HILLSBORO, Ore. and A6LENTOWN, Pa. - December 10, 2001 - Lattice Semiconductor Corporation (NASDAQ: LSCC) and Agere Systems (NYSE: AGR.A) today announced a definitive agreement under which Lattice Semiconductor will acquire the FPGA business of Agere Systems for $250 million in cash. The acquisition will be financed through cash on hand.
Agere and Lattice anticipate closing the transaction in the first calendar quarter of 2002 subject to regulatory approval and other customary closing conditions. The transaction is expected to be accretive to Lattice's calendar year 2002 proforma earnings before goodwill.
The transaction includes Agere's general-purpose ORCA® FPGA product portfolio, its field programmable system chip (FPSC) product portfolio and all related software design tools. FPSCs are advanced system oriented products which combine generic FPGA logic with embedded cores dedicated to the implementation of advanced communication protocols and high-speed input/output (I/O) functions. As part of the transaction, approximately 100 Agere product development, marketing and technical sales employees will join Lattice.
Lattice will also acquire certain intellectual property cores and patents that are unique to Agere's FPGA business. Additionally, the parties will enter into a cross-license agreement whereby Lattice will receive rights to Agere patents and certain intellectual property for use in current and future FPGA and FPSC products and Agere will continue to have access to the ORCA FPGA technology for incorporation into its "system-on-a-chip" integrated circuits.
"This acquisition provides Lattice with a unique opportunity to accelerate our previously announced intention to enter the FPGA market," stated Steven A. Laub, president of Lattice. "Agere's products are proven solutions that will complement our internal FPGA development effort. Agere also offers a deeply experienced and talented team capable of extending the technology and building the product portfolio."
"We are particularly attracted to the groundbreaking FPSC products which have strong design-in activity within key communication equipment OEM customers. Currently unmatched in our industry, this FPSC portfolio will immediately provide Lattice an important means of differentiation in the FPGA market. We look forward to leveraging our existing sales channels, global salesforce and broad customer base to accelerate the adoption of these leadership products," Laub concluded.
"This sale is one of a series of actions Agere is taking to better position our business for long-term profitable growth," said Sohail Khan, executive vice president of Agere's Infrastructure Systems Group. "While FPGAs have been a strong business for us, we are redirecting our resources to areas where we can focus our skills on system-level integration for advanced communications applications. The business is a strong strategic fit with Lattice and we look forward to working with them to ensure a smooth transition for our customers."
Goldman, Sachs & Co. served as financial advisor to Lattice in this transaction.
About Agere Systems FPGA business
Agere Systems first introduced the ORCA family of FPGAs in 1994. Agere's FPGAs are designed for use in communications systems such as network routers and switches. These integrated circuits (ICs) give system providers a "clean slate" to create custom circuitry at their own development and manufacturing sites. In contrast, circuitry for typical "standard-cell" ICs needs to be designed before the chips are manufactured in a semiconductor fabrication facility. FPGAs provide flexibility to meet evolving industry standards because the circuits can be changed even after the systems are manufactured and deployed.
In 1998, Agere Systems pioneered a class of FPGAs known as field-programmable system chips, or FPSCs, which combine the benefits of both FPGAs and standard-cell IC technology on the same chip. FPSCs add a block of standard cell logic to an FPGA, giving system designers higher component density and performance for those parts of their circuitry that are unlikely to change, while retaining the advantages of programmability for faster development and timely delivery of new system features.
About Agere Systems
Agere Systems is the world's No.1 provider of components for communications applications with leadership in optical components and integrated circuits. This dual capability uniquely positions Agere to deliver integrated solutions that form the building blocks for advanced wired, wireless, and optical communications networks. Agere also designs and manufactures a wide range of semiconductor solutions for communications-related devices used by consumers such as cellular phones, modems, and hard disk drives for personal computers and workstations. In addition, the company supplies complete wireless computer networking solutions through the ORiNOCO product line. More information about Agere Systems is available from its Web site at http://www.agere.com/.
About Lattice Semiconductor
Oregon-based Lattice Semiconductor Corporation designs, develops and markets the broadest range of high-performance ISP programmable logic devices (PLDs) and offers total solutions for today's advanced logic designs.
Lattice products are sold worldwide through an extensive network of independent sales representatives and distributors, primarily to OEM customers in the communication, computing, industrial and military end markets. Company headquarters are located at 5555 N.E. Moore Court, Hillsboro, Oregon 97124 USA; Telephone (503) 268-8000; FAX (503) 268-8037. For more information access our web site at: http://www.latticesemi.com/.
Forward-Looking Statements are omitted