News Column

Lattice Semiconductor Reports Second Quarter 2014 Results

July 24, 2014

Financial Highlights:

  • Revenue of $99.3 million, an increase of 2.8% from $96.6 million in 1Q14 and an increase of 17.2% from $84.7 million in 2Q13.
  • Net income of $0.10 per basic and diluted share, compared to net income of $0.10 per basic and diluted share in 1Q14 and net income of $0.04 per basic and diluted share in 2Q13.
  • Gross margin of 55.4%, compared to 56.0% in 1Q14 and 53.3% in 2Q13.


    HILLSBORO, Ore.--(BUSINESS WIRE)-- Lattice Semiconductor Corporation (NASDAQ: LSCC), the leader in low power, small form factor and customizable solutions announced financial results today for the fiscal second quarter ended June 28, 2014.

    For the second quarter, revenue was $99.3 million, an increase of 2.8% from $96.6 million reported in the prior quarter, and an increase of 17.2% from the $84.7 million reported in the same quarter a year ago.

    Net income for the second quarter was $11.8 million ($0.10 per basic and diluted share), compared to the prior quarter net income of $12.0 million ($0.10 per basic and diluted share) and net income of $5.0 million ($0.04 per basic and diluted share) reported in the same quarter a year ago.

    Darin G. Billerbeck, President and Chief Executive Officer, said, "This was another solid quarter for us as we executed to our plan. Strength in communications and growth in the industrial markets more than offset sequential softness in the consumer market. We continue to accelerate our new products to market, reaffirming our leadership in providing the lowest power, smallest footprint and affordably innovative programmable solutions."

    Joe Bedewi, Corporate Vice President and Chief Financial Officer, added, "Revenue and gross margin continue to be highlights, underscoring the strength of our business strategy. We achieved gross margins of 55.4% on a diversified revenue base, completely in sync with our stated strategy. The sequential increase in operating expenses was primarily due to an increase in variable compensation and severance costs. Our cash and investments increased approximately $22 million to end the second fiscal quarter with approximately $247 million in cash, cash equivalents and short-term marketable securities."

    Recent Business Highlights:

  • Major Product Launch: Lattice's new iCE40 Ultra™ FPGAs deliver 5x more functionality at 30% smaller size than competing solutions. Lattice has also reduced power by 75% over previous devices. Combined, these enable designers to give their systems more compact form factors and longer battery life, speeding customization of innovative features for mobile devices.

    Business Outlook - Third Quarter 2014:

  • Revenue is expected to be 8% to 12% lower on a sequential basis.
  • Gross margin percentage is expected to be higher at approximately 56% plus or minus 2%.
  • Total operating expenses are expected to be lower by approximately one million dollars on a sequential basis.

    Investor Conference Call / Webcast Details:

    Lattice Semiconductor will review the Company's financial results for the second quarter of 2014 and business outlook for the third quarter of 2014 on Thursday, July 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 70246926. 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 August 8, 2014, by telephone at 1-404-537-3406. To access the replay, use conference identification number 70246926. 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 continued acceleration of all new products to reaffirm our leadership in providing the lowest power, smallest footprint and affordably innovative programmable solutions; and those statements under the heading “Business Outlook - Third 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 iCE40™, 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 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), iCE40 Ultra, iCE40, MachXO and LatticeECP3 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 EndedSix Months Ended

    June 28,

    2014

     

    March 29,

    2014

     

    June 29,

    2013

    June 28,

    2014

     

    June 29,

    2013

    Revenue $ 99,320   $ 96,637   $ 84,694   $ 195,957   $ 155,852  
    Costs and expenses:
    Cost of products sold 44,345 42,499 39,584 86,844 72,587
    Research and development 22,302 21,239 20,267 43,541 38,381

    Selling, general and administrative

    18,832 18,749 17,072 37,581 33,570
    Acquisition related charges 737 737 737 1,474 1,486
    Restructuring 3   11   19   14   172  
    86,219   83,235   77,679   169,454   146,196  
    Income from operations 13,101 13,402 7,015 26,503 9,656
    Other income (loss), net 906   309   (54 ) 1,215   (106 )
    Income before provision for income taxes 14,007 13,711 6,961 27,718 9,550
    Provision for income taxes 2,236   1,727   1,921   3,963   2,620  
    Net income $ 11,771   $ 11,984   $ 5,040   $ 23,755   $ 6,930  
     
    Net income per share:
    Basic $ 0.10   $ 0.10   $ 0.04   $ 0.20   $ 0.06  
    Diluted $ 0.10   $ 0.10   $ 0.04   $ 0.20   $ 0.06  
     
    Shares used in per share calculations:
    Basic 117,904   116,436   115,733   117,170   115,562  
    Diluted 120,944   118,917   117,109   120,041   116,935  
     
     
    Lattice Semiconductor Corporation
    Consolidated Balance Sheets
    (in thousands)
    (unaudited)
       

    June 28,

    2014

    December 28,

    2013

    Assets
    Current assets:
    Cash, cash equivalents and short-term marketable securities $ 247,037 $ 215,815
    Accounts receivable, net 66,289 50,085
    Inventories 59,270 46,222
    Other current assets 13,857   13,679
    Total current assets 386,453 325,801
     
    Property and equipment, net 41,132 41,719
    Long-term marketable securities 5,241
    Other long-term assets 8,921 6,120
    Intangible assets, net of amortization 11,011 12,484
    Goodwill 44,808 44,808
    Deferred income taxes 9,325   11,703
    $ 501,650   $ 447,876
     
    Liabilities and Stockholders' Equity
    Current liabilities:
    Accounts payable and other accrued liabilities $ 48,274 $ 51,113
    Deferred income and allowances on sales to sell-through distributors 23,631   7,495
    Total current liabilities 71,905 58,608
     
    Other long-term liabilities 7,195   3,588
    Total liabilities 79,100 62,196
     
    Stockholders' equity 422,550   385,680
    $ 501,650   $ 447,876
     
     

    Lattice Semiconductor Corporation

    - Supplemental Historical Financial Information -

       
    Three Months EndedSix Months Ended
    6/28/2014   3/29/2014   6/29/20136/28/2014   6/29/2013
    Operations Information
    Percent of Revenue
    Gross Margin 55.4 % 56.0 % 53.3 % 55.7 % 53.4 %
    R&D Expense 22.5 % 22.0 % 23.9 % 22.2 % 24.6 %
    SG&A Expense 19.0 % 19.4 % 20.2 % 19.2 % 21.5 %
    Depreciation and amortization (in thousands) 5,773 5,860 4,894 11,633 9,962
    Capital expenditures (in thousands) 2,480 2,395 3,783 4,875 6,837
    Stock compensation expense (in thousands) 3,320 3,090 2,513 6,410 4,423
    Restructuring and severance related charges (in thousands) 403 90 19 493 172
    Taxes paid (cash, in thousands) 418 380 104 798 956
    Balance Sheet Information
    Current Ratio 5.4 5.2 5.4
    A/R Days Revenue Outstanding 60 62 68
    Inventory Months 4.0 4.1 3.8
    Revenue% (by Product Family)
    PLD 65 % 65 % 69 % 65 % 69 %
    FPGA 35 % 35 % 31 % 35 % 31 %
    Revenue% (by Product Classification) (1)
    New 50 % 53 % 46 % 51 % 43 %
    Mainstream 38 % 34 % 40 % 36 % 42 %
    Mature 12 % 13 % 14 % 13 % 15 %
    Revenue% (by Geography)
    Asia 74 % 75 % 74 % 75 % 72 %
    Europe (incl. Africa) 16 % 15 % 14 % 15 % 16 %
    Americas 10 % 10 % 12 % 10 % 12 %
    Revenue% (by End Market) (2)
    Communications 44 % 41 % 38 % 43 % 38 %
    Consumer 26 % 31 % 31 % 28 % 28 %
    Industrial 30 % 28 % 31 % 29 % 34 %
    Revenue% (by Channel)
    Sell-through distribution 42 % 39 % 44 % 40 % 46 %
    Direct 58 % 61 % 56 % 60 % 54 %
     


    (1) New: LatticeECP5, MachXO3, LatticeECP3, MachXO2, Power Manager II, and iCE40 Mainstream: ispMACH 4000ZE, ispMACH 4000/Z, LatticeSC, LatticeECP2/M, LatticeXP2, MachXO, ispClock A/D/S, Software and IP Mature: LatticeECP, LatticeXP, 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 2014 we reclassified our New, Mainstream and Mature product categories to better reflect our current product portfolio.

    (2) During the second quarter of fiscal 2014, the Company condensed its End Market categories. All periods presented have been revised accordingly.



    Lattice Semiconductor Corporation

    Joe Bedewi

    Chief Financial Officer

    503-268-8000

    or

    Global IR Partners

    David Pasquale

    914-337-8801

    lscc@globalirpartners.com


    Source: Lattice Semiconductor Corporation


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