Financial Highlights:
- Revenue of $87.2 million, an increase of 2.9% from $84.7 million in 2Q13 and an increase of 23.0% from $70.9 million in 3Q12.
- Net income of $0.07 per basic and diluted share, compared to net income of $0.04 per basic and diluted share in 2Q13 and a net loss of $0.02 per basic and diluted share in 3Q12.
- Gross margin of 52.4%, compared to 53.3% in 2Q13 and 54.4% in 3Q12.
- Operating expenses of $37.5 million, compared to operating expenses of $38.1 million in 2Q13 and $38.9 million in 3Q12.
Lattice Semiconductor Corporation (
For the third quarter, revenue was $87.2 million, an increase of 2.9% from $84.7 million reported in the prior quarter, and an increase of 23.0% from the $70.9 million reported in the same quarter a year ago. FPGA revenue for the third quarter was $26.2 million, compared to $26.0 million in the prior quarter, and $26.1 million in the same quarter a year ago. PLD revenue for the third quarter was $61.0 million, compared to $58.7 million reported in the prior quarter, and $44.8 million in the same quarter a year ago.
Net income for the third quarter was $8.2 million ($0.07 per basic and diluted share), compared to the prior quarter net income of $5.0 million ($0.04 per basic and diluted share) and net loss of $2.2 million ($0.02 per basic and diluted share) reported in the same quarter a year ago.
Darin G. Billerbeck, President and Chief Executive Officer, said, "For the second consecutive quarter, the Company achieved record revenue levels, while maintaining a healthy gross margin and improving our net income per share. Growth was driven by our consumer end market and increased new product category sales. The broader communications market in Asia continues to rebound, while worldwide computing and industrial markets are lagging. Overall, we continue to be confident and encouraged by the successful execution of our business strategy, along with our customer and market diversification efforts."
Joe Bedewi, Corporate Vice President and Chief Financial Officer, added, "We continue to drive cost efficiencies organization-wide, as we leverage increasing unit volume. We are effectively managing inventory levels to meet customer demand and potential upsides. Our operations team is minimizing the impact of our fab transition at Fujitsu and is focused on keeping gross margins stable, despite anticipated seasonally lower revenue. We exited the third quarter with a debt-free balance sheet and approximately $210.8 million in cash, cash equivalents and short-term marketable securities, an increase of $36.5 million from the second quarter."
Recent Business Highlights:
- Tiny, Ultra-Low Power iCE40™: Lattice announced its new, ultra-low density iCE40 FPGAs, delivering the world's smallest, most flexible, single chip sensor solution for ultra-low power mobile devices. The new additions to the iCE40 FPGA family allow customers to integrate functions into a smaller space.
- Ultra-Low Density MachX03™: Lattice launched its ultra-low density MachXO3™ FPGA family, the world's smallest, lowest-cost-per I/O programmable platform aimed at expanding system capabilities and bridging emerging connectivity interfaces using both parallel and serial I/O.
- New Reference Designs: Lattice introduced three new complete reference designs that will make it easier for electronic OEMs to deliver media-rich experiences to their end users by taking advantage of low-cost, industry-standard MIPI (Mobile Industry Processor Interface) camera, application processor, and display technologies.
Business Outlook - Fourth Quarter 2013:
- In-line with recent annual demand trends, revenue is expected to be minus 5% to 9% on a sequential basis.
- Gross margin percentage is expected to be approximately 53% plus or minus 2%.
- Total operating expenses are expected to be approximately $37.5 million, including approximately $1.0 million of mask costs in support of growth opportunities.
Investor Conference Call / Webcast Details:
Lattice Semiconductor will review the Company's financial results for the third quarter of 2013 and business outlook for the fourth quarter of 2013 on Thursday, October 24, 2013 at 5:00 p.m. Eastern Time. The conference call-in number is 1-888-286-6281 or 1-706-643-3761 with conference identification number 75501489. A live webcast of the conference call will also be available on Lattice's website at www.latticesemi.com. The Company's financial guidance will be limited to the comments on its public quarterly earnings call and the public business outlook statements contained in this press release.
A replay of the call will be available approximately two hours after the conclusion of the live call through 11:59 p.m. Eastern Time on November 7, 2013, by telephone at 1-404-537-3406. To access the replay, use conference identification number 75501489. A webcast replay will also be available on Lattice's investor relations website at www.latticesemi.com.
Forward-Looking Statements Notice:
The foregoing paragraphs contain forward-looking statements that involve estimates, assumptions, risks and uncertainties. Such forward-looking statements include statements relating to: the continuing rebound of the broader communications market in Asia and the lagging of computing and industrial markets; execution of our business strategy and our customer and market diversification efforts; continuing efforts to drive cost efficiencies organization-wide, as we leverage our increasing unit volume; our ability to manage our inventory; our operations' team ability to minimize the impact of our fab transition at Fujitsu and our ability to keep gross margins stable, despite anticipated seasonally lower revenue; and those statements under the heading "Business Outlook - Fourth Quarter 2013" relating to expected revenue, gross margin, total operating expenses, and projected costs associated with the Company's support of growth opportunities. Other forward-looking statements may be indicated by words such as "will," "could," "should," "would," "expect," "plan," "anticipate," "intend," "forecast," "believe," "estimate," "predict," "propose," "potential," "continue" or the negative of these terms or other comparable terminology. Lattice believes the factors identified below could cause actual results to differ materially from the forward-looking statements.
Estimates of future revenue are inherently uncertain due to, among other things, the high percentage of quarterly "turns" business. In addition, revenue is affected by such factors as global economic conditions, which may affect customer demand, pricing pressures, competitive actions, the demand for our Mature, Mainstream and New products, and in particular our iCE™, MachXO™ and LatticeECP3™ devices, the ability to supply products to customers in a timely manner, changes in our distribution relationships, or the volatility of our consumer business. Actual gross margin percentage and operating expenses could vary from the estimates on the basis of, among other things, changes in revenue levels, changes in product pricing and mix, changes in wafer, assembly, test and other costs, including commodity costs, variations in manufacturing yields, the failure to sustain operational improvements, the actual amount of compensation charges due to stock price changes. Any unanticipated declines in revenue or gross margin, any unanticipated increases in our operating expenses or unanticipated charges could adversely affect our profitability.
In addition to the foregoing, other factors that may cause actual results to differ materially from the forward-looking statements in this press release include global economic uncertainty, overall semiconductor market conditions, market acceptance and demand for our new products, the Company's dependencies on its silicon wafer suppliers, the impact of competitive products and pricing, technological and product development risks, and the other risks that are described in this press release and that are otherwise described from time to time in our filings with the Securities and Exchange Commission. 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.
About Lattice Semiconductor
Lattice Semiconductor (
Lattice Semiconductor Corporation, Lattice (& design), L (& design), Lattice Semiconductor (& design), iCE40, iCEcube2, Lattice Diamond 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.
GENERAL NOTICE: Other product names used in this publication are for identification purposes only and may be trademarks of their respective holders.
Lattice Semiconductor Corporation
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
--------------------------------- ---------------------
September June 29, September September September
28, 2013 2013 29, 2012 28, 2013 29, 2012
---------- ---------- ---------- ---------- ----------
Revenue $ 87,154 $ 84,694 $ 70,889 $ 243,006 $ 213,381
Costs and
expenses:
Cost of products
sold 41,463 39,584 32,341 114,050 98,297
Research and
development 20,254 20,267 20,446 58,635 58,955
Selling, general
and
administrative 16,385 17,072 17,720 49,955 55,048
Acquisition
related charges
(1) 737 737 729 2,223 3,418
Restructuring (2) 85 19 -- 257 643
---------- ---------- ---------- ---------- ----------
78,924 77,679 71,236 225,120 216,361
---------- ---------- ---------- ---------- ----------
Income (loss) from
operations 8,230 7,015 (347) 17,886 (2,980)
Other income
(expense), net 346 (54) 88 240 846
---------- ---------- ---------- ---------- ----------
Income (loss)
before provision
for income taxes 8,576 6,961 (259) 18,126 (2,134)
Provision for
income taxes (3) 417 1,921 1,916 3,037 20,297
---------- ---------- ---------- ---------- ----------
Net Income (loss) $ 8,159 $ 5,040 $ (2,175) $ 15,089 $ (22,431)
========== ========== ========== ========== ==========
Net Income (loss)
per share (4):
Basic $ 0.07 $ 0.04 $ (0.02) $ 0.13 $ (0.19)
========== ========== ========== ========== ==========
Diluted $ 0.07 $ 0.04 $ (0.02) $ 0.13 $ (0.19)
========== ========== ========== ========== ==========
Shares used in per
share
calculations (4):
Basic 116,055 115,733 116,785 115,730 117,612
========== ========== ========== ========== ==========
Diluted 117,349 117,109 116,785 117,093 117,612
========== ========== ========== ========== ==========
------------------
Notes:
(1) During the first nine months of fiscal 2012, the Company recorded
consulting, legal costs, severance related integration costs and
amortization of intangible assets associated with the acquisition of
SiliconBlue. During the first nine months of 2013, Acquisition related
charges consist of amortization of acquired intangible assets.
(2) Represents costs and adjustments incurred primarily related to the
corporate restructuring plans announced on October 12, 2012 and April
21, 2011.
(3) The tax provision for the three and nine months ended September 29,
2012 reflects the nonrecurring impact of transactions required to
implement our global tax structure and the resulting intercompany sale
of inventory and fixed assets.
(4) For the three and nine month periods in fiscal 2012, the computation
of diluted earnings per share excludes the effects of stock options,
restricted stock units and ESPP shares as they are antidilutive. For
the three and nine month periods in fiscal 2013, the computation of
diluted earnings per share includes the effects of stock options and
restricted stock units as they are dilutive. ESPP shares are included
if dilutive.
Lattice Semiconductor Corporation
Consolidated Balance Sheets
(in thousands)
(unaudited)
September 28, December 29,
2013 2012
-------------- --------------
Assets
Current assets:
Cash, cash equivalents and short-term
marketable securities $ 210,772 $ 183,401
Accounts receivable, net 52,991 46,947
Inventories 42,295 44,194
Other current assets (1) 14,631 12,527
-------------- --------------
Total current assets 320,689 287,069
Property and equipment, net 42,345 40,384
Long-term marketable securities 4,717 4,717
Other long-term assets 7,199 6,854
Intangible assets, net of amortization 13,220 15,430
Goodwill 44,808 44,808
Deferred income taxes (1) 13,746 15,357
-------------- --------------
$ 446,724 $ 414,619
============== ==============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued liabilities $ 44,424 $ 42,540
Deferred income and allowances on sales to
sell-through distributors 17,587 10,553
-------------- --------------
Total current liabilities 62,011 53,093
Other long-term liabilities (1) 5,011 3,976
-------------- --------------
Total liabilities 67,022 57,069
Stockholders' equity 379,702 357,550
-------------- --------------
$ 446,724 $ 414,619
============== ==============
------------------
Notes:
(1) In June 2013 the company early adopted, with retrospective
application, the requirements of ASU 2013-11 Presentation of an
Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a
Similar Tax Loss, or a Tax Credit Carryforward Exists. Accordingly,
previous periods have been revised to conform with current period
presentation. This resulted in both long-term taxes payable and
deferred tax assets declining by approximately $14 million for all
periods presented.
Lattice Semiconductor Corporation
- Supplemental Historical Financial Information -
3Q13 2Q13 3Q12
Operations Information
Percent of Revenue
Gross Margin 52.4% 53.3% 54.4%
R&D Expense 23.2% 23.9% 28.8%
SG&A Expense 18.8% 20.2% 25.0%
Depreciation and amortization (in thousands) 5,210 4,894 5,892
Capital expenditures (in thousands) 3,400 3,783 3,156
Stock compensation expense (in thousands) 2,562 2,511 2,075
Restructuring and severance related charges (in
thousands) 376 84 1,195
Taxes paid (cash, in thousands) 126 104 333
Balance Sheet Information
Current Ratio 5.2 5.4 5.7
A/R Days Revenue Outstanding 55 68 71
Inventory Months 3.1 3.8 3.5
Revenue% (by Product Family)
PLD 70% 69% 63%
FPGA 30% 31% 37%
Revenue% (by Product Classification) (1)
New 51% 46% 26%
Mainstream 41% 42% 54%
Mature 8% 12% 20%
Revenue% (by Geography)
Asia 76% 74% 69%
Europe (incl. Africa) 14% 14% 18%
Americas 10% 12% 13%
Revenue% (by End Market) (2)
Communications 35% 38% 44%
Industrial & Other 20% 23% 32%
Computing 9% 8% 13%
Consumer 36% 31% 11%
Revenue% (by Channel)
Sell-through distribution 41% 44% 56%
Direct 59% 56% 44%
(1) New: LatticeECP3, MachXO2, Power Manager II, and iCE40 Mainstream:
ispMACH 4000ZE, ispMACH 4000/Z, LatticeSC, LatticeECP2/M, LatticeECP,
LatticeXP2, LatticeXP, MachXO, ispClock A/D/S, Software and IP Mature:
ispXPLD, ispXPGA, FPSC, ORCA 2, ORCA 3, ORCA 4, ispPAC, isplsi 8000V,
ispMACH 5000B, ispMACH 2LV, ispMACH 5LV, ispLSI 2000V, ispLSI 5000V,
ispMACH 5000VG, all 5-volt CPLDs, ispGDX2, GDX/V, ispMACH 4/LV, iCE65,
ispClock, Power Manager I, all SPLDs
* Product categories are modified as appropriate relative to our
portfolio of products and the generation within each major product
family. New products consist of our latest generation of products,
while Mainstream and Mature are older or based on unique late stage
customer-based production needs. Generally, product categories are
adjusted every two to three years, at which time prior periods are
reclassified to conform to the new categorization. In the first fiscal
quarter 2012 we reclassified our New, Mainstream and Mature product
categories to better reflect our current product portfolio.
(2) During the first quarter of 2013, the Company refined its methodology
for assigning revenue to End Market categories. All periods presented
have been revised to conform to this methodology.
For more information contact: Joe Bedewi Chief Financial Officer Lattice Semiconductor Corporation 503-268-8000 David Pasquale Global IR Partners 914-337-8801 lscc@globalirpartners.com