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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): APRIL 25, 2000
LSI LOGIC CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 0-11674 94-2712976
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(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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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 April 25, 2000 is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Text of Press Release dated April 25, 2000
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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: April 27, 2000 By: /s/ DAVID E. SANDERS
----------------------------------------
David E. Sanders
Vice President, General Counsel and
Secretary
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EXHIBIT INDEX
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<CAPTION>
Exhibit Number Description
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<S> <C>
99.1 Text of Press Release dated April 25, 2000.
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE APRIL 25, 2000
Contacts:
Investor Relations Media Relations
Diana Matley Kevin Brett
408-433-4365 408-433-7150
CC00-26
LSI Logic Reports Record First Quarter Revenues
-- FIRST QUARTER 2000 HIGHLIGHTS -
The LSI Logic 2000 first quarter news release follows this summary:
- - Record Q1 bookings.
- - Record Q1 revenues of $615 million.
- - Q1 revenues up 33 percent compared to Q1 1999.
- - Ninth quarter of sequential revenue growth.
- - Diluted per share EBG* was 26 cents, compared to First Call consensus estimate
of 25 cents.
* Earnings before goodwill amortization and special items.
<PAGE> 2
Q1 2000 LSI LOGIC REVENUES GROW 33 PERCENT
COMMUNICATIONS DRIVE REVENUE AND PROFIT GROWTH
MILPITAS, CALIFORNIA - LSI Logic Corporation (NYSE:LSI) today reported 2000
first quarter revenues of $615 million, a 33 percent increase over the $464
million posted in the first quarter of 1999.
Net income before amortization of goodwill and other special items (EBG), was
$88 million or 26 cents a diluted share, compared to the $11.2 million or 4
cents a diluted share in the first quarter of 1999. EBG diluted share figures
have been adjusted to reflect last February's two-for-one common stock split.
Improved profits reflect higher revenues, sequential gross margin expansion and
declining operating expenses. The company's gross margin improved to 42.4
percent in the first quarter of 2000 compared to 34.9 percent in the first
quarter of 1999. Operating expenses as a percent of revenues declined in the
first quarter of this year to 24.5 percent compared to 29.8 percent in the first
quarter of last year. Cash and short-term investments grew $207 million in the
first quarter to $868 million.
"Our first quarter profits represented more than a six-fold increase over the
year-ago period," said Wilfred J. Corrigan, LSI Logic chairman and chief
executive officer. "This positive momentum continued into Q2 and we expect April
to be the strongest bookings month ever for the company. We expect strong
revenue growth in the second quarter and for the remainder of the year."
During the first quarter, LSI Logic successfully completed the sale of $500
million of 4.0 percent convertible subordinated notes. "Through this accretive
transaction, LSI Logic was able to completely retire the senior debt incurred as
a result of the 1998 acquisition of Symbios, Inc.," said Doug Norby, LSI Logic
executive vice president and chief financial officer. "The balance of the
proceeds were used to augment our growing cash position and further strengthen
our balance sheet."
LSI LOGIC COMMUNICATIONS OVERVIEW
Communications continued as the primary growth driver for LSI Logic revenues and
profits in the first quarter. LSI Logic expects that the company's
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communications business - networking, broadband including optical switching,
wireless, set-top boxes and other applications - will grow 60 percent in 2000.
LSI Logic will utilize $25 million in one time gains (not included in EBG
calculation) realized on the sale of venture investments to augment the
company's communications venture fund. During the first quarter, LSI Logic made
several equity investments in communications technologies and companies. These
equity investments were made from LSI Logic's communications venture fund.
"We have now increased our communications venture fund to $75 million for equity
investments in emerging communications technologies and promising start-ups,"
said John Daane, LSI Logic executive vice president of the Communications
Products Group. "LSI Logic is well on track to achieving the 60 percent growth
target for communications. The company continues to focus its competitive
advantages on the rapidly growing global communications market. We are an
established leader in this space and we are gaining market share in critical
communications sectors."
RECENT COMMUNICATIONS BUSINESS ANNOUNCEMENTS
~ LSI Logic shipped more than five million Fast Ethernet PHY ports in the first
quarter, a 20 times increase over the first quarter of 1999.
~ LSI Logic is supplying Extreme Networks with the "Inferno Chipset," second
generation ASICs for carrier-class gigabit Ethernet switches.
~ LSI Logic announced the availability of a single-chip, fully-integrated
standard product, the L64324 Intelligent Ethernet Switch.
~ LSI Logic formed an alliance with RTX Telecom to provide turnkey design
services for wireless communications systems based on LSI Logic's single chip,
CDMA IS-95 baseband processor.
~ LSI Logic announced that its CDMA baseband processor has been selected for Air
Prime's Wireless Internet Cards. LSI Logic's CDMA processor enables Air Prime's
products to have high-speed Internet access for applications including e-mail
and web browsing.
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~ LSI Logic announced the availability of the company's second generation CDMA
IS-95 baseband processor standard product.
~ LSI Logic introduced its family of SureConnex(TM) communications interfaces
including 1394, USB, PCI-X, SCSI, HyperPHY, Fibre Channel, RAMBUS RAC and
GigaBlaze. The company also unveiled a family of standard products based on its
industry leading communications I/O portfolio called SpeedBlazer.
~ Broadening the company's relationship with ARM Ltd., LSI Logic announced the
availability of the industry's first ARM9E(TM) processor core proved in silicon.
LSI Logic employed its CoreWare design methodology to implement the ARM9E core
and Embedded Trace Macrocell into its G12(TM), 0.18-micron process technology.
~ LSI Logic introduced the Gflx(TM) 0.13-micron drawn, 0.10-micron effective
process technology. Gflx offers 78 million usable logic gates, equivalent to 612
million transistors and eight optional modules including high performance and
low power transistors.
~ LSI Logic announced the $14.5 million acquisition of NeoMagic mixed-signal
engineering design teams, RF intellectual property core and related patents. The
acquisition is intended to enhance and accelerate LSI Logic's set-top decoder
and DVD product offerings.
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
appropriate levels 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.
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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 network solutions for the enterprise. LSI Logic is
headquartered at 1551 McCarthy Boulevard, Milpitas, CA 95035, 408-433-8000,
http://www.lsilogic.com.
###
Editor's Notes:
1. The LSI Logic logo design is a registered trademark of LSI Logic
Corporation.
2. All other brand or product names may be trademarks or registered
trademarks of their respective companies.
<PAGE> 6
LSI LOGIC CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 31, March 31,
2000 1999
--------- ---------
<S> <C> <C>
Revenues $ 615,186 $ 463,617
--------- ---------
Costs and expenses:
Cost of revenues 354,400 301,891
Research and development 80,229 76,523
Selling, general and administrative 70,240 61,489
--------- ---------
Total costs and expenses 504,869 439,903
--------- ---------
Income from operations 110,317 23,714
Interest expense (9,704) (10,580)
Interest income and other, net 7,129 1,736
Recurring investment income 9,500 -
--------- ---------
Income before income taxes 117,242 14,870
Provision for income taxes 29,311 3,718
--------- ---------
Pro forma net income $ 87,931 $ 11,152
========= =========
Pro forma earnings per share:
Basic $ 0.29 $ 0.04
========= =========
Diluted $ 0.26 $ 0.04
========= =========
Shares used in computing per share amounts:
Basic 302,682 288,244
========= =========
Diluted 349,159 293,540
========= =========
</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 period ended March 31, 2000, the special items
represented restructuring of operations and other non-recurring items, net and
other special items. The other special items consisted of an unplanned gain on
sale of equity securities, charges associated with the elimination of a
non-strategic product area and the write-off of debt issuance costs resulting
from repayment of bank debt during the quarter.
During the three month period ended March 31, 1999, the special items
represented reversal of restructuring reserves and other non-recurring items,
net and the cumulative effect of a change in accounting principle. 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 period presented. Unplanned gains were 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 pro forma diluted earnings per share for the three month period
ended March 31, 2000, pro forma net income was increased by $2,750 for interest
(net of taxes) on the $345 million convertible notes considered dilutive common
stock equivalents. Common equivalent shares of 3,442 and $1,750 of interest
expense (net of taxes) associated with the $500 million convertible notes were
excluded from the computation of pro forma diluted earnings per share as a
result of their antidilutive effect.
For the three month period ended March 31, 1999, common equivalent shares of
2,530 and $305 of interest expense (net of taxes) associated with the $345
million convertible debentures were excluded from the computation of pro forma
diluted earnings per share as a result of their antidilutive effect.
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LSI LOGIC CORPORATION
RECONCILIATION OF PRO FORMA NET INCOME TO REPORTED RESULTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
March 31, March 31,
2000 1999
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<S> <C> <C>
Pro forma net income $ 87,931 $ 11,152
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Amortization of goodwill and special items:
Amortization of goodwill (11,836) (11,207)
Restructuring of operations and other non-recurring items, net (2,781) 1,977
Other special items 12,383 --
Tax (provision)/benefit 546 2,088
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Total amortization of goodwill and special items (1,688) (7,142)
--------- -----------
Income before cumulative effect of change in accounting principle 86,243 4,010
Cumulative effect of change in accounting principle -- (91,774)
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Net income/(loss) $ 86,243 $ (87,764)
========= ===========
Basic earnings per share:
Pro forma net income $ 0.29 $ 0.04
Amortization of goodwill and special items (0.01) (0.03)
--------- -----------
Income before cumulative effect of change in accounting principle $ 0.28 $ 0.01
Cumulative effect of change in accounting principle -- (0.32)
--------- -----------
Net income/(loss) $ 0.28 $ (0.31)
========= ===========
Diluted earnings per share *:
Pro forma net income $ 0.26 $ 0.04
Amortization of goodwill and special items (0.01) $ (0.03)
--------- -----------
Income before cumulative effect of change in accounting principle $ 0.25 $ 0.01
Cumulative effect of change in accounting principle -- (0.31)
--------- -----------
Net income/(loss) $ 0.25 $ (0.30)
========= ===========
Shares used in computing per share amounts:
Basic 302,682 288,244
========= ===========
Diluted 349,159 293,540
========= ===========
</TABLE>
* In computing diluted earnings per share for the three month period ended
March 31, 2000, net income was increased by $2,750 for interest (net of
taxes) on the $345 million convertible notes considered dilutive common
stock equivalents. Common equivalent shares of 3,442 and $1,750 of
interest expense (net of taxes) associated with the $500 million
convertible notes were excluded from the computation of diluted earnings
per share as a result of their antidilutive effect. For the three month
period ended March 31, 1999, common equivalent shares of 2,530 and $305 of
interest expense (net of taxes) associated with the $345 million
convertible notes 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 STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 31, March 31,
2000 1999
--------- ---------
<S> <C> <C>
Revenues $ 615,186 $ 463,617
--------- ---------
Costs and expenses:
Cost of revenues 365,500 301,891
Research and development 80,229 76,523
Selling, general and administrative 70,240 61,489
Restructuring of operations and other non-recurring items, net 2,781 (1,977)
Amortization of intangibles 11,836 11,207
--------- ---------
Total costs and expenses 530,586 449,133
--------- ---------
Income from operations 84,600 14,484
Interest expense (10,893) (10,580)
Interest income and other, net 7,129 1,736
Gain on sale of equity securities 34,172 --
--------- ---------
Income before income taxes and cumulative effect of change in
accounting principle 115,008 5,640
Provision for income taxes 28,765 1,630
--------- ---------
Income before cumulative effect of change in accounting principle 86,243 4,010
Cumulative effect of change in accounting principle -- (91,774)
--------- ---------
Net income/(loss) $ 86,243 $ (87,764)
--------- ---------
Basic earnings per share:
Income before cumulative effect of change in accounting principle $ 0.28 $ 0.01
Cumulative effect of change in accounting principle -- (0.32)
--------- ---------
Net income/(loss) $ 0.28 $ (0.31)
--------- ---------
Diluted earnings per share *:
Income before cumulative effect of change in accounting principle $ 0.25 $ 0.01
Cumulative effect of change in accounting principle -- (0.31)
--------- ---------
Net income/(loss) $ 0.25 $ (0.30)
--------- ---------
Shares used in computing per share amounts:
Basic 302,682 288,244
--------- ---------
Diluted 349,159 293,540
--------- ---------
</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 ended March 31, 2000, net income was increased by
$2,750 for interest (net of taxes) on the $345 million convertible notes
considered dilutive common stock equivalents. Common equivalent shares of
3,442 and $1,750 of interest expense (net of taxes) associated with the
$500 million convertible notes were excluded from the computation of
diluted earnings per share as a result of their antidilutive effect. For
the three month period ended March 31, 1999, common equivalent shares of
2,530 and $305 of interest expense (net of taxes) associated with the $345
million convertible notes were excluded from the computation of diluted
earnings per share as a result of their antidilutive effect.
<PAGE> 9
LSI LOGIC CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31 December 31,
ASSETS 2000 1999
- ------ -------- ------------
<S> <C> <C>
Cash, cash equivalents and short-term investments $ 868.2 $ 661.3
Accounts receivable, net 396.8 275.6
Inventories 255.1 243.9
Prepaid expenses and other current assets 141.8 107.5
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Total current assets 1,661.9 1,288.3
Property and equipment, net 1,255.4 1,323.5
Goodwill and other intangibles 281.8 293.6
Other assets 314.8 301.2
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Total assets $3,513.9 $3,206.6
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and other current liabilities $ 439.5 $ 418.3
Current portion of long-term obligations 1.7 57.0
-------- --------
Total current liabilities 441.2 475.3
Long-term obligations and deferred tax liabilities 1,056.3 869.3
-------- --------
Total liabilities 1,497.5 1,344.6
Minority interest in subsidiaries 6.1 6.2
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Stockholders' equity:
Common stock 1,327.1 1,274.1
Retained earnings 521.8 435.6
Accumulated other comprehensive income 161.4 146.1
-------- --------
Total stockholders' equity 2,010.3 1,855.8
-------- --------
Total liabilities and stockholders' equity $3,513.9 $3,206.6
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</TABLE>
