For the second quarter, revenue was $46.9 million, an increase of 8% from the $43.3 million reported in the prior quarter, and a decrease of 19% from the $58.1 million reported in the same quarter a year ago.
FPGA revenue for the second quarter was $17.2 million, an increase of 11% from the $15.5 million reported in the prior quarter, and an increase of 28% from the $13.4 million reported in the same quarter a year ago. PLD revenue for the second quarter was $29.7 million, an increase of 7% from the $27.8 million reported in the prior quarter, and a decrease of 34% from the $44.7 million reported in the same quarter a year ago.
Other income (expense), net, for the second quarter was income of $0.2 million compared to an expense of $0.5 million reported in the prior quarter and an expense of $10.5 million reported in the same quarter a year ago. Other income (expense) included an impairment charge of $0.5 million in the second quarter of 2009 compared to $0.7 million in the first quarter of 2009, related to an other-than-temporary decline in fair value of auction rate securities held in Long-term marketable securities. Other income (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.
Net loss for the second quarter was $2.7 million ($0.02 per share), compared to a prior quarter net loss of $5.8 million ($0.05 per share) and a net loss of $13.6 million ($0.12 per share) reported in the same quarter a year ago. The second quarter results included stock-based compensation expense, restructuring charges and an other-than-temporary impairment charge on marketable securities which totaled $1.4 million. Prior quarter and second quarter 2008 results include amortization charges, stock-based compensation expense, an other-than-temporary impairment charge and restructuring charges which totaled $2.1 million and $14.9 million, respectively. Excluding these items, non-GAAP net loss for the second quarter of 2009 was $1.3 million ($0.01 per share) compared to non-GAAP net loss of $3.6 million ($0.03 per share) for the first quarter of 2009 and non-GAAP net income of $1.3 million ($0.01 per share) for the same quarter a year ago.
Bruno Guilmart, Lattice's President and CEO, commented, "We continued to make progress in the second quarter as we executed on our focused product strategy under our improved operating structure. We benefited from continued strength in the Chinese telecom market, and a slight improvement of our business in Japan and the U.S., which helped offset continued weakness in Europe. Revenue in the second quarter remained strong to the end, with our turns business exceeding expectations. While visibility has improved it is still not great. We remain confident entering the third quarter, however, based on a stronger backlog, continued traction with new products and a significant win at one of the world's largest flat panel companies, that we expect to start contributing to revenue during the third quarter. We expect these positive trends will offset an approximately $2.0 million, expected negative revenue impact in the third quarter from changing certain distributors from a sell-in to a sell-through business model. These changes are necessary as they will improve transparency and visibility at our end customers.
"As part of our ongoing efforts to improve customer service and reduce our costs, we will be moving our warehouse to Singapore during the quarter. We expect this will improve our shipping times to most of our customers, reduce our cost of supply and reduce inventory on hand as well. We are also acting to reduce our staff by approximately 8% as we work to even better align our resources with our new operating model, bringing us closer to our goal of sustained profitability."
Michael G. Potter, Lattice's Corporate Vice President and Chief Financial Officer, added, "We generated $33.6 million of cash from operations in the second quarter, including the $30.0 million in other receivable that was repaid in cash by Fujitsu, ending the quarter with total liquidity of $158.2 million. This is comprised of $104.3 million of cash and cash equivalents, $30.0 million of other receivables and $23.9 million advance credits (recorded in other current assets) from Fujitsu. We expect to collect the other receivable in the fourth quarter of 2009, with the advance credits expected to be consumed over the next 12 months. We have no long term debt. We expect that the charge for the staff reductions planned for the third quarter will be approximately $1.2 million and that our cost reduction actions will reduce on-going expenses by approximately $1.5 million per quarter. Although we will have made significant progress towards lowering our overall costs with the actions taken in the third quarter of 2008 and these new actions, we will continue to look for ways to become closer to our customers and to reduce our costs as well."
Second Quarter Business Highlights:
-- Launched a new member of Lattice's award-winning Power Manager II
family, the ProcessorPM™ device, a programmable, single chip solution
for the reset generation, watchdog timer and voltage supervision functions
found in virtually every microprocessor or DSP design
-- Announced availability of a new 0.8-mm pitch 256-pin Chip-Array BGA
(caBGA256) package for its popular MachXO™ PLD family that provides
designers with a broader range of package options for implementing cost-
sensitive, board space constrained designs
-- Announced that industrial temperature-qualified versions of all
Lattice's non-volatile LatticeXP2™ FPGAs have been released to volume
production
-- In Greater China, expanded distribution partnership with Weikeng and
named Origin Electronics, a division of Nu Horizons Electronics Corp.
(NASDAQ :
NUHC), distributor of the full range of Lattice products
Business Outlook - Third Quarter 2009:
-- Revenue is expected to be minus 2% to plus 3% on a sequential basis,
including the expected reduction in revenue of approximately $2.0 million
due to transitioning certain distributors from the sell-in to the sell-
through business model
-- Gross margin percentage is expected to be approximately 52% to 54% of
revenue
-- Total operating expenses are expected to be approximately $29.2
million, inclusive of $1.2 million of restructuring charges
Investor Conference Call / Webcast Details
Lattice Semiconductor will review detailed second quarter 2009 results on Thursday, July 23, 2009 at 5:00 p.m. EDT. The conference call-in number is 1-706-758-4489. A live webcast of the conference call will also be available on Lattice's website at www.lscc.com. Our financial guidance will be limited to the comments on our public quarterly earnings call and the public business outlook statements contained in this press release.
A replay of the call will be available approximately one hour after the conclusion of the live call through 12:00 p.m. EDT on August 6, 2009, by telephone at 1-706-645-9291. To access the replay use conference identification number 19724416. A webcast replay will also be available at on Lattice's website at www.lscc.com
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) income, which we refer to as non-GAAP net (loss) income. This measure is generally based on the revenue from 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 (loss) income excludes amortization of intangible assets, stock-based compensation, impairment of Long-term marketable securities (net of realized gain on sale of auction rate securities) and restructuring charges. 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. Restructuring charges consist of expenses and subsequent adjustments incurred under corporate restructuring plans that were initiated in the fourth quarter of 2005, the third quarter of 2007, and the third quarter of 2008, and include items such as severance costs, costs to vacate space under long-term lease arrangements, and other related expenses.
Non-GAAP net (loss) 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 Statements of Operations contained in this earnings release.
