LSI Logic Reports Record First Quarter Revenues
MILPITAS, Calif., April 20 /PRNewswire/ -- LSI Logic
Corporation (NYSE: LSI) today reported 1999 first quarter
revenues of $457 million, a 41 percent increase over the $325
million posted in the first quarter of 1998.
Net income before amortization of goodwill, the reversal of
restructuring reserves, and a change in accounting principle was $11
million or 8 cents a diluted share. The result represents a decrease of
approximately 64 percent as compared to net income before
amortization of goodwill and other intangibles of $31 million or 22
cents a diluted share in the first quarter of 1998.
Net income before the change in accounting principle was $5 million
or 3 cents a diluted share. As previously announced, LSI Logic
expensed the unamortized preproduction balance of $92 million, net
of tax on January 1, 1999 and presented it as a cumulative effect of
a change in accounting principle. The change in accounting principle
reduced net income per diluted share by 63 cents resulting in a net
loss of $87 million or 60 cents a diluted share.
"LSI Logic had record bookings in the first quarter," said Wilfred J.
Corrigan, LSI Logic chairman and chief executive officer. "We
achieved sequential revenue growth, lowered operating costs and
our backlog continued to build. We clearly have momentum as we
head into the second quarter and beyond." LSI Logic Market
Overview
The rapid worldwide acceptance of the Internet was a major driver
for LSI Logic in all six of the company's targeted vertical markets.
"LSI Logic is participating in the growth of the Internet
infrastructure on an across the board basis," said John Daane, LSI
Logic executive vice president for Communications, Computer and
ASIC Products. "We are providing system-on-a-chip designs for
switches and routers in the networking space; high-performance,
high-density SCSI and Fibre Channel chips in storage components;
CDMA and GSM single-chip systems in wireless; SONET and
xDSL semiconductors in telecommunications; ASIC solutions for
servers in computer; RAID system products in storage systems; and
digital cameras and digital television in the consumer electronics
market."
"Consumer products growth, including video games, DVD, digital
camera and digital television, looks strong for 1999, with sequential
quarterly growth building through the rest of the year," said Elie
Antoun, LSI Logic executive vice president of Consumer Products.
First Quarter 1999 Business and Technology Highlights
* LSI Logic's stock was the top performing Standard and Poors
500 common stock during the first quarter, and fourth best
performing NYSE common stock in the first quarter.
* Sony Computer Entertainment Inc. (SCEI) selected LSI Logic as
the system-on-a-chip supplier of the key I/O processor for its
second-generation Sony PlayStation video game console.
* LSI Logic and SEEQ Technology, Inc. (Nasdaq: SEEQ)
announced an agreement for LSI Logic to acquire SEEQ in a stock
transaction valued when announced at approximately $100 million.
The acquisition, which is expected to be accretive, is anticipated to
be completed in the second quarter.
* LSI Logic completed a $345 million offering of 4.25 percent
convertible subordinated notes to institutional investors. The net
proceeds were used to repay bank debt and strengthen the LSI Logic
balance sheet.
* LSI Logic added the Symbios(R) SYM53C140 Ultra2 SCSI Bus
Expander to its SCSI Bus Expander family, combining the features
of two LSI Logic expanders and support for Ultra2 SCSI into a
single product.
* LSI Logic shipped CoreWare(R) models for the Direct
Rambus(TM) ASIC Cell (D-RAC), utilizing the company's
G11(TM) process technology (0.18-micron, effective) to
customers.
* Silicon Graphics selected LSI Logic to provide system-on-a-chip
ASICs for Silicon Graphicsa 320 and 540 visual workstations. The
design wins demonstrates LSI Logic's ability to provide high
performance ASICs into the high-growth NT Workstation market.
Safe Harbor for Forward Looking Statements: Statements 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 Exchange Act of 1934, as amended.
These statements involve known and unknown risks and
uncertainties. The company's actual results in future periods may be
materially different from any performance suggested in this 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, currency exchange rates
and the availability and utilization of manufacturing capacity by the
company. Other risks and uncertainties include, but are not
necessarily limited to the timing and success of new product
introductions and unexpected obsolescence of existing products.
The extent to which the company's plans for future cost reductions
are realized also may 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 addition, the actual results
reported here may be restated on the advice of independent
accountants to the company in response to recent comments by the
SEC regarding calculation of acquisition-related in-process research
and development charges as described in the accounting notes
contained in this news release. 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 with the
Securities and Exchange Commission during the past 12 months.
LSI Logic Corporation, The System on a Chip Company(R), is a
leading supplier of custom high-performance semiconductors with
operations worldwide. The company enables customers to build
complete systems on a single chip with its CoreWarea design
program, thereby increasing performance, lowering system costs
and accelerating time to market. LSI Logic develops
application-optimized products in partnership with trendsetting
customers and operates leading edge, high-volume manufacturing
facilities to produce submicron chips. The company maintains a
high level of quality, as demonstrated by its ISO 9000 certifications.
LSI Logic is headquartered at 1551 McCarthy Boulevard, Milpitas,
CA 95035, 408-433-8000, lsilogic.com . LSI LOGIC CORPORATION
Pro Forma Consolidated Condensed Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31, March 31,
1999 1998
Revenues $456,837 $324,850
Costs and expenses:
Cost of revenues 297,066 183,106
Research and development 75,423 63,842
Selling, general and administrative 60,315 43,752
Total costs and expenses 432,804 290,700
Income from operations 24,033 34,150
Interest expense (10,485) --
Interest income and other 1,628 7,846
Income before income taxes 15,176 41,996
Provision for income taxes 3,794 10,499
Pro forma net income $11,382 $31,497
Pro forma earnings per share:
Basic $0.08 $0.22
Diluted $0.08 $0.22
Shares used in computing per share amounts:
Basic 141,674 140,242
Diluted 144,151 141,590
LSI LOGIC CORPORATION
Reconciliation of Pro Forma Net Income to Reported Results
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31, March 31,
1999 1998
Pro forma net income $11,382 $31,497
Amortization of goodwill and special items:
Amortization of goodwill (11,207) (1,386)
Restructuring of operations 2,533 --
Tax benefit 2,164 332
Total amortization of goodwill and special items (6,510) (1,054)
Income before cumulative effect of change
in accounting principle 4,872 30,443
Cumulative effect of change in accounting principle (91,774) --
Net (loss)/income ($86,902) $30,443
Basic earnings per share:
Pro forma net income $0.08 $0.22
Amortization of goodwill and special items (0.05) --
Income before cumulative effect of change
in accounting principle $0.03 $0.22
Cumulative effect of change in accounting principle (0.64) --
Net (loss)/income ($0.61) $0.22
Diluted earnings per share:
Pro forma net income $0.08 $0.22
Amortization of goodwill and special items (0.05) --
Income before cumulative effect of change
in accounting principle $0.03 $0.22
Cumulative effect of change in accounting principle (0.63) --
Net (loss)/income ($0.60) $0.22
Shares used in computing per share amounts:
Basic 141,674 140,242
Diluted 144,151 141,590
LSI LOGIC CORPORATION
Consolidated Condensed Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31, March 31,
1999 1998
Revenues $456,837 $324,850
Costs and expenses:
Cost of revenues 297,066 183,106
Research and development 75,423 63,842
Selling, general and administrative 60,315 43,752
Amortization of intangibles 11,207 1,386
Restructuring of operations (2,533) --
Total costs and expenses 441,478 292,086
Income from operations 15,359 32,764
Interest expense (10,485) --
Interest income and other 1,628 7,846
Income before income taxes and cumulative effect
of change in accounting principle 6,502 40,610
Provision for income taxes 1,630 10,167
Income before cumulative effect of change
in accounting principle 4,872 30,443
Cumulative effect of change in accounting principle (91,774) --
Net (loss)/income ($86,902) $30,443
Basic earnings per share:
Income before cumulative effect of change
in accounting principle $0.03 $0.22
Cumulative effect of change in accounting principle (0.64) --
Net (loss)/income ($0.61) $0.22
Diluted earnings per share(A):
Income before cumulative effect of change
in accounting principle $0.03 $0.22
Cumulative effect of change in accounting principle (0.63) --
Net (loss)/income ($0.60) $0.22
Shares used in computing per share amounts:
Basic 141,674 140,242
Diluted 144,151 141,590 (A) Diluted earnings per share are based on average common and
common equivalent shares outstanding. For the three month period
ended March 31, 1999, common equivalent shares of 1,265 and
$305 of interest expense (net of taxes) associated with convertible
debentures considered dilutive common stock equivalents were
excluded from the computation of diluted earnings per share as a
result of their antidilutive effect. LSI LOGIC CORPORATION
Consolidated Condensed Balance Sheet
(In millions)
(Unaudited)
March 31, Dec. 31,
1999 1998
Assets
Current Assets:
Cash and short-term investments $282.4 $281.3
Accounts receivable, net 283.0 245.5
Inventories 171.8 178.1
Prepaid expenses and other current assets 107.0 114.6
Total current assets 844.2 819.4
Property and equipment, net 1,310.9 1,480.1
Goodwill and other intangibles 321.6 332.8
Other assets 171.0 167.6
Total assets $2,647.7 $2,800.0
Liabilities and Stockholders' Equity
Current liabilities:
Current liabilities $360.3 $406.6
Current portion of long-term debt, capital lease
obligations and short-term borrowings 40.6 186.2
Total current liabilities 400.9 592.8
Long-term debt, capital lease obligations
and other noncurrent liabilities 815.8 691.8
Total liabilities 1,216.7 1,284.6
Minority interest in consolidated subsidiaries 5.2 5.2
Stockholders' equity:
Common stock 1,015.8 1,010.7
Retained earnings 393.1 480.0
Accumulated other comprehensive income 16.9 19.5
Total stockholders' equity 1,425.8 1,510.2
Total liabilities and stockholders' equity $2,647.7 $2,800.0 /CONTACT: Diana Matley, Investor Relations, 408-433-4365, or
Kevin Brett, Media Relations, 408-433-7150, both of LSI Logic
Corporation/
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