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LSI Logic Reports Q4 and 2003 Financial ResultsFourth Quarter News Release Summary
First Quarter Business Outlook
* Generally Accepted Accounting Principles ** Acquisition-related amortization, restructuring and other special items. LSI Logic Exceeds Q4 Top and Bottom Line Guidance January 28, 2004 - Milpitas, California - LSI Logic Corporation (NYSE: LSI) today reported 2003 fourth quarter revenues of $463 million, a 3 percent increase compared to the $450 million reported in the third quarter of 2003, and a decline of 4 percent compared to the $480 million reported in the fourth quarter of 2002. Cash and short-term investments totaled $814 million at the end of the 2003-fourth quarter. The company generated positive operating cash flow for the seventh consecutive quarter and repurchased approximately $250 million in convertible notes, eliminating all 2005 debt. In the third quarter, LSI Logic extinguished all 2004 debt. The 2003-fourth quarter GAAP* net income was $8 million or 2 cents per diluted share. The 2003-third quarter GAAP net loss was $32 million or 8 cents per diluted share. The company reported a GAAP net loss of $31 million or 8 cents per diluted share in the 2002-fourth quarter. Fourth quarter net income, excluding special items**, was $25 million or 6 cents per diluted share compared to a third quarter net income, excluding special items, of $17 million or 4 cents per diluted share. The company reported net income, excluding special items, of $5 million or 1 cent per diluted share in the fourth quarter of 2002. Strength in Storage Systems, Storage Components and Communications more than offset the weakness in the video-game sector in Q4, said Wilfred Corrigan, LSI Logic chairman and chief executive officer. In the fourth quarter, the sequential revenue growth of our Storage Systems business reflected the continued movement by OEMs toward scalable, modular storage systems. Storage Components demonstrated strength, driven by increased demand for servers, migration to Ultra320 SCSI controllers and growth of the global SAN market. Our Communications business continued to show signs of improvement as a result of renewed IT spending and growing broadband acceptance. Our Consumer business exhibited traditional fourth quarter seasonality, partially offset by robust design-win and sales activities for our single-chip architectures for high-definition products and DVD-recorders. The worldwide economy and the global IT industry are both improving, particularly in the U.S. and Asia. The global semiconductor industry is projected by market analysts to grow by 20 percent or more. LSI Logic is confident that it is well positioned to capitalize on this favorable business environment. Last November, LSI Logic announced its intention to create a separate company based on its wholly owned subsidiary, LSI Logic Storage Systems, Inc. Please refer to the companysNovember 13, 2003 news releasefor further information concerning the separation. During the fourth quarter, LSI Logic finalized its sale of the companys Tsukuba, Japan manufacturing facility to Rohm Co. LSI Logic has now completed the consolidation of its internal manufacturing at the companys Gresham, Oregon campus, supplemented by strategic foundry relationships. LSI Logic recorded 2003 revenues of $1.69 billion, a 7 percent decrease from the $1.82 billion in 2002. The GAAP 2003 net loss was $309 million or 82 cents per diluted share compared to the GAAP 2002 net loss of $292 million or 79 cents per diluted share. LSI Logic recorded a 2003 net loss, excluding special items, of $16 million or 4 cents per diluted share, compared to a 2002 net loss, excluding special items, of $42 million or 11 cents a diluted share. The company generated $190 million in cash from operations in 2003, a 15 percent increase over the previous year. We shipped our first RapidChip platform products in the fourth quarter. We have now recorded Platform ASIC design wins with existing and new customers based in all major semiconductor consuming regions including North America, Europe, Japan and China, said Joe Zelayeta, LSI Logic executive vice president of ASIC Technology and Methodology. As the global semiconductor market gathers momentum, we anticipate an acceleration of our RapidChip design-win activity, strengthening LSI Logics leadership position in the growing Platform ASIC space. In the fourth quarter, LSI Logic achieved its profitability goal on both a GAAP and excluding special items basis, and generated positive operating cash flow for the seventh straight quarter, said Bryon Look, LSI Logic chief financial officer. We also used our strong cash position to reduce overall debt by more than $360 million in 2003. We are executing our financial plan and we are looking forward to a period of sustained growth and financial strength. LSI Logic First Quarter Business Outlook
Common stock equivalents are excluded from share count in loss periods as a result of their anti-dilutive effect. Capital spending is projected to be around $25 million in the first quarter, and approximately $100 million in 2004. First quarter depreciation and software amortization are expected to be approximately $32 million. * Generally Accepted Accounting Principles NOTE: The companys financial guidance will be limited to the comments made on todays 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 and 2003 financial results. The number is 1-303-262-2050. 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 p.m. PST and will be available for 48 hours. The number is 1-800-405-2236 (International, 1-303-590-3000), passcode 565933#. About LSI LogicLSI 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
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 projected revenue range in the first quarter, forecasts of operating expenses, projections of profitability or loss, projections of the companys first-quarter business outlook including, net other income, earnings, gross margins, tax provisions, capital spending, depreciation, acquisition-related amortization, restructuring expenses, other special items, common share count, increased orders and the RapidChip platform generating new business in the first quarter. Additional forward-looking statements include projections of worldwide economic improvement, growth of the semiconductor industry, a period of sustained growth and financial strength, the strengthening of the companys leadership position in the platform ASIC space and new market opportunities with high-volume and mid-volume customers in existing and new market segments. The companys 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 companys achievement of revenue objectives, other financial targets, thecompanys ability to develop new products, and the timing and the success of new product introductions. Other risks and uncertainties that could cause the forward-looking statements contained herein to differ from actual results include: the continued availability of appropriate levels of manufacturing capacity, the realization of benefits from the companys strategic relationships, competing technologies, R&D investments, products and other competitive factors and investments and disruptions in general economic activity caused by the effects of terrorist activities and armed conflict. 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 companys control. For additional information, readers are referred to the documents filed by LSI Logic with the SEC, and specifically the companys 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 companys SEC reports filed during the past 12 months.
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