Headline: VLSI Technology Reports Second Quarter Results
======================================================================
SAN JOSE, Calif.--(BUSINESS WIRE)--July 15, 1998--VLSI Technology
Inc. (NASDAQ:VLSI) today reported that second quarter revenues were
$137.8 million, a decrease of 19.4% from $171.0 million for the same
quarter one year ago and a decrease of 2.5% from the $141.3 million
revenues in the first quarter of 1998.
Net income for the second quarter was $6.5 million, or $0.14 per
share, compared to net income of $12.3 million, or $0.26 per share for
the second quarter 1997. Included in the $0.14 earnings per share for
the quarter is a gain of $0.07 from the sale of 20% of the company's
holdings in ARM Limited in their April initial public offering. In the
first quarter of 1998, the company reported net income of $3.2
million, or $0.07 per share.
"The world-wide softness in the semiconductor market and
inventory adjustments at a range of customers combined to reduce
shipments for this quarter," said Alfred J. Stein, chairman and CEO.
"Despite the resulting business uncertainties, we maintained
reasonable profitability by meeting our revenue goals, executing well
in manufacturing, and by implementing a broad set of programs that
reduced our operating expenses by 10%."
"Recent forecasts for the semiconductor industry range from no
growth to a decline of 10%, as opposed to the robust growth initially
predicted for 1998. Looking forward, we see some strengthening in the
wireless market, while other major markets continue mixed. We remain
cautious and, hence, feel it is prudent to scale back our cost
structure. We will invest in key product development and other
strategic areas to maintain our leadership role as a designer and
manufacturer of custom integrated circuits."
VLSI plans to reduce its current worldwide workforce by
approximately 190 positions, which will result in an associated charge
against third quarter earnings of an estimated $5-7 million. With this
action, VLSI's workforce will have been reduced through attrition and
layoffs by more than 10% since the beginning of the year to
approximately 2,200.
"VLSI remains focused on our target markets," said Richard M.
Beyer, president and chief operating officer. "We had strong design
wins in the quarter, particularly in communications, and began
shipping samples of our CDMA+(TM) solution. Our OneC(TM) GSM
single-chip solution is generating a great deal of interest, and we
feel that with both CDMA and GSM offerings, VLSI is strongly
positioned in wireless communications."
"We are pleased to see the pilot launch of the Divx digital video
disc systems and look forward to its upcoming nationwide rollout. A
very key element in this system is our complex security ASIC chip.
Five suppliers will produce future Divx systems that are scheduled for
fourth quarter rollout and some will include multiple chips from
VLSI."
"We are continuing to expand our VLSI Integrated Set-Top
Architecture, ViSTA '98 (TM), to address additional elements of the
digital video marketplace. Late in the quarter, we saw growth in
bookings from both U.S. and Japanese-based satellite set-top box
producers. In addition, we also recorded several design wins for our
back-end MPEG-2 and transport products."
In the past quarter, VLSI made a number of significant
announcements, including the following:
*T
-- VLSI expanded the scope of its ViSTA '98 Digital Set-Top Box
product line to cover all major digital TV market
opportunities. New products include three new chips
targeting U.S. digital cable, digital terrestrial
broadcasting, interactive TV upstream communications, and a
plug-in board enabling Windows-equipped PCs to receive
digital satellite video and data communications feeds.
-- VLSI is shipping to customers samples of its single-chip
CDMA dual-core baseband solution, the market's most highly
integrated CDMA product. VLSI's CDMA+ provides a complete,
verified and supported package including the low-cost,
low-power consuming CDMA+ Processor 100 chip, software, and
debug tools. This comprehensive package simplifies mobile
phone development, provides quick time to market and reduces
development cost and risk. VLSI is the first vendor to offer
both GSM and CDMA baseband products, reinforcing the
company's position as a leading wireless chip provider. This
also uniquely positions VLSI to address the emerging
third-generation IMT-2000 standard that combines CDMA and
GSM technology.
-- VLSI joined with Ericsson, IBM, Intel, Nokia, Toshiba and 12
additional adopter companies to support the "Bluetooth"
wireless connectivity technology, which utilizes short range
radio communication for personal and business mobile
devices. Working with Ericsson, VLSI helped design portions
of Bluetooth's baseband wireless communications capability.
VLSI plans to leverage its expertise in semiconductor design
and manufacturing to produce chips that incorporate the
Bluetooth specification. VLSI is committed to manufacture
Bluetooth-based semiconductor products and will create
versions with an on-chip USB interface and versions with
on-chip flash memory.
-- VLSI's 0.25-micron (drawn gate length; 0.18-micron
Leffective) VSC9 custom circuit process technology is in
full production in the San Antonio, Texas fab line.
Development of the 0.2-micron (drawn gate length;
0.15-micron Leffective) VSC10 process proceeds on schedule,
with full production qualification expected in early Q4
1998.
*T
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
wireless communications and consumer entertainment markets; 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; 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 10-Q for
the quarter ended March 27, 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 System-Level
Silicon(TM) integrated circuits based on its FSB(TM) functional system
blocks(TM) library. Targeting its offerings toward the wireless
communications, networking, consumer digital entertainment and
computing markets, the company offers its customers advanced
system-level integration capabilities. The company is based in San
Jose, with 1997 revenues from continuing operations of $712.7 million,
and approximately 2,200 employees worldwide. Visit VLSI's homepage at
vlsi.com.
*T
VLSI TECHNOLOGY, INC.
Summary Consolidated Financial Statements
(Thousands, except per share amounts)
Three months Six months
ended ended
June 26, June 27, June 26, June 27,
CONSOLIDATED STATEMENT OF 1998 1997(a) 1998 1997(a)
INCOME (Unaudited)
Net Revenues $137,811 $170,977 $279,097 $338,455
Cost of sales 84,987 99,445 167,927 198,535
Gross Profit 52,824 71,532 111,170 139,920
Research and development 26,539 22,763 54,576 46,778
Marketing, general
and administrative 22,553 28,388 48,850 55,629
Operating income 3,732 20,381 7,744 37,513
Interest income (expense), net 5,156 (875) 5,480 (2,424)
Income from continuing
operations before taxes 8,888 19,506 13,224 35,089
Provision for taxes on income 2,400 6,240 3,570 11,220
Income from continuing operations 6,488 13,266 9,654 23,869
Loss from discontinued operations,
net of taxes -- 933 -- 2,550
Net income $ 6,488 $ 12,333 $ 9,654 $ 21,319
Income per share - Basic(1):
- Continuing operations $ .14 $ .29 $ .21 $ .52
- Net income $ .14 $ .27 $ .21 $ .46
Income per share - Diluted(1):
- Continuing operations $ .14 $ .28 $ .20 $ .49
- Net income $ .14 $ .26 $ .20 $ .44
Weighted average common and common
equivalent shares outstanding
- Diluted 47,357 48,146 47,442 48,158
(a) Reclassified to reflect discontinued operations reporting with
respect to COMPASS Design Automation, Inc.
(1) Basic net income per share is computed by dividing net income by
the weighted average number of common shares outstanding. Diluted net
income per share includes the dilutive impact of outstanding options.
June 26, Dec. 26,
1998 1997
CONSOLIDATED BALANCE SHEET (Unaudited)
Current assets:
Cash and cash equivalents $181,936 $193,899
Marketable securities 136,710 89,585
Accounts receivable 88,596 110,869
Inventories 45,276 51,875
Deferred and refundable income taxes 69,156 82,870
Other current assets 7,755 4,779
Total current assets 529,429 533,877
Property, plant and equipment, net 390,311 380,904
Other assets 9,178 7,297
Total assets $928,918 $922,078
Total current liabilities $152,259 $186,228
Long-term debt 172,500 182,039
Other long-term obligations 30,131 24,960
Non-current deferred income taxes 12,456 12,456
Stockholders' equity 561,572 516,395
Total liabilities and stockholders' equity $928,918 $922,078
*T
Note to Editors: OneC, CDMA+, ViSTA '98, FSB, functional system
blocks, and System-Level Silicon are trademarks of VLSI Technology
Inc. All other brand or product names are trademarks and/or registered
trademarks of their respective owners. |
