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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 21, 1999
LSI LOGIC CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 0-11674 94-2712976
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<S> <C> <C>
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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1551 MCCARTHY BOULEVARD
MILPITAS, CALIFORNIA 95035
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(ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(408) 433-8000
NOT APPLICABLE
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS.
The information that is set forth in the Registrant's Press
Release dated July 21, 1999 is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Text of Press Release dated July 21, 1999
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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 hereunto duly authorized.
LSI LOGIC CORPORATION
A Delaware Corporation
Dated: July 23, 1999 By: /s/ R. Douglas Norby
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R. Douglas Norby
Executive Vice President, Finance and
Chief Financial Officer
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EXHIBIT INDEX
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Exhibit Number Description
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99.1 Text of Press Release dated July 21, 1999.
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE July 21, 1999
CC99-38
Contacts:
Investor Relations Media Relations
Diana Matley Kevin Brett
408-433-4365 408-433-7150
LSI LOGIC REPORTS RECORD Q2 AND FIRST HALF 1999 REVENUES
- 1999 SECOND QUARTER FINANCIAL HIGHLIGHTS -
[ ] Record Q2 revenues of $501 million; exceeds $500 million mark for the first
time in a quarter.
[ ] Q2 revenues up 49 percent compared to Q2 1998.
[ ] Sixth quarter of sequential revenue growth; up 8 percent from the $464
million in Q1 1999.
[ ] Per share EBG* was 21 cents, compared to First Call consensus estimate of 18
cents.
[ ] Gross margin expands to 37.2 percent; operating expenses decline.
[ ] Cash and short-term investments grow from $291 million in Q1 to $345 million
in Q2.
* Earnings before goodwill amortization and special items.
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LSI LOGIC REPORTS 49 PERCENT Q2 REVENUE GROWTH OVER Q2 1998
MILPITAS, CALIFORNIA - LSI Logic Corporation (NYSE:LSI) today reported 1999
second quarter revenues of $501 million, a 49 percent increase over the $336
million posted in the second quarter of 1998.
The 1999 second quarter revenues were also 8 percent higher than the $464
million reported in the first quarter of this year, marking the sixth quarter of
sequential sales growth.
Net income before amortization of goodwill and other special items was $31
million or 21 cents a diluted share, up from $11 million or 8 cents a diluted
share in the first quarter. The second quarter net income figure declined
slightly from the $33 million or 23 cents a diluted share in the second quarter
of 1998.
Gross margin improved to 37.2 percent in the second quarter from the 34.9
percent in the first quarter of the year. Operating expenses declined as a
percentage of revenues, and cash and short-term investments grew from $291
million in the first quarter of 1999 to $345 million in the second quarter.
"LSI Logic is now on a $2 billion annual run rate and we are growing faster than
the global semiconductor industry," said Wilfred J. Corrigan, LSI Logic chairman
and chief executive officer. "We are successfully executing our Internet-driven
business strategy of providing system-on-a-chip solutions for our high-volume
customers competing in high-growth vertical markets."
LSI Logic reported record first half revenues of $965 million in the first six
months of 1999, up 44 percent from $669 million in the first half of 1998. First
half net income before goodwill amortization and other special items was $42
million or 28 cents a diluted share, compared to $65 million or 45 cents a
diluted share.
LSI LOGIC GLOBAL MARKET OVERVIEW
"We are well on our way to achieving the goals in our financial model," said
Doug Norby, LSI Logic executive vice president and chief financial officer. "Our
revenues grew. Our gross margin expanded. Operating expenses fell. Our cash
position strengthened."
During the second quarter, the company took steps to enhance its product
portfolio by means of the $106 million acquisition of SEEQ Technology, Inc.
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"We are continually exploring strategic acquisitions that build upon our
existing intellectual property library and increase LSI Logic's leadership
position in our designated high-growth vertical markets," said John Daane, LSI
Logic executive vice president of Communications, Computer and ASIC Products.
"The SEEQ acquisition immediately bolstered our product offerings for customers
competing in the networking space."
"We are seeing renewed strength in the Asian economies and China is emerging as
a major consumer market for LSI Logic," said Elie Antoun, LSI Logic executive
vice president for Consumer Products. "The second quarter for our Consumer
Division was sequentially higher than the first quarter, and we expect the
second half of the year to be stronger."
SECOND QUARTER 1999 BUSINESS AND TECHNOLOGY HIGHLIGHTS
[ ] LSI Logic was the No. 1 performing S&P 500 common stock in the first half of
1999, growing 189 percent in that time period.
[ ] LSI Logic completed the $106 million acquisition of SEEQ Technology, Inc., a
leading semiconductor designer of data communications devices for the
Internet-driven networking market.
[ ] LSI Logic and Silterra (Malaysia) announced a technology licensing and
manufacturing relationship, valued at $120 million to LSI Logic.
[ ] LSI Logic delivered its 500th CoreWare design to a high-volume customer,
just five years after introducing the landmark design process that makes
system-on-a chip solutions a reality for a wide variety of customers competing
in high-growth markets.
[ ] LSI Logic acquired ZSP Corporation, a leading-edge company developing high
performance DSP products for customers competing in high-growth communications
markets.
[ ] LSI Logic introduced the SC2000 Source Decoder, a fully integrated
single-chip solution that enables sophisticated multimedia capabilities for a
set-top box by supporting a full spectrum of video and audio utilizing multiple
broadcast standards.
[ ] LSI Logic and the Tao Group entered into a strategic relationship in which
Tao will mount its JBC Virtual Machine for running Java applications on LSI
Logic's set-top box reference platforms.
[ ] LSI Logic and ARM announced the licensing of the ARM9E processor core from
ARM to LSI Logic. The processor core combines both control and digital signal
processing (DSP) capabilities in a single-processor architecture.
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[ ] Cabletron Systems selected LSI Logic's GigaBlaze(R) system-on-a-chip ASIC
transceiver core for SmartSwitch, Cabletron's highest capacity ATM switch for
core networks.
[ ] LSI Logic introduced a portfolio of Ultra3 SCSI solutions for
next-generation desktop, workstation and server systems. The product offerings
include rich host controller standard products, host adapter boards and bus
expanders.
[ ] LSI Logic unveiled the PCI Fibre Channel SAN controller standard product to
meet the increased demand for networked storage and cluster resources also known
as Storage Area Networks (SANs).
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. 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 and the achievement of revenue objectives by the company. Other risks and
uncertainties include, but are not necessarily limited to the timing and success
of new product introductions and the integration of acquired entities. 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 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(NYSE:LSI), 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 CoreWare 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, www.lsilogic.com.
CoreWare, GigaBlaze and The System on a Chip Company are registered trademarks
of LSI Logic. Java is a trademark of Sun Microsystems Inc. AREM9E is a trademark
of ARM Limited.
# # # # # #
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LSI LOGIC CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
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<CAPTION>
Three Months Ended Six Months Ended
------------------------- ------------------------
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Revenues $ 501,012 $ 336,272 $ 964,629 $ 669,002
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Costs and expenses:
Cost of revenues 314,398 179,844 616,289 367,392
Research and development 75,046 65,943 151,569 130,857
Selling, general and administrative 62,783 52,404 124,272 97,601
--------- --------- --------- ---------
Total costs and expenses 452,227 298,191 892,130 595,850
--------- --------- --------- ---------
Income from operations 48,785 38,081 72,499 73,152
Interest expense (9,620) (95) (20,200) (175)
Interest income and other 2,459 5,470 4,195 13,480
--------- --------- --------- ---------
Income before income taxes 41,624 43,456 56,494 86,457
Provision for income taxes 10,406 10,864 14,124 21,614
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Pro forma net income $ 31,218 $ 32,592 $ 42,370 $ 64,843
--------- --------- --------- ---------
Pro forma earnings per share:
Basic $ 0.21 $ 0.23 $ 0.29 $ 0.45
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Diluted $ 0.21 $ 0.23 $ 0.28 $ 0.45
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Shares used in computing per share amounts:
Basic 145,622 143,168 144,883 142,868
--------- --------- --------- ---------
Diluted 151,947 144,719 149,614 144,377
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</TABLE>
Pro forma net income is intended to present the Company's operating results,
excluding amortization of goodwill and special items, for the three and
six-month periods ended June 30, 1999 and 1998. During the three-month period
ended June 30, 1999, the special items were acquired in-process research and
development related to the acquisition of a non-public technology company and
expenses related to the merger with Seeq Technology, Inc. During the six-month
period ended June 30, 1999, the special items also included the reversal of
restructuring reserves and the cumulative effect of change in accounting
principle in addition to the items included in the three-month period ended June
30, 1999. During the three and six-month periods ended June 30, 1998, there were
no special items other than amortization of goodwill.
The Company reported an overall tax provision of $7,530 and $10,691 for the
three-month periods ended June 30, 1999 and 1998, respectively, and $9,160 and
$20,890 for the six-month periods ended June 30, 1999 and 1998, respectively.
However, the pro forma statements include a provision of $10,406 and $10,864 for
the three-month periods ended June 30, 1999 and 1998 and $14,124 and $21,614 for
the six-month periods ended June 30, 1999 and 1998, respectively, using the
Company's normal 25% tax rate to calculate pro forma net income.
A reconciliation from pro forma net income to the reported results is presented
on the following page. The format presented above is not in accordance with
Generally Accepted Accounting Principles.
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LSI LOGIC CORPORATION
RECONCILIATION OF PRO FORMA NET INCOME TO REPORTED RESULTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
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Three Months Ended Six Months Ended
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June 30, June 30, June 30, June 30,
1999 1998 1999 1998
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Pro forma net income $ 31,218 $ 32,592 $ 42,370 $ 64,843
--------- ----------- --------- -----------
Amortization of goodwill and special items:
Amortization of goodwill (11,815) (1,386) (23,022) (2,772)
Acquired in-process research and development (4,600) -- (4,600) --
Restructuring of operations and merger related expenses (7,848) -- (5,871) --
Tax benefit 2,876 173 4,964 724
--------- ----------- --------- -----------
Total amortization of goodwill and special items (21,387) (1,213) (28,529) (2,048)
Income before cumulative effect of change in accounting
principle 9,831 31,379 13,841 62,795
Cumulative effect of change in accounting principle -- -- (91,774) --
--------- ----------- --------- -----------
Net income/(loss) $ 9,831 $ 31,379 $ (77,933) $ 62,795
--------- ----------- --------- -----------
Basic earnings per share:
Pro forma net income $ 0.21 $ 0.23 $ 0.29 $ 0.45
Amortization of goodwill and special items * (0.14) (0.01) (0.19) (0.01)
--------- ----------- --------- -----------
Income before cumulative effect of change in
accounting principle 0.07 0.22 0.10 0.44
--------- ----------- --------- -----------
Cumulative effect of change in accounting principle -- -- (0.64) --
Net income/(loss) $ 0.07 $ 0.22 $ (0.54) $ 0.44
--------- ----------- --------- -----------
Diluted earnings per share:
Pro forma net income $ 0.21 $ 0.23 $ 0.28 $ 0.45
Amortization of goodwill and special items * (0.15) (0.01) (0.19) (0.02)
--------- ----------- --------- -----------
Income before cumulative effect of change in
accounting principle 0.06 0.22 0.09 0.43
Cumulative effect of change in accounting principle -- -- (0.61) --
--------- ----------- --------- -----------
Net income/(loss) $ 0.06 $ 0.22 $ (0.52) $ 0.43
--------- ----------- --------- -----------
Shares used in computing per share amounts:
Basic 145,622 143,168 144,883 142,868
--------- ----------- --------- -----------
Diluted 151,947 144,719 149,614 144,377
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* This line item includes rounding adjustments.
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LSI LOGIC CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
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<CAPTION>
Three Months Ended Six Months Ended
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June 30, June 30, June 30, June 30,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Revenues $ 501,012 $ 336,272 $ 964,629 $ 669,002
--------- --------- --------- ---------
Costs and expenses:
Cost of revenues 314,398 179,844 616,289 367,392
Research and development 75,046 65,943 151,569 130,857
Selling, general and administrative 62,783 52,404 124,272 97,601
Acquired in-process research and development 4,600 -- 4,600 --
Restructuring of operations and merger related expenses 7,848 -- 5,871 --
Amortization of intangibles 11,815 1,386 23,022 2,772
--------- --------- --------- ---------
Total costs and expenses 476,490 299,577 925,623 598,622
--------- --------- --------- ---------
Income from operations 24,522 36,695 39,006 70,380
Interest expense (9,620) (95) (20,200) (175)
Interest income and other 2,459 5,470 4,195 13,480
--------- --------- --------- ---------
Income before income taxes and cumulative effect of change
in accounting principle 17,361 42,070 23,001 83,685
Provision for income taxes 7,530 10,691 9,160 20,890
--------- --------- --------- ---------
Income before cumulative effect of change in accounting principle 9,831 31,379 13,841 62,795
Cumulative effect of change in accounting principle -- -- (91,774) --
--------- --------- --------- ---------
Net income/(loss) 9,831 31,379 (77,933) 62,795
--------- --------- --------- ---------
Basic earnings per share:
Income before cumulative effect of change in accounting principle $ 0.07 $ 0.22 $ 0.10 $ 0.44
Cumulative effect of change in accounting principle -- -- (0.64) --
--------- --------- --------- ---------
Net income/(loss) $ 0.07 $ 0.22 $ (0.54) $ 0.44
--------- --------- --------- ---------
Diluted earnings per share* $ 0.06 $ 0.22 $ 0.09 $ 0.43
Income before cumulative effect of change in accounting principle -- -- (0.61) --
--------- --------- --------- ---------
Cumulative effect of change in accounting principle $ 0.06 $ 0.22 $ (0.52) $ 0.43
--------- --------- --------- ---------
Net income/(loss)
Shares used in computing per share amounts:
Basic 145,622 143,168 144,883 142,868
--------- --------- --------- ---------
Diluted 151,947 144,719 149,614 144,377
--------- --------- --------- ---------
</TABLE>
Diluted earnings per share are based on average common and common equivalent
shares outstanding that are dilutive. For the three and six-month periods ended
June 30, 1999, common equivalent shares of 11,004 and 6,244 and interest expense
of $2,780 and $3,085 (net of taxes), respectively, 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.
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LSI LOGIC CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
(IN MILLIONS)
(UNAUDITED)
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<CAPTION>
June 30, December 31,
ASSETS 1999 1998
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Current assets:
Cash and short-term investments $ 345.2 $ 291.5
Accounts receivable, net 333.8 249.1
Inventories 191.5 181.4
Prepaid expenses and other current assets 106.7 115.0
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Total current assets 977.2 837.0
Property and equipment, net 1,246.5 1,486.2
Goodwill and other intangibles 316.7 332.8
Other assets 215.3 167.8
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Total assets $ 2,755.7 $ 2,823.8
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current liabilities $ 386.7 410.5
Current portion of long-term debt, capital lease
obligations and short-term borrowings 72.1 187.8
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Total current liabilities 458.8 598.3
Long-term debt, capital lease obligations and
other noncurrent liabilities 805.7 695.8
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Total liabilities 1,264.5 1,294.1
Minority interest in consolidated subsidiaries 5.1 5.2
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Stockholders' equity:
Common stock 1,160.9 1,136.6
Retained earnings 290.4 368.4
Accumulated other comprehensive income 34.8 19.5
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Total stockholders' equity 1,486.1 1,524.5
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Total liabilities and stockholders' equity $ 2,755.7 $ 2,823.8
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