Exhibit 99.1
Lattice Semiconductor Reports First Quarter Results
HILLSBORO, Ore.--(BUSINESS WIRE)--April 22, 2003--Lattice
Semiconductor Corporation (Nasdaq:LSCC) today announced financial
results for the first quarter of 2003.
Revenue for the quarter was $58.3 million, an increase of one
percent from last quarter's revenue of $57.7 million and down one
percent from the $58.9 million reported in the same quarter a year
ago. Quarterly revenue from high density CPLD products was $40.7
million, an increase of four percent from last quarter while quarterly
revenue from FPGA products was $8.4 million, a decrease of nine
percent from last quarter.
On a GAAP basis, net loss for the quarter was $18.8 million ($0.17
per share). This loss includes a $21.1 million charge for amortization
of intangible assets.
Non-GAAP income for the quarter was $2.3 million ($0.02 per
share). Non-GAAP earnings exclude non-cash acquisition related
amortization expenses. Management believes this presentation is useful
to investors because it more closely approximates our cash earnings
performance. A reconciliation of non-GAAP to GAAP earnings accompanies
the financial tables in this earnings release.
"We are pleased to report sequential revenue growth and an
improvement in our non-GAAP operating income for the second
consecutive quarter," stated Cyrus Y. Tsui, chairman and chief
executive officer. "Our CPLD revenue grew nicely and our results
reflect the broad leadership position of our innovative product
portfolio. Despite the sequential decline in our FPGA revenue, we
remain confident about ongoing customer design activity and the future
prospects for our advanced FPSC products and our innovative XP
products. We will continue to sustain our R&D investment to develop a
portfolio of differentiated FPGA solutions that allows us to improve
our position in this attractive segment of the PLD market."
"Over the last three months, we have released three new products,"
continued Tsui. "First, the ORT42G5, our latest field programmable
system chip ("FPSC"), offers four channels of leadership SERDES
input/output ("I/O") technology running at up to 3.7 gigabits per
second. At roughly half the cost of our existing eight-channel ORT82G5
device, and with double the programmable logic resources per SERDES
channel, the ORT42G5 extends the market reach of our FPSC products.
Second, the ispMACH(R) 4000Z family offers the world's lowest power
CPLDs. With an eighty percent reduction in static power consumption
versus competitive alternatives and leadership performance, the
ispMACH 4000Z will allow us to compete effectively for designs within
the emerging consumer end market. Finally, the ispPAC(R) POWR 1208,
the world's first mixed signal PLD, breaks new ground by combining
programmable logic and programmable analog on a single chip. Based on
an intuitive silicon architecture and easy to use software, this
device allows designers to easily meet the challenges of sequencing
and managing the multiple power supplies prevalent within today's
advanced systems. We believe the unique technology underlying the
ispPAC POWR will be instrumental in opening new markets for
programmable products and for Lattice. We are pleased with the early
design activity for each of these newly released products," Tsui
concluded.
Business Outlook -- June 2003 Quarter
The Company believes that second quarter revenues will be
essentially flat on a sequential basis. Gross margins are expected to
remain at approximately 60% of revenue. Operating expenses are
expected to be essentially flat on a sequential basis. Intangible
asset amortization is expected to decline to approximately $18.6
million. Finally, Other Income is expected to be approximately $1
million.
On April 22, 2003, Lattice will hold a telephone conference call
at 2:00 pm (Pacific time) with financial analysts and publish a
"Business Outlook Statement" covering the June 2003 quarter. Investors
may listen to our conference call via the web at www.on24.com. Both
the conference call and our business outlook statement will be
available on our website, www.lscc.com through April 29, 2003. On June
12, 2003, we plan to publish a "Business Update Statement" on our
website for five calendar days. Our financial guidance will be limited
to the comments on our public quarterly earnings call and these public
business outlook statements. Additionally, during the June 2003
quarter, Lattice plans to participate in investor conferences
sponsored by JP Morgan, Salomon Smith Barney and Bear Stearns.
Specific presentation dates and times are posted on our website at
www.lscc.com.
The foregoing paragraphs contain forward-looking statements within
the meaning of the Federal Securities laws including statements about
future quarterly financial results, revenues, customers, product
offerings and our ability to compete. Investors are cautioned that
actual events and results could differ materially from these
statements as a result of a number of factors, including overall
semiconductor market conditions, potential impact on demand and
customers from a prolonged engagement in Iraq or from the SARS
outbreak, market acceptance and demand for our new products, risks
related to our recent acquisitions and their integration with Lattice,
our dependencies on our silicon wafer suppliers, the impact of
competitive products and pricing, technological and product
development risks.
Oregon-based Lattice Semiconductor Corporation designs, develops
and markets the broadest range of high-performance ISP(TM)
programmable logic devices (PLDs), Field Programmable Gate Arrays
(FPGAs) and Field Programmable System-on-a-Chip (FPSC) devices.
Lattice offers total solutions for today's system designs by
delivering the most innovative programmable silicon products that
embody leading-edge system expertise.
Lattice products are sold worldwide through an extensive network
of independent sales representatives and distributors, primarily to
OEM customers in the communication, computing, industrial and military
end markets. Company headquarters are located at 5555 N.E. Moore
Court, Hillsboro, Oregon 97124 USA. For more information access our
web site at www.latticesemi.com.
Lattice Semiconductor Corporation, L (& design), Lattice (&
design), in-system programmable, ISP 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.
Lattice Semiconductor Corporation
Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
Three months ended
------------------------------
Mar. 31, Dec. 31, Mar. 31,
Description 2003 2002 2002
- --------------------------------------- --------- ---------- ---------
Revenue $58,311 $57,710 $58,878
Costs and expenses:
Costs of products sold 23,208 23,019 23,606
Research and development 21,832 21,790 21,385
Selling, general and administrative 12,483 12,309 11,858
In-process research and development
(1) -- -- 24,200
Amortization of intangible assets
(2)(3) 21,114 18,799 18,623
--------- ---------- ---------
Total costs and expenses 78,637 75,917 99,672
--------- ---------- ---------
Loss from operations (20,326) (18,207) (40,794)
Other income (loss), net 1,491 2,253 (1,901)
--------- ---------- ---------
Loss before provision (benefit)
for income taxes (18,835) (15,954) (42,695)
Provision (benefit) for income taxes
(4) -- 111,146 (17,078)
--------- ---------- ---------
Net loss ($18,835) ($127,100) ($25,617)
========= ========== =========
Basic loss per share ($0.17) ($1.14) ($0.23)
========= ========== =========
Diluted net loss per share ($0.17) ($1.14) ($0.23)
========= ========== =========
Shares used in per share calculations:
Basic 111,390 111,311 109,558
========= ========== =========
Diluted (5) 111,390 111,311 109,558
========= ========== =========
Notes:
(1) Represents write-off of in-process research and development in
conjunction with the January 18, 2002 acquisition of the FPGA
business of Agere Systems, Inc.
(2) Intangible assets subject to amortization aggregate $138.1
million, net, at March 31, 2003 and relate to the acquisition of
Cerdelinx Technologies, Inc. on August 26, 2002, the acquisition
of the FPGA business of Agere Systems, Inc. on January 18, 2002,
the acquisition of Vantis Corporation on June 16, 1999 and the
acquisition of Integrated Intellectual Property Inc. on March 16,
2001. These intangible assets are amortized to expense generally
over three to seven years on a straight-line basis.
(3) Includes $3.3 million, $1.1 million and $0.6 million of deferred
stock compensation expense for the quarters ended March 31, 2003,
December 31, 2002 and March 31, 2002, respectively, attributable
to Research and Development activities.
(4) In the quarter ended December 31, 2002, we recorded a tax charge
of $118.6 million, representing a 100% valuation allowance on our
recorded deferred tax assets, in accordance with the provisions of
Statement of Financial Accounting Standards No. 109.
(5) For all periods presented, the computation of diluted net loss per
share excludes the effect of stock options and our convertible
notes as they are antidilutive.
Lattice Semiconductor Corporation
Consolidated Balance Sheet
(in thousands)
(unaudited)
Mar. 31, Dec. 31,
Description 2003 2002
- ------------------------------------------------------------ ---------
Assets
Current assets:
Cash and short-term investments $252,847 $276,880
Accounts receivable, net 30,651 26,374
Inventories 51,876 56,241
Other current assets 34,748 35,033
--------- ---------
Total current assets 370,122 394,528
Property and equipment, net 61,284 62,786
Foundry investments, advances and other assets 100,059 104,507
Goodwill and other intangible assets, net (1) 361,754 379,442
--------- ---------
$893,219 $941,263
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued
liabilities $37,170 $33,597
Deferred income on sales to distributors 13,102 11,983
Income taxes payable -- 142
--------- ---------
Total current liabilities 50,272 45,722
4 3/4% Convertible notes due in 2006 175,304 208,061
Other long-term liabilities 26,335 26,345
--------- ---------
201,639 234,406
Stockholders' equity 641,308 661,135
--------- ---------
$893,219 $941,263
========= =========
Note:
(1) Includes approximately $11.0 million of other intangible assets,
net, recorded in the September 2002 quarter in connection with the
August 26, 2002 acquisition of Cerdelinx Technologies, Inc. Also
includes $142.5 million in Goodwill and $65.6 million of other
intangible assets, net, recorded in the March 2002 quarter in
connection with the January 18, 2002 acquisition of the FPGA
business of Agere Systems, Inc., and approximately $81.1 million
in Goodwill and $61.6 million of other intangible assets, net,
related to previous acquisitions. The other intangible assets will
be amortized to expense generally over three to seven years.
Goodwill is not amortized effective with the March 2002 quarter.
Appendix 1
Lattice Semiconductor Corporation
Consolidated Operations Information- Non-GAAP Basis (1)
(in thousands, except per share data)
(unaudited)
Three months ended
------------------------------
Mar. 31, Dec. 31, Mar. 31,
Description 2003 2002 2002
- --------------------------------------- ----------- -------- ---------
Revenue $58,311 $57,710 $58,878
Costs and expenses:
Costs of products sold 23,208 23,019 23,606
Research and development 21,832 21,790 21,385
Selling, general and administrative 12,483 12,309 11,858
----------- -------- ---------
Total costs and expenses 57,523 57,118 56,849
----------- -------- ---------
Income from operations 788 592 2,029
Other income (loss), net 1,491 2,253 (1,901)
----------- -------- ---------
Income before provision
for income taxes 2,279 2,845 128
Provision for income taxes -- 740 33
Tax shield (2) -- 4,250 3,923
----------- -------- ---------
Non-GAAP earnings $2,279 $6,355 $4,018
=========== ======== =========
Diluted Non-GAAP earnings per share (3) $0.02 $0.06 $0.04
=========== ======== =========
Shares used in calculations 113,098 112,876 112,971
=========== ======== =========
Notes:
(1) This table presents operating information which is consistent with
the information reported by First Call, IBES and Zacks for Lattice
Semiconductor Corporation. A reconciliation to GAAP on a per share
basis is attached as Appendix 2.
(2) Tax Shield represents the current period tax deduction available
from amortizing gross goodwill and other intangible assets
(approximately $750 million as of December 31, 2002) over 15 years
on a straight line basis using a 34% tax rate. As of the March 31,
2003 quarter, we are no longer reporting a Tax Shield.
(3) For all periods presented, the computation of diluted Non-GAAP
earnings includes the effect of stock options but excludes the
effect of our convertible notes as they are antidilutive.
Appendix 2
Lattice Semiconductor Corporation
Non-GAAP Earnings Reconciliation (1)
(unaudited)
Three months ended
--------------------------
Mar. 31, Dec. 31, Mar. 31,
Description 2003 2002 2002
- ---------------------------------------------------- -------- --------
Net loss ($0.17) ($1.14) ($0.23)
Add:
Amortization of intangible assets $0.19 $0.12 $0.10
In-process research and development (2) -- -- $0.13
Valuation allowance for deferred tax assets
(3) -- $1.00 --
Tax shield (4) -- $0.04 $0.03
Difference in effective tax rate (5) -- $0.04 $0.01
-------- -------- --------
Non-GAAP income $0.02 $0.06 $0.04
======== ======== ========
Notes:
(1) This table reconciles net income (loss) to non-GAAP information,
which is presented in Appendix 1, on a per-share basis.
(2) Represents write-off of in-process research and development in
conjunction with the January 18, 2002 acquisition of the FPGA
business of Agere Systems, Inc.
(3) In the quarter ended December 31, 2002, we recorded a tax charge
of $118.6 million, representing a 100% valuation allowance on our
recorded deferred tax assets, in accordance with the provisions of
Statement of Financial Accounting Standards No. 109.
(4) Tax Shield represents the current period tax deduction available
from amortizing gross goodwill and other intangible assets
(approximately $750 million as of December 31, 2002) over 15 years
on a straight line basis using a 34% tax rate. As of the March 31,
2003 quarter, we are no longer reporting a Tax Shield.
(5) The effective tax rate is the ratio of income tax expense to
pretax income. The rates presented in the non-GAAP information
presentation for the quarters ended December 31, 2002 and March
31, 2002, are different from the rates in the Statement of
Operations, due primarily to the difference in the proportion of
taxable income derived from operations.
Appendix 3
LATTICE SEMICONDUCTOR CORPORATION
- Supplemental Historic Financial Information -
(Q1 2003)
Operations Information Q103 Q402 Q102
----------- ----------- -----------
Percent of Revenue
Gross Margin 60.2% 60.1% 59.9%
R&D Expense 37.4% 37.8% 36.3%
SG&A Expense 21.4% 21.3% 20.1%
Operating (Loss) Income -34.9% -31.5% -69.3%
Operating Income (Non-GAAP) 1.4% 1.0% 3.4%
Depreciation Expense ($000) 4,742 4,856 4,699
Capital Expenditures ($000) 3,211 3,781 4,707
Balance Sheet Information Q103 Q402 Q102
----------- ----------- -----------
Current Ratio 7.4 8.6 6.7
A/R Days Revenue Outstanding 48 42 57
Inventory Months 6.7 7.3 8.1
Revenue % (by Product Family) Q103 Q402 Q102
----------- ----------- -----------
FPGA 14% 16% 8%
CPLD 70% 68% 71%
SPLD 16% 16% 21%
Revenue % (by Geography) Q103 Q402 Q102
----------- ----------- -----------
Americas 41% 42% 48%
Europe (incl. Africa) 29% 23% 29%
Asia (incl. ROW) 30% 35% 23%
Revenue % (by End Market) Q103 Q402 Q102
----------- ----------- -----------
Communications 44% 45% 46%
Computing 21% 26% 27%
Other 35% 29% 27%
Revenue % (by Channel) Q103 Q402 Q102
----------- ----------- -----------
Direct 54% 55% 50%
Distribution 46% 45% 50%
CONTACT: Lattice Semiconductor Corporation
Roddy Sloss, 503/268-8000