News Releases

Darin G. Billerbeck, President and Chief Executive Officer, said, "We are modeling mid-point revenue of approximately $485 million on a non-GAAP basis for the full year 2015, with our recent acquisition of Silicon Image, and will continue to work to achieve above industry average growth. This is after growing revenue from $279 million for the full year 2012 to $333 million in 2013 and to $366 million in 2014. In addition to delivering continued above market revenue growth, our focus is on achieving 20% operating income on a non-GAAP basis at any revenue level, and doubling our earnings per share on an annualized non-GAAP basis over the next two years. With the acquisition of Silicon Image, we have diversified our Consumer market growth opportunities, while reducing our reliance on any one customer. Our business outlook for the second half of the year remains optimistic based on continued growth in our new consumer initiatives and modest growth in the industrial market that should offset a sluggish communications market. We expect to end 2015 in an even stronger position as we achieve our synergy goals."

Joe Bedewi, Corporate Vice President and Chief Financial Officer, added, "We are moving aggressively to integrate and consolidate our transformational acquisition of Silicon Image, which closed in March. We expect to see the benefits of our synergy actions in the current second quarter, with the balance coming as we move through 2015. In connection with our acquisition, we issued $350 million in term debt, which is shown on our balance sheet net of related financing costs. Our targeted cost synergies are now approximately $42 million, as we have uncovered new opportunities for increased organizational efficiencies. The efficiencies can be achieved without adversely impacting our customers or our product roadmap. This target is 30% higher than our initial target of $32 million and is also above our revised target of approximately $36 million. We plan to drive free cash flow and actively reduce debt, as we continue building value for our shareholders through an effective growth and capital allocation strategy, and the use of our balance sheet."

Recent Business Highlights

1. Lattice Closed its Acquisition of Silicon Image; Creates Global Leader in Wired and Wireless Connectivity Solutions: Full details of the acquisition, the tender offer and closing conditions are detailed in the press release issued on March 11, 2015 and in the Company’s filings with the U.S. Securities and Exchange Commission.
2. Partners with NYU Wireless to Advance Wireless 5G Technologies: Lattice Semiconductor's SiBEAM joined NYU's research center as an industrial-affiliate sponsor of fundamental research that is creating the next generation of wireless technologies, also known as 5G.
3. Develops Industry First Miracast HDCP Protocol Analyzer: Lattice Semiconductor's Simplay™ Labs, LLC, the leading provider of standards compliance and interoperability testing services for consumer electronics (CE) and mobile devices, announced that its SL-8810 Miracast HDCP 2.2 test tool is being evaluated by Digital Content Protection (DCP) LLC as the Authorized Test Tool for High-bandwidth Digital Content Protection (HDCP) 2.2 Interface Independent Adaptation (IIA) Compliance Testing. Upon successfully completing the evaluation process, the SL-8810 will be the industry’s first test tool for HDCP 2.2 IIA Compliance Testing for Miracast products.
4. Introduces Industry's First USB TYPE-C Port Controllers with MHL ALT Mode: Lattice Semiconductor's Silicon Image launched the SiI7023 and SiI7033, the industry’s first single-chip USB Type-C port controllers that include MHL® Alternate Mode for the USB Type-C specification, as well as port configuration switches. These ICs have a fully integrated USB Type-C communication transceiver, adhering to the Power Delivery and Configuration Channel requirements defined in the USB Type-C related specifications. Device manufacturers can utilize these new port controllers with integrated switches in order to deliver brilliant MHL 4K Ultra HD video, immersive audio, power, and data over the USB Type-C connector.

Business Outlook - Second Quarter and Full Year 2015:

1. Revenue for the second quarter of 2015 is expected to be approximately $120 million plus or minus 3% on a non-GAAP basis, with revenue for the full year 2015 expected to be approximately $485 million plus or minus 3% on a non-GAAP basis.
2. Gross margin percentage for both the second quarter and full year 2015 is expected to be approximately 56.5% plus or minus 2% on a non-GAAP basis.
3. Total operating expenses, excluding acquisition or restructuring related charges, are expected to be approximately $65.2 million plus or minus 2% on a non-GAAP basis for the second quarter of 2015, and approximately $215 million plus or minus 2% on a non-GAAP basis for the full year 2015, which includes the benefit of synergy savings.
4. Restructuring charges are expected to be approximately $10 million for the second quarter of 2015 and approximately $25 million for the full year 2015.
5. Acquisition related charges, including amortization of acquired intangibles are expected to be approximately $10.5 million in the second quarter of 2015, and approximately $49.0 million for the full year 2015.
6. The Company expects operating synergies to be approximately $42 million on an annualized basis as it exits 2015.

Investor Conference Call / Webcast Details:
Lattice Semiconductor will review the Company's financial results for the first quarter of 2015 and business outlook for the second quarter and full year 2015 on Monday, May 4, 2015 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 23028933. 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 May 18, 2015, by telephone at 1-404-537-3406. To access the replay, use conference identification number 23028933. 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 expectation that we may achieve mid-point revenue of $485 million on a non-GAAP basis for the full year 2015; that we will continue to work to achieve above industry average growth; our ability to achieve 20% operating income on a non-GAAP basis at any revenue level, and to double our EPS on an annualized non-GAAP basis over the next two years; that we will experience continued growth in our new consumer initiatives and modest growth in the industrial market that should offset a sluggish communications market; that we will see the benefits of our synergy actions in the second quarter, with the balance coming as we move through 2015; that we will achieve synergies of $42 million; that these synergies can be achieved without adversely impacting customers or our product roadmap; that we will drive free cash flow, reduce debt and continue building value for shareholders; and those statements under the heading “Business Outlook - Second Quarter and Full Year 2015” relating to expected revenue, gross margin, total operating expenses, synergies and acquisition charges, including amortization of acquired intangibles. 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 products, and in particular our iCE40™ and MachXO3L™ 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, our results could vary due to our acquisition of Silicon Image. We have not had experience operating Silicon Image or projecting its operating results. The acquisition of another company carries inherent risks, including our discovering unknown liabilities or encountering unanticipated issues relating to integrating the business with ours. Any unanticipated declines in revenue or gross margin, any unanticipated increases in our operating expenses or unanticipated charges, including without limitation, restructuring charges, or issues with integrating Silicon Image, 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.

Non-GAAP Financial Measures
Included within this press release and the accompanying tables and notes are non-GAAP financial measures that supplement the Company's consolidated financial information prepared under GAAP. The Company describes these non-GAAP financial measures and reconciles them to the most directly comparable GAAP measures in the tables and notes attached to this press release. The Company's management believes that these non-GAAP measures provide a more meaningful representation of the Company’s ongoing financial performance than GAAP measures alone. In addition, the Company uses Adjusted EBITDA to measure compliance with certain of its debt covenants. These non-GAAP measures are included solely for informational and comparative purposes and are not meant as a substitute for GAAP and should be considered together with the consolidated financial information located in the tables attached to this press release.