Headline: VLSI Technology Reports Improved First Quarter Results
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SAN JOSE, Calif., April 19 /PRNewswire/ -- VLSI Technology (NASDAQ:VLSI)
today announced revenue of $149.6 million and earnings of $4.7 million, or
$0.09 per share diluted, for the quarter ended April 2, 1999.
Excluding certain charges and gains, net income in the first quarter was
$2.3 million, or $0.05 per share diluted, up 136.4 percent from fourth quarter
1998 net income of $1.0 million, or $0.02 per share diluted. Excluding
certain charges and gains, net income in the first quarter was down
26.6 percent from first quarter 1998 net income of $3.2 million, or $0.07 per
share diluted.
In the first quarter of 1999 VLSI recorded a pretax charge of $4.5 million
for expenses relating to the unsolicited tender offer by Royal Philips
Electronics. The company recorded pretax gains of $7.8 million in the first
quarter of 1999 and $22.4 million in the fourth quarter of 1998, primarily as
a result of the sale of ARM Holdings Ltd. shares.
First quarter revenue of $149.6 million was up 8.5 percent sequentially
from fourth quarter 1998 revenue of $137.9 million, and up 5.9 percent from
first quarter 1998 revenue of $141.3 million.
Bookings in the first quarter increased 34 percent over fourth quarter
1998 bookings, and 43 percent over the first quarter of 1998. Book-to-bill
ratio for the quarter was 1.2.
"We are very pleased with the substantial growth in revenues and bookings
VLSI experienced in the first quarter," said Alfred J. Stein, Chairman and
CEO. "Our business outlook has strengthened considerably over the past few
months. Bookings were strong in all markets. They were particularly strong
in the communications market, where we continue to expand our customer base
and have received significant orders from several market leaders.
"We expect business to continue to accelerate," Stein said. "Second
quarter bookings look to be higher than those in the first quarter, and
for the second half of the year revenues and operating profits are
expected to increase significantly."
FIRST QUARTER 1999 BUSINESS REVIEW AND HIGHLIGHTS
Communications (Wireless and Networking)
-- On March 29 VLSI announced that it received from Samsung its largest-
ever single order. The order for VLSI GSM chipsets used in Samsung's
current and new generations of GSM phones is valued at approximately
$34 million, with the majority of the order expected to be delivered
in the third quarter of this year. $16 million of the order was in
the first quarter bookings, and the remainder will be in the second
quarter bookings.
-- On March 4 VLSI unveiled its Ericsson-endorsed Bluetooth Developer's
Kit and added Bluetooth to its range of wireless capabilities,
complementing its portfolio of standards such as GSM, CDMA, DECT and
future Third Generation (3G) protocols. The Bluetooth initiative,
promoted by Ericsson, IBM, Intel, Nokia and Toshiba, replaces cable
and infrared computing and communications connections with a universal,
low-cost radio link. VLSI started production shipments of the
Bluetooth chip during the quarter.
-- At the March 1999 CeBIT Fair in Hannover, Germany, VLSI showed the
first-ever implementation of the industry's new Adaptive Multi-Rate
(AMR) Vocoder. Utilizing VLSI's state-of-the-art Velocity(TM)-based
Standard Communication Platform(TM) design approach, this
implementation was accomplished within three weeks of the publication
of the AMR standard by the European Telecommunication Standards
Institute (ETSI).
-- The company won significant designs for 3G product development. VLSI's
goal is to become a key innovator in the 3G marketplace.
-- The company shipped its single-chip CDMA dual-core baseband solution
during the quarter. CDMA+(TM) is a highly integrated CDMA product,
providing a complete, verified and supported package. This product
simplifies mobile phone development, provides quick time-to-market and
reduces development cost and risk.
-- During the quarter the GSM OneC(TM) standard product went into full
production with significant volumes. VLSI's OneC is a highly
integrated, customizable single-chip solution, incorporating all the
analog and digital functions necessary for GSM baseband functionality.
-- In the DECT market, VLSI shipped the new VEGA+(TM), with first-time
silicon success. The product is in system integration with leading
customers. The current Vega product family was further reinforced by
VLSI's in-house-developed GAP Stack software achieving type approval.
-- The wireless area experienced strong ASIC design wins based on the
dual-processor Velocity-based Standard Communication Platform.
-- During the quarter VLSI entered into a strategic technology partnership
with 3COM to supply a custom data security coprocessor chip. This chip
will be designed into several of 3COM's network product offerings.
Advanced Computing and Consumer Digital Entertainment
-- VLSI received the first production order for a very high volume ASIC
from a key computer customer. VLSI has also been awarded follow-on
designs for next-generation ASIC products.
-- VLSI announced that it has licensed the Direct Rambus(TM) ASIC Cell (D-
RAC), a high performance chip-to-chip memory interface technology, from
Rambus Inc. The D-RAC is particularly suited for the high-speed memory
requirements of today's computer, multimedia and networking
applications.
-- Velocity, VLSI's Rapid Silicon Prototyping development system designed
to cut ASIC chip design cycles in half, has allowed the company to
secure design wins in product areas new to VLSI with several Fortune
500 customers.
-- Velocity was selected by EDN Magazine as a finalist in the embedded
computing category of the EDN 1998 Innovation of the Year Awards
competition. This competition is dedicated to honoring outstanding
engineering products in the electronics industry.
-- VLSI announced the VMS113 and VMS115 high-speed data security
coprocessors. Each provides strong data security for networking
equipment and internet enabled products such as Virtual Private
Networks, Network Interface Cards, set-top boxes, routers, browsers,
high-speed modems and point-of-sale terminals. The VMS115 provides
hardware acceleration for the emerging Internet Protocol Security
(IPSec) specification. Samples and production of the VMS113 are
available today. The VMS115 is sampling now with production available
in the second quarter.
-- VLSI achieved significant design wins with a major consumer product
manufacturer targeting the Direct-TV/HDTV markets.
-- The company achieved a significant design win from and began volume
shipments to a major cable modem supplier in this new, rapidly growing
market driven by the demand for high-speed internet access.
-- VLSI made volume shipments of its first MPEG decoder chips, broadening
its product offerings into the back-end sector of the set-top box
market. VLSI now provides a complete front-end and back-end set-top
box solution.
-- The company continues to ship current generation designs for Circuit
City's DIVX program, and was awarded the follow-on design for next-
generation development.
Manufacturing and Technology
-- During the latter part of the quarter, VLSI's San Antonio Fab operated
at full capacity, with a utilization factor for the quarter of
approximately 85 percent.
-- Due to increased bookings and the resulting higher demand, VLSI will
start production in several major wafer fab foundries to provide
additional 0.20, 0.25 and 0.35 micron capacity.
-- VLSI is currently ramping up 0.25 micron production. Early engineering
shipments of 0.20 micron products began in the first quarter, with
volume shipments planned for the second quarter.
-- Process development of 0.15 micron technology is on-schedule at the
San Jose Technology Development Center, and qualification is planned
by year-end. Production is planned for early 2000.
-- The conversion of the San Antonio Fab to 8-inch wafer capability, which
began in late 1998, is expected to accelerate in the second half of
this year and is planned for completion in the first half of 2000.
-- The company has signed a definitive agreement with Macronix to jointly
develop embedded flash technology for communications applications. The
embedded flash technology based on this joint development in planned to
be available for prototyping in early 2000. As a first step,
Macronix's fab is in the process of qualification on VLSI's VSC10 logic
technology (0.20 micron) as an alternate source to VLSI. Production of
foundry wafers for VLSI is planned to ramp beginning in the second
quarter of 1999.
-- VLSI sampled an industry-leading 0.5mm FPBGA chip scale package for a
Bluetooth application. This package is well-suited for a variety of
wireless applications.
-- During the quarter, VLSI completed a major milestone in its strategy
to develop RF CMOS silicon, with results on the first silicon (0.20
micron) exceeding expectations.
-- VLSI announced the availability of a highly configurable N-Trace IP
block used for real-time instruction and data trace on deeply embedded
ARM-7 and ARM-9 Thumb family designs.
This press release includes forward-looking statements that involve a
number of risks and uncertainties. Factors that could cause actual results to
differ materially include: weakness in the semiconductor industry in general
and in the wireless communications and consumer entertainment markets in
particular; deterioration in the geographical economic markets served by the
company; slowing growth or decline in the demand for the company's
semiconductors; product pricing pressures and the impact of competitive
forces; loss or changing requirements of one or more major customers; failure
to develop and introduce products in a timely manner; inability to hire and
retain key management and employees; low factory utilization leading to less
favorable gross margins than anticipated; availability of wafer capacity to
meet anticipated demand; and unanticipated problems experienced in ramping up
production of a new process or facilities, including the 8-inch conversion
process; the effect of the unsolicited tender offer on the company's business;
and other risk factors listed from time to time in the company's SEC reports,
including the company's annual report on Form 10-K for the fiscal year ended
December 25, 1998. The forward-looking statements are subject to significant
uncertainties and contingencies, all of which are difficult to quantify and
many of which are beyond the control of the company. Accordingly, the
forward-looking statements are inherently imprecise and there can be no
assurance that they will prove accurate, and actual results may be materially
greater or less than those contained in the forward-looking statements. The
company does not presently intend to update or publicly revise the forward-
looking statements in this press release to reflect circumstances existing or
developments occurring after the preparation of such information or to reflect
the occurrence of unanticipated events.
VLSI Technology, Inc. designs and manufactures custom and semi-custom
integrated circuits for leading firms in the wireless communications,
networking, consumer digital entertainment and advanced computing markets.
The company is based in San Jose, Calif. with 1998 revenues from continuing
operations of $547.8 million, and approximately 2,200 employees worldwide.
Information related to VLSI Technology is available at VLSI's homepage,
vlsi.com.
Velocity, Standard Communication Platform, CDMA+, OneC and Vega+ are
trademarks of VLSI Technology, Inc. Other brand or product names are
registered trademarks or trademarks of their respective companies.
VLSI TECHNOLOGY, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME - UNAUDITED
(thousands, except per share amounts)
Three Months Ended
April 2, Dec. 25, March 27,
1999 1998 1998
Net revenues $149,577 $137,869 $141,286
Cost of sales 91,717 84,887 82,940
Gross profit 57,860 52,982 58,346
Operating expenses:
Research and development 31,810 30,659 28,037
Marketing, general and administrative 23,957 21,864 26,297
Charges resulting from tender offer 4,500 -- --
Operating income (loss) (2,407) 459 4,012
Gain on sale of marketable securities 7,625 22,403 --
Interest income and other expenses, net 3,517 3,592 3,808
Interest expense (2,292) (2,622) (3,484)
Income before provision for taxes
on income 6,443 23,832 4,336
Provision for taxes on income 1,740 9,015 1,170
Net income $4,703 $ 14,817 $3,166
Net income per share - Basic $0.10 $0.32 $0.07
Net income per share - Diluted $0.09 $0.31 $0.07
Weighted-average common
shares outstanding - Basic 46,238 45,736 45,748
Weighted-average common
shares outstanding and assumed
conversions - Diluted 49,921 47,421 47,415
VLSI TECHNOLOGY, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(thousands)
April 2, December 25,
1999 1998
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $76,683 $122,460
Marketable securities 169,048 171,921
Accounts receivable 78,606 81,890
Inventories 37,257 43,096
Deferred and refundable income taxes 53,485 54,382
Prepaid expenses and other current assets 10,557 8,962
Total current assets 425,636 482,711
Net property, plant and equipment 446,107 428,931
Other assets 10,746 10,403
TOTAL ASSETS $882,489 $922,045
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $140,275 $183,948
Long-term debt 161,208 164,808
Other long-term obligations 17,558 18,239
Total stockholders' equity 563,448 555,050
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $882,489 $922,045
VLSI TECHNOLOGY, INC.
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION - UNAUDITED
(thousands, except Other Information)
Three Months Ended
April 2, Dec. 25, March 27,
1999 1998 1998
Geographic revenues:
North America $54,573 $52,948 $54,597
Europe 55,588 51,201 58,253
Japan/Asia-Pacific 39,416 33,720 28,436
Selected Financial Information:
Depreciation $27,901 $27,590 $25,338
Capital Additions 44,820 74,540 33,964
Charges Resulting from Tender Offer 4,500 -- --
Gain on Sale of ARM Securities 7,625 22,403 --
Repurchase of Convertible Notes 3,402 894 --
Retirement of Equipment Loans -- -- 11,719
Sale of Property, Plant & Equipment -- 8,576 16,361
Other Information:
Number of Employees 2,229 2,205 2,465
SOURCE VLSI Technology, Inc.
-0- 04/19/99
/CONTACT: Analysts-Investors - Lisa Ewbank, Director, Investor Relations,
408-474-5519, or Media - Earle Speranza, Public Relations Manager,
408-922-5268, both of VLSI Technology, Inc./
/Web site: vlsi.com |
