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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
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Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
July 21 2003
Date of Report (Date of earliest event reported)
LATTICE SEMICONDUCTOR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 000-18032 93-0835214
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
5555 NE Moore Court
Hillsboro, OR 97124-6421 (503) 268-8000
(Address of principal executive offices) (Registrant's telephone number,
including area code)
Item 7. Exhibits.
(c) Exhibits:
The following exhibit is filed with this report on Form 8-K:
Exhibit No. Description
- ----------- -----------
99.1 Press Release of Lattice Semiconductor Corporation, dated July 21,
2003.
Item 9. Regulation FD Disclosure and Disclosure of Results of Operations and
Financial Condition (Item 12)*
The following information and exhibit relating thereto are furnished
pursuant to Items 9 and 12 of this Current Report on Form 8-K: On July 21 2003,
Lattice Semiconductor Corporation (the "Company") issued a press release
announcing the Company's earnings for the fiscal quarter ended June 28,2003. A
copy of the press release is attached hereto as Exhibit 99.1.
* The information furnished under Item 9 and Item 12 of this Current Report on
Form 8-K, including Exhibit 99.1, shall not be deemed to be "filed" for the
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liabilities of that section.
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Press Release of Lattice Semiconductor Corporation, dated July 21,
2003.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LATTICE SEMICONDUCTOR CORPORATION
Date: July 21, 2003
By: /s/ Stephen A. Skaggs
------------------------------------------
Name: STEPHEN A. SKAGGS
Title: Chief Financial Officer
Exhibit 99.1
Lattice Semiconductor Reports Second Quarter Results
HILLSBORO, Ore.--(BUSINESS WIRE)--July 21, 2003--Lattice
Semiconductor Corporation (NASDAQ:LSCC) today announced financial
results for the second quarter of 2003.
Revenue for the quarter was $58.2 million, flat with last
quarter's revenue and an increase of three percent from the $56.5
million reported in the same quarter a year ago. Quarterly revenue
from high density CPLD products was $40.3 million, down one percent
from last quarter while quarterly revenue from FPGA products was $9.0
million, an increase of seven percent from last quarter.
On a GAAP basis, net loss for the quarter was $16.9 million ($0.15
per share). This loss includes an $18.7 million charge for
amortization of intangible assets.
Non-GAAP income for the quarter was $1.8 million ($0.02 per
share). Non-GAAP earnings exclude non-cash acquisition related
amortization expenses and more closely approximates our cash earnings
performance. A reconciliation of non-GAAP to GAAP earnings accompanies
the financial tables in this earnings release.
"We remain pleased with the progress of our new product
initiatives," stated Cyrus Y. Tsui, chairman and chief executive
officer. "Since 2002, we have brought to market five major new product
families: our advanced field programmable system chips (FPSC), our
technologically differentiated ispXP(TM) products, our innovative
ispPAC(R) PWR devices, our low power ispMACH(R) 4000Z CPLDs and our
third generation BFW III CPLDs. While the collective revenue of these
new products is still relatively small, it grew very rapidly on a
sequential basis. In addition, these new products accounted for well
over a third of our customer design activity last quarter. We believe
this positive customer reception will drive continued growth for these
products."
"Last quarter, we introduced our sixth new product family, the
XPIO(TM) 110GXS," continued Tsui. "The XPIO is the industry's lowest
power 10 gigabit per second CMOS transceiver and further solidifies
our leadership position in the SERDES marketplace. We are committed to
embedding this innovative technology into future generations of
advanced FPSC and FPGA products," Tsui concluded.
Business Outlook - September 2003 Quarter
-- We believe that, due to seasonality and general industry
conditions, third quarter revenues will be between $52 million
and $55 million.
-- Gross margins are expected to remain at approximately 60% of
revenue.
-- Total operating expenses are expected to decrease by
approximately $1 million to $2 million on a sequential basis.
-- In conjunction with the previously announced retirement of our
4 3/4 percent convertible notes, we will incur a one-time
charge of approximately $5.7 million for the call premium and
accelerated write-off of remaining unamortized issuance costs
related to these notes. Total Other Expense, including this
non-recurring charge, is expected to be approximately $5.6
million.
-- Finally, we anticipate reporting a tax credit of $3 million to
$4 million.
On July 22, 2003, Lattice will hold a telephone conference call at
5:30 am (Pacific Time) with financial analysts and publish a "Business
Outlook Statement" covering the September 2003 quarter. Investors may
listen to our conference call via the web at www.on24.com. Both the
conference call and our business outlook statement will be available
on our website, www.lscc.com through July 28, 2003. On September 11,
2003, we plan to publish a "Business Update Statement" on our website
for five calendar days. Our financial guidance will be limited to the
comments on our public quarterly earnings call and these public
business outlook statements. Additionally, during the September 2003
quarter, Lattice plans to participate in investor conferences
sponsored by Soundview and Bank of America Securities. Specific
presentation dates and times are posted on our website at
www.lscc.com.
The foregoing paragraphs contain forward-looking statements within
the meaning of the Federal Securities laws including statements about
future quarterly financial results, revenues, customers, product
offerings and our ability to compete. Investors are cautioned that
actual events and results could differ materially from these
statements as a result of a number of factors, including overall
semiconductor market conditions, market acceptance and demand for our
new products, risks related to our recent acquisitions and their
integration with Lattice, our dependencies on our silicon wafer
suppliers, the impact of competitive products and pricing,
technological and product development risks.
Oregon-based Lattice Semiconductor Corporation designs, develops
and markets the broadest range of Field Programmable Gate Arrays
(FPGAs) and Field Programmable System Chips (FPSCs) and
high-performance ISP(TM) programmable logic devices (PLDs).
Lattice offers total solutions for today's system designs by
delivering the most innovative programmable silicon products that
embody leading-edge system expertise. Lattice products are sold
worldwide through an extensive network of independent sales
representatives and distributors, primarily to OEM customers in the
communication, computing, industrial and military end markets. Company
headquarters are located at 5555 N.E. Moore Court, Hillsboro, Oregon
97124, USA. For more information access our web site at
www.latticesemi.com.
Lattice Semiconductor Corporation, L (& design), Lattice (&
design), in-system programmable, ISP 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 Statement of Operations
(in thousands, except per share data)
(unaudited)
Three months ended Six months ended
---------------------------- -------------------
June 30, Mar. 31, June 30, June 30, June 30,
Description 2003 2003 2002 2003 2002
- --------------------- --------- --------- -------- --------- ---------
Revenue $58,178 $58,311 $56,466 $116,489 $115,344
Costs and expenses:
Costs of products
sold 23,289 23,208 22,492 46,497 46,098
Research and
development 21,702 21,832 21,078 43,534 42,463
Selling, general and
administrative 12,614 12,483 12,220 25,097 24,078
In-process research
and development (1) -- -- -- -- 24,200
Amortization of
intangible assets
(2)(3) 18,687 21,114 17,923 39,801 36,546
--------- --------- -------- --------- ---------
Total costs and
expenses 76,292 78,637 73,713 154,929 173,385
--------- --------- -------- --------- ---------
Loss from operations (18,114) (20,326) (17,247) (38,440) (58,041)
Other (expense)
income, net (1,365) 1,491 3,078 126 1,177
--------- --------- -------- --------- ---------
Loss before benefit
for income taxes (19,479) (18,835) (14,169) (38,314) (56,864)
Benefit for income
taxes (2,554) -- (6,022) (2,554) (23,100)
--------- --------- -------- --------- ---------
Net loss ($16,925) ($18,835) ($8,147) ($35,760) ($33,764)
========= ========= ======== ========= =========
Basic net loss per
share ($0.15) ($0.17) ($0.07) ($0.32) ($0.31)
========= ========= ======== ========= =========
Diluted net loss per
share ($0.15) ($0.17) ($0.07) ($0.32) ($0.31)
========= ========= ======== ========= =========
Shares used in per
share calculations:
Basic 111,507 111,390 109,684 111,473 109,619
========= ========= ======== ========= =========
Diluted (4) 111,507 111,390 109,684 111,473 109,619
========= ========= ======== ========= =========
Notes:
(1) Represents write-off of in-process research and development in
conjunction with the January 18, 2002 acquisition of the FPGA
business of Agere Systems, Inc.
(2) Intangible assets subject to amortization aggregate $120.3
million, net, at June 30, 2003 and relate to the acquisition of
Cerdelinx Technologies, Inc. on August 26, 2002, the acquisition of
the FPGA business of Agere Systems, Inc. on January 18, 2002, the
acquisition of Vantis Corporation on June 16, 1999 and the
acquisition of Integrated Intellectual Property Inc. on March 16,
2001. These intangible assets are amortized to expense generally over
three to seven years on a straight-line basis.
(3) Includes $0.8 million, $3.3 million and $0.6 million of deferred
stock compensation expense for the quarters ended June 30, 2003,
March 31, 2003 and June 30, 2002, respectively, and $4.1 million and
$1.1 million of deferred stock compensation expense for the six
months ended June 30, 2003 and June 30, 2002, respectively,
attributable to Research and Development activities.
(4) For all periods presented, the computation of diluted net loss per
share excludes the effect of stock options and our convertible notes
as they are antidilutive.
Lattice Semiconductor Corporation
Consolidated Balance Sheet
(in thousands)
(unaudited)
June 30, Dec. 31,
Description 2003 2002
- ---------------------------------------------- ----------- -----------
Assets
Current assets:
Cash and short-term investments $470,178 $276,880
Accounts receivable, net 28,372 26,374
Inventories 48,283 56,241
Other current assets 11,476 35,033
----------- -----------
Total current assets 558,309 394,528
Property and equipment, net 58,978 62,786
Foundry investments, advances and other assets 108,574 104,507
Goodwill and other intangible assets, net (1) 343,909 379,442
----------- -----------
$1,069,770 $941,263
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued
liabilities $31,238 $33,597
Deferred income on sales to distributors 8,763 11,983
Income taxes payable -- 142
----------- -----------
Total current liabilities 40,001 45,722
4 3/4% Convertible notes due in 2006 172,304 208,061
Zero Coupon Convertible notes due in 2010 200,000 --
Other long-term liabilities 25,704 26,345
----------- -----------
398,008 234,406
Stockholders' equity 631,761 661,135
----------- -----------
$1,069,770 $941,263
=========== ===========
Note:
(1) At June 30, 2003, includes approximately $10.4 million of other
intangible assets, net, recorded in the September 2002 quarter in
connection with the August 26, 2002 acquisition of Cerdelinx
Technologies, Inc. Also includes $142.5 million in Goodwill and $61.1
million of other intangible assets, net, recorded in the March 2002
quarter in connection with the January 18, 2002 acquisition of the
FPGA business of Agere Systems, Inc., and approximately $81.1 million
in Goodwill and $48.8 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.
Appendix 1
Lattice Semiconductor Corporation
Consolidated Operations Information- Non-GAAP Basis (1)
(in thousands, except per share data)
(unaudited)
Three months ended Six months ended
-------------------------- -------------------
June 30, Mar. 31, June 30, June 30, June 30,
Description 2003 2003 2002 2003 2002
- ----------------------- -------- -------- -------- --------- ---------
Revenue $58,178 $58,311 $56,466 $116,489 $115,344
Costs and expenses:
Costs of products sold 23,289 23,208 22,492 46,497 46,098
Research and
development 21,702 21,832 21,078 43,534 42,463
Selling, general and
administrative 12,614 12,483 12,220 25,097 24,078
-------- -------- -------- --------- ---------
Total costs and
expenses 57,605 57,523 55,790 115,128 112,639
-------- -------- -------- --------- ---------
Income from operations 573 788 676 1,361 2,705
Other (expense) income,
net (1,365) 1,491 3,078 126 1,177
-------- -------- -------- --------- ---------
Income before (benefit)
provision
for income taxes (792) 2,279 3,754 1,487 3,882
(Benefit) provision for
income taxes (2,554) -- 976 (2,554) 1,009
Tax shield (2) -- -- 4,250 -- 8,173
-------- -------- -------- --------- ---------
Non-GAAP earnings $1,762 $2,279 $7,028 $4,041 $11,046
======== ======== ======== ========= =========
Diluted Non-GAAP
earnings per share (3) $0.02 $0.02 $0.06 $0.04 $0.10
======== ======== ======== ========= =========
Shares used in
calculations 113,405 113,098 110,991 113,268 111,978
======== ======== ======== ========= =========
Notes:
(1) This table presents operating information which is consistent
with the information reported by First Call, IBES and Zacks for
Lattice Semiconductor Corporation. A reconciliation to GAAP on a
per-share basis is attached as Appendix 2.
(2) Tax Shield represents the current period tax deduction available
from amortizing gross goodwill and other intangible assets
(approximately $750 million as of December 31, 2002) over 15 years on
a straight line basis using a 34% tax rate. As of the March 31, 2003
quarter, we are no longer reporting a Tax Shield.
(3) For all periods presented, the computation of diluted Non-GAAP
earnings includes the effect of stock options but excludes the effect
of our convertible notes as they are antidilutive.
Appendix 2
Lattice Semiconductor Corporation
Non-GAAP Earnings Reconciliation (1)
(unaudited)
Three months ended Six months ended
----------------------------- -------------------
June 30, Mar. 31, June 30, June 30, June 30,
Description 2003 2003 2002 2003 2002
- -------------------- --------- --------- --------- --------- ---------
Net loss ($0.15) ($0.17) ($0.07) ($0.32) ($0.31)
Add:
Amortization of
intangible assets $0.17 $0.19 $0.09 $0.36 $0.20
In-process research
and development (2) -- -- -- -- $0.13
Tax shield (3) -- -- $0.04 -- $0.07
Difference in
effective tax rate
(4) -- -- -- -- $0.01
--------- --------- --------- --------- ---------
Non-GAAP earnings $0.02 $0.02 $0.06 $0.04 $0.10
========= ========= ========= ========= =========
Notes:
(1) This table reconciles net income (loss) to non-GAAP information,
which is presented in Appendix 1, on a per-share basis.
(2) Represents write-off of in-process research and development in
conjunction with the January 18, 2002 acquisition of the FPGA
business of Agere Systems, Inc.
(3) Tax Shield represents the current period tax deduction available
from amortizing gross goodwill and other intangible assets
(approximately $750 million as of December 31, 2002) over 15 years on
a straight line basis using a 34% tax rate. As of the March 31, 2003
quarter, we are no longer reporting a Tax Shield.
(4) The effective tax rate is the ratio of income tax expense to
pretax income. The rate for the six months ended June 30, 2002
presented in the non-GAAP information presentation is different from
the rates in the Statement of Operations, due to the difference in
the proportion of taxable income derived from operations.
Appendix 3
LATTICE SEMICONDUCTOR CORPORATION
- Supplemental Historic Financial Information -
(Q2 2003)
Operations Information Q203 Q103 Q202
---------- ---------- ----------
Percent of Revenue
Gross Margin 60.0% 60.2% 60.2%
R&D Expense 37.3% 37.4% 37.3%
SG&A Expense 21.7% 21.4% 21.6%
Operating (Loss) Income -31.1% -34.9% -30.5%
Operating Income (Non-GAAP) 1.0% 1.4% 1.2%
Depreciation Expense ($000) 4,603 4,742 4,780
Capital Expenditures ($000) 2,504 3,211 5,626
Balance Sheet Information Q203 Q103 Q202
---------- ---------- ----------
Current Ratio 14.0 7.4 8.2
A/R Days Revenue Outstanding 45 48 46
Inventory Months 6.2 6.7 8.5
Revenue % (by Product Family) Q203 Q103 Q202
---------- ---------- ----------
FPGA 16% 14% 13%
CPLD 69% 70% 68%
SPLD 15% 16% 19%
Revenue % (by Geography) Q203 Q103 Q202
---------- ---------- ----------
Americas 45% 41% 47%
Europe (incl. Africa) 24% 29% 23%
Asia (incl. ROW) 31% 30% 30%
Revenue % (by End Market) Q203 Q103 Q202
---------- ---------- ----------
Communications 52% 44% 55%
Computing 21% 21% 23%
Other 27% 35% 22%
Revenue % (by Channel) Q203 Q103 Q202
---------- ---------- ----------
Direct 52% 54% 52%
Distribution 48% 46% 48%
CONTACT: Lattice Semiconductor Corporation
Roddy Sloss, 503-268-8000