SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarter Ended October 2, 1994
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _____________ to___________
Commission File Number: 0-11674
LSI LOGIC CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2712976
(State of Incorporation) (I.R.S. Employer
Identification Number)
1551 McCarthy Boulevard
Milpitas, California 95035
(Address of principal executive offices)
(408) 433-8000
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES x NO
As of October 31, 1994 there were 56,949,482 shares of
registrant's Common Stock, $.01 par value, outstanding.
LSI LOGIC CORPORATION
Form 10-Q
FOR THE QUARTER ENDED OCTOBER 2, 1994
INDEX
Page
No.
PART I Financial Information
Item 1 Financial Statements
Consolidated Condensed Balance Sheets
- September 30, 1994 and December 31, 1993 3
Consolidated Condensed Statements of Operations -
Three-Month and Nine-Month Periods Ended
September 30, 1994 and 1993 4
Consolidated Condensed Statements of Cash Flows -
Nine-Month Periods Ended September 30, 1994 and 1993 5
Notes to Consolidated Condensed Financial Statements 6
Item 2 Management's Discussion and Analysis of Results of
Operations and Financial Condition 9
PART II Other Information
Item 1 Legal Proceedings 13
Item 6 Exhibits and Reports on Form 8-K 13
PART I
Item 1. Financial Statements
<TABLE>
<CAPTION>
LSI LOGIC CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
September 30, December 31,
1994 1993
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 223,491 $121,319
Short-term investments 178,155 80,764
Accounts receivable, less allowance
for doubtful accounts of $3,362
and $2,470 158,332 124,384
Inventories 98,352 69,066
Prepaid expenses and other
current assets 37,796 30,165
Total current assets 696,126 425,698
Property and equipment, at cost less
accumulated depreciation and
amortization 451,320 385,063
Other assets 59,129 41,945
Total assets $ 1,206,575 $852,706
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 146,741 $ 66,822
Accrued salaries, wages and benefits 21,713 24,397
Accrued restructuring costs 25,316 29,503
Other accrued liabilities 33,043 28,353
Income taxes payable 33,179 17,079
Current portion of long-term obligations
and short-term borrowings 24,470 22,727
Total current liabilities 284,462 188,881
Long-term obligations 294,973 246,314
Deferred income taxes 5,774 6,337
Minority interest in subsidiaries 125,279 118,740
Stockholders' equity:
Preferred shares; 2,000 shares authorized - -
Common stock; $.01 par value; 73,500
shares authorized; 56,890 and 49,728
shares outstanding 569 497
Additional paid-in capital 387,837 273,933
Retained earnings (accumulated deficit) 30,588 (41,673)
Cumulative translation adjustment 77,093 59,677
Total stockholders' equity 496,087 292,434
Total liabilities and
stockholders' equity $ 1,206,575 $852,706
See accompanying notes to unaudited consolidated condensed
financial statements.
</TABLE>
<TABLE>
<CAPTION>
LSI LOGIC CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenues $240,218 $183,761 $646,137 $529,770
Costs and expenses:
Cost of revenues 138,219 112,001 376,943 324,167
Research and development 26,834 19,134 72,442 57,539
Selling, general and
administrative 30,645 29,910 91,204 88,125
Total costs and expenses 195,698 161,045 540,589 469,831
Income from operations 44,520 22,716 105,548 59,939
Interest expense 4,822 2,538 14,275 7,095
Interest income and other 3,263 1,818 12,186 6,025
Income before income taxes
and minority interest 42,961 21,996 103,459 58,869
Provision for income taxes 12,028 6,599 28,966 17,661
Income before minority
interest 30,933 15,397 74,493 41,208
Minority interest in net
income of subsidiaries 1,465 1,022 2,232 3,148
Net income $ 29,468 $ 14,375 $ 72,261 $ 38,060
Net income per share:
Primary $ 0.52 $ 0.29 $ 1.35 $ 0.78
Fully diluted $ 0.49 $ 1.26
Common share and common
share equivalents used
in computing per share
amounts:
Primary 56,394 50,249 53,496 48,936
Fully diluted 63,938 61,886
See accompanying notes to unaudited consolidated condensed
financial statements.
</TABLE>
<TABLE>
<CAPTION>
LSI LOGIC CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
1994 1993
<S> <C> <C>
Operating activities:
Net income $ 72,261 $ 38,060
Adjustments:
Depreciation and amortization 78,121 47,438
Minority interest in net income
of subsidiaries 2,232 3,148
Change in:
Accounts receivable (27,333) (21,984)
Inventories (24,340) 4,218
Prepaid and other assets (24,559) (6,011)
Accounts payable 75,482 (30,788)
Accrued and other liabilities 11,439 18,624
Accrued restructuring costs (4,472) (6,201)
Net cash provided by operating
activities 158,831 46,504
Investing activities:
Purchases of debt and equity securities
available-for-sale, net of maturities
and sales (89,806) -
Change in other short-term debt
and equity securities (7,989) (18,038)
Acquisition of stock from minority
interest holders (10,710) -
Purchases of property and equipment,
net of retirements (102,553) (75,139)
Net cash used for investing
activities (211,058) (93,177)
Financing activities:
Issuance of Convertible
Subordinated Notes 143,750 -
Proceeds from borrowings 5,061 57,588
Repayment of debt obligations (17,724) (19,226)
Issuance of common stock 15,471 23,852
Tax benefit from employee stock plans 1,400 -
Net cash provided by financing
activities 147,958 62,214
Effect of exchange rate changes on
cash and cash equivalents 6,441 14,971
Increase in cash and cash equivalents 102,172 30,512
Cash and cash equivalents at beginning
of period 121,319 87,103
Cash and cash equivalents at end
of period $223,491 $117,615
Non-Cash Transactions:
Conversion of subordinated
debentures to common stock $ 97,105
See accompanying notes to unaudited consolidated condensed
financial statements.
</TABLE>
LSI LOGIC CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - In the opinion of the Company, the accompanying
unaudited consolidated condensed financial statements contain all
adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the financial information included
therein. While the Company believes that the disclosures are
adequate to make the information not misleading, it is suggested
that these financial statements be read in conjunction with the
audited consolidated financial statements and accompanying notes
included in the Company's Annual Report to Stockholders
incorporated by reference in the Company's Annual Report on Form
10-K for the year ended January 2, 1994.
For financial reporting purposes, the Company reports on
a 13 or 14 week quarter and a 52 or 53 week year ending on the
Sunday closest to December 31. For presentation purposes, the
consolidated financial statements refer to the quarter's calendar
month end for convenience. The results of operations for the
three month and nine-month periods ended September 30, 1994 are
not necessarily indicative of the results to be expected for the
full year.
Note 2 - Effective January 3, 1994, the Company adopted the
Statement of Financial Accounting Standards No. 115 (SFAS 115),
"Accounting for Certain Investments in Debt and Equity
Securities." This statement requires investments in debt and
equity securities to be classified as "held-to-maturity,"
"trading," or "available-for-sale." The Company classifies its
investments as held-to-maturity, which are reported at amortized
cost, and as available-for-sale, which are reported at fair value
with unrealized gains and losses, net of related tax, if any,
reported as a separate component of stockholders' equity.
Realized gains and losses are based on the book value of specific
securities sold and were not material during the three months and
nine months ended September 30, 1994.
Fair market value of the Company's investments
approximate cost. The cumulative effect of adoption on January
3, 1994, was not material.
Note 3 - Balance sheet detail (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
<S> <C> <C>
Inventories:
Raw materials $ 12,855 $ 11,667
Work-in-process 60,919 34,997
Finished goods 24,578 22,402
Total $ 98,352 $ 69,066
Property and equipment:
Property and
equipment, at cost $897,507 $750,186
Accumulated depreciation
and amortization (446,187) (365,123)
Property and
equipment, net $451,320 $385,063
</TABLE>
Property and equipment includes capitalized interest of
approximately $8.2 million (net of $1.4 million accumulated
amortization) and $9.6 million at September 30, 1994 and December
31, 1993, respectively. Property and equipment includes
preproduction engineering costs of $27.4 million at September 30,
1994 and December 31, 1993. Accumulated amortization of
preproduction engineering costs was $5.7 million at September 30,
1994. There was no accumulated amortization for preproduction
engineering at December 31, 1993.
Note 4 - During the third quarter of 1992, the Company recorded a
$101.8 million restructuring charge which consisted primarily of
estimated costs associated with consolidations in the Company's
worldwide manufacturing operations, write-down and discontinuance
of certain commodity standard product inventories, severance
costs and other costs. The Company's strategic consolidation of
worldwide manufacturing operations and facilities encompassed the
phase-out and closure of the Company's German assembly and test
operations, the write-down of U.S. manufacturing assets
pertaining to older process technologies which, in certain
instances, had become redundant; and estimated operating losses
attributable to the period of the phase-out and closure of such
operations or the write-down of such assets.
In 1993, the Company sold certain assets from its
discontinued German assembly and test operation, transferred
certain Canadian manufacturing equipment to its U.S. operations,
continued phase-down of its older process-technology
manufacturing facility in the U.S. and began consolidation and
phase-out of some of its other U.S. manufacturing facilities.
During the first nine months of 1994 the Company
continued its strategic consolidation of worldwide operations
that were contemplated by the Company's 1992 restructuring. As
the Company's discontinued German manufacturing facility remains
unsold at this time, management has determined that additional
reserves are necessary to further write-down the facility to its
estimated net realizable value. In the second quarter of 1994,
the Company delayed the phase-out of its manufacturing facility
in the U.S. in response to unexpected levels of customer demand.
Management has determined that remaining reserves
attributable to this facility may not need to be fully utilized.
As excess reserves associated with the U.S. facility offset the
reserves needed in connection with the German facility, overall
restructuring reserves remaining at September 30, 1994 are
considered adequate to cover uncertainties associated with the
completion of the 1992 restructuring.
Note 5 -During March 1994, the Company issued $143,750,000 of
5 1/2% Convertible Subordinated Notes (Notes) due 2001. The
Notes are subordinated to all existing and future senior debt,
are convertible at any time after 60 days following issuance into
shares of the Company's common stock at a conversion price of
$24.50 per share, and are redeemable at the option of the
Company, in whole or in part, at any time on or after March 18,
1997. Each holder of these Notes has the right to cause the
Company to repurchase all of such holder's Notes at 100% of their
principal amount plus accrued interest subject to certain events
and circumstances. Interest is payable semiannually. The
proceeds from this offering will be used for capital expenditures
and for general corporate purposes.
Cash paid for interest expense was $15.5 million and $8.6
million during the nine months ended September 30, 1994 and 1993,
respectively.
Note 6 - In July, 1994, the Company called for redemption all of
its $98 million, 6 1/4% convertible subordinated debentures. In
July and August 1994, substantially all of the debentures were
converted into approximately 4.9 million shares of common stock
at a price of $20 per share.
Note 7 - The Company's effective tax rate differs from the
statutory rate due to the Company's ability to utilize certain
deferred benefits for which a valuation allowance was previously
required. Cash paid for income taxes was $13.7 million and $0.4
million during the nine months ended September 30, 1994 and 1993,
respectively.
Note 8 - Primary income per common share and common equivalent
share is computed using the weighted average number of common
shares outstanding during the respective periods, including
dilutive stock options, as applicable. Fully-dilutive income per
common share and common equivalent share is computed by adjusting
net income and primary shares outstanding for the potential
effect of the conversion of the weighted average subordinated
debentures outstanding during the period.
Fully-dilutive earnings per share computations are based on
the most advantageous (to the security holder) conversion or
exercise rights that become effective within ten years following
the period reported upon.
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
General
As a participant in the semiconductor industry, the Company
operates in a technologically advanced, rapidly changing and
highly competitive environment. The Company predominately sells
custom products to customers operating in a similar environment.
Accordingly, changes in the circumstances of the Company's
customers may have a greater impact on the Company than if the
Company offered standard products that could be sold to many
purchasers. While the Company cannot predict what effect these
various factors may have on its financial results, the aggregate
effect of these and other factors could result in significant
volatility in the Company's future performance. To the extent
the Company's performance may not satisfy expectations published
by external sources, public reaction could result in a sudden and
significant adverse impact on the market price of the Company's
securities, particularly on a short-term basis.
The Company's future operating results are and will continue to
be subject to quarterly variations based upon a wide variety of
factors, many of which are beyond the Company's control,
including sudden fluctuations in customer requirements, rapid
price declines, unexpected product obsolescence, currency
exchange rate fluctuations and other economic conditions
affecting customer demand and the Company's cost of operations in
one or more of the global markets in which the Company does
business. While the Company attempts to identify and respond to
these conditions in a timely manner, they represent significant
risks to the Company's performance.
While management believes that the discussion and analysis in
this report is adequate for a fair presentation of the
information, management recommends that this discussion and
analysis be read in conjunction with Management's Discussion and
Analysis included in the Company's 1993 Annual Report to
Stockholders incorporated by reference in the Company's Annual
Report on Form 10-K for the year ended January 2, 1994.
Results of Operations
Revenues for the third quarter and first nine months of 1994 were
$240.2 million and $646.1 million, representing an increase of
31% and 22%, respectively, over the comparable periods of 1993.
The composition of revenues by major element was as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Component products 90% 87% 88% 86%
Design and services 10% 13% 12% 14%
100% 100% 100% 100%
</TABLE>
Total component revenues grew 36% to $216.5 million in the third
quarter and 25% to $566.0 million in the first nine months of
1994 from $159.5 million and $454.1 million compared to
comparable periods in 1993. The increase in revenue dollars in
the third quarter and first nine months of 1994 compared to the
third quarter and first nine months of 1993 were primarily due to
increased revenues from application specific integrated circuit
(ASIC) products. Higher ASIC component revenues in the third
quarter of 1994 compared to the third quarter of 1993 were
primarily the result of increase unit shipments. Higher ASIC
component revenues and higher ASIC component revenues as a
percentage of total revenues in the first nine months of 1994
compared to the first nine months of 1993 was due to both higher
average selling prices and increased unit shipments. Total
dollar revenues from design and services increased approximately
$1 million in the third quarter of 1994 and $4.3 million in the
first nine months of 1994 compared to the same periods in 1993.
The increase for the nine month period was primarily attributable
to a one-time $7 million sale in the second quarter of 1994
involving certain product and marketing rights.
Key elements of the statements of operations, expressed as a
percentage of revenues, were as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Gross profit margin 42.5% 39.1% 41.7% 38.8%
Research and development
expenses 11.2% 10.4% 11.2% 10.9%
Selling, general and
administrative expenses 12.8% 16.3% 14.1% 16.6%
Income from operations 18.5% 12.4% 16.3% 11.3%
</TABLE>
Gross profit, as a percentage of revenues, increased during the
third quarter and first nine months of 1994 over the comparable
1993 periods. The majority of the increases in gross margin are
attributable to an increased product demand for ASIC products,
higher average selling prices during the third quarter of 1994
and the nine months ended September 30, 1994, and the increased
use of lower cost third-party subcontractors, partially offset by
the higher costs of revenues associated with the output from the
Japanese affiliate's new submicron wafer manufacturing facility.
In the second and third quarters of 1994, the Company continued
to substantially increase sales of product manufactured at this
new facility, which began volume production in the first quarter
of 1994. Costs of revenues for the third quarter and first nine
months of 1994 reflect the depreciation, amortization of
preproduction engineering and other manufacturing costs
attributable to this facility, and the increased costs of
operating in Japan due to the continued strengthening of the Yen
in relation to the U.S. Dollar. Gross profits from design and
services revenue as a percentage of revenue decreased slightly in
the third quarter of 1994 and increased 7.5% in the first nine
months of 1994 compared to the same periods in 1993. The
Company's gross profit margins are largely dependent upon factory
capacity and utilization, availability of certain raw materials,
terms negotiated with third-party subcontractors, foreign
currency exchange rate fluctuations and product mix. Volume
production capability is expected to continue to increase
throughout 1994, thereby significantly increasing factory
capacity by the end of 1994. A new wafer fabrication facility
initially operates at higher fixed costs. In the event that
demand for the Company's products does not absorb this
additional capacity at a sufficient rate or delays occur in the
ramp up of the new facility, the Company's gross profit
margins could be negatively impacted in future periods.
Accordingly, gross profit margins for the third quarter and
first nine months of 1994 may not be indicative of results in
future periods.
Research and development (R&D) expenses for the third quarter and
first nine months of 1994 related primarily to advanced process
technology and new product development and increased
approximately $7.7 million (40%) and $14.9 million (26%),
respectively, from the comparable periods in 1993. The Company
is committed to technological leadership in the ASIC markets and
anticipates continued investment in R&D at a rate of between
10-12% of revenues in future periods. The Company's R&D
investments are primarily for the development of advanced
manufacturing processes, development of new advanced products and
enhancements to the Company's design automation software
capability.
Selling, general and administrative (SG&A) expenses decreased
approximately 3.5% and 2.5% as a percentage of revenues during
the third quarter and first nine months of 1994, respectively,
compared to the same periods in 1993 as management continued its
cost containment efforts.
In summary, total operating costs and expenses for the third
quarter and first nine months of 1994 were $195.7 million and
$540.6 million, respectively, an increase over $161.0 million and
$469.8 million for the third quarter and first nine months of
1993, respectively. However, operating income as a percentage of
revenues increased to 18.5% and 16.3% in the third quarter and
first nine months of 1994 from 12.4% and 11.3%, respectively, for
the comparable periods in 1993.
Interest expense for the third quarter and first nine months of
1994 increased by $2.3 million and $7.2 million from the
comparable 1993 periods. The majority of the increases resulted
from discontinued capitalization of interest upon commencement of
volume production by the Japanese affiliate's new submicron wafer
fabrication facility in the first quarter of 1994 and the
issuance of $143.8 million of 5 1/2% convertible subordinated
notes in March 1994. Interest expense is expected to decrease in
the fourth quarter of 1994 as a result of the conversion of
approximately $97 million of the Company's 6 1/4% convertible
subordinated debentures during July and August of 1994 (see
discussion at Note 6 to the Consolidated Financial Statements).
Interest income and other for the third quarter and first nine
months of 1994 increased $1.5 million and $6.2 million,
respectively, in relation to the same periods in 1993. The
majority of these increases are attributable to increased
interest earnings on higher cash and investments in the third
quarter of 1994 and net foreign currency exchange gains,
partially offset by bond redemption costs.
The Company recorded a provision for income taxes for the third
quarter and first nine months of 1994 with an effective rate of
28% compared to 30% for the comparable 1993 periods. The
decrease in the effective rate was primarily attributable to
changes in the composition of worldwide earnings.
Minority interest for the third quarter of 1994 increased
slightly from the third quarter of 1993 and decreased slightly
for the first nine months of 1994 compared to the same period in
1993. The fluctuations in minority interest were attributable to
the composition of earnings and losses among certain of the
Company's international affiliates.
Financial Condition
The Company's cash, cash equivalents and short-term investments
increased $199.6 million during the first nine months of 1994 to
$401.6 million, and working capital increased by $174.8 million
to $411.7 million at September 30, 1994. The increase is
primarily attributable to the issuance of $143.8 million of
convertible subordinated notes in March, 1994, as discussed
below, and cash generated by operations, partially offset by
fixed asset acquisitions.
During the first nine months of 1994, the Company generated
$158.8 million of cash and equivalents from its operating
activities, compared to $46.5 million during the first half of
1993. The increased net cash provided from operations as
compared to the comparable 1993 period was primarily attributable
to an increase in accounts payable and net income before
depreciation which was partially offset by increases in
inventories, prepaid and other assets and accounts receivable.
During the first nine months of 1994, $211.1 million of cash and
equivalents were used for investing activities compared to $93.2
million during the comparable period of 1993. The primary
investing activities consisted of the purchase of fixed assets
for the Japanese affiliate's new submicron wafer manufacturing
facility in Japan and the U.S. research and development facility,
the purchase of short-term debt securities, and the repurchase of
LSI Logic K.K. minority owned stock. Net capital expenditures
for the nine months ended September 30, 1994 totaled
approximately $102.6 million. Based on current business outlook,
management expects net capital expenditures of approximately $70
to $80 million for the last quarter of 1994.
Financing activities generated $148.1 million of cash and
equivalents during the first nine months of 1994 compared
to $62.2 million for the same period of 1993. The Company repaid
U.S., Japanese and European debt totaling approximately $17.7
million during the first nine months of 1994. In addition, the
Company issued $143.8 million of 5 1/2% Convertible Subordinated
Notes due in 2001. The Notes are subordinated to all existing
and future senior debt, are convertible at any time after 60 days
following issuance into shares of the Company's common stock at a
conversion price of $24.50 per share, and are redeemable at the
option of the Company, in whole or in part, at any time on or
after March 18, 1997. Each holder of these Notes has the right
to cause the Company to repurchase all of such holder's Notes at
100% of their principal amount plus accrued interest subject to
certain events and circumstances. Interest is payable
semiannually. The proceeds from this offering will be used for
capital expenditures and for general corporate purposes.
In July, 1994, the Company called for redemption all of its $98
million, 6 1/4% convertible subordinated debentures. In July and
August 1994, substantially all of the bonds were converted into
approximately 4.9 million shares of common stock at a price of
$20 per share.
During the first nine months of 1994 the Company continued its
strategic consolidation of worldwide operations contemplated by
the Company's 1992 restructuring. Cash outlays during this
period were not material. As the Company's discontinued German
manufacturing facility remains unsold at this time, management
has determined that additional reserves are necessary to further
write-down the facility to its estimated net realizable value.
In the second quarter of 1994, the Company delayed the phase-out
of its manufacturing facility in the U.S. in response to
unexpected levels of customer demand. Management has determined
that remaining reserves attributable to this facility may not
need to be fully utilized. As excess reserves associated with
the U.S. facility offset the reserves needed in connection
with the German facility, overall restructuring reserves
remaining at September 30, 1994 are considered adequate to
cover uncertainties associated with the completion of the 1992
restructuring.
The Company utilizes various instruments, primarily forward
exchange and currency swap contracts, to manage its risk
associated with currency fluctuations on intercompany loans and
certain net non-U.S. dollar denominated asset and liability
positions. At September 30, 1994, the Company had various
forward exchange and currency swap contracts outstanding totaling
approximately $75 million. The majority of these contracts are
for periods less than one year.
In August 1994, the Company increased its revolving bank credit
agreement from $25 million to $60 million and extended the
maturity date to August 31, 1997. No amount is outstanding under
this credit agreement. The Company believes that its existing
liquid resources, together with cash generated from operations
and the established revolving credit agreement, are sufficient to
satisfy anticipated operating cash requirements through 1994.
Part II
Item 1 Legal Proceedings
Reference is made to Item 3, Legal Proceedings, of the
Company's Annual Report on Form 10K for the fiscal year ended
January 2, 1994 for a discussion of certain pending legal
proceedings. The information provided at such reference remains
unchanged except as follows. Various pretrial motions in the
Texas Instruments Incorporated litigation matter were filed
during the first quarter of 1994, including motions regarding the
significance, if any, of the prior ITC action on the District
Court action. In August 1994, the judge in the District Court
action denied all of the pretrial motions and a trial is expected
in April, 1995.
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
11.1 Calculation of Earnings Per Share
27.0 Financial Data Schedule
(b) Reports on Form 8-K
On August 10, 1994, the Company filed a Report on Form
8-K, Item 5, announcing that 4,856,000 shares of the Company's
common stock were issued in connection with the conversion of the
Company's 6 1/4% Convertible Subordinated Debentures due 2002.
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
LSI LOGIC CORPORATION
(Registrant)
Date: November 15, 1994 By /s/ Albert A. Pimentel
Albert A. Pimentel
Senior Vice President Finance
and Chief Financial Officer
<TABLE>
<CAPTION>
Exhibit 11.1
LSI LOGIC CORPORATION
CALCULATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Primary Earnings
Per Share
Net income $29,468 $14,375 $72,261 $38,060
Average common and
common equivalent
shares:
Average common
shares outstanding 54,640 48,425 51,799 47,106
Dilutive options 1,754 1,824 1,697 1,830
56,394 50,249 53,496 48,936
Earnings per common
and common equivalent
share $ 0.52 $ 0.29 $ 1.35 $ 0.78
Fully Diluted
Earnings Per Share
Net income $29,468 $72,261
Interest expense on
convertible
subordinated debt,
net of tax effect 1,780 5,651
Adjusted net income $31,248 $77,912
Average common and
common equivalent
shares on a fully
diluted basis:
Average common
shares outstanding 56,119 55,529
Convertible
subordinated
debt 5,867 4,238
Dilutive options 1,952 2,119
63,938 61,886
Fully diluted earnings
per common and common
equivalent share $ 0.49 $ 1.26
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 223,491
<SECURITIES> 178,155
<RECEIVABLES> 161,694
<ALLOWANCES> 3,362
<INVENTORY> 98,352
<CURRENT-ASSETS> 696,126
<PP&E> 897,507
<DEPRECIATION> 446,187
<TOTAL-ASSETS> 1,206,575
<CURRENT-LIABILITIES> 284,462
<BONDS> 143,750
<COMMON> 569
0
0
<OTHER-SE> 495,518
<TOTAL-LIABILITY-AND-EQUITY> 1,206,575
<SALES> 646,137
<TOTAL-REVENUES> 646,137
<CGS> 376,943
<TOTAL-COSTS> 376,943
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,275
<INCOME-PRETAX> 103,459
<INCOME-TAX> 28,966
<INCOME-CONTINUING> 72,261
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72,261
<EPS-PRIMARY> 1.35
<EPS-DILUTED> 1.26
</TABLE>
