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Lattice Semiconductor Corporation, Lattice (& design), L (& design), ispLEVER, ispXP2, LatticeECP2M, LatticeSC, 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. HyperTransport is a licensed trademark of the HyperTransport Technology Consortium in the U.S. and other jurisdictions.
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 Statement of Operations (in thousands, except per share data) Three months ended Six months ended ---------------------------------- ---------------------- June 30, March 31, July 1, June 30, July 1, Description 2007 2007 2006 2007 2006 ---------- ---------- ---------- ---------- ---------- (unaudited)(unaudited) (unaudited) (unaudited) (unaudited) Revenue $ 59,243 $ 58,107 $ 62,719 $ 117,350 $ 120,171 Costs and expenses (1): Cost of products sold 26,593 26,218 26,946 52,811 52,091 Research and development 20,752 22,008 20,440 42,760 40,791 Selling, general and administrative 14,785 14,566 14,594 29,351 28,283 Amortization of intangible assets (2) 2,665 2,667 2,670 5,332 5,483 Restructuring (3) 27 (130) 97 (103) 216 ========== ========== ========== ========== ========== Total costs and expenses 64,822 65,329 64,747 130,151 126,864 ========== ========== ========== ========== ========== Loss from operations (5,579) (7,222) (2,028) (12,801) (6,693) Other income, net (4) 4,299 3,008 4,350 7,307 8,397 ========== ========== ========== ========== ========== (Loss) income before provision for income taxes (1,280) (4,214) 2,322 (5,494) 1,704 Provision for income taxes 181 169 256 350 445 ========== ========== ========== ========== ========== Net (loss) income $ (1,461) $ (4,383) $ 2,066 $ (5,844) $ 1,259 ========== ========== ========== ========== ========== Basic net (loss) income per share $ (0.01) $ (0.04) $ 0.02 $ (0.05) $ 0.01 ========== ========== ========== ========== ========== Diluted net (loss) income per share $ (0.01) $ (0.04) $ 0.02 $ (0.05) $ 0.01 ========== ========== ========== ========== ========== Shares used in per share calculations: Basic 114,827 114,688 114,165 114,758 113,960 ========== ========== ========== ========== ========== Diluted (5) 114,827 114,688 125,343 114,758 114,287 ========== ========== ========== ========== ========== Notes: (1) As a result of the restructuring implemented in the fourth quarter of 2005, the Company realigned certain departments and job responsibilities in 2006. Due to these changes, the Company reviewed its historical cost center allocations and has reclassified these to reflect post-restructuring operations. Amounts previously reported in the three and six months ended July 1, 2006 have been reclassified to be consistent with the approach applied for the other periods presented. (2) Intangible assets subject to amortization aggregate $10.3 million, net, at June 30, 2007 and relate to the acquisition of Cerdelinx Technologies, Inc. on August 26, 2002 and the acquisition of the FPGA business of Agere Systems, Inc. on January 18, 2002. These intangible assets are amortized to expense generally over three to seven years on a straight-line basis. (3) Represents costs and adjustments incurred under the corporate restructuring plan, which was implemented in the fourth quarter of 2005. (4) Includes a $1.6 million gain recorded during the three months ended June 30, 2007 as a result of the Company selling a parcel of undeveloped land near its corporate headquarters. (5) For the three months ended June 30, 2007 and March 31, 2007 and the six months ended June 30, 2007, the computation of diluted earnings per share excludes the effects of stock options, restricted stock units, warrants and Convertible Notes, as they are antidilutive. For the six months ended July 1, 2006, the computation of diluted earnings per share excludes Convertible Notes, as they are antidilutive. Reconciliation of GAAP Net (Loss) Income to Non-GAAP Income (Loss) (in thousands) Three months ended Six months ended ---------------------------------- ---------------------- June 30, March 31, July 1, June 30, July 1, 2007 2007 2006 2007 2006 ---------- ---------- ---------- ---------- ---------- (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) GAAP net (loss) income $ (1,461) $ (4,383) $ 2,066 $ (5,844) $ 1,259 Reconciling items: Amortization of intangibles(1) 2,665 2,667 2,670 5,332 5,483 Stock-based compensation 1,325 1,389 638 2,714 1,345 Restructuring (2) 27 (130) 97 (103) 216 ---------- ---------- ----------- ---------- ----------- Non-GAAP net income (loss) $ 2,556 $ (457) $ 5,471 $ 2,099 $ 8,303 ========== ========== =========== ========== =========== Reconciliation of GAAP Net (Loss) Income per Share to Non-GAAP Net Income (Loss) per Share Three months ended Six months ended ---------------------------------- ---------------------- June 30, March 31, July 1, June 30, July 1, 2007 2007 2006 2007 2006 ---------- ---------- ---------- ---------- ---------- (unaudited)(unaudited) (unaudited) (unaudited) (unaudited) Basic and Diluted (4): GAAP net (loss) income $ (0.01) $ (0.04) $ 0.02 $ (0.05) $ 0.01 Reconciling items: Amortization of Intangibles (1) 0.02 0.02 0.02 0.05 0.05 Stock-based compensation 0.01 0.01 0.01 0.02 0.01 Restructuring (2) 0.00 (0.00) 0.00 (0.00) 0.00 ---------- ---------- ----------- ---------- ----------- Non-GAAP net income (loss) $ 0.02 $ (0.00) $ 0.05 $ 0.02 $ 0.07 ========== ========== =========== ========== =========== Shares used in per share calculations: Basic 114,827 114,688 114,165 114,758 113,960 ========== ========== =========== ========== =========== Diluted (3) 122,611 114,688 125,343 123,290 124,763 ========== ========== =========== ========== =========== Notes: (1) Relates to intangible assets acquired through our acquisition of Cerdelinx Technologies, Inc. on August 26, 2002 and the acquisition of the FPGA business of Agere Systems, Inc. on January 18, 2002. (2) Represents costs incurred under the corporate restructuring plan, which was implemented in the fourth quarter of 2005. These costs primarily relate to separation packages, costs to vacate space under long-term lease arrangements and adjustments to sublease income. (3) For the three months ended March 31, 2007, the computation of diluted earnings excludes the effects of stock options, restricted stock units, warrants and Convertible Notes, as they are antidilutive. (4) Per share amounts may differ due to rounding. Lattice Semiconductor Corporation Consolidated Balance Sheet (in thousands) June 30, December 30, Description 2007 2006 ----------- ----------- (unaudited) Assets Current assets: Cash and short-term investments $ 165,220 $ 233,208 Accounts receivable, net 29,661 22,545 Inventories 38,207 38,816 Other current assets 34,553 35,474 ----------- ----------- Total current assets 267,641 330,043 Property and equipment, net 46,101 46,696 Foundry investments, advances and other assets 101,259 109,964 Goodwill and other intangible assets, net (1) 233,870 239,203 ----------- ----------- $ 648,871 $ 725,906 =========== =========== Liabilities and Stockholders' Equity Current liabilities: Accounts payable and other accrued liabilities $ 37,741 $ 82,843 Deferred income and allowances on sales to distributors 7,290 6,230 Other current liabilities -- 20,480 ----------- ----------- Total current liabilities 45,031 109,553 Zero Coupon Convertible Notes due in 2010 (2) 80,000 89,120 Other long-term liabilities 5,814 15,488 ----------- ----------- Total liabilities 130,845 214,161 Stockholders' equity 518,026 511,745 ----------- ----------- $ 648,871 $ 725,906 =========== =========== Notes: (1) At June 30, 2007, includes approximately $223.6 million in goodwill and $10.3 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. (2) Effective July 1, 2007, the Convertible Notes will be classified as a current liability as the holders of the Convertible Notes have a right to require payment of the Convertible Notes on July 1, 2008. Lattice Semiconductor Corporation - Supplemental Historic Financial Information - Operations Information Q207 Q107 Q206 ------- ------- ------- Percent of Revenue (1): Gross Margin 55.1% 54.9% 57.0% R&D Expense 35.0% 37.9% 32.6% SG&A Expense 25.0% 25.1% 23.3% Depreciation Expense ($000) 3,396 3,383 3,028 Capital Expenditures ($000) 2,914 3,915 5,461 Balance Sheet Information Current Ratio 5.9 4.7 5.7 A/R Days Revenue Outstanding 46 45 48 Inventory Months 4.3 4.6 4.0 Revenue% (by Product Family) FPGA 23% 20% 21% PLD 77% 80% 79% Revenue% (by Product Classification) New 11% 8% 5% Mainstream 50% 48% 46% Mature 39% 44% 49% Revenue% (by Geography) Americas 24% 23% 30% Europe (incl. Africa) 18% 22% 24% Asia 58% 55% 46% Revenue% (by End Market) Communications 52% 45% 51% Industrial & Other 24% 32% 23% Consumer & Automotive 13% 12% 9% Computing 11% 11% 17% Revenue% (by Channel) Direct 64% 62% 58% Distribution 36% 38% 42% New: LatticeSC, LatticeECP2/M, LatticeECP, LatticeXP, MachXO, Power Manager, ispClock Mainstream: FPSC, XPLD, ispGDX2, ispMACH 4/LV, ispGDX/V, ispMACH 4000/Z, XPGA, Software and IP Mature: 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, all SPLDs Note: (1) Q206 amounts have been reclassified to be consistent with the current period.
For more information contact: Jan Johannessen Chief Financial Officer Lattice Semiconductor Corporation (503) 268-8000