VLSI Technology Reports Third Quarter Results
BusinessWire, Wednesday, October 14, 1998 at 17:02
SAN JOSE, Calif.--(BUSINESS WIRE)--Oct. 14, 1998--VLSI
Technology, Inc. (NASDAQ:VLSI) today reported that third quarter
revenues were $130.8 million, a decrease of 27.8% from $181.2 million
for the same quarter one year ago and a decrease of 5.1% from the
$137.8 million revenues in the second quarter of 1998.
Net loss for the third quarter was $3.6 million or $0.08 per
share, which includes both a pre-tax charge against earnings primarily
associated with severance costs of $7.4 million and a gain of $0.8
million from the repurchase of some of the company's convertible
subordinated notes. Without the charge and gain, net income was $1.2
million or $0.03 per share. Net income for the third quarter of 1997
was $28.5 million or $0.57 per share, of which $7.7 million or $0.15
per share was associated with the sale of COMPASS Design Automation.
In the second quarter of 1998, the company reported net income of $6.5
million or $0.14 per share, of which $0.07 per share came from the
sale of 20% of the company's holdings in ARM Limited in their April
initial public offering.
"VLSI maintained operating profitability through a period when
the world-wide semiconductor market continued to be soft," said Alfred
J. Stein, chairman and CEO. "With our workforce reduction in July, we
positioned the company for this weakness and have maintained tight
controls on spending. Our balance sheet remains strong, and we have
and will continue to invest selectively in processes, technologies and
products that we believe will drive our target market sales when the
global industry demand returns."
VLSI is focused on helping customers get their products to market
faster by providing them with function-rich, customized solutions. In
the quarter VLSI announced the Velocity(tm) family of rapid silicon
prototyping products, which can cut development time in half -- a
substantial breakthrough that enables VLSI customers to deliver end
products to market significantly faster. In the month since its
announcement, VLSI has won multiple new designs with its Velocity
development system. Several additional major customers are showing
interest in this new Fast-Time-To-Market product family.
To further strengthen its system-on-a-chip solutions, the company
signed a memorandum of understanding to partner with Macronix
International Co. Ltd. of Taiwan to develop an advanced manufacturing
process for adding embedded flash memory.
VLSI and the DSP Group announced DSP Group's new PalmDSPCore(tm).
The new core is an important addition to VLSI's extensive embedded
core library.
VLSI acquired Atlantic Cores Inc., a privately held wide area
network chip design company. ACI's technologies will significantly
strengthen the company's wide area network offerings.
In the third quarter the company completed an 8% workforce
reduction of approximately 190 people. As previously announced, Rich
Beyer, president and chief operating officer, left the company for
personal reasons; Alfred J. Stein, chairman and CEO, assumed his
duties. Bala Iyer, senior vice president and chief financial officer,
has departed the company recently to accept a position as CFO of a
larger semiconductor company.
To expand on the significant projects that will enhance VLSI's
products and technologies, the following is a summary of the company's
recent announcements.
-- VLSI announced the Velocity family of Rapid Silicon
Prototyping chip development products. VLSI believes the Velocity
family can reduce system-on-a-chip product development time by more
than half in suitable applications, enabling VLSI customers to deliver
end products to market significantly faster than under prevailing
methods. Custom system-on-a-chip integrated circuits created with the
Velocity product family will enable customers to integrate more
features, and lower the costs, of new generations of high-volume
wireless communications, consumer electronics and data communications
end products. Velocity products use the rapid silicon prototyping
methodology, a new custom integrated circuit design style developed by
VLSI to narrow the "design productivity gap," cited by many as a key
challenge facing the semiconductor industry.
-- VLSI and Macronix International Co. Ltd. of Taiwan, a leading
manufacturer of high performance flash and other non-volatile memory
products, jointly announced that they signed a memorandum of
understanding to develop cooperatively advanced embedded flash memory
process technologies. The advanced technologies will allow flash
memory to be included in system-on-a-chip semiconductor products
targeting such applications as wireless communications and handheld
computing. This feature allows system designers the flexibility to
reprogram many times the on-chip memory for software upgrades,
enhancements and bug fixing, thus reducing cost and time to market.
Non-volatile flash memory differs from conventional dynamic RAM
because it does not erase when power to it shuts off.
-- VLSI and the DSP Group announced DSP Group's new PalmDSPCore.
The new core, which VLSI is the first to license, is another addition
to VLSI's extensive embedded core roadmap. The PalmDSPCore is a
parallel digital signal processor architecture providing the
performance and flexibility customers need to meet the demands of
leading edge embedded DSP applications. The PalmDSPCore is designed
for embedded applications that require high processor throughput and
architectural flexibility such as GSM/CDMA handsets, third generation
IMT-2000 wireless products, high-speed Data Subscriber Links (e.g.
xDSL), pooled modems, Internet gateways and multimedia applications.
-- VLSI has acquired Atlantic Cores Incorporated (ACI), a
Boxboro, Mass.-based developer of standard products and on-chip
intellectual property for the fast growing wide area networking
market. ACI is an important addition to VLSI's Wide Area Networking
capability, allowing the company to build scalable, high functionality
wide area networking chips that increase the number of line
connections and increase bandwidth for network equipment manufacturers
building frame relay and ATM routers and switches. ACI is chartered
with developing standard and custom system-on-a-chip integrated
circuits. Initial products are expected to come to market in the
second quarter of 1999 and will address access concentrators and
carrier-class switches for frame relay applications.
Certain statements in this press release are forward-looking.
Actual results could differ materially. Among the factors that could
cause actual results to differ are the following: weakness in the
semiconductor industry in general and in the wireless communications
and consumer entertainment markets in particular; further
deterioration in Asian economic markets; slowing growth or decline in
the demand for the company's semiconductors; product pricing pressures
and the impact of competitive forces; loss of one or more major
customers, particularly in the communications market; failure to
develop and introduce new products in a timely manner; inability to
hire and retain top management personnel to fill recently vacated
positions; lower factory utilization and excess capacity leading to
unfavorable gross margins; and unanticipated problems experienced in
ramping up production of a new process or facility. For a more
detailed discussion of these and other risk factors, see the company's
SEC reports, including but not limited to the Annual Report on Form
10-K for the year ended December 26, 1997 and the Quarterly Report on
Form 10-Q for the quarter ended June 26, 1998. The company disclaims
any duty to update the forward-looking statements contained herein,
except as may be required by law.
About VLSI Technology, Inc.
VLSI Technology, Inc. designs and manufactures custom and
semicustom integrated circuits for leading firms in the wireless
communications, networking, consumer digital entertainment and
computing markets. VLSI's value proposition is based on full-service
customer support, deep libraries of vertical market-focused IC
intellectual property, unparalleled custom circuit design expertise
enabled through the Velocity Rapid Silicon Prototyping design style,
and one of the world's most flexible and efficient custom circuit
manufacturing facilities. The company is based in San Jose,
California, with 1997 revenues from continuing operations of $712.7
million, and approximately 2,200 employees worldwide. Visit VLSI's
homepage at vlsi.com.
Note to Editors: Velocity is a trademark of VLSI Technology, Inc.
Other brand or product names are registered trademarks or
trademarks of their respective companies.
*T
VLSI TECHNOLOGY, INC.
Summary Consolidated Financial Statements
(Thousands, except per share amounts)
Three months ended Nine months ended
Sept. 25, Sept. 26, Sept. 25, Sept. 26,
1998 1997 1998 1997
--------------------- ---------------------
CONSOLIDATED STATEMENT OF
OPERATIONS (Unaudited)
Net revenues $ 130,838 $ 181,181 $ 409,935 $ 519,636
Cost of sales 80,494 100,241 248,421 298,776
Gross profit 50,344 80,940 161,514 220,860
Research and development 26,473 24,831 81,049 71,609
Marketing, general and
administrative 23,055 28,891 71,905 84,520
Special charge 7,400 -- 7,400 --
Operating income (loss) (6,584) 27,218 1,160 64,731
Other income (expense),
net 1,709 (1,140) 7,189 (3,564)
Income (loss) from
continuing operations
before taxes (4,875) 26,078 8,349 61,167
Provision (benefit)
for taxes on income
(loss) (1,320) 5,295 2,250 16,515
Income (loss) from
continuing operations (3,555) 20,783 6,099 44,652
Income (loss) from
discontinued operations,
including gain on
disposal, net of taxes -- 7,723 -- 5,173
Net income (loss) $ (3,555) $ 28,506 $ 6,099 $ 49,825
Income (loss) per
share - Basic (1):
- Continuing
operations $ (.08) $ .44 $ .13 $ .96
- Net income (loss) $ (.08) $ .62 $ .13 $ 1.08
.13
$ 1.08
Income (loss) per
share - Diluted (1):
- Continuing
operations $ (.08) $ .41 $ .13 $ .91
- Net income (loss) $ (.08) $ .57 $ .13 $ 1.02
Weighted average
common and common
equivalent shares
outstanding - Diluted 46,378 49,894 47,215 48,672
(1) Basic net income (loss) per share is computed by dividing net
income (loss) by the weighted average number of common shares
outstanding. Diluted net income (loss) per share includes the dilutive
impact of outstanding options.
Sept. 25, Dec. 26,
1998 1997
CONSOLIDATED BALANCE SHEET (Unaudited) |
