-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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Three Months Ended Six Months Ended June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003
June 30, December 31, 2004 2003
Six Months Ended June 30, 2004 June 30, 2003
1
2
4
LATTICE SEMICONDUCTOR CORPORATION
5
See Accompanying Notes to Condensed Unaudited Consolidated Financial Statements.
6 | ||
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7 | ||
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Three months ended |
Six months ended |
||||||||||||
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|
June 30, 2004 |
June 30, 2003 |
June 30, 2004 |
June 30, 2003 |
|||||||||
|
|
|
|
||||||||||
Net loss |
$ |
(15,976 |
) |
$ |
(18,232 |
) |
$ |
(32,517 |
) |
$ |
(37,901 |
) | |
|
|
|
|
||||||||||
Shares used in basic net loss per share
calculations |
112,812 |
111,507 |
112,728 |
111,473 |
|||||||||
|
|
|
|
|
|||||||||
Dilutive effect of stock options, warrants and other potentially
dilutive securities |
|
|
|
|
|||||||||
|
|
|
|
||||||||||
Shares used in diluted net loss per share |
112,812 |
111,507 |
112,728 |
111,473 |
|||||||||
|
|
|
|
||||||||||
Basic net loss per share |
$ |
(0.14 |
) |
$ |
(0.16 |
) |
$ |
(0.29 |
) |
$ |
(0.34 |
) | |
|
|
|
|
||||||||||
Diluted net loss per share |
$ |
(0.14 |
) |
$ |
(0.16 |
) |
$ |
(0.29 |
) |
$ |
(0.34 |
) | |
|
|
|
|
Grants for |
|||||||||||||
|
|||||||||||||
Three months ended |
Six months ended |
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June 30, 2004 |
June 30, 2003 |
June 30, 2004 |
June 30, 2003 |
|||||||||
|
|
|
|
||||||||||
Stock Options: |
|
|
|
|
|||||||||
Expected Volatility |
51.8 |
% |
57.1 |
% |
52.3 |
% |
58.1 |
% | |||||
Risk-free interest rate |
3.2 |
% |
1.9 |
% |
3.0 |
% |
2.1 |
% | |||||
Expected life from vesting date |
1.5 years |
1.6 years |
1.5 years |
1.6 years |
|||||||||
Dividend yield |
0 |
% |
0 |
% |
0 |
% |
0 |
% |
8 | ||
|
Three months ended |
Six months ended |
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|
June 30, 2004 |
June 30, 2003 |
June 30, 2004 |
June 30, 2003 |
|||||||||
|
|
|
|
||||||||||
Net loss, as reported |
$ |
(15,976 |
) |
$ |
(18,232 |
) |
$ |
(32,516 |
) |
$ |
(37,901 |
) | |
Add: Stock based employee compensation expense
included in reported loss |
1,324 |
841 |
2,130 |
4,111 |
|||||||||
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects |
(5,127 |
) |
(8,077 |
) |
(10,158 |
) |
(15,508 |
) | |||||
|
|
|
|
||||||||||
Pro forma net loss |
$ |
(19,779 |
) |
$ |
(25,468 |
) |
$ |
(40,545 |
) |
$ |
(49,298 |
) | |
|
|
|
|
||||||||||
Net loss per share: |
|
|
|
|
|||||||||
Basic-as reported |
$ |
(0.14 |
) |
$ |
(0.16 |
) |
$ |
(0.29 |
) |
$ |
(0.34 |
) | |
|
|
|
|
||||||||||
Basic- pro forma |
$ |
(0.18 |
) |
$ |
(0.23 |
) |
$ |
(0.36 |
) |
$ |
(0.44 |
) | |
|
|
|
|
||||||||||
Diluted-as reported |
$ |
(0.14 |
) |
$ |
(0.16 |
) |
$ |
(0.29 |
) |
$ |
(0.34 |
) | |
|
|
|
|
||||||||||
Diluted-pro forma |
$ |
(0.18 |
) |
$ |
(0.23 |
) |
$ |
(0.36 |
) |
$ |
(0.44 |
) | |
|
|
|
|
|
June 30, 2004 |
Dec. 31, 2003 |
|||||
|
|
||||||
Work in progress |
$ |
27,528 |
$ |
34,327 |
|||
Finished goods |
13,242 |
12,303 |
|||||
|
|
||||||
|
$ |
40,770 |
$ |
46,630 |
|||
|
|
9 | ||
| ||
|
Common Stock |
Paid-in Capital |
Deferred Stock Compensation |
Accumulated Other Comprehensive Income/(Loss) |
|
Retained Earnings (Deficit) |
|
Total |
|||||||||||
|
|
|
|
|
|
||||||||||||||
Balances, Dec. 31, 2003 |
$ |
1,130 |
$ |
586,834 |
$ |
(5,444 |
) |
$ |
20,203 |
$ |
3,389 |
$ |
606,112 |
||||||
|
|
|
|
|
|
|
|||||||||||||
Common stock issued |
4 |
2,692 |
|
|
|
2,696 |
|||||||||||||
|
|
|
|
|
|
|
|||||||||||||
Unrealized loss on foundry
investments, net (Note 9) |
|
|
|
(11,221 |
) |
|
(11,221 |
) | |||||||||||
|
|
|
|
|
|
|
|||||||||||||
Recognized gain on sale of
UMC stock (Note 9) |
|
|
|
(4,555 |
) |
|
(4,555 |
) | |||||||||||
|
|
|
|
|
|
|
|||||||||||||
Unrealized gain on stock
holdings |
|
|
|
203 |
|
203 |
|||||||||||||
|
|
|
|
|
|
|
|||||||||||||
Deferred stock compensation |
|
(68 |
) |
68 |
|
|
|
||||||||||||
|
|
|
|
|
|
|
|||||||||||||
Amortization of deferred
stock compensation |
|
|
2,130 |
|
|
2,130 |
|||||||||||||
|
|
|
|
|
|
|
|||||||||||||
Translation adjustment |
|
|
|
(72 |
) |
|
(72 |
) | |||||||||||
|
|
|
|
|
|
|
|||||||||||||
Net loss for the six-month
period |
|
|
|
|
(32,517 |
) |
(32,517 |
) | |||||||||||
|
|
|
|
|
|
||||||||||||||
Balances, June 30, 2004 |
$ |
1,134 |
$ |
589,458 |
$ |
(3,246 |
) |
$ |
4,558 |
$ |
(29,128 |
) |
$ |
562,776 |
|||||
|
|
|
|
|
|
10 | ||
| ||
June 30, 2004 |
Gross |
Accumulated amortization |
Net |
|||||||
|
|
|
|
|||||||
Current technology |
$ |
273.6 |
$ |
(239.5 |
) |
$ |
34.1 |
|||
Core technology |
7.3 |
(2.6 |
) |
4.7 |
||||||
Licenses |
10.2 |
(3.6 |
) |
6.6 |
||||||
Non-compete agreements |
14.3 |
(11.6 |
) |
2.7 |
||||||
Workforce |
4.7 |
(1.7 |
) |
3.0 |
||||||
Backlog |
1.4 |
(1.4 |
) |
|
||||||
Customer list |
17.4 |
(17.4 |
) |
|
||||||
Patents and trademarks |
26.8 |
(26.8 |
) |
|
||||||
|
|
|
||||||||
Total |
$ |
355.7 |
$ |
(304.6 |
) |
$ |
51.1 |
|||
|
|
|
December 31, 2003 |
Gross |
Accumulated amortization |
Net |
|||||||
|
|
|
|
|||||||
Current technology |
$ |
273.6 |
$ |
(214.3 |
) |
$ |
59.3 |
|||
Core technology |
7.3 |
(1.9 |
) |
5.4 |
||||||
Licenses |
10.2 |
(2.9 |
) |
7.3 |
||||||
Non-compete agreements |
14.3 |
(9.2 |
) |
5.1 |
||||||
Workforce |
4.7 |
(1.2 |
) |
3.5 |
||||||
Backlog |
1.4 |
(1.4 |
) |
|
||||||
Customer list |
17.4 |
(15.8 |
) |
1.6 |
||||||
Patents and trademarks |
26.8 |
(24.3 |
) |
2.5 |
||||||
|
|
|
||||||||
Total |
$ |
355.7 |
$ |
(271.0 |
) |
$ |
84.7 |
|||
|
|
|
Fiscal Year: |
Amount | |||
|
| |||
2004 (remaining six months) |
$ |
10.3 |
||
2005 |
14.4 |
|||
2006 |
10.8 |
|||
2007 |
9.8 |
|||
Later years |
5.8 |
|||
|
||||
|
$ |
51.1 |
||
|
11 | ||
| ||
12 | ||
| ||
Three Months Ended |
Six Months Ended |
||||||||||||
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|
||||||||||||
|
June 30, 2004 |
June 30, 2003 |
June 30, 2004 |
June 30, 2003 |
|||||||||
|
|
|
|
||||||||||
United States: |
$ |
15,257 |
$ |
19,334 |
$ |
33,125 |
$ |
36,767 |
|||||
Export: |
|
|
|
|
|||||||||
Europe |
13,865 |
14,549 |
28,062 |
31,958 |
|||||||||
Asia Pacific (other than Japan) |
20,964 |
13,498 |
37,845 |
26,359 |
|||||||||
Japan |
7,918 |
5,745 |
14,740 |
11,372 |
|||||||||
Other |
2,935 |
3,449 |
6,238 |
7,416 |
|||||||||
|
|
|
|
||||||||||
|
$ |
60,939 |
$ |
56,575 |
$ |
120,010 |
$ |
113,872 |
|||||
|
|
|
|
Resale of product through two distributors accounted for approximately 13% and 11% of revenue in the first six months of 2004, and 14% and 10%, respectively, for the first six months of 2003. More than 90% of our property and equipment is located in the United States. Other long-lived assets located outside the United States consist primarily of foundry investments and advances.
13 | ||
| ||
14 | ||
| ||
Three Months Ended |
Six Months Ended |
||||||||||||
|
|
||||||||||||
|
June 30, 2004 |
June 30, 2003 |
June 30, 2004 |
June 30, 2003 |
|||||||||
|
|
|
|
||||||||||
Revenue |
100.0% |
100.0% |
100.0% |
100.0% |
|||||||||
Gross margin |
57.0% |
59.4% |
57.5% |
59.6% |
|||||||||
Research and development expenses |
37.1% |
38.4% |
37.4% |
38.2% |
|||||||||
Selling, general and administrative expenses | 23.1% | 22.3% | 22.6% | 22.0% | |||||||||
Amortization of intagible assets | 28.0% | 33.0% | 29.8% | 35.0% | |||||||||
Loss form operations |
(31.2)% |
(34.3)% |
(32.2)% |
(35.6)% |
Three Months Ended |
Six Months Ended |
||||||||||||
|
|
||||||||||||
|
June 30, 2004 |
June 30, 2003 |
June 30, 2004 |
June 30, 2003 |
|||||||||
|
|
|
|
||||||||||
FPGA |
18% |
16% |
19% |
15% |
|||||||||
PLD (CPLD and SPLD) |
82% |
84% |
81% |
85% |
15 | ||
| ||
16 | ||
| ||
1) |
We continued to experience significant losses during the first half of 2004 and 2003 and are currently not paying any Federal or state income taxes; |
|
|
2) |
Net operating loss carry backs and credit carry backs available in prior periods are no longer available; and, |
|
|
3) |
In the fourth quarter of 2002, we recorded a $118.6 million charge to income tax expense, representing a valuation allowance on our recorded deferred tax assets, in accordance with SFAS 109, Accounting for Income Taxes. We provided a valuation allowance equal to our net deferred tax assets due to uncertainties regarding their realization. Due to continued uncertainties regarding their realization, we continue to provide a valuation allowance equal to our net deferred tax assets at June 30, 2004. |
17 | ||
| ||
June 30, 2004 |
Gross |
Accumulated amortization |
Net |
|||||||
|
|
|
|
|||||||
Current technology |
$ |
273.6 |
$ |
(239.5 |
) |
$ |
34.1 |
|||
Core technology |
7.3 |
(2.6 |
) |
4.7 |
||||||
Licenses |
10.2 |
(3.6 |
) |
6.6 |
||||||
Non-compete agreements |
14.3 |
(11.6 |
) |
2.7 |
||||||
Workforce |
4.7 |
(1.7 |
) |
3.0 |
||||||
Backlog |
1.4 |
(1.4 |
) |
|
||||||
Customer list |
17.4 |
(17.4 |
) |
|
||||||
Patents and trademarks |
26.8 |
(26.8 |
) |
|
||||||
|
|
|
||||||||
Total |
$ |
355.7 |
$ |
(304.6 |
) |
$ |
51.1 |
|||
|
|
|
December 31, 2003 |
Gross |
Accumulated amortization |
Net |
|||||||
|
|
|
|
|||||||
Current technology |
$ |
273.6 |
$ |
(214.3 |
) |
$ |
59.3 |
|||
Core technology |
7.3 |
(1.9 |
) |
5.4 |
||||||
Licenses |
10.2 |
(2.9 |
) |
7.3 |
||||||
Non-compete agreements |
14.3 |
(9.2 |
) |
5.1 |
||||||
Workforce |
4.7 |
(1.2 |
) |
3.5 |
||||||
Backlog |
1.4 |
(1.4 |
) |
|
||||||
Customer list |
17.4 |
(15.8 |
) |
1.6 |
||||||
Patents and trademarks |
26.8 |
(24.3 |
) |
2.5 |
||||||
|
|
|
||||||||
Total |
$ |
355.7 |
$ |
(271.0 |
) |
$ |
84.7 |
|||
|
|
|
Fiscal Year: |
Amount |
|||
|
|
|||
2004 (remaining six months) |
$ |
10.3 |
||
2005 |
14.4 |
|||
2006 |
10.8 |
|||
2007 |
9.8 |
|||
Later years |
5.8 |
|||
|
||||
|
$ |
51.1 |
||
|
18 | ||
| ||
19 | ||
| ||
20 | ||
| ||
21 | ||
| ||
22 | ||
| ||
23 | ||
| ||
24 | ||
| ||
25 | ||
| ||
26 | ||
| ||
27 | ||
| ||
28 | ||
| ||
a) |
annual meeting of stockholders was held on May 11, 2004. | |
b) |
the following directors were elected at the meeting to serve a term of three years: | |
|
|
|
|
|
Mark O. Hatfield |
|
|
Cyrus Y. Tsui |
|
|
|
|
The following directors are continuing to serve their terms: | |
|
|
|
|
|
Daniel S. Hauer |
|
|
Soo Boon Koh |
|
|
Harry A. Merlo |
|
|
|
c) |
the matters voted upon at the meeting and results of the voting with respect to those matters are as follows: |
|
For |
Withheld |
|||||
|
|
||||||
(1) Election of directors: |
|
|
|||||
Mark O. Hatfield |
83,056,553 |
22,186,814 |
|||||
Cyrus Y. Tsui |
85,529,738 |
19,713,629 |
|
For |
Against |
Abstain |
Not Voted |
|||||||||
|
|
|
|
||||||||||
(2) Approval of an amendment to the Companys Employee Stock Purchase Plan |
86,449,548 |
3,052,207 |
431,908 |
23,181,000 |
|||||||||
(3) Ratification of PricewaterhouseCoopers LLP as the Companys independent registered public accounting firm for the fiscal year ending January 1, 2005 |
100,603,252 |
4,546,088 |
94,027 |
7,871,296 |
29 | ||
| ||
(a) |
|
Exhibits | |
|
|
| |
|
|
31.1 |
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. |
|
|
| |
|
|
31.2 |
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. |
|
|
| |
|
|
32.1 |
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
30 | ||
| ||
By: |
/s/ Jan Johannessen |
|
|
||
|
Jan Johannessen | |
|
Corporate Vice President and Chief Financial Officer |
31 | ||
| ||
|
1. |
I have reviewed this quarterly report on Form 10-Q of Lattice Semiconductor Corporation; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) |
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) |
|
evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(c)
|
|
disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
|
5. |
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) |
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) |
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
|
/s/ Cyrus Y. Tsui |
|
|
||
|
Cyrus Y. Tsui | |
|
Chief Executive Officer |
32 | ||
| ||
|
1. |
I have reviewed this quarterly report on Form 10-Q of Lattice Semiconductor Corporation; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) |
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) |
|
evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(c)
|
|
disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
|
5. |
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) |
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) |
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
|
/s/Jan Johannessen |
|
|
||
|
Jan Johannessen | |
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Corporate Vice President and Chief Financial Officer |
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CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL |
OFFICER |
PURSUANT TO |
18 U.S.C. SECTION 1350, |
AS ADOPTED PURSUANT TO |
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 |
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By: |
/s/ Cyrus Y. Tsui |
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Name: |
Cyrus Y. Tsui | ||
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Title: |
Chief Executive Officer | ||
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By: |
/s/ Jan Johannessen |
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Name: |
Jan Johannessen | ||
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Title: |
Corporate Vice President and | ||
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Chief Financial Officer |
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