Exhibit 99.1
Lattice Semiconductor Reports Third Quarter Results
HILLSBORO, Ore.--(BUSINESS WIRE)--Oct. 20, 2003--Lattice
Semiconductor Corporation (Nasdaq:LSCC) today announced financial
results for the third quarter of 2003.
Revenue for the quarter was $51.0 million, down 12 percent from
the $58.2 million reported last quarter and a decrease of nine percent
from the $56.1 million reported in the same quarter a year ago.
Quarterly revenue from FPGA products was $9.2 million, an increase
of three percent from last quarter, while quarterly revenue from high
density CPLD products was $34.8 million, down 14 percent from last
quarter.
New product revenue grew 41 percent sequentially and now accounts
for 12 percent of total quarterly revenue. Mainstream product revenue
declined four percent sequentially and now accounts for 44 percent of
quarterly revenue, while Mature product revenue declined 27 percent
sequentially and now accounts for 44 percent of quarterly revenue.
On a GAAP basis, net loss for the quarter was $21.9 million ($0.20
per share). This loss includes an $18.7 million charge for
amortization of intangible assets.
Non-GAAP loss for the quarter was $3.2 million ($0.03 per share).
This loss includes a $5.7 million non-recurring charge associated with
the early call of our previously outstanding 4 3/4 percent convertible
notes. Non-GAAP earnings exclude non-cash acquisition related
amortization expenses and more closely approximates our cash earnings
performance. A reconciliation of non-GAAP to GAAP earnings accompanies
the financial tables in this earnings release.
"While disappointed with our overall revenue performance last
quarter, we remain encouraged about the acceptance of our new
products," stated Cyrus Y. Tsui, chairman and chief executive officer.
"Our recently introduced products once again generated a record level
of design activity during the last quarter and continue to be well
received by our worldwide customer base. These new products now
account for over 50 percent of our new design-ins. Unfortunately the
sequential revenue growth of our new products and our FPGA business
was more than offset by the sequential revenue decline of our mature
product families."
Business Outlook - December 2003 Quarter:
-- Revenue is expected to be approximately flat.
-- Gross margins are expected to be approximately flat as a
percentage of revenue.
-- Total operating expenses are expected to be approximately
flat.
-- Other Income is expected to be approximately $400 thousand.
-- We do not anticipate reporting a tax provision.
On October 21, 2003, Lattice will hold a telephone conference call
at 5:30 am (Pacific Time) with financial analysts. Investors may
listen to our conference call via the web at www.ccbn.com. Both the
conference call and our business outlook statement will be available
on our website, www.lscc.com. On December 11, 2003, 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. Additionally, during the
December 2003 quarter, Lattice plans to participate in investor
conferences sponsored by the American Electronics Association, JP
Morgan and Morgan Stanley. 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, 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 Field Programmable Gate Arrays
(FPGAs) and Field Programmable System Chips (FPSCs) and
high-performance ISP(TM) programmable logic devices (PLDs).
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 Nine months ended
------------------ -----------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
Description 2003 2003 2002 2003 2002
- --------------------- --------- -------- --------- --------- ---------
Revenue $51,038 $58,178 $56,072 $167,527 $171,416
Costs and expenses:
Costs of products
sold 20,662 23,289 22,429 67,159 68,527
Research and
development 21,173 21,702 21,523 64,707 63,986
Selling, general and
administrative 12,114 12,614 11,712 37,211 35,790
In-process research
and development (1) -- -- 5,653 -- 29,853
Amortization of
intangible assets
(2)(3) 18,665 18,687 18,070 58,466 54,616
--------------------------- --------- ---------
Total costs and
expenses 72,614 76,292 79,387 227,543 252,772
--------------------------- --------- ---------
Loss from operations (21,576) (18,114) (23,315) (60,016) (81,356)
Other (expense) income,
net (3,611) (1,365) 2,764 (3,485) 3,941
--------------------------- --------- ---------
Loss before benefit for
income taxes (25,187) (19,479) (20,551) (63,501) (77,415)
Benefit for income
taxes (3,300) (2,554) (6,180) (5,854) (29,280)
--------------------------- --------- ---------
Net loss ($21,887)($16,925)($14,371) ($57,647) ($48,135)
=========================== ========= =========
Basic net loss per
share ($0.20) ($0.15) ($0.13) ($0.52) ($0.44)
=========================== ========= =========
Diluted net loss per
share ($0.20) ($0.15) ($0.13) ($0.52) ($0.44)
=========================== ========= =========
Shares used in per
share calculations:
Basic 111,840 111,507 110,232 111,615 109,855
=========================== ========= =========
Diluted (4) 111,840 111,507 110,232 111,615 109,855
=========================== ========= =========
Notes:
(1) Represents write-off of in-process research and development in
conjunction with the August 26, 2002, acquisition of Cerdelinx
Technologies, Inc. and the January 18, 2002, acquisition of
the FPGA business of Agere Systems, Inc.
(2) Intangible assets subject to amortization aggregate $102.5
million, net, at September 30, 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 $0.8 million of deferred stock compensation expense
for each of the quarters ended September 30, 2003, June 30,
2003, and September 30, 2002, respectively, and $4.9 million
and $1.9 million of deferred stock compensation expense for
the nine months ended September 30, 2003, and September 30,
2002, respectively, attributable to Research and Development
activities.
(4) 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.
Consolidated Balance Sheet
(in thousands)
(unaudited)
Sept. 30, Dec. 31,
Description 2003 2002
- ------------------------------------------------- --------- --------
Assets
Current assets:
Cash and short-term investments $278,754 $276,880
Accounts receivable, net 26,941 26,374
Inventories 47,942 56,241
Other current assets 12,617 35,033
--------- ---------
Total current assets 366,254 394,528
Property and equipment, net 56,520 62,786
Foundry investments, advances and other assets 124,670 104,507
Goodwill and other intangible assets, net (1) 326,071 379,442
--------- ---------
$873,515 $941,263
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued liabilities $28,846 $33,597
Deferred income on sales to distributors 6,361 11,983
Income taxes payable -- 142
--------- ---------
Total current liabilities 35,207 45,722
4 3/4% Convertible notes due in 2006 -- 208,061
Zero Coupon Convertible notes due in 2010 184,000 --
Other long-term liabilities 22,053 26,345
--------- ---------
206,053 234,406
Stockholders' equity 632,255 661,135
--------- ---------
$873,515 $941,263
========= =========
Note:
(1) At September 30, 2003, includes approximately $9.8 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 $56.7 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
$36.0 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 Nine months ended
------------------ -----------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
Description 2003 2003 2002 2003 2002
- --------------------- --------- -------- --------- --------- ---------
Revenue $51,038 $58,178 $56,072 $167,527 $171,416
Costs and expenses:
Costs of products
sold 20,662 23,289 22,429 67,159 68,527
Research and
development 21,173 21,702 21,523 64,707 63,986
Selling, general and
administrative 12,114 12,614 11,712 37,211 35,790
------------------------ ------------------
Total costs and
expenses 53,949 57,605 55,664 169,077 168,303
------------------------ ------------------
(Loss) income from
operations (2,911) 573 408 (1,550) 3,113
Other (expense) income,
net (3,611) (1,365) 2,764 (3,485) 3,941
------------------------ ------------------
(Loss) income before
(benefit) provision
for income taxes (6,522) (792) 3,172 (5,035) 7,054
(Benefit) provision for
income taxes (3,300) (2,554) 825 (5,854) 1,834
Tax shield (2) -- -- 4,250 -- 12,423
------------------------ ------------------
Non-GAAP (loss)
earnings ($3,222) $1,762 $6,597 $819 $17,643
======================== ==================
Diluted Non-GAAP (loss)
earnings per share (3) ($0.03) $0.02 $0.06 $0.01 $0.16
======================== ==================
Shares used in
calculations 111,840 113,405 110,683 112,918 111,760
======================== ==================
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 the three months ended June 30, 2003, and September 30,
2002, and for the nine months ended September 30, 2003 and
2002, respectively, 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. For
the three months ended September 2003, the computation of
diluted Non-GAAP loss excludes the effect of both stock
options and our convertible notes as they are antidilutive.
Appendix 2
Lattice Semiconductor Corporation
Non-GAAP Earnings Reconciliation (1)
(unaudited)
Three months ended Nine months ended
------------------ -----------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
Description 2003 2003 2002 2003 2002
- -------------------- --------- -------- --------- --------- ---------
Net loss ($0.20) ($0.15) ($0.13) ($0.52) ($0.44)
Add:
Amortization of
intangible assets $0.17 $0.17 $0.10 $0.53 $0.31
In-process research
and development (2) -- -- $0.04 -- $0.17
Tax shield (3) -- -- $0.04 -- $0.11
Difference in effective
tax rate (4) -- -- $0.01 -- $0.01
-------------------------- ---------------
Non-GAAP (loss)
income ($0.03) $0.02 $0.06 $0.01 $0.16
========================= ===============
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 August 26, 2002 acquisition of Cerdelinx
Technologies, Inc. and the January 18, 2002, acquisition of
the FPGA business of Agere Systems, Inc.
(3) 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.
(4) The effective tax rate is the ratio of income tax expense to
pretax income. The rate for the three and nine months ended
September 30, 2002, presented in the non-GAAP information
presentation is different from the rates in the Statement of
Operations, due to the difference in the proportion of taxable
income derived from operations.
Appendix 3
LATTICE SEMICONDUCTOR CORPORATION
- Supplemental Historic Financial Information -
(Q3 2003)
Operations Information Q303 Q203 Q302
------------------------------
Percent of Revenue
Gross Margin 59.5% 60.0% 60.0%
R&D Expense 41.5% 37.3% 38.4%
SG&A Expense 23.7% 21.7% 20.9%
Operating (Loss) Income -42.3% -31.1% -41.6%
Operating (Loss) Income (Non-GAAP) -5.7% 1.0% .7%
Depreciation Expense ($000) 4,658 4,603 4,841
Capital Expenditures ($000) 2,300 2,504 4,494
Balance Sheet Information
Current Ratio 10.4 14.0 8.0
A/R Days Revenue Outstanding 48 45 45
Inventory Months 7.0 6.2 8.1
Revenue % (by Product Family)
FPGA 18% 16% 13%
CPLD 68% 69% 69%
SPLD 14% 15% 18%
Revenue % (by Product Classification (a) )
New 12% 8%
Mainstream 44% 40%
Mature 44% 52%
Revenue % (by Geography)
Americas 37% 41% 43%
Europe (incl. Africa) 23% 26% 26%
Asia (incl. ROW) 40% 33% 31%
Revenue % (by End Market)
Communications 49% 52% 43%
Computing 22% 21% 27%
Other 29% 27% 30%
Revenue % (by Channel)
Direct 56% 52% 50%
Distribution 44% 48% 50%
(a) Product Classification:
---------------------------
New: FPSC, XPLD, XPGA, GDX2, ORCA 4, ispMACH 4000,
ispMACH 4000 Z, ispPAC-PWR
Mainstream: ORCA 3, GDX/V, ispMACH L/V, ispLSI 2000V, ispLSI
5000V, ispLSI 8000V, ispMACH 5000VG, Mixed Signal,
Software
Mature: ORCA 2, All 5-Volt CPLDs, All SPLDs
CONTACT: Lattice Semiconductor Corporation, Hillsboro
Roddy Sloss, 503-268-8000