On April 24, 2008, Lattice will hold a telephone conference call at 2:00 p.m. (Pacific Time) with financial analysts. Investors may listen to our conference call live via the web at www.lscc.com. Replays of the call will also be available at www.lscc.com. On June 12, 2008, we plan to publish a "Business Update Statement" on our website. Our financial guidance will be limited to the comments on our public quarterly earnings call and these public business outlook statements.
Forward-Looking Statements Notice:
The foregoing paragraphs contain forward-looking statements that involve estimates, assumptions, risks and uncertainties. With respect to particular forward-looking statements in the "Business Outlook - June 2008 Quarter" section of this release, Lattice believes the factors identified below in connection with each such statement could cause actual results to differ materially from the forward-looking statements.
Estimates of future revenue are inherently uncertain due to the high percentage of quarterly "turns" business. In addition, revenue is affected by such factors as pricing pressures, competitive actions, the demand for our Mature, Mainstream, and New products, and the ability to supply products to customers in a timely manner. Actual gross margin percentage and operating expenses could vary from the estimates contained herein on the basis of, among other things, changes in revenue levels, changes in product pricing and mix, changes in wafer, assembly and test costs, variations in manufacturing yields, and changes in stock-based compensation charges due to stock price changes. Restructuring charges are estimates that are subject to change. Other income may vary due to changes in investment returns. Assets held for investment purposes are subject to credit risk and may become impaired on an other than temporary basis.
In addition to the foregoing, other factors that may cause actual results to differ materially from the forward-looking statements herein include the Company's dependencies on its silicon wafer suppliers, technological and product development risks, and the other risks that are described from time to time in our filings with the Securities and Exchange Commission. The Company does not intend to update or revise any forward-looking statements, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
About Lattice Semiconductor:
Lattice Semiconductor Corporation provides the industry's broadest range of Programmable Logic Devices (PLD), including Field Programmable Gate Arrays (FPGA), Complex Programmable Logic Devices (CPLD), Mixed-Signal Power Management and Clock Generation Devices, and industry-leading SERDES products.
Lattice continues to deliver "More of the Best" to its customers with comprehensive solutions for system design, including an unequaled portfolio of high performance, non-volatile and low cost FPGAs.
Lattice products are sold worldwide through an extensive network of independent sales representatives and distributors, primarily to OEM customers in communications, computing, industrial, consumer, automotive, medical and military end markets. For more information, visit http://www.latticesemi.com.
Lattice Semiconductor Corporation, Lattice (& design), L (& design), ispLever, LatticeECP2M, LatticeSCM, LatticeXP, LatticeXP2, LatticeMico32 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. 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
----------------------------------
March 29, December March 31,
2008 29, 2007 2007
---------- ---------- ----------
(unaudited) (unaudited) (unaudited)
Revenue $ 56,604 $ 53,055 $ 58,107
Costs and expenses:
Cost of products sold 25,160 23,641 26,218
Research and development 17,668 20,051 22,008
Selling, general and administrative 14,999 14,080 14,566
Goodwill impairment (1) -- 223,556 --
Amortization of intangible assets
(2) 1,481 2,042 2,667
Restructuring (3) 1,790 757 (130)
---------- ---------- ----------
Total costs and expenses 61,098 284,127 65,329
---------- ---------- ----------
Loss from operations (4,494) (231,072) (7,222)
Other income, net 1,333 1,682 3,008
---------- ---------- ----------
Loss before provision for income taxes (3,161) (229,390) (4,214)
Provision for income taxes 93 135 169
---------- ---------- ----------
Net loss $ (3,254) $ (229,525) $ (4,383)
========== ========== ==========
Basic net loss per share $ (0.03) $ (1.99) $ (0.04)
========== ========== ==========
Diluted net loss per share $ (0.03) $ (1.99) $ (0.04)
========== ========== ==========
Shares used in per share calculations:
Basic 115,146 115,121 114,688
========== ========== ==========
Diluted (4) 115,146 115,121 114,688
========== ========== ==========
Notes:
(1) At December 29, 2007, the Company performed an impairment test on
Goodwill in accordance with SFAS No. 142, "Goodwill and Other
Intangible Assets." As a result, goodwill related to the acquisition
of Vantis Corporation on June 15, 1999, the acquisition of Integrated
Intellectual Properties, Inc. on March 16, 2001, and the acquisition of
the FPGA business of Agere Systems, Inc. on January 18, 2002, was
determined to have no implied fair value and the entire balance of
$223.6 million was recorded as a Goodwill impairment charge.
(2) Intangible assets subject to amortization aggregate $4.3 million, net,
at March 29, 2008 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 2007. Amortization charges are expected to be
eliminated after the first quarter of 2009.
(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 first quarter of fiscal 2008, the
Company incurred costs of $1.8 million, of which $1.3 million primarily
related to costs to vacate leased space and $0.5 million in severance
costs related to the resignation of the President and Chief Executive
Officer announced on February 1, 2008. During the fourth quarter of
2007, the Company incurred a charge of $0.8 million primarily related
to severance costs.
(4) For the three months ended March 29, 2008, December 29, 2007 and March
31, 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.
Reconciliation of GAAP Net Loss to Non-GAAP Net Income (Loss)
(in thousands)
Three months ended
----------------------------------
March 29, December 29, March 31,
2008 2007 2007
---------- ---------- ----------
(unaudited) (unaudited) (unaudited)
GAAP net loss $ (3,254) $ (229,525) $ (4,383)
Reconciling items:
Goodwill impairment (1) -- 223,556 --
Amortization of intangibles (2) 1,481 2,042 2,667
Stock-based compensation 1,368 1,434 1,389
Restructuring (3) 1,790 757 (130)
---------- ---------- ----------
Non-GAAP net income (loss) $ 1,385 $ (1,736) $ (457)
========== ========== ==========
Reconciliation of GAAP Net Loss per Share to Non-GAAP Net Income (Loss)
per Share
Three months ended
----------------------------------
March 29, December 29, March 31,
2008 2007 2007
---------- ---------- ----------
(unaudited) (unaudited) (unaudited)
Basic and Diluted (5):
GAAP net loss $ (0.03) $ (1.99) $ (0.04)
Reconciling items:
Goodwill impairment (1) -- 1.94 --
Amortization of intangibles (2) 0.01 0.02 0.02
Stock-based compensation 0.01 0.01 0.01
Restructuring (3) 0.02 0.01 --
---------- ---------- ----------
Non-GAAP net income (loss) $ 0.01 $ (0.02) $ 0.00
========== ========== ==========
Shares used in per share calculations:
Basic 115,146 115,121 114,688
========== ========== ==========
Diluted (4) 119,227 115,121 114,688
========== ========== ==========
Notes:
(1) At December 29, 2007, the Company performed an impairment test on
Goodwill in accordance with SFAS No. 142, "Goodwill and Other
Intangible Assets." As a result, goodwill related to the acquisition
of Vantis Corporation on June 15, 1999, the acquisition of Integrated
Intellectual Properties, Inc. on March 16, 2001, and the acquisition of
the FPGA business of Agere Systems, Inc. on January 18, 2002, was
determined to have no implied fair value and the entire balance of
$223.6 million was recorded as a Goodwill impairment charge.
(2) Intangible assets subject to amortization aggregate $4.3 million, net,
at March 29, 2008 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 2007. Amortization charges are expected to be
eliminated after the first quarter of 2009.
(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 first quarter of fiscal 2008, the
Company incurred costs of $1.8 million, of which $1.3 million primarily
related to costs to vacate leased space and $0.5 million in severance
costs related to the resignation of the President and Chief Executive
Officer announced on February 1, 2008. During the fourth quarter of
2007, the Company incurred a charge of $0.8 million primarily related
to severance costs.
(4) For the three months ended March 29, 2008, the computation of diluted
earnings per share includes the effects of stock options, restricted
stock units, warrants and Convertible Notes, as they are dilutive. For
the three months ended December 29, 2007 and March 31, 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.
(5) Per share amounts may not add up due to rounding.
Lattice Semiconductor Corporation
Consolidated Balance Sheet
(in thousands)
March 29, December 29,
2008 2007
------------ ------------
(unaudited)
Assets
Current assets:
Cash, cash equivalents and short-term
marketable securities (1) $ 87,738 $ 85,063
Accounts receivable, net 28,916 29,293
Inventories 39,252 40,005
Other current assets 38,737 37,185
------------ ------------
Total current assets 194,643 191,546
Property and equipment, net 43,575 43,617
Long-term marketable securities (1) 36,971 44,900
Foundry advances, investments and other assets 80,018 90,407
Intangible assets, net (2) 4,334 5,815
------------ ------------
$ 359,541 $ 376,285
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued liabilities $ 28,426 $ 32,978
Deferred income and allowances on sales to
distributors 7,114 8,033
Zero Coupon Convertible Notes due in 2010 40,000 40,000
------------ ------------
Total current liabilities 75,540 81,011
Other long-term liabilities 7,358 9,042
------------ ------------
Total liabilities 82,898 90,053
Stockholders' equity (1) 276,643 286,232
------------ ------------
$ 359,541 $ 376,285
============ ============
Notes:
(1) Long-term marketable securities include auction rate securities that
were reclassified from Cash, cash equivalents and short-term marketable
securities because recent auctions have been unsuccessful, and as a
result, such securities are presently considered to be illiquid. The
Company has the intent and ability to hold these investments until the
resumption of orderly auctions. As a result of temporary declines in
fair value for the securities, we recorded an unrealized loss of $7.9
million to accumulated other comprehensive loss.
(2) At December 29, 2007, the Company performed an impairment test on
Goodwill. As a result, Goodwill related to the acquisition of Vantis
Corporation on June 15, 1999, the acquisition of Integrated
Intellectual Properties, Inc. on March 16, 2001, and the acquisition of
the FPGA business of Agere Systems, Inc. on January 18, 2002, was
determined to have no implied fair value and the entire balance of
$223.6 million was recorded as a Goodwill impairment charge. As a
result, we no longer have Goodwill recorded on our Consolidated Balance
Sheet.
Lattice Semiconductor Corporation
- Supplemental Historic Financial Information -
OperationsInformation Q108 Q407 Q107
--------- --------- ---------
Percent of Revenue:
Gross Margin 55.6% 55.4% 54.9%
R&D Expense 31.2% 37.8% 37.9%
SG&A Expense 26.5% 26.5% 25.1%
Depreciation Expense ($000) 3,249 3,295 3,383
Capital Expenditures ($000) 3,207 2,099 3,915
Balance Sheet Information
Current Ratio 2.6 2.4 4.7
A/R Days Revenue Outstanding 47 50 45
Inventory Months 4.7 5.1 4.6
Revenue% (by Product Family)
FPGA 24% 25% 20%
PLD 76% 75% 80%
Revenue% (by Product Classification)
New 20% 18% 8%
Mainstream 48% 49% 48%
Mature 32% 33% 44%
Revenue% (by Geography)
Americas 22% 21% 23%
Europe (incl. Africa) 22% 20% 22%
Asia 56% 59% 55%
Revenue% (by End Market)
Communications 54% 54% 45%
Industrial & Other 24% 24% 32%
Consumer & Automotive 10% 11% 12%
Computing 12% 11% 11%
Revenue% (by Channel)
Direct 63% 66% 62%
Distribution 37% 34% 38%
New: LatticeXP2, LatticeSC, LatticeECP2M, LatticeECP, LatticeXP,
MachXO, Power Manager, ispClock
Mainstream: FPSC, ispXPLD, ispGDX2, ispMACH 4/LV, ispGDX/V, ispMACH 4000/Z,
ispXPGA, 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
