Lattice Semiconductor Reports Fourth Quarter and 2003 Year End Financial Results and Restatement Of First, Second and Third Quarter 2003 Financial Statements.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)--March 24, 2004 Company reiterates first quarter 2004 business outlook 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 fourth quarter and year ended December December: see month. 2003. In addition, the Company announced that it has completed a review of its deferred income accounting. Deferred income is the balance sheet account which represents the estimated future gross margin, including credits that may be due, related to inventory held by the Company's distributors that is expected to be either resold to end users or returned to the Company for a credit. As the Company's distributors have price protection and limited return rights, the Company's policy is to defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. recognition of revenue for sales through distribution until the distributor resells the Company's products to an end customer. However, upon shipment of product to distributors, the Company records a receivable and credits deferred income while also relieving re·lieve tr.v. re·lieved, re·liev·ing, re·lieves 1. To cause a lessening or alleviation of: relieved all his symptoms; relieved the tension. 2. its inventory account and offsetting the cost of inventory shipped against deferred income. The receivable and deferred income accounts are also adjusted for estimated credits that may be due distributors. As previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). , the Company has concluded that its deferred income account became overdepleted during 2003. After review by the Audit Committee and the Company's independent auditor Independent Auditor An external auditor with a certified public accounting designation that qualifies him or her to provide an auditor's report. Notes: These auditors aren't affiliated with the company being audited. , the Company has determined restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of the March, June June: see month. and September September: see month. quarter 2003 financial statements is necessary to correct errors and a failure to record a change in accounting estimate related to deferred income. The restatement resulted from inappropriate inappropriate Medtalk adjective A diagnostic or therapeutic procedure proven to be unnecessary for the efficient management of a particular Pt. See Appropriateness, Canadian plan, Practice guidelines Neurology adjective Referring to a response or behavior accounting entries made by an individual in the Company's finance department and deficiencies in the design and operation of internal accounting controls related to the deferred income account. For the September 2003 quarter, the restatement: -- reduces revenue, originally reported as $51.0 million, by $8.0 million to $43.0 million; -- reduces cost of sales, originally reported as $20.7 million, by $1.2 million to $19.4 million; -- increases net loss, originally reported as $21.9 million ($0.20 per share), by $6.8 million ($0.06 per share) to $28.7 million ($0.26 per share); -- increases the originally reported deferred income balance sheet account by $3.4 million to $9.8 million -- increases the originally reported accounts payable and other accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. balance sheet account by $5.5 million to $34.4 million; and -- reduces the originally reported retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. balance sheet account by $8.9 million to $28.6 million. For the June 2003 quarter, the restatement: -- reduces revenue, originally reported as $58.2 million, by $1.6 million to $56.6 million; -- reduces cost of sales, originally reported as $23.3 million, by $0.3 million to $23.0 million; -- increases net loss, originally reported as $16.9 million ($0.15 per share), by $1.3 million ($0.01 per share) to $18.2 million ($0.16 per share); -- increases the originally reported deferred income balance sheet account by $0.8 million to $9.6 million; -- increases the originally reported accounts payable and other accrued liabilities balance sheet account by $1.3 million to $32.5 million; and -- reduces the originally reported retained earnings balance sheet account by $2.1 million to $57.3 million. For the March 2003 quarter, the restatement: -- reduces revenue, originally reported as $58.3 million, by $1.0 million to $57.3 million; -- reduces cost of sales, originally reported as $23.2 million, by $0.2 million to $23.0 million; -- increases net loss, originally reported as $18.8 million ($0.17 per share), by $0.8 million ($0.01 per share) to $19.7 million ($0.18 per share); -- increases the originally reported deferred income balance sheet account by $0.8 million to $13.9 million; and -- reduces the originally reported retained earnings balance sheet account by $0.8 million to $75.5 million. Revenue for the fourth quarter was $52.8 million. Quarterly revenue from 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. products was $10.4 million, or 20 percent of total revenue, while revenue from high density 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. products was $35.6 million. New product revenue accounted for 14 percent of total quarterly revenue. Net loss for the fourth quarter was $25.2 million ($0.22 per share). This loss includes an $18.7 million charge 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, the net loss for the quarter was $6.6 million ($0.06 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 2004 and are currently expected to be eliminated in 2007. The Company believes exclusion exclusion /ex·clu·sion/ (eks-kloo´zhun) 1. a shutting out or elimination. 2. surgical isolation of a part, as of a segment of intestine, without removal from the body. of these charges more closely approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. its cash earnings performance. A reconciliation of non-GAAP to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). loss accompanies the financial tables in this earnings release. For the year 2003, revenue was $209.7 million, a decrease of eight percent from the $229.1 million reported for 2002. Net loss for 2003 was $91.8 million ($0.82 per share), as compared to the net loss of $175.2 million ($1.59 per share) reported for 2002. Net loss for 2003, adjusted for amortization of intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. assets of $77.1 million, was $14.7 million ($0.13 per share) compared to adjusted earnings of $24.0 million ($0.21 per share) reported for 2002. The Company currently anticipates filing amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. for the first, second and third quarters of 2003, which will contain the restated financial results discussed above, and its 2003 Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. by April 2, 2004. "We are disappointed with the restatement of our 2003 quarterly financial results", stated Cyrus Cy·rus Known as "the Younger." 424?-401 b.c. Persian prince who led a mammoth force of Greeks against his brother Artaxerxes II. Y. Tsui, chairman and chief executive officer. "However, we have performed an accounting review, made improvements in our method of accounting for Deferred Income and are pursuing improvements in our internal controls under the guidance of our Audit Committee." Separately, the Company reiterated its business outlook for the March 2004 quarter: -- Revenue is expected to be grow 10 to 13 percent on a sequential One after the other in some consecutive order such as by name or number. basis. -- Gross margins are expected to be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 57 to 58 percent of revenue. -- 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 $35 million. -- Other income is expected to be approximately $2.5 to $3.0 million, including a gain on the sale of foundry A semiconductor manufacturer that makes chips for third parties. It may be a large chip maker that sells its excess manufacturing capacity or one that makes chips exclusively for other companies. investments. -- No tax provision is anticipated. On March 24, 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 2:30 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. 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 the anticipated filing date of the Company's 10-K and amended 10-Q, 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 Company's ability to file its 10-K and amended 10-Q reports by April 2, 2004, 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 Adj. 1. high-performance - modified to give superior performance; "a high-performance car" superior - of high or superior quality or performance; "superior wisdom derived from experience"; "superior math students" 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 and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. other countries.
Lattice Semiconductor Corporation
Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
Three months ended Year ended
--------------------------------- ----------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
Description 2003 2003 2002 2003 2002
------------------------ ---------- ----------- ---------- -----------
(Restated)
Revenue $ 52,757 $ 43,033 $ 57,710 $ 209,662 $ 229,126
Costs and
expenses:
Costs of
products
sold 23,814 19,431 23,019 89,266 91,546
Research and
develop-
ment 22,385 21,173 21,790 87,092 85,776
Selling,
general and
adminis-
trative 13,562 12,114 12,309 50,773 48,099
In-process
research
and
develop-
ment (1) -- -- -- -- 29,853
Amorti-
zation of
intangible
assets (2)(3) 18,661 18,665 18,799 77,127 73,415
--------- --------- ---------- --------- ----------
Total costs
and
expenses 78,422 71,383 75,917 304,258 328,689
--------- --------- ---------- --------- ----------
Loss from
operations (25,665) (28,350) (18,207) (94,596) (99,563)
Other income
(expense),
net 421 (3,611) 2,253 (3,064) 6,194
--------- --------- ---------- --------- ----------
Loss before
(benefit)
provision
for income
taxes (25,244) (31,961) (15,954) (97,660) (93,369)
(Benefit)
provision for
income taxes -- (3,300) 111,146 (5,854) 81,866
--------- --------- ---------- --------- ----------
Net loss ($25,244) ($28,661) ($127,100) ($91,806) ($175,235)
========= ========= ========== ========= ==========
Basic net loss
per share ($0.22) ($0.26) ($1.14) ($0.82) ($1.59)
========= ========= ========== ========= ==========
Diluted net
loss per
share ($0.22) ($0.26) ($1.14) ($0.82) ($1.59)
========= ========= ========== ========= ==========
Shares used in
per share
calculations:
Basic 112,364 111,840 111,311 111,794 110,193
========= ========= ========== ========= ==========
Diluted (4) 112,364 111,840 111,311 111,794 110,193
========= ========= ========== ========= ==========
Notes:
(1) Represents write-off of in-process research and development in
conjunction with the Aug. 26, 2002, acquisition of Cerdelinx
Technologies, Inc. and the Jan. 18, 2002, acquisition of the FPGA
business of Agere Systems, Inc.
(2) Intangible assets subject to amortization aggregate $84.6 million,
net, at Dec. 31, 2003, and relate to the acquisition of Cerdelinx
Technologies, Inc. on Aug. 26, 2002, the acquisition of the FPGA
business of Agere Systems, Inc. on Jan. 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, $0.8 million and $1.1 million of deferred
stock compensation expense for the quarters ended Dec. 31, 2003,
Sept. 30, 2003, and Dec. 31, 2002, respectively, and $5.7 million
and $2.9 million of deferred stock compensation expense for the
years ended Dec. 31, 2003, and Dec. 31, 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.
Lattice Semiconductor Corporation
Consolidated Balance Sheet
(in thousands)
(unaudited)
Dec. 31, Dec. 31,
Description 2003 2002
------------------------------------------------- -------- --------
Assets
Current assets:
Cash and short-term investments $277,750 $276,880
Accounts receivable, net 26,796 26,374
Inventories 46,630 56,241
Other current assets 51,537 35,033
-------- --------
Total current assets 402,713 394,528
Property and equipment, net 53,800 62,786
Foundry investments, advances and other assets 86,883 104,507
Goodwill and other intangible assets, net (1) 308,232 379,442
-------- --------
$851,628 $941,263
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued
liabilities $ 28,500 $ 33,597
Deferred income on sales to distributors 10,564 11,983
Income taxes payable 37 142
-------- --------
Total current liabilities 39,101 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 22,415 26,345
-------- --------
206,415 234,406
Stockholders' equity 606,112 661,135
-------- --------
$851,628 $941,263
======== ========
Note:
(1) At Dec. 31, 2003, includes approximately $9.2 million of other
intangible assets, net, recorded in the September 2002 quarter in
connection with the Aug. 26, 2002, acquisition of Cerdelinx
Technologies, Inc. Also includes $142.5 million in Goodwill and
$52.2 million of other intangible assets, net, recorded in the
March 2002 quarter in connection with the Jan. 18, 2002,
acquisition of the FPGA business of Agere Systems, Inc., and
approximately $81.1 million in Goodwill and $23.3 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 Year ended
------------------------------ --------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
Description 2003 2003 2002 2003 2002
------------------ --------- ---------- --------- ---------- ---------
(Restated)
Revenue $ 52,757 $ 43,033 $ 57,710 $ 209,662 $229,126
Costs and
expenses:
Costs of
products sold 23,814 19,431 23,019 89,266 91,546
Research and
development 22,385 21,173 21,790 87,092 85,776
Selling,
general and
administrative 13,562 12,114 12,309 50,773 48,099
-------- --------- -------- --------- --------
Total costs
and
expenses 59,761 52,718 57,118 227,131 225,421
-------- --------- -------- --------- --------
(Loss) income from
operations (7,004) (9,685) 592 (17,469) 3,705
Other income
(expense), net 421 (3,611) 2,253 (3,064) 6,194
-------- --------- -------- --------- --------
(Loss) income
before (benefit)
provision for
income taxes (6,583) (13,296) 2,845 (20,533) 9,899
(Benefit)
provision for
income taxes -- (3,300) 740 (5,854) 2,574
Tax shield (2) -- -- 4,250 -- 16,673
-------- --------- -------- --------- --------
Non-GAAP (loss)
earnings ($6,583) ($9,996) $ 6,355 ($14,679) $ 23,998
======== ========= ======== ========= ========
Diluted Non-GAAP
(loss) earnings
per share (3) ($0.06) ($0.09) $ 0.06 ($0.13) $ 0.21
======== ========= ======== ========= ========
Shares used in
calculations 112,364 111,840 112,876 111,794 111,889
======== ========= ======== ========= ========
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 Dec. 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 and year ended Dec. 31, 2002, 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 all 2003 periods presented, 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 Year ended
---------------------------- -----------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
Description 2003 2003 2002 2003 2002
----------------------- -------- ---------- -------- -------- --------
(Restated)
Net loss ($0.22) ($0.26) ($1.14) ($0.82) ($1.59)
Add:
Amortization of
intangible assets $ 0.16 $ 0.17 $ 0.12 $ 0.69 $ 0.40
In-process research and
development (2) -- -- -- -- $ 0.19
Valuation allowance for
deferred tax assets
(3) -- -- $ 1.00 -- $ 1.01
Tax shield (4) -- -- $ 0.04 -- $ 0.15
Difference in effective
tax rate (5) -- -- $ 0.04 -- $ 0.05
------- ------- ------- ------- -------
Non-GAAP (loss) income ($0.06) ($0.09) $ 0.06 ($0.13) $ 0.21
======= ======= ======= ======= =======
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 Aug. 26, 2002, acquisition of Cerdelinx
technologies, Inc. and the Jan. 18, 2002, acquisition of the FPGA
business of Agere Systems, Inc.
(3) In the quarter ended Dec. 31, 2002, we recorded a tax provision of
$111.1 million, representing a 100% valuation allowance for 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 Dec. 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 rate for the three months and year ended Dec.
31, 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 -
(Q4 2003)
Operations Information Q403 Q303 Q402
------ ---------- ------
Percent of Revenue (Restated)
Gross Margin 54.9% 54.8% 60.1%
R&D Expense 42.4% 49.2% 37.8%
SG&A Expense 25.7% 28.2% 21.3%
Operating (Loss) Income -48.6% -65.9% -31.5%
Operating (Loss) Income (Non-GAAP) -13.3% -22.5% 1.0%
Depreciation Expense ($000) 4,598 4,658 4,856
Capital Expenditures ($000) 1,808 2,300 3,781
Balance Sheet Information
Current Ratio 10.3 8.3 8.6
A/R Days Revenue Outstanding 46 57 42
Inventory Months 5.9 7.6 7.3
Revenue % (by Product Family)
FPGA 20% 21% 16%
CPLD 67% 69% 68%
SPLD 13% 10% 16%
Revenue % (by Product Classification*)
New 14% 15%
Mainstream 42% 52%
Mature 44% 33%
Revenue % (by Geography)
Americas 36% 32% 42%
Europe (incl. Africa) 22% 21% 23%
Asia (incl. ROW) 42% 47% 35%
Revenue % (by End Market)
Communications 51% 49% 45%
Computing 21% 22% 26%
Other 28% 29% 29%
Revenue % (by Channel)
Direct 61% 67% 55%
Distribution 39% 33% 45%
* 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
Appendix 4
Lattice Semiconductor Corporation
Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
Three months ended
--------------------------------------
Sept. 30, June 30, Mar. 31,
Description 2003 2003 2003
----------------------------- ------------ ------------ ------------
(Restated) (Restated) (Restated)
Revenue $ 43,033 $ 56,575 $ 57,297
Costs and expenses:
Costs of products sold 19,431 22,993 23,028
Research and development 21,173 21,702 21,832
Selling, general and
administrative 12,114 12,614 12,483
In-process research and
development (1) -- -- --
Amortization of intangible
assets (2)(3) 18,665 18,687 21,114
--------- --------- ---------
Total costs and
expenses 71,383 75,996 78,457
--------- --------- ---------
Loss from operations (28,350) (19,421) (21,160)
Other (expense) income, net (3,611) (1,365) 1,491
--------- --------- ---------
Loss before benefit for
income taxes (31,961) (20,786) (19,669)
Benefit for income taxes (3,300) (2,554) --
--------- --------- ---------
Net loss ($28,661) ($18,232) ($19,669)
========= ========= =========
Basic net loss per share ($0.26) ($0.16) ($0.18)
========= ========= =========
Diluted net loss per share ($0.26) ($0.16) ($0.18)
========= ========= =========
Shares used in per share
calculations:
Basic 111,840 111,507 111,390
========= ========= =========
Diluted (4) 111,840 111,507 111,390
========= ========= =========
Three months ended
---------------------------------------
Sept. 30, June 30, Mar. 31,
Description 2002 2002 2002
----------------------------- ------------ ------------- ------------
Revenue $ 56,072 $ 56,466 $ 58,878
Costs and expenses:
Costs of products sold 22,429 22,492 23,606
Research and development 21,523 21,078 21,385
Selling, general and
administrative 11,712 12,220 11,858
In-process research and
development (1) 5,653 -- 24,200
Amortization of intangible
assets (2)(3) 18,070 17,923 18,623
--------- -------- ---------
Total costs and
expenses 79,387 73,713 99,672
--------- -------- ---------
Loss from operations (23,315) (17,247) (40,794)
Other (expense) income, net 2,764 3,078 (1,901)
--------- -------- ---------
Loss before benefit for
income taxes (20,551) (14,169) (42,695)
Benefit for income taxes (6,180) (6,022) (17,078)
--------- -------- ---------
Net loss ($14,371) ($8,147) ($25,617)
========= ======== =========
Basic net loss per share ($0.13) ($0.07) ($0.23)
========= ======== =========
Diluted net loss per share ($0.13) ($0.07) ($0.23)
========= ======== =========
Shares used in per share
calculations:
Basic 110,232 109,684 109,558
========= ======== =========
Diluted (4) 110,232 109,684 109,558
========= ======== =========
Notes:
(1) Represents write-off of in-process research and development in
conjunction with the Aug. 26, 2002, acquisition of Cerdelinx
Technologies, Inc. and the Jan. 18, 2002, acquisition of the FPGA
business of Agere Systems, Inc.
(2) Intangible assets subject to amortization relate to the
acquisition of Cerdelinx Technologies, Inc. on Aug. 26, 2002, the
acquisition of the FPGA business of Agere Systems, Inc. on Jan.
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 to three to seven years on a straight-line basis.
The balance of these assets are unchanged as a result of the
restatements presented here.
(3) Balances presented include amortization of deferred stock
compensation expense attributable to Research and Development
Activities, which amounts are unchanged as a result of the
restatements presented here.
(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.
Appendix 5
Lattice Semiconductor Corporation
Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
Nine Nine
months Six months months Six months
ended ended ended ended
Sept. 30, June 30, Sept. 30, June 30,
Description 2003 2003 2002 2002
-------------------------- ---------- ---------- ---------- ----------
(Restated) (Restated)
Revenue $ 156,905 $ 113,872 $ 171,416 $ 115,344
Costs and expenses:
Costs of products sold 65,452 46,021 68,527 46,098
Research and
development 64,707 43,534 63,986 42,463
Selling, general and
administrative 37,211 25,097 35,790 24,078
In-process research and
development (1) -- -- 29,853 24,200
Amortization of
intangible assets
(2)(3) 58,466 39,801 54,616 36,546
--------- --------- --------- ---------
Total costs and
expenses 225,836 154,453 252,772 173,385
--------- --------- --------- ---------
Loss from operations (68,931) (40,581) (81,356) (58,041)
Other (expense) income,
net (3,485) 126 3,941 1,177
--------- --------- --------- ---------
Loss before benefit for
income taxes (72,416) (40,455) (77,415) (56,864)
Benefit for income taxes (5,854) (2,554) (29,280) (23,100)
--------- --------- --------- ---------
Net loss ($66,562) ($37,901) ($48,135) ($33,764)
========= ========= ========= =========
Basic net loss per share ($0.60) ($0.34) ($0.44) ($0.31)
========= ========= ========= =========
Diluted net loss per share ($0.60) ($0.34) ($0.44) ($0.31)
========= ========= ========= =========
Shares used in per share
calculations:
Basic 111,615 111,473 109,855 109,619
========= ========= ========= =========
Diluted (4) 111,615 111,473 109,855 109,619
========= ========= ========= =========
Notes:
(1) Represents write-off of in-process research and development in
conjunction with the Aug. 26, 2002, acquisition of Cerdelinx
Technologies, Inc. and the Jan. 18, 2002, acquisition of the FPGA
business of Agere Systems, Inc.
(2) Intangible assets subject to amortization relate to the
acquisition of Cerdelinx Technologies, Inc. on Aug. 26, 2002, the
acquisition of the FPGA business of Agere Systems, Inc. on Jan.
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. The
balance of these assets are unchanged as a result of the
restatements presented here.
(3) Balances presented include amortization of deferred stock
compensation expense attributable to Research and Development
Activities, which amounts are unchanged as a result of the
restatements presented here.
(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.
Appendix 6
Lattice Semiconductor Corporation
Consolidated Balance Sheet
(in thousands)
(unaudited)
Sept. 30, June 30, Mar. 31, Dec. 31,
Description 2003 2003 2003 2002
-------------------------- -------- ---------- -------- --------
(Restated) (Restated) (Restated)
Assets
Current assets:
Cash and short-term
investments $278,754 $ 470,178 $252,847 $276,880
Accounts receivable,
net 26,941 28,372 30,651 26,374
Inventories 47,942 48,283 51,876 56,241
Other current assets 12,617 11,476 34,748 35,033
-------- ---------- -------- --------
Total current assets 366,254 558,309 370,122 394,528
Property and equipment,
net 56,520 58,978 61,284 62,786
Foundry investments,
advances and other assets 124,670 108,574 100,059 104,507
Goodwill and other
intangible assets, net(1) 326,071 343,909 361,754 379,442
-------- ---------- -------- --------
$873,515 $1,069,770 $893,219 $941,263
======== ========== ======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and
other accrued
liabilities $ 34,356 $ 32,538 $ 37,170 $ 33,597
Deferred income on
sales to distributors 9,766 9,604 13,936 11,983
Income taxes payable -- -- -- 142
-------- ---------- -------- --------
Total current
liabilities 44,122 42,142 51,106 45,722
4 3/4% Convertible notes
due in 2006 -- 172,304 175,304 208,061
Zero Coupon Convertible
notes due in 2010 184,000 200,000 -- --
Other long-term
liabilities 22,053 25,704 26,335 26,345
-------- ---------- -------- --------
206,053 398,008 201,639 234,406
Stockholders' equity 623,340 629,620 640,474 661,135
-------- ---------- -------- --------
$873,515 $1,069,770 $893,219 $941,263
======== ========== ======== ========
Note:
(1) Includes other intangible assets, net, recorded in the September
2002 quarter in connection with the Aug. 26, 2002, acquisition of
Cerdelinx Technologies, Inc. Also includes Goodwill and other
intangible assets, net, recorded in the March 2002 quarter in
connection with the Jan. 18, 2002, acquisition of the FPGA
business of Agere Systems, Inc., and Goodwill and 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. Goodwill and other intangible assets, net, are
unchanged as a result of the restatements presented here.
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