Published: January 26, 2006
Lattice Semiconductor Reports Fourth Quarter and Year End Financial Results
Lattice Semiconductor Corporation (NASDAQ: LSCC) today announced financial results for the fourth quarter and year
ended December 31, 2005.
For the fourth quarter, revenue was $54.0 million, an increase of 11
percent from the $48.5 million reported in the same quarter a year ago and
an increase of one percent from the $53.4 million reported last quarter.
Quarterly revenue from PLD products was $44.1 million, or 82 percent of
total revenue, and increased two percent sequentially. Quarterly revenue
from FPGA products was $9.9 million, or 18 percent of total revenue, and
decreased three percent sequentially. Quarterly revenue from New products,
now 38 percent of total revenue, grew five percent sequentially and 66
percent on a year over year basis.
Net loss for the fourth quarter was $23.0 million ($0.20 per share). This
loss includes charges of $3.7 million for the amortization of intangible
assets and $11.9 million for restructuring costs. Excluding these charges,
loss for the quarter was $7.3 million ($0.06 per share). The non-cash
amortization charges have been highlighted as these charges are currently
expected to be substantially eliminated in 2008. Further, the
restructuring costs are significant charges that are unique to the fourth
quarter of 2005 and are related to severance payments, accrued lease
obligations, write-off of an intellectual property license, and other costs
incurred prior to year-end. Remaining costs to complete the restructuring
will be recorded in future periods as incurred and are not expected to be
significant. The Company believes exclusion of these charges more closely
approximates its ongoing operational performance. In addition to the above,
the Company recorded charges related to its last-time buy program to
obsolete certain mature parts.
Fourth Quarter Business Highlights:
-- Completed volume production release of the full, five-device LatticeXP
non-volatile 130nm FPGA product family;
-- Completed volume production release of the full, four-device MachXO
non-volatile 130nm cross-over programmable logic family;
-- Released the ispLever 5.1 software design tool, which supports all
next generation 130nm product families (LatticeEC/P, LatticeXP and MachXO);
-- Introduced the second generation Power Manager II devices, the ispPAC-
Power1220AT8, and announced the second generation ispClock products with a
family of revolutionary zero-delay clock generators, the ispClock5600;
-- Completed the previously announced corporate restructuring by reducing
14 percent of the workforce and streamlining the R&D organization by
closing four remote design centers; and
-- Reached an agreement to settle the shareholder derivative litigation.
"With our company-wide restructuring and related one-time write-offs behind
us, we enter 2006 with a renewed sense of optimism. Our operating expense
level has been reduced, and our next generation FPGAs, now fully production
released, continue to make inroads into the worldwide customer base.
Acceptance of these new FPGA products is increasing across multiple
applications, and we are winning a growing number of design-ins," said
Steve Skaggs, President and CEO of Lattice Semiconductor Corporation.
For the year 2005, revenue was $211.1 million, a decrease of seven percent
from the $225.8 million reported in 2004.
Net loss for 2005 was $49.1 million ($0.43 per share), as compared to the
net loss of $52.0 million ($0.46 per share) reported in 2004. These losses
also include the previously described non-cash amortization charges and
restructuring charges, which total approximately $28.1 million and $47.2
million for the years ended 2005 and 2004, respectively. Excluding these
charges, the loss for 2005 was $21.0 million ($0.18 per share) as compared
to a loss of $4.7 million ($0.04 per share) for 2004.
A reconciliation of non-GAAP net loss to GAAP net loss accompanies the
financial tables in this earnings release.
Business Outlook - March 2006 Quarter:
-- Sequential quarterly revenue growth is expected to be approximately 2%-
5%;
-- Gross margin percentage is expected to be approximately 54%-56%;
-- Total operating expenses are expected to be approximately $34-$35
million, which includes an estimated $1 million of stock-based compensation
expense (inclusion of stock-based compensation in operating expenses adds
significant uncertainty to our estimates of expenses due to the effect of
the volatility in our stock price, which we can not predict);
-- Intangible asset amortization is expected to be approximately $2.9
million; and
-- Other income is expected to be approximately $2.4 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 loss, which we refer to as non-GAAP net loss. This measure is
generally based on the revenues of our products and the costs of those
operations, such as cost of revenue, research and development, sales and
marketing and general and administrative expenses, that management
considers in evaluating our ongoing core operating performance. Non-GAAP
net loss consists of net loss excluding amortization of intangible assets
and restructuring charges.
Intangible assets relate to assets acquired through acquisitions and
consist of purchased technology and deferred stock compensation issued in
connection with the acquisitions. Restructuring charges consist of expenses
incurred under our corporate restructuring plan, and include items such as
separation packages, costs to vacate space under long-term lease
arrangements, cost to write-off an intellectual property license and other
related expenses.
Non-GAAP net loss 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 statements of
operations contained in this earnings release.
On January 26, 2006, Lattice will hold a telephone conference call at 2:00
pm (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 March 15, 2006, 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. Additionally, during the March 2006
quarter, Lattice plans to participate in an investor conference sponsored
by Morgan Stanley. Specific presentation dates and times are posted on our
website at www.lscc.com.
The foregoing paragraphs contain forward-looking statements that involve
estimates, assumptions, risks and uncertainties. With respect to
particular forward-looking statements in the Business Outlook - March 2006
Quarter section of this release, Lattice 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 pricing pressures, competitive actions, the demand for
our products, and the ability to supply products to customers in a timely
manner. Actual gross margin percentage and operating costs could vary from
the estimates contained herein on the basis of, among other things, changes
in revenue levels, product pricing, changes in wafer, assembly and test
costs, and variations in manufacturing yields.
In addition to the foregoing, other factors that may cause actual results
to differ materially from the forward-looking statements herein include the
Securities and Exchange Commission's informal inquiry and any resulting
actions, developments in our pending securities class action litigation,
the Company's dependencies on its silicon wafer suppliers, technological
and product development risks, and the other risks that are 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.
Lattice Semiconductor Corporation, the inventor of in-system programmable
(ISPTM) logic products, designs, develops and markets the broadest range of
Field Programmable Gate Arrays (FPGA), Field Programmable System Chips
(FPSCs) and high-performance Programmable Logic Devices (PLDs), including
Complex Programmable Logic Devices (CPLD), Programmable Mixed Signal
Components (ispPAC®), and Programmable Digital Interconnect (ispGDX®).
Lattice also offers industry leading SERDES products. Lattice offers total
solutions for today's system designs by delivering the most innovative
programmable silicon products that embody leading-edge system expertise.
Lattice products are sold worldwide through an extensive network of
independent sales representatives and distributors, primarily to OEM
customers in the communications, computing, consumer, industrial and
military end markets. Company headquarters are located at 5555 N.E. Moore
Court, Hillsboro, Oregon 97124 USA. For more information access our web
site at www.latticesemi.com.
Lattice Semiconductor Corporation, Lattice (& design), L (& design),
LatticeECP, LatticeXP, MachXO, isp, ispLever, ispPAC, ispGDX, Power
Manager, 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.
Lattice Semiconductor Corporation
Consolidated Statement of Operations
(in thousands, except per share data)
Three months ended Year Ended
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
Description 2005 2005 2004 2005 2004
-------- -------- -------- -------- --------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue $53,991 $53,390 $48,541 $211,060 $225,832
Costs and expenses:
Costs of
products sold 27,494 23,398 21,058 95,925 96,857
Research and
development 23,653 22,719 22,886 95,412 90,957
Selling, general
and administrative 13,217 13,558 13,017 57,541 53,803
Amortization of
intangible assets (1)(2) 3,714 3,968 5,759 16,211 47,249
Restructuring costs 11,936 -- -- 11,936 --
-------- -------- -------- -------- --------
Total costs and
expenses 80,014 63,643 62,720 277,025 288,866
-------- -------- -------- -------- --------
Loss from operations (26,023) (10,253) (14,179) (65,965) (63,034)
Other income, net 2,829 3,405 1,141 17,079 11,373
-------- -------- -------- -------- --------
Loss before (benefit)
provision for
income taxes (23,194) (6,848) (13,038) (48,886) (51,661)
Benefit (provision)
for income taxes (204) 237 100 233 318
-------- -------- -------- -------- --------
Net loss ($22,990) ($7,085)($13,138) ($49,119) ($51,979)
======== ======== ======== ======== ========
Basic net loss per share ($0.20) ($0.06) ($0.12) ($0.43) ($0.46)
======== ======== ======== ======== ========
Diluted net loss per share ($0.20) ($0.06) ($0.12) ($0.43) ($0.46)
======== ======== ======== ======== ========
Shares used in per
share calculations:
Basic 113,619 113,544 113,307 113,525 112,976
======== ======== ======== ======== ========
Diluted (3) 113,619 113,544 113,307 113,525 112,976
======== ======== ======== ======== ========
Notes:
(1) Intangible assets subject to amortization aggregate $26.4 million,
net, at December 31, 2005 and relate to the acquisition of Cerdelinx
Technologies, Inc. on August 26, 2002, the acquisition of the FPGA
business of Agere Systems, Inc. on January 18, 2002 and the acquisition
of Integrated Intellectual Property Inc. on March 16, 2001.
These intangible assets are amortized to expense
generally over three to seven years on a straight-line basis.
(2) Includes $0.2 million, $0.4 million and $0.6 million of deferred
stock compensation expense for the quarters ended December 31, 2005,
September 30, 2005, December 31, 2004, respectively, attributable to
Research and Development activities. Includes $1.8 million, and $3.4
million of deferred stock compensation expense for the years ended
December 31, 2005, and December 31, 2004, respectively, attributable
to Research and Development activities.
(3) For all periods presented, the computation of diluted net loss
per share excludes the effect of stock options and our convertible
notes as they are antidilutive.
Reconciliation of GAAP Net Loss to Non-GAAP Net Loss
(unaudited)
Three months ended Year Ended
Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31,
2005 2005 2004 2005 2004
-------- -------- -------- -------- --------
GAAP net loss ($22,990) ($ 7,085) ($13,138) ($49,119) ($51,979)
Reconciling
items:
Amortization of
intangibles (1) 3,714 3,968 5,759 16,211 47,249
Restructuring
charges (2) 11,936 -- -- 11,936 --
-------------------------------- --------------------
Non-GAAP net
loss ($ 7,340) ($ 3,117) ($ 7,379) ($20,972) ($ 4,730)
================================ ====================
Reconciliation of GAAP Net Loss per Share to Non-GAAP Net Loss per Share
(unaudited)
Three months ended Year Ended
Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31,
2005 2005 2004 2005 2004
-------- -------- -------- -------- --------
Basic and Diluted:
GAAP net loss per
share ($0.20) ($0.06) ($0.12) ($0.43) ($0.46)
Reconciling items:
Amortization of
intangibles (1) 0.03 0.03 0.05 0.14 0.42
Restructuring
charges (2) 0.11 -- -- 0.11 --
-------------------------------- --------------------
Non-GAAP net
loss per share ($0.06) ($0.03) ($0.07) ($0.18) ($0.04)
================================ ====================
(1) Relates to intangible assets acquired through our acquisition of
Cerdelinx Technologies, Inc. on August 26, 2002, the acquisition of the
FPGA business of Agere Systems, Inc. on January 18, 2002 and the
acquisition
of Integrated Intellectual Property Inc. on March 16, 2001. Includes
deferred compensation expense attributable to Research and Development
activities.
(2) Represents costs incurred year to date under the corporate
restructuring plan, which was implemented in the fourth quarter of 2005.
These costs primarily relate to separation packages and costs to vacate
space under long-term lease arrangements. Also includes $2.7 million
related to the write-off of an intellectual property license.
Lattice Semiconductor Corporation
Consolidated Balance Sheet
(in thousands)
Dec. 31, Dec. 31,
Description 2005 2004
--------- ---------
(unaudited)
Assets
Current assets:
Cash and short-term investments $ 264,192 $ 296,295
Accounts receivable, net 23,577 19,587
Inventories 28,581 38,634
Other current assets 24,614 46,527
--------- ---------
Total current assets 340,964 401,043
Property and equipment, net 45,450 47,586
Foundry investments, advances and other assets 79,432 97,877
Goodwill and other intangible assets, net (1) 250,011 264,400
--------- ---------
$ 715,857 $ 810,906
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued
liabilities $ 53,438 $ 61,161
Deferred income on sales to distributors 10,449 11,399
--------- ---------
Total current liabilities 63,887 72,560
Zero Coupon Convertible notes due in 2010 133,500 169,000
Other long-term liabilities 20,386 26,755
--------- ---------
153,886 195,755
Stockholders' equity 498,084 542,591
--------- ---------
$ 715,857 $ 810,906
========= =========
Note:
(1) At December 31, 2005, includes approximately $223.6 million in
goodwill and $26.4 million of other intangible assets, net, related
to previous acquisitions. The other intangible assets will be
amortized to expense generally over three to seven years. Goodwill
is not amortized effective with the March 2002 quarter.
Lattice Semiconductor Corporation
- Supplemental Historic Financial Information -
Operations Information Q405 Q305 Q404
------ ------ ------
Percent of Revenue:
Gross Margin 49.1% 56.2% 56.6%
R&D Expense 43.8% 42.6% 47.1%
SG&A Expense 24.5% 25.4% 26.8%
Restructuring Expense 22.1% -- --
Depreciation Expense ($000) 3,047 3,199 3,890
Capital Expenditures ($000) 3,327 3,305 2,301
Balance Sheet Information
Current Ratio 5.3 6.3 5.5
A/R Days Revenue Outstanding 40 45 37
Inventory Months 3.2 4.1 5.5
Revenue % (by Product Family)
FPGA 18% 19% 18%
PLD 82% 81% 82%
Revenue % (by Product Classification*)
New 38% 36% 26%
Mainstream 28% 29% 35%
Mature 34% 35% 39%
Revenue % (by Geography)
Americas 28% 31% 33%
Europe (incl. Africa) 23% 24% 26%
Asia (incl. ROW) 49% 45% 41%
Revenue % (by End Market)
Communications 49% 51% 48%
Computing 18% 18% 20%
Other 33% 31% 32%
Revenue % (by Channel)
Direct 65% 65% 59%
Distribution 35% 35% 41%
* Product Classification:
----------------------
New: LatticeEC/P, LatticeXP, MachXO, FPSC, XPLD, XPGA, GDX2, ORCA 4,
ispMACH 4000/Z, ispPAC-PWR, ispCLK
Mainstream: ORCA 3, GDX/V, ispMACH L/V, ispLSI 2000V, ispLSI 5000V,
ispLSI 8000V, ispMACH 5000VG, and Other
Mature: ORCA 2, All 5-Volt CPLDs, all SPLDs
Distributed by Market Wire
Copyright © 2012, MarketWire
Copyright © 2012, NewsBlaze,
Daily News
Search News
