LSI Logic Reports 27% Year-Over-Year Revenue Growth
Third Quarter News Release Summary
- Revenues of $482 million, consistent with previous guidance.
- Revenues up 27 percent compared to Q3 2004.
- Gross margin of 44 percent, consistent with previous guidance.
- Generated positive operating cash flow for 14th consecutive quarter.
- GAAP* net loss of 19 cents per diluted share, compared to a net loss of 73 cents per diluted share in Q3 2004.
- Net income, excluding special items**, of 11 cents per diluted share, compared to a net loss, excluding special items, of 7 cents per diluted share in Q3 2004.
Fourth Quarter Business Outlook
- Projected revenue of $475 million to $500 million.
- GAAP* net income range of 4-6 cents per diluted share.
- Net income, excluding special items**, in the range of 10-12 cents per diluted share.
* Generally Accepted Accounting Principles
** Acquisition-related amortization, restructuring and other special items
Storage Systems and Consumer Products Drive Third Quarter Revenues
Storage Systems and Consumer Products Drive Third Quarter Revenues
Milpitas, Calif., October 26, 2005 - LSI Logic Corporation (NYSE: LSI) today reported third quarter 2005 revenues of $482 million compared to the $481 million reported in the second quarter of 2005, and a 27 percent increase over the $380 million reported in the third quarter of 2004.
Cash and short-term investments totaled $845 million at the end of the third quarter of 2005. LSI Logic generated positive operating cash flow for the 14th consecutive quarter.
Third quarter 2005 GAAP* net loss of $73 million or 19 cents per diluted share was mainly attributable to the $91 million restructuring charge associated with the planned sale of the companys Gresham, Oregon manufacturing facility. The company anticipates incurring related restructuring charges of less than $3 million per quarter in the fourth quarter of 2005 and the first two quarters of 2006. LSI Logic reported second quarter 2005 GAAP net income of $25 million or 6 cents per diluted share. Third quarter 2004 GAAP net loss was $282 million or 73 cents per diluted share, which included a $206 million non-cash charge for the Gresham facility impairment.
Third quarter 2005 net income, excluding special items**, was $45 million or 11 cents per diluted share compared to second quarter 2005 net income, excluding special items, of $45 million or 11 cents per diluted share. Excluding special items, third quarter 2004 net loss was $25 million or 7 cents per diluted share.
"Our storage systems subsidiary, Engenio Information Technologies, reported record third quarter revenues and our Consumer Products Group revenues, led by our DoMiNo® architecture-based products for DVD-recorder and cable set-top box customers and custom solutions for the digital audio player market, were robust in the third quarter," said Abhi Talwalkar, LSI Logic president and chief executive officer. "After serving as a primary driver in the first two quarters of the year, our storage ASICs and storage standard products businesses softened in the third quarter as customers worked down inventory. We are confident that the insatiable demand for storage, coupled with our market leadership and first-mover advantages, is expected to drive fourth quarter revenue growth for these businesses.
"In the third quarter, LSI Logic announced a broad-based reorganization and the adoption of a fabless manufacturing model. We are on track to exceed the Semiconductor Industry Associations current estimate of six percent for the worldwide semiconductor industrys 2005 growth rate. During the coming quarters, we will intensify our efforts to drive long-term revenue growth, capitalize on our market share and technology leadership positions in strategic markets and identify opportunities to enhance our competitive position in the global marketplace."
"LSI Logic continues to stay focused on streamlining operations and driving profitability," said Bryon Look, LSI Logic chief financial officer. "We have increased our ongoing efforts to identify synergies and drive efficiencies across the company in order to deliver greater value to our shareholders."
"Since we announced our intent to sell our Gresham manufacturing facility, we have had detailed discussions with numerous parties. The process of selling a semiconductor fabrication facility is complex, but we are encouraged by the interest from qualified buyers."
LSI Logic Fourth Quarter Business Outlook
| GAAP* | Special Items** | Excluding Special Items | |
|---|---|---|---|
| Revenues | $475 million to $500 million |  |
$475 million to $500 million |
| Gross Margin | 43-44 percent | |
43-44 percent |
| Operating Expenses | $179 million to $183 million | Approximately $23 million** | $156 million to $160 million |
| Net Other Income/(Expense) | $(2) to $(3) million | |
$(2) to $(3) million |
| Tax Provision | $6.25 million | |
$6.25 million |
| Net Income Per Share | $0.04 to $0.06 | Approximately $0.06 | $0.10 to $0.12 |
| Diluted Share Count | 404 million | |
404 million |
Capital spending is projected to be around $20 million in the fourth quarter and approximately $60 million in total for 2005.
Fourth quarter depreciation and software amortization is expected to be approximately $15 million.
* Generally Accepted Accounting Principles
** Acquisition-related amortization, restructuring and other special items
NOTE: The companys financial guidance will be limited to the comments made on todays public conference call and contained in the Fourth Quarter Business Outlook section of this news release.
LSI Logic Conference Call Information
LSI Logic will hold a conference call today at 2 p.m. PDT to discuss third quarter financial results and the fourth quarter business outlook. The number is 1-303-205-0055. 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 4:30 p.m. PDT and will be available for 48 hours. The replay access numbers are 1-800-405-2236 within the U.S. and 1-303-590-3000 for all other locations, passcode 11041485#.
Safe Harbor for Forward-Looking Statements
This news release contains forward-looking statements, which include the following: the expected drive for fourth quarter 2005 growth in the storage ASICs and storage standard products businesses, the expectation to outpace the semiconductor industry growth for 2005, the expectation to intensify efforts to drive long-term revenue growth, capitalize on market share and technology leadership positions and identify opportunities to enhance competitive position in the marketplace, projected revenues for the fourth quarter of 2005, projected GAAP net income for the fourth quarter of 2005, projected net income, excluding special items, for the fourth quarter of 2005, projected capital spending in the fourth quarter of 2005 and for the year and expected fourth quarter of 2005 depreciation and software amortization. Forward-looking statements also include projections of gross margins, operating expenses, net other income / (expense), tax provisions, earnings per share and diluted share count. These forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could cause LSI Logics actual results to differ materially from those set forth in the forward-looking statements include, but are not limited to: fluctuations in the timing and volumes of customer demand, particularly for storage, the companys inability to achieve revenue objectives, the companys inability to meet financial targets and failure to execute on its financial plan, the companys inability to generate positive operating cash flow, control operating expenses or drive sustained revenue growth, the companys inability to leverage technology marketplace advantages and leadership positions, the inability to identify opportunities to enhance its competitive position and the unavailability of appropriate levels of manufacturing capacity. For additional information, readers are referred to the documents filed by LSI Logic with the SEC, and specifically the risk factors set forth in the companys most recent reports on Form 10-K, 10-Q and 8-K. LSI Logic is not obligated to update these forward-looking statements to reflect events or circumstances after the date of this document.
About LSI Logic
LSI Logic Corporation (NYSE:LSI) is a leading provider of silicon-to-system solutions that are used at the core of products that create, move and store electronic content. LSI Logic's broad portfolio of capabilities includes customer specific and standard product ICs, host bus and RAID adapters, enterprise storage network solutions and software applications. LSI Logic products enable leading technology companies in the Consumer, Communications and Storage markets to deliver some of the most advanced and well-known electronic systems in the market today. More information is available at www.lsilogic.com.
