Lattice Semiconductor Reports First Quarter 2014 Results

HILLSBORO, OR -- (Marketwired) -- Apr 24, 2014 -- Lattice Semiconductor Corporation (NASDAQ: LSCC)

Financial Highlights:

  • Revenue of $96.6 million, an increase of nearly 8.0% from $89.5 million in 4Q13 and an increase of 35.7% from $71.2 million in 1Q13.
  • Net income of $0.10 per basic and diluted share, compared to net income of $0.06 per basic and diluted share in 4Q13 and net income of $0.02 per basic and diluted share in 1Q13.
  • Gross margin of 56.0%, compared to 54.3% in 4Q13 and 53.6% in 1Q13.

Lattice Semiconductor Corporation (NASDAQ: LSCC) today announced financial results for the fiscal first quarter ended March 29, 2014.

For the first quarter, revenue was $96.6 million, an increase of nearly 8.0% from $89.5 million reported in the prior quarter, and an increase of 35.7% from the $71.2 million reported in the same quarter a year ago.

Net income for the first quarter was $12.0 million ($0.10 per basic and diluted share), compared to the prior quarter net income of $6.5 million ($0.06 per basic and diluted share) and net income of $1.9 million ($0.02 per basic and diluted share) reported in the same quarter a year ago.

Darin G. Billerbeck, President and Chief Executive Officer, said, "Q1 revenue and net income growth were led by continued momentum in revenue from new products. Consistent with our strategy, we achieved sustained growth in the Consumer market combined with strength in the China communications market, as well as broad market improvement in the European distribution channel. We remain focused on becoming the undisputed leader in providing low cost, low power, small footprint FPGAs to applications where time-to-market is crucial."

Joe Bedewi, Corporate Vice President and Chief Financial Officer, added, "We achieved Q1 revenue growth of nearly 8.0% compared to Q4, realizing five consecutive quarters of sustained growth. Gross margin for the quarter was 56.0%, above our earlier expectations for the quarter. Our increased scale, sustained product cost reductions and favorable mix all contributed to gross margin improvement in the quarter. We ended the first fiscal quarter with a debt-free balance sheet and approximately $219.5 million in cash, cash equivalents and short-term marketable securities."

Recent Business Highlights:

  • Launch of ECP5™ Family: The ECP5 Family is ideal for small-cell, microserver, broadband access, industrial video and other high-volume applications where the lowest-possible cost, lowest-possible-power, and smallest-possible form-factor are crucial. The ECP5 family removes development obstacles and breaks the rule that conventional FPGAs should be the highest density, power hungry and expensive.
  • Google Selects Lattice: Google's Advanced Technology and Projects group selected Lattice FPGAs for its ambitious Project Ara initiative that aims to deliver the world's first smartphones for consumers to configure from a variety of modules.
  • New FPGA-Based Camera Design Solutions Featured: Lattice demonstrated several new FPGA-based camera design solutions at SPIE Photonics West, along with partner Helion GmbH, that are enabling new HD quality camera solutions for the industrial and healthcare markets.
  • Expands European Distribution: Intercomp was appointed as a representative in Central Europe, in support of Lattice as it extends the reach of its programmable solutions.
  • Philippines Facility Receives ISO9001:2008 Certification: Lattice's operations site in Manila was the company's latest facility to receive this important certification recognizing commitment to excellence and quality worldwide.

Business Outlook - Second Quarter 2014:

  • Revenue is expected to be flat to plus 4% on a sequential basis.
  • Gross margin percentage is expected to be approximately 55% plus or minus 2%.
  • Total operating expenses are expected to be approximately flat on a sequential basis.

Investor Conference Call / Webcast Details:

Lattice Semiconductor will review the Company's financial results for the first quarter of 2014 and business outlook for the second quarter of 2014 on Thursday, April 24, 2014 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 22510192. A live webcast of the conference call will also be available on Lattice's website at www.latticesemi.com. 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 May 8, 2014, by telephone at 1-404-537-3406. To access the replay, use conference identification number 22510192. A webcast replay will also be available on Lattice's investor relations website at www.latticesemi.com.

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: our becoming the undisputed leader in providing low cost, low power, small footprint FPGAs to applications where time-to-market is crucial and those statements under the heading "Business Outlook - Second Quarter 2014" relating to expected revenue, gross margin and total operating expenses. 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 Semiconductor (NASDAQ: LSCC) is the world's leading provider of ultra-low-power programmable IC solutions for makers of smartphones, mobile handheld devices, small-cell networking equipment, industrial control, automotive infotainment, and much more. With more than 1 billion units sold over the past 10 years, Lattice ships more FPGAs, CPLDs and Power Management solutions than any other programmable solutions vendor. For more information, visit www.latticesemi.com. You can also follow Lattice via Twitter, Facebook, or RSS.

Lattice Semiconductor Corporation, Lattice (& design), L (& design), ECP5 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)                                        
                                                                (unaudited)                                                                  
                                                                                                                                                        
                                                                                                Three  Months  Ended                    
                                                                              ------------------------------------  
                                                                                March  29,    December  28,    March  30,    
                                                                                      2014                2013                  2013        
                                                                              -----------  ------------    ----------  
Revenue                                                                $        96,637  $          89,519    $      71,158  
                                                                              -----------  ------------    ----------  
Costs  and  expenses:                                                                                                                  
Cost  of  products  sold                                              42,499              40,916            33,003  
Research  and  development                                        21,239              22,331            18,114  
Selling,  general  and  administrative                  18,749              17,189            16,498  
Acquisition  related  charges                                        737                    737                  749  
Restructuring                                                                      11                    131                  153  
                                                                              -----------  ------------    ----------  
                                                                                        83,235              81,304            68,517  
                                                                              -----------  ------------    ----------  
Income  from  operations                                            13,402                8,215              2,641  
Other  income  (loss),  net                                              309                  (540)                (52)
                                                                              -----------  ------------    ----------  
Income  before  provision  for  income                                                                                    
  taxes                                                                            13,711                7,675              2,589  
Provision  for  income  taxes                                      1,727                1,128                  699  
                                                                              -----------  ------------    ----------  
Net  income                                                          $        11,984  $            6,547    $        1,890  
                                                                              ===========  ============    ==========  
                                                                                                                                                        
Net  income  per  share:                                                                                                              
Basic                                                                    $            0.10  $              0.06    $          0.02  
                                                                              ===========  ============    ==========  
Diluted                                                                $            0.10  $              0.06    $          0.02  
                                                                              ===========  ============    ==========  
                                                                                                                                                        
Shares  used  in  per  share  calculations:                                                                            
Basic                                                                            116,436            115,718          115,391  
                                                                              ===========  ============    ==========  
Diluted                                                                        118,917            117,156          116,714  
                                                                              ===========  ============    ==========  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                            Lattice  Semiconductor  Corporation                                          
                                                  Consolidated  Balance  Sheets                                                
                                                              (in  thousands)                                                              
                                                                  (unaudited)                                                                
                                                                                                                                                        
                                                                                                  March  29,          December  28,  
                                                                                                        2014                      2013          
                                                                                              --------------  --------------
                                        Assets                                                                                                    
Current  assets:                                                                                                                          
Cash,  cash  equivalents  and  short-term                                                                              
  marketable  securities                                                  $            219,515  $            215,815
Accounts  receivable,  net                                                              66,674                  50,085
Inventories                                                                                        58,180                  46,222
Other  current  assets                                                                      12,945                  13,679
                                                                                              --------------  --------------
Total  current  assets                                                                    357,314                325,801
                                                                                                                                                        
Property  and  equipment,  net                                                        41,432                  41,719
Long-term  marketable  securities                                                  5,241                    5,241
Other  long-term  assets                                                                    5,336                    6,120
Intangible  assets,  net  of  amortization                                  11,747                  12,484
Goodwill                                                                                              44,808                  44,808
Deferred  income  taxes                                                                    10,651                  11,703
                                                                                              --------------  --------------
                                                                                              $            476,529  $            447,876
                                                                                              ==============  ==============
                                                                                                                                                        
          Liabilities  and  Stockholders'  Equity                                                                      
Current  liabilities:                                                                                                                
Accounts  payable  and  other  accrued  liabilities  $              51,542  $              51,113
Deferred  income  and  allowances  on  sales  to                                                                    
  sell-through  distributors                                                          16,980                    7,495
                                                                                              --------------  --------------
Total  current  liabilities                                                            68,522                  58,608
                                                                                                                                                        
Other  long-term  liabilities                                                          3,264                    3,588
                                                                                              --------------  --------------
Total  liabilities                                                                            71,786                  62,196
                                                                                                                                                        
Stockholders'  equity                                                                    404,743                385,680
                                                                                              --------------  --------------
                                                                                              $            476,529  $            447,876
                                                                                              ==============  ==============
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                          Lattice  Semiconductor  Corporation                                            
                          -  Supplemental  Historical  Financial  Information  -                            
                                                                                                                                                        
                                                                                                    Three  Months  Ended                
                                                                                      --------------------------------  
                                                                                      3/29/2014    12/28/2013    3/30/2013  
                                                                                      ---------    ----------    ---------  
Operations  Information                                                                                                            
    Percent  of  Revenue                                                                                                                
    Gross  Margin                                                                    56.0%              54.3%            53.6%
    R&D  Expense                                                                      22.0%              24.9%            25.5%
    SG&A  Expense                                                                    19.4%              19.2%            23.2%
    Depreciation  and  amortization  (in                                                                                  
      thousands)                                                                    5,860              5,634            5,066  
    Capital  expenditures  (in  thousands)                    2,395              2,263            3,054  
    Stock  compensation  expense  (in                                                                                        
      thousands)                                                                    3,090              2,537            1,912  
    Restructuring  and  severance  related                                                                              
      charges  (in  thousands)                                                  90                  167                153  
    Taxes  paid  (cash,  in  thousands)                                380                  289                852  
Balance  Sheet  Information                                                                                                      
    Current  Ratio                                                                    5.2                  5.6                5.1  
    A/R  Days  Revenue  Outstanding                                        62                    50                  71  
    Inventory  Months                                                              4.1                  3.4                4.0  
Revenue%  (by  Product  Family)                                                                                                
    PLD                                                                                          65%                  68%                68%
    FPGA                                                                                        35%                  32%                32%
Revenue%  (by  Product  Classification)  (1)                                                                        
    New                                                                                          53%                  46%                39%
    Mainstream                                                                            34%                  40%                44%
    Mature                                                                                    13%                  14%                17%
Revenue%  (by  Geography)                                                                                                          
    Asia                                                                                        75%                  76%                69%
    Europe  (incl.  Africa)                                                      15%                  12%                18%
    Americas                                                                                10%                  12%                13%
Revenue%  (by  End  Market)  (2)                                                                                                
    Communications                                                                    41%                  41%                39%
    Consumer                                                                                31%                  27%                25%
    Industrial,  Scientific,  Medical  and                                                                              
      Computing                                                                            28%                  32%                36%
Revenue%  (by  Channel)                                                                                                              
    Sell-through  distribution                                              39%                  45%                49%
    Direct                                                                                    61%                  55%                51%
                                                                                                                                                        
 

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