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News Release

Supplemental Historic Financial Information, Q3 FY 2002

LATTICE SEMICONDUCTOR CORPORATION

- Supplemental Historic Financial Information -

(Q3 2002)

Operations Information (Pro forma)

Q302

Q202

Q301

Percent of Revenue

     

Gross Margin

60.0%

60.2%

62.1%

R&D Expense

38.4%

37.3%

30.9%

SG&A Expense

20.9%

21.6%

19.5%

Operating Income

0.7%

1.2%

11.7%

Pro forma Earnings

11.8%

12.4%

-150%

Tax Rate

26.0%

26.0%

-38.4%

Depreciation Expense ($000)

4,841

4,780

4,836

Capital Expenditures ($000)

4,494

5,626

4,220

Balance Sheet Information

Q302

Q202

Q301

Current Ratio

8.0

8.2

9.0

A/R Days Revenue Outstanding

45

46

30

Inventory Months

8.1

8.5

8.9

Revenue % (by Product Family)

Q302

Q202

Q301

FPGA

13%

13%

0%

CPLD

69%

68%

74%

SPLD

18%

19%

26%

Revenue % (by Geography)

Q302

Q202

Q301

Americas

43%

47%

50%

Europe (incl. Africa)

26%

23%

28%

Asia (incl. ROW)

31%

30%

22%

Revenue % (by End Market)

Q302

Q202

Q301

Communications

43%

55%

45%

Computing

27%

23%

28%

Other

30%

22%

27%

Revenue % (by Channel)

Q302

Q202

Q301

Direct

50%

52%

43%

Distribution

50%

48%

57%

Appendix 1

Lattice Semiconductor Corporation

Consolidated Statement of Operations

(in thousands, except per share data)

(unaudited)

 

Three months ended

Nine months ended

Description

Sept. 30,
2002

June 30,
2002

Sept. 30,
2001

Sept. 30,
2002

Sept. 30,
2001

Revenue

$56,072

$56,466

$58,038

$171,416

$243,218

Costs and expenses:

         

Costs of products sold

22,429

22,492

21,995

68,527

91,676

Research and development

21,523

21,078

17,946

63,986

54,261

Selling, general and administrative

11,712

12,220

11,297

35,790

42,064

In-process research and development (1)

5,653

--

--

29,853

--

Amortization of intangible assets (2)

18,070

17,923

21,127

54,616

63,024

Total costs and expenses

79,387

73,713

72,365

252,772

251,025

Loss from operations

(23,315)

(17,247)

(14,327)

(81,356)

(7,807)

Loss on depreciation of foundry investments (3)

--

--

(152,795)

--

(152,795)

Other income, net

2,764

3,078

403

3,941

4,737

Loss before benefit for income taxes

(20,551)

(14,169)

(166,719)

(77,415)

(155,865)

Benefit for income taxes

(6,180)

(6,022)

(62,118)

(29,280)

(58,863)

Net loss

($14,371)

($8,147)

($104,601)

($48,135)

($97,002)

Basic loss per share

($0.13)

($0.07)

($0.96)

($0.44)

($0.89)

Diluted net loss per share

($0.13)

($0.07)

($0.96)

($0.44)

($0.89)

Shares used in per share calculations:

         

Basic

110,232

109,684

109,155

109,855

108,635

Diluted (4)

110,232

109,684

109,155

109,855

108,635

Notes:

(1) Represents write-off of in-process research and development in conjunction with the August 26, 2002 acquisition of Cerdelinx Technologies, Inc. and the January 18, 2002 acquisition of the FPGA business of Agere Systems, Inc.

(2) Intangible assets subject to amortization aggregate $173.4 million, net, at September 30, 2002 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, the acquisition of Vantis Corporation on June 16, 1999 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.

(3) Represents market depreciation of foundry investments in Taiwan.

(4) 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.

Appendix 2

Lattice Semiconductor Corporation

Pro forma Earnings Reconciliation (1)

(unaudited)

 

Three months ended

Nine months ended

Description

Sept. 30,
2002

June 30,
2002

Sept. 30,
2001

Sept. 30,
2002

Sept. 30,
2001

Pro forma earnings (loss)

$0.06

$0.06

($0.80)

$0.16

($0.42)

Deduct:

         

Amortization of intangible assets

($0.10)

($0.09)

($0.12)

($0.31)

($0.36)

In-process research and development (2)

($0.04)

--

--

($0.17)

--

Tax shield (3)

($0.04)

($0.04)

($0.03)

($0.11)

($0.08)

Difference in effective tax rate (4)

($0.01)

--

($0.01)

($0.01)

($0.03)

Diluted net loss per share

($0.13)

($0.07)

($0.96)

($0.44)

($0.89)

Notes:

(1) This table reconciles pro forma earnings (loss) per share information to diluted net loss per share which is presented in Appendix 1.

(2) Represents write-off of in-process research and development in conjunction with the August 26, 2002 acquisition of Cerdelinx Technologies, Inc. and the January 18, 2002 acquisition of the FPGA business of Agere Systems, Inc.

(3) Tax Shield represents the current period tax deduction available from amortizing gross goodwill and other intangible assets (approximately $750 million as of September 30, 2002) over 15 years on a straight line basis using a 34% tax rate.

(4) The effective tax rate is the ratio of income tax expense to pretax income. The rates for all periods presented in the Pro forma Earnings presentation are different from the rates in the GAAP Statement of Operations, due to the difference in the proportion of taxable income derived from operations. For the three and nine months ended September 30, 2002 and 2001, further differences in the effective tax rate are attributable to a change in the estimated rate at which tax benefits related to pretax losses will be recovered.

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