Lattice Semiconductor Corporation (Nasdaq:LSCC) today announced financial results for the fourth quarter and year ending December 2004.

For the year 2004, revenue was $225.8 million, an increase of eight percent from the $209.7 million reported in 2003. During 2004, PLD revenue grew six percent to $183.1 million and accounted for 81 percent of total revenue while FPGA revenue increased 15 percent to $42.7 million and accounted for 19 percent of total revenue.

Net loss for 2004 was $52.0 million ($0.46 per share), an improvement from the net loss of $91.8 million ($0.82 per share) reported in 2003. These losses include charges of $47.3 million and $77.1 million, respectively, for the amortization of intangible assets. Excluding these charges, the loss for 2004 was $4.7 million ($0.04 per share) as compared to a loss of $14.7 million ($0.13 per share) for 2003. These non-cash amortization charges have been highlighted as they are currently expected to be substantially eliminated in 2008. The Company believes exclusion of these charges more closely approximate its cash earnings performance. A reconciliation of non-GAAP loss to GAAP net loss accompanies the financial tables in this earnings release.

For the fourth quarter of 2004, revenue was $48.5 million, a decrease of eight percent from the $52.8 million reported in the same quarter a year ago and a decrease of 15 percent from the $57.3 million reported last quarter. Quarterly revenue from PLD products was $39.6 million, or 82 percent of total revenue, and declined 14 percent sequentially. Quarterly revenue from FPGA products was $8.9 million, or 18 percent of total revenue, and declined 21 percent sequentially. Quarterly revenue from New products, now 26 percent of total revenue, grew 5 percent sequentially and 72 percent on a year over year basis.

Net loss for the fourth quarter was $13.1 million ($0.12 per share). This loss includes a $5.8 million charge for amortization of intangible assets. Excluding this charge, loss for the quarter was $7.4 million ($0.07 per share). This non-cash amortization charge has been highlighted as these charges are currently expected to be substantially eliminated in 2008. The Company believes exclusion of these charges more closely approximate its cash earnings performance. A reconciliation of non-GAAP loss to GAAP net loss accompanies the financial tables in this earnings release.

"Last quarter was a difficult one for the PLD industry and our results reflect these unfavorable market conditions," stated Cyrus Y. Tsui, chairman and chief executive officer. "On a positive note, we posted sequential revenue growth from our New products, reduced our inventory balance and continued to generate positive cash flow from operations before the payment of a $25 million advance to our foundry partner Fujitsu."

"The year 2004 has been a period of transition for Lattice," continued Tsui. "We sustained a large R&D investment in order to support the development of a full portfolio of next generation FPGA product families. We believe these new products will be critical to our long-term success and ability to grow our revenue and market share in this attractive segment. During the third quarter, we initiated the market roll-out of the first of these new families, the LatticeEC(TM) and LatticeEC-DSP(TM), and are now moving quickly towards volume production availability of all 12 devices in these families. At this early stage, we remain pleased with the initial customer reception and are optimistic about the market potential for these new FPGA families. Looking forward, we expect this new product momentum to continue throughout 2005 as we continue our roll-out of additional families of differentiated products targeted at the FPGA market."

Business Outlook - March 2005 Quarter:

-- Quarterly revenue is expected to be $46 million to $49 million;

-- Gross margin percentage is expected to be approximately flat;

-- Total operating expenses are expected to increase by $1 million to $2 million;

-- Intangible asset amortization is expected to be approximately $4.4 million; and

-- Other Income is expected to be approximately $1 million.

On January 25, 2005, Lattice will hold a telephone conference call at 5:30 am (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 March 15, 2005, 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. Additionally, during the March 2005 quarter, Lattice plans to participate in investor conferences sponsored by Goldman Sachs and Morgan Stanley. Specific presentation dates and times are posted on our website at www.lscc.com.

The foregoing paragraphs contain forward-looking statements within the meaning of the federal securities laws including statements about future quarterly financial results, revenues, customers, product offerings and the Company's ability to compete. Investors are cautioned that actual events and results could differ materially from these statements as a result of a number of factors, including overall semiconductor market conditions, market acceptance and demand for the Company's new products, the Company's dependencies on our silicon wafer suppliers, the impact of competitive products and pricing, technological and product development risks. 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.

Lattice Semiconductor Corporation, the inventor of in-system programmable (ISP(TM)) logic products, designs, develops and markets the broadest range of Field Programmable Gate Arrays (FPGA), Field Programmable System Chips (FPSCs) and high-performance Programmable Logic Devices (PLDs), including Complex Programmable Logic Devices (CPLD), Programmable Mixed Signal Components (ispPAC), and Programmable Digital Interconnect (ispGDX). Lattice also offers industry leading SERDES products. Lattice offers total solutions for today's system designs by delivering the most innovative programmable silicon products that embody leading-edge system expertise.

Lattice products are sold worldwide through an extensive network of independent sales representatives and distributors, primarily to OEM customers in the communications, computing, consumer, industrial and military end markets. Company headquarters are located at 5555 N.E. Moore Court, Hillsboro, Oregon 97124 USA. For more information access our web site at www.latticesemi.com.

Lattice Semiconductor Corporation, L (& design), Lattice (& design) ISP 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.