AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 17, 1995 REGISTRATION NO. 33- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------- LATTICE SEMICONDUCTOR CORPORATION (Exact name of Registrant as specified in its charter) DELAWARE 93-0835214 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 5555 NE MOORE COURT HILLSBORO, OREGON 97124-6421 (503) 681-0118 (Address, including zip code and telephone number, including area code, of Registrant's principal executive offices) --------------------- CYRUS Y. TSUI CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER AND PRESIDENT 5555 NE MOORE COURT HILLSBORO, OREGON 97124-6421 (503) 681-0118 (Name, address, including zip code, and telephone number, including area code, of agent for service) --------------------- COPIES TO: LARRY W. SONSINI, ESQ. WILLIAM D. SHERMAN, ESQ. JOHN A. FORE, ESQ. C. JEFFREY CHAR, ESQ. WILSON SONSINI GOODRICH & ROSATI, PC MORRISON & FOERSTER 650 PAGE MILL ROAD 755 PAGE MILL ROAD PALO ALTO, CALIFORNIA 94304 PALO ALTO, CALIFORNIA 94304 (415) 493-9300 (415) 813-5600 --------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / ________________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / ________________ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / --------------------- CALCULATION OF REGISTRATION FEE --------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED (1) UNIT (2) PRICE (2) REGISTRATION FEE Common Stock, $.01 par value (3).................. 2,875,000 shares $35.625 $102,421,875 $35,319 (1) Includes 375,000 shares issuable upon exercise of an option granted to the Underwriters to cover over-allotments, if any. (2) Estimated solely for the purpose of computing the amount of the registration fee and based on the average of the high and low price of the common stock of Lattice Semiconductor Corporation as reported on The Nasdaq National Market on October 10, 1995 pursuant to Rule 457(c). (3) Includes Rights to purchase Preferred Stock of the Company which, prior to certain events, will not be exercisable or evidenced separately from the Common Stock. EXPLANATORY NOTE This Registration Statement contains two forms of prospectuses: one to be used in connection with an offering in the United States and the other to be used in connection with a concurrent international offering (the "International Prospectus"). The two prospectuses are identical except for the outside front cover page. The alternate page for the International Prospectus is included herein and labeled "Alternate Page For International Prospectus." Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. PROSPECTUS (SUBJECT TO COMPLETION) ISSUED OCTOBER 17, 1995 2,500,000 SHARES [LOGO] COMMON STOCK ----------------- OF THE 2,500,000 SHARES OF COMMON STOCK BEING OFFERED, 2,000,000 SHARES ARE BEING OFFERED INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS AND 500,000 SHARES ARE BEING OFFERED INITIALLY OUTSIDE OF THE UNITED STATES AND CANADA BY THE INTERNATIONAL UNDERWRITERS. ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY THE COMPANY. THE COMPANY'S COMMON STOCK IS TRADED IN THE OVER-THE-COUNTER MARKET UNDER THE NASDAQ NATIONAL MARKET SYMBOL "LSCC." THE LAST SALE PRICE FOR THE COMMON STOCK ON OCTOBER 16, 1995, AS REPORTED ON THE NASDAQ NATIONAL MARKET, WAS $36 3/4 PER SHARE. SEE "PRICE RANGE OF COMMON STOCK." ------------------------ THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING ON PAGE 6 HEREOF. ------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------- PRICE $ A SHARE ------------------- - --------- (1) THE COMPANY HAS AGREED TO INDEMNIFY THE UNDERWRITERS AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SEE "UNDERWRITERS." (2) BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT $ . (3) THE COMPANY HAS GRANTED TO THE U.S. UNDERWRITERS AN OPTION, EXERCISABLE WITHIN 30 DAYS OF THE DATE HEREOF, TO PURCHASE UP TO AN AGGREGATE OF 375,000 ADDITIONAL SHARES AT THE PRICE TO PUBLIC LESS UNDERWRITING DISCOUNTS AND COMMISSIONS FOR THE PURPOSE OF COVERING OVER-ALLOTMENTS, IF ANY. IF THE U.S. UNDERWRITERS EXERCISE SUCH OPTION IN FULL, THE TOTAL PRICE TO PUBLIC, UNDERWRITING DISCOUNTS AND COMMISSIONS AND PROCEEDS TO COMPANY WILL BE $ , $ AND $ , RESPECTIVELY. SEE "UNDERWRITERS." ------------------------ THE SHARES ARE OFFERED SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY THE UNDERWRITERS NAMED HEREIN AND SUBJECT TO APPROVAL OF CERTAIN LEGAL MATTERS BY MORRISON & FOERSTER, COUNSEL FOR THE UNDERWRITERS. IT IS EXPECTED THAT DELIVERY OF THE SHARES WILL BE MADE ON OR ABOUT NOVEMBER , 1995 AT THE OFFICE OF MORGAN STANLEY & CO. INCORPORATED, NEW YORK, N.Y., AGAINST PAYMENT THEREFOR IN NEW YORK FUNDS. ------------------- MORGAN STANLEY & CO. INCORPORATED DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION PAINEWEBBER INCORPORATED NEEDHAM & COMPANY, INC. , 1995
UNDERWRITING PRICE TO DISCOUNTS AND PROCEEDS TO PUBLIC COMMISSSIONS(1) COMPANY(2) ------------------- ------------------- ------------------- PER SHARE........................................ $ $ $ TOTAL(3)......................................... $ $ $ Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. [ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS] PROSPECTUS (SUBJECT TO COMPLETION) ISSUED OCTOBER 17, 1995 2,500,000 SHARES [LOGO] COMMON STOCK ----------------- OF THE 2,500,000 SHARES OF COMMON STOCK BEING OFFERED, 500,000 SHARES ARE BEING OFFERED INITIALLY OUTSIDE OF THE UNITED STATES AND CANADA BY THE INTERNATIONAL UNDERWRITERS AND 2,000,000 SHARES ARE BEING OFFERED INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS. ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY THE COMPANY. THE COMPANY'S COMMON STOCK IS TRADED IN THE OVER-THE-COUNTER MARKET UNDER THE NASDAQ NATIONAL MARKET SYMBOL "LSCC." THE LAST SALE PRICE FOR THE COMMON STOCK ON OCTOBER 16, 1995, AS REPORTED ON THE NASDAQ NATIONAL MARKET, WAS $36 3/4 PER SHARE. SEE "PRICE RANGE OF COMMON STOCK." ------------------------ THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING ON PAGE 6 HEREOF. ------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------- PRICE $ A SHARE ------------------- - --------- (1) THE COMPANY HAS AGREED TO INDEMNIFY THE UNDERWRITERS AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SEE "UNDERWRITERS." (2) BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT $ . (3) THE COMPANY HAS GRANTED TO THE U.S. UNDERWRITERS AN OPTION, EXERCISABLE WITHIN 30 DAYS OF THE DATE HEREOF, TO PURCHASE UP TO AN AGGREGATE OF 375,000 ADDITIONAL SHARES AT THE PRICE TO PUBLIC LESS UNDERWRITING DISCOUNTS AND COMMISSIONS FOR THE PURPOSE OF COVERING OVER-ALLOTMENTS, IF ANY. IF THE U.S. UNDERWRITERS EXERCISE SUCH OPTION IN FULL, THE TOTAL PRICE TO PUBLIC, UNDERWRITING DISCOUNTS AND COMMISSIONS AND PROCEEDS TO COMPANY WILL BE $ , $ AND $ , RESPECTIVELY. SEE "UNDERWRITERS." ------------------------ THE SHARES ARE OFFERED SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY THE UNDERWRITERS NAMED HEREIN AND SUBJECT TO APPROVAL OF CERTAIN LEGAL MATTERS BY MORRISON & FOERSTER, COUNSEL FOR THE UNDERWRITERS. IT IS EXPECTED THAT DELIVERY OF THE SHARES WILL BE MADE ON OR ABOUT NOVEMBER , 1995 AT THE OFFICE OF MORGAN STANLEY & CO. INCORPORATED, NEW YORK, N.Y., AGAINST PAYMENT THEREFOR IN NEW YORK FUNDS. ------------------- MORGAN STANLEY & CO. INTERNATIONAL DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION PAINEWEBBER INTERNATIONAL NEEDHAM & COMPANY, INC. , 1995
UNDERWRITING DISCOUNTS AND PROCEEDS TO PRICE TO PUBLIC COMMISSSIONS (1) COMPANY (2) ------------------- ------------------- ------------------- PER SHARE........................................ $ $ $ TOTAL (3)........................................ $ $ $ NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND ANY INFORMATION OR REPRESENTATION NOT CONTAINED OR INCORPORATED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH AN OFFERING OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS AT ANY TIME NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. --------------------- NO ACTION HAS BEEN OR WILL BE TAKEN IN ANY JURISDICTION BY THE COMPANY OR BY AN UNDERWRITER THAT WOULD PERMIT A PUBLIC OFFERING OF THE COMMON STOCK OR POSSESSION OR DISTRIBUTION OF THIS PROSPECTUS IN ANY JURISDICTION WHERE ACTION FOR THAT PURPOSE IS REQUIRED, OTHER THAN IN THE UNITED STATES. PERSONS INTO WHOSE POSSESSION THIS PROSPECTUS COMES ARE REQUIRED BY THE COMPANY AND THE UNDERWRITERS TO INFORM THEMSELVES ABOUT, AND TO OBSERVE ANY RESTRICTIONS AS TO, THE OFFERING OF THE COMMON STOCK AND THE DISTRIBUTION OF THIS PROSPECTUS. --------------------- TABLE OF CONTENTS --------------------- INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents heretofore filed by the Company with the Securities and Exchange Commission (the "Commission") pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act") are incorporated herein by reference: (1) the Company's Annual Report on Form 10-K for the fiscal year ended April 1, 1995; (2) the Company's Quarterly Report on Form 10-Q for the quarter ended July 1, 1995; (3) the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995; (4) the Company's Current Report on Form 8-K dated October 2, 1995; (5) the description of the Common Stock contained in the Company's Registration Statement on Form 8-A filed with the Commission on September 27, 1989; and (6) the description of the preferred stock purchase rights of the Company contained in the Company's Registration Statement on Form 8-A filed with the Commission on September 13, 1991. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Common Stock hereunder shall be deemed to be incorporated by reference herein and to be a part hereof from the date of the filing of such reports and documents. The Company will provide without charge, to each person to whom this Prospectus is delivered, a copy of any or all of such documents (exclusive of exhibits unless such exhibits are specifically incorporated by reference herein), upon written or oral request to Rodney F. Sloss, Vice President, Finance, Lattice Semiconductor Corporation, 5555 NE Moore Court, Hillsboro, Oregon 97124, telephone (503) 681-0118. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. --------------------- IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP MEMBERS (IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITERS." 2
PAGE ----- Incorporation of Certain Documents by Reference............................................................ 2 Prospectus Summary......................................................................................... 3 The Company................................................................................................ 4 Risk Factors............................................................................................... 6 Use of Proceeds............................................................................................ 11 Price Range of Common Stock................................................................................ 11 Dividend Policy............................................................................................ 11 Capitalization............................................................................................. 12 Selected Consolidated Financial Data....................................................................... 13 Business................................................................................................... 15 Description of Capital Stock............................................................................... 23 Certain United States Federal Tax Considerations for Non-U.S. Holders of Common Stock...................... 25 Underwriters............................................................................................... 27 Legal Matters.............................................................................................. 30 Experts.................................................................................................... 30 Available Information...................................................................................... 30 PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. THE COMPANY Lattice Semiconductor Corporation (the "Company") is the world's leading supplier of in-system programmable ("ISP-TM-") logic devices and pioneered the application of electrically erasable CMOS ("E(2)CMOS-Registered Trademark-") technology to programmable logic. The Company designs, develops and markets both high-and low-density, high performance E(2)CMOS programmable logic devices ("PLDs") and related development system software. PLDs are standard semiconductor components that can be configured by the end customer as specific logic circuits. PLDs enable the end customer to shorten design cycle times and reduce development costs. The Company's strategy has been to penetrate the rapidly growing high-density complex programmable logic device ("CPLD") market with differentiated products and technology while maintaining its leadership position in the low-density market. The Company has pioneered the development of ISP, a proprietary technology, which affords it a competitive advantage in the high-density CPLD market. ISP can allow customers to reduce design cycle times, accelerate time to market, reduce prototyping costs, reduce manufacturing costs, lower inventory requirements and perform simplified and cost-effective field upgrades. The Company seeks to maintain a relatively high margin low-density product mix by differentiating its products through performance, proprietary architectures and lower operating voltages. The Company's end customers are primarily original equipment manufacturers ("OEMs") in the fields of communications, computing, peripherals, instrumentation, industrial controls and military systems. THE OFFERING SUMMARY CONSOLIDATED FINANCIAL DATA (3) (IN THOUSANDS, EXCEPT PER SHARE DATA)
U.S. Offering.......................... 2,000,000 Shares International Offering................. 500,000 Shares Total (1).............................. 2,500,000 Shares Common Stock to be outstanding after the offering.................... 22,002,914 Shares (1)(2) Use of proceeds........................ For expansion and maintenance of the Company's wafer supply and assembly capacity, including funding a planned equity investment in an advanced semiconductor manufacturing facility in Taiwan, and other general corporate purposes, including procurement of additional capital equipment and facilities, development of new products and possible acquisitions. See "Use of Proceeds" and "Business -- Operations -- Wafer Fabrication." The Nasdaq National Market symbol...... LSCC
SIX MONTHS FISCAL YEAR ENDED ENDED --------------------------------------------------------- ---------------------- MARCH 30, MARCH 28, APRIL 3, APRIL 2, APRIL 1, OCT. 1, SEPT. 30, 1991 1992 1993 1994 1995 1994 1995 ----------- ----------- --------- --------- --------- --------- ----------- CONSOLIDATED STATEMENT OF OPERATIONS DATA: Revenue......................................... $ 64,539 $ 71,009 $ 103,391 $ 126,241 $ 144,083 $ 67,477 $ 93,621 Income from operations.......................... 12,115 13,315 22,746 30,040 37,268 17,339 26,502 Net income...................................... 10,297 10,855 17,399 22,490 26,966 12,418 18,624 Net income per share............................ $ 0.61 $ 0.61 $ 0.94 $ 1.19 $ 1.41 $ 0.65 $ 0.93 Weighted average common and common equivalent shares outstanding............................ 16,770 17,834 18,458 18,946 19,164 19,073 20,117 3
AS OF SEPTEMBER 30, 1995 ------------------------- ACTUAL AS ADJUSTED(4) --------- -------------- CONSOLIDATED BALANCE SHEET DATA: Working capital.......................................................................... $ 138,050 $ 225,119 Total assets............................................................................. 225,768 312,837 Stockholders' equity..................................................................... 186,006 273,075 - ------------ (1) Assumes the U.S. Underwriters' over-allotment option to purchase 375,000 shares is not exercised. See "Underwriters." (2) Excludes (i) 2,063,126 shares of Common Stock subject to outstanding options under the Company's 1988 Stock Incentive Plan with an average exercise price of $19.75 per share and 693,560 shares available for future grants of options thereunder as of September 30, 1995; (ii) 133,593 shares of Common Stock reserved but unissued under the Company's Employee Stock Purchase Plan; (iii) 94,125 shares of Common Stock subject to outstanding options under the Company's 1993 Outside Directors Stock Option Plan with an average exercise price of $20.49 per share and 148,500 shares available for future grants of options thereunder as of September 30, 1995; and (iv) 123,625 shares of Common Stock subject to outstanding warrants owned by Bain & Company with an average exercise price of $18.76 per share. (3) All share and per share amounts have been adjusted to reflect the three-for-two stock split effected in the form of a stock dividend which was paid on July 6, 1993. (4) Gives effect to the issuance and sale of 2,500,000 shares offered hereby by the Company at an assumed per share offering price of $36.75, the last reported sale price of the Common Stock on October 16, 1995. THE COMPANY Lattice Semiconductor Corporation (the "Company") is the world's leading supplier of in-system programmable ("ISP-TM-") logic devices and pioneered the application of electrically erasable CMOS ("E(2)CMOS-Registered Trademark-") technology to programmable logic. The Company designs, develops and markets both high-and low-density, high performance E(2)CMOS programmable logic devices ("PLDs") and related development system software. PLDs are standard semiconductor components that can be configured by the end customer as specific logic circuits, and enable the end customer to shorten design cycle times and reduce development costs. Manufacturers of electronic systems are increasingly challenged to bring differentiated products to market quickly. These competitive pressures often preclude the use of custom-designed application specific integrated circuits ("ASICs"), which generally entail significant design risks and time delay. Standard logic products, an alternative to custom-designed ASICs, limit a manufacturer's flexibility to adequately customize an end system. PLDs are standard products that can be configured into a virtually unlimited number of specific logic circuits by programming the device with electrical signals. PLDs give system designers the ability to quickly create their own custom logic circuits and to provide product differentiation and rapid time to market. The Company offers a full product line in both the high-density complex programmable logic device ("CPLD") market and the low-density CMOS PLD market. The Company's strategy has been to penetrate the rapidly growing high-density CPLD market with differentiated products and technology while maintaining its leadership position in the low-density market. Since the Company introduced its first high-density products in fiscal 1993, its percentage of total revenue generated by sales of high-density products has grown to 21% for the fiscal year ended April 1, 1995 and 33% for the six-month period ended September 30, 1995. The Company has pioneered the development of ISP, a proprietary technology, which affords it a competitive advantage in the high-density CPLD market. In contrast to standard PLD programming technologies, ISP allows the system designer to configure and reconfigure the PLD without removing the device from the system board. ISP enhances the flexibility of PLD devices, providing a number of important benefits to a system manufacturer across the full spectrum of an electronic system product cycle. ISP can allow customers to reduce design cycle times, accelerate time to market, reduce prototyping costs, reduce manufacturing costs, lower inventory requirements and perform simplified and cost-effective field upgrades. Since the Company entered the high-density CPLD market in fiscal 1993, it has introduced three high-density CPLD product families, the ispLSI-Registered Trademark- 1000, ispLSI 2000 and ispLSI 3000. The ispLSI 1000, the Company's first high-density CPLD product family, was the industry's first PLD product family based on ISP technology. The ispLSI 1000 offers performance of up to 110 MHz, with propagation delays (the time it takes an input signal to propagate through the device to a designated output) as low as 10 nanoseconds and densities of 2,000 to 8,000 gates. The ispLSI 2000 product family, first introduced in fiscal 1994, offers CPLD performance leadership with performance of up to 154 MHz, with propagation delays as low as 5.5 nanoseconds, and is capable of supporting high speed communications and computing applications based on advanced microprocessors, such as Pentium, PowerPC and other RISC-based systems. The ispLSI 3000 product family, also introduced in fiscal 1994, incorporates an enhanced logic architecture to target CPLD density leadership at densities of 8,000 to 14,000 gates and performance of up to 100 MHz, with propagation delays as low as 10 nanoseconds. The ispLSI 3000 family offers additional architectural enhancements and boundary scan test to satisfy sophisticated and complex customer applications. The Company's high-density CPLD products with ISP technology can be quickly and easily configured and reconfigured on the system board using the Company's proprietary software development tools. These tools may be used on a stand-alone basis or integrated with computer aided engineering ("CAE") design tools and automatic test equipment provided by selected third party vendors. During the twelve months ended September 30, 1995, the number of installed seats of the Company's software development tools, as measured by the Company, has grown from over 3,000 to over 7,000. The high-density CPLD market, according to Dataquest Incorporated, a semiconductor market research firm, amounted to $306 million in calendar year 1994 and is growing at a 37% annual rate. The Company's high-density CPLD revenue mix by end-market for the first six months of fiscal 1996 was: 49% 4 communications, 11% computing, 23% peripherals and 17% industrial and other markets. The Company expects that in the future the communications market will continue to account for a substantial portion of the Company's high-density revenue and revenue growth. The Company holds a leading position in the low-density CMOS PLD market. The Company seeks to maintain a relatively high margin, low-density product mix by differentiating its products through performance, proprietary architectures and by offering lower operating voltages. In addition, the Company maintains industry leading performance across its entire low-density CMOS PLD product line. The Company offers the industry's broadest line of low-density CMOS PLDs based on its 16 families of GAL-Registered Trademark- ("Generic Array Logic") products offered in over 150 speed, power, package and temperature range combinations. GAL devices range in complexity from approximately 200 to 1,000 logic gates and are typically assembled in 20-, 24- and 28-pin standard dual in-line packages ("DIPs") and in 20- and 28-pin standard plastic leaded chip carrier ("PLCC") packages. The Company's low-density PLDs are offered in both 5-volt and 3.3-volt technologies with propagation delays as low as 3.5 nanoseconds, the highest performance in the industry. The Company is currently selling the GAL16LV8D-3.5, the world's fastest PLD available in any technology or operating voltage. The Company sells its products directly to end customers through a network of independent sales representatives and indirectly through a network of distributors. The Company utilizes a direct sales management and field applications engineering organization in combination with manufacturer's representatives and distributors to reach a broad base of potential end customers. The Company's end customers are primarily original equipment manufacturers ("OEMs") in the fields of communications, computing, peripherals, instrumentation, industrial controls and military systems. The Company believes its distribution channels provide a cost-effective means for reaching end customers. The Company's current high- and low-density PLD offerings are based on the Company's proprietary E(2)CMOS process technologies, termed UltraMOS-Registered Trademark-. The Company's current production processes, UltraMOS IV and UltraMOS V, are sub-micron CMOS technologies. The Company has recently released to production UltraMOS VI, an advanced sub-micron process technology designed to enhance product performance and densities. The Company's manufacturing strategy has been to procure wafers for its products from a leading manufacturer under current purchase orders and long-term agreements, which has allowed the Company to avoid the cost of establishing its own wafer fabrication facility. The Company currently obtains all of its wafer supply from Seiko Epson Corporation ("Seiko Epson") through Seiko Epson's affiliated United States distributor, S MOS Systems Inc. ("S MOS"). See "Business -- Licenses and Agreements -- Seiko Epson/ S MOS." The Company intends to expand existing sources and establish additional sources of wafer supply for its products at such time as these arrangements are required to meet customer demand. The Company entered into a series of agreements with United Microelectronics Corporation ("UMC") in September 1995 pursuant to which the Company has agreed to join UMC and several other companies to form a separate Taiwanese company for the purpose of building and operating an advanced semiconductor manufacturing facility in Taiwan, Republic of China. Under the terms of the agreement, the Company will invest $60 million, payable in three installments over the next two and a half years, for a 10% equity interest in the venture and the right to receive a percentage of the facility's wafer production at market prices. In a related agreement, UMC has committed to supply the Company with sub-micron wafers beginning in the first calendar quarter of 1996 and continuing with phased increases for several years, until such capacity is available from the new facility. See "Business -- Licenses and Agreements -- UMC." The Company was incorporated in Oregon in 1983 and reincorporated in Delaware in 1985. The Company's principal offices are located at 5555 NE Moore Court, Hillsboro, Oregon 97124, and its telephone number is (503) 681-0118. References to the Company shall mean Lattice Semiconductor Corporation and its subsidiaries, unless the context requires otherwise. "GAL", "ispLSI", "ispGAL", "E(2)CMOS", "UltraMOS", "pDS", "pDS+", "pLSI", "ISP", "ISP", "In-System Programmable", "In-System Programmability", "LATTICE SEMICONDUCTOR CORPORATION", "Silicon Forest" and "L LATTICE SEMICONDUCTOR CORPORATION", including the design and the symbol "L" in the form appearing on the cover page of this Prospectus, are trademarks of the Company. This Prospectus also includes product names, trade names and trademarks of other companies. 5 RISK FACTORS IN ADDITION TO THE OTHER INFORMATION PROVIDED IN THIS PROSPECTUS AND IN THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN, THE FOLLOWING RISK FACTORS SHOULD BE CAREFULLY CONSIDERED IN EVALUATING THE COMPANY AND ITS BUSINESS BEFORE PURCHASING THE COMMON STOCK OFFERED BY THIS PROSPECTUS. DEPENDENCE ON WAFER SUPPLIERS. The Company does not manufacture finished silicon wafers. Its products, however, require wafers manufactured with state-of-the-art fabrication equipment and techniques. Accordingly, the Company's strategy has been to maintain relationships with large semiconductor manufacturers for the production of its wafers. All of its silicon wafers are currently manufactured by Seiko Epson in Japan and sold to the Company, through Seiko Epson's affiliated U.S. distributor, S MOS. See "Business -- Licenses and Agreements -- Seiko Epson/S MOS." In connection with a series of agreements recently entered into with UMC providing for the formation of a separate Taiwanese company for the purpose of building and operating an advanced semiconductor manufacturing facility in Taiwan, Republic of China, UMC committed to supply the Company with sub-micron wafers beginning in the first calendar quarter of 1996 and continuing with phased increases for several years. See "Business -- Licenses and Agreements -- UMC." A significant interruption in supply from Seiko Epson through S MOS or from UMC would have a material adverse effect on the Company's business. Worldwide manufacturing capacity for silicon wafers is limited and inelastic. Therefore, significant increases in demand or interruptions in supply could adversely affect the Company. Through fiscal 1995, the Company has been successful in obtaining adequate wafer capacity commitments and has not experienced any material difficulties or delays in the supply of wafers. Presently, demand on wafer suppliers for silicon wafers is growing and existing capacity commitments may not be sufficient to permit the Company to satisfy all of its customers' demand in future periods. The Company negotiates wafer prices and certain wafer supply commitments with Seiko Epson and S MOS on an annual basis, and, in some cases, as frequently as semiannually. Moreover, wafer prices and commitments are subject to continuing review and revision by the parties. Although current commitments are anticipated to be adequate through fiscal 1996, Seiko Epson and S MOS advised the Company in July 1995 that, due to high levels of demand and limited manufacturing capacity, there were significant uncertainties as to whether they would be able to supply wafers to the Company for the Company's fiscal 1997 at increased levels relative to fiscal 1996 or even at historical levels. More recently, however, the Company received indications from Seiko Epson and S MOS that they believe they will be able to supply wafers to the Company in fiscal 1997 at levels moderately higher than in fiscal 1996. In addition, the Company recently obtained a commitment from UMC to supply the Company with sub-micron wafers beginning in the first calendar quarter of 1996 and continuing with phased increases for several years. Wafer prices and other purchase terms are expected to be negotiated prior to initiating wafer production and will be subject to periodic adjustment. The availability of wafers from UMC will depend on, among other things, UMC successfully achieving volume production. There can be no assurance that UMC will successfully achieve volume production of Company wafers or that Seiko Epson, S MOS or UMC will not reduce their allocations of wafers or increase prices to the Company in future periods or that any such reduction in supply could be offset pursuant to arrangements with alternate sources of supply. If any substantial reduction of supply or substantial price increase were to occur, the Company's operating results would be materially adversely affected. The Company's future revenue growth will depend in part on improving yields of die per wafer through reductions in the die size of its products, shifting capacity to a higher revenue per wafer product mix, successfully achieving production volumes at UMC, increasing its wafer allocations from its suppliers or obtaining additional wafer allocations from other suppliers. There can be no assurance that the Company will be successful in improving yields, enhancing product mix, achieving volume production at UMC or otherwise increasing wafer supply. The Company's wafer purchases from Seiko Epson are denominated in Japanese yen. During the first two calendar quarters of 1995, the dollar lost substantial value with respect to the yen. Such loss was regained in the third calendar quarter of 1995. There is no assurance that the value of the dollar with respect to the yen will not again experience substantial deterioration or that any such deterioration will not continue in the future. Any substantial continued deterioration of dollar-yen exchange rates could have a material adverse effect on the Company's results of operations. 6 The Company depends upon wafer suppliers to produce wafers with acceptable yields and to deliver them to the Company in a timely manner. Substantially all of the Company's revenues are derived from products based on E(2)CMOS process technology. Successful implementation of the Company's proprietary E(2)CMOS process technology, UltraMOS, requires a high degree of coordination between the Company and its wafer supplier. Therefore, significant lead time is required to reach volume production at a new wafer supply location such as UMC. Accordingly, there can be no assurance that volume production at UMC will be achieved in the near term or at all. The manufacture of high performance E(2)CMOS semiconductor wafers is a complex process that requires a high degree of technical skill, state-of-the-art equipment and effective cooperation between the wafer supplier and the circuit designer to produce acceptable yields. Minute impurities, errors in any step of the fabrication process, defects in the masks used to print circuits on a wafer and other factors can cause a substantial percentage of wafers to be rejected or numerous die on each wafer to be non-functional. As is common in the semiconductor industry, the Company has from time to time experienced in the past and expects that it will experience in the future production yield problems and delivery delays. Any prolonged inability to obtain adequate yields or deliveries could adversely affect the Company's operating results. The Company expects that, as is customary in the semiconductor business, it will in the future seek to convert its fabrication process technology to larger wafer sizes, to smaller device geometries or to new or additional suppliers in order to maintain or enhance its competitive position. Such conversions entail inherent technological risks that could adversely affect yields and delivery times and could have a material adverse impact on the Company's operating results. To a considerable extent, the Company's ability to execute its strategies will depend upon its ability to maintain and enhance its advanced process technologies. As the Company does not presently operate its own wafer fabrication or process development facility, the Company depends upon silicon wafer manufacturers to provide the facilities and support for its process development. In light of this dependency and the intensely competitive nature of the semiconductor industry, there is no assurance that either process technology development or timely product introduction can be sustained in the future. In addition, other unanticipated changes in or disruptions of the Company's wafer supply arrangements could reduce product availability, increase cost or impair product quality and reliability. Many of the factors that could result in such changes are beyond the Company's control. For example, a disruption of operations at Seiko Epson's or UMC's manufacturing facilities as a result of a work stoppage, fire, earthquake or other natural disaster, would cause delays in shipments of the Company's products and could have a material adverse effect on the Company's operating results. DEPENDENCE ON ASSEMBLY CONTRACTORS. The Company's finished silicon wafers are assembled and packaged by independent subcontractors located in the Philippines and South Korea. Although the Company has not yet experienced significant problems or interruptions in supply from its assembly contractors, any prolonged work stoppages or other failure of these contractors to supply finished products would have a material adverse effect on the Company's operating results. FLUCTUATIONS IN OPERATING RESULTS. The Company believes that its future operating results will be subject to quarterly variations based upon a wide variety of factors, including the cyclical nature of both the semiconductor industry and the markets addressed by the Company's products, the timing of new product introductions, price erosion, product obsolescence, substantial adverse currency exchange rate movements, variations in product mix, scheduling, rescheduling and cancellation of large orders, competitive factors, the availability of manufacturing capacity and wafer supply, the ability to achieve volume production at UMC, the ability to develop and implement new process technologies, fluctuations in manufacturing yields, changes in effective tax rates and litigation expenses. Due to these and other factors, the Company's past results are a less useful predictor of future results than is the case in more mature and less dynamic industries. The Company has increased its level of operating expenses and investment in manufacturing capacity in anticipation of future growth in revenues, primarily from increased sales of its high-density products. To the extent that this revenue growth does not materialize, the Company's operating results would be adversely affected. 7 PRODUCT ENHANCEMENTS AND NEW PRODUCTS. Because of the rapid rate of technological change in the semiconductor industry, the Company's success will ultimately depend in large part on its ability to introduce new products on a timely basis that meet a market need at a competitive price and with acceptable margins as well as enhancing the performance of its existing products. The success of new products, including the Company's high-density product families, depends on a variety of factors, including product selection, timely and efficient completion of product design, timely and efficient implementation of manufacturing and assembly processes, product performance, quality and reliability in the field and effective sales and marketing. Because new product development commitments must be made well in advance of sales, new product decisions must anticipate both future demand and the technology that will be available to supply that demand. New and enhanced products are continually being introduced into the Company's markets by others, and these products can be expected to affect the competitive environment in the markets in which they are introduced. There is no assurance that the Company will be successful in enhancing its existing products or in selecting, developing, manufacturing, marketing and selling new products. The majority of the Company's revenue and gross margin percentage over the past three fiscal years was due to revenues from low-density GAL products, many of which are second sourced by other suppliers. Future revenue growth will be largely dependent on market acceptance of the Company's new and proprietary products, including its high-density product families, and market acceptance of the Company's proprietary software development tools. There can be no assurance that the Company's product and process development efforts will be successful or that new products, including the Company's high-density products, will continue to achieve market acceptance. If the Company were unable to successfully define, develop and introduce competitive new products in a timely manner, its future operating results would be adversely affected. COMPETITION AND RAPID TECHNOLOGICAL CHANGE. The semiconductor industry is intensely competitive and is characterized by rapid technological change, sudden price fluctuations, general price erosion, rapid rates of product obsolescence, periodic shortages of materials and manufacturing capacity and variations in manufacturing costs and yields. The Company's competitive position is affected by all of these factors and by industry competition for effective sales and distribution channels. The Company's existing and potential competitors range from established major domestic and international semiconductor companies to emerging companies. Many of the Company's competitors have substantially greater financial, technological, manufacturing, marketing and sales resources than the Company. The Company faces direct competition from companies that have developed or licensed similar technology and from licensees of the Company's products and technology. The Company also faces indirect competition from a wide variety of semiconductor companies offering products and solutions based on alternative technologies. Although to date the Company has not experienced significant competition from companies located outside the United States, such companies may become a more significant competitive factor in the future. As the Company and its current competitors seek to expand their markets, competition may increase, which could have an adverse effect on the Company's operating results. Development of new technologies that have price/performance characteristics superior to the Company's technologies could adversely affect the Company's results of operations. There can be no assurance that the Company will be able to develop and market new products successfully or that the products introduced by others will not render the Company's products or technologies non-competitive or obsolete. See "-- Product Enhancements and New Products." The Company expects that its markets will become more competitive in the future. See "Business -- Competition." CYCLICAL NATURE OF THE SEMICONDUCTOR INDUSTRY. The semiconductor industry is highly cyclical and has been subject to significant downturns at various times that have been characterized by diminished product demand, production overcapacity and accelerated erosion of average selling prices. The Company's rate of growth in recent periods has been positively impacted by recent trends in the semiconductor industry. Any material imbalance in industry-wide production capacity relative to demand, shift in industry capacity toward products competitive with the Company's products, reduced demand or reduced growth in demand or other factors could result in a rapid decline in product pricing and have a material adverse effect on the Company's operating results. 8 FUTURE CAPITAL NEEDS. In an effort to secure additional wafer supply, the Company may from time to time consider various arrangements, including joint ventures with, minority investments in, advanced purchase payments to, loans to or similar arrangements with independent wafer manufacturers in exchange for committed production capacity. Such arrangements are becoming common within the industry as independent wafer manufacturers increasingly seek to require their customers to share a portion of the cost of capital intensive wafer fabrication facilities. The Company entered into an advanced production payment arrangement with Seiko Epson in 1994 pursuant to which it advanced a total of $42 million to Seiko Epson. See "Business -- Licenses and Agreements -- Seiko Epson/S MOS." In September 1995, the Company entered into an agreement with UMC to invest $60 million for a 10% equity interest in a separate Taiwanese company providing for the formation of a joint venture with UMC and several other companies for the purpose of building and operating an advanced semiconductor manufacturing facility. See "Business -- Licenses and Agreements -- UMC." To the extent the Company pursues any other such transactions with Seiko Epson, UMC or any other wafer manufacturers, such transactions could entail even greater levels of investment requiring the Company to seek additional equity or debt financing to fund such activities. See "Use of Proceeds." There can be no assurance that any such additional funding could be obtained when needed or, if available, on terms acceptable to the Company. LIMITED PROTECTION OF INTELLECTUAL PROPERTY. The Company's success depends in part on its proprietary technology. While the Company attempts to protect its proprietary technology through patents, copyrights and trade secrets, it believes that its success will depend more upon technological expertise, continued development of new products, and successful market penetration of its silicon and software products. There can be no assurance that the Company will be able to protect its technology or that competitors will not be able to develop similar technology independently. The Company currently has a number of United States and foreign patents and patent applications. See "Business -- Patents." There can be no assurance that the claims allowed on any patents held by the Company will be sufficiently broad to protect the Company's technology, or that any patents will issue from any application pending or filed by the Company. In addition, there can be no assurance that any patents issued to the Company will not be challenged, invalidated or circumvented or that the rights granted thereunder will provide competitive advantages to the Company. The semiconductor industry is generally characterized by vigorous protection and pursuit of intellectual property rights and positions, which have on occasion resulted in protracted litigation that utilizes cash and management resources, which can have a significant adverse effect on operating results. The Company has received a letter from a semiconductor manufacturer stating that it believes a number of its patents, related to product packaging, cover certain products sold by the Company. While the manufacturer has offered to license certain of such patents to the Company, there can be no assurance, on this or any other claim which may be made against the Company, that the Company could obtain a license on terms or under conditions that would be favorable to the Company. In addition, there can be no assurance that other intellectual property claims will not be made against the Company in the future or that the Company will not be prohibited from using the technologies subject to such claims or be required to obtain licenses and make corresponding royalty payments for past or future use. See "Business -- Patents." IMPORTANCE OF INTERNATIONAL REVENUES. International revenues accounted for 45%, 43%, 47% and 49% of the Company's revenues for fiscal years 1993, 1994, 1995 and the first six months of fiscal 1996, respectively. The Company believes that international revenues will continue to represent a significant percentage of revenues. International revenues and operations may be adversely affected by the imposition of governmental controls, export license requirements, restrictions on the export of technology, political instability, trade restrictions, changes in tariffs and difficulties in staffing and managing international operations. See "Business -- Marketing, Sales and Customers." DEPENDENCE ON KEY PERSONNEL. The future success of the Company is dependent, in part, on its ability to attract and retain highly qualified technical and management personnel, particularly highly skilled engineers involved in new product, both silicon and software, and process technology development. Competition for such personnel is intense. There can be no assurance that the Company will be able to retain its existing key 9 technical and management personnel or attract additional qualified employees in the future. The loss of key technical or management personnel could delay product development cycles or otherwise have a material adverse effect on the Company's business. FOREIGN MANUFACTURING AND ASSEMBLY. The Company currently depends on Seiko Epson, a Japanese company, for the manufacture of all of its finished silicon wafers, and anticipates depending on UMC, a Taiwanese company, and a joint venture formed with UMC and other semiconductor companies for the manufacture of a portion of its finished silicon wafers. In addition, after wafer manufacturing is completed and each wafer is tested, products are assembled by subcontractors in South Korea and the Philippines. Although the Company's subcontractors have not recently experienced any serious work stoppages, the social and political situations in these countries can be volatile, and any prolonged work stoppages or other disruptions in the Company's ability to manufacture and assemble its products would have a material adverse effect on the Company's results of operations. Furthermore, economic risks, such as changes in currency exchange rates, tax laws, tariffs, or freight rates, or interruptions in air transportation, could have a material adverse effect on the Company's results of operations. See "Business -- Operations." VOLATILITY OF COMMON STOCK PRICE. The market price of the Company's Common Stock could be subject to significant fluctuations in response to variations in quarterly operating results, shortfalls in revenues or earnings from levels expected by securities analysts and other factors such as announcements of technological innovations or new products by the Company or by the Company's competitors, government regulations, developments in patent or other proprietary rights, and developments in the Company's relationships with parties to collaborative agreements. In addition, the stock market has recently experienced significant price fluctuations. These fluctuations often have been unrelated to the operating performance of the specific companies whose stocks are traded. Broad market fluctuations, as well as economic conditions generally and in the semiconductor industry specifically, may adversely affect the market price of the Company's Common Stock. See "Price Range of Common Stock." POTENTIAL ANTI-TAKEOVER EFFECTS. Certain provisions of the Company's stockholder rights plan, its Certificate of Incorporation and Delaware law could discourage potential acquisition proposals and could delay or prevent a change in control of the Company. Such provisions could diminish the opportunities for a stockholder to participate in tender offers, including tender offers at a price above the then current market value of the Common Stock. Such provisions may also inhibit increases in the market price of the Common Stock that could result from takeover attempts. In addition, the Company's Board of Directors has the authority to issue Preferred Stock without any further vote or action by the stockholders. The issuance of Preferred Stock may have the effect of delaying, deferring or preventing a change in control of the Company without further action by the stockholders and could adversely affect the rights and powers, including voting rights, of the holders of Common Stock. Such effects could result in a decrease in the market price of the Company's Common Stock. See "Description of Capital Stock." 10 USE OF PROCEEDS The net proceeds to be received by the Company from the sale of the 2,500,000 shares of Common Stock offered by the Company hereby are estimated to be approximately $87.1 million ($100.2 million if the U.S. Underwriters' over-allotment option is exercised in full) assuming a public offering price of $36.75 per share. The Company intends to use the proceeds of this offering primarily for expansion and maintenance of its wafer supply and assembly capacity, including funding a planned equity investment in an advanced semiconductor manufacturing facility in Taiwan, and other general corporate purposes, including procurement of additional capital equipment and facilities to expand the Company's internal manufacturing capacity, development of new products, and potential acquisitions of businesses, products, or technologies that would complement the Company's businesses. See "Business -- Licenses and Agreements -- UMC." In addition, the Company from time to time has discussions with third parties regarding possible arrangements with respect to wafer supply and assembly capacity, such as purchasing options for such capacity or making investments in new or existing manufacturing facilities. Except as discussed elsewhere in this Prospectus, there are no current understandings or agreements involving purchasing options or making investments with respect to any material wafer supply and assembly arrangements or with respect to business, product, or technology acquisition transactions. Pending such applications, the net proceeds from this offering will be invested in bank deposits and investment grade, interest bearing securities. PRICE RANGE OF COMMON STOCK The following table sets forth the range of high and low sales prices of the Company's Common Stock for the indicated periods, as reported by The Nasdaq National Market. On October 16, 1995, the last reported sale price for the Common Stock on The Nasdaq National Market was $36 3/4 per share. As of October 16, 1995, the Company had approximately 297 holders of record of the Common Stock. All prices have been restated to reflect a three-for-two stock split effected in the form of a stock dividend which was paid on July 6, 1993. DIVIDEND POLICY To date the Company has not declared or paid cash dividends on its Common Stock. The Board of Directors of the Company presently intends to retain all earnings for use in the Company's business and therefore does not anticipate declaring or paying any cash dividends on its Common Stock in the foreseeable future. 11
HIGH LOW ------- ------- Fiscal year ended April 2, 1994: First Quarter...................................................................... $20 13/16 $14 11/16 Second Quarter..................................................................... 26 3/4 14 3/4 Third Quarter...................................................................... 24 3/4 12 1/4 Fourth Quarter..................................................................... 19 3/8 14 Fiscal year ended April 1, 1995: First Quarter...................................................................... 19 5/8 14 3/4 Second Quarter..................................................................... 20 1/8 16 1/4 Third Quarter...................................................................... 19 3/8 15 1/2 Fourth Quarter..................................................................... 27 1/8 16 3/8 Fiscal year ending March 30, 1996: First Quarter...................................................................... 37 1/8 23 Second Quarter..................................................................... 43 28 7/8 Third Quarter (through October 16, 1995)........................................... 42 1/8 33 CAPITALIZATION The following table sets forth, on an unaudited basis, the short-term debt and capitalization of the Company at September 30, 1995, and as adjusted to reflect the sale by the Company of the 2,500,000 shares of Common Stock offered hereby at an assumed public offering price of $36.75 per share (after deducting underwriting discounts and commissions and estimated offering expenses). 12
AS OF SEPTEMBER 30, 1995 -------------------------- ACTUAL AS ADJUSTED(1) ---------- -------------- (IN THOUSANDS, EXCEPT SHARE DATA) Short-term debt.............................................................. $ -- $ -- Long-term debt............................................................... -- -- Stockholders' equity: Preferred Stock, $.01 par value, 10,000,000 shares authorized; none issued and outstanding........................................................... -- -- Common Stock, $.01 par value, 100,000,000 shares authorized; 19,502,914 shares issued and outstanding; 22,002,914 shares issued and outstanding as adjusted(2)............................................................... 195 220 Paid-in capital............................................................ 92,381 179,425 Retained earnings.......................................................... 93,430 93,430 ---------- -------------- Total stockholders' equity............................................. 186,006 273,075 ---------- -------------- Total capitalization................................................. $ 186,006 $ 273,075 ---------- -------------- ---------- -------------- - --------- (1) Assumes the U.S. Underwriters' over-allotment option to purchase 375,000 shares from the Company is not exercised. See "Underwriters." (2) Excludes (i) 2,063,126 shares of Common Stock subject to outstanding options under the Company's 1988 Stock Incentive Plan with an average exercise price of $19.75 per share and 693,560 shares available for future grants of options thereunder as of September 30, 1995; (ii) 133,593 shares of Common Stock reserved but unissued under the Company's Employee Stock Purchase Plan; (iii) 94,125 shares of Common Stock subject to outstanding options under the Company's 1993 Outside Directors Stock Option Plan with an average exercise price of $20.49 per share and 148,500 shares available for future grants of options thereunder as of September 30, 1995; and (iv) 123,625 shares of Common Stock subject to outstanding warrants owned by Bain & Company with an average exercise price of $18.76 per share. SELECTED CONSOLIDATED FINANCIAL DATA The selected consolidated financial data presented below as of April 2, 1994 and April 1, 1995, and for each of the years in the three-year period ended April 1, 1995 have been derived from the consolidated financial statements of the Company, which have been audited by Price Waterhouse LLP, independent accountants, which financial statements are incorporated by reference herein. The selected consolidated financial data presented below as of March 30, 1991, March 28, 1992 and April 3, 1993, and for each of the years in the two-year period ended March 28, 1992 have also been derived from audited consolidated financial statements of the Company which are not incorporated by reference herein. The selected consolidated financial data presented below as of October 1, 1994 and September 30, 1995, for the six months then ended, for the fiscal quarters ended July 1, 1995 and September 30, 1995, and for each of the four quarters of fiscal 1994 and fiscal 1995 have been derived from unaudited consolidated financial statements of the Company. In the opinion of the Company's management, such unaudited consolidated financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth therein. The following consolidated financial data should be read in conjunction with the consolidated financial statements, related notes and other financial information incorporated by reference herein. See "Incorporation of Certain Documents by Reference." All share and per share amounts have been adjusted to reflect the three-for-two stock split effected in the form of a stock dividend which was paid on July 6, 1993. 13
FISCAL YEAR ENDED SIX MONTHS ENDED --------------------------------------------------------- ---------------------- MARCH 30, MARCH 28, APRIL 3, APRIL 2, APRIL 1, OCT. 1, SEPT. 30, 1991 1992 1993 1994 1995 1994 1995 ----------- ----------- --------- --------- --------- --------- ----------- (IN THOUSANDS, EXCEPT PER SHARE DATA) CONSOLIDATED STATEMENT OF OPERATIONS DATA: Revenue..................................... $ 64,539 $ 71,009 $ 103,391 $ 126,241 $ 144,083 $ 67,477 $ 93,621 Costs and expenses: Cost of products sold................... 29,919 31,015 43,650 53,266 58,936 27,416 38,959 Research and development................ 10,363 12,535 16,530 20,636 22,859 10,884 13,073 Selling, general and administrative..... 12,142 14,144 20,465 22,299 25,020 11,838 15,087 ----------- ----------- --------- --------- --------- --------- ----------- Total costs and expenses............ 52,424 57,694 80,645 96,201 106,815 50,138 67,119 ----------- ----------- --------- --------- --------- --------- ----------- Income from operations...................... 12,115 13,315 22,746 30,040 37,268 17,339 26,502 Interest and other income, net.............. 2,439 2,420 2,470 2,566 3,349 1,402 1,932 ----------- ----------- --------- --------- --------- --------- ----------- Income before provision for income taxes.... 14,554 15,735 25,216 32,606 40,617 18,741 28,434 Provision for income taxes.................. 4,257 4,880 7,817 10,116 13,651 6,323 9,810 ----------- ----------- --------- --------- --------- --------- ----------- Net income.................................. $ 10,297 $ 10,855 $ 17,399 $ 22,490 $ 26,966 $ 12,418 $ 18,624 ----------- ----------- --------- --------- --------- --------- ----------- ----------- ----------- --------- --------- --------- --------- ----------- Net income per share........................ $ 0.61 $ 0.61 $ 0.94 $ 1.19 $ 1.41 $ 0.65 $ 0.93 ----------- ----------- --------- --------- --------- --------- ----------- ----------- ----------- --------- --------- --------- --------- ----------- Weighted average common and common equivalent shares outstanding............. 16,770 17,834 18,458 18,946 19,164 19,073 20,117 AS OF AS OF --------------------------------------------------------- ---------------------- MARCH 30, MARCH 28, APRIL 3, APRIL 2, APRIL 1, SEPT. 30, 1991 1992 1993 1994 1995 1995 ----------- ----------- --------- --------- --------- ----------- OCT. 1, 1994 --------- (IN THOUSANDS) CONSOLIDATED BALANCE SHEET DATA: Working capital............................. $ 51,770 $ 64,297 $ 79,878 $ 105,007 $ 106,021 $ 102,317 $ 138,050 Total assets................................ 79,081 91,653 128,876 146,093 192,917 169,884 225,768 Long-term lease obligations, excluding current portion........................... 566 205 -- -- -- -- -- Stockholders' equity........................ 63,230 75,643 98,481 125,068 157,797 140,013 186,006 The following table presents unaudited quarterly results in dollar amounts and as a percentage of revenue for the Company's last ten fiscal quarters.
QUARTER ENDED ----------------------------------------------------------------------------------------- FISCAL FISCAL 1994 1995 -------------------------------------------------- ------------------------------------- JULY 3, OCT. 2, JAN. 1, APR. 2, JULY 2, OCT. 1, DEC. 31, 1993 1993 1994 1994 1994 1994 1994 ----------- ----------- ----------- ----------- ----------- ----------- ----------- (IN THOUSANDS, EXCEPT PER SHARE DATA) CONSOLIDATED STATEMENT OF OPERATIONS DATA: Revenue...................... $ 33,345 $ 34,136 $ 28,573 $ 30,187 $ 32,913 $ 34,564 $ 36,288 Costs and expenses: Cost of products sold.... 14,241 14,509 12,070 12,446 13,418 13,998 14,810 Research and development............. 5,425 5,428 4,797 4,986 5,306 5,578 5,790 Selling, general and administrative.......... 5,949 5,897 5,113 5,340 5,769 6,069 6,283 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total costs and expenses............ 25,615 25,834 21,980 22,772 24,493 25,645 26,883 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Income from operations....... 7,730 8,302 6,593 7,415 8,420 8,919 9,405 Interest and other income, net........................ 608 663 668 627 669 733 895 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Income before provision for income taxes............... 8,338 8,965 7,261 8,042 9,089 9,652 10,300 Provision for income taxes... 2,668 2,868 2,178 2,402 3,090 3,233 3,450 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net income................... $ 5,670 $ 6,097 $ 5,083 $ 5,640 $ 5,999 $ 6,419 $ 6,850 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net income per share......... $ 0.30 $ 0.32 $ 0.27 $ 0.30 $ 0.32 $ 0.34 $ 0.36 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Weighted average common and common equivalent shares outstanding................ 18,896 19,051 18,918 18,925 19,002 19,145 19,134 FISCAL 1996 ------------------------ APR. 1, JULY 1, SEPT. 30, 1995 1995 1995 ----------- ----------- ----------- CONSOLIDATED STATEMENT OF OPERATIONS DATA: Revenue...................... $ 40,318 $ 45,013 $ 48,608 Costs and expenses: Cost of products sold.... 16,710 18,769 20,190 Research and development............. 6,185 6,383 6,690 Selling, general and administrative.......... 6,899 7,371 7,716 ----------- ----------- ----------- Total costs and expenses............ 29,794 32,523 34,596 ----------- ----------- ----------- Income from operations....... 10,524 12,490 14,012 Interest and other income, net........................ 1,052 1,015 917 ----------- ----------- ----------- Income before provision for income taxes............... 11,576 13,505 14,929 Provision for income taxes... 3,878 4,659 5,151 ----------- ----------- ----------- Net income................... $ 7,698 $ 8,846 $ 9,778 ----------- ----------- ----------- ----------- ----------- ----------- Net income per share......... $ 0.40 $ 0.45 $ 0.49 ----------- ----------- ----------- ----------- ----------- ----------- Weighted average common and common equivalent shares outstanding................ 19,467 19,811 20,119 14
AS A PERCENTAGE OF REVENUE --------------------------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF OPERATIONS DATA: Revenue..................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Costs and expenses: Cost of products sold... 42.7% 42.5% 42.2% 41.2% 40.8% 40.5% 40.8% 41.5% 41.7% Research and development............ 16.3% 15.9% 16.8% 16.5% 16.1% 16.1% 16.0% 15.3% 14.2% Selling, general and administrative......... 17.8% 17.3% 17.9% 17.7% 17.5% 17.6% 17.3% 17.1% 16.4% --------- --------- --------- --------- --------- --------- ----------- --------- --------- Total costs and expenses........... 76.8% 75.7% 76.9% 75.4% 74.4% 74.2% 74.1% 73.9% 72.3% --------- --------- --------- --------- --------- --------- ----------- --------- --------- Income from operations...... 23.2% 24.3% 23.1% 24.6% 25.6% 25.8% 25.9% 26.1% 27.7% Interest and other income, net....................... 1.8% 2.0% 2.3% 2.1% 2.0% 2.1% 2.5% 2.6% 2.3% --------- --------- --------- --------- --------- --------- ----------- --------- --------- Income before provision for income taxes.............. 25.0% 26.3% 25.4% 26.7% 27.6% 27.9% 28.4% 28.7% 30.0% Provision for income taxes..................... 8.0% 8.4% 7.6% 8.0% 9.4% 9.3% 9.5% 9.6% 10.3% --------- --------- --------- --------- --------- --------- ----------- --------- --------- Net income.................. 17.0% 17.9% 17.8% 18.7% 18.2% 18.6% 18.9% 19.1% 19.7% --------- --------- --------- --------- --------- --------- ----------- --------- --------- --------- --------- --------- --------- --------- --------- ----------- --------- --------- CONSOLIDATED STATEMENT OF OPERATIONS DATA: Revenue..................... 100.0% Costs and expenses: Cost of products sold... 41.5% Research and development............ 13.8% Selling, general and administrative......... 15.9% ----------- Total costs and expenses........... 71.2% ----------- Income from operations...... 28.8% Interest and other income, net....................... 1.9% ----------- Income before provision for income taxes.............. 30.7% Provision for income taxes..................... 10.6% ----------- Net income.................. 20.1% ----------- ----------- BUSINESS GENERAL Lattice Semiconductor Corporation (the "Company") is the world's leading supplier of in-system programmable ("ISP") logic devices and pioneered the application of electrically erasable CMOS ("E(2)CMOS") technology to programmable logic. The Company designs, develops and markets both high-and low-density, high performance E(2)CMOS programmable logic devices ("PLDs") and related development system software. PLDs are standard semiconductor components that can be configured by the end customer as specific logic circuits. PLDs enable the end customer to shorten design cycle times and reduce development costs. PLD MARKET BACKGROUND Three principal types of digital integrated circuits are used in most electronic systems: microprocessors, memory and logic. Microprocessors are used for control and computing tasks, memory is used to store programming instructions and data, and logic is employed to manage the interchange and manipulation of digital signals within a system. Logic circuits contain interconnected groupings of simple logical "AND" and logical "OR" functions, commonly described as "gates". Typically, complex combinations of individual gates are required to implement the specialized logic circuits required for systems applications. While system designers use a relatively small number of standard architectures to meet their microprocessor and memory needs, they require a wide variety of logic circuits in order to achieve end product differentiation. Logic circuits are found in a wide range of today's electronic systems including communications equipment, computers, peripherals, instrumentation, industrial control and military systems. According to Dataquest Incorporated, a semiconductor market research firm, logic accounted for approximately 32% of the estimated $79 billion worldwide digital integrated circuit market in 1994. The logic market encompasses, among other segments, standard transistor-transistor logic ("TTL"), custom-designed application specific integrated circuits ("ASICs", which include conventional gate-arrays, standard cells and full custom logic circuits), and PLDs. Logic circuits are often classified by the number of gates per circuit, with TTL circuits typically containing up to 100 gates, PLDs offering up to 20,000 gates, and conventional gate arrays and custom logic circuits reaching up to to several hundred thousand gates. Manufacturers of electronic systems are increasingly challenged to bring differentiated products to market quickly. These competitive pressures often preclude the use of custom-designed ASICs, which generally entail significant design risks and time delay. Standard logic products, an alternative to custom- designed ASICs, limit a manufacturer's flexibility to adequately customize an end system. Programmable logic addresses this inherent dilemma. PLDs are standard products, purchased by systems manufacturers in a "blank" state, that can be custom configured into a virtually unlimited number of specific logic circuits by programming the device with electrical signals. PLDs give system designers the ability to quickly create their own custom logic circuits to provide product differentiation and rapid time to market. Certain PLD products, including the Company's, are reprogrammable, which means that the logic configuration can be modified, if needed, after the initial logic programming. A recent technology development, in-system programmability, extends the flexibility of standard reprogrammable PLDs by allowing the system designer to configure and reconfigure the logic functions of the PLD with a standard 5-volt power supply without removing the PLD from the system board. Several common types of PLDs currently coexist in the marketplace, each offering customers a particular set of benefits. These include low-density PLDs (less than 1,000 gates) and high-density PLDs (greater than 1,000 gates). High-density PLDs include both complex PLDs ("CPLDs," up to 14,000 gates) and field programmable gate arrays ("FPGAs," up to 20,000 gates). Low-density devices are typically based on industry standard architectures and include the GAL ("Generic Array Logic") product family developed by the Company. These architectures are familiar to most system designers and are supported by standard widely available development tools. Offering the highest absolute performance and lowest cost per device, these products are the most effective PLD solution to support simple logic functions in all systems and complex logic functions in systems with fast clock rates, such as those supporting state-of-the-art microprocessors. 15 High-density devices are typically based on proprietary architectures and require support from sophisticated computer aided engineering ("CAE") development tools. Due to their higher levels of logic integration, absolute performance levels typically lag those of state-of-the-art low-density PLDs by one or more technology generations. However, in situations requiring complex logic functions, high-density PLDs can provide important advantages over the use of a large cluster of low-density devices. These advantages include system performance enhancement and power and cost savings. CPLDs and FPGAs are the two primary types of high-density PLD architectures. CPLD and FPGA architectures are generally optimal for different types of logic functions, although many logic functions can be implemented with either architecture. CPLDs are characterized by a regular building block structure of wide-input logic cells, termed macrocells, and use of a centralized logic interconnect scheme. CPLDs are optimal for control logic applications, such as state machines, bus arbitration, encoders and decoders and sequencers. FPGAs are characterized by a narrow-input logic cell and use a distributed interconnect scheme. FPGAs are optimal for register intensive and data path logic applications such as interface logic and arithmetic functions. The Company believes that a substantial portion of high-density PLD customers utilize both CPLD and FPGA architectures within a single system design, partitioning logic functions across multiple devices to optimize overall system performance and cost. TECHNOLOGY The Company believes that E(2)CMOS is the preferred process technology for both high-density CPLDs and low-density PLDs due to its inherent performance, reprogrammability and testability benefits. E(2)CMOS, through its fundamental ability to be programmed and erased electronically, serves as the foundation for the Company's ISP technology. IN-SYSTEM PROGRAMMABLE (ISP) TECHNOLOGY The Company has pioneered the development of ISP, a proprietary technology, which affords it a competitive advantage in the high-density CPLD market. In contrast to standard PLD programming technologies, ISP allows the system designer to configure and reconfigure the PLD without removing the device from the system board. Standard E(2)CMOS programmable logic devices require 12-volt electrical signals and therefore must be removed from the printed circuit board and programmed using stand alone, specialized hardware, while ISP devices can be programmed with standard 5-volt electrical signals. ISP enhances the flexibility of PLDs, providing a number of important benefits to a system manufacturer across the full spectrum of an electronic system product cycle. ISP can allow customers to reduce design cycle times, accelerate time to market, reduce prototyping costs, reduce manufacturing costs and lower inventory requirements. ISP can also provide customers the opportunity to perform simplified and cost-effective field reconfiguration through a data file transferred by computer disk or telephone line. All of the Company's high-density CPLDs are available with ISP technology. The Company also offers its most popular low-density architecture, the GAL22V10, with ISP technology. E(2)CMOS PROCESS TECHNOLOGY The Company's current high- and low-density PLD offerings are based on the Company's proprietary E(2)CMOS manufacturing process technology, termed UltraMOS-Registered Trademark-. The Company's current production processes, UltraMOS IV and UltraMOS V, are sub-micron CMOS technologies. The Company has recently released to production UltraMOS VI, an advanced sub-micron process technology designed to enhance product performance and densities. In comparison to bipolar technology, at one time the dominant technology for low-density PLDs, E(2)CMOS technology consumes less power and generates less heat while operating at comparable speed. Additionally, in contrast to one-time-programmable bipolar PLDs, E(2)CMOS PLDs are fully erasable and reprogrammable, providing greater end customer design flexibility and allowing the PLD manufacturer to fully test all programmable elements in a device prior to shipment. An alternative CMOS technology, Erasable Programmable Read Only Memory ("EPROM"), provides the same low power consumption benefits as E(2)CMOS, but requires ultraviolet light exposure for erasure, necessitating expensive quartz windowed packages and limiting testability. Antifuse and Static Random Access Memory ("SRAM") technologies, used primarily in the manufacture of high-density FPGAs, offer certain advantages for very dense 16 logic devices, but also have significant drawbacks when compared with E(2)CMOS. Antifuse technology is non-erasable, non-reprogrammable and subject to lengthy initial programming times that can hinder usage in volume production applications. SRAM technology is volatile (erases when electrical power is removed), and as such programmable SRAM FPGAs require additional non-volatile memory, typically on a separate device, to store programming code. This adds cost and printed circuit board area to a design, and results in the devices not being completely functional at initial system power-up. PRODUCTS HIGH-DENSITY CPLDS SILICON. In fiscal 1993, the Company entered the high-density PLD market by releasing to production its ispLSI 1000 product family, consisting of eight devices. The ispLSI 1000 product family, based on an innovative proprietary CPLD architecture incorporating familiar GAL-like logic building blocks, offers performance of up to 110 MHz, with propagation delays as low as 10 nanoseconds, densities of 2,000 to 8,000 gates, and is available in surface mount packages ranging from 44- to 128-pins. The Company is currently shipping over 60 speed, package and temperature range combinations of the ispLSI 1000 family. In fiscal 1994, the Company announced two new ispLSI families, the 2000 and 3000 series. The ispLSI 2000 family, containing eight devices, targets CPLD performance leadership, providing performance of up to 154 MHz, with propagation delays as low as 5.5 nanoseconds, densities of 1,000 to 4,000 gates, and 44- to 128-pin standard surface mount packages. It is the first high-density PLD architecture capable of supporting advanced microprocessors operating at clock speeds over 75 MHz, such as Pentium, PowerPC and other RISC-based systems. The ispLSI 3000 family, initially containing six devices, incorporates an enhanced logic architecture to target CPLD density leadership while retaining high performance. It offers densities of 8,000 to 14,000 gates, and performance of up to 100 MHz, with propagation delays as low as 10 nanoseconds. Available in 128- to 208-pin surface mount packages, the 3000 family also incorporates boundary scan test, an attractive feature that provides enhanced testing capabilities important for complex systems. The Company is currently shipping over 30 speed, package and temperature range combinations of the ispLSI 2000 and 3000 families. The Company plans to continue to introduce new families of high-density products, as well as improving the performance of existing product families, to meet market needs. SOFTWARE DEVELOPMENT TOOLS. All of the Company's high-density products are supported by the Company's pDS-Registered Trademark- software development tools and pDS+-TM- software development tools (referred to as "fitters"). First introduced in fiscal 1992, pDS software allows a customer to enter and verify a logic design, perform logic minimization, assign input/output ("I/O") pins and critical speed paths, and execute automatic place and route tasks. Designed to be a low cost, fully integrated development tool, pDS runs under the Microsoft Windows operating system on a personal computer. First introduced in fiscal year 1994, pDS+ software supports most popular third party CAE development tool environments running on IBM compatible personal computers as well as workstations from Sun Microsystems and Hewlett-Packard. Designed to provide a low cost method to incorporate the Company's high-density CPLD products into standard development environments, pDS+ software leverages customers' existing investment in third-party CAE tools. The Company also provides ispCODE-TM- software, a product that supports in-system programming of the Company's ISP devices. During fiscal 1995, the Company released new versions of all its existing pDS and pDS+ software development tools to enhance performance, functionality and ease of use. The Company offers pDS+ products supporting common third party CAE design tool environments, including Cadence, CUPL, Data I/O ABEL, Data I/O Synario, Isdata, Mentor Graphics, OrCAD, Synopsys and ViewLogic. The Company also enhanced its ISP programming support by releasing ispTEST-TM- software, a product that enables ISP to be integrated into automatic test equipment ("ATE") on the manufacturing floor. Currently ispTEST supports ATE equipment from Genrad, Hewlett-Packard and Teradyne. During the twelve months ended September 30, 1995, the number of installed seats of the Company's software development tools, as measured by the Company, has grown from over 3,000 to over 7,000. The Company plans to continue to enhance and expand its development tool offerings during fiscal 1996. 17 LOW-DENSITY PLDS The Company offers the industry's broadest line of low-density CMOS PLDs based on its 16 families of GAL products offered in over 150 speed, power, package and temperature range combinations. GAL devices range in complexity from approximately 200 to 1,000 logic gates and are typically assembled in 20-, 24- and 28-pin standard dual in-line packages and in 20- and 28-pin standard plastic leaded chip carrier packages. The Company offers the industry standard GAL16V8, GAL20V8, GAL22V10, GAL20RA10 and GAL20XV10 architectures in a variety of speed grades, with propagation delays as low as 5 nanoseconds, the highest performance in the industry. The Company also offers several innovative proprietary extension architectures, the ispGAL22V10, GAL26CV12, GAL18V10, GAL16VP8, GAL20VP8, GAL6001/2, GAL16V8Z and GAL20V8Z, each of which is optimized for specific applications. These product families offer industry leading performance levels, typically with propagation delays as low as 7.5 nanoseconds. Beginning in fiscal 1995, the Company extended its GAL line by introducing a family of 3.3-volt industry standard architectures, the GAL16LV8, GAL20LV8 and the GAL22LV10 in a variety of speed grades, with propagation delays as low as 3.5 nanoseconds, the highest performance in the industry. Offered with a range of power consumption specifications, these devices are targeted towards emerging high-growth, low-voltage system applications in the computing and communication markets. The Company is currently selling the GAL16LV8D-3.5, the world's fastest PLD available in any technology or operating voltage. The Company plans to continue to maintain a broad offering of performance leadership, standard and proprietary architecture low-density CMOS PLDs. The Company's GAL products are supported by industry standard software and hardware development tools marketed by independent manufacturers specifically for PLD applications. PRODUCT DEVELOPMENT The Company places great emphasis on product development and believes that continued investment in the development of new products that exploit market trends is required to maintain its competitive position. The Company's product development activities emphasize new high-density PLDs, improvements of its proprietary E(2)CMOS processes and ISP technologies, performance enhancement and cost reduction of existing products, and extension and enhancement of its software development tools. Product development activities occur in the Company's Hillsboro, Oregon headquarters, its Milpitas, California product development center, and its Shanghai, China design center. Research and development expenses were $16.5 million, $20.6 million, $22.9 million and $13.1 million in fiscal years 1993, 1994, 1995 and the first six months of fiscal 1996, respectively. The Company expects to continue to make significant investments in research and development in the future. OPERATIONS The Company does not manufacture its silicon wafers. The Company has historically maintained strategic relationships with large semiconductor manufacturers in order to source its finished silicon wafers, allowing the Company to focus its internal resources on product, process and market development. In addition, assembly is performed for the Company by outside suppliers. The Company performs most test operations and all reliability and quality assurance processes internally, as the Company believes it can add significant customer value in these areas. In fiscal 1994, the Company became the first domestic PLD company to achieve ISO 9001 quality registration, an indication of the Company's high internal operational standards. WAFER FABRICATION All of the Company's silicon wafer requirements are currently supplied by Seiko Epson in Japan pursuant to an agreement with S MOS, an affiliated U.S. distributor of Seiko Epson. See "-- Licenses and Agreements -- Seiko Epson/S MOS." The Company negotiates wafer volumes, prices and terms with Seiko Epson and S MOS on a periodic basis. In addition, the Company entered into a series of agreements with UMC in September 1995 pursuant to which the Company has agreed to join UMC and several other companies to form a separate Taiwanese company for the purpose of building and operating an advanced semiconductor manufacturing facility in Taiwan, Republic of China. As a result of its equity ownership, the Company will receive rights to purchase at market prices a percentage of the facility's wafer production. In a 18 related agreement, UMC has committed to supply the Company with sub-micron wafers beginning in the first calendar quarter of 1996 and continuing with phased increases for several years, until such capacity is available from the new facility. Wafer prices and other terms are expected to be negotiated prior to initiating wafer production and will be subject to periodic adjustment. See " - -- Licenses and Agreements -- UMC." A significant interruption in supply from Seiko Epson through S MOS or from UMC would have a material adverse effect on the Company's business. See "Risk Factors -- Dependence on Wafer Suppliers." ASSEMBLY After wafer fabrication and initial testing, the Company ships wafers to independent subcontractors for assembly. During assembly, wafers are separated into individual die and encapsulated in plastic or ceramic packages. Presently, the Company has qualified long term assembly partners in Hong Kong, the Philippines, South Korea and the United States. TESTING The Company electrically tests the die on each wafer prior to shipment for assembly. Following assembly, prior to customer shipment, each product undergoes final testing using sophisticated test equipment, techniques and quality assurance procedures developed by the Company. Final testing on certain products is performed at independent contractors in the Philippines, South Korea and the United States. MARKETING, SALES AND CUSTOMERS The Company sells its products directly to end customers through a network of independent sales representatives and indirectly through a network of distributors. The Company utilizes a direct sales management and field applications engineering organization in combination with manufacturer's representatives and distributors to reach a broad base of potential end customers. The Company's end customers are primarily original equipment manufacturers in the fields of communications, computing, peripherals, instrumentation, industrial controls and military systems. The Company believes its distribution channel is a cost-effective means of reaching end customers. On September 30, 1995, the Company had 19 sales representatives and five distributors in the United States and Canada. In North America, Arrow Electronics, Inc., Hamilton Hallmark, Insight Electronics, Inc. and Marshall Industries provide nationwide distribution, while Future Electronics provides regional distribution coverage in Canada. The Company has established sales channels in over 25 foreign countries through a network of over 30 sales representatives and distributors. Approximately one-half of the Company's North American sales and most of its foreign sales are made through distributors. The Company protects each of its North American distributors and some of its foreign distributors against reductions in published prices, and expects to continue this policy in the foreseeable future. The Company also allows returns from these distributors of unsold products under certain conditions. For these reasons, the Company does not recognize revenue until products are resold by these distributors. The Company provides technical and marketing assistance to its end customers and sales force with engineering staff based in the Company's offices in Oregon, California and selected field sales offices. The Company maintains 17 domestic and international sales offices where the Company's field sales managers and applications engineers are based. These offices are located in the metropolitan areas of Atlanta, Austin, Boston, Chicago, Dallas, Los Angeles, Minneapolis, New York, Orlando, Portland, San Jose, Hong Kong, London, Munich, Paris, Seoul and Tokyo. International revenues, including those from Canada, accounted for 45%, 43%, 47% and 49% of the Company's revenues in fiscal 1993, 1994, 1995 and the first six months of fiscal 1996, respectively. Revenues from Europe were $13.1 million, $16.1 million, $24.5 million and $17.8 million, and from Asia were $32.7 million, $34.3 million, $40.6 million and $26.4 million, in fiscal 1993, 1994, 1995 and the first six months of fiscal 1996, respectively. Both international and domestic revenues are generally invoiced in U.S. dollars with the exception of sales in Japan which are invoiced in yen. 19 The Company's products are sold to a large and diverse group of customers. Two distributors accounted for approximately 11% each of revenue in fiscal 1993, approximately 12% and 10% in fiscal 1994 and approximately 12% and 11% in fiscal 1995. No individual customer accounted for more than 5% of revenue in fiscal 1995. The Company's sales are primarily executed against purchase orders for standard products. Customers frequently revise quantities and delivery schedules, without penalty. The Company therefore does not believe that backlog as of any given date is indicative of future revenue. COMPETITION The semiconductor industry overall is intensely competitive and is characterized by rapid technological change, rapid rates of product obsolescence and price erosion. The Company's current and potential competitors include a broad range of semiconductor companies, ranging from very large, established companies to emerging companies, many of which have greater financial, technical, manufacturing, marketing and sales resources than the Company. The principal competitive factors in the CMOS PLD market include product features, price, customer support, and sales, marketing and distribution strength. In the high-density segment, the availability of competitive software development tools is also critical. In addition to product features such as speed, power consumption, reprogrammability, design flexibility and reliability, competition in the PLD market occurs on the basis of price and market acceptance of specific products and technology. The Company believes that it competes favorably with respect to each of these factors. The Company intends to continue to address these competitive factors by working to continually introduce product enhancements and new products, by seeking to establish its products as industry standards in their respective markets, and by working to reduce the manufacturing cost of its products over their life cycle. In the high-density PLD market, the Company competes directly primarily with Advanced Micro Devices ("AMD") and Altera, both of which offer competing CPLD products. The Company also competes indirectly with manufacturers of FPGA devices such as Actel, AT&T, and Xilinx as well as other semiconductor companies providing non-PLD based logic solutions. As the Company and these other companies seek to expand their markets, competition may increase. In the low-density PLD market, the Company competes primarily with AMD, a licensee of the Company's GAL patents, which offers a full line of E(2)CMOS GAL-compatible PLDs. Altera, Atmel and Cypress Semiconductor offer products based on similar and competing CMOS technologies and architectures, however, these companies do not offer full product lines. Although to date the Company has not experienced significant competition from companies located outside the United States, such companies may become a more significant competitive factor in the future. As the Company and its current competitors seek to expand their markets, competition may increase. Any such increases in competition could have material adverse effect on the Company's operating results. PATENTS The Company seeks to protect its products and wafer fabrication process technology primarily through patents, trade secrecy measures, copyrights, mask work protection, trademark registrations, licensing restrictions, confidentiality agreements and other approaches designed to protect proprietary information. There can be no assurance that others may not independently develop competitive technology not covered by the Company's patents or that measures taken by the Company to protect its technology will be effective. The Company holds 32 domestic and European patents on its PLD products and has a number of patent applications pending in the United States, Japan and under the European Patent Convention. There can be no assurance that pending patent applications or other applications that may be filed will result in issued patents, or that any issued patents will survive challenges to their validity. Although the Company believes that its patents have value, there can be no assurance that the Company's patents, or any additional patents that may be issued in the future, will provide meaningful protection from competition. The Company believes its success will depend primarily upon the technical expertise, experience, creativity and the sales and marketing abilities of its personnel. 20 Patent and other proprietary rights infringement claims are common in the semiconductor industry. The Company has received a letter from a semiconductor manufacturer stating that it believes a number of its patents, related to product packaging, cover certain products sold by the Company. While the manufacturer has offered to license certain of such patents to the Company, there can be no assurance, on this or any other claim which may be made against the Company, that the Company could obtain a license on terms or under conditions that would be favorable to the Company. LICENSES AND AGREEMENTS SEIKO EPSON/S MOS S MOS, an affiliated U.S. distributor of Seiko Epson, has agreed to provide manufactured wafers to the Company in quantities based on six-month rolling forecasts provided by the Company. The Company has committed to buy certain minimum quantities of wafers per month. The Company's products are manufactured in Japan at Seiko Epson's wafer fabrication facilities and delivered to the Company by S MOS. Prices for the wafers obtained from S MOS are reviewed and adjusted periodically and may be adjusted to reflect prevailing currency exchange rates. See "Risk Factors -- Dependence on Wafer Suppliers." Daniel S. Hauer, a member of the Company's Board of Directors, is Chairman of the Board of Directors of S MOS. In July 1994, the Company entered into an advance production payment agreement with Seiko Epson and S MOS, under which it advanced to Seiko Epson $42 million during fiscal 1995 to be used by Seiko Epson to finance additional sub-micron semiconductor wafer manufacturing capacity. Under the terms of the agreement, the advances are to be repaid in the form of advanced technology sub-micron semiconductor wafers. Subject to certain conditions set forth in the agreement, Seiko Epson has agreed to supply, and the Company has agreed to receive, such wafers at a price (in Japanese yen) and volume expected to achieve full repayment of the advance over a three- to four-year period. In conjunction with the advance production payment agreement, the Company also paid $2 million during fiscal 1995 for the development of sub-micron process technology and the fabrication of engineering wafers to be delivered over the same period. The agreement calls for wafers to be supplied by Seiko Epson through S MOS pursuant to a purchase agreement concluded with S MOS. UMC The Company entered into a series of agreements with UMC in September 1995 pursuant to which the Company has agreed to join UMC and several other companies to form a separate Taiwanese company for the purpose of building and operating an advanced semiconductor manufacturing facility in Taiwan, Republic of China. Under the terms of the agreement, the Company will invest $60 million, payable in three installments over the next two and a half years, for a 10% equity interest in the venture. As a result of its equity ownership, the Company will receive rights to purchase at market prices a percentage of the facility's wafer production. The proposed facility is expected to commence production of eight-inch sub-micron wafers during the second half of 1997. Formation of the venture is subject to a number of conditions, including receipt of requisite governmental approvals. In a related agreement, UMC has committed to supply the Company with sub-micron wafers beginning in the first calendar quarter of 1996 and continuing with phased increases for several years, until such capacity is available from the new facility. The Company is currently engaged in qualifying its process technology with UMC in anticipation of starting volume wafer production. Wafer prices, and other terms, are expected to be negotiated prior to initiating wafer production and will be subject to periodic adjustment. AMD In November 1987, as part of the settlement of a patent infringement suit against the Company, the Company and Monolithic Memories Inc. ("MMI", subsequently merged with AMD) entered into an agreement cross-licensing each other's patents covering programmable and reprogrammable logic devices based on patent applications having a first filing date prior to November 1989. The agreement was subsequently amended in May 1989 by the Company and AMD, the successor to the rights and obligations of MMI in the original agreement. The amendment covers those patents relating to PLD products which are based on patent applications originally filed by the Company, MMI and AMD prior to December 31, 1991. The license terminates, with respect to certain patents asserted by AMD, to cover the Company's current 21 principal products if the Company is acquired by a semiconductor manufacturer with sales in excess of a stated amount or by certain types of companies headquartered in designated Asian countries. No license has been granted to either party for any copyright work, trademark or process technology and, therefore, AMD has not been licensed to use the GAL trademark on its products. EMPLOYEES As of September 30, 1995, the Company had 452 full-time employees. The Company believes that its future success will depend, in part, on its ability to continue to attract and retain highly skilled technical, marketing and management personnel. None of the Company's employees is subject to a collective bargaining agreement. The Company has never experienced a work stoppage and considers its employee relations good. PROPERTIES The Company's corporate offices and testing and principal research and design facilities are located in two adjacent buildings owned by the Company in Hillsboro, Oregon comprising a total of 90,000 square feet. The Company's executive, administrative, marketing and production activities are also located at these facilities. The Company also leases a 41,000 square foot research and design facility in Milpitas, California under a five-year lease which expires in August 1998. The Company leases space in various locations in the United States for its domestic sales offices, and also leases space in Hong Kong, London, Munich, Paris, Seoul and Tokyo for its foreign sales offices. The Company also owns a 13,000 square foot research and development facility and approximately 6,000 square feet of dormitory facilities in Shanghai. 22 DESCRIPTION OF CAPITAL STOCK The Company's authorized capital stock consists of 100,000,000 shares of common stock, $.01 par value (the "Common Stock"), and 10,000,000 shares of preferred stock, $.01 par value (the "Preferred Stock"). As of September 30, 1995, there were 19,502,914 shares of Common Stock and no shares of Preferred Stock outstanding. COMMON STOCK The holders of Common Stock are entitled to one vote per share on all matters to be voted upon by the stockholders. Subject to preferences applicable to any outstanding Preferred Stock, the holders of Common Stock are entitled to receive ratably such dividends as may be declared from time to time by the Board of Directors out of funds legally available therefor and in the event of liquidation, dissolution, or winding up of the Company, the holders of Common Stock are entitled to share in all assets remaining after payment of liabilities. The Common Stock has no preemptive or conversion rights and is not subject to further calls or assessments by the Company. There are no redemption or sinking fund provisions applicable to the Common Stock. The Common Stock currently outstanding is, and the Common Stock offered hereby will be, validly issued, fully paid and non-assessable. CERTAIN CHARTER PROVISIONS The Company's Restated Certificate of Incorporation, as amended, and Bylaws, as amended, contain certain procedural provisions that could have the effect of delaying, deferring or preventing a change in control of the Company. These include the following: (i) a provision classifying the Board of Directors into three classes; and (ii) a provision requiring that the affirmative vote of two-thirds (2/3) of the outstanding voting shares of capital stock of the Company is required to approve certain business combinations. PREFERRED STOCK The Board of Directors of the Company has the authority to issue the Preferred Stock in one or more series and to fix the rights, preferences and privileges, including dividend rights, conversion rights, liquidation rights, voting rights, and the number of shares constituting any series or the designation of such series of Preferred Stock, without any further vote or action by the stockholders. As of the date of this Prospectus, there are no outstanding shares of Preferred Stock or options to purchase Preferred Stock other than the Rights Agreement described below. Although it has no present intention to do so, the Board of Directors of the Company may, without stockholder approval, issue Preferred Stock with voting and conversion rights which could adversely affect the voting power of the holders of Common Stock. The issuance of Preferred Stock may have the effect of delaying, deferring, or preventing a change of control of the Company. RIGHTS AGREEMENT Effective September 1991, the Board of Directors of the Company approved a Preferred Shares Right Agreement and declared a dividend distribution payable November 14, 1991 of one Preferred Share Purchase Right (the "Rights") for each share of its Common Stock outstanding on November 14, 1991 and each share of its Common Stock issued thereafter (subject to certain limitations). Currently, the Rights trade with the shares of Common Stock. When the Rights become exercisable, each Right will entitle the holder to buy one one-thousandth of a share of Series A Participating Preferred Stock, $.01 par value, at an exercise price of $60 per one one-thousandth of a share. The Rights will become exercisable and will trade separately from the Common Stock (unless postponed by action of the disinterested directors of the Company) on the earlier of (i) 10 days following a public announcement that a person or group has acquired, or obtained the right to acquire, beneficial ownership of 20% or more of the Company's outstanding Common Stock or (ii) 10 days following the commencement or announcement of a tender offer or exchange offer which, if consummated, would result in the beneficial ownership by a person or group of 20% or more of the Company's outstanding Common Stock. In general, if any person or group acquires 20% or more of the Company's Common Stock without approval of the Company's Board of Directors, each Right not held by the acquiring person will entitle its holder to purchase $120 worth of the Company's Common Stock for an effective purchase price of $60. If, after any person or group acquires 20% or more of the Company's Common Stock without the approval of 23 the Board of Directors, the Company is acquired in a merger or other business combination transaction, each Right not held by the acquiring person would entitle its holder to purchase $120 worth of the Common Stock of the acquiring company for $60. Under certain conditions, the Company may elect to redeem the Rights for $.01 per Right or cause the exchange of each Right not held by the acquiring person for one share of the Company's Common Stock. Additionally, the exercise price, number of Rights, and number of shares of Series A Participating Preferred or Common Stock that may be acquired for the exercise price are subject to adjustment from time to time to prevent dilution. The Rights expire on September 11, 2001, unless previously exchanged or redeemed as described above, or terminated in connection with the acquisition of the Company by consolidation or merger approved by the Board of Directors and satisfying certain conditions. The Rights are designed to protect and maximize the value of the outstanding equity interests in the Company in the event of an unsolicited attempt by an acquiror to take over the Company in a manner or on terms not approved by the Board of Directors. Takeover attempts frequently include coercive tactics to deprive a corporation's Board of Directors and its stockholders of any real opportunity to determine the destiny of the corporation. The Rights have been declared by the Board of Directors in order to deter such tactics, including a gradual accumulation of shares in the open market of a 20% or greater position to be followed by a merger or a partial or two-tier tender offer that does not treat all stockholders equally. The Rights are not intended to prevent a takeover of the Company and will not do so. Nevertheless, the Rights may have the effect of rendering more difficult or discouraging an acquisition of the Company deemed undesirable by the Board of Directors. The Rights may cause substantial dilution to a person or group that attempts to acquire the Company on terms or in a manner not approved by the Company's Board of Directors, except pursuant to an offer conditioned upon the negation, purchase or redemption of the Rights. The description above is qualified in its entirety by reference to the Preferred Shares Right Agreement dated as of September 11, 1991. DELAWARE TAKEOVER STATUTE The Company is subject to the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a publicly-held Delaware corporation from engaging in any "business combination" with an "interested stockholder" for three years following the date that such stockholder became an interested stockholder, unless (i) prior to such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; (ii) upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding, those shares owned (a) by persons who are directors and also officers and (b) by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or (iii) on or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock not owned by the interested stockholder. Generally, a "business combination" includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the stockholders. An "interested stockholder" is a person who, together with affiliates and associates, owns (or within three years prior did own) 15% or more of the corporation's voting stock. TRANSFER AGENT AND REGISTRAR The Transfer Agent and Registrar for the Common Stock is First Interstate Bank. 24 CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF COMMON STOCK The following discussion concerns the material United States federal income, gift and estate tax consequences of the ownership and disposition of shares of Common Stock applicable to Non-U.S. Holders, as defined, of such shares of Common Stock. In general, a "Non-U.S. Holder" is any holder other than (i) a citizen or resident of the United States, (ii) a corporation or partnership created or organized in the United States or under the laws of the United States or any State or (iii) an estate or trust whose income is includible in gross income for United States federal income tax purposes regardless of its source. The discussion is based on current law, which is subject to change retroactively or prospectively, and is for general information only. The discussion does not address all aspects of federal income and estate taxation and does not address any aspects of state, local or foreign tax laws. The discussion does not consider any specific facts or circumstances that may apply to a particular Non-U.S. Holder (including the fact that in the case of a Non-U.S. Holder that is a partnership, the United States tax consequences of holding and disposing of shares of Common Stock may be affected by certain determinations made at the partner level). Accordingly, prospective investors are urged to consult their tax advisors regarding the United States federal, state, local and non-U.S. income and other tax consequences of holding and disposing of shares of Common Stock. DIVIDENDS Dividends, if any (see "Dividend Policy"), paid to a Non-U.S. Holder generally will be subject to United States withholding tax at a 30% rate (or a lower rate as may be prescribed by an applicable tax treaty) unless the dividends are effectively connected with a trade or business of the Non-U.S. Holder within the United States. Dividends effectively connected with such a trade or business will generally not be subject to withholding (if the Non-U.S. Holder properly files an executed IRS Form 4224 with the payor of the dividend) and generally will be subject to United States federal income tax on a net income basis at regular graduated rates. In the case of a Non-U.S. Holder which is a corporation, such effectively connected income also may be subject to the branch profits tax (which is generally imposed on a foreign corporation on the repatriation from the United States of effectively connected earnings and profits). The branch profits tax may not apply if the recipient is a qualified resident of certain countries with which the United States has an income tax treaty. To determine the applicability of a tax treaty providing for a lower rate of withholding, dividends paid to an address in a foreign country are presumed, under the current Internal Revenue Service position, to be paid to a resident of that country, unless the payor had definite knowledge that such presumption is not warranted or an applicable tax treaty (or United States Treasury Regulations thereunder) requires some other method for determining a Non-U.S. Holder's resident. The Company must report annually to the Internal Revenue Service and to each Non-U.S. Holder the amount of dividends paid to, and the tax withheld with respect to, each Non-U.S. Holder. These reporting requirements apply regardless of whether withholding was reduced or eliminated by an applicable tax treaty. Copies of these information returns also may be made available under the provisions of a specific treaty or agreement to the tax authorities in the country in which the Non-U.S. Holder resides. SALE OF COMMON STOCK Generally, a Non-U.S. Holder will not be subject to United States federal income tax on any gain realized upon the disposition of such holder's shares of Common Stock unless (i) the gain is effectively connected with a trade or business carried on by the Non-U.S. Holder within the United States (in which case the branch profits tax may apply); (ii) the Non-U.S. Holder is an individual who holds the shares of Common Stock as a capital asset and is present in the United States for 183 days or more in the taxable year of the disposition and to whom such gain is United States source; (iii) the Non-U.S. Holder is subject to tax pursuant to the provisions of U.S. tax law applicable to certain former United States citizens or residents; or (iv) the Company is or has been a "U.S. real property holding corporation" for federal income tax purposes (which the Company does not believe that it is or is likely to become) at any time during the five year period ending on the date of disposition (or such shorter period that such shares were held) and, subject to certain exceptions, the Non-U.S. Holder held, directly or indirectly, more than 5% of the Common Stock. 25 GIFT TAX Generally, an individual who is not a citizen or resident (as specially defined for United States federal estate and gift tax purposes) of the United States at the time of a gift will not be subject to United States federal gift tax on the lifetime transfer of shares of Common Stock by gift unless the individual is subject to tax pursuant to the provisions of U.S. tax law applicable to certain former United States citizens. ESTATE TAX Shares of Common Stock owned or treated as owned by an individual who is not a citizen or resident (as specially defined for United States federal estate and gift tax purposes) of the United States at the time of death will be includible in the individual's gross estate for United States federal estate tax purposes, unless an applicable tax treaty provides otherwise, and may be subject to United States federal estate tax. BACKUP WITHHOLDING AND INFORMATION REPORTING Under current United States federal income tax law, backup withholding tax (which generally is a withholding tax imposed at the rate of 31 percent on certain payments to persons that fail to furnish certain required information) and information reporting apply to payments of dividends (actual and constructive) made to certain non-corporate United States persons. The United States backup withholding tax requirements will generally not apply to dividends paid on Common Stock to a Non-U.S. Holder at an address outside the United States. The payment of the proceeds from the disposition of shares of Common Stock through the United States office of a broker will be subject to information reporting and backup withholding unless the holder, under penalties of perjury, certifies, among other things, its status as a Non-U.S. Holder, or otherwise, establishes an exemption. Generally, the payment of the proceeds from the disposition of shares of Common Stock to or through a non-U.S. office of a broker will not be subject to backup withholding and will not be subject to information reporting. In the case of the payment of proceeds from the disposition of shares of Common Stock through a non-U.S. office of a broker that is a U.S. person or a "U.S.-related person", as defined below, existing regulations require information reporting (but not backup withholding) on the payment unless the broker receives a statement from the owner, signed under penalties of perjury, certifying, among other things, its status as a Non-U.S. Holder, or the broker has documentary evidence in its files that the owner is a Non-U.S. Holder and the broker has no actual knowledge to the contrary. For this purpose, a "U.S.-related person" is (i) a "controlled foreign corporation" for the United States federal income tax purposes or (ii) a foreign person 50% or more of whose gross income from all sources for the three year period ending with the close of its taxable year preceding the payment (or for such part of the period that the broker has been in existence) is derived from activities that are effectively connected with the conduct of a United States trade or business. Any amounts withheld from a payment to a Non-U.S. Holder under the backup withholding rules will be allowed as a credit against such holder's United States federal income tax liability and may entitle such holder to a refund, provided that the required information is furnished to the United States Internal Revenue Service. Non-U.S. Holders should consult their tax advisors regarding the application of these rules to their particular situations, the availability of an exemption therefrom and the procedure for obtaining such an exemption, if available. 26 UNDERWRITERS Under the terms and subject to conditions contained in an Underwriting Agreement dated the date hereof, the U.S. Underwriters named below, for whom Morgan Stanley & Co. Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation, PaineWebber Incorporated and Needham & Company, Inc. are serving as U.S. Representatives, have severally agreed to purchase, and the Company has agreed to sell, 2,000,000 shares of the Company's Common Stock, and the International Underwriters named below (collectively with the U.S. Representatives, the "Representatives"), have severally agreed to purchase, and the Company has agreed to sell, 500,000 shares of the Company's Common Stock, which in the aggregate equals the number of shares set forth opposite the name of such Underwriters below. The U.S. Underwriters and the International Underwriters are collectively referred to as the "Underwriters." The Underwriting Agreement provides that the obligations of the several Underwriters to pay for and accept delivery of the shares of Common Stock offered hereby are subject to the approval of certain legal matters by counsel and to certain other conditions. The Underwriters are obligated to take and pay for all of the shares of Common Stock offered hereby (other than those covered by the over-allotment option described below) if any are taken. Pursuant to the Agreement Between U.S. and International Underwriters, each U.S. Underwriter has represented and agreed that, with certain exceptions set forth below, (a) it is not purchasing any U.S. Shares (as defined below) for the account of anyone other than a United States or Canadian Person (as defined below) and (b) it has not offered or sold, and will not offer or sell, directly or indirectly, any U.S. Shares or distribute this Prospectus outside the United States or Canada or to anyone other than a United States or Canadian Person. Pursuant to the Agreement between U.S. and International Underwriters, each International Underwriter has represented and agreed that, with certain exceptions set forth below, (a) it is not purchasing any International Shares (as defined below) for the account of any United States or Canadian Person and (b) it has not offered or sold, and will not offer or sell, directly or indirectly, any International Shares or distribute this Prospectus within the United States or Canada or to any United States or Canadian Person. The foregoing limitations do not apply to stabilization transactions or to certain other transactions 27
NUMBER NAME OF SHARES - ------------------------------------------------------------------------------------------- ---------- U.S. Underwriters: Morgan Stanley & Co. Incorporated........................................................ Donaldson, Lufkin & Jenrette Securities Corporation...................................... PaineWebber Incorporated................................................................. Needham & Company, Inc................................................................... ---------- Subtotal........................................................................... 2,000,000 International Underwriters: Morgan Stanley & Co. International Limited............................................... Donaldson, Lufkin & Jenrette Securities Corporation...................................... PaineWebber International (U.K.) Ltd..................................................... Needham & Company, Inc................................................................... ---------- Subtotal........................................................................... 500,000 ---------- Total.............................................................................. 2,500,000 ---------- ---------- specified in the Agreement Between U.S. and International Underwriters. With respect to each of Donaldson, Lufkin & Jenrette Securities Corporation and Needham & Company, Inc., the foregoing representations or agreements (i) made by it in its capacity as a U.S. Underwriter shall apply only to shares of Common Stock purchased by it in its capacity as a U.S. Underwriter, (ii) made by it in its capacity as an International Underwriter shall apply only to shares of Common Stock purchased by it in its capacity as an International Underwriter and (iii) shall not restrict its ability to distribute this Prospectus to any person. As used herein, "United States or Canadian Person" means any national or resident of the United States or Canada or any corporation, pension, profit-sharing or other trust or other entity organized under the laws of the United States or Canada or of any political subdivision thereof (other than a branch located outside of the United States and Canada of any United States or Canadian Person) and includes any United States or Canadian branch of a person who is not otherwise a United States or Canadian Person, and "United States" means the United States of America, its territories, its possessions and all areas subject to this jurisdiction. All shares of Common Stock to be offered by the U.S. Underwriters and International Underwriters under the Underwriting Agreement are referred to herein as the "U.S. Shares" and the "International Shares," respectively. Pursuant to the Agreement Between U.S. and International Underwriters, sales may be made between the U.S. Underwriters and the International Underwriters of any number of shares of Common Stock to be purchased pursuant to the Underwriting Agreement as may be mutually agreed. The per share price and currency settlement of any shares of Common Stock so sold shall be the public offering price set forth on the cover page hereof, in United States dollars, less an amount not greater than the per share amount of the concession to dealers set forth below. Pursuant to the Agreement Between U.S. and International Underwriters, each U.S. Underwriter has represented that it has not offered or sold, and has agreed not to offer or sell, any shares of Common Stock, directly or indirectly, in Canada in contravention of the securities laws of Canada or any province or territory thereof and has represented that any offer of such shares in Canada will be made only pursuant to an exemption from the requirement to file a prospectus in the province or territory of Canada in which such offer is made. Each U.S. Underwriter has further agreed to send to any dealer who purchases from it any shares of Common Stock a notice stating in substance that, by purchasing such shares, such dealer represents and agrees that it has not offered or sold, and will not offer or sell, directly or indirectly, any of such shares in Canada in contravention of the securities laws of Canada or any province or territory thereof and that any offer of shares of Common Stock in Canada will be made only pursuant to an exemption from the requirement to file a prospectus in the province or territory of Canada in which such offer is made, and that such dealer will deliver to any other dealer to whom it sells any of such shares a notice to the foregoing effect. Pursuant to the Agreement Between U.S. and International Underwriters, each International Underwriter has represented that (i) it has not offered or sold and will not offer or sell any shares of Common Stock to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which are not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995 (the "Regulations"); (ii) it has complied and will comply with all applicable provisions of the Financial Services Act of 1986 and the Regulations with respect to anything done by it in relation to such shares in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on to any person in the United Kingdom any document received by it in connection with the issue of such shares, if that person is of a kind described in Article 11(3) of the Financial Services Act of 1986 (Investment Advertisements) (Exemptions) Order 1995, or is a person to whom such document may otherwise lawfully be issued or passed on. Pursuant to the Agreement Between U.S. and International Underwriters, each International Underwriter has represented and agreed that it has not offered or sold, and will not offer or sell, directly or indirectly, in Japan or to or for the account of any resident thereof, any shares of Common Stock acquired in connection with this offering, except for offers or sales to Japanese International Underwriters or dealers and except pursuant to any exemption from the registration requirements of the Securities and Exchange Law of Japan. Each International Underwriter has further agreed to send to any dealer who purchases from 28 it any of such shares of Common Stock a notice stating in substance that such dealer may not offer or sell any of such shares, directly or indirectly, in Japan or to or for the account of any resident thereof, except pursuant to any exemption from the registration requirements of the Securities and Exchange Law of Japan, and that such dealer will send to any other dealer to whom it sells any of such shares a notice to the foregoing effect. The Underwriters propose to offer part of the shares of Common Stock offered hereby directly to the public at the public offering price set forth on the cover page hereof and part to certain dealers at a price which represents a concession not in excess of $ per share under the public offering price. The Underwriters may allow, and such dealers may re-allow, a concession not in excess of $ per share to other Underwriters or to certain other dealers. After the initial offering of the Common Stock, the offering price and other selling terms may from time to time be varied by the Representatives. Pursuant to the Underwriting Agreement, the Company has granted to the U.S. Underwriters an option, exercisable for 30 days from the date of this Prospectus, to purchase up to an additional 375,000 shares of Common Stock at the public offering price set forth on the cover page hereof, less underwriting discounts and commissions. The U.S. Underwriters may exercise such option to purchase solely for the purpose of covering over-allotments, if any, incurred in the sale of the shares of Common Stock offered hereby. To the extent such option is exercised, each U.S. Underwriter will become obligated, subject to certain conditions, to purchase approximately the same percentage of such additional shares as the number set forth next to such U.S. Underwriters' name in the preceding table bears to the total number of shares of Common Stock offered hereby to the U.S. Underwriters. The Company and the Underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"). Each of the executive officers and directors of the Company has agreed not to offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock, or any securities convertible into or exercisable or exchangeable for Common Stock, or enter into any swap or similar agreement that transfers, in whole or in part, the economic risk of ownership of the Common Stock, for a period of 90 days from the date of this Prospectus, without the prior written consent of Morgan Stanley & Co. Incorporated, other than an aggregate of 100,000 shares by all such executive officers and directors, which shall include no more than 50,000 shares by any such individual. The Company has agreed in the Underwriting Agreement that it will not, directly or indirectly, without the prior written consent of Morgan Stanley & Co. Incorporated, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, for a period of 90 days after the date of this Prospectus, subject to certain limited exceptions. In connection with this offering, certain Underwriters and selling group members (if any) or their respective affiliates who are qualified registered market makers on The Nasdaq National Market, may engage in passive market making transactions in the Common Stock on The Nasdaq National Market in accordance with Rule 10b-6A under the Exchange Act during the two-business-day period before commencement of offers or sales of the Common Stock. The passive market making transactions must comply with applicable volume and price limits and be identified as such. In general, a passive market maker may display its bid at a price not in excess of the highest independent bid for the security; if all independent bids are lowered below the passive market maker's bid, however, such bid must then be lowered when certain purchase limits are exceeded. Passive market making may stabilize the market price of the Common Stock at a level above that which might otherwise prevail and, if commenced, may be discontinued at any time. 29 LEGAL MATTERS The validity of the issuance of the shares of Common Stock offered hereby will be passed upon for the Company by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California. Larry W. Sonsini, a member of such firm, is a director of the Company and holds options to purchase 26,625 shares of Common Stock. Certain legal matters in connection with the offering, will be passed upon for the Underwriters by Morrison & Foerster, Palo Alto, California. EXPERTS The consolidated financial statements incorporated by reference in the Company's Annual Report on Form 10-K for the year ended April 1, 1995, which Form 10-K has been incorporated by reference in this Prospectus, have been incorporated by reference in this Prospectus in reliance on the report of Price Waterhouse LLP, independent accountants, given on the authority of said firm as experts in accounting and auditing. AVAILABLE INFORMATION The Company has filed with the Commission a Registration Statement on Form S-3 (referred to herein, together with all amendments and exhibits, as the "Registration Statement") under the Securities Act, with respect to the securities offered by this Prospectus. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which have been omitted in accordance with the rules and regulations of the Commission. For further information with respect to the Company and the securities offered hereby, reference is made to the Registration Statement. Statements made in this Prospectus as to the contents of any contract or other document referred to herein are not necessarily complete and, in each instance in which a copy of such contract is filed as an exhibit to the Registration Statement, reference is made to such copy and each such statement shall be deemed qualified in all respects by such reference. Copies of the Registration Statement may be inspected, without charge, at the offices of the Commission, or obtained at prescribed rates from the Public Reference Section of the Commission at the address set forth below. The Company is subject to the informational requirements of the Exchange Act, and in accordance therewith files reports, proxy statements and other information with the Commission. Such reports, proxy statements and other information filed by the Company can be inspected and copied at the public reference facilities of the Commission located at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the Commission's regional offices at Seven World Trade Center, 13th Floor, New York, New York 10048 and at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material also can be obtained from the Public Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Company's Common Stock is quoted for trading on The Nasdaq National Market and reports, proxy statements and other information concerning the Company may be inspected at the offices of the National Association of Securities Dealers, Inc., 9513 Key West Avenue, Rockville, Maryland 20850. 30 [LOGO] PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION All of the amounts shown other than the SEC, NASD and Nasdaq fees are estimated. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Company's Restated Certificate of Incorporation, as amended, limits the personal liability of directors for monetary damages for their conduct as a director. The Company's Bylaws provide that the Company shall indemnify its officers and directors and may indemnify its employees and other agents to the fullest extent permitted by the Delaware General Corporation Law ("Delaware Law"). Section 145 of the Delaware Law provides that a corporation may indemnify a director, officer, employee or agent made a party to an action by reason of the fact that he was a director, officer, employee or agent of the corporation or was serving at the request of the corporation against expenses actually and reasonably incurred by him in connection with such action if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation and with respect to any criminal action, had no reasonable cause to believe his conduct was unlawful. Delaware Law does not permit a corporation to eliminate a director's duty of care, and the provisions of the Company's Restated Certificate of Incorporation have no effect on the availability of equitable remedies such as injunction or rescission, based upon a director's breach of the duty of care. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Securities Act"), may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission (the "Commission") such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. ITEM 16. EXHIBITS
TO BE PAID BY THE REGISTRANT ---------- Securities and Exchange Commission registration fee..................................... $ 35,319 NASD filing fee......................................................................... 10,743 The Nasdaq National Market listing fee.................................................. 17,500 Accounting fees and expenses............................................................ 45,000 Printing expenses....................................................................... 45,000 Transfer agent and registrar fees....................................................... 4,000 Blue Sky fees and expenses.............................................................. 12,000 Legal fees and expenses................................................................. 125,000 Miscellaneous expenses.................................................................. 55,438 ---------- Total............................................................................. $ 350,000 ---------- ---------- II-1
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ---------- -------------------------------------------------------------------------------------------------------------- 1.1 Form of Underwriting Agreement 5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel to Registrant, as to the legality of the shares of common stock being registered 23.1 Consent of Price Waterhouse LLP, independent public accountants 23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 5.1) 24.1 Power of Attorney (see page II-3)ITEM 17. UNDERTAKINGS Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Securities Act"), may be permitted to directors, officers and controlling persons of the Registrant pursuant to the Delaware Law, the Underwriting Agreement, the Registrant's Certificate of Incorporation and Bylaws, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of Prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. (3) For the purposes of determining liability under the Securities Act each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. II-2 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Hillsboro, State of Oregon, on the 17th of October, 1995. LATTICE SEMICONDUCTOR CORPORATION By: ________/s/_RODNEY F. SLOSS_______ Rodney F. Sloss, VICE PRESIDENT, FINANCE POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Cyrus Y. Tsui and Rodney F. Sloss, jointly and severally, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Registration Statement (including post-effective amendments), and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. II-3
SIGNATURE TITLE DATE - ------------------------------------------------------ ------------------------------------ ------------------- President, Chief Executive Officer /s/CYRUS Y. TSUI and Chairman of the Board October 17, 1995 Cyrus Y. Tsui (Principal Executive Officer) /s/RODNEY F. SLOSS Vice President, Finance (Principal Rodney F. Sloss Financial and Accounting Officer) October 17, 1995 /s/DANIEL S. HAUER Daniel S. Hauer Director October 17, 1995 /s/HARRY A. MERLO Harry A. Merlo Director October 17, 1995 /s/LARRY W. SONSINI Larry W. Sonsini Director October 17, 1995 /s/DOUGLAS C. STRAIN Douglas C. Strain Director October 17, 1995
2,500,000 SHARES LATTICE SEMICONDUCTOR CORPORATION COMMON STOCK ($0.01 PER SHARE PAR VALUE) UNDERWRITING AGREEMENT October ____, 1995 October ___, 1995 Morgan Stanley & Co. Incorporated Donaldson, Lufkin & Jenrette Securities Corporation PaineWebber Incorporated Needham & Company, Inc. as Representatives of the several U.S. Underwriters named in Schedule I herein c/o Morgan Stanley & Co. Incorporated 1251 Avenue of the Americas New York, New York 10020 Morgan Stanley & Co. International Limited Donaldson, Lufkin & Jenrette Securities Corporation PaineWebber International (U.K.) Ltd. Needham & Company, Inc. as Representatives of the several International Underwriters named in Schedule II herein c/o Morgan Stanley & Co. International Limited 25 Cabot Square Canary Wharf London E14 4QA England Dear Sirs: Lattice Semiconductor Corporation, a Delaware corporation (the "Company"), proposes to issue and sell to the several Underwriters (as defined below) an aggregate of 2,500,000 shares of the Common Stock ($0.01 per share par value) of the Company (the "Firm Shares"). It is understood that, subject to the conditions hereinafter stated, 2,000,000 Firm Shares (the "U.S. Firm Shares") will be sold to the several U.S. Underwriters named in Schedule I hereto (the "U.S. Underwriters") in connection with the offering and sale of such U.S. Firm Shares in the United States and Canada to United States and Canadian Persons (as such terms are defined in the Agreement Between U.S. and International Underwriters of even date herewith), and 500,000 Firm Shares (the "International Shares") will be sold to the several International Underwriters named in Schedule II hereto (the "International Underwriters") in connection with the offering and sale of such International Shares outside the United States and Canada to persons other than United States and Canadian Persons. Morgan Stanley & Co. Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation, PaineWebber Incorporated and Needham & Company, Inc. shall act as representatives (the "U.S. Representatives") of the several U.S. Underwriters, and Morgan Stanley & Co. International Limited, Donaldson, Lufkin & Jenrette Securities Corporation, PaineWebber International (U.K.) Ltd. and Needham & Company, Inc. shall act as representatives (the "International Representatives") of the several International Underwriters. The U.S. Underwriters and the International Underwriters are hereinafter collectively referred to as the Underwriters. The Company also proposes to issue and sell to the several U.S. Underwriters not more than an additional 375,000 shares of its Common Stock ($0.01 per share par value) (the "Additional Shares") if and to the extent that the U.S. Representatives shall have determined to exercise, on behalf of the U.S. Underwriters, the right to purchase such shares of common stock granted to the U.S. Underwriters in Article II hereof. The Firm Shares and the Additional Shares are hereinafter collectively referred to as the Shares. The shares of Common Stock ($0.01 per share par value) of the Company to be outstanding after giving effect to the sales contemplated hereby are hereinafter referred to as the Common Stock. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement, including a prospectus, relating to the Shares. The registration statement contains two prospectuses to be used in connection with the offering and sales of the Shares: the U.S. prospectus, to be used in connection with the offering and sale of Shares in the United States and Canada to United States and Canadian Persons, and the international prospectus, to be used in connection with the offering and sale of Shares outside the United States and Canada to persons other than United States and Canadian Persons. The international prospectus is identical to the U.S. prospectus except for the outside and inside front cover pages. The registration statement as amended at the time it becomes effective, including the information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended (the "Securities Act"), is hereinafter referred to as the Registration Statement; the U.S. prospectus and the international prospectus in the respective forms first used to confirm sales of Shares are hereinafter collectively referred to as the Prospectus (including, in the case of all references to the Registration Statement and the Prospectus, documents incorporated therein by reference). If the Company files a registration statement to register a portion of the Shares and relies on Rule 462(b) for such registration statement to become effective upon filing with the Commission (the "Rule 462 Registration Statement"), then any reference to the "Registration Statement" shall be deemed to include the Rule 462 Registration Statement as amended from time to time. I. The Company represents and warrants to each of the Underwriters that: (a) The Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or, to the best knowledge of the Company, threatened by the Commission. (b) The Company has filed in a timely manner each document or report required to be filed by it pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules and regulations thereunder within the twelve (12) month period preceding the date hereof, (ii) each such document complied or will comply when so filed in all material respects 2 with the Exchange Act and the applicable rules and regulations thereunder, (iii) each part of the Registration Statement, when such part became effective, did not contain and each such part, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (iv) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder and (v) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this Paragraph 1(b) do not apply to statements or omissions in the Registration Statement or the Prospectus based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through you expressly for use therein. (c) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole. (d) Each subsidiary of the Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole. There is no "significant subsidiary" of the Company (as such term is defined under Rule 405 under the Securities Act). (e) The authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Prospectus. (f) The shares of Common Stock outstanding prior to the issuance of the Shares to be sold by the Company have been duly authorized and are validly issued, fully paid and non-assessable. Except as disclosed in the Prospectus, or as issued pursuant to any employee or director stock option or purchase plan or the Sales Representative Warrant Plan disclosed therein, the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any such options, rights, convertible securities or obligations. All outstanding shares of capital stock and options and other rights to acquire capital stock have been issued in compliance with the registration and qualification provisions of all applicable securities 3 laws and were not issued in contraction of any preemptive rights, rights of first refusal or other similar rights. No holders of Common Stock or other securities of the Company have registration rights with respect to such securities which are triggered by this offering, except for registration rights which have been waived with respect to this offering. (g) The Shares to be sold by the Company have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of such Shares will not be subject to any preemptive rights, rights of first refusal or other similar rights. (h) This Agreement has been duly authorized, executed and delivered by the Company. (i) The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement will not contravene any provision of applicable law or the certificate of incorporation or by-laws of the Company or any agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any subsidiary, and no consent, approval, authorization or order of or qualification with any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares. (j) There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectus. (k) There are no legal or governmental proceedings pending or, to the knowledge of the Company, threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject that are required to be described in the Registration Statement or the Prospectus and are not so described or any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed as required. (l) Each of the Company and its subsidiaries has all necessary consents, authorizations, approvals, orders, certificates and permits of and from, and has made all declarations and filings with, all federal, state, local and other governmental authorities, all self-regulatory organizations and all courts and other tribunals, to own, lease, license and use its properties and assets and to conduct its business in the manner described in the Prospectus, except to the extent that the failure to obtain or file would not have a material adverse effect on the Company and its subsidiaries, taken as a whole. 4 (m) Each preliminary prospectus filed as part of the registration statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 or Rule 462 under the Securities Act, complied when so filed in all material respects with the Securities Act and the rules and regulations of the Commission thereunder. (n) The Company is not, and after giving effect to the issuance and sale of the Shares by the Company will not be, an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended. (o) The Company and its subsidiaries are (i) in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole. (p) The Company has reasonably concluded that costs and liabilities associated with Environmental Laws would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole. (q) The Company has complied with all provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida). (r) The consolidated financial statements of the Company, together with related schedules and notes set forth in the Registration Statement and the Prospectus, fairly present in all material respects the consolidated financial condition of the Company as of the dates indicated and the results of operations and changes in financial position for the periods therein specified in conformity with generally accepted accounting principles consistently applied throughout the periods involved (except as otherwise disclosed therein). (s) Each of the Company and its subsidiaries owns or possesses adequate licenses or other rights to use (or could obtain such ownership or possession on terms not materially adverse to the Company and its subsidiaries taken as a whole) all patents, patent rights, trademarks, trade names, service marks, service names, copyrights, license rights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) and other intellectual property rights necessary to carry on its business in all material respects as presently conducted and, except as disclosed in the Prospectus, neither the Company nor any of its subsidiaries has received any notice of infringement of or conflict with asserted rights of others that could reasonably be expected to result in any material adverse change in the condition, financial or otherwise, or in the earnings, business or operations of the Company or any of its subsidiaries, taken as a whole. 5 (t) The Company and its subsidiaries have filed all tax returns required to be filed and are not in default in the payment of any taxes which were payable pursuant to said returns or any assessments with respect thereto, other than any which the Company or any such subsidiary is contesting in good faith and other than where any such failures or defaults, taken in the aggregate, would not have a material adverse effect on the business or financial condition of the Company and its subsidiaries taken as a whole. (u) The accountants who have certified or shall certify the financial statements filed or to be filed with the Commission as parts of the Registration Statement and the Prospectus are independent public accountants as required by the Securities Act. (v) The Company has not distributed and, prior to the later to occur of (i) the Closing Date and (ii) completion of the distribution of the Shares, will not distribute any offering material in connection with the offering and sale of the Shares other than the Registration Statement, the Prospectus or other materials, if any, permitted by the Securities Act. (w) The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) material transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to material assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for material assets is compared with existing material assets at reasonable intervals and appropriate action is taken with respect to any differences. (x) Neither the Company nor any of its subsidiaries nor any employee or agent of the Company or any of its subsidiaries has made any payment of funds of the Company or any subsidiary or received or retained any funds in violation of any law, rule or regulation, which payment, receipt or retention of funds is of a character required to be disclosed in the Prospectus. (y) No material labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is imminent; and the Company is not aware of any existing, threatened or imminent labor disturbance by the employees of any of its principal suppliers, manufacturers or contractors that could result in any material adverse change in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole. (z) Each of the Company and its subsidiaries is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the business in which it is engaged; and neither the Company nor any such subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the earnings, business or operations of the Company and its subsidiaries, taken as a whole. 6 II. The Company hereby agrees to sell to the several Underwriters, and each Underwriter, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to purchase from the Company at $______ a share (the purchase price) the number of Firm Shares (subject to such adjustments to eliminate fractional shares as you may determine) that bears the same proportion to the number of Firm Shares to be sold by the Company as the aggregate number of Firm Shares set forth in Schedules I and II hereto opposite the name of such Underwriter bears to the total number of Firm Shares. On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Company agrees to sell to the U.S. Underwriters the Additional Shares, and the U.S. Underwriters shall have a one-time right to purchase, severally and not jointly, up to all of the Additional Shares at the purchase price. Additional Shares may be purchased as provided in Article IV hereof solely for the purpose of covering over-allotments made in connection with the offering of the Firm Shares. If any Additional Shares are to be purchased, each U.S. Underwriter agrees, severally and not jointly, to purchase the number of Additional Shares (subject to such adjustments to eliminate fractional shares as you may determine) that bears the same proportion to the total number of Additional Shares to be purchased as the number of Firm Shares set forth in Schedule I hereto opposite the name of such U.S. Underwriter bears to the total number of Firm Shares. The Company hereby agrees that, without the prior written consent of Morgan Stanley & Co. Incorporated, it will not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of any shares of Common Stock of the Company or any securities convertible into or exercisable or exchangeable for Common Stock, for a period of ninety (90) days after the date of the public offering of the Shares, other than (i) the Shares to be sold hereunder and (ii) any shares of such Common Stock which may be sold by the Company upon the exercise of an option or warrant or the conversion of a security in any such case only to the extent such security was outstanding on the date hereof, (iii) any shares of Common Stock issued by the Company or options to purchase Common Stock (or any shares of Common Stock issued by the Company upon the exercise of such options) granted under any of the Company's existing employee or director stock option or purchase plans, and (iv) any rights issuable pursuant to the Company's Preferred Shares Right Agreement, the shares of preferred stock issuable pursuant to such rights, and the shares of Common Stock issuable upon conversion of such shares of preferred stock. The Company has furnished or will furnish to you "lock-up" letters in form and substance satisfactory to you, signed by each of its current officers and directors. III. The Company is advised by you that the Underwriters propose to make a public offering of their respective portions of the Shares as soon after the Registration Statement and 7 this Agreement have become effective as in your judgment is advisable. The Company is further advised by you that the Shares are to be offered to the public initially at $_____________ a share (the public offering price) and to certain dealers selected by you at a price that represents a concession not in excess of $______ a share under the public offering price, and that any Underwriter may allow, and such dealers may reallow, a concession, not in excess of $_____ a share, to any Underwriter or to certain other dealers. Each U.S. Underwriter hereby makes to and with the Company the representations and agreements of such U.S. Underwriter contained in the fifth and sixth paragraphs of Article III of the Agreement Between U.S. and International Underwriters of even date herewith. Each International Underwriter hereby makes to and with the Company the representations and agreements of such International Underwriter contained in the seventh, eighth, ninth and tenth paragraphs of Article III of such Agreement. Copes of such fifth, sixth, seventh, eighth, ninth and tenth paragraphs of Article III of the Agreement Between U.S. and International Underwriters are attached hereto as Schedule III. IV. Payment for the Firm Shares to be sold by the Company shall be made by certified or official bank check or checks payable to the order of the Company in New York Clearing House funds at the office of Wilson, Sonsini, Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304-1050, at 7:00 A.M., local time, on November __, 1995, or at such other time on the same or such other date, not later than ____________, 1995, as shall be designated in writing by you. The time and date of each such payment are hereinafter referred to as the Closing Date. Payment for any Additional Shares shall be made by certified or official bank check or checks payable to the order of the Company in New York Clearing House funds at the office of Wilson, Sonsini, Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304-1050, at 7:00 A.M., local time, on such date (which may be the same as the Closing Date but shall in no event be earlier than the Closing Date nor later than ten (10) business days after the giving of the notice hereinafter referred to) as shall be designated in a written notice from you to the Company of your determination, on behalf of the Underwriters, to purchase a number, specified in said notice, of Additional Shares, or on such other date, in any event not later than _______________, 1995, as shall be designated in writing by you. The time and date of such payment are hereinafter referred to as the Option Closing Date. The notice of the determination to exercise the option to purchase Additional Shares and of the Option Closing Date may be given at any time within thirty (30) days after the date of this Agreement. Certificates for the Firm Shares and Additional Shares shall be in definitive form and registered in such names and in such denominations as you shall request in writing not later than two (2) full business days prior to the Closing Date or the Option Closing Date, as the case may be. The certificates evidencing the Firm Shares and Additional Shares shall be delivered to you on the Closing Date or the Option Closing Date, as the case may be, for the respective accounts of the several Underwriters, with any transfer taxes payable in connection with the 8 transfer of the Shares to the Underwriters duly paid, against payment of the purchase price therefor. V. The obligations of the Company and the several obligations of the Underwriters hereunder are subject to the condition that the Registration Statement shall have become effective not later than the date hereof. The several obligations of the Underwriters hereunder are subject to the following further conditions: (a) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date, (i) there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any of the Company's securities by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; and (ii) there shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations, of the Company and its subsidiaries, taken as a whole, from that set forth in the Registration Statement, that, in your judgment, is material and adverse and that makes it, in your judgment, impracticable to market the Shares on the terms and in the manner contemplated in the Prospectus. (b) The Underwriters shall have received on the Closing Date a certificate, dated the Closing Date and signed by the Company's Chief Executive Officer and Chief Financial Officer to the effect set forth in clause (a)(i) above and to the effect that the representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date and that the Company has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date. The officers signing and delivering such certificate may rely upon the best of their knowledge as to proceedings threatened. (c) You shall have received on the Closing Date an opinion of Wilson, Sonsini, Goodrich & Rosati, counsel for the Company, dated the Closing Date, to the effect that: (i) the Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct 9 of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; (ii) there is no "significant subsidiary" of the Company (as such term is defined under Rule 405 under the Securities Act); (iii) the authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Prospectus and the shares of Common Stock outstanding prior to the issuance of the Shares to be sold by the Company have been duly authorized and are validly issued, non-assessable, and, to the knowledge of such counsel, fully paid; (iv) the Shares to be sold by the Company have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of such Shares will not be subject to any preemptive right or, to such counsel's knowledge, rights of first refusal or other similar rights under any of the Reviewed Agreements; (v) this Agreement has been duly authorized, executed and delivered by the Company; (vi) the execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement will not contravene any provision of applicable law or the certificate of incorporation or by-laws of the Company or, to the best of such counsel's knowledge, any agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole, and filed as an exhibit to the Registration Statement or any document incorporated by reference therein (the "Reviewed Agreements"), or, to the best of such counsel's knowledge, any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any subsidiary, and no consent, approval, authorization or order of or qualification with any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares; (vii) the statements (1) in the Prospectus under the captions "Business--Licenses and Agreements" (other than the first paragraph of the sub-caption "Seiko Epson/S MOS" and the sub-caption "AMD"), "Description of Capital Stock" and "Underwriters" (to the extent of the description of this Agreement) and (2) in the Registration Statement in Item 15, in each case insofar as such statements constitute summaries of the legal matters, documents or proceedings referred to therein, fairly present in all material respects the information called for with respect to such legal matters, documents and proceedings and fairly summarize in all material respects the matters referred to therein; 10 (viii) to such counsel's knowledge, there is no legal or governmental proceeding pending or threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject that is required to be described in the Registration Statement or the Prospectus and is not so described and, to such counsel's knowledge, there is no statute, regulation, contract or other document that is required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement that is not described or filed as required; (ix) the Company is not, and after giving effect to the issuance and sale of the Shares by the Company will not be, an "investment company" or an entity "controlled" by an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended; (x) such counsel (1) is of the opinion that each document, if any, filed pursuant to the Exchange Act and incorporated by reference in the Registration Statement and the Prospectus (except for financial statements and schedules and other financial data derived therefrom included therein as to which such counsel need not express any opinion) complied when so filed as to form in all material respects with the Exchange Act, and the applicable rules and regulations of the Commission thereunder, (2) is of the opinion that the Registration Statement and Prospectus (except for financial statements and schedules and other financial data derived therefrom included therein as to which such counsel need not express any opinion) comply as to form in all material respects with the Securities Act and the rules and regulations of the Commission thereunder, (3) believes that (except for financial statements and schedules and other financial data derived therefrom included therein as to which such counsel need not express any belief) the Registration Statement and the prospectus included therein at the time the Registration Statement became effective did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (4) believes that (except for financial statements and schedules and other financial data derived therefrom included therein as to which such counsel need not express any belief) the Prospectus does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; and (xi) to such counsel's knowledge, no holders of Common Stock or other securities of the Company have registration rights with respect to such securities which are triggered by this offering, except for registration rights which have been waived with respect to this offering. (d) You shall have received on the Closing Date an opinion of Morrison & Foerster, counsel for the Underwriters, dated the Closing Date, covering the matters 11 referred to in subparagraphs (v), (ix) (but only as to the statements in the Prospectus under the caption "Underwriters") and clauses (3) and (4) of (x) of paragraph (c) above. With respect to subparagraph (x) of paragraph (c) above, Wilson, Sonsini, Goodrich & Rosati and Morrison & Foerster may make such statement based upon their participation in the preparation of the Registration Statement and Prospectus and any amendments or supplements thereto (other than the documents incorporated by reference) and upon review and discussion of the contents thereof, but are without independent check or verification except as specified. The opinion of Wilson, Sonsini, Goodrich & Rosati described in paragraph (c) above shall be rendered to you at the request of the Company and shall so state therein. (e) You shall have received, on each of the date hereof and the Closing Date, a letter dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to you, from Price Waterhouse LLP, independent public accountants, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in, or incorporated by reference into, the Registration Statement and the Prospectus. (f) The "lock-up" agreements between you and each of the current officers and directors of the Company relating to sales of shares of common stock of the Company or any securities convertible into or exercisable or exchangeable for such common stock, delivered to you on or before the date hereof, shall be in full force and effect on the Closing Date. (g) The Company shall have complied with the provisions of Section VI.(a) hereof with respect to the furnishing of Prospectuses on the business day next succeeding the date of this Agreement. The several obligations of the U.S. Underwriters to purchase Additional Shares hereunder are subject to the delivery to the U.S. Representatives on the Option Closing Date of such documents as you may reasonably request with respect to the good standing of the Company, the due authorization and issuance of the Additional Shares, other matters related to the issuance of the Additional Shares and an opinion of counsel in form and substance satisfactory to counsel for the Underwriters. VI. In further consideration of the agreements of the Underwriters herein contained, the Company covenants as follows: (a) To furnish you, without charge, seven (7) signed copies of the Registration Statement (including exhibits thereto and documents incorporated by reference therein) and to each other Underwriter a confirmed copy of the Registration Statement (without 12 exhibits thereto but including documents incorporated by reference therein) and, during the period mentioned in paragraph (c) below, as many copies of the Prospectus and documents incorporated by reference therein, and any supplements and amendments thereto or to the Registration Statement as you may reasonably request. The terms "supplement" and "amendment" or "amend" as used in this Agreement shall include all documents subsequently filed by the Company with the Commission pursuant to the Exchange Act, that are deemed to be incorporated by reference in the Prospectus. In the case of the Prospectus, to furnish copies of the Prospectus in New York City, prior to 5:00 pm., on the business day next succeeding the date of this Agreement, in such quantities as you reasonably request. (b) Before amending or supplementing the Registration Statement or the Prospectus, to furnish to you a copy of each such proposed amendment or supplement and to file no such proposed amendment or supplement to which you reasonably object. (c) If, during such period after the first date of the public offering of the Shares as in the opinion of your counsel the Prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of your counsel, it is necessary to amend or supplement the Prospectus to comply with law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses you will furnish to the Company) to which Shares may have been sold by you on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with law. (d) To use reasonable efforts to qualify the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as you shall reasonably request. (e) To make generally available to the Company's security holders and to you as soon as practicable an earning statement covering the twelve-month period ending December 31, 1996 that satisfies the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder. (f) To pay all expenses incident to the performance of its obligations under this Agreement, including (i) the preparation and filing of the Registration Statement and the Prospectus and all amendments and supplements thereto, (ii) the preparation, issuance and delivery of the Shares, including any transfer taxes payable in connection with the transfer of the Shares to the Underwriters, (iii) the fees and disbursements of the Company's counsel and accountants, (iv) the qualification of the Shares under state securities or Blue Sky laws in accordance with the provisions of paragraph (d) above, 13 including filing fees and the fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of any Blue Sky or Legal Investment Memoranda, (v) the printing and delivery to the Underwriters, in quantities as hereinabove stated, copies of the Registration Statement and all amendments and exhibits thereto and of each preliminary prospectus and the Prospectus and any amendments or supplements thereto, (vi) the printing and delivery to the Underwriters of copies of any Blue Sky or Legal Investment Memoranda, (vii) the filing fees and expenses, including fees and disbursements of counsel, incurred with respect to any filing and review with the National Association of Securities Dealers, Inc., made in connection with the offering of the Shares, (viii) any expenses incurred by the Company in connection with a "road show" presentation to potential investors and (ix) the listing of the Common Stock on The Nasdaq National Market. VII. The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, any preliminary prospectus or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through you expressly for use therein, provided, further, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages, or liabilities purchased Shares, or any person controlling, controlled by or under common control with such Underwriter, if a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Shares to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such loss, claim, damage or liability. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, the directors of the Company, the officers of the Company who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in 14 the Registration Statement or any amendment thereof, any preliminary prospectus or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but only with reference to information relating to such Underwriter furnished to the Company in writing by such Underwriter through you expressly for use in the Registration Statement, any preliminary prospectus, the Prospectus or any amendments or supplements thereto. In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to any of the two preceding paragraphs, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (a) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Underwriters and all persons, if any, who control any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, and (b) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Company, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either such Section, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Underwriters and such control persons of Underwriters, such firm shall be designated in writing by Morgan Stanley & Co. Incorporated. In the case of any such separate firm for the Company, and such directors, officers and control persons of the Company, such firm shall be designated in writing by the Company. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than thirty (30) days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the 15 prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. If the indemnification provided for in the first or second paragraph of this Article VII is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party or parties on the other hand from the offering of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and of the indemnified party or parties on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other hand in connection with the offering of the Shares shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Shares (before deducting expenses) received by the Company and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate public offering price of the Shares. The relative fault of the Company on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Underwriters' respective obligations to contribute pursuant to this Article VII are several in proportion to the respective number of Shares they have purchased hereunder, and not joint. The Company and the Underwriters agree that it would not be just or equitable if contribution pursuant to this Article VII were determined by PRO RATA allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Article VII, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of 16 such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Article VII are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. The indemnity and contribution provisions contained in this Article VII and the representations and warranties of the Company contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter, or the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Shares. VIII. This Agreement shall be subject to termination by notice given by you to the Company, if (a) after the execution and delivery of this Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on or by, as the case may be, any of the New York Stock Exchange, the American Stock Exchange, the National Association of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter market, (iii) a general moratorium on commercial banking activities in New York shall have been declared by either Federal or New York State authorities, or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis that, in your judgment, is material and adverse and (b) in the case of any of the events specified in clauses (a)(i) through (iv), such event singly or together with any other such event makes it, in your judgment, impracticable to market the Shares on the terms and in the manner contemplated in the Prospectus. IX. This Agreement shall become effective upon the execution and delivery hereof by the parties hereto. If, on the Closing Date or the Option Closing Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase Shares that it or they have agreed to purchase hereunder on such date, and the aggregate number of Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of the Shares to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the number of Firm Shares set forth opposite their respective names in Schedules I and II bears to the aggregate number of Firm Shares set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as you may specify, to purchase the Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the number of Shares that any Underwriter has agreed to purchase pursuant to Article II be increased pursuant 17 to this Article IX by an amount in excess of one-ninth of such number of Shares without the written consent of such Underwriter. If, on the Closing Date or the Option Closing Date, as the case may be, any Underwriter or Underwriters shall fail or refuse to purchase Shares and the aggregate number of Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Shares to be purchased on such date, and arrangements satisfactory to you and the Company for the purchase of such Shares are not made within thirty-six (36) hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter, or the Company. In any such case, either you or the Company shall have the right to postpone the Closing Date or the Option Closing Date, as the case may be, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and in the Prospectus or in any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement. If this Agreement shall be terminated by the Underwriters, or any of them, because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason shall be unable to perform its obligations under this Agreement, the Company will reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to themselves, for all out-of-pocket expenses (including the fees and disbursements of their counsel) reasonably incurred by such Underwriters in connection with this Agreement or the offering contemplated hereunder. This Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 18 This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. Very truly yours, LATTICE SEMICONDUCTOR CORPORATION By___________________________ Title________________________ Accepted, October __, 1995 Morgan Stanley & Co. Incorporated Donaldson, Lufkin & Jenrette Securities Corporation PaineWebber Incorporated Needham & Company, Inc. Acting severally on behalf of themselves and the several U.S. Underwriters named in Schedule I herein. By Morgan Stanley & Co. Incorporated By_______________________________________ Morgan Stanley & Co. International Limited Donaldson, Lufkin & Jenrette Securities Corporation PaineWebber International (U.K.) Ltd. Needham & Company, Inc. Acting severally on behalf of themselves and the several International Underwriters named in Schedule II herein. By Morgan Stanley & Co. International Limited By_______________________________________ 19 SCHEDULE I U.S. UNDERWRITERS Number of U.S. Firm Shares Underwriter To Be Purchased ----------- --------------- Morgan Stanley & Co. Incorporated Donaldson, Lufkin & Jenrette Securities Corporation PaineWebber Incorporated Needham & Company, Inc. ------------- Total U.S. Firm Shares.......................... 2,000,000 ------------ ------------ 20 SCHEDULE II INTERNATIONAL UNDERWRITERS Number of International Shares Underwriter To Be Purchased ----------- -------------------- Morgan Stanley & Co. International Limited Donaldson, Lufkin & Jenrette Securities Corporation PaineWebber International (U.K.) Ltd. Needham & Company, Inc. ------------- Total International Shares...................... 500,000 ------------ ------------ 21 SCHEDULE III COPIES OF PARAGRAPHS 5-10 OF ARTICLE III OF THE AGREEMENT BETWEEN U.S. AND INTERNATIONAL UNDERWRITERS Each U.S. Underwriter represents that it has not offered or sold, and agrees not to offer or sell, any Shares, directly or indirectly, in any province or territory of Canada in contravention of the securities laws thereof and, without limiting the generality of the foregoing, represents that any offer of Shares in Canada will be made only pursuant to an exemption from the requirement to file a prospectus in the province or territory of Canada in which such offer is made. Each U.S. Underwriter further agrees to send to any dealer who purchases from it any of the Shares a notice stating in substance that, by purchasing such Shares, such dealer represents and agrees that it has not offered or sold, and will not offer or sell, directly or indirectly, any of such Shares in any province or territory of Canada or to, or for the benefit of, any resident of any province or territory of Canada in contravention of the securities laws thereof and that any offer of Shares in Canada will be made only pursuant to an exemption from the requirement to file a prospectus in the province or territory of Canada in which such offer is made, and that such dealer will deliver to any other dealer to whom it sells any of such Shares a notice containing substantially the same statement as is contained in this sentence. The Underwriters understand that no action has been or will be taken in any jurisdiction by the Underwriters or the Company that would permit a public offering of the Shares, or possession or distribution of the Prospectus (as defined in the Underwriting Agreement), in preliminary or final form, in any jurisdiction where, or in any circumstances in which, action for that purpose is required, other than the United States. Each International Underwriter agrees that it will comply with all applicable laws and regulations, and make or obtain all necessary filings, consents or approvals, in each jurisdiction in which it purchases, offers, sells or delivers Shares (including, without limitation, any applicable requirements relating to the delivery of the international prospectus, in preliminary or final form), in each case at its own expense. In connection with sales of and offers to sell Shares made by it, such International Underwriter will either furnish to each person to whom any such sale or offer is made a copy of the then current international prospectus (in preliminary or final form and as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or inform such person that such international prospectus, in preliminary or final form, will be made available upon request. Each International Underwriter further represents that it has not offered or sold, and agrees not to offer or sell, directly or indirectly, in Japan or to or for the account of any resident thereof, any of the Shares acquired in connection with the distribution contemplated hereby, except for offers or sales to Japanese International Underwriters or dealers and except pursuant to any exemption from the registration requirements of the Securities and Exchange Law of Japan. Each International Underwriter further agrees to send to any dealer who purchases from it any of the Shares a notice stating in substance that, by purchasing such Shares, such dealer represents and agrees that it has not offered or sold, and will not offer or sell, any of such 22 Shares, directly or indirectly, in Japan or to or for the account of any resident thereof except pursuant to any exemption from the registration requirements of the Securities and Exchange Law of Japan, and that such dealer will send to any other dealer to whom it sells any of such Shares a notice containing substantially the same statement as is contained in this sentence. Each International Underwriter further represents and agrees that (i) it has not offered or sold and will not offer or sell any Shares to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995 (the "Regulations"); (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 and the Regulations with respect to anything done by it in relation to the Shares in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on to any person in the United Kingdom any document received by it in connection with the issue of the Shares, if that person is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995, or is a person to whom such document may otherwise lawfully be issued or passed on. Each International Underwriter agrees to indemnify and hold harmless each Underwriter and each person controlling any Underwriter from and against any and all losses, claims, damages and liabilities (including fees and disbursements of counsel) arising from any breach by it of any of the provisions of paragraphs seven, eight and nine of this Article III. 23
EXHIBIT 5.1 October 16, 1995 Lattice Semiconductor Corporation 5555 N.E. Moore Court Hillsboro, OR 97124-6421 RE: REGISTRATION STATEMENT ON FORM S-3 Ladies and Gentlemen: We have examined the Registration Statement on Form S-3 to be filed by Lattice Semiconductor Corporation (the "Company") with the Securities and Exchange Commission (the "Commission") on October 17, 1995, as thereafter amended or supplemented, (the "Registration Statement"), in connection with the registration under the Securities Act of 1933, as amended, of 2,875,000 shares (including an option granted by the Company to the underwriters to purchase up to 375,000 shares to cover over-allotments, if any) of the common stock of the Company (the "Shares"). The Shares are to be sold to the underwriters for resale to the public as described in the Registration Statement and pursuant to the Underwriting Agreement being filed as an exhibit thereto. As your legal counsel in connection with this transaction, we have examined the proceedings taken and are familiar with the proceedings proposed to be taken by you in connection with the sale and issuance of the Shares. It is our opinion that, upon conclusion of the proceedings being taken or contemplated to be taken prior to the issuance of the Shares, the Shares, when issued and sold in the manner described in the Registration Statement, will be legally and validly issued, fully paid and non-assessable. We consent to the use of this opinion as an exhibit to the Registration Statement and further consent to the use of our name wherever appearing in the Registration Statement, including any Prospectus constituting a part thereof, and any amendments thereto. Very truly yours, /s/ Wilson, Sonsini, Goodrich & Rosati -------------------------------------- WILSON, SONSINI, GOODRICH & ROSATI Professional Corporation
EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Prospectus constituting part of this Registration Statement on Form S-3 of our report dated April 20, 1995 which appears on page 24 of the 1995 Annual Report to Shareholders of Lattice Semiconductor Corporation, which is incorporated by reference in Lattice Semiconductor Corporation's Annual Report on Form 10-K for the year ended April 1, 1995. We also consent to the incorporation by reference of our report on the Financial Statement Schedules, which appears on page S-1 of such Annual Report on Form 10-K. We also consent to the references to us under the headings "Experts" and "Selected Financial Data" in such Prospectus. However, it should be noted that Price Waterhouse LLP has not prepared or certified such "Selected Financial Data." /s/ Price Waterhouse LLP PRICE WATERHOUSE LLP Portland, Oregon October 16, 1995