First Quarter News Release Summary
- Revenues of $373 million, within previous guidance
- GAAP* net loss of 33 cents a diluted share.
- Net loss, excluding special items**, of 14 cents, beats First Call consensus estimate.
- Gross Margin of 33 percent, exceeds previous guidance.
- Generated positive operating cash flow for fourth consecutive quarter.
- Cash and short-term investments grow $15 million to $1 billion.
Second Quarter Business Outlook
- Projected sequential revenue growth in the range of 4-10 percent.
- GAAP loss per share in the range of 23-31 cents.
- Net loss per share, excluding special items, in the range of 10-12 cents.
- Global workforce reduction and other actions to lower break-even point.
* Generally Accepted Accounting Principles
** Acquisition-related amortization, restructuring and other special items.
LSI Logic anticipates Q2 revenue growth; lowers break-even point
Milpitas, California - LSI Logic Corporation (NYSE: LSI) today reported revenues of $373 million in the first quarter of 2003, a 22 percent sequential decrease compared to the $480 million reported in the fourth quarter of 2002, and a decline of 10 percent compared to the $413 million reported in the first quarter of 2002.
Cash and short-term investments increased $15 million to $1.0 billion at the end of the 2003 first quarter.
The 2003 first quarter GAAP* net loss was $122 million or 33 cents a diluted share. The 2002 fourth quarter GAAP net loss was $31 million or 8 cents a diluted share. The company reported a GAAP net loss of $172 million or 47 cents a diluted share in the 2002 first quarter.
First quarter net loss, excluding special items**, was $51 million or 14 cents a diluted share compared to fourth quarter 2002 net income, excluding special items, of $5 million or 1 cent a diluted share. The company reported a net loss, excluding special items, of $42 million or 12 cents a diluted share in the first quarter of 2002.
"Excess retail inventory in consumer electronics led to greater than anticipated seasonality in our Consumer business,' said Wilfred Corrigan, LSI Logic chairman and chief executive officer. "Lingering inventory in the enterprise networking supply chain also contributed to a difficult business environment in the first quarter. We are anticipating sequential revenue growth of 4-10 percent in the second quarter.
"We recorded our first design wins with our RapidChip™ semiconductor platform and anticipate first revenues in the middle of the year. This new technology will strengthen our ASIC product offerings. We are targeting the return to profitability in the second half of the year on both an excluding special items and GAAP basis."
Cost reduction actions taken in the first and second quarters are projected to reduce the company's break-even point to approximately $450 million quarterly revenue (excluding special items) and about $500 million quarterly revenue (GAAP), accelerating the return to profitability. These measures will reduce the company's global workforce by approximately 580 positions or 11 percent.
"We are executing a financial plan that is generating cash, reducing our long-term debt, improving our cost structure and promoting growth in our targeted businesses," said Bryon Look, LSI Logic chief financial officer.
LSI Logic Second Quarter Business Outlook
| ||GAAP* ||Special Items** ||Excluding Special Items |
|Revenue Growth ||4 to 10% Sequentially || ||4 to 10% Sequentially |
|Gross Margin ||35 to 36% || ||35 to 36% |
|Operating Expenses ||$223 to $245 million ||$50 to $70 million ||$173 to $175 million |
|Net Other Income (Exp.) ||$(2) to $(4) million || ||$(2) to $(4) million |
|Tax Provision ||$6 million || ||$6 million |
|Earnings (Loss)/Share ||$(0.23) to $(0.31) ||$(0.13) to $(0.19) ||$(0.10) to $(0.12) |
|Diluted Share Count ||378 million || ||378 million |
Capital spending is projected to be under $20 million in the second quarter, and less than $100 million in 2003.
Second quarter depreciation and software amortization is expected to be approximately $50 million.
* Generally Accepted Accounting Principles
** Acquisition-related amortization, restructuring and other special items.
NOTE: The company's financial guidance will be limited to the comments made on today's public conference call and contained in the Business Outlook section of this news release.
LSI Logic Business, Technology and Product Announcements
LSI Logic announced the availability of seven user-configurable RapidChip™ slices that free designers to create custom logic solutions for a broad range of applications in as little as six months. The slices are aimed at the communications, storage and consumer markets.
LSI Logic announced demonstration of the first intelligent, fully integrated iSCSI storage controller solution using MegaRAID® technology connecting to an IP SAN. The iMegaRAID™ single- and dual-channel iSCSI RAID products will enable storage system manufacturers to deploy target subsystems with proven, intelligent functionality, storage flexibility and scalability.
JVC (Victor Company of Japan, Limited) Professional Products, Systems and Network Sector and LSI Logic announced that they are making it easier and more cost-effective to develop high definition content in a PC environment. Using the LSI Logic DoMiNo™ network media processing architecture, JVC created the industry's first high-definition television (HDTV) real-time encoder PCI board, the HDTVxpress™ Compressor.
LSI Logic announced the availability of an Ultra320 SCSI Integrated Striping hardware RAID solution. Developed to provide users with exceptional performance and scalability for workstation applications including digital content creation, CAD/CAE, GIS, software development and financial analysis, Dell Precision™ workstations are first to offer the LSI Logic Integrated Striping product.
LSI Logic Storage Systems, Inc. introduced a new entry-level controller designed to deliver significant price/performance benefits with robust features and functionality not typically available in small to mid-range configurations. The new 2882 controller provides robust features, functionality and modular scalability for small to mid-range configurations.
LSI Logic and Synplicity announced a joint development agreement to provide an optimized physical synthesis tool expressly for LSI Logic RapidChip™ customers. Synplicity is working closely with the LSI Logic RapidChip engineering team to create a customized physical synthesis solution that uniquely targets the RapidChip architecture and sets a new standard for custom logic designer productivity. This joint development will result in a new class of physical synthesis tools that enables designers to readily achieve design goals on RapidChip products.
TANDBERG Television (Oslo, Norway, Stock Exchange: TAT) selected LSI Logic's advanced codec solutions for its latest high definition television (HDTV) encoder and decoder products. LSI Logic's DVxpert™ and DoMiNo™ product families are shaping the broadcast industry by addressing HDTV's demanding requirements for quality, reliability and compression efficiency.
Acer Inc. selected LSI Logic's market leading Ultra320 PCI RAID storage adapters for Acer's high-performance tower and rack mount server lines. Acer will offer LSI Logic's first-to-market MegaRAID® SCSI 320-1 and MegaRAID SCSI 320-2 storage adapters across all high volume and enterprise class server lines including the Altos G510, a powerful and reliable general-purpose server.
LSI Logic announced the availability of a complete Linux-based ADSL Ethernet reference design for customer premise equipment (CPE) manufacturers.
Toshiba Corporation selected LSI Logic's first-to-market MegaRAID® SCSI 320-1 and MegaRAID SCSI 320-2 storage adapters across their Magnia server lines. LSI Logic is the leading supplier of host-based RAID to the global PC and server markets with nearly two million RAID solutions shipped to OEMs, ODMs, system integrators and resellers worldwide.
LSI Logic announced production capability of its advanced flip chip packaging products with its Gflx™ 0.11-micron copper and low k-based SoC product line. This advanced flip chip capability follows LSI Logic's Pad on I/O™ technology announcement, which places bond pads directly on top of active I/O circuits in a chip design and is already in production using copper/low k processes.
Teradata, a division of NCR Corporation, selected LSI Logic Fibre Channel host bus adapters (HBA). LSI Logic's quad-channel HBAs enable operation of the NCR6840 Quad Modular Fibre Channel Disk Array, which is a key component in large parallel processing systems that have been designed by Teradata for active data warehousing.
LSI Logic announced that Dazzle™, the leading brand in digital video capture and editing, is leveraging the power of the LSI Logic DoMiNo™ DMN-8100 codec for its Hollywood USB 2.0. Using the LSI Logic DMN-8100 single-chip device, the Hollywood USB 2.0 allows consumers to capture DVD-quality video from any (digital or analog) camcorder, VCR or TV, and create Hollywood-style DVD content.
LSI Logic announced full production availability of MegaRAID® Serial ATA 150-2 RAID storage adapters extending their position as leading provider of low-cost RAID with the industry's widest offering of Serial ATA and ATA-based solutions. The MegaRAID SATA 150-2 ensures high performance and continuous data redundancy using the fastest Serial ATA/150 drives.
LSI Logic announced the availability of production samples of the market's first quad-channel PCI-X SCSI RAID storage adapters with Ultra320 SCSI performance. Designed for enterprise-class computing platforms, the new PCI-X SCSI RAID storage adapters are targeted at the critical need for high-bandwidth server and storage environments.
Hitachi Global Storage Technologies and LSI Logic's Storage Standard Products division announced plans to coordinate their respective product development efforts to speed delivery of next-generation Serial Attached SCSI (SAS) technology. The companies plan to share design implementations, performance-testing results and debug information, as well as participate in other joint activities.
LSI Logic Conference Call Information
LSI Logic will hold a conference call today at 2 p.m. PDT to discuss first quarter 2003 financial results. The number is 1-303-262-2130. Internet users can access the conference call by visiting http://www.lsilogic.com/investors. A replay of the call will be available today at approximately 5 p.m. PST and will be available for 48 hours. The number is 1-800-405-2236. (International, 1-303-590-3000). The webcast replay will be available until April 30.
Safe Harbor for Forward Looking Statements: This news release and the statements by LSI Logic management include forward-looking statements that may involve a number of risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from the actual future events or results. Forward-looking statements include projections of growth in the storage components, storage systems, consumer and communications businesses, estimates of revenue growth, operating expenses, net other income, earnings, gross margins, tax provisions, capital spending, depreciation, acquisition-related amortization, restructuring expenses, other special items and common share count made in this news release. The company's actual results in future periods may be materially different from any performance suggested in this news release. Risks and uncertainties to which the company is subject include, but are not necessarily limited to, fluctuations in the timing and volumes of customer demand, the rate of depletion of customer inventory buildup and the company's achievement of revenue objectives and other financial targets. Other risks and uncertainties that may affect the company's actual results include, but are not necessarily limited to, the development of new products, the timing and success of new product introductions, the continued availability of appropriate levels of manufacturing capacity, the realization of benefits from the company's strategic relationships, competing technologies, products and other competitive factors and investments and disruptions in general economic activity due to worsening global business conditions or caused by the effects of terrorist activities and armed conflict. The extent to which the company may not realize the cost savings it expects from the reduction in workforce and operating expenses may also impact its future performance. The company operates in an industry sector where securities' values are highly volatile and may be influenced by the cyclical nature of the industry, the unpredictability of the economy and other factors beyond the company's control. For additional information, Readers are referred to the documents filed by LSI Logic with the SEC, and specifically the most recent reports on Form 10-K, 10-Q and 8-K. In the context of forward-looking information, reference is made to the discussion of risk factors described in the company's SEC reports filed during the past 12 months.
About LSI Logic
LSI Logic Corporation (NYSE: LSI) is a leading designer and manufacturer of communications, consumer and storage semiconductors for applications that access, interconnect and store data, voice and video. In addition, the company supplies storage network solutions for the enterprise. LSI Logic is headquartered at 1621 Barber Lane, Milpitas, CA 95035, http://www.lsilogic.com.