Lattice Semiconductor Reports First Quarter 2010 Results; Exceeds Upwardly Revised Guidance

HILLSBORO, OR, Apr 22 (MARKET WIRE) --
Lattice Semiconductor (NASDAQ: LSCC)

First Quarter 2010 Highlights:

-- Revenue of $70.4 million, an increase of 28% compared to 4Q09 and up
63% compared to 1Q09.
-- Gross margin of 58.5%, compared to 55.3% in 4Q09 and 52.3% in 1Q09.
-- Net income of $0.10 per share, compared to net income of $0.05 per
share in 4Q09 and a net loss of $0.05 per share in 1Q09.
-- Company expects further sequential and year-over-year improvements in
revenue and profitability.

Lattice Semiconductor (NASDAQ: LSCC) today announced financial
results for the first quarter ended April 3, 2010.

For the first quarter, revenue was $70.4 million, an increase of 28% from
the $55.1 million reported in the prior quarter, and an increase of 63%
from the $43.3 million reported in the same quarter a year ago. FPGA
revenue for the first quarter was $23.4 million, an increase of 41% from
the $16.6 million reported in the prior quarter, and an increase of 51%
from the $15.5 million reported in the same quarter a year ago. PLD
revenue for the first quarter was $47.0 million, an increase of 22% from
the $38.5 million reported in the prior quarter, and an increase of 69%
from the $27.8 million reported in the same quarter a year ago.

Net income for the first quarter was $11.1 million ($0.10 per share),
compared to $5.6 million ($0.05 per share) in the prior quarter and a net
loss of $5.8 million ($0.05 per share) reported in the same quarter a
year ago.

Other income (expense), net, for the first quarter was income of $0.3
million compared to income of $2.7 million reported in the prior quarter
and an expense of $0.5 million reported in the same quarter a year ago.
Other income (expense) included a realized gain of less than $0.1 million
in the first quarter of 2010 related to the sale of a portion of the
Company's auction rate security portfolio. The fourth quarter of 2009
included a realized gain of $2.8 million related to the sale of a portion
of the Company's auction rate security portfolio offset by an impairment
charge of $0.3 million related to an other-than-temporary decline in fair
value of auction rate securities. Other income (expense) for the first
quarter of 2009 included an impairment charge of $0.7 million primarily
related to an other-than-temporary decline in fair value of auction rate
securities.

Bruno Guilmart, Lattice's President and CEO, commented, "Our financial
results again exceeded upwardly revised guidance as we grew revenue for
the fourth quarter in a row and recorded our second consecutive quarter
of profitability. We have continued to see robust growth across all
geographies, end markets and product families. Our order bookings
remained strong throughout the quarter and we continued to strictly
manage inventory levels. Our first quarter marked record revenue for both
our new FPGA business and our MachXO product family. Our MachXO family is
now on track to become the Company's largest revenue generator this year.
Even our mature business was up, which is unusual for that part of our
business."

"While we are pleased to see the progress and results of our efforts, our
focus remains the same. If anything, we will continue to be aggressive in
pursuit of growth opportunities, improved operational efficiencies and
profitability. We remain highly confident in Lattice's competitive
position and our ability to capture increased share in the markets we
serve. We continue to build momentum with design wins with our
LatticeECP3, LatticeXP2, MachXO and Power Manager solutions in the
communications, computing and consumer markets, while concurrently
executing on our roadmap with the next generations of products. In
addition, we expect to see increasing returns from our distribution
channel given the changes we have made over the past few quarters. One of
the most recent moves was the global expansion of our relationship with
Nu Horizons Electronics, which is expected to help us generate new demand
and enhance service to existing customers."

Michael G. Potter, Lattice's Corporate Vice President and Chief Financial
Officer, added, "The first quarter was another strong quarter for
Lattice, with strong and broad revenue growth and improved profitability.
We are pleased that our gross margin has continued to improve as
increased volumes, a good mix and the benefits from our cost reduction
actions undertaken over the last year all contributed to the improved
performance. We generated an additional $20.9 million of cash from
operations, ending the quarter with a cash, cash equivalents and
short-term marketable securities balance of $183.5 million. Our advance
credits with Fujitsu are now down to approximately $5.3 million, which we
expect to use over the next quarter. Inventory at April 3, 2010 was $24.7
million, compared to $25.9 million in the prior quarter and $30.3 million
in the year ago period. We are benefitting from the leverage in our
business we built to last year and expect to continue to control
operating expenses, while investing in key growth initiatives. Although
we expect only a modest increase in our operating expenses in the second
quarter, we anticipate R&D spending will remain at elevated levels given
new product development efforts."

First Quarter Highlights:

-- Announced that over 200 million ispMACH(R) 4000 complex
programmable logic devices (CPLD) have shipped.
-- Formally opened Lattice SG Pte. Ltd., its new Asia Operations Center.
-- Announced that eVision Systems GmbH will represent Lattice and its
full range of products in the Central European video and surveillance
market.
-- LatticeECP3 FPGA family has been chosen from among hundreds of
nominations as a finalist in the 20th Annual EDN Innovation Awards
competition.

Business Outlook -- Second Quarter 2010:

-- Revenue is expected to increase 6% to 10% on a sequential basis.
-- Gross margin percentage is expected to be approximately 57% to 59% of
revenue.
-- Total operating expenses are expected to be approximately $31 million.
-- We expect continued profitability in the second quarter, including a
gain, net of tax, of approximately $0.5 million from the sale of
excess real estate in China.

Investor Conference Call / Webcast Details:

Lattice Semiconductor will review detailed first quarter 2010 results on
Thursday, April 22, 2010 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.latticesemi.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 two hours after the
conclusion of the live call through 11:59 p.m. EDT on April 29, 2010, by
telephone at 1-706-645-9291. To access the replay, use conference
identification number 66334776. A webcast replay will also be available
on Lattice's investor relations website at www.latticesemi.com

Forward-Looking Statements Notice:

The foregoing paragraphs contain forward-looking statements that involve
estimates, assumptions, risks and uncertainties, including statements
relating to our business outlook, including those under the heading
"Business Outlook -- Second Quarter 2010"; our belief that our MachXO
family is now on track to become the Company's largest revenue generator
this year; that we will continue to be aggressive in pursuit of growth
opportunities, improved operational efficiencies and profitability; that
we will be able to capture increased market share; that we will continue
to build momentum with design wins with our LatticeECP3, LatticeXP2,
MachXO and Power Manager solutions, while concurrently executing on our
roadmap; our expectation that we will see increasing returns from our
distribution channel; that Nu Horizons Electronics will help us generate
new demand and enhance service to our existing customers; that we will
use our advance credits with Fujitsu over the next quarter; that we will
continue to control operating expenses, while investing in key
initiatives; that we will experience only a modest increase in our
operating expenses in the second quarter; and that R&D spending will
remain at elevated levels given new product development efforts. Other
forward-looking statements may be indicated by words such as "will,"
"could," "should," "would," "expect," "plan," "anticipate," "intend,"
"forecast," "believe," "estimate," "predict," "propose," "potential,"
"continue" or the negative of these terms or other comparable
terminology. Lattice believes the factors identified below could cause
actual results to differ materially from the forward-looking statements.

Estimates of future revenue are inherently uncertain due to, among other
things, the high percentage of quarterly "turns" business. In addition,
revenue is affected by such factors as global economic conditions which
may affect customer demand, 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 on the
basis of, among other things, changes in revenue levels, changes in
product pricing and mix, changes in wafer, assembly, test and other
costs, variations in manufacturing yields, the failure to sustain
operational improvements, the effects of transitioning certain
distributors from the sell-to to the sell-through business model, and
compensation charges due to stock price changes. Any unanticipated
declines in revenue or gross margin, any unanticipated increases in our
operating expenses or unanticipated charges, including without
limitation, restructuring charges or any impairment charges related to an
other-than-temporary decline in fair value of auction rate securities
held in Long-term marketable securities, could adversely affect our
profitability during the quarter.

In addition to the foregoing, other factors that may cause actual results
to differ materially from the forward-looking statements in this press
release include global economic uncertainty, overall semiconductor market
conditions, market acceptance and demand for our new products, the
Company's ability to successfully transition certain of its distributors,
the Company's dependencies on its silicon wafer suppliers, the impact of
competitive products and pricing, technological and product development
risks, the compromised liquidity of the Company's auction rate
securities, our ability to improve customer service and reduce costs by
moving our warehouse to Singapore, our ability to improve operational
efficiencies by establishment of our Asia Operations Center, and the
other risks that are described in this press release and that are
otherwise 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 Semiconductor
Lattice is the source for innovative FPGA,
PLD, programmable Power Management and Clock Management solutions. For
more information, visit www.latticesemi.com

Lattice Semiconductor Corporation, Lattice (& design), L (& design),
ispLEVER, LatticeECP3, LatticeXP2, sysDSP 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.

Lattice Semiconductor Corporation
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)

Three months ended
-------------------------------------
April 3, January 2, April 4,
2010 2010 2009
------------ ------------ -----------

Revenue $ 70,432 $ 55,087 $ 43,336

Costs and expenses:
Cost of products sold 29,264 24,627 20,658
Research and development 14,682 12,642 14,891
Selling, general and administrative 15,418 13,290 12,943
Amortization of intangible assets
(1) - - 228
Restructuring (2) 82 1,185 (25)
------------ ------------ -----------
59,446 51,744 48,695
------------ ------------ -----------
Income (loss) from operations 10,986 3,343 (5,359)

Other income (expense), net (3) 302 2,671 (512)
------------ ------------ -----------
Income (loss) before provision
(benefit) for income taxes 11,288 6,014 (5,871)
Provision (benefit) for income taxes 199 388 (121)
------------ ------------ -----------
Net income (loss) $ 11,089 $ 5,626 $ (5,750)
============ ============ ===========

Net income (loss) per share (4):
Basic and diluted $ 0.10 $ 0.05 $ (0.05)
============ ============ ===========

Shares used in per share calculations
(4):
Basic 115,669 115,443 115,430
============ ============ ===========
Diluted 116,717 115,666 115,430
============ ============ ===========
Notes:
(1) Intangible assets subject to amortization relate to the acquisition
of the FPGA business of Agere Systems, Inc. on January 18, 2002 which
became fully amortized during the first quarter of 2009.
(2) Represents costs and adjustments incurred under the corporate
restructuring plans. During the first quarter of fiscal 2010, the
Company recorded a charge of $0.1 million, comprised primarily of
severance and related costs. During the fourth quarter of fiscal
2009, the Company recorded a charge of $1.2 million, comprised
primarily of severance and related costs of $1.0 million, of which
$0.3 million was paid during the fourth quarter of fiscal 2009, and
costs of $0.2 million related to vacated leased space in San Jose,
California. During the first quarter of fiscal 2009, the Company
incurred a net credit of less than $0.1 million primarily resulting
from changes in original estimates under these restructuring plans.
(3) During the three months ended January 2, 2010 and April 4, 2009 the
Company recognized an impairment charge related to an other-than-
temporary decline in fair value of auction rate securities held in
Long-term marketable securities of $0.3 million and $0.7 million,
respectively. Also included for the three months ended January 2,
2010 was a realized gain of $2.8 million on sale of auction rate
securities and other investments. No impairment charge was recognized
in the quarter ended April 3, 2010.
(4) For the three months ended April 3, 2010 and January 2, 2010, the
computation of diluted earnings per share includes the effects of
stock options and restricted stock units as they are dilutive. For
the three months ended April 4, 2009, the computation of diluted
earnings per share excludes the effects of stock options, restricted
stock units and warrants, as they are antidilutive.

Lattice Semiconductor Corporation
Consolidated Balance Sheets
(in thousands)
(unaudited)

April 3, January 2,
2010 2010
------------ ------------

Assets

Current assets:
Cash, cash equivalents and short-term marketable
securities $ 183,525 $ 164,540
Accounts receivable, net 48,303 33,551
Inventories 24,680 25,925
Other current assets 13,602 19,455
------------ ------------
Total current assets 270,110 243,471

Property and equipment, net 35,863 36,507
Long-term marketable securities 12,822 12,939
Other long-term assets 2,779 3,640
------------ ------------
$ 321,574 $ 296,557
============ ============

Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable and other accrued liabilities $ 34,717 $ 27,797
Deferred income and allowances on sales to
distributors 16,735 10,160
------------ ------------
Total current liabilities 51,452 37,957

Other long-term liabilities 4,645 5,240
------------ ------------
Total liabilities 56,097 43,197

Stockholders' equity 265,477 253,360
------------ ------------
$ 321,574 $ 296,557
============ ============

Lattice Semiconductor Corporation
-- Supplemental Historical Financial Information --

Q1 10 Q4 09 Q1 09
--------- --------- ---------
Operations Information
Percent of Revenue
Gross Margin 58.5% 55.3% 52.3%
R&D Expense 20.8% 22.9% 34.4%
SG&A Expense 21.9% 24.1% 29.9%

Depreciation and Amortization (in
thousands) 3,508 3,282 4,100
Capital Expenditures (in thousands) 1,954 2,708 798
Stock Compensation Expense (in thousands) 1,195 1,213 1,259

Balance Sheet Information
Current Ratio 5.2 6.4 7.5
A/R Days Revenue Outstanding 62 55 53
Inventory Months 2.5 3.2 4.4

Revenue% (by Product Family)
PLD 67% 70% 64%
FPGA 33% 30% 36%

Revenue% (by Product Classification) *
New 40% 38% 30%
Mainstream 35% 37% 40%
Mature 25% 25% 30%

Revenue% (by Geography)
Asia 67% 70% 59%
Europe (incl. Africa) 18% 15% 21%
Americas 15% 15% 20%

Revenue% (by End Market)
Communications 52% 51% 63%
Industrial & Other 21% 20% 18%
Computing 15% 17% 8%
Consumer & Automotive 12% 12% 11%

Revenue% (by Channel)
Direct 45% 54% 68%
Distribution 55% 46% 32%

* Beginning with the first fiscal quarter of 2010, we updated our
life cycle categories. Product categories are modified as appropriate
relative to our portfolio of products and the generation within each
major product family. New products consist of our latest generation of
products, while Mainstream and Mature are older or based on unique late
stage customer-based production needs. Generally, product categories are
adjusted every two to three years, at which time prior periods are
reclassified to conform to the new categorization. Had we not updated our
life cycle categories our New, Mainstream and Mature quarter revenue by
product classification would have been 49%, 32% and 19%, respectively,
for the first fiscal quarter of 2010.

New: LatticeECP3, LatticeXP2, LatticeECP2/M. MachXO, Power Manager II,
ispClockA/D/S, ispMACH 4000ZE

Mainstream: ispXPLD, ispGDX2, ispMACH 4000/Z, ispXPGA, LatticeSC,
LatticeECP, LatticeXP, ispClock, Power Manager I, Software and IP

Mature: FPSC, ORCA 2, ORCA 3, ORCA 4, ispPAC, isplsi 8000V, ispMACH
5000B, ispMACH 2LV, ispMACH 5LV, ispLSI 2000V, ispLSI 5000V, ispMACH
5000VG, all 5-volt CPLDs, GDX/V, ispMACH 4/LV, all SPLDs

For more information contact:
Michael G. Potter
Chief Financial Officer
Lattice Semiconductor Corporation
503-268-8000

David Pasquale
Global IR Partners
914-337-8801
lscc@globalirpartners.com

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