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LATTICE SEMICONDUCTOR REPORTS SECOND QUARTER FINANCIAL RESULTS–Quarterly revenue up three percent sequentially–HILLSBORO, OR – July 24, 2008 - Lattice Semiconductor Corporation (NASDAQ: LSCC) today announced financial results for the second quarter of fiscal 2008 ended June 28, 2008. For the second quarter, revenue was $58.1 million, an increase of three percent from the $56.6 million reported in the prior quarter, and a decrease of two percent from the $59.2 million reported in the same quarter a year ago. FPGA revenue for the second quarter was $13.4 million, down two percent from the $13.7 million reported in the prior quarter, and down one percent from the $13.5 million reported in the same quarter a year ago. PLD revenue for the quarter was $44.7 million, an increase of four percent over the $42.9 million reported in the prior quarter, and a two percent decrease from the $45.7 million reported in the same quarter a year ago. New product revenue for the second quarter was $12.3 million, up 10 percent from the $11.2 million reported in the prior quarter, and up 90 percent from the $6.5 million reported in the same quarter a year ago. Other (expense) income, net for the second quarter was an expense of $10.5 million compared to income of $1.3 million reported in the prior quarter and income of $4.3 million reported in the same quarter a year ago. Other expense for the second quarter of 2008 included an impairment charge of $11.3 million 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 second quarter of 2007 included a $0.4 million gain related to the extinguishment of our Zero Coupon Convertible Notes and a $1.6 million gain related to the sale of land. Net loss for the second quarter was $13.6 million ($0.12 per share), as compared to a prior quarter net loss of $3.3 million ($0.03 per share), and a net loss of $1.5 million ($0.01 per share) reported in the same quarter a year ago. These results include amortization charges, stock-based compensation expense, an impairment charge, restructuring charges, and gain on sale of land which totaled $14.9 million and $4.6 million for the second quarter of 2008 and prior quarter, respectively, and $2.4 million for the second quarter of 2007. Excluding these items, non-GAAP net income for the second quarter of 2008 was $1.3 million as compared to non-GAAP net income of $1.4 million for the first quarter of 2008 and non-GAAP net income of $1.0 million for the same quarter a year ago. The Company believes exclusion of these items more closely approximates its ongoing operational performance. “I’m honored and excited that the board of Lattice entrusted me to take the lead of our company moving forward,” stated Bruno Guilmart, President and CEO, who joined Lattice July 7, 2008. “In the near term, I am working closely with my management team to comprehensively review Lattice’s business in order to formulate a new cost structure and a refined product strategy. We intend to implement a new business model that better aligns our operating costs with near-term revenue expectations and to deliver improved operating results.” Business Outlook – September 2008 Quarter
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 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 and in the third quarter of 2007, 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 UpdateOn July 24, 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 September 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 NoticeThe foregoing paragraphs contain forward-looking statements that involve estimates, assumptions, risks and uncertainties, including statements relating to the implementation of a new business model and the expected results produced by that model, the timing of related announcements and statements relating to our business outlook. The forward-looking statements in the “Business Outlook - September 2008 Quarter” section of this release do not include the effects of any restructuring charges or other 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 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. In addition to the foregoing, other factors that may cause actual results to differ materially from the forward-looking statements herein include the disruption of our business activities due to the transition to our new Chief Executive Officer, 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. About Lattice SemiconductorLattice Semiconductor Corporation provides the industry’s broadest range of Programmable Logic Devices (PLD), including Field Programmable Gate Arrays (FPGA), Complex Programmable Logic Devices (CPLD), Mixed-Signal Power Management and Clock Generation Devices, and industry-leading SERDES products. Lattice continues to deliver “More of the Best” to its customers with comprehensive solutions for system design, including an unequaled portfolio of high-performance, non-volatile and low-cost FPGAs. Lattice products are sold worldwide through an extensive network of independent sales representatives and distributors, primarily to OEM customers in communications, computing, industrial, consumer, automotive, medical and military end markets. For more information, visit http://www.latticesemi.com # # # Lattice Semiconductor Corporation, Lattice (& design), L (& design), ispLever, LatticeECP2/M, LatticeSCM, LatticeXP, LatticeXP2, LatticeMico32 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. 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