LSI Logic Reports Record Q3 Revenues and Profits - Third Quarter 2000 Highlights - The LSI Logic 2000 Third Quarter News Release Follows this Summary: - Record Q3 revenues of $728 million; up 13 percent sequentially from Q2. - Eleventh quarter of seq -- 3:59 PM EDT
MILPITAS, Calif., Oct 24, 2000 /PRNewswire via COMTEX/ -- LSI Logic Corporation
(NYSE: LSI) today reported record 2000 third quarter revenues of $728 million, a
13 percent sequential increase over the second quarter and a 35 percent increase
over the $540 million posted in the third quarter of 1999.
Net income before amortization of goodwill and other special items was $114
million or 33 cents a diluted share, compared to $55 million or 17 cents a
diluted share in the third quarter of 1999. The third quarter diluted share
figures have been adjusted to reflect last February's two-for-one common stock
split.
The improvement in profits stems from higher revenues and gross margin
expansion. The company's gross margin improved for the sixth consecutive quarter
to 43.3 percent. Cash and short-term investments exceeded $1 billion for the
first time, growing by $142 million to $1.1 billion. During the third quarter,
LSI Logic spent $49 million to purchase 1.5 million shares of the company's
common stock.
"We have strong momentum heading into 2001 based upon our communications focus,
record bookings and expanded manufacturing capacity," said Wilfred J. Corrigan,
LSI Logic chairman and chief executive officer.
"Communications chip sales now represent more than 50 percent of LSI Logic's
total revenues," said John Daane, LSI Logic executive vice president of the
Communications Products Group. "The company anticipates that communications chip
revenues will grow 65 percent or more this year."
LSI Logic Business Outlook
LSI Logic expects 2000 Q4 revenue to be up approximately 10 percent sequentially
from the $728 million reported in the third quarter.
The company anticipates reporting fourth quarter earnings of 36 cents a diluted
share.
Gross margin is expected to be approximately 44 percent in the fourth quarter.
Recurring investment income will be around $15 million in the fourth quarter,
approximately the same amount as realized in the second and third quarters.
The fourth quarter tax rate is expected to be 25 percent.
Capital spending for 2000 is anticipated to be approximately $600 million.
Fourth quarter depreciation is projected to be approximately $90 million.
LSI Logic Highlights
-- LSI Logic and Advanced Micro Devices announced an agreement to develop
advanced solutions, employing AMD's flash memory and LSI Logic's baseband
technology, for the fast-growing CDMA handset market.
lsilogic.com
-- LSI Logic announced the licensing of its ZSP(TM) 400 digital signal processor
(DSP) core to Virata Corporation for use in Voice-over-Internet Protocol (VoIP)
and digital subscriber line (DSL) applications.
lsilogic.com
-- LSI Logic completed the $420 million strategic acquisition of DataPath
Systems, Inc., a leading provider of standard product solutions in the rapidly
growing broadband communications market.
lsilogic.com
-- The company announced the availability of the industry's first synthesized
ARM(R) processor core to reach 200MHz. The addition of the ARM processor core
extended LSI Logic's library of CoreWare(R) products.
lsilogic.com
-- LSI Logic announced its 0.18-micron GigaBlaze(R) transceiver core designed to
support the emerging InfiniBand interconnect standard. InfiniBand developers
will be able to use LSI Logic's GigaBlaze transceiver technology to address the
rising demand for reliable, high-bandwidth connections to the Internet.
lsilogic.com
-- The company unveiled its latest innovative organic laminate flip chip
package, offering LSI Logic customers significant improvements in thermal and
electrical performance over most advanced wire-bond packages.
lsilogic.com
LSI Logic Conference Call Information: LSI Logic will hold a conference call
today at 1:30 p.m. PDT to discuss third quarter financial results. The access
number is 212-346-6501. The call will be webcast realtime through
www.StreetFusion.com. A replay of the call will be available today at
approximately 4 p.m. PDT and will be available for 48 hours. The number is
800-633-8284, access code 16227865. The replay will also be available over the
Internet at the StreetFusion website. The StreetFusion replay will be available
until October 31.
Safe Harbor for Forward Looking Statements: The statements by LSI Logic
management and the above statements regarding future bookings, earnings, gross
margins, gains from the sale of equity securities, tax rates, capital spending
estimates, depreciation and future revenues 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 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, particularly for applications where rapid growth is anticipated, 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.
LSI Logic Corporation is a leading supplier of communications chips for
broadband, data networking, wireless and set-top box applications. In addition,
the company provides chips and boards for network computing and supplies storage
network solutions for the enterprise. LSI Logic is headquartered at 1551
McCarthy Boulevard, Milpitas, CA 95035, 408-433-8000, 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,
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 Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2000 1999 2000 1999
Revenues $727,578 $539,959 $1,987,092 $1,504,588
Costs and expenses:
Cost of revenues 412,808 325,785 1,135,186 942,074
Research and development 101,669 71,878 268,699 223,447
Selling, general and
administrative 79,099 66,881 224,418 191,153
Total costs and
expenses 593,576 464,544 1,628,303 1,356,674
Income from operations 134,002 75,415 358,789 147,914
Interest expense (10,176) (9,404) (30,203) (29,604)
Interest income and other 12,971 4,855 31,607 9,050
Recurring investment
income 15,309 2,151 40,123 2,151
Income before income
taxes 152,106 73,017 400,316 129,511
Provision for income taxes 38,027 18,254 100,080 32,378
Pro forma net income $114,079 $54,763 $300,236 $97,133
Pro forma earnings per share:
Basic $0.36 $0.19 $0.97 $0.33
Diluted $0.33 $0.17 $0.87 $0.32
Shares used in computing per share amounts:
Basic 314,038 293,534 308,304 291,028
Diluted 355,732 332,942 353,322 304,046
LSI LOGIC CORPORATION
Reconciliation of Pro Forma Net Income to Reported Results
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2000 1999 2000 1999
Pro forma net income $114,079 $54,763 $300,236 $97,133
Special items:
Amortization of
acquisition related
items including
intangibles and
non-cash deferred
stock compensation (41,156) (11,767) (66,812) (34,789)
Acquired in-process
research and
development (54,155) -- (70,488) (4,600)
Restructuring of
operations and
other non-recurring
charges -- 7,934 (2,781) 2,063
Other special items 5,738 -- 18,121 --
Tax benefit (6,410) 994 (3,361) 5,958
Total special items (95,983) (2,839) (125,321) (31,368)
Income/(loss) before
cumulative effect of
change in accounting
principle 18,096 51,924 174,915 65,765
Cumulative effect of
change in accounting
principle -- -- -- (91,774)
Net income/(loss) $18,096 $51,924 $174,915 ($26,009)
Basic earnings
per share:
Pro forma net income $0.36 $0.19 $0.97 $0.33
Special items ** (0.30) (0.01) (0.40) (0.10)
Income/(loss) before
cumulative effect of
change in accounting
principle 0.06 0.18 0.57 0.23
Cumulative effect of
change in accounting
principle -- -- -- (0.32)
Net income/(loss) $0.06 $0.18 $0.57 ($0.09)
Diluted earnings per share*:
Pro forma net income $0.33 $0.17 $0.87 $0.32
Special items ** (0.27) (0.01) (0.35) (0.10)
Income/(loss) before
cumulative effect of change
in accounting principle 0.06 0.16 0.52 0.22
Cumulative effect of change
in accounting principle -- -- - (0.31)
Net income / (loss) $0.06 $0.16 $0.52 ($0.09)
Shares used in computing
per share amounts:
Basic 314,038 293,534 308,304 291,028
Diluted 355,732 332,942 353,322 304,046
*In computing diluted earnings per share for the three month periods ended
September 30, 2000 and 1999, net income was increased by $2,750 in each
period for interest, net of taxes, on the $345 million convertible notes
considered dilutive common stock equivalents.In computing diluted earnings
per share for the nine month period ended September 30, 2000, net income
was increased by $8,248 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 Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2000 1999 2000 1999
Revenues $727,578 $539,959 $1,987,092 $1,504,588
Costs and expenses:
Cost of revenues 412,808 325,785 1,146,286 942,074
Research and development 101,669 71,878 268,699 223,447
Selling, general and
administrative 79,099 66,881 224,418 191,153
Acquired in-process
research and development 54,155 -- 70,488 4,600
Restructuring of operations
and other non-recurring
charges -- (7,934) 2,781 (2,063)
Amortization of
acquisition related
items including intangibles
and non-cash deferred stock
compensation * 41,156 11,767 66,812 34,789
Total costs and expenses 688,887 468,377 1,779,484 1,394,000
Income/(loss) from
operations 38,691 71,582 207,608 110,588
Interest expense (10,176) (9,404) (31,392) (29,604)
Interest income
and other 18,709 4,855 37,345 9,050
Gain on sale of
equity securities 15,309 2,151 64,795 2,151
Income/(loss) before
income taxes and cumulative
effect of change in
accounting principle 62,533 69,184 278,356 92,185
Provision for income taxes 44,437 17,260 103,441 26,420
Income/(loss) before
cumulative effect of
change in
accounting principle 18,096 51,924 174,915 65,765
Cumulative effect of
change in accounting
principle -- -- -- (91,774)
Net income/(loss) $18,096 $51,924 $174,915 ($26,009)
Basic earnings per share:
Income/(loss) before
cumulative effect of change
in accounting principle $0.06 $0.18 $0.57 $0.23
Cumulative effect of change
in accounting principle -- -- -- (0.32)
Net income/(loss) $0.06 $0.18 $0.57 ($0.09)
Diluted earnings per share ***:
Income/(loss) before
cumulative effect of change
in accounting principle $0.06 $0.16 $0.52 $0.22
Cumulative effect of change
in accounting principle -- -- -- ($0.31)
Net income/(loss) $0.06 $0.16 $0.52 ($0.09)
Shares used in computing
per share amounts:
Basic 314,038 293,534 308,304 291,028
Diluted 355,732 332,942 353,322 304,046
*The amortization of acquisition related items including intangibles and
non-cash deferred stock compensation for the quarter
ended September 30, 2000 are comprised of the following items:
Amortization of continuing intangibles $15,776
Amortization of newly purchased intangibles 6,201
Amortization of non-cash deferred stock compensation ** 19,179
Total $41,156
**On July 1, 2000, FASB Interpretation (FIN) No. 44,Accounting For Certain
Transactions Involving Stock Compensation was adopted by the Company. The
acquisition of DataPath Systems, Inc. closed on July 14, 2000, after the
effective date of the new interpretation.In accordance with FIN No. 44,
the intrinsic value of the options and restricted stock awards assumed as
part of the transaction and not vested as of the closing date was recorded
as deferred compensation and included as a component of shareholders'
equity.The deferred compensation is being amortized over the respective
vesting periods of the options and awards.
***In computing diluted earnings per share for the three month periods
ended September 30, 2000 and 1999, net income was increased by $2,750 in
each period for interest, net of taxes, on the $345 million convertible
notes considered dilutive common stock equivalents. In computing diluted
earnings per share for the nine month period ended September 30, 2000, net
income was increased by $8,248 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)
Sept. 30, December 31,
Assets 2000 1999
Current assets:
Cash and short-term investments $1,084.5 $661.3
Accounts receivable, net 456.6 275.6
Inventories 289.6 243.9
Prepaid expenses and other current assets 129.3 107.5
Total current assets 1,960.0 1,288.3
Property and equipment, net 1,208.3 1,323.5
Goodwill and other intangibles 506.8 293.6
Other assets 335.2 301.2
Total assets $4,010.3 $3,206.6
Liabilities and Stockholders' Equity
Current liabilities:
Current liabilities $562.7 $418.3
Current portion of long-term debt, capital
lease obligations and short-term borrowings 1.2 57.0
Total current liabilities 563.9 475.3
Long-term debt, capital lease obligations
and other noncurrent liabilities 1,057.7 869.3
Total liabilities 1,621.6 1,344.6
Minority interest in consolidated subsidiaries 6.0 6.2
Stockholders' equity:
Common stock 1,809.8 1,274.1
Deferred compensation (182.5) --
Retained earnings 610.5 435.6
Accumulated other comprehensive income 144.9 146.1
Total stockholders' equity 2,382.7 1,855.8
Total liabilities and stockholders' equity $4,010.3 $3,206.6
LSI LOGIC CORPORATION
Selected Financial Information
(In millions, except where noted)
(Unaudited)
Three Months Ended
Sept. 30, June 30, Sept. 30,
2000 2000 1999
Semiconductor revenues $618.4 $547.3 $470.1
SAN Systems revenues $109.2 $97.0 $69.9
Total revenues $727.6 $644.3 $540.0
Percentage change in
revenues-qtr./qtr.(A) 12.9% 4.7% 7.8%
Percentage change in
revenues-yr./yr.(B) 34.7% 28.5% 36.0%
Capital additions $86.8 $126.8 $89.9
Depreciation/amortization(C) $82.4 $81.9 $78.8
Days sales outstanding 56 56 62
Days of inventory 63 70 60
Current ratio 3.5 3.9 2.2
Quick ratio 2.7 2.9 1.6
R&D as a percentage of revenues 14.0% 13.5% 13.3%
SG&A as a percentage of revenues 10.9% 11.7% 12.4%
Gross margin as a percentage of revenues 43.3% 42.9% 39.7%
Employees(D) 7,036 6,820 6,241
Revenues per employee (in thousands)(E) $414 $378 $346
Diluted shares (in thousands) 355,732 353,120 332,942
(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)Actual number of employees at the end of each period presented.
(E)Revenue per employee is calculated by annualizing revenue for each
quarter presented and dividing it by the number of employees.
SOURCE LSI Logic Corporation
CONTACT: Investor Relations, Diana Matley, 408-433-4365, or
diana@lsil.com, or Media Relations, Kevin Brett, 408-433-7150, or
kbrett@lsil.com, both of LSI
/Company News On-Call: prnewswire.com or fax,
800-758-5804, ext. 516675
URL: lsilogic.com
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