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Lattice Semiconductor Corporation, Lattice (& design), L (& design), ispLEVER, Reveal, LatticeECP2M, LatticeSC, PURESPEED, and specific product designations are either registered trademarks or trademarks of Lattice Semiconductor Corporation or its subsidiaries in the United States and/or other countries. HyperTransportTM is a licensed trademark of the HyperTransport Technology Consortium in the U.S. and other jurisdictions.
GENERAL NOTICE: Other product names used in this publication are for identification purposes only and may be trademarks of their respective holders.
Lattice Semiconductor Corporation
Consolidated Statement of Operations
(in thousands, except per share data)
Three months ended Nine months ended
---------------------------------- -----------------------
September June September September September
29, 30, 30, 29, 30,
Description 2007 2007 2006 2007 2006
----------- ---------- ---------- ---------- ---------- ----------
(unaudited)(unaudited) (unaudited) (unaudited) (unaudited)
Revenue $ 58,304 $ 59,243 $ 63,456 $ 175,654 $ 183,627
Costs and
expenses (1):
Cost of
products
sold 26,705 26,593 27,764 79,516 79,855
Research and
development 20,166 20,752 20,905 62,926 61,696
Selling,
general and
administrative 15,054 14,785 15,207 44,405 43,490
Amortization
of
intangible
assets (2) 2,458 2,665 2,657 7,790 8,140
Restructuring
(3) 1,718 27 102 1,615 318
---------- ---------- ---------- ---------- ----------
Total costs and
expenses 66,101 64,822 66,635 196,252 193,499
---------- ---------- ---------- ---------- ----------
Loss from
operations (7,797) (5,579) (3,179) (20,598) (9,872)
Other income,
net (4) 3,551 4,299 4,324 10,858 12,721
---------- ---------- ---------- ---------- ----------
(Loss) income
before
provision for
income taxes (4,246) (1,280) 1,145 (9,740) 2,849
Provision for
income taxes 201 181 248 551 693
---------- ---------- ---------- ---------- ----------
Net (loss)
income $ (4,447) $ (1,461) $ 897 $ (10,291) $ 2,156
========== ========== ========== ========== ==========
Basic net
(loss) income
per share $ (0.04) $ (0.01) $ .01 $ (0.09) $ .02
========== ========== ========== ========== ==========
Diluted net
(loss) income
per share $ (0.04) $ (0.01) $ .01 $ (0.09) $ .02
========== ========== ========== ---------- ==========
Shares used in
per share
calculations:
Basic 115,057 114,827 114,376 114,852 114,091
========== ========== ========== ========== ==========
Diluted (5) 115,057 114,827 115,560 114,852 114,577
========== ========== ========== ========== ==========
Notes:
(1) As a result of the restructuring implemented in the fourth quarter of
2005, the Company realigned certain departments and job
responsibilities in 2006. Due to these changes, the Company reviewed
its historical cost center allocations and has reclassified these to
reflect post-restructuring operations. Amounts previously reported
in the three and nine months ended September 30, 2006 have been
reclassified to be consistent with the approach applied for the other
periods presented.
(2) Intangible assets subject to amortization aggregate $7.9 million, net,
at September 29, 2007 and relate to the acquisition of the FPGA
business of Agere Systems, Inc. on January 18, 2002. Intangible assets
related to the acquisition of Cerdelinx Technologies, Inc. became fully
amortized in the third quarter of fiscal 2007. Amortization charges
are expected to be substantially eliminated by the end of 2008.
(3) Represents costs and adjustments incurred under the corporate
restructuring plans, implemented in the fourth quarter of 2005 and the
third quarter of 2007. During the third quarter of 2007, we approved
and initiated a restructuring plan ("2007 restructuring plan") to lower
operating expenses. During the third quarter of 2007, we recorded an
initial restructuring charge of $1.7 million comprised primarily of
severance and related costs of which $1.2 million was paid during the
third quarter of 2007. The Company expects to incur an additional
charge of $1.5 million to $2.5 million in the fourth quarter of 2007
primarily related to costs to vacate leased space.
(4) Includes a $1.6 million gain recorded during the three months ended
June 30, 2007 as a result of the Company selling a parcel of
undeveloped land near its corporate headquarters.
(5) For the three months ended September 29, 2007 and June 30, 2007 and
the nine months ended September 29, 2007, the computation of diluted
earnings per share excludes the effects of stock options, restricted
stock units, warrants and Convertible Notes, as they are antidilutive.
For the three and nine months ended September 30, 2006, the
computation of diluted earnings per share excludes Convertible
Notes, as they are antidillutive.
Reconciliation of GAAP Net (Loss) Income to Non-GAAP Net Income
(in thousands)
Three Months ended Nine Months ended
----------- ----------- ----------- ----------- -----------
September September September September
29, June 30, 30, 29, 30,
2007 2007 2006 2007 2006
----------- ----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
GAAP net (loss)
income $ (4,447)$ (1,461)$ 897 $ (10,291) $ 2,156
Reconciling
items:
Amortization
of
intangibles
(1) 2,458 2,665 2,657 7,790 8,140
Stock-based
compensation 1,349 1,325 1,117 4,063 2,462
Restructuring
(2) 1,718 27 102 1,615 318
----------- ----------- ----------- ----------- -----------
Non-GAAP net
income $ 1,078 $ 2,556 $ 4,773 $ 3,177 $ 13,076
=========== =========== =========== =========== ===========
Reconciliation of GAAP Net (Loss) Income per Share to Non-GAAP Net Income
per Share
Three Months ended Nine Months ended
----------- ----------- ----------- ----------- -----------
September September September September
29, June 30, 30, 29, 30,
2007 2007 2006 2007 2006
----------- ----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Basic and
Diluted (4):
GAAP net
(loss) income $ (0.04) $ (0.01) $ 0.01 $ (0.09) $ 0.02
Reconciling
items:
Amortization
of
intangibles
(1) 0.02 0.02 0.02 0.07 0.07
Stock-based
compensation 0.01 0.01 0.01 0.04 0.02
Restructuring
(2) 0.01 0.00 0.00 0.01 0.00
----------- ----------- ----------- ----------- -----------
Non-GAAP net
income $ 0.01 $ 0.02 $ 0.04 $ 0.03 $ 0.11
=========== =========== =========== =========== ===========
Shares used in
per share
calculations:
Basic 115,057 114,827 114,376 114,852 114,091
=========== =========== =========== =========== ===========
Diluted (3) 120,659 122,611 125,385 122,462 124,816
=========== =========== =========== =========== ===========
Notes:
(1) Intangible assets subject to amortization aggregate $7.9 million, net,
at September 29, 2007 and relate to the acquisition of the FPGA
business of Agere Systems, Inc., on January 18, 2002. Intangible
assets related to the acquisition of Cerdelinx Technologies, Inc.
became fully amortized in the third quarter of fiscal 2007.
Amortization charges are expected to be substantially eliminated
by the end of 2008.
(2) Represents costs and adjustments incurred under the corporate
restructuring plans, implemented in the fourth quarter of 2005 and the
third quarter of 2007. During the third quarter of 2007, we approved
and initiated a restructuring plan ("2007 restructuring plan") to
lower operating expenses. During the third quarter of 2007, we
recorded an initial restructuring charge of $1.7 million comprised
primarily of severance and related costs of which $1.2 million was
paid during the third quarter of 2007. The Company expects to incur an
additional charge of $1.5 million to $2.0 million in the fourth
quarter of 2007 primarily related to costs to vacate leased space.
(3) For all periods presented the effects of stock options, restricted
stock units and convertible notes are included as they are dilutive.
(4) Per share amounts may differ due to rounding.
Lattice Semiconductor Corporation
Consolidated Balance Sheet
(in thousands)
Description September December
----------- 29, 30,
2007 2006
--------- ---------
(unaudited)
Assets
Current assets:
Cash and short-term investments $ 128,364 $ 233,208
Accounts receivable, net 31,097 22,545
Inventories 36,677 38,816
Other current assets 35,111 35,474
--------- ---------
Total current assets 231,249 330,043
Property and equipment, net 44,813 46,696
Foundry investments, advances and other assets 93,909 109,964
Goodwill and other intangible assets, net (1) 231,412 239,203
--------- ---------
$ 601,383 $ 725,906
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued liabilities $ 33,114 $ 82,843
Deferred income and allowances on sales to
distributors 7,042 6,230
Zero Coupon Convertible Notes due in 2010 (2) 40,000 20,480
--------- ---------
Total current liabilities 80,156 109,553
Zero Coupon Convertible Notes due in 2010 (2) - 89,120
Other long-term liabilities 6,031 15,488
--------- ---------
Total liabilities 86,187 214,161
Stockholders' equity 515,196 511,745
--------- ---------
$ 601,383 $ 725,906
========= =========
Notes:
(1) At September 29, 2007, includes approximately $223.6 million in
goodwill and $7.9 million of other intangible assets, net, related to
the acquisition of the FPGA business of Agere Systems, Inc. Goodwill is
not amortized effective with the March 2002 quarter.
(2) Effective July 1, 2007, the Convertible Notes were classified as a
current liability as the holders of the Convertible Notes have a right
to require payment of the Convertible Notes on July 1, 2008. At
December 30, 2006, $20.5 million of Convertible Notes were classified
as a current liability because it was known at the time of filing our
financial statements this amount would be extinguished in the first
quarter of fiscal 2007.
Lattice Semiconductor Corporation
- Supplemental Historic Financial Information -
Operations Information Q307 Q207 Q306
--------- --------- ---------
Percent of Revenue (1):
Gross Margin 54.2% 55.1% 56.2%
R&D Expense 34.6% 35.0% 32.9%
SG&A Expense 25.8% 25.0% 24.0%
Depreciation Expense ($000) 3,398 3,396 3,151
Capital Expenditures ($000) 2,110 2,914 2,728
Balance Sheet Information
Current Ratio 2.9 5.9 5.9
A/R Days Revenue Outstanding 49 46 33
Inventory Months 4.1 4.3 4.0
Revenue% (by Product Family)
FPGA 23% 23% 21%
PLD 77% 77% 79%
Revenue% (by Product Classification)
New 14% 11% 8%
Mainstream 53% 50% 49%
Mature 33% 39% 43%
Revenue% (by Geography)
Americas 21% 24% 25%
Europe (incl. Africa) 20% 18% 21%
Asia 59% 58% 54%
Revenue% (by End Market)
Communications 54% 52% 52%
Industrial & Other 24% 24% 22%
Consumer & Automotive 11% 13% 11%
Computing 11% 11% 15%
Revenue% (by Channel)
Direct 66% 64% 64%
Distribution 34% 36% 36%
New: LatticeSC, LatticeECP2/M, LatticeECP, LatticeXP, MachXO,
Power Manager, ispClock
Mainstream: FPSC, XPLD, ispGDX2, ispMACH 4/LV, ispGDX/V, ispMACH
4000/Z, XPGA, Software and IP
Mature: ORCA 2, ORCA 3, ORCA 4, ispPAC, ispLSI 8000V, ispMACH
5000B, ispMACH 2LV, ispMACH 5LV, ispLSI 2000V, ispLSI
5000V, ispMACH 5000VG, all 5 Volt CPLDs, all SPLDs
Note:
(1) Q306 amounts have been reclassified to be consistent with the current
period.
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