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LSI Logic to Close Colorado Springs Manufacturing Facility
Rapid Decline in Demand and Inventory Correction Prompts Closure Decision
MILPITAS, Calif., April 11 /PRNewswire/ -- In response to the adverse economic climate and the widespread inventory correction in worldwide communications and storage markets, LSI Logic (NYSE: LSI - news) today announced plans to close its Colorado Springs manufacturing facility.
The closure of the 1635 Aeroplaza Drive factory will take place in August. The facility, which commenced manufacturing in 1983, uses mature process technologies. Approximately 500 employees will be impacted by the decision. Many of these employees will be offered transfers and the balance will receive a competitive severance package.
``This decision is precipitated by the weakening national economy, sharp decline in end-demand and the build-up of inventory in the supply chain,'' said Wilfred J. Corrigan, LSI Logic chairman and chief executive officer. ``The mature technologies utilized by the Colorado Springs facility have been particularly impacted by the decline in the overall economy. We are consolidating our manufacturing capacity at our two major sites in Gresham, Oregon and Tsukuba, Japan.''
The company estimates it will record restructuring and other charges of approximately $120 million to $150 million for fixed asset write-downs, severance, direct exit costs and other expenses associated with the closure of the Colorado Springs facility. The company is in the process of refining its estimates for the charges. The restructuring charge will be recognized in the second quarter, and other related charges will be incurred in the second and third quarters of 2001.
Joe Zelayeta, LSI Logic executive vice president for Worldwide Operations, said that LSI Logic will have more than adequate world-class capacity to meet the anticipated demand for its ASIC and standard product solutions.
The affected employees will be provided with a competitive severance package and outplacement assistance. Some employees will be offered relocation to the company's manufacturing facility in Gresham, Oregon.
Safe Harbor for Forward-Looking Statements:
The statements by LSI Logic management and the above statements regarding future manufacturing plans, personnel numbers, benefits, plant consolidations, restructuring and other charges, severance and other expenses and their recognition, revenues, manufacturing capacity, and relocation 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 forward-looking statements included in this news release are made only as of the date of this release and the company undertakes no obligation to update the forward-looking statements to reflect subsequent events or circumstances. The company's actual actions and results in future periods may be materially different from any suggested in this news release. The company urges the reader to consider the risks and uncertainties to which the company is subject and which may cause the company's actions and actual results to differ materially from the expectations of the company or its management. Such risks and uncertainties 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, the company's ability to obtain needed licenses from third parties 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.
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