Lattice Semiconductor Reports First Quarter 2016 Results

First Quarter 2016 Financial Highlights*:

  • Revenue of $96.5 million on both a GAAP and non-GAAP basis.
  • Net loss of $19.7 million or $0.17 per basic and diluted share on a GAAP basis, and $1.0 million or $0.01 per basic and diluted share on a non-GAAP basis.
  • Operating expenses of $70.5 million on a GAAP basis, and $51.9 million on a non-GAAP basis.
  • Gross margin of 59.2% on a GAAP basis and 60.0% on a non-GAAP basis.

* For a reconciliation of GAAP to non-GAAP results, see accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP Financial Measures."

PORTLAND, Ore. — (BUSINESS WIRE) — May 9, 2016 — Lattice Semiconductor Corporation (NASDAQ: LSCC), the global leader in smart connectivity solutions, announced financial results today for the fiscal first quarter ended April 2, 2016.

The Company reported revenues on a GAAP basis for the first quarter of 2016 of $96.5 million, which was down 4.7% sequentially, as compared to the fourth quarter 2015 revenue of $101.2 million, and was up 9%, as compared to the first quarter 2015 revenue of $88.6 million (Lattice closed its acquisition of Silicon Image on March 10, 2015). Revenue for the first quarter of 2016 was $96.5 million on a non-GAAP basis. Gross margin on a GAAP basis was 59.2% for the first quarter of 2016, as compared to the fourth quarter of 2015 gross margin of 53.5% and 54.0% for the first quarter of 2015. Gross margin for the first quarter of 2016 was 60.0% on a non-GAAP basis, as compared to 54.6% for the fourth quarter of 2015. Total operating expenses for the first quarter of 2016 were $51.9 million on a non-GAAP basis, essentially unchanged from the fourth quarter of 2015.

Net loss for the first quarter on a GAAP basis was $19.7 million ($0.17 per basic and diluted share), and $1.0 million ($0.01 per basic and diluted share) on a non-GAAP basis. GAAP results for the first quarter of 2016 reflect $5.4 million in restructuring charges, less than $0.1 million in acquisition related charges, $1.9 million in tax expense, $8.7 million in amortization of acquired intangible assets, and $4.6 million in stock-based compensation expense. This compares to a net loss on a GAAP basis in the prior quarter of $45.5 million ($0.38 per basic and diluted share), with a net loss on a non-GAAP basis in the prior quarter of $5.0 million ($0.04 per basic and diluted share), and compares to a net loss on a GAAP basis in the year ago period of $53.3 million ($0.46 per basic and diluted share), or net income of $3.9 million ($0.03 per basic and diluted share) on a non-GAAP basis. GAAP results for the fourth quarter of 2015 reflect $3.5 million in restructuring charges, $0.4 million in acquisition related charges, $3.5 million in tax expense, $8.8 million in amortization of acquired intangible assets, $21.7 million in impairment of goodwill and intangible assets, and $4.8 million in stock-based compensation expense.

Darin G. Billerbeck, President and Chief Executive Officer, said, "Double-digit revenue growth in our FPGA business was offset by typical seasonal weakness in licensing, mobile handsets and digital TVs. Despite the mixed environment we delivered higher than expected gross margin on revenue that came in at the lower end of our guidance. As we said in February, we expected the first quarter to represent a low point in revenue for the year, followed by a healthy uptick in the second half of 2016, which puts us firmly on track to outpace expected overall industry growth. We are in execution mode with increased visibility into the planned second half ramp of wins at major consumer OEMs. Since we introduced our consumer mobile FPGAs 5 years ago, all of the key Consumer Mobile OEMs have embraced these products to bring leading edge innovation to market. We also are benefiting from diversification of Greenfield markets, as we build on the high value, high performance proposition only Lattice is delivering to customers. These broad market growth opportunities range from ASIC replacements, to wins in automotive, to a wide variety of imaging and entertainment applications, newer wearable devices, IoT and smart home application wins. All of which are in-line with our vision of accelerating customer innovation for a better connected world.”

Max Downing, Interim Chief Financial Officer, added, "First quarter of 2016 gross margin was 60% on a non-GAAP basis, due to a higher margin product mix, along with improved purchase and manufacturing efficiencies. We expect to see gross margin more in-line with our long-term, mid-50’s percent target, as the revenue contribution from our consumer business again rebounds during the year. Total first quarter of 2016 operating expenses were slightly above plan due to investments made to secure growth opportunities at strategic customers, along with higher fees for professional services. We ended the first quarter with $116.5 million in cash and short term investments after $23.1 million in cash flow provided by operations, and as compared to a balance of $102.6 million at the end of the prior quarter. This improvement reflects our focus on driving debt reduction.”

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