News Release

In Detail

Consolidated Financial Statements, Q3, FY 2003

Lattice Semiconductor Corporation
Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
	Three months ended			Nine months ended
Description	Sept. 30, 2003	June 30, 2003	Sept. 30, 2002	Sept. 30, 2003	Sept. 30, 2002
Revenue	$51,038	$58,178	$56,072	$167,527	$171,416
Costs and expenses:
Costs of products sold	20,662	23,289	22,429	67,159	68,527
Research and development	21,173	21,702	21,523	64,707	63,986
Selling, general and administrative	12,114	12,614	11,712	37,211	35,790
In-process research and development (1)	--	--	5,653	--	29,853
Amortization of intangible assets (2)(3)	18,665	18,687	18,070	58,466	54,616
Total costs and expenses	72,614	76,292	79,387	227,543	252,772
Loss from operations	(21,576)	(18,114)	(23,315)	(60,016)	(81,356)
Other (expense) income, net	(3,611)	(1,365)	2,764	(3,485)	3,941

Loss before benefit for income taxes	(25,187)	(19,479)	(20,551)	(63,501)	(77,415)
Benefit for income taxes	(3,300)	(2,554)	(6,180)	(5,854)	(29,280)
Net loss	($21,887)	($16,925)	($14,371)	($57,647)	($48,135)
Basic net loss per share	($0.20)	($0.15)	($0.13)	($0.52)	($0.44)
Diluted net loss per share	($0.20)	($0.15)	($0.13)	($0.52)	($0.44)
Shares used in per share calculations:
Basic	111,840	111,507	110,232	111,615	109,855
Diluted (4)	111,840	111,507	110,232	111,615	109,855

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 $102.5 million, net, at September 30, 2003 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) Includes $0.8 million of deferred stock compensation expense for each of the quarters ended September 30, 2003, June 30, 2003 and September 30, 2002, respectively, and $4.9 million and $1.9 million of deferred stock compensation expense for the nine months ended September 30, 2003 and September 30, 2002, respectively, attributable to Research and Development activities.

(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.

Consolidated Balance Sheet
(in thousands)
(unaudited)
Description	Sept. 30, 2003	Dec. 31, 2002
Assets
Current assets:
Cash and short-term investments	$278,754	$276,880
Accounts receivable, net	26,941	26,374
Inventories	47,942	56,241
Other current assets	12,617	35,033
Total current assets	366,254	394,528
Property and equipment, net	56,520	62,786
Foundry investments, advances and other assets	124,670	104,507
Goodwill and other intangible assets, net (1)	326,071	379,442
	$873,515	$941,263
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued liabilities	$28,846	$33,597
Deferred income on sales to distributors	6,361	11,983
Income taxes payable	--	142
Total current liabilities	35,207	45,722
4 3/4% Convertible notes due in 2006	--	208,061
Zero Coupon Convertible notes due in 2010	184,000	--
Other long-term liabilities	22,053	26,345
	206,053	234,406
Stockholders' equity	632,255	661,135
	$873,515	$941,263

Note:

(1) At September 30, 2003, includes approximately $9.8 million of other intangible assets, net, recorded in the September 2002 quarter in connection with the August 26, 2002 acquisition of Cerdelinx Technologies, Inc. Also includes $142.5 million in Goodwill and $56.7 million of other intangible assets, net, recorded in the March 2002 quarter in connection with the January 18, 2002 acquisition of the FPGA business of Agere Systems, Inc., and approximately $81.1 million in Goodwill and $36.0 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.