Lattice Semiconductor Reports First Quarter Financial Results.Business Editors HILLSBORO Hillsboro, city (1990 pop. 37,520), seat of Washington co., NW Oreg., in the Tualatin valley; inc. 1876. Integrated circuits, other high-tech products, furniture, plastics, and medical equipment are manufactured in this growing city in Oregon's "Sunset Corridor. , Ore.--(BUSINESS WIRE)--April 22, 2004 Lattice Semiconductor Lattice Semiconductor Corporation (NASDAQ: LSCC) is a United States based manufacturer of high-performance programmable logic devices (FPGAs, CPLDs, & SPLDs). The Oregon based company is the number four ranked company in world market share for FPGA devices,[1] Corporation (Nasdaq:LSCC LSCC Lake-Sumter Community College (Florida) LSCC Lattice Semiconductor Corporation (stock symbol) LSCC Lawson State Community College (Alabama) ) today announced financial results for the first quarter ended March 2004. Revenue for the first quarter was $59.1 million, an increase of 12 percent from last quarter's revenue of $52.8 million and up three percent from the $57.3 million reported in the same quarter a year ago. Beginning this quarter, the Company will provide product revenue detail for only two categories: FPGA (Field Programmable Gate Array) A type of gate array that is programmed in the field rather than in a semiconductor fab. Containing up to hundreds of thousands of gates, there are a variety of FPGA architectures on the market. and PLD (Programmable Logic Device) Refers to a variety of logic chips that are programmable at the customer's site, the customer being the vendor of the finished chip, not the end user. . PLD product revenue includes revenue from CPLD (Complex PLD) A programmable logic device that is made up of several simple PLDs (SPLDs) with a programmable switching matrix in between the logic blocks. CPLDs typically use EEPROM, flash memory or SRAM to hold the logic design interconnections. See PLD and SPLD. and SPLD (Simple PLD) A programmable logic device that provides a small logic block that can be programmed. The logic block typically contains a handful of macrocells, which have multiple inputs and the ability to perform a limited amount of logic. products. Quarterly revenue from FPGA products was $11.4 million, or 19 percent of total revenue, and grew 10 percent sequentially. Quarterly revenue from PLD products was $47.7 million, or 81 percent of total revenue, and grew over 12 percent sequentially. Net loss for the first quarter was $16.5 million ($0.15 per share). This loss includes $18.7 million of charges for amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. . Excluding these charges, income for the quarter was $2.1 million ($0.02 per share). These non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. have been highlighted here as they are not expected to continue at these levels beyond June June: see month. 2004 and are currently expected to be eliminated in 2009. The Company believes exclusion of these charges more closely approximates its cash earnings performance. A reconciliation of non-GAAP income to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). loss accompanies the financial tables in this earnings release. "During the first quarter, the programmable logic See PLD. market experienced a strong recovery," stated Cyrus Y. Tsui, chairman and chief executive officer. "Due to these favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. conditions we posted very strong sequential quarterly revenue growth. However, these historically high growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. are not sustainable going forward. During the ensuing en·sue intr.v. en·sued, en·su·ing, en·sues 1. To follow as a consequence or result. See Synonyms at follow. 2. To take place subsequently. year we will remain steadfastly focused on executing our product development strategy and introducing our next generation FPGA product families." Business Outlook - June 2004 Quarter: -- Revenue is expected to grow approximately 3 to 5 percent on a sequential basis; -- Gross margin percent is expected to be in the same range as the March 2004 quarter; -- Total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. are expected to be approximately flat; -- Intangible asset amortization is expected to decrease by approximately $1 million; -- Other Income is expected to be approximately $3 million; and -- We do not anticipate reporting a tax provision. On April 23, 2004, Lattice (theory) lattice - A partially ordered set in which all finite subsets have a least upper bound and greatest lower bound. This definition has been standard at least since the 1930s and probably since Dedekind worked on lattice theory in the 19th century; though he may not will hold a telephone conference call at 5:30 am (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 10, 2004, 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 June 2004 quarter, Lattice plans to participate in investor conferences sponsored by the JP Morgan Morgan, American family of financiers and philanthropists. Junius Spencer Morgan, 1813–90, b. West Springfield, Mass., prospered at investment banking. and Smith Barney Smith Barney is a division of Citigroup Global Capital Markets Inc., a global, full-service financial firm, that provides brokerage, investment banking and asset management services to corporations, governments and individuals around the world. Citigroup. Specific presentation dates and times are posted on our website at www.lscc.com. The foregoing paragraphs contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the federal securities laws including statements about future quarterly financial results, revenues, customers, product offerings and the Company's 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 the possibility that further accounting adjustments may be required and the effectiveness of changes to the Company's internal controls, as well as overall semiconductor market conditions, market acceptance and demand for the Company's new products, the Company's dependencies on our silicon wafer (1) A small, thin continuous-loop magnetic tape cartridge that has been used from time to time for data storage and specialized applications. (2) The base unit of chip making. It is a slice taken from a salami-like silicon crystal ingot up to 12" (300mm) in diameter. suppliers, the impact of competitive products and pricing, technological and product development risks. The Company does not intend to update or revise any forward looking statements, whether as a result of events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" or to reflect the occurrence of unanticipated events. Lattice Semiconductor Corporation, the inventor INVENTOR. One who invents or finds out something. 2. The patent laws of the United States authorize a patent to be issued to the original inventor; if the invention is suggested by another, he is not the inventor within the meaning of those laws; but in that of in-system programmable Refers to programmable logic chips (PLDs) that are programmed after they are attached to the circuit board. Also called "in-circuit programmable," devices that use static RAM (SRAM) are in-system programmable by nature because they are loaded at startup. See PLD. (ISP (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. (TM)) logic products, designs, develops and markets the broadest range of Field Programmable Gate Arrays See FPGA. (FPGA), Field Programmable System Chips (FPSCs) and high-performance ISP Programmable Logic Devices See PLD. (PLDs), including Complex Programmable Logic Devices (hardware) complex programmable logic device - (CPLD) A programmable circuit similar to an FPGA, but generally on a smaller scale, invented by Xilinx, Inc. (CPLD), Programmable Analog Components (PAC PAC, see political action committee. (1) See perceptual audio coding. (2) (Programmable Automation Controller) A programmable microprocessor-based device that is used for discrete manufacturing, process control ), and Programmable Digital Interconnect (1) To attach one device to another. (2) A physical port (plug, socket) or wireless port (transmitter, receiver) used to attach one device to another. (GDX GDX Magadan, Russia - Magadan (Airport Code) GDX Gamma Delta Chi (fraternity) GDX Generic Digital Crosspoint ). Lattice also offers industry leading SERDES See serializer/deserializer. products. Lattice offers total solutions for today's system designs by delivering the most innovative programmable silicon products that embody em·bod·y tr.v. em·bod·ied, em·bod·y·ing, em·bod·ies 1. To give a bodily form to; incarnate. 2. To represent in bodily or material form: leading-edge system expertise. Lattice products are sold worldwide through an extensive network of independent sales representatives and distributors, primarily to OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and customers in the communications, computing computing - computer , industrial and military end markets. Company headquarters are located at 5555 N.E. Moore Moore, city (1990 pop. 40,761), Cleveland co., central Okla., a suburb of Oklahoma City; inc. 1887. Its manufactures include lightning- and surge-protection equipment, packaging for foods, and auto parts. Court, Hillsboro, Oregon Hillsboro is a city in and county seat of Washington County, Oregon, United States.GR6 The community began in 1842 and was named Hillsborough in 1850, before incorporation in 1876 as Hillsboro. 97124 USA. For more information access our web site at www.latticesemi.com. Lattice Semiconductor Corporation, L (& design), Lattice (& design) ISP and specific product designations are either registered trademarks or trademarks of Lattice Semiconductor Corporation or its subsidiaries in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. 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 2004 2003 2003
---------------------------------------------------------------------
Revenue $59,071 $52,757 $57,297
Costs and expenses:
Costs of products sold 24,719 23,814 23,028
Research and development 22,259 22,385 21,832
Selling, general and administrative 13,087 13,562 12,483
Amortization of intangible assets
(1)(2) 18,654 18,661 21,114
-----------------------------
Total costs and expenses 78,719 78,422 78,457
-----------------------------
Loss from operations (19,648) (25,665) (21,160)
Other income, net 3,107 421 1,491
-----------------------------
Loss before (benefit) provision for
income taxes (16,541) (25,244) (19,669)
(Benefit) provision for income taxes -- -- --
-----------------------------
Net loss ($16,541) ($25,244) ($19,669)
=============================
Basic net loss per share ($0.15) ($0.22) ($0.18)
=============================
Diluted net loss per share ($0.15) ($0.22) ($0.18)
=============================
Shares used in per share calculations:
Basic 112,627 112,364 111,390
=============================
Diluted (3) 112,627 112,364 111,390
=============================
Notes:
(1) Intangible assets subject to amortization aggregate $66.8
million, net, at March 31, 2004 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.
(2) Includes $0.8 million, $0.8 million and $3.3 million of deferred
stock compensation expense for the quarters ended March 31, 2004,
December 31, 2003 and March 31, 2003, respectively, attributable to
Research and Development activities.
(3) 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 2004 2003
----------------------------------------------------------- ---------
Assets
Current assets:
Cash and short-term investments $298,548 $277,750
Accounts receivable, net 26,013 26,796
Inventories 44,312 46,630
Other current assets 57,575 51,537
--------- ---------
Total current assets 426,448 402,713
Property and equipment, net 51,313 53,800
Foundry investments, advances and other assets 74,293 86,883
Goodwill and other intangible assets, net (1) 290,384 308,232
--------- ---------
$842,438 $851,628
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued liabilities $31,729 $28,500
Deferred income on sales to distributors 13,847 10,564
Income taxes payable 126 37
--------- ---------
Total current liabilities 45,702 39,101
Zero Coupon Convertible notes due in 2010 184,000 184,000
Other long-term liabilities 22,699 22,415
--------- ---------
206,699 206,415
Stockholders' equity 590,037 606,112
--------- ---------
$842,438 $851,628
========= =========
Note:
(1) At March 31, 2004, includes approximately $8.5 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
$47.7 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 $10.6 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 2004 2003 2003
---------------------------------------------------------------------
Revenue $59,071 $52,757 $57,297
Costs and expenses:
Costs of products sold 24,719 23,814 23,028
Research and development 22,259 22,385 21,832
Selling, general and administrative 13,087 13,562 12,483
--------------------------
Total costs and expenses 60,065 59,761 57,343
--------------------------
Loss from operations (994) (7,004) (46)
Other income, net 3,107 421 1,491
--------------------------
Income (loss) before provision (benefit)
for income taxes 2,113 (6,583) 1,445
Provision (benefit) for income taxes -- -- --
--------------------------
Non-GAAP earnings (loss) $2,113 ($6,583) $1,445
==========================
Diluted Non-GAAP earnings (loss) per share
(2) $0.02 ($0.06) $0.01
==========================
Shares used in calculations 117,795 112,364 113,098
==========================
Notes:
(1) This table presents operating information which is consistent
with the information reported by First Call, Reuters and Zacks for
Lattice Semiconductor Corporation. A reconciliation to GAAP on a
per share basis is attached as Appendix 2.
(2) For the three months ended March 31, 2004 and March 31, 2003,
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 December 31, 2003,
the computation of diluted Non-GAAP loss excludes the effect of both
stock options and 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 2004 2003 2003
---------------------------------------------------------------------
Net loss ($0.15) ($0.22) ($0.18)
Add:
Amortization of intangible assets $0.17 $0.16 $0.19
--------------------------
Non-GAAP income (loss) $0.02 ($0.06) $0.01
==========================
Notes:
(1) This table reconciles net income (loss) to non-GAAP
information, which is presented in Appendix 1, on a per-share basis.
Appendix 3
LATTICE SEMICONDUCTOR CORPORATION
- Supplemental Historic Financial Information -
(Q1 2004)
Operations Information Q104 Q403 Q103
--------------------
Percent of Revenue
Gross Margin 58.2% 54.9% 59.8%
R&D Expense 37.7% 42.4% 38.1%
SG&A Expense 22.2% 25.7% 21.8%
Operating Loss -33.3% -48.6% -36.9%
Operating Loss (Non-GAAP) -1.7% -13.3% -0.1%
Depreciation Expense ($000) 4,498 4,598 4,742
Capital Expenditures ($000) 2,022 1,808 3,211
Balance Sheet Information
Current Ratio 9.3 10.3 7.2
A/R Days Revenue Outstanding 40 46 49
Inventory Months 5.4 5.9 6.7
Revenue % (by Product Family)
FPGA 19% 20% 15%
CPLD 67% 67% 70%
SPLD 14% 13% 15%
Revenue % (by Product Classification(a))
New 13% 14%
Mainstream 43% 42%
Mature 44% 44%
Revenue % (by Geography)
Americas 36% 36% 37%
Europe (incl. Africa) 24% 22% 31%
Asia (incl. ROW) 40% 42% 32%
Revenue % (by End Market)
Communications 53% 51% 44%
Computing 19% 21% 21%
Other 28% 28% 35%
Revenue % (by Channel)
Direct 58% 61% 55%
Distribution 42% 39% 45%
(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
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