EX-99.1 3 f91656exv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 FOR IMMEDIATE RELEASE JULY 23, 2003 Investor Relations Contact: Media Relations Contact: Diana Matley Kevin Brett 408-433-4365 408-433-7150 DIANA@LSIL.COM KBRETT@LSIL.COM CC03-85 LSI LOGIC REPORTS SECOND QTR. 2003 FINANCIAL RESULTS SECOND QUARTER NEWS RELEASE SUMMARY - Revenues of $407 million, 9 percent sequential growth. - GAAP* net loss of 43 cents per diluted share. - Net loss, excluding special items**, of 2 cents per diluted share, beats First Call consensus estimate. - Gross Margin of 41 percent. - Generated positive operating cash flow for fifth consecutive quarter. - Cash and short-term investments grew $110 million to $1.1 billion. THIRD QUARTER BUSINESS OUTLOOK - Projected sequential revenue growth of approximately 8-12 percent. - GAAP net loss per share in the range of 4-7 cents. - Net income per share, excluding special items, in the range of 1-3 cents. * Generally Accepted Accounting Principles ** Acquisition-related amortization, restructuring and other special items. LSI LOGIC MOVES TOWARD PROFITABILITY IN SECOND HALF RAPIDCHIP(TM) PLATFORM DESIGN WINS EXCEED EXPECTATIONS MILPITAS, CALIFORNIA - LSI Logic Corporation (NYSE: LSI) today reported revenues of $407 million in the second quarter of 2003, a 9 percent sequential increase compared to the $373 million reported in the first quarter of 2003, and a decline of 7 percent compared to the $438 million reported in the second quarter of 2002. Cash and short-term investments increased $110 million to $1.1 billion at the end of the 2003-second quarter. The company generated positive operating cash flow for the fifth consecutive quarter. The 2003-second quarter GAAP* net loss was $162 million or 43 cents a diluted share. The 2003-first quarter GAAP net loss was $122 million or 33 cents a diluted share. The company reported a GAAP net loss of $62 million or 17 cents a diluted share in the 2002-second quarter. Second quarter net loss, excluding special items**, was $6 million or 2 cents a diluted share compared to first quarter net loss of $51 million or 14 cents a diluted share. The company reported a net loss, excluding special items, of $21 million or 6 cents a diluted share in the second quarter of 2002. "Each of our four businesses grew sequentially in the second quarter," said Wilfred Corrigan, LSI Logic chairman and chief executive officer. "Our Consumer business gained momentum in the second quarter, paving the way for a seasonally strong third quarter. Our Communications business was up strongly in the second quarter, particularly enterprise networking, and we expect further improvement in the second half of the year. Both of our storage businesses, Storage Components and Storage Systems, are expected to continue their growth ramps in the third quarter and the two businesses are anticipated to total about $1 billion in combined revenues for the year. "In the third quarter, we are forecasting sequential revenue growth in the 8-12 percent range, while maintaining our controls on operating expenses. We are on course to return to profitability in the third quarter, excluding special items, and in the fourth quarter on a GAAP basis." In the second quarter, LSI Logic secured a wide variety of design wins with its RapidChip(TM) semiconductor platform, introduced the RapidWorx(TM) design system, and this week unveiled two new families of IP-rich slices, the Rapid Xtreme(TM) and RapidChip Integrator(TM) slice families in 0.11-micron process technology. The RapidChip platform is demonstrating its broad market appeal as the company is capturing design wins in a range of sectors including: disk drives, encryption, embedded processing, broadband modems, and storage systems. "LSI Logic's RapidChip semiconductor platform is winning with our existing customers and is generating new business opportunities as evidenced by the fact that we are already exceeding our own design-win projections," said Rick Marz, LSI Logic executive vice president of ASIC Technology. "This Platform ASIC approach is providing greater customer choice and is specifically designed to meet the design-time and cost requirements of the underserved middle of the global logic market." "LSI Logic's projected move to profitability in the second half of the year reflects the impact of revenue growth and the actions the company has taken to reduce its break-even points," said Bryon Look, LSI Logic chief financial officer. "LSI Logic has completed its restructuring program, including the consolidation of its internal manufacturing at the company's Gresham manufacturing campus, supplemented by strategic foundry engagements. We made substantial progress in the second quarter toward our three key financial initiatives for 2003 - accelerating the return to profitability, generating positive operating cash flow, and making R&D investments that will provide us with leadership positions in our target markets." LSI LOGIC THIRD QUARTER BUSINESS OUTLOOK
GAAP* SPECIAL ITEMS** EXCLUDING SPECIAL ITEMS ----- --------------- ----------------------- REVENUE GROWTH 8-12% Sequentially 8-12% Sequentially GROSS MARGIN 41-42 percent 41-42 percent OPERATING EXPENSES $190 to $200 million $25 to $30 million $165 to $170 million NET OTHER INCOME (EXP.) $(2) to $(4) million $(2) to $(4) million TAX PROVISION $6 million $6 million EARNINGS (LOSS)/SHARE $(0.04) to $(0.07) $(0.07) to $(0.08) $0.01 to $0.03 DILUTED SHARE COUNT 380 million 390 million
Common stock equivalents are excluded from share count in loss periods as a result of their anti-dilutive effect. Capital spending is projected to be under $30 million in the third quarter, and less than $100 million in 2003. Third quarter depreciation and software amortization is expected to be approximately $46 million. * Generally Accepted Accounting Principles ** Acquisition-related amortization, restructuring and other special items. NOTE: The company's financial guidance will be limited to the comments made on today's public conference call and contained in the Business Outlook section of this news release. LSI LOGIC CONFERENCE CALL INFORMATION LSI Logic will hold a conference call today at 2 p.m. PDT to discuss second quarter 2003 financial results. The number is 1-303-262-2171. Internet users can access the conference call by visiting http://www.lsilogic.com/investors. A replay of the call will be available today at approximately 5 p.m. PDT and will be available for 48 hours. The number is 1-800-405-2236 (International, 1-303-590-3000), pass code 544423#. SAFE HARBOR FOR FORWARD LOOKING STATEMENTS: This news release and the statements by LSI Logic management include forward-looking statements that may involve a number of risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from the actual future events or results. Forward-looking statements include projections of growth in the storage components, storage systems, consumer, communications and enterprise networking, forecasts of sequential revenue growth, maintaining operating expenses, projections of profitability, net other income, earnings, gross margins, tax provisions, capital spending, depreciation, acquisition-related amortization, restructuring expenses, other special items, common share count made in this news release and our RapidChip platform generating new business. 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 include, but are not necessarily limited to, fluctuations in the timing and volumes of customer demand, the rate of depletion of customer inventory buildup and the company's achievement of revenue objectives and other financial targets. Other risks and uncertainties that may affect the company's actual results include, but are not necessarily limited to, the development of new products, the timing and success of new product introductions, the RapidChip platform continuing to generate new business and continuing to find traction with existing customers, the continued availability of appropriate levels of manufacturing capacity, the realization of benefits from the company's strategic relationships, competing technologies, R&D investments, products and other competitive factors and investments and disruptions in general economic activity due to worsening global business conditions or caused by the effects of terrorist activities and armed conflict. The extent to which the company may not realize the cost savings it expects from the reduction in workforce and operating expenses may also impact its future performance. The company operates in an industry sector where securities' values are highly volatile and may be influenced by the cyclical nature of the industry, the unpredictability of the economy and other factors beyond the company's control. For additional information, Readers are referred to the documents filed by LSI Logic with the SEC, and specifically the most recent reports on Form 10-K, 10-Q and 8-K. In the context of forward-looking information, reference is made to the discussion of risk factors described in the company's SEC reports filed during the past 12 months. ABOUT LSI LOGIC LSI Logic Corporation (NYSE: LSI) is a leading designer and manufacturer of communications, consumer and storage semiconductors for applications that access, interconnect and store data, voice and video. In addition, the company supplies storage network solutions for the enterprise. LSI Logic is headquartered at 1621 Barber Lane, Milpitas, CA 95035. http://www.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, http://www.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 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS EXCLUDING SPECIAL ITEMS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Three Months Ended Six Months Ended ------------------------ ------------------------ June 30, June 30, June 30, June 30, 2003 2002 2003 2002 --------- --------- --------- --------- Revenues $ 407,213 $ 437,768 $ 779,998 $ 850,277 --------- --------- --------- --------- Costs and expenses: Cost of revenues 238,469 269,632 486,537 535,541 Research and development 111,326 112,833 226,453 227,176 Selling, general and administrative 56,870 57,366 114,499 115,546 --------- --------- --------- --------- Total costs and expenses 406,665 439,831 827,489 878,263 --------- --------- --------- --------- Income/(loss) from operations 548 (2,063) (47,491) (27,986) Interest expense (7,314) (15,486) (16,145) (31,320) Interest income and other, net 6,469 2,621 18,506 6,267 --------- --------- --------- --------- Loss before income taxes (297) (14,928) (45,130) (53,039) Provision for income taxes 6,000 6,000 12,000 10,250 --------- --------- --------- --------- Net loss excluding special items $ (6,297) $ (20,928) $ (57,130) $ (63,289) ========= ========= ========= ========= Loss per share excluding special items: Basic $ (0.02) $ (0.06) $ (0.15) $ (0.17) ========= ========= ========= ========= Diluted $ (0.02) $ (0.06) $ (0.15) $ (0.17) ========= ========= ========= ========= Shares used in computing per share amounts: Basic 376,619 369,672 375,745 368,769 ========= ========= ========= ========= Diluted 376,619 369,672 375,745 368,769 ========= ========= ========= =========
Statements of operations excluding special items are intended to present the Company's operating results, excluding special items described below, for the periods presented. During the three and six month periods ended June 30, 2003, the special items represented amortization of acquisition related items including intangibles and non-cash deferred stock compensation, restructuring of operations and other items, net, and other special items. The other special items consisted of losses associated with repurchases of a portion of the Company's Convertible Subordinated Notes, write downs of certain equity securities due to impairment, offset in part by gains on miscellaneous asset sales. During the three and six month periods ended June 30, 2002, the special items represented additional excess inventory and related charges, amortization of acquisition related items including intangibles and non-cash deferred stock compensation, restructuring of operations and other items, net, and a $22 million tax benefit as a result of changes in the tax laws in the first quarter of 2002. For the three and six month periods ended June 30, 2003, the statements excluding special items are prepared using the Company's calculated tax expense of $6,000 and $12,000, respectively when excluding special items. For the three and six month periods ended June 30, 2002, the statements excluding special items are prepared using the Company's calculated tax expense of $6,000 and $10,250 when excluding special items. In computing diluted loss per share excluding special items for the three and six month periods ended June 30, 2003 and 2002, common stock equivalents were excluded from the computation of diluted loss per share as a result of their antidilutive effect. A reconciliation from net loss excluding special items to the reported results is presented on the following page. The format presented above is not intended to be in accordance with Generally Accepted Accounting Principles. LSI LOGIC CORPORATION RECONCILIATION OF NET LOSS EXCLUDING SPECIAL ITEMS TO GAAP RESULTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Three Months Ended Six Months Ended ------------------------ ------------------------ June 30, June 30, June 30, June 30, 2003 2002 2003 2002 --------- --------- --------- --------- Net loss excluding special items $ (6,297) $ (20,928) $ (57,130) $ (63,289) --------- --------- --------- --------- Special items: Additional excess inventory and related charges in cost of revenues -- (4,772) -- (45,526) Amortization of acquisition related items including intangibles and non-cash deferred stock compensation (28,151) (42,996) (58,819) (89,074) Restructuring of operations and other items, net (124,527) 6,405 (160,193) (58,655) Other special items (3,109) -- (8,367) -- Tax benefit -- -- -- 22,500 --------- --------- --------- --------- Total special items (155,787) (41,363) (227,379) (170,755) --------- --------- --------- --------- Net loss $(162,084) $ (62,291) $(284,509) $(234,044) ========= ========= ========= ========= Basic loss per share: Net loss excluding special items $ (0.02) $ (0.06) $ (0.15) $ (0.17) Special items** (0.41) (0.11) (0.61) (0.46) --------- --------- --------- --------- Net loss $ (0.43) $ (0.17) $ (0.76) $ (0.63) ========= ========= ========= ========= Diluted loss per share*: Net loss excluding special items $ (0.02) $ (0.06) $ (0.15) $ (0.17) Special items** (0.41) (0.11) (0.61) (0.46) --------- --------- --------- --------- Net loss $ (0.43) $ (0.17) $ (0.76) $ (0.63) ========= ========= ========= ========= Shares used in computing per share amounts: Basic 376,619 369,672 375,745 368,769 ========= ========= ========= ========= Diluted 376,619 369,672 375,745 368,769 ========= ========= ========= =========
* In computing diluted loss per share for the three and six month periods ended June 30, 2003 and 2002, all common stock equivalents were excluded as a result of their antidilutive effect. ** This line item includes rounding adjustments. LSI LOGIC CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (GAAP) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Three Months Ended Six Months Ended ---------------------------- ---------------------------- June 30, June 30, June 30, June 30, 2003 2002 2003 2002 ----------- ----------- ----------- ----------- Revenues $ 407,213 $ 437,768 $ 779,998 $ 850,277 ----------- ----------- ----------- ----------- Costs and expenses: Cost of revenues 238,469 274,404 486,537 581,067 Research and development 111,326 112,833 226,453 227,176 Selling, general and administrative 56,870 57,366 114,499 115,546 Restructuring of operations and other items, net 124,527 (6,405) 160,193 58,655 Amortization of acquisition related items including intangibles and non-cash deferred stock compensation* 28,151 42,996 58,819 89,074 ----------- ----------- ----------- ----------- Total costs and expenses 559,343 481,194 1,046,501 1,071,518 ----------- ----------- ----------- ----------- Loss from operations (152,130) (43,426) (266,503) (221,241) Interest expense (7,314) (15,486) (16,145) (31,320) Interest income and other, net 3,360 2,621 10,139 6,267 ----------- ----------- ----------- ----------- Loss before income taxes (156,084) (56,291) (272,509) (246,294) Provision/ (benefit) for income taxes 6,000 6,000 12,000 (12,250) ----------- ----------- ----------- ----------- Net loss $ (162,084) $ (62,291) $ (284,509) $ (234,044) =========== =========== =========== =========== Loss per share: Basic $ (0.43) $ (0.17) $ (0.76) $ (0.63) =========== =========== =========== =========== Diluted** $ (0.43) $ (0.17) $ (0.76) $ (0.63) =========== =========== =========== =========== Shares used in computing per share amounts: Basic 376,619 369,672 375,745 368,769 =========== =========== =========== =========== Diluted 376,619 369,672 375,745 368,769 =========== =========== =========== ===========
* The amortization of acquisition related items including intangibles and non-cash deferred stock compensation for the three month period ended June 30, 2003 are comprised of the following items: Amortization of intangibles $ 19,267 Amortization of non-cash deferred stock compensation 8,884 -------- $ 28,151 --------
** In computing diluted loss per share for the three and six month periods ended June 30, 2003 and 2002, all common stock equivalents were excluded as a result of their antidilutive effect. LSI LOGIC CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (IN MILLIONS) (UNAUDITED)
June 30, December 31, ASSETS 2003 2002 ------ -------- -------- Current assets: Cash and short-term investments $1,114.8 $ 990.0 Accounts receivable, net 241.1 248.6 Inventories 205.4 194.5 Prepaid expenses and other current assets 199.4 193.0 -------- -------- Total current assets 1,760.7 1,626.1 Property and equipment, net 497.4 747.0 Goodwill and other intangibles 1,187.7 1,251.0 Other assets 594.7 518.6 -------- -------- Total assets $4,040.5 $4,142.7 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Other current liabilities $ 430.3 $ 397.4 Current portion of long-term debt, capital lease obligations and short-term borrowings 173.7 0.4 -------- -------- Total current liabilities 604.0 397.8 Long-term debt and capital lease obligations 1,133.2 1,241.2 Deferred tax and other long-term liabilities 263.0 196.9 -------- -------- Total liabilities 2,000.2 1,835.9 Minority interest in consolidated subsidiaries 6.8 6.5 -------- -------- Stockholders' equity: Common stock 2,945.6 2,958.0 Deferred stock compensation (31.7) (51.2) Accumulated deficit (896.7) (612.2) Accumulated other comprehensive income 16.3 5.7 -------- -------- Total stockholders' equity 2,033.5 2,300.3 -------- -------- Total liabilities and stockholders' equity $4,040.5 $4,142.7 ======== ========
LSI LOGIC CORPORATION STATEMENT OF CASH FLOWS (IN THOUSANDS, EXCEPT WHERE NOTED) (UNAUDITED)
Three Months Ended Six Months Ended ---------------------- ---------------------- Jun. 30, Jun. 30, Jun. 30, Jun. 30, 2003 2002 2003 2002 -------- ------- -------- -------- OPERATING ACTIVITIES: Net loss (162,084) (62,291) (284,509) (234,044) Adjustments: Depreciation & amortization 65,053 87,029 152,111 175,928 Amortization of non-cash deferred stock compensation 8,884 23,849 19,427 50,770 Non-cash restructuring and non-recurring items, net 97,569 (7,303) 127,323 49,598 Loss on write down of equity securities, net 2,068 -- 9,074 -- Loss on repurchase of Convertible Subordinated Notes 2,029 -- 2,029 -- Gain on sale of property and equipment (857) -- (2,560) -- Changes in deferred tax assets and liabilities 447 (3,341) 37 (3,171) Changes in assets and liabilities Accounts receivable, net (15,660) (19,057) 8,500 (49,577) Inventories, net 1,826 1,787 (10,040) 61,115 Prepaid expenses and other assets 52,776 13,846 52,440 (9,308) Accounts payable 13,134 (7,766) 12,028 (41,398) Accrued and other liabilities 17,000 (1,686) 18,205 (9,847) -------- ------- -------- -------- NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES 82,185 25,067 104,065 (9,934) -------- ------- -------- -------- INVESTING ACTIVITIES: Purchases of debt and equity securities available-for-sale (552,298) (386,122) (1,409,529) (937,742) Maturities and sales of debt and equity securities available-for-sale 570,318 303,380 1,455,927 627,823 Purchases of equity securities -- (8,500) -- (9,894) Proceeds from (purchases)/sale of property and equipment, net (8,586) (7,397) 140,337 (12,148) Decrease/(increase) in non-current assets and deposits 4,642 7,083 (145,768) 236 -------- ------- -------- -------- NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES 14,076 (91,556) 40,967 (331,725) -------- ------- -------- -------- FINANCING ACTIVITIES: Proceeds from borrowings 350,000 -- 350,000 -- Repurchase of Convertible Subordinated Notes (288,587) -- (288,587) -- Cash paid for call spread options (28,000) -- (28,000) -- Debt issuance costs (10,566) -- (10,566) -- Repayment of debt obligations (86) (83) (174) (191) Issuance of common stock, net 15,648 24,967 15,890 26,589 -------- ------- -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 38,409 24,884 38,563 26,398 -------- ------- -------- -------- -------- ------- -------- -------- Effect of exchange rate changes on cash and cash equivalents 2,966 2,434 3,722 4,065 -------- ------- -------- -------- Increase/(decrease) in cash and cash equivalents 137,636 (39,171) 187,317 (311,196) Cash and cash equivalents at beginning of period 498,528 485,113 448,847 757,138 -------- ------- -------- -------- Cash and cash equivalents at end of period 636,164 445,942 636,164 445,942 ======== ======= ======== ========
LSI LOGIC CORPORATION SELECTED FINANCIAL INFORMATION (GAAP) (IN MILLIONS, EXCEPT WHERE NOTED) (UNAUDITED)
Three Months Ended -------------------------------------- June 30, Mar. 31, June 30, 2003 2003 2002 ---------- ---------- ---------- Semiconductor revenues $ 306.2 $ 273.1 $ 354.8 Storage Systems revenues $ 101.0 $ 99.7 $ 83.0 Total revenues $ 407.2 $ 372.8 $ 437.8 Percentage change in revenues-qtr./qtr.(a) 9.2% -22.3% 6.1% Percentage change in revenues-yr./yr.(b) -7.0% -9.6% -5.9% Days sales outstanding 53 54 50 Days of inventory 78 75 65 Current ratio 2.9 2.3 3.7 Quick ratio 2.2 1.7 2.6 R&D as a percentage of revenues 27.3% 30.9% 25.8% SG&A as a percentage of revenues 14.0% 15.5% 13.1% Gross margin as a percentage of revenues 41.4% 33.5% 37.3% Employees(c) 5,044 5,323 5,445 Revenues per employee (in thousands)(d) $ 322.9 $ 280.1 $ 321.6 Diluted shares (in thousands) 376,619 374,628 369,672 Selected Cash Flow information; Purchase of property and equipment(e) $ 13.0 $ 14.7 $ 8.8 Depreciation/amortization(f) $ 41.8 $ 61.1 $ 62.1 In-process research and development $ -- $ -- $ -- Issuance of common stock for employee stock purchase and option programs $ 15.6 $ 0.2 $ 25.0
(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) Actual number of employees at the end of each period presented. (d) Revenue per employee is calculated by annualizing revenue for each quarter presented and dividing it by the number of employees. (e) Represents gross addition of property and equipment. (f) Represents depreciation of fixed assets and amortization of software. Excludes amortization of intangibles and non-cash deferred stock compensation.