Lattice Semiconductor Reports Third Quarter 2013 Results

Lattice Semiconductor Reports Third Quarter 2013 Results 
HILLSBORO, OR -- (Marketwired) -- 10/24/13 --  Lattice Semiconductor
Corporation (NASDAQ: LSCC) 
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 (NASDAQ: LSCC) today announced
financial results for the fiscal third quarter ended September 28,
2013.  
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(TM): 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(TM): Lattice launched its ultra-low
    density MachXO3(TM) 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(TM), 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. 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 (NASDAQ: LSCC) is
the World's leading provider of ultra-low-power programmable IC
solutions for makers of smartphones, mobile handheld devices,
small-cell networking equipment, industrial control, automotive
infotainment, and much more. With more than 1 billion units sold over
the past 10 years, Lattice ships more FPGAs, CPLDs and Power
Management solutions than any other programmable solutions vendor.
For more information, visit www.latticesemi.com. You can also follow
us via Twitter, Facebook, or RSS. 
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 
 
 
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