Lattice Semiconductor Reports First Quarter 2013 Results

Lattice Semiconductor Reports First Quarter 2013 Results 
HILLSBORO, OR -- (Marketwired) -- 04/18/13 --  Lattice Semiconductor
Corporation (NASDAQ: LSCC) 
Financial Highlights: 


 
--  Revenue of $71.2 million, an increase of 8.0% from $65.9 million in
    4Q12 and a decrease of 0.7% from $71.7 million in 1Q12.
--  Gross margin of 53.6%, compared to 54.2% in 4Q12 and 55.1% in 1Q12.
--  Operating expenses of $35.4 million excluding restructuring charges,
    compared to $36.7 million in 4Q12 and $38.8 million in 1Q12.
--  Net income of $0.02 per basic and diluted share, compared to net loss
    of $0.06 per basic and diluted share in 4Q12 and net loss of $0.07 per
    diluted share in 1Q12.
    --  1Q13 financial results included a $0.7 million ($0.01 per basic
        and diluted share) income tax expense, $0.7 million of
        amortization expense from acquired intangibles and $0.2 million of
        restructuring related charges.
    --  4Q12 financial results included a $0.4 million ($0.00 per basic
        and diluted share) income tax expense, $0.8 million of
        amortization expense from acquired intangibles and $5.4 million of
        restructuring related charges.
    --  1Q12 financial results included a $7.9 million ($0.07 per basic
        and diluted share) income tax expense, $1.7 million of acquisition
        related costs and $0.6 million of restructuring related charges.

  
Lattice Semiconductor Corporation (NASDAQ: LSCC) today announced
financial results for the fiscal first quarter ended March 30, 2013.  
For the first quarter, revenue was $71.2 million, an increase of 8.0%
from $65.9 million reported in the prior quarter, and a decrease of
0.7% from the $71.7 million reported in the same quarter a year ago.
FPGA revenue for the first quarter was $22.9 million, an increase
from the $20.9 million reported in the prior quarter, and slight
decrease from the $23.3 million reported in the same quarter a year
ago. PLD revenue for the first quarter was $48.3 million, an increase
from the $45.0 million reported in the prior quarter, and essentially
flat with the $48.4 million reported in the same quarter a year ago.  
Net income for the first quarter was $1.9 million ($0.02 per diluted
share), which included tax expense of $0.7 million,
 amortization
expense from acquired intangibles of $0.7 million and restructuring
charges of $0.2 million, compared to the prior quarter net loss of
$7.2 million ($0.06 per basic and diluted share) and net loss of $7.7
million ($0.07 per basic and diluted share) reported in the same
quarter a year ago. Fourth quarter of 2012 financial results included
$0.4 million ($0.00 per basic and diluted share) income tax expense,
$0.8 million of amortization expense from acquired intangibles and
$5.4 million of restructuring related charges. First quarter of 2012
financial results included a $7.9 million ($0.07 per basic and
diluted share) income tax expense, $1.7 million of acquisition
related costs and $0.6 million of restructuring related charges. 
Darin G. Billerbeck, President and Chief Executive Officer, said,
"Revenue for the first quarter of 2013 came in at the high end of
upwardly revised guidance and well above our original guidance. The
strong revenue growth directly reflects expansion into the consumer
market along with some strengthening in the communications market.
Importantly, we returned to profitability in the first quarter, which
is the ultimate validation of our market strategy and operations
execution. We are pleased by the traction we are seeing with our low
density, low power programmable devices especially in applications
where long battery life is crucial." 
Joe Bedewi, Corporate Vice President and Chief Financial Officer,
added, "Gross margin for Q1 was 53.6% at the midpoint of our original
guidance. Margins continue to be strong due to higher than
anticipated OEM shipments, mix and inventory management. Margins will
continue to fluctuate throughout the year due to mix and volume in
the consumer market. We are offsetting some of this mix related
impact through continued cost reductions in operations. Our long-term
gross margin target remains at the mid-50% level. Operating expenses
in the first quarter of 2013 were approximately $35.5 million, which
included $0.2 million in restructuring charges. Finally, during the
quarter we repurchased approximately 0.6 million shares of our common
stock at a cost of approximately $2.5 million." 
Business Outlook - Second Quarter 2013: 


 
--  Revenue is expected to increase approximately 15% to 20% on a
    sequential basis.
--  Gross margin percentage is expected to be approximately 51% plus or
    minus 2%.
--  Total operating expenses are expected to be approximately $37.5
    million. This includes approximately $1.0 million in R&D variable
    cost related to program timing, $0.5 million in variable spending
    related to sales increases and $0.3 million in other expenses
    associated with the Company's move to a new facility in San Jose.

  
Investor Conference Call / Webcast Details: 
Lattice Semiconductor will review the Company's financial results for
the first quarter of 2013 and business outlook for the second quarter
of 2013 on Thursday, April 18, 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 31764719. 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
April 18, 2013, by telephone at 1-404-537-3406. To access the replay,
use conference identification number 31764719. 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: our
business outlook, including those statements under the heading
"Business Outlook - Second Quarter 2013" relating to expected
revenue, gross margin, total operating expenses, and projected R&D
variable costs related to program timing, variable spending related
to sales increases, and other expenses associated with the Company's
move to a new facility in San Jose, California, our expectation that
gross margin will fluctuate throughout the year; and our expectation
that we will offset the impact on our gross margin through cost
reductions. 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, Mainstr
eam and New
products, and in particular our MachXO(TM) and LatticeECP3(TM)
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. Further, the impact
of any restructuring, including the restructuring actions undertaken
during the fourth quarter of 2012, will depend on, among other
factors, the final actions taken, negotiation of related expenses
with third parties, the timing of restructuring activities and the
ability of the Company to successfully reallocate functions formerly
addressed by the employees and other resources eliminated in the
restructuring. 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 is a service-driven developer of innovative low cost, low
power programmable design solutions. For more information about how
our FPGA, CPLD and programmable power management devices help our
customers unlock their innovation, visit www.latticesemi.com. You can
also follow us via Twitter, Facebook, or RSS. 
Lattice Semiconductor Corporation, Lattice (& design), L (& design),
iCE40 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            
                                   ---------------------------------------- 
                                     March 30,   December 29,    March 31,  
                                       2013          2012          2012     
                                   ------------  ------------  ------------ 
Revenue                            $     71,158  $     65,875  $     71,700 
Costs and expenses:                                                         
Cost of products sold                    33,003        30,202        32,215 
Research and development                 18,114        18,655        19,146 
Selling, general and                                                        
 administrative                          16,498        17,269        17,923 
Acquisition related charges (1)             749           760         1,707 
Restructuring (2)                           153         5,375           556 
                                   ------------  ------------  ------------ 
                                         68,517        72,261        71,547 
                                   ------------  ------------  ------------ 
Income (loss) from operations             2,641        (6,386)          153 
Other income (expense), net                 (52)         (341)           64 
                                   ------------  ------------  ------------ 
Income (loss) before provision                                              
 (benefit) for income taxes               2,589        (6,727)          217 
Provision (benefit) for income                                              
 taxes (3)                                  699           448         7,931 
                                   ------------  ------------  ------------ 
Net Income (loss)                  $      1,890  $     (7,175) $     (7,714)
                                   ============  ============  ============ 
                                                                            
Net Income (loss) per share (4):                                            
Basic                              $       0.02  $      (0.06) $      (0.07)
                                   ============  ============  ============ 
Diluted                            $       0.02  $      (0.06) $      (0.07)
                                   ============  ============  ============ 
                                                                            
Shares used in per share                                                    
 calculations (4):                                                          
Basic                                   115,391       115,943       118,174 
                                   ============  ============  ============ 
Diluted                                 116,714       115,943       118,174 
                                   ============  ============  ============ 
                                                                            
Notes:                                                                      
                                                                            
(1)  The Company recorded consulting, legal costs, severance related        
     integration costs and amortization of intangible assets associated with
     the acquisition of SiliconBlue from the acquisition date, December 16, 
     2011 during the first quarter of fiscal 2012.                          
                                                                            
(2)  Represents costs and adjustments incurred primarily related to the     
     corporate restructuring plan announced on October 12, 2012.            
                                                                            
(3)  The tax provision for the three months ended March 31, 2012 reflects   
     our new global tax structure and the resulting intercompany sale of    
     inventory and fixed assets.                                            
                                                                            
(4)  For the three 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    
     month period 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 thou
sands)                               
                                 (unaudited)                                
                                                                            
                                                                            
                                                  March 30,    December 29, 
                                                     2013           2012    
                                                -------------  -------------
                     Assets                                                 
Current assets:                                                             
Cash, cash equivalents and short-term                                       
 marketable securities                          $     179,044        183,401
Accounts receivable, net                               55,984         46,947
Inventories                                            43,755         44,194
Other current assets                                   14,020         12,806
                                                -------------  -------------
Total current assets                                  292,803        287,348
                                                                            
Property and equipment, net                            40,596         40,384
Long-term marketable securities                         4,717          4,717
Other long-term assets                                  8,767          6,854
Intangible assets, net of amortization                 14,722         15,430
Goodwill                                               44,808         44,808
Deferred income taxes                                  28,617         29,218
                                                -------------  -------------
                                                $     435,030  $     428,759
                                                =============  =============
                                                                            
      Liabilities and Stockholders' Equity                                  
Current liabilities:                                                        
Accounts payable and other accrued liabilities  $      45,257  $      42,540
Deferred income and allowances on sales to                                  
 sell-through distributors                             11,656         10,553
                                                -------------  -------------
Total current liabilities                              56,913         53,093
                                                                            
Other long-term liabilities                            18,101         18,116
                                                -------------  -------------
Total liabilities                                      75,014         71,209
                                                                            
Stockholders' equity                                  360,016        357,550
                                                -------------  -------------
                                                $     435,030  $     428,759
                                                =============  =============
                                                                            
                                                                            
                                                                            
                      Lattice Semiconductor Corporation                     
              - Supplemental Historical Financial Information -             
                                                                            
                                                                            
                                               1Q13       4Q12       1Q12   
Operations Information                                                      
Percent of Revenue                                                          
Gross Margin                                   53.6%      54.2%      55.1%  
R&D Expense                                    25.5%      28.3%      26.7%  
SG&A Expense                                   23.2%      26.2%      25.0%  
                                                                            
Depreciation and amortization (in                                           
 thousands)                                    5,066      5,987      5,027  
Capital expenditures (in thousands)            3,054      2,363      3,442  
Stock compensation expense (in thousands)      1,912      1,757      1,624  
Restructuring and severance related charges                                 
 (in thousands)                                 153       5,375       556   
Taxes paid (cash, in thousands)                 852        172        204   
                                                                            
Balance Sheet Information                                                   
Current Ratio                                   5.1        5.4        5.6   
A/R Days Revenue Outstanding                    71         64         66    
Inventory Months                                4.0        4.4        3.4   
                                                                            
Revenue% (by Product Family)                                                
PLD                                             68%        68%        67%   
FPGA                                            32%        32%        33%   
                                                                            
Revenue% (by Product Classification) (1)                                    
New                                             39%        29%        16%   
Mainstream                                      47%        53%        53%   
Mature                                          14%        18%        31%   
                                                                            
Revenue% (by Geography)                                                     
Asia                                            69%        69%        64%   
Europe (incl. Africa)                           18%        16%        19%   
Americas                                        13%        15%        17%   
                                                                            
Revenue% (by End Market) (2)                                                
Communications                                  39%        38%        39%   
Industrial & Other                              26%        31%        32%   
Computing                                       10%        13%        15%   
Consumer                                        25%        18%        14%   
                                                                            
Revenue% (by Channel)                                                       
Sell-through distribution                       49%        55%        53%   
Direct                                          51%        45%        47%   

 
(1) New: LatticeECP4, 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