EX-99.1 3 a4623248ex99.txt PRESS RELEASE Exhibit 99.1 Lattice Semiconductor Reports First Quarter Financial Results HILLSBORO, Ore.--(BUSINESS WIRE)--April 22, 2004--Lattice Semiconductor Corporation (Nasdaq:LSCC) 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 and PLD. PLD product revenue includes revenue from CPLD and SPLD 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. Excluding these charges, income for the quarter was $2.1 million ($0.02 per share). These non-cash charges 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 2009. The Company believes exclusion of these charges more closely approximates its cash earnings performance. A reconciliation of non-GAAP income to GAAP loss accompanies the financial tables in this earnings release. "During the first quarter, the programmable logic market experienced a strong recovery," stated Cyrus Y. Tsui, chairman and chief executive officer. "Due to these favorable conditions we posted very strong sequential quarterly revenue growth. However, these historically high growth rates are not sustainable going forward. During the ensuing 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 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 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 and Smith Barney Citigroup. 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 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 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 after the date hereof or to reflect the occurrence of unanticipated events. Lattice Semiconductor Corporation, the inventor of in-system programmable (ISP(TM)) logic products, designs, develops and markets the broadest range of Field Programmable Gate Arrays (FPGA), Field Programmable System Chips (FPSCs) and high-performance ISP Programmable Logic Devices (PLDs), including Complex Programmable Logic Devices (CPLD), Programmable Analog Components (PAC), and Programmable Digital Interconnect (GDX). Lattice also offers industry leading SERDES products. 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 communications, 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) ISP and specific product designations are either registered trademarks or trademarks of Lattice Semiconductor Corporation or its subsidiaries in the United States and/or other countries. Lattice Semiconductor Corporation Consolidated Statement of Operations (in thousands, except per share data) (unaudited) Three months ended ----------------------------- Mar. 31, Dec. 31, Mar. 31, Description 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 CONTACT: Lattice Semiconductor Corporation Roddy Sloss, 503-268-8000