HILLSBORO, OR -- (MARKET WIRE) -- Oct 23, 2008 -- Lattice Semiconductor Corporation (NASDAQ: LSCC) today announced financial results for the third quarter of fiscal 2008 ended September 27, 2008.
For the third quarter, revenue was $57.6 million, a decrease of 0.8 percent from the $58.1 million reported in the prior quarter, and a decrease of 1.2 percent from the $58.3 million reported in the same quarter a year ago.
FPGA revenue for the third quarter was $16.4 million, up 23 percent from the $13.4 million reported in the prior quarter, and up 21 percent from the $13.6 million reported in the same quarter a year ago. PLD revenue for the quarter was $41.2 million, a decrease of 8 percent from the $44.7 million reported in the prior quarter, and an 8 percent decrease from the $44.7 million reported in the same quarter a year ago.
New product revenue for the third quarter was $17.5 million, up 42 percent from the $12.3 million reported in the prior quarter, and up 111 percent from the $8.3 million reported in the same quarter a year ago. Mainstream product revenue for the third quarter was $25.0 million, down 13 percent from the $28.6 million reported in the prior quarter, and down 18 percent from the $30.5 million reported in the same quarter a year ago. Mature product revenue for the third quarter was $15.1 million, down 12 percent from the $17.2 million reported in the prior quarter, and down 22 percent from the $19.5 million reported in the same quarter a year ago.
During the third quarter of 2008 the Company recorded a $3.9 million charge for restructuring costs, primarily related to the 14 percent workforce reduction announced on September 16, 2008.
Other income (expense), net for the third quarter was expense of $1.0 million compared to an expense of $10.5 million reported in the prior quarter and income of $3.6 million reported in the same quarter a year ago. Other expense included an impairment charge of $1.7 million and $11.3 million, for the third and second quarter of 2008, respectively, primarily related to an other-than-temporary decline in fair value of auction rate securities held in Long-term marketable securities. Other income for the third quarter of 2007 included a $1.7 million gain related to the extinguishment of Zero Coupon Convertible Notes.
Net loss for the third quarter was $7.0 million ($.06 per share), as compared to a prior quarter net loss of $13.6 million ($0.12 per share), and a net loss of $4.4 million ($0.04 per share) reported in the same quarter a year ago. These results include amortization charges, stock-based compensation expense, an impairment charge on marketable securities, and restructuring charges. Excluding these items, non-GAAP net income for the third quarter of 2008 was $1.4 million as compared to non-GAAP net income of $1.3 million for the second quarter of 2008 and non-GAAP net income of $1.1 million for the same quarter a year ago. The Company believes exclusion of these items more closely approximates its ongoing operational performance.
Bruno Guilmart, Lattice's President and CEO commented, "Although it is difficult to predict what affects the current macroeconomic crisis will have on customer demand in ensuing quarters, we have accomplished several important things with our recent restructuring. First, we have taken steps to address our cost structure by lowering our quarterly GAAP break-even revenue to approximately $57 million, a level that we have achieved in nine of the last twelve quarters. Second, with the promotion of Chris Fanning, Corporate Vice President Low Density and Mixed Signal Solutions, and the hiring of Sean Riley, Corporate Vice President High Density Solutions, we have clearly focused our business on identifying and pursuing programmable logic opportunities where we have sustainable and differentiated market positions. We believe these accomplishments will help further strengthen our balance sheet and liquidity position, and hasten our return to profitability."
Business Outlook - December 2008 Quarter:
-- Revenue is expected to be flat to down four percent on a sequential basis -- Gross margin percentage is expected to be approximately 54% to 55% of revenue -- Total operating expenses are expected to be approximately $30.5 million -- Intangible asset amortization is expected to be approximately $1.4 million -- Restructuring costs are expected to be approximately $0.3 million -- Interest and other income is expected to be approximately $0.7 million
Discussion of Non-GAAP Financial Measures:
Management evaluates and makes operating decisions using various performance measures. In addition to our GAAP results, we also consider adjusted net income, which we refer to as non-GAAP net income. This measure is generally based on the revenue of our products and the costs of those operations, such as cost of products sold, research and development, sales and marketing and general and administrative expenses, that management considers in evaluating our ongoing core operating performance. Non-GAAP net income excludes amortization of intangible assets, stock-based compensation, impairment of Long-term marketable securities and Other current assets, restructuring charges and the gain on sale of land. Intangible assets relate to assets acquired through acquisitions and consist of technology purchased in connection with the acquisitions. Stock-based compensation charges include expense for items such as stock options and restricted stock units granted to employees and purchases under the employee stock purchase plan. Impairment of Long-term marketable securities relates to an other-than-temporary decline in fair value of our auction rate securities that continue to experience unsuccessful auctions. Impairment of Other current assets relates to an other-than-temporary decline in fair value of common stock of one of our foundry partners. Restructuring charges consist of expenses and subsequent adjustments incurred under corporate restructuring plans that were initiated in the fourth quarter of 2005, third quarter of 2007, and third quarter of 2008, and include items such as severance costs, costs to vacate space under long-term lease arrangements, and other related expenses. Gain on sale of land relates to a gain resulting from the sale of real property during the relevant period.
Non-GAAP net income is a supplemental measure of our performance that is not required by and not presented in accordance with GAAP. Moreover, it should not be considered as an alternative to net loss, operating loss or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities or as a measure of our liquidity. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with our net loss, which is our most directly comparable GAAP financial result. For more information, see the Consolidated Statement of Operations contained in this earnings release.
Conference Call and Business Update:
On October 23, 2008, Lattice will hold a telephone conference call at 2:00 p.m. (Pacific Time) with financial analysts. Investors may listen to our conference call live via the web at www.lscc.com. Replays of the call will also be available at www.lscc.com. On December 11, 2008, we plan to publish a "Business Update Statement" on our website. Our financial guidance will be limited to the comments on our public quarterly earnings call and these public business outlook statements.
Forward-Looking Statements Notice:
The foregoing paragraphs contain forward-looking statements that involve estimates, assumptions, risks and uncertainties, including statements relating to our addressing our cost structure by lowering our quarterly GAAP break-even revenue to approximately $57 million, our having clearly focused our business on identifying and pursuing programmable logic opportunities where we have sustainable and differentiated market positions, our belief that these accomplishments will help further strengthen our balance sheet and liquidity position, and hasten our return to profitability, and statements relating to our business outlook. The forward-looking statements in the "Business Outlook - December 2008 Quarter" section of this release do not include the effects of accounting adjustments that may be required by actions taken in connection with the formulation of a new cost structure or refinement of product strategy. Lattice also believes the factors identified below in connection with each such statement could cause actual results to differ materially from the forward-looking statements.
Estimates of future revenue are inherently uncertain due to the high percentage of quarterly "turns" business. In addition, revenue is affected by such factors as current uncertainty in global macroeconomic conditions which may affect customer demand, pricing pressures, competitive actions, the demand for our Mature, Mainstream, and New products, and the ability to supply products to customers in a timely manner. Actual gross margin percentage and operating expenses could vary from the estimates contained herein on the basis of, among other things, changes in revenue levels, changes in product pricing and mix, changes in wafer, assembly and test costs, variations in manufacturing yields, and changes in stock-based compensation charges due to stock price changes.