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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report: October 21, 2004
(Date of earliest event reported)
LATTICE SEMICONDUCTOR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 000-18032 93-0835214
-------- --------- ----------
(State of (Commission (IRS Employer
incorporation) File Number) Identification No.)
5555 N.E. Moore Court, Hillsboro, Oregon 97124-6421
--------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(503) 268-8000
--------------
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Attached hereto as Exhibit 99.1 and incorporated by reference
herein is financial information for Lattice Semiconductor
Corporation for the quarter ended October 2, 2004 and
forward-looking statements relating to 2004 and the fourth
quarter of 2004 as presented in a press release of October 21,
2004. The information in this report shall be deemed incorporated
by reference into any registration statement heretofore or
hereafter filed under the Securities Act of 1933, as amended,
except to the extent that such information is superseded by
information as of a subsequent date that is included in or
incorporated by reference into such registration statement. The
information in this report shall not be treated as filed for
purposes of the Securities Exchange Act of 1934, as amended.
SIGNATURES
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
(Registrant)
Date: October 21, 2004 By: /s/ Jan Johannessen
---------------------------------
Jan Johannessen
Chief Financial Officer
EXHIBIT 99.1
Lattice Semiconductor Reports Third Quarter Financial Results
HILLSBORO, Ore.--(BUSINESS WIRE)--Oct. 21, 2004--Lattice
Semiconductor Corporation (NASDAQ:LSCC) today announced financial
results for the third quarter ended September 2004.
Revenue for the third quarter was $57.3 million, a decrease of six
percent from last quarter's revenue of $60.9 million, but up 33
percent from the $43.0 million (restated) in revenue reported for the
same quarter a year ago.
Quarterly revenue from PLD products was $46.0 million, or 80
percent of total revenue, and declined eight percent sequentially.
Quarterly revenue from FPGA products was $11.3 million, or 20 percent
of total revenue, and grew one percent sequentially. Quarterly revenue
from New products, now 21 percent of total revenue, grew 22 percent
sequentially and nearly doubled on a year over year basis
Net loss for the third quarter was $6.3 million ($0.06 per share).
This loss includes a $5.8 million charge for amortization of
intangible assets. Excluding this charge, loss for the quarter was
$0.5 million ($0.00 per share). This non-cash amortization charge has
been highlighted as these charges are currently expected to be
substantially eliminated in 2008. The Company believes exclusion of
these charges more closely approximate its cash earnings performance.
A reconciliation of non-GAAP income to GAAP loss accompanies the
financial tables in this earnings release.
The business continues to generate significant cash from
operations despite the GAAP losses. Last quarter the Company generated
approximately $7 million in cash from operations, which makes the year
to-date operating cash flow approximately $26 million.
"As expected, third quarter revenue declined as the semiconductor
industry experienced a summer slowdown," stated Cyrus Y. Tsui,
Chairman and Chief Executive Officer. "Unfortunately, we have yet to
see an acceleration of orders in the current quarter and it now
appears that general industry conditions have deteriorated when
compared to the first half of 2004."
"On a positive note, last quarter we executed superbly on the
roll-out of our recently announced LatticeEC(TM) and
LatticeECP-DSP(TM) new FPGA families", continued Tsui. "We have
released the initial two devices to volume production, secured our
first design-ins and made our first customer shipments. This quarter
we are on track to sample the remaining 10 devices, which when
accomplished, will mark the fastest roll-out of a major new product
family in our corporate history. Additionally, these innovative
devices offer several unique features, previously unavailable from
competitive low-cost, high-volume FPGAs. They are the only low-cost
FPGAs to support 400 Mbps DDR memory interfaces, the only devices to
provide a high performance, flexible DSP block and the only FPGA
families to support industry standard, low-cost, boot PROMs. At this
early stage, we are pleased with the initial market reception and are
optimistic about the market potential for these new FPGA families."
Business Outlook -- December 2004 Quarter:
-- Due to subdued industry conditions, quarterly revenue is
expected to decline to between $51 and $53 million;
-- Gross margin percentage is expected to be approximately flat;
-- Total operating expenses are expected to be approximately
flat;
-- Intangible asset amortization is expected to be approximately
$5.8 million; and
-- Other Income is expected to be approximately $1 million.
On October 22, 2004, Lattice will hold a telephone conference call
at 5:30 a.m. (Pacific time) with financial analysts. Investors may
listen to our conference call live via the web at www.lscc.com.
Replays of the call will also be available at www.lscc.com. On
December 16, 2004, we plan to publish a "Business Update Statement" on
our website. Our financial guidance will be limited to the comments on
our public quarterly earnings call and these public business outlook
statements. Additionally, during the December 2004 quarter, Lattice
plans to participate in investor conferences sponsored by the American
Electronics Association and Wells Fargo. 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 the Company's 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 the
possibility that further accounting adjustments may be required and
the effectiveness of changes to the Company's internal controls, as
well as overall semiconductor market conditions, market acceptance and
demand for the Company's new products, the Company's dependencies on
our silicon wafer suppliers, the impact of competitive products and
pricing, and technological and product development risks. 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.
Lattice Semiconductor Corporation, the inventor of in-system
programmable (ISP(TM)) logic products, designs, develops and markets
the broadest range of Field Programmable Gate Arrays (FPGA), Field
Programmable System Chips (FPSCs) and high-performance ISP
Programmable Logic Devices (PLDs), including Complex Programmable
Logic Devices (CPLD), Programmable Analog Components (PAC), and
Programmable Digital Interconnect (GDX). Lattice also offers industry
leading SERDES products. 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 communications, 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) 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 Nine months ended
------------------------------- ---------------------
Sept. 30, June. 30, Sept. 30, Sept. 30, Sept. 30,
Description 2004 2004 2003 2004 2003
- ---------------- --------- ---------- --------------------- ----------
Revenue $ 57,281 $ 60,939 $ 43,033 $ 177,291 $ 156,905
Costs and
expenses:
Costs of
products
sold 24,848 26,232 19,431 75,799 65,452
Research and
development 23,213 22,599 21,173 68,071 64,707
Selling,
general and
adminis-
trative 13,630 14,069 12,114 40,786 37,211
Amortization
of
intangible
assets
(1)(2) 5,785 17,051 18,665 41,490 58,466
-------- --------- --------- --------- ---------
Total costs
and
expenses 67,476 79,951 71,383 226,146 225,836
-------- --------- --------- --------- ---------
Loss from
operations (10,195) (19,012) (28,350) (48,855) (68,931)
Other income
(expense), net 3,989 3,136 (3,611) 10,232 (3,485)
-------- --------- --------- --------- ---------
Loss before
provision for
income taxes (6,206) (15,876) (31,961) (38,623) (72,416)
Provision
(benefit) for
income taxes 118 100 (3,300) 218 (5,854)
-------- --------- --------- --------- ---------
Net loss ($6,324) ($15,976) ($28,661) ($38,841) ($66,562)
======== ========= ========= ========= =========
Basic net loss
per share ($0.06) ($0.14) ($0.26) ($0.34) ($0.60)
======== ========= ========= ========= =========
Diluted net loss
per share ($0.06) ($0.14) ($0.26) ($0.34) ($0.60)
======== ========= ========= ========= =========
Shares used in
per share
calculations:
Basic 113,181 112,812 111,840 112,871 111,615
======== ========= ========= ========= =========
Diluted (3) 113,181 112,812 111,840 112,871 111,615
======== ========= ========= ========= =========
Notes:
(1) Intangible assets subject to amortization aggregate $46.0 million,
net, at September 30, 2004 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
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.
(2) Includes $0.7 million, $1.3 million and $0.8 million of deferred
stock compensation expense for the quarters ended September 30,
2004, June 30, 2004, September 30, 2003, respectively,
attributable to Research and Development activities. Includes $2.8
million, and $4.9 million of deferred stock compensation expense
for the nine-month periods ended September 30, 2004, and September
30, 2003, respectively, attributable to Research and Development
activities.
(3) 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)
Sept. 30, Dec. 31,
Description 2004 2003
- -------------------------------------------------- -------- --------
Assets
Current assets:
Cash and short-term investments $319,398 $277,750
Accounts receivable, net 27,001 26,796
Inventories 39,099 46,630
Other current assets 47,743 51,537
-------- --------
Total current assets 433,241 402,713
Property and equipment, net 49,002 53,800
Foundry investments, advances and other assets 74,225 86,883
Goodwill and other intangible assets, net (1) 269,528 308,232
-------- --------
$825,996 $851,628
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued liabilities $ 61,573 $ 28,500
Deferred income on sales to distributors 16,040 10,564
Income taxes payable 41 37
-------- --------
Total current liabilities 77,654 39,101
Zero Coupon Convertible notes due in 2010 169,000 184,000
Other long-term liabilities 27,056 22,415
-------- --------
196,056 206,415
Stockholders' equity 552,286 606,112
-------- --------
$825,996 $851,628
======== ========
Note:
(1) At September 30, 2004, includes approximately $223.6 million in
Goodwill and $46.0 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 Nine months ended
----------------------------- -------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
Description 2004 2004 2003 2004 2003
- ------------------- --------- --------- --------- --------- ---------
Revenue $ 57,281 $ 60,939 $ 43,033 $177,291 $156,905
Costs and expenses:
Costs of
products sold 24,848 26,232 19,431 75,799 65,452
Research and
development 23,213 22,599 21,173 68,071 64,707
Selling, general
and
administrative 13,630 14,069 12,114 40,786 37,211
-------- -------- -------- -------- --------
Total costs
and
expenses 61,691 62,900 52,718 184,656 167,370
-------- -------- -------- -------- --------
Loss from
operations (4,410) (1,961) (9,685) (7,365) (10,465)
Other income
(expense), net 3,989 3,136 (3,611) 10,232 (3,485)
-------- -------- -------- -------- --------
Income (loss)
before provision
(benefit) for
income taxes (421) 1,175 (13,296) 2,867 (13,950)
Provision (benefit)
for income taxes 118 100 (3,300) 218 (5,854)
-------- -------- -------- -------- --------
Non-GAAP earnings ($539) $ 1,075 ($9,996) $ 2,649 ($8,096)
======== ======== ======== ======== ========
Diluted Non-GAAP
earnings per share
(2) ($0.00) $ 0.01 ($0.09) $ 0.02 ($0.07)
======== ======== ======== ======== ========
Shares used in
calculations 113,181 114,125 111,840 114,222 111,615
======== ======== ======== ======== ========
Notes:
(1) This table presents operating information which is consistent with
the information reported by First Call, Reuters and Zacks for
Lattice Semiconductor Corporation. A reconciliation to GAAP on a
per share basis is attached as Appendix 2.
(2) For the three months ended June 30, 2004, and for the nine months
ended September 30, 2004 , 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. For the
three months ended September 30, 2004 and September 30, 2003, and
for the nine months ended September 30, 2003, the computation of
diluted Non- GAAP loss excludes the effect of both stock options
and the effect of our convertible notes as they are antidilutive.
Appendix 2
Lattice Semiconductor Corporation
Non-GAAP Earnings Reconciliation (1)
(unaudited)
Three months ended Nine months ended
---------------------------- -------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
Description 2004 2004 2003 2004 2003
- ------------------------------- -------- --------- --------- ---------
Net loss ($0.06) ($0.14) ($0.26) ($0.34) ($0.60)
Add:
Amortization of
intangible assets $0.06 $0.15 $0.17 $0.36 $ 0.53
--------- -------- --------- --------- -------
Non-GAAP income (loss) $0.00 $0.01 ($0.09) $0.02 ($0.07)
========= ======== ======= ========= =======
Notes:
(1) This table reconciles net loss to non-GAAP information, which is
presented in Appendix 1, on a per-share basis.
Appendix 3
LATTICE SEMICONDUCTOR CORPORATION
- Supplemental Historic Financial Information -
(Q3 2004)
Operations Information Q304 Q204 Q303
-------- -------- ---------
Percent of Revenue
Gross Margin 56.6% 57.0% 54.8%
R&D Expense 40.5% 37.1% 49.2%
SG&A Expense 23.8% 23.1% 28.2%
Operating Loss -17.8% -31.2% -65.9%
Operating Loss (Non-GAAP) -7.7% -3.2% -22.5%
Depreciation Expense ($000) 4,185 4,366 4,658
Capital Expenditures ($000) 1,361 4,774 2,300
Balance Sheet Information
Current Ratio 5.6 9.8 8.3
A/R Days Revenue Outstanding 43 43 57
Inventory Months 4.7 4.6 7.5
Revenue % (by Product Family)
FPGA 20% 18% 21%
PLD 80% 82% 79%
Revenue % (by Product Classification(a))
New 21% 16% 15%
Mainstream 43% 43% 52%
Mature 36% 41% 33%
Revenue % (by Geography)
Americas 31% 30% 32%
Europe (incl. Africa) 22% 23% 21%
Asia (incl. ROW) 47% 47% 47%
Revenue % (by End Market)
Communications 50% 51% 49%
Computing 20% 17% 22%
Other 30% 32% 29%
Revenue % (by Channel)
Direct 62% 63% 67%
Distribution 38% 37% 33%
(a) Product Classification:
- ------------------------------------------
New: FPSC, XPLD, XPGA, GDX2, ORCA 4, ispMACH 4000, ispMACH 4000 Z,
ispPAC-PWR
Mainstream: ORCA 3, GDX/V, ispMACH L/V, ispLSI 2000V, ispLSI 5000V,
ispLSI 8000V, ispMACH 5000VG, and Other
Mature: ORCA 2, All 5-Volt CPLDs, All SPLDs
CONTACT: Lattice Semiconductor Corporation
Roddy Sloss, 503-268-8000