Storage and Consumer Businesses Drive Revenues
Cash and short-term investments grew to $815 million at the end of the fourth quarter of 2004. LSI Logic generated positive operating cash flow for the 11th consecutive quarter.
Fourth quarter 2004 GAAP* net loss was $197 million or 51 cents per diluted share, including a $178 million non-cash charge associated with the company's Gresham manufacturing facility. The fourth quarter GAAP result compares to third quarter GAAP net loss of $282 million or 73 cents per diluted share, including a $206 million non-cash charge associated with the company's Gresham manufacturing facility. Fourth quarter 2003 GAAP net income was $8 million or 2 cents per diluted share.
Fourth quarter 2004 net income, excluding special items**, was $15 million or 4 cents per diluted share compared to a net loss, excluding special items, of $25 million or 7 cents per diluted share in the third quarter. Excluding special items, fourth quarter 2003 net income was $25 million or 6 cents per diluted share.
"In Q4, we saw sequential growth in Storage Systems, Storage Components and Consumer Products," said Wilfred J. Corrigan, LSI Logic chairman and chief executive officer. "The adjustment in our customers' supply chain inventory that began in Q2 appears to be substantially over in Storage Systems, Storage Components and Consumer Products. We are anticipating a small seasonal decline in the first quarter with revenues in the range of $400 million to $415 million.
"In semiconductors, LSI Logic has technology and market share leadership positions in several high-growth sectors, including DVD recorders, Ultra320 SCSI controllers, SAS (Serial Attached SCSI), Fibre Channel, RAID adapters and our RapidChip(R) Platform ASICs. Our Engenio storage systems subsidiary demonstrated strong growth in the fourth quarter and expanded its OEM base with its range of leading modular, scalable storage systems. All of these products are expected to drive company revenue growth in 2005."
LSI Logic recorded 2004 revenues of $1.70 billion, compared to $1.69 billion in 2003.
GAAP 2004 net loss was $464 million or $1.21 per diluted share, which includes the $384 million non-cash charge associated with the Gresham manufacturing facility. The 2003 GAAP net loss was $309 million or 82 cents per diluted share.
LSI Logic reported 2004 net income, excluding special items, of $43 million or 11 cents per diluted share compared to a 2003 net loss, excluding special items, of $16 million or 4 cents per diluted share.
The company's 2004 gross margin was 43.3 percent, a 330-basis point improvement over 2003. The company generated $91 million in cash from operations in 2004. LSI Logic reduced its convertible debt in 2004 by $69 million through open market purchases.
"In the fourth quarter, we generated revenue growth above expectations and our gross margin improved over the prior quarter," said Bryon Look, LSI Logic chief financial officer. "We continued to improve our cost structure and align our resources to the highest value opportunities. We maintained our strong focus on cash flows, continuing to generate positive cash flow as we grew revenues. LSI Logic was profitable, excluding special items, in both our semiconductor and our storage systems segments."
LSI Logic First Quarter Business Outlook Excluding Special** GAAP* Special Items** Items Revenue $400 million $400 million to to $415 million $415 million Gross 41.5-43.5 percent 41.5-43.5 percent Margin Operating $174 million to Approximately $154 million to Expenses $179 million $20 million $159 million Net Other $(2) to $(3) $(2) to $(3) Income (Exp.) million million Tax $6 million $6 million Provision Net (Loss)/ ($0.04) to ($0.01) Approximately $0.01 to $0.04 Income $0.05 Per Share Diluted Share 388 million 394 million Count
Capital spending is projected to be around $20 million in the first quarter, and approximately $80 million in total for 2005.
First quarter depreciation and software amortization is expected to be approximately $22 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 First 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. PST to discuss fourth quarter/2004 financial results and the first quarter business outlook. The number is 1-303-205-0033. 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 replay access numbers are 1-800-405-2236 within the U.S. and 1-303-590-3000 for all other locations, passcode 11020471#.
Safe Harbor for Forward Looking Statements: This news release contains forward-looking statements, which include the following: projected revenues for the first quarter of 2005; the extent of the seasonal decline in the first quarter of 2005; projected GAAP net loss for the first quarter of 2005; projected net income, excluding special items, for the first quarter of 2005; the company's expectation for revenue growth for the company in 2005; the company's expectations of a continued heightened level of sales activity for RapidChip(R) Platform ASICs in the first quarter of 2005; the completion of our customer's supply chain inventory adjustments; continued technology and market share leadership positions in several sectors, including DVD recorders, Ultra 320 SCSI controllers, SAS (Serial Attached SCSI), Fibre Channel, RAID adapters, and RapidChip(R) Platform ASICs; continued high-growth in these sectors, including DVD recorders, Ultra 320 SCSI controllers, SAS (Serial Attached SCSI), Fibre Channel, RAID adapters, and RapidChip(R) Platform ASICs; continued expansion of our Engenio storage subsidiary's growth and expansion of its OEM base; the ability of any of the company's products to drive revenue growth in 2005; projected capital spending in the first quarter of 2005 and for the year; expected first quarter depreciation and software amortization. Forward-looking statements also include projections of gross margins, operating expenses, net other income (exp.), tax provisions, earnings/loss 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 Logic's 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 especially in our DVD recorders, Ultra 320 SCSI controllers, SAS (Serial Attached SCSI), Fibre Channel, RAID adapters, and RapidChip(R) Platform ASICs products; the rate of depletion of customer inventory buildup; the company's failure to achieve revenue objectives; the company's failure to meet financial targets; 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 company's most recent reports on Form 10-K, 10-Q and 8-K.