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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: January 24, 2005
(Date of earliest event reported)
LATTICE SEMICONDUCTOR CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 000-18032 93-0835214
- ------------------------ --------- ----------
(State of incorporation) (Commission (IRS Employer Identification No.)
File Number)
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
(17CFR 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
On January 24, 2005, Lattice Semiconductor Corporation (the "Company") issued a
press release announcing the Company's financial results for the fiscal quarter
and year ending January 1, 2005. A copy of the press release is attached as
Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Item 2.02, in Item 9.01 hereof and in 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 (the "Exchange Act"), or incorporated by
reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as shall be expressly set forth by specific reference in
such a filing.
Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS
The following exhibit is being furnished (not filed) herewith:
Exhibit Number Description
- ----------------- ------------------------------------------------------------
99.1 Press Release dated January 24, 2005, entitled
"Lattice Semiconductor Reports
Fourth Quarter and Year End Financial Results"
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: January 24, 2005 By: /s/ Jan Johannessen
-------------------------
Jan Johannessen
Chief Financial Officer
EXHIBIT INDEX
Exhibit Number Description
- ----------------- ------------------------------------------------------------
99.1 Press Release dated January 24, 2005, entitled
"Lattice Semiconductor Reports
Fourth Quarter and Year End Financial Results"
Exhibit 99.1
Lattice Semiconductor Reports Fourth Quarter and Year End Financial Results
HILLSBORO, Ore.--(BUSINESS WIRE)--Jan. 24, 2005--Lattice Semiconductor
Corporation (Nasdaq:LSCC) today announced financial results for the fourth
quarter and year ending December 2004.
For the year 2004, revenue was $225.8 million, an increase of eight percent
from the $209.7 million reported in 2003. During 2004, PLD revenue grew six
percent to $183.1 million and accounted for 81 percent of total revenue while
FPGA revenue increased 15 percent to $42.7 million and accounted for 19 percent
of total revenue.
Net loss for 2004 was $52.0 million ($0.46 per share), an improvement from
the net loss of $91.8 million ($0.82 per share) reported in 2003. These losses
include charges of $47.3 million and $77.1 million, respectively, for the
amortization of intangible assets. Excluding these charges, the loss for 2004
was $4.7 million ($0.04 per share) as compared to a loss of $14.7 million ($0.13
per share) for 2003. These non-cash amortization charges have been highlighted
as they 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 loss to GAAP net loss
accompanies the financial tables in this earnings release.
For the fourth quarter of 2004, revenue was $48.5 million, a decrease of
eight percent from the $52.8 million reported in the same quarter a year ago and
a decrease of 15 percent from the $57.3 million reported last quarter. Quarterly
revenue from PLD products was $39.6 million, or 82 percent of total revenue, and
declined 14 percent sequentially. Quarterly revenue from FPGA products was $8.9
million, or 18 percent of total revenue, and declined 21 percent sequentially.
Quarterly revenue from New products, now 26 percent of total revenue, grew 5
percent sequentially and 72 percent on a year over year basis.
Net loss for the fourth quarter was $13.1 million ($0.12 per share). This
loss includes a $5.8 million charge for amortization of intangible assets.
Excluding this charge, loss for the quarter was $7.4 million ($0.07 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 loss to GAAP net loss accompanies the
financial tables in this earnings release.
"Last quarter was a difficult one for the PLD industry and our results
reflect these unfavorable market conditions," stated Cyrus Y. Tsui, chairman and
chief executive officer. "On a positive note, we posted sequential revenue
growth from our New products, reduced our inventory balance and continued to
generate positive cash flow from operations before the payment of a $25 million
advance to our foundry partner Fujitsu."
"The year 2004 has been a period of transition for Lattice," continued
Tsui. "We sustained a large R&D investment in order to support the development
of a full portfolio of next generation FPGA product families. We believe these
new products will be critical to our long-term success and ability to grow our
revenue and market share in this attractive segment. During the third quarter,
we initiated the market roll-out of the first of these new families, the
LatticeEC(TM) and LatticeEC-DSP(TM), and are now moving quickly towards volume
production availability of all 12 devices in these families. At this early
stage, we remain pleased with the initial customer reception and are optimistic
about the market potential for these new FPGA families. Looking forward, we
expect this new product momentum to continue throughout 2005 as we continue our
roll-out of additional families of differentiated products targeted at the FPGA
market."
Business Outlook - March 2005 Quarter:
-- Quarterly revenue is expected to be $46 million to $49 million;
-- Gross margin percentage is expected to be approximately flat;
-- Total operating expenses are expected to increase by $1 million to $2
million;
-- Intangible asset amortization is expected to be approximately $4.4
million; and
-- Other Income is expected to be approximately $1 million.
On January 25, 2005, Lattice will hold a telephone conference call at 5:30
am (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 March 15, 2005, 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 March 2005 quarter, Lattice plans to
participate in investor conferences sponsored by Goldman Sachs and Morgan
Stanley. 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 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,
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 Programmable Logic Devices (PLDs), including Complex
Programmable Logic Devices (CPLD), Programmable Mixed Signal Components
(ispPAC), and Programmable Digital Interconnect (ispGDX). 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, consumer, 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)
Three months ended Year Ended
--------------------------------- --------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
Description 2004 2004 2003 2004 2003
- ----------------------------------------------------------------------
(unaudited)(unaudited)(unaudited) (unaudited)
Revenue $48,541 $57,281 $52,757 $225,832 $209,662
Costs and
expenses:
Costs of
products sold 21,058 24,848 23,814 96,857 89,266
Research and
development 22,886 23,213 22,385 90,957 87,092
Selling,
general and
administrative 13,017 13,630 13,562 53,803 50,773
Amortization of
intangible
assets (1)(2) 5,759 5,785 18,661 47,249 77,127
--------------------------------- --------------------
Total costs
and
expenses 62,720 67,476 78,422 288,866 304,258
--------------------------------- --------------------
Loss from
operations (14,179) (10,195) (25,665) (63,034) (94,596)
Other income
(expense), net 1,141 3,989 421 11,373 (3,064)
--------------------------------- --------------------
Loss before
(benefit)
provision for
income taxes (13,038) (6,206) (25,244) (51,661) (97,660)
Provision
(benefit) for
income taxes 100 118 0 318 (5,854)
--------------------------------- --------------------
Net loss ($13,138) ($6,324) ($25,244) ($51,979)($91,806)
================================= ====================
Basic net loss
per share ($0.12) ($0.06) ($0.22) ($0.46) ($0.82)
================================= ====================
Diluted net loss
per share ($0.12) ($0.06) ($0.22) ($0.46) ($0.82)
================================= ====================
Shares used in
per share
calculations:
Basic 113,307 113,181 112,364 112,976 111,794
================================= ====================
Diluted (3) 113,307 113,181 112,364 112,976 111,794
================================= ====================
Notes:
(1) Intangible assets subject to amortization aggregate $40.8 million,
net, at December 31, 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 $0.6 million, $0.7 million and $0.8 million of deferred
stock compensation expense for the quarters ended December 31, 2004,
September 30, 2004, December 31, 2003, respectively, attributable to
Research and Development activities. Includes $3.4 million, and $5.7
million of deferred stock compensation expense for the years ended
December 31, 2004, and December 31, 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)
Dec. 31, Dec. 31,
Description 2004 2003
- ------------------------------------------------------------ ---------
(unaudited)
Assets
Current assets:
Cash and short-term investments $296,295 $277,750
Accounts receivable, net 19,587 26,796
Inventories 38,634 46,630
Other current assets 46,527 51,537
----------- ---------
Total current assets 401,043 402,713
Property and equipment, net 47,586 53,800
Foundry investments, advances and other assets 97,877 86,883
Goodwill and other intangible assets, net (1) 264,400 308,232
----------- ---------
$810,906 $851,628
=========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued
liabilities $61,161 $28,537
Deferred income on sales to distributors 11,399 10,564
----------- ---------
Total current liabilities 72,560 39,101
Zero Coupon Convertible notes due in 2010 169,000 184,000
Other long-term liabilities 26,755 22,415
----------- ---------
195,755 206,415
Stockholders' equity 542,591 606,112
----------- ---------
$810,906 $851,628
=========== =========
Note:
(1) At December 31, 2004, includes approximately $223.6 million in
Goodwill and $40.8 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 Year Ended
-------------------------- ------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
Description 2004 2004 2003 2004 2003
- ----------------------------------------------------------------------
Revenue $48,541 $57,281 $52,757 $225,832 $209,662
Costs and expenses:
Costs of products sold 21,058 24,848 23,814 96,857 89,266
Research and
development 22,886 23,213 22,385 90,957 87,092
Selling, general and
administrative 13,017 13,630 13,562 53,803 50,773
-------------------------- ------------------
Total costs and
expenses 56,961 61,691 59,761 241,617 227,131
-------------------------- ------------------
Loss from operations (8,420) (4,410) (7,004) (15,785) (17,469)
Other income (expense),
net 1,141 3,989 421 11,373 (3,064)
-------------------------- ------------------
Loss before provision
(benefit)
for income taxes (7,279) (421) (6,583) (4,412) (20,533)
Provision (benefit) for
income taxes 100 118 0 318 (5,854)
-------------------------- ------------------
Non-GAAP net loss ($7,379) ($539)($6,583) ($4,730)($14,679)
========================== ==================
Diluted Non-GAAP loss per
share (2) ($0.07) ($0.00) ($0.06) ($0.04) ($0.13)
========================== ==================
Shares used in
calculations 113,307 113,181 112,364 112,976 111,794
========================== ==================
Notes:
(1) This table presents operating information which is consistent
with the information reported by Thompson Financial, Reuters and
Zacks for Lattice Semiconductor Corporation. A reconciliation to
GAAP on a per share basis is attached as Appendix 2.
(2) For all periods presented, the computation of diluted Non-GAAP
loss excludes the effect of stock options and our convertible notes
as they are antidilutive.
Appendix 2
Lattice Semiconductor Corporation
Non-GAAP Earnings Reconciliation (1)
(unaudited)
Three months ended Year Ended
-------------------------- -----------------
Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31,
Description 2004 2004 2003 2004 2003
- ---------------------- -------- -------- -------- -------- --------
Net loss ($0.12) ($0.06) ($0.22) ($0.46) ($0.82)
Add:
Amortization of
intangible assets $0.05 $0.06 $0.16 $0.42 $0.69
---------------------------------------------
Non-GAAP loss ($0.07) $0.00 ($0.06) ($0.04) ($0.13)
=============================================
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 -
(Q4 2004)
Operations Information Q404 Q304 Q403
--------- -------- ---------
Percent of Revenue
Gross Margin 56.6% 56.6% 54.9%
R&D Expense 47.1% 40.5% 42.4%
SG&A Expense 26.8% 23.8% 25.7%
Operating Loss -29.2% -17.8% -48.6%
Operating Loss (Non-GAAP) -17.3% -7.7% -13.3%
Depreciation Expense ($000) 3,890 4,185 4,598
Capital Expenditures ($000) 2,301 1,361 1,808
Balance Sheet Information
Current Ratio 5.5 5.6 10.3
A/R Days Revenue Outstanding 37 43 46
Inventory Months 5.5 4.7 5.9
Revenue % (by Product Family)
FPGA 18% 20% 20%
PLD 82% 80% 80%
Revenue % (by Product Classification(a))
New 26% 21% 14%
Mainstream 35% 43% 42%
Mature 39% 36% 44%
Revenue % (by Geography)
Americas 33% 31% 36%
Europe (incl. Africa) 26% 22% 22%
Asia (incl. ROW) 41% 47% 42%
Revenue % (by End Market)
Communications 48% 50% 51%
Computing 20% 20% 21%
Other 32% 30% 28%
Revenue % (by Channel)
Direct 59% 62% 61%
Distribution 41% 38% 39%
(a) Product Classification:
- ---------------------------
New: LatticeEC/P, FPSC, XPLD, XPGA, GDX2, ORCA 4, ispMACH
4000, ispMACH 4000 Z, ispPAC-PWR, ispCLK
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
Rodney Sloss, 503-268-8000