Lattice Semiconductor Corporation (Lattice) has reported revenues of $222.3 million for the year-end 2008, down 3%, compared with the revenues of $228.7 million in the previous year-end. It has also reported a net loss of $38.2 million, or $0.33 loss per share, for the year-end 2008, compared with the net loss of $239.8 million, or $2.09 loss per share, in the previous year-end.

For the fourth quarter, revenue was $50.0 million, a decrease of 13% from the $57.6 million reported in the prior quarter, and a decrease of 6% from the $53.1 million reported in the same quarter a year ago.

FPGA revenue for the fourth quarter was $14.3 million, down 13% from the $16.4 million reported in the prior quarter, and up 10% from the $13.0 million reported in the same quarter a year ago. PLD revenue for the fourth quarter was $35.7 million, a decrease of 13% from the $41.2 million reported in the prior quarter, and an 11% decrease from the $40.1 million reported in the same quarter a year ago.

Revenue from FPGA products was $57.9 million, an increase of 11% over 2007. Revenue from PLD products was $164.4 million, a decrease of 7% from 2007.

In the fourth quarter we recorded a charge of $2.0 million to cost of sales for the obsolescence of selected inventory parts.

Other (expense) income, net, for the fourth quarter was an expense of $7.6 million compared to an expense of $1.0 million reported in the prior quarter and income of $1.7 million reported in the same quarter a year ago. Other expense included an impairment charge of $8.0 million and $1.4 million for the fourth and third quarters of fiscal 2008, respectively, related to other-than-temporary decline in fair value of auction rate securities held in Long-term marketable securities.

For fiscal year 2008, other (expense) income, net, was an expense of $17.8 million compared to income of $12.5 million in fiscal 2007. Other expense included an impairment charge of $19.7 million related to other-than-temporary decline in fair value of auction rate securities held in Long-term marketable securities. For fiscal year 2007, other income included a $2.7 million gain related to the extinguishment of Zero Coupon Convertible Notes and a $1.6 million gain related to the sale of land.

Net loss for the fourth quarter was $14.4 million ($0.12 per share), as compared to a prior quarter net loss of $7.0 million ($0.06 per share), and a net loss of $229.5 million ($1.99 per share) reported in the same quarter a year ago. These results include amortization charges, stock-based compensation expense, restructuring charges, a Goodwill impairment charge and an impairment charge on marketable securities and foundry investments. Excluding these items, non-GAAP net loss for the fourth quarter of 2008 was $3.7 million ($0.03 per share) as compared to non-GAAP net income of $1.4 million ($0.01 per share) for the third quarter of 2008 and non-GAAP net loss of $1.7 million ($0.02 per share) for the same quarter a year ago. The Company believes exclusion of these items more closely approximates its ongoing operational performance.

The results of net loss from 2007 and 2008 include amortization charges; gain on debt buyback, stock-based compensation expense, restructuring charges, a Goodwill impairment charge and an impairment charge on marketable securities and foundry investments. Excluding these items, non-GAAP net income for fiscal 2008 was $0.4 million as compared to non-GAAP net loss of $0.2 million for fiscal 2007. The company believes exclusion of these items more closely approximates its ongoing operational performance.

Bruno Guilmart, Lattice’s president and chief executive officer, commented, Though the direction of the market is unclear, we face it with a solid balance sheet – with strong liquidity and no debt – and with a demonstrated ability to manage our cash flow despite revenue challenges. It is our intent to capitalize on this downturn. Our key product lines offer strong value to customers. Our low density, Flash-based family leads the competition by a generation and has versatile features that are broadly attractive. We also offer the lowest power SERDES-capable FPGA family in its class at a robustly competitive price point. We believe our financial strength and product strategy will enable us to come out of this downturn stronger and more competitive.

Business Outlook of March 2009 Quarter:

Revenue is expected to be down by 10% to 20% on a sequential basis;

Gross margin percentage is expected to be about 52% to 54% of revenue;

Total operating expenses are expected to be about $28.0 million;

Intangible asset amortization is expected to be about $0.2 million;

Interest and other income is expected to be about $0.5 million.