Lattice Semiconductor Reports Second Quarter 2013 Results; 19% Sales Increase Produces Record Revenue Quarter
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Lattice Semiconductor Reports Second Quarter 2013 Results; 19% Sales Increase Produces Record Revenue Quarter

HILLSBORO, OR -- (Marketwired) -- Jul 25, 2013 -- Lattice Semiconductor Corporation (NASDAQ: LSCC)

Financial Highlights:

Lattice Semiconductor Corporation (NASDAQ: LSCC) today announced financial results for the fiscal second quarter ended June 29, 2013.

For the second quarter, revenue was $84.7 million, an increase of 19.0% from $71.2 million reported in the prior quarter, and an increase of 19.6% from the $70.8 million reported in the same quarter a year ago. FPGA revenue for the second quarter was $26.0 million, compared to $22.9 million in the prior quarter, and $24.9 million in the same quarter a year ago. PLD revenue for the second quarter was $58.7 million, compared to $48.3 million reported in the prior quarter, and $45.9 million in the same quarter a year ago.

Net income for the second quarter was $5.0 million ($0.04 per basic and diluted share), compared to the prior quarter net income of $1.9 million ($0.02 per basic and diluted share) and net loss of $12.5 million ($0.11 per basic and diluted share) reported in the same quarter a year ago. The second quarter of 2013 included tax expense of $1.9 and amortization expense from acquired intangibles of $0.7 million, compared with the first quarter of 2013 tax expense of $0.7 million, amortization expense from acquired intangibles of $0.7 million and restructuring charges of $0.2 million. Second quarter of 2012 results included approximately $1.0 million of acquisition related costs, $0.1 million of restructuring related charges, and $10.5 million income tax expense.

Darin G. Billerbeck, President and Chief Executive Officer, said, "We achieved the Company's highest quarterly revenue level in over a decade, while maintaining a healthy gross margin and doubling our net income per share compared to the prior quarter. Growth was driven by our consumer end market and increased new product category sales. The broader communications market in Asia continues to rebound, while computing and industrial are lagging. Overall, we are confident and encouraged by the successful execution of our business strategy, along with our customer and market diversification efforts."

Joe Bedewi, Corporate Vice President and Chief Financial Officer, added, "Gross margin for Q2 was 53.3%, which is above the high end of our guidance. We were able to achieve this quarterly improvement through effective supply chain management and ongoing cost controls, while continuing to support ramping customer products. Our operating expenses came in $600 thousand above our guidance of $37.5 million, primarily due to higher variable spending related to our increased sales and higher R&D variable cost in support of new business opportunities. Specifically, Q2 operating expenses included $1.4 million in program related R&D variable cost and $0.7 million in variable spending primarily related to higher sales. We continue to focus on aggressive operating expense control; quarterly fluctuations will continue to be dependent on variable expenses related to revenue levels and the timing of R&D spending as we opportunistically support new products and new capabilities."

Recent Business Highlights:

Business Outlook - Third Quarter 2013:

Investor Conference Call / Webcast Details:

Lattice Semiconductor will review the Company's financial results for the second quarter of 2013 and business outlook for the third quarter of 2013 on Thursday, July 25, 2013 at 5:00 p.m. Eastern Time. The conference call-in number is 1-888-286-6281 or 1-706-643-3761 with conference identification number 13777011. A live webcast of the conference call will also be available on Lattice's website at The Company's financial guidance will be limited to the comments on its public quarterly earnings call and the public business outlook statements contained in this press release.

A replay of the call will be available approximately two hours after the conclusion of the live call through 11:59 p.m. Eastern Time on August 1, 2013, by telephone at 1-404-537-3406. To access the replay, use conference identification number 13777011. A webcast replay will also be available on Lattice's investor relations website at

Forward-Looking Statements Notice:

The foregoing paragraphs contain forward-looking statements that involve estimates, assumptions, risks and uncertainties. Such forward-looking statements include statements relating to: rebounding of the broader communications market in Asia and the lagging of computing and industrial markets; execution of our business strategy and our customer and market diversification efforts; our aggressive control of operating expenses and quarterly operating expense fluctuations being dependent on variable expenses related to revenue levels and the timing of R&D spending as we opportunistically support new products and new capabilities; and those statements under the heading "Business Outlook - Third Quarter 2013" relating to expected revenue, gross margin, total operating expenses, and projected charges associated with the Company's move to a new facility in San Jose, California. Other forward-looking statements may be indicated by words such as "will," "could," "should," "would," "expect," "plan," "anticipate," "intend," "forecast," "believe," "estimate," "predict," "propose," "potential," "continue" or the negative of these terms or other comparable terminology. Lattice believes the factors identified below could cause actual results to differ materially from the forward-looking statements.

Estimates of future revenue are inherently uncertain due to, among other things, the high percentage of quarterly "turns" business. In addition, revenue is affected by such factors as global economic conditions, which may affect customer demand, pricing pressures, competitive actions, the demand for our Mature, Mainstream and New products, and in particular our iCE™, MachXO™ and LatticeECP3™ devices, the ability to supply products to customers in a timely manner, changes in our distribution relationships, or the volatility of our consumer business. Actual gross margin percentage and operating expenses could vary from the estimates on the basis of, among other things, changes in revenue levels, changes in product pricing and mix, changes in wafer, assembly, test and other costs, including commodity costs, variations in manufacturing yields, the failure to sustain operational improvements, the actual amount of compensation charges due to stock price changes. Any unanticipated declines in revenue or gross margin, any unanticipated increases in our operating expenses or unanticipated charges could adversely affect our profitability.

In addition to the foregoing, other factors that may cause actual results to differ materially from the forward-looking statements in this press release include global economic uncertainty, overall semiconductor market conditions, market acceptance and demand for our new products, the Company's dependencies on its silicon wafer suppliers, the impact of competitive products and pricing, technological and product development risks, and the other risks that are described in this press release and that are otherwise described from time to time in our filings with the Securities and Exchange Commission. The Company does not intend to update or revise any forward-looking statements, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

About Lattice Semiconductor:

Lattice is a service-driven developer of innovative low cost, low power programmable design solutions. For more information about how our FPGA, CPLD and programmable power management devices help our customers unlock their innovation, visit You can also follow us via Twitter, Facebook, or RSS.

Lattice Semiconductor Corporation, Lattice (& design), L (& design), iCE40 and specific product designations are either registered trademarks or trademarks of Lattice Semiconductor Corporation or its subsidiaries in the United States and/or other countries.

GENERAL NOTICE: Other product names used in this publication are for identification purposes only and may be trademarks of their respective holders.

                     Lattice Semiconductor Corporation                      
                   Consolidated Statements of Operations                    
                   (in thousands, except per share data)                    
                                Three Months Ended        Six Months Ended  
                          ----------------------------- ------------------- 
                           June 29, March 30,  June 30,  June 29,  June 30, 
                             2013      2013      2012      2013      2012   
                          --------- --------- --------- --------- --------- 
Revenue                   $  84,694 $  71,158 $  70,792 $ 155,852 $ 142,492 
Costs and expenses:                                                         
Cost of products sold        39,584    33,003    33,741    72,587    65,956 
Research and development     20,267    18,114    19,363    38,381    38,509 
Selling, general and                                                        
 administrative              17,072    16,498    19,405    33,570    37,328 
Acquisition related                                                         
 charges (1)                    737       749       982     1,486     2,689 
Restructuring (2)                19       153        87       172       643 
                          --------- --------- --------- --------- --------- 
                             77,679    68,517    73,578   146,196   145,125 
                          --------- --------- --------- --------- --------- 
Income (loss) from                                                          
 operations                   7,015     2,641    (2,786)    9,656    (2,633)
Other (expense) income,                                                     
 net                            (54)      (52)      694      (106)      758 
                          --------- --------- --------- --------- --------- 
Income (loss) before                                                        
 provision for income                                                       
 taxes                        6,961     2,589    (2,092)    9,550    (1,875)
Provision for income taxes                                                  
 (3)                          1,921       699    10,450     2,620    18,381 
                          --------- --------- --------- --------- --------- 
Net Income (loss)         $   5,040 $   1,890 $ (12,542)$   6,930 $ (20,256)
                          ========= ========= ========= ========= ========= 
Net Income (loss) per                                                       
 share (4):                                                                 
Basic                     $    0.04 $    0.02 $   (0.11)$    0.06 $   (0.17)
                          ========= ========= ========= ========= ========= 
Diluted                   $    0.04 $    0.02 $   (0.11)$    0.06 $   (0.17)
                          ========= ========= ========= ========= ========= 
Shares used in per share                                                    
 calculations (4):                                                          
Basic                       115,733   115,391   117,874   115,562   118,024 
                          ========= ========= ========= ========= ========= 
Diluted                     117,109   116,714   117,874   116,935   118,024 
                          ========= ========= ========= ========= ========= 
(1) During the first six months of fiscal 2012, the Company recorded        
    consulting, legal costs, severance related integration costs and        
    amortization of intangible assets associated with the acquisition of    
    SiliconBlue. During the first six months of 2013, Acquisition related   
    charges consist of amortization of acquired intangible assets.          
(2) Represents costs and adjustments incurred primarily related to the      
    corporate restructuring plans announced on October 12, 2012 and April   
    21, 2011.                                                               
(3) The tax provision for the three and six months ended June 30, 2012      
    reflects our new global tax structure and the resulting intercompany    
    sale of inventory and fixed assets.                                     
(4) For the three and six month periods in fiscal 2012, the computation of  
    diluted earnings per share excludes the effects of stock options,       
    restricted stock units and ESPP shares as they are antidilutive. For the
    three and six month periods in fiscal 2013, the computation of diluted  
    earnings per share includes the effects of stock options and restricted 
    stock units as they are dilutive. ESPP shares are included if dilutive. 
                      Lattice Semiconductor Corporation                     
                        Consolidated Balance Sheets                         
                               (in thousands)                               
                                                   June 29,    December 29, 
                                                      2013          2012    
                                                 ------------- -------------
Current assets:                                                             
Cash, cash equivalents and short-term marketable                            
 securities                                      $     174,224       183,401
Accounts receivable, net                                63,605        46,947
Inventories                                             49,654        44,194
Other current assets (1)                                13,342        12,527
                                                 ------------- -------------
Total current assets                                   300,825       287,069
Property and equipment, net                             41,733        40,384
Long-term marketable securities                          4,717         4,717
Other long-term assets                                   8,503         6,854
Intangible assets, net of amortization                  13,957        15,430
Goodwill                                                44,808        44,808
Deferred income taxes (1)                               13,757        15,357
                                                 ------------- -------------
                                                 $     428,300 $     414,619
                                                 ============= =============
      Liabilities and Stockholders' Equity                                  
Current liabilities:                                                        
Accounts payable and other accrued liabilities   $      42,013        42,540
Deferred income and allowances on sales to sell-                            
 through distributors                                   13,890        10,553
                                                 ------------- -------------
Total current liabilities                               55,903        53,093
Other long-term liabilities (1)                          5,222         3,976
                                                 ------------- -------------
Total liabilities                                       61,125        57,069
Stockholders' equity                                   367,175       357,550
                                                 $     428,300 $     414,619
                                                 ============= =============
(1) In June 2013 the company early adopted, with retrospective application, 
    the requirements of ASU 2013-11 Presentation of an Unrecognized Tax     
    Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a
    Tax Credit Carryforward Exists. Accordingly, previous periods have been 
    revised to conform with current period presentation. This resulted in   
    both long-term taxes payable and deferred tax assets declining by       
    approximately $14 million for all periods presented.                    
                      Lattice Semiconductor Corporation                     
              - Supplemental Historical Financial Information -             
                                               2Q13       1Q13       2Q12   
Operations Information                                                      
Percent of Revenue                                                          
Gross Margin                                   53.3%      53.6%      52.3%  
R&D Expense                                    23.9%      25.5%      27.4%  
SG&A Expense                                   20.2%      23.2%      27.4%  
Depreciation and amortization (in                                           
 thousands)                                    4,894      5,066      5,243  
Capital expenditures (in thousands)            3,783      3,054      4,632  
Stock compensation expense (in thousands)      2,513      1,912      2,054  
Restructuring and severance related charges                                 
 (in thousands)                                 19         153       1,493  
Taxes paid (cash, in thousands)                 104        852        53    
Balance Sheet Information                                                   
Current Ratio                                   5.4        5.1        5.8   
A/R Days Revenue Outstanding                    68         71         77    
Inventory Months                                3.8        4.0        3.3   
Revenue% (by Product Family)                                                
PLD                                             69%        68%        65%   
FPGA                                            31%        32%        35%   
Revenue% (by Product Classification) (1)                                    
New                                             46%        39%        20%   
Mainstream                                      42%        47%        60%   
Mature                                          12%        14%        20%   
Revenue% (by Geography)                                                     
Asia                                            74%        69%        70%   
Europe (incl. Africa)                           14%        18%        17%   
Americas                                        12%        13%        13%   
Revenue% (by End Market) (2)                                                
Communications                                  38%        39%        46%   
Industrial & Other                              23%        26%        33%   
Computing                                       8%         10%        13%   
Consumer                                        31%        25%        8%    
Revenue% (by Channel)                                                       
Sell-through distribution                       44%        49%        56%   
Direct                                          56%        51%        44%   
(1) New: LatticeECP3, MachXO2, Power Manager II, and iCE40 Mainstream:      
    ispMACH 4000ZE, ispMACH 4000/Z, LatticeSC, LatticeECP2/M, LatticeECP,   
    LatticeXP2, LatticeXP, MachXO, ispClock A/D/S, Software and IP Mature:  
    ispXPLD, ispXPGA, FPSC, ORCA 2, ORCA 3, ORCA 4, ispPAC, isplsi 8000V,   
    ispMACH 5000B, ispMACH 2LV, ispMACH 5LV, ispLSI 2000V, ispLSI 5000V,    
    ispMACH 5000VG, all 5-volt CPLDs, ispGDX2, GDX/V, ispMACH 4/LV, iCE65,  
    ispClock, Power Manager I, all SPLDs                                    
    * Product categories are modified as appropriate relative to our        
    portfolio of products and the generation within each major product      
    family. New products consist of our latest generation of products, while
    Mainstream and Mature are older or based on unique late stage customer- 
    based production needs. Generally, product categories are adjusted every
    two to three years, at which time prior periods are reclassified to     
    conform to the new categorization. In the first fiscal quarter 2012 we  
    reclassified our New, Mainstream and Mature product categories to better
    reflect our current product portfolio.                                  
(2) During the first quarter of 2013, the Company refined its methodology   
    for assigning revenue to End Market categories. All periods presented   
    have been revised to conform to this methodology.                       

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

David Pasquale 
Global IR Partners 

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