News Releases

Lattice Semiconductor Reports Fourth Quarter 2011 Results

HILLSBORO, OR, Jan 26, 2012 (MARKETWIRE via COMTEX) -- Lattice Semiconductor Corporation (NASDAQ: LSCC)

Financial Highlights:

--  Revenue of $70.2 million, a decrease of 14.1% from $81.7 million in
    3Q11 and a decrease of 4.0% from $73.1 million in 4Q10.
--  Gross margin of 57.7%, compared to 58.6% in 3Q11 and 62.7% in 4Q10.
--  Net income of $0.34 per diluted share, compared to net income of $0.11
    per diluted share in 3Q11 and net income of $0.11 per diluted share in
    4Q10. 4Q11 financial results include approximately $35.1 million
    ($0.29 per diluted share) of income tax benefit, $1.1 million of
    restructuring related charges and $0.5 million of acquisition related
    costs. 3Q11 financial results included approximately $1.8 million of
    restructuring related charges and a $0.9 million tax settlement

Lattice Semiconductor Corporation (NASDAQ: LSCC) today announced financial results for the fourth quarter ended December 31, 2011. Results for the fourth quarter of 2011 reflect the Company's acquisition of SilionBlue Technologies Ltd. ("SiliconBlue") on December 16, 2011.

For the fourth quarter, revenue was $70.2 million, a decrease of 14% from the $81.7 million reported in the prior quarter, and a decrease of 4% from the $73.1 million reported in the same quarter a year ago. FPGA revenue for the fourth quarter was $22.1 million, a decrease from the $26.2 million reported in the prior quarter, and a decrease from the $24.4 million reported in the same quarter a year ago. PLD revenue for the fourth quarter was $48.1 million, a decrease from the $55.5 million reported in the prior quarter, and a decrease from the $48.7 million reported in the same quarter a year ago.

Net income for the fourth quarter was $40.9 million ($0.34 per diluted share), compared to a prior quarter net income of $13.3 million ($0.11 per diluted share) and net income of $13.9 million ($0.11 per diluted share) reported in the same quarter a year ago. In the fourth quarter of 2011, we recognized a tax benefit of $35.1 million ($0.29 per diluted share) related to the release of tax valuation allowance for certain deferred tax assets, based on an evaluation of the likelihood of use of these tax attributes due to the improvement in our operating results in 2011 and the implementation of a new global tax structure during the fourth quarter of 2011. The Company anticipates completing its global tax restructuring during the first quarter of 2012, which will result in a tax provision of approximately $10.8 million. Fourth quarter 2011 financial results include approximately $1.1 million of restructuring related charges, as compared to approximately $1.8 million of restructuring related charges included in the third quarter 2011 financial results. The fourth quarter of 2011 also included $0.5 million related to acquisition charges.

Darin G. Billerbeck, President and Chief Executive Officer, said, "We achieved approximately 7% revenue growth in 2011 compared to 2010, even with ongoing, broader market weakness and the macro softening of demand, primarily in the communications business. During this period of uncertainty, our primary focus is on controlling costs and our spending, and continuing to invest in new products and technologies, while managing our inventory. Our integration of the SiliconBlue acquisition is progressing well. Importantly, we believe this acquisition will accelerate our growth strategy in the Consumer market driven by its desire for longer battery life, more natural interfaces, increased functionality, smaller form factors and lower cost."

Joe Bedewi, Corporate Vice President and Chief Financial Officer, added, "Total operating expenses were $34.8 million, including approximately $1.1 million in restructuring charges in the quarter. While most elements of our 2011 restructuring program are now substantially complete, we will incur restructuring charges in the first quarter of 2012 related to our previously discussed transfer of our operations to our low cost site in the Philippines. Gross margin for the fourth quarter was 57.7%, in line with our original guidance. This also includes the impact of SiliconBlue. We generated $10.3 million of cash from operations, ending the quarter with a cash, cash equivalents and short-term marketable securities balance of $210.1 million, reflecting our acquisition of SiliconBlue for approximately $63 million in cash. We concluded our stock repurchase program on October 20, 2011, having repurchased approximately 2.8 million shares during the term of the program at a cost of $16.4 million."

Fourth Quarter 2011 Business Highlights:

--  Acquired SiliconBlue: Lattice extended its leadership position in the
    highly attractive mobile consumer and handheld market with its $63
    million acquisition of SiliconBlue. The mobile consumer market for
    PLD's includes digital cameras, smartphones, eReaders, tablets,
    notebooks and netbooks. Key market growth trends include the drive for
    longer battery life, more natural interfaces, increased functionality,
    lower cost and reduced weight.
--  Shipped More Than 75 Million MachXO(TM) Programmable Logic Devices:
    Lattice has now shipped more than 75 million MachXO(TM) PLDs since
    their introduction. Widely adopted in a broad range of high volume,
    cost sensitive applications, customers worldwide are taking advantage
    of the MachXO(TM) PLD family's innovative combination of
    ease-of-use, flexibility, system integration and price. The
    MachXO(TM) PLD family's unique system integration benefits have
    continued to drive its widespread adoption in a broad range of
    low-density applications that require general purpose I/O expansion,
    interface bridging and power-up management functions.
--  All members Of Lattice's Award Winning MachXO2(TM) PLD Family
    Released To Production: The MachXO2(TM) PLD family consists of nine
    devices in 29 device/package combinations to satisfy a broad range of
    customer requirements.
--  MachXO2(TM) PLD Family Recognized by EDN Magazine as "Hot 100"
    Product: Recognition as a Hot 100 product is unique because there is
    no nomination process: instead, EDN's editors select from among
    thousands of new products that, in their judgment, are particularly
--  Shipped 15 Millionth Power Manager Device:  Lattice's seven Power
    Manager devices have been broadly adopted in a wide range of high
    volume, cost sensitive applications because they enable board
    designers to integrate the multiple power management functions of a
    circuit board into a single programmable device. Integration reduces
    overall system cost by eliminating duplicate functions.
--  Announced New Release Of Lattice Diamond(R) Design Software:
    Release 1.4 of Lattice Diamond(R) design software will accelerate
    FPGA design optimization for low power and cost sensitive
    applications, and reduce time to market. Lattice Diamond 1.4 software
    enhances support for the MachXO2(TM) PLD family by providing final
    production timing, power models and bitstreams for the entire family,
    including the latest wafer-level chip scale packaged version of the
    LCMXO2-2000U and LCMXO2-1200U devices that are ideal for very high
    volume, cost- and power-sensitive applications.

Business Outlook - First Quarter 2012:

--  Revenue is expected to increase approximately 1% to 5% on a sequential
--  Gross margin percentage is expected to be approximately 57% plus or
    minus 2%.
--  Total operating expenses are expected to be approximately $39.0
    million, including approximately $0.8 million in restructuring charges
    and $0.9 million in acquisition related charges (primarily
    amortization of intangible assets).
--  Income will be affected by a tax provision of approximately $10.8
    million primarily associated with the completion of the Company's new
    global tax structure.

Investor Conference Call / Webcast Details:

Lattice Semiconductor will review the Company's financial results for the fourth quarter 2011 and business outlook for the first quarter 2012 on Thursday, January 26, 2012 at 5:00 p.m. EST. The conference call-in number is 1-888-286-6281 or 1-706-643-3761 with conference identification number 41340129. A live webcast of the conference call will also be available on Lattice's website at 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. EDT on February 2, 2012, by telephone at 1-404-537-3406. To access the replay, use conference identification number 41340129. A webcast replay will also be available on Lattice's investor relations website at 

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 - First Quarter 2012" relating to expected revenue, gross margin, total operating expenses, projected restructuring charges, projected acquisition related charges, and projected tax provision; the completion and effects of our global tax restructuring; the effects of our acquisition of SiliconBlue, including the acceleration of our growth strategy in the Consumer market; our continued focus on controlling costs and spending, investing in new products and technologies, and managing inventory. 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 MachXO and LatticeECP3 solutions, the ability to supply products to customers in a timely manner or changes in our distribution relationships. 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 restructuring charges and compensation charges due to stock price changes. Restructuring charges may vary from the estimate on the basis of the timing and scope of the restructuring. In addition, our results could vary due to our acquisition of SiliconBlue. We have not had experience operating SiliconBlue or projecting its operating results. The acquisition of a new 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 SiliconBlue, could adversely affect our profitability during the quarter.

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 the source for innovative FPGA, PLD, and programmable Power Management solutions. For more information, visit Follow Lattice via Facebook, RSS and Twitter.

Lattice Semiconductor Corporation, Lattice (& design), L (& design) 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.

                      Lattice Semiconductor Corporation
                    Consolidated Statements of Operations
                    (in thousands, except per share data)

                            Three Months Ended               Year ended
                    ---------------------------------  ---------------------
                     December  October 1,  January 1,   December  January 1,
                     31, 2011     2011        2011      31, 2011     2011
                    ---------  ----------  ----------  ---------  ----------
Revenue             $  70,170  $   81,720  $   73,080  $ 318,366  $  297,768

  Costs and
  Cost of products
   sold                29,707      33,866      27,239    129,769     117,943
  Research and
   development         16,085      16,999      15,672     71,855      60,326
  Selling, general
   administrative      17,121      16,809      16,738     68,838      64,359
   related charges
   (1)                    536          --          --        536          --
  Restructuring (2)     1,097       1,760         (30)     6,079          11
                    ---------  ----------  ----------  ---------  ----------
                       64,546      69,434      59,619    277,077     242,639
                    ---------  ----------  ----------  ---------  ----------
Income from
 operations             5,624      12,286      13,461     41,289      55,129

Other income, net
 (3)                      255         248         558      1,434       2,474
                    ---------  ----------  ----------  ---------  ----------
Income before
 provision for
 income taxes           5,879      12,534      14,019     42,723      57,603
(Benefit) provision
 for income taxes
 (4)                  (35,066)       (803)        140    (35,509)        531
                    ---------  ----------  ----------  ---------  ----------
Net income          $  40,945  $   13,337  $   13,879  $  78,232  $   57,072
                    =========  ==========  ==========  =========  ==========

Net income per
 share (5):
Basic               $    0.35  $     0.11  $     0.12  $    0.66  $     0.49
                    =========  ==========  ==========  =========  ==========
Diluted             $    0.34  $     0.11  $     0.11  $    0.65  $     0.48
                    =========  ==========  ==========  =========  ==========

Shares used in per
 share calculations
Basic                 117,528     117,926     117,907    117,875     116,726
                    =========  ==========  ==========  =========  ==========
Diluted               120,473     120,627     121,215    121,139     120,143
                    =========  ==========  ==========  =========  ==========


(1)  The Company recorded consulting and legal costs of $0.4 million and
     amortization of intangible assets of $0.1 million associated with
     customer relationships and developed technology in the acquisition of
     SiliconBlue, from the acquisition date, December 16, 2011 through
     December 31, 2011.

(2)  Represents costs and adjustments incurred primarily related to the
     corporate restructuring plan announced on April 21, 2011.

(3)  During the first quarter of fiscal 2011 and the second quarter of
     fiscal 2010, the Company recognized a gain on the sale of certain
     auction rate securities of $0.6 million and a gain on the sale of real
     estate of $0.7 million, respectively.

(4)  In the fourth quarter fiscal 2011, we recognized a tax benefit of
     $35.2 million related to the release of tax valuation allowance for
     certain deferred tax assets, following our evaluation about the
     likelihood of using these tax attributes in the future in light of the
     significant improvement in our operating results in 2011 and the
     affects of our global tax restructuring, which will be completed in
     2012. In the third quarter of fiscal 2011 a tax benefit was recorded
     in connection with the settlement of IRS proposed adjustments for the
     Company's income tax returns for 2001 and 2002.

(5)  For all periods presented 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)

                                                 December 31,   January 1,
                                                      2011          2011
                                                 ------------- -------------
Current assets:
  Cash, cash equivalents and short-term
   marketable securities                         $     210,134 $     238,220
  Accounts receivable, net                              36,993        41,188
  Inventories                                           37,278        37,333
  Other current assets                                  15,517         8,648
                                                 ------------- -------------
    Total current assets                               299,922       325,389

Property and equipment, net                             41,113        39,322
Long-term marketable securities                          6,946        10,232
Other long-term assets                                  11,579         2,744
Intangible assets, net of amortization (1)              18,426            --
Deferred income taxes                                   45,130            --
Goodwill (1)                                            44,808            --
                                                 ------------- -------------
                                                 $     467,924 $     377,687
                                                 ============= =============

      Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable and other accrued liabilities $      41,215 $      38,648
  Deferred income and allowances on sales to
   sell-through distributors                            10,761        15,692
                                                 ------------- -------------
    Total current liabilities                           51,976        54,340

Other long-term liabilities                             22,387         4,625
                                                 ------------- -------------
    Total liabilities                                   74,363        58,965

Stockholders' equity                                   393,561       318,722
                                                 ------------- -------------
                                                 $     467,924 $     377,687
                                                 ============= =============

(1)  The Company is in the process of finalizing the purchase price
     accounting for the December 16, 2011 acquisition of SiliconBlue.

                     Lattice Semiconductor Corporation
             - Supplemental Historical Financial Information -

                                                    4Q11     3Q11     4Q10
                                                  -------  -------  -------
Operations Information
Percent of Revenue
  Gross Margin                                       57.7%    58.6%    62.7%
  R&D Expense                                        22.9%    20.8%    21.4%
  SG&A Expense                                       24.4%    20.6%    22.9%

Depreciation and amortization (in thousands)        4,084    4,089    3,850
Capital Expenditures (in thousands)                 4,309    1,383    5,325
Stock Compensation Expense (in thousands)           1,588    1,687    1,046

Balance Sheet Information
Current Ratio                                         5.8      5.7      6.0
A/R Days Revenue Outstanding                           47       59       51
Inventory Months                                      3.8      3.1      4.1

Revenue% (by Product Family)
PLD                                                    69%      68%      67%
FPGA                                                   31%      32%      33%

Revenue% (by Product Classification)
New                                                    50%      48%      43%
Mainstream                                             27%      27%      30%
Mature                                                 23%      25%      27%

Revenue% (by Geography)
Asia                                                   64%      64%      66%
Europe (incl. Africa)                                  19%      20%      19%
Americas                                               17%      16%      15%

Revenue% (by End Market)
Communications                                         42%      44%      46%
Industrial & Other                                     30%      31%      29%
Computing                                              15%      13%      13%
Consumer                                               13%      12%      12%

Revenue% (by Channel)
Distribution                                           65%      61%      59%
Direct                                                 35%      39%      41%

New: LatticeECP3, LatticeXP2, LatticeECP2/M, MachXO, Power Manager II, ispClock A/D/S, ispMACH 4000ZE, iCE40, iCE65

Mainstream: ispXPLD, ispGDX2, ispMACH 4000/Z, ispXPGA, LatticeSC, LatticeECP, LatticeXP, ispClock, Power Manager I, Software and IP

Mature: 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, GDX/V, ispMACH 4/LV, all SPLDs

For more information contact:
Joe Bedewi
Chief Financial Officer
Lattice Semiconductor Corporation

David Pasquale
Global IR Partners

SOURCE: Lattice Semiconductor Corporation