<PAGE> 1
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): JANUARY 25, 2000
LSI LOGIC CORPORATION
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-11674 94-2712976
- ---------------------------- ------------------------ -------------------
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION IDENTIFICATION NO.)
OR ORGANIZATION)
1551 MCCARTHY BOULEVARD
MILPITAS, CALIFORNIA 95035
-------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(408) 433-8000
NOT APPLICABLE
-------------------------------------------------------------
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE> 2
ITEM 5. OTHER EVENTS.
The information that is set forth in the Registrant's Press Release dated
January 25, 2000 is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
<TABLE>
<S> <C>
99.1 Text of Press Release dated January 25, 2000
</TABLE>
<PAGE> 3
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: January 26, 2000 By: /s/ David E. Sanders
--------------------------------
David E. Sanders
Vice President, General Counsel
and Secretary
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
99.1 Text of Press Release dated January 25, 2000.
</TABLE>
<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE January 25, 2000
Contacts:
Investor Relations Media Relations
Diana Matley Kevin Brett
408-433-4365 408-433-7150
CC00-X
LSI LOGIC REPORTS RECORD 1999 AND Q4 REVENUES;
ANNOUNCES TWO-FOR-ONE STOCK SPLIT
NEWS RELEASE HIGHLIGHTS
- - Record Q4 revenues of $585 million.
- - Record Q4 bookings.
- - Eighth quarter of sequential revenue growth.
- - Q4 revenues up 8 percent from the $540 million in Q3 1999.
- - Diluted per share EBG* was 47 cents, compared to First Call consensus estimate
of 43 cents.
- - Two-for-one common stock split announced.
- - Communications, fastest growing LSI Logic business sector.
- - $50 million communications venture fund established.
- - Cash and short-term investments grew more than $200 million sequentially.
* Earnings before goodwill amortization and special items.
<PAGE> 2
1999 LSI LOGIC REVENUES EXCEED $2 BILLION MARK
-- NET INCOME UP 85 PERCENT --
Communications comprises nearly 40 percent of LSI Logic revenues;
Fastest growing sector of LSI Logic's business
MILPITAS, CALIFORNIA - LSI Logic Corporation (NYSE: LSI) today reported 1999
record revenues of $2.09 billion, a 38 percent increase over the $1.52 billion
in 1998. During 1999 profits grew at more than twice the rate of revenue growth,
and cash more than doubled to $661 million.
Net income for 1999, before amortization of goodwill and other special items
(EBG), was $174 million or $1.12 a diluted share, an 85 percent increase over
the $94 million in net income or 65 cents a diluted share reported for 1998.
LSI Logic also announced a stock dividend in the form of a two-for-one common
stock split, effective February 4, 2000. Shareholders of record on that date
will receive one new share of common stock for each share held. The distribution
of the new shares will occur on February 16, 2000. Distribution of the
additional shares will increase the number of common shares issued and
outstanding from approximately 150 million to 300 million.
"LSI Logic enters the new century growing faster than the global semiconductor
industry as a whole and strategically positioned to capitalize on the global
communications revolution," said Wilfred J. Corrigan, LSI Logic chairman and
chief executive officer. "We have strong momentum as a result of our record
bookings in the fourth quarter. We have the right products at the right time in
the right markets."
LSI Logic recorded $585 million in revenues for the 1999 fourth quarter, a 30
percent increase over the $451 million reported in the fourth quarter of 1998.
Revenues in the 1999 fourth quarter were 8 percent higher than the $540 million
reported in the third quarter, the eighth quarter of sequential revenue growth.
Fourth quarter 1999 EBG net income was $76 million or 47 cents a diluted share.
The fourth quarter EBG net income figure represented an increase of 986 percent
over the $7 million or 5 cents a diluted share in the fourth quarter of 1998.
Cash and short-term investments grew by more than $200 million in the fourth
quarter.
"Our strategic cash position and greater cash flow provides us with the vital
capital to make strategic acquisitions and to invest in the technologies in the
future," said Doug Norby, LSI Logic executive vice president and chief financial
officer.
Included in the $200 million of fourth quarter cash generation are $42 million
of special one-time gains realized on the sale of venture investments. (These
special gains are not included in net income before goodwill amortization and
other special items.)
<PAGE> 3
LSI Logic also announced that these special proceeds are being used to establish
a $50 million venture fund to invest in emerging communications technologies and
start-ups.
LSI LOGIC COMMUNICATIONS HIGHLIGHTS
John Daane, LSI Logic executive vice president of the Communications Products
Group, noted that products for communications applications already comprise
approximately 39 percent of LSI Logic revenues and represents the fastest
growing part of the company's business.
The convergence of data, voice and video is accelerating our growth in the
communications space," said Daane. "LSI Logic is providing the key components of
wireless, optical switching, set-top box, networking, broadband communications
systems and other rapidly growing communications applications."
Supporting the increased business generated from communications and other
applications, Corrigan said that LSI Logic has ample 0.18-micron internal
capacity, augmented by strategic foundry relationships, to accommodate demand
well in excess of the anticipated growth rate for the global semiconductor
industry.
"The investments we have made and our strategic manufacturing relationships are
now benefiting our high-volume, high-growth customers," said Corrigan. "Our
worldwide manufacturing strategy is a competitive advantage as we enter the
second year of the industry upswing."
1999 FINANCIAL HIGHLIGHTS
- - Exceeded the $2 billion revenue mark for the first time.
- - LSI Logic common stock grew 319 percent, making it the 11th best performing
NYSE stock and 4th best on the S&P 500.
- - LSI Logic revenues increased 38 percent in 1999, exceeding the 15.4 percent
growth rate projected for the global semiconductor industry by the Semiconductor
Industry Association.
- - Gross margin improved by 600 basis points from 35 to 41 percent in 1999.
- - LSI Logic and Silterra (Malaysia) announced a technology licensing and
manufacturing relationship, valued at $120 million to LSI Logic.
1999 LSI LOGIC COMMUNICATIONS HIGHLIGHTS
- - Completed the $106 million acquisition of SEEQ Technology, Inc., a leading
semiconductor designer of data communications devices for the Internet-driven
networking market.
<PAGE> 4
- - Acquired ZSP Corporation, a leading-edge developer of high-performance digital
signal processor products for customers competing in high-growth communications
markets.
- - Unveiled an open architecture licensing strategy for the new ZSP digital
signal processor architecture. Broadcom became the first licensee of LSI Logic
ZSP400 digital signal processor.
- - Delivered the 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.
- - Announced the addition of an embedded FPGA core into the company's CoreWare
library for high-volume programmable applications.
- - Sony Computer Entertainment (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 announced the availability of its next-generation single-chip
demodulator, improving digital terrestrial TV coverage and performance.
- - Denso Corporation selected LSI Logic's single-chip CDMA baseband processor for
incorporation into its wireless handsets for the Japan market.
SAFE HARBOR FOR FORWARD LOOKING STATEMENTS: Statements made 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 and
Exchange Act of 1934, as amended. 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 may include, but may not
necessarily be limited to fluctuations in the timing and volumes of customer
demand, particularly for applications where rapid growth is anticipated, and the
company's achievement of revenue objectives and other financial targets. Other
risks and uncertainties include, but are not necessarily limited to the timing
and success of new product introductions, the continued availability of
manufacturing capacity and the realization of benefits from the company's
strategic relationships and investments. The extent to which the company's plans
for future cost reductions are realized may also 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), is a leading supplier of communications chips
for broadband, data networking, wireless and set-top box applications. In
addition, the company provides chips and boards for network computing, and
supplies storage area network systems for the enterprise. LSI Logic is
headquartered at 1551 McCarthy Boulevard, Milpitas, CA 95035, 408-433-8000,
www.lsilogic.com.
# # # # # # #
<PAGE> 5
LSI LOGIC CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
------------------------ ----------------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1999 1998
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $584,856 $451,018 $2,089,444 $1,516,891
-------- -------- ---------- ----------
Costs and expenses:
Cost of revenues 344,770 291,806 1,286,844 884,598
Research and development 74,107 80,967 297,554 291,125
Selling, general and administrative 66,559 67,511 257,712 226,258
-------- -------- ---------- ----------
Total costs and expenses 485,436 440,284 1,842,110 1,401,981
-------- -------- ---------- ----------
Income from operations 99,420 10,734 247,334 114,910
Interest expense (10,384) (2,662) (39,988) (8,865)
Interest income and other, net 8,351 895 17,401 19,878
Recurring investment income 4,497 -- 6,648 --
-------- -------- ---------- ----------
Income before income taxes 101,884 8,967 231,395 125,923
Provision for income taxes 25,471 2,242 57,849 31,481
-------- -------- ---------- ----------
Pro forma net income $ 76,413 $ 6,725 $ 173,546 $ 94,442
-------- -------- ---------- ----------
Pro forma earnings per share:
Basic $ 0.51 $ 0.05 $ 1.19 $ 0.66
-------- -------- ---------- ----------
Diluted $ 0.47 $ 0.05 $ 1.12 $ 0.65
-------- -------- ---------- ----------
Shares used in computing per share amounts:
Basic 149,079 143,707 146,424 143,153
-------- -------- ---------- ----------
Diluted 168,659 144,461 162,544 144,196
-------- -------- ---------- ----------
</TABLE>
Pro forma statements of operations are intended to present the Company's
operating results, excluding amortization of goodwill and special items, for the
periods presented.
During the three month periods ended December 31, 1999 and 1998, the special
item represented an unplanned gain on sale of equity securities. During the year
ended December 31, 1999, the special items consisted of acquired in-process
research and development related to the acquisition of a non-public technology
company, restructuring of operations and other non-recurring items, consisting
of the reversal of a portion of restructuring reserves originally established in
the third quarter of 1998 due to changes in management's estimate, expenses
related to effecting a business combination with Seeq Technology, Inc., an
unplanned gain on sale of equity securities, and the cumulative effect of change
in accounting principle.
During the year ended December 31, 1998, special items consisted of acquired
in-process research and development related to the acquisition of Symbios, Inc.,
restructuring charges and other special items primarily consisting of the
impairment of stock investments, write-offs of assets not relating to
restructuring, litigation settlement costs and an unplanned gain on sale of
equity securities.
In the third quarter of 1999, the Company adopted a program of regular selling
of marketable equity securities. Recurring investment income reflects the gain
from sale of the Company's marketable equity securities that was planned as part
of the program during the periods presented. Unplanned gains are excluded from
the determination of earnings before goodwill.
The provision for income taxes for the pro forma statements was calculated using
the Company's normal 25% tax rate for the periods presented.
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. In computing diluted earnings per
share for the three month period and for the year ended December 31, 1999, net
income was increased by $2,749 and $8,584 for interest (net of taxes),
respectively, on the convertible debentures considered dilutive common stock
equivalents.
<PAGE> 6
LSI LOGIC CORPORATION
RECONCILIATION OF PRO FORMA NET INCOME TO REPORTED RESULTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
------------------------ --------------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1999 1998
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
Pro forma net income $ 76,413 $ 6,725 $173,546 $ 94,442
-------- -------- -------- ---------
Amortization of goodwill and special items:
Amortization of goodwill (11,836) (12,259) (46,625) (22,369)
Acquired in-process research and development -- -- (4,600) (145,500)
Restructuring of operations and other
Non-recurring items, net -- -- 2,063 (75,400)
Other special items 41,745 16,671 41,745 (12,227)
Tax (provision)/benefit
(13,139) (1,380) (7,181) 21,576
-------- -------- -------- ---------
Total amortization of goodwill and
special items 16,770 3,032 (14,598) (233,920)
Income/(loss) before cumulative effect of change
in accounting principle 93,183 9,757 158,948 (139,478)
Cumulative effect of change in accounting
principle -- -- (91,774) --
-------- -------- -------- ---------
Net income/(loss) $ 93,183 $ 9,757 $ 67,174 ($139,478)
-------- -------- -------- ---------
Basic earnings per share:
Pro forma net income $ 0.51 $ 0.05 $ 1.19 $ 0.66
Amortization of goodwill and special items 0.12 0.02 (0.10) (1.63)
-------- -------- -------- ---------
Income/(loss) before cumulative effect of
change in accounting principle 0.63 0.07 1.09 (0.97)
Cumulative effect of change in accounting
principle -- -- (0.63) --
-------- -------- -------- ---------
Net income/(loss) $ 0.63 $ 0.07 $ 0.46 ($ 0.97)
-------- -------- -------- ---------
Diluted earnings per share:
Pro forma net income $ 0.47 $ 0.05 $ 1.12 $ 0.65
Amortization of goodwill and special items 0.10 0.02 (0.09) (1.62)
-------- -------- -------- ---------
Income/(loss) before cumulative effect of
change in accounting principle 0.57 0.07 1.03 (0.97)
Cumulative effect of change in accounting
principle -- -- (0.57) --
-------- -------- -------- ---------
Net income/(loss) $ 0.57 $ 0.07 $ 0.46 ($ 0.97)
-------- -------- -------- ---------
Shares used in computing per share amounts:
Basic 149,079 143,707 146,424 143,153
-------- -------- -------- ---------
Diluted 168,659 144,461 162,544 143,153*
-------- -------- -------- ---------
</TABLE>
* For the year ended December 31, 1998, the difference between diluted shares
for purposes of computing diluted earnings per share and pro forma earnings
per share relates to common equivalents of 1,043 shares, which were excluded
from calculation of diluted earnings per share for reported results because of
their antidilutive effect. These common equivalents impacted diluted earnings
per share for the period by $0.01 which is included in the line item for
amortization of goodwill and special items in the calculation of diluted
earnings per share for the year ended December 31, 1998.
In computing diluted earnings per share for the three month period and for the
year ended December 31, 1999, net income was increased by $2,749 and $8,584
for interest (net of taxes), respectively, on the convertible debentures
considered dilutive common stock equivalents.
<PAGE> 7
LSI LOGIC CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
------------------------- ----------------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1999 1998
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $584,856 $451,018 $2,089,444 $1,516,891
-------- -------- ---------- ----------
Costs and expenses:
Cost of revenues 344,770 291,806 1,286,844 884,598
Research and development 74,107 80,967 297,554 291,125
Selling, general and administrative 66,559 67,511 257,712 226,258
Acquired in-process research and development -- -- 4,600 145,500
Restructuring of operations and other
non-recurring items, net -- -- (2,063) 75,400
Amortization of Intangibles 11,836 12,259 46,625 22,369
-------- -------- ---------- ----------
Total costs and expenses 497,272 452,543 1,891,272 1,645,250
-------- -------- ---------- ----------
Income/(loss) from operations 87,584 (1,525) 198,172 (128,359)
Interest expense (10,384) (2,662) (39,988) (8,865)
Gain on sale of equity securities 46,242 16,671 48,393 16,671
Interest income and other, net 8,351 895 17,401 (9,020)
-------- -------- ---------- ----------
Income/(loss) before income taxes and cumulative
effect of change in accounting principle 131,793 13,379 223,978 (129,573)
Provision for income taxes 38,610 3,622 65,030 9,905
-------- -------- ---------- ----------
Income/(loss) before cumulative effect of change
in accounting principle 93,183 9,757 158,948 (139,478)
Cumulative effect of change in accounting
principle -- -- (91,774) --
-------- -------- ---------- ----------
Net income/(loss) $ 93,183 $ 9,757 $ 67,174 ($ 139,478)
-------- -------- ---------- ----------
Basic earnings per share:
Income/(loss) before cumulative effect of
change in accounting principle $ 0.63 $ 0.07 $ 1.09 ($ 0.97)
Cumulative effect of change in accounting
principle -- -- (0.63) --
-------- -------- ---------- ----------
Net income/(loss) $ 0.63 $ 0.07 $ 0.46 ($ 0.97)
-------- -------- ---------- ----------
Diluted earnings per share *:
Income/(loss) before cumulative effect of
change in accounting principle $ 0.57 $ 0.07 $ 1.03 ($ 0.97)
Cumulative effect of change in accounting
principle -- -- (0.57) --
-------- -------- ---------- ----------
Net income/(loss) $ 0.57 $ 0.07 $ 0.46 ($ 0.97)
-------- -------- ---------- ----------
Shares used in computing per share amounts:
Basic 149,079 143,707 146,424 143,153
-------- -------- ---------- ----------
Diluted 168,659 144,461 162,544 143,153
-------- -------- ---------- ----------
</TABLE>
* Diluted earnings per share are based on average common and common equivalent
shares outstanding. In computing diluted earnings per share for the three
month period and for the year ended December 31, 1999, net income was
increased by $2,603 and $8,126 for interest (net of taxes), respectively, on
the convertible debentures considered dilutive common stock equivalents.
<PAGE> 8
LSI LOGIC CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
(IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
December 31, December 31,
ASSETS 1999 1998
- ------ ------------ ------------
<S> <C> <C>
Cash, cash equivalents and short-term investments $ 661.3 $ 291.5
Accounts receivable, net 275.6 249.1
Inventories 243.9 181.4
Prepaid expenses and other current assets 107.5 115.0
-------- --------
Total current assets 1,288.3 837.0
Property and equipment, net 1,323.5 1,486.2
Goodwill and other intangibles 293.6 332.8
Other assets 301.2 167.8
-------- --------
Total assets $3,206.6 $2,823.8
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and other current liabilities $ 418.3 $ 410.4
Current portion of long-term obligations 57.0 187.9
-------- --------
Total current liabilities 475.3 598.3
Long-term obligations and deferred tax liabilities 869.3 695.8
-------- --------
Total liabilities 1,344.6 1,294.1
Minority interest in subsidiaries 6.2 5.2
-------- --------
Stockholders' equity:
Common stock 1,274.1 1,136.7
Retained earnings 435.6 368.4
Accumulated other comprehensive income 146.1 19.4
-------- --------
Total stockholders' equity 1,855.8 1,524.5
-------- --------
Total liabilities and stockholders' equity $3,206.6 $2,823.8
-------- --------
</TABLE>
