Accounting Standard
("SFAS") No. 142 "Goodwill and Other Intangible Assets". SFAS No. 142
changes the accounting for goodwill from an amortization method to an
impairment-only approach. As a result of the adoption of SFAS No. 142,
amortization of goodwill and intangibles will be lower by approximately $112
million in 2002 as compared to 2001 and approximately $952 million of
goodwill will no longer be amortized. For more information regarding the
adoption of SFAS No. 142, please refer to our Annual Report on Form 10-K for
the fiscal year ended December 31, 2001 and our current report on Form 10-Q
for the three month period ended March 31, 2002.
** In computing diluted loss per share for the three and six month periods
ended June 30, 2002 and 2001, common stock equivalents were excluded from
the computation of diluted loss per share as a result of their antidilutive
effect.
LSI LOGIC CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN MILLIONS)
(UNAUDITED)
June 30, December 31,
2002 2001
---------- ------------
ASSETS
Current assets:
Cash and short-term investments $ 1,008.5 $ 1,013.3
Accounts receivable, net 244.7 191.7
Inventories 197.8 256.6
Prepaid expenses and other current assets 311.3 307.3
---------- ----------
Total current assets 1,762.3 1,768.9
Property and equipment, net 819.3 944.4
Goodwill and other intangibles 1,273.0 1,319.8
Other assets 572.8 592.7
---------- ----------
Total assets $ 4,427.4 $ 4,625.8
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current liabilities $ 478.7 $ 509.7
Current portion of long-term debt, capital lease
obligations and short-term borrowings 0.3 0.3
---------- ----------
Total current liabilities 479.0 510.0
Long-term debt and capital lease obligations 1,334.3 1,335.8
Deferred tax and other long-term liabilities 285.9 294.2
---------- ----------
Total liabilities 2,099.2 2,140.0
Minority interest in consolidated subsidiaries 6.7 5.9
---------- ----------
Stockholders' equity:
Common stock 2,939.4 2,909.3
Deferred stock compensation (76.5) (124.1)
Accumulated deficit (553.8) (319.8)
Accumulated other comprehensive income 12.4 14.5
---------- ----------
Total stockholders' equity 2,321.5 2,479.9
---------- ----------
Total liabilities and stockholders' equity $ 4,427.4 $ 4,625.8
========== ==========
LSI LOGIC CORPORATION
SELECTED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT WHERE NOTED)
(UNAUDITED)
Three Months Ended
-------------------------------------------
June 30, March 31, June 30,
2002 2002 2001
--------- --------- ---------
Semiconductor revenues $ 354.8 $ 352.6 $ 413.9
Storage Systems revenues $ 83.0 $ 59.9 $ 51.3
Total revenues $ 437.8 $ 412.5 $ 465.2
Percentage change in revenues-qtr./qtr.(a) 6.1% 1.7% -10.1%
Percentage change in revenues-yr./yr.(b) -5.9% -20.2% -27.8%
Days sales outstanding 50 48 58
Days of inventory(d) 66 66 112
Current ratio 3.7 3.4 3.6
Quick ratio 2.6 2.4 2.5
R&D as a percentage of revenues 25.8% 27.7% 27.4%
SG&A as a percentage of revenues 13.1% 14.1% 16.7%
Gross margin as a percentage of revenues(d) 38.4% 35.5% 38.8%
Employees(e) 5,445 5,632 7,526
Revenues per employee (in thousands)(f) $ 321.6 $ 293.0 $ 247.3
Diluted shares (in thousands)(g) 369,672 367,578 344,873
Selected Cash Flow information
Purchase of property and equipment $ 8.8 $ 5.1 $ 86.0
Depreciation/amortization(c) $ 62.1 $ 64.5 $ 83.9
In-process research and development $ -- $ -- $ 77.5
Issuance of common stock for employee stock
purchase and option programs $ 25.0 $ 1.6 $ 32.2
(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) Represents depreciation of fixed assets and amortization of software.
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 per share.