SecProbe.io

CORRESP
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filename1.htm

November 17,
2005

Ms. Angela
Crane, Branch Chief

Mr. Eric
Atallah, Staff Accountant

United States
Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.
20549

Via U.S. Mail and Facsimile to (202) 772-9218

RE:         Lattice Semiconductor Corporation

Form 10-K for the fiscal year ended January 1, 2005

Form 8-K filed October 27, 2005

File No. 0-18032

Dear Ms. Crane
and Mr. Atallah:

Lattice
Semiconductor Corporation (the “Company” or “Lattice”) hereby submits this
letter in response to the comments of the Staff of the Securities and Exchange
Commission (the “Commission”), as set forth in your letter to Mr. Jan
Johannessen, the Chief Financial Officer of the Company, dated November 3,
2005, regarding the above referenced documents.

For your convenience, we
have numbered the responses to correspond to the comments in the Staff’s letter
and have incorporated the Staff’s comments in bold typeface before each of the
Company’s responses. In the following discussion, the words “we,” “us” and “our”
refer to the Company.

Form 10-K for the fiscal year
ended January 1, 2005

Consolidated Statements of Operations, page 38

1.     We
note that you have excluded the amortization of deferred stock compensation
from research and development expenses. Please revise your presentation in
future filings to include this amortization within research and development
expenses and any other applicable line items. Also, expand your discussion of
the research and development expense in your MD&A to discuss the related stock
compensation charges. For reference see SAB Topic 14F.

The intangible assets related to deferred stock compensation for
research and development activities are expected to be fully amortized by January 2006.  As the remaining expense to be incurred from
such deferred compensation is immaterial, we respectfully request that we
continue our current presentation for reasons of comparability, and to be
consistent with our historical presentation. In addition we will provide
supplementary discussion in our MD&A to address the amount of deferred
compensation included in the amortization of intangible assets that relate to
research and development activities. Note that we have already implemented
additional discussion in our MD&A regarding the above, commencing with our
third quarter ended October 1, 2005. There are currently no other line
items in our financial statements that are affected by deferred compensation.

Upon our adoption of SFAS No. 123R, effective January 1,
2006, we will present expense related to stock-based compensation awards in the
same line items as cash compensation paid to the same employees.

Report of Independent Registered Public Accounting
Firm, page 62

2.     Please
have your accountants revise their report in future filings to indicate the
city and state of issuance. For reference see Rule 2-02(a) of
Regulation S-X.

We will have our accountants revise their report to include the city
and state of issuance on any applicable future filings.

Note 12. Long-term debt, page 55

3.     Please
tell us if the convertible subordinated notes had a beneficial conversion
feature as addressed in EITF 98-5. Also, tell us how you accounted for the
interest related to the notes. Refer to EITF 85-17 in your response.

Our
convertible subordinated notes do not contain a beneficial conversion feature
as defined under EITF 98-5. We recognize that EITF 85-17 speaks to the issue of
whether interest expense should be accrued or imputed to the date of conversion
when unpaid interest is forfeited by the former debt holder at the date of
conversion, and how such a transaction should be recorded. Please note that
none of our notes have been converted to equity to date. However, should the
notes be converted in the future, we will account for the transactions in
accordance with EITF 85-17.

Note 17. Segment and
Geographic Information, page 60

4.     If
revenues derived from any particular foreign country are material,
revise future filings to disclose the name of the country and the amount of
revenue from the country. Refer to paragraph 38(a) SFAS 131.

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Paragraph 38(a) of SFAS 131 states that, “If
revenues from external customers attributed to an individual foreign country
are material, those revenues shall be disclosed separately.”  We currently utilize a process to evaluate
the materiality of revenues by country for any given reporting period. As such,
we disclosed in our prior 10-K and 10-Q revenues for the following countries:
United States; Japan; and China. We will continue to evaluate this area going
forward and will incorporate any changes into our future filings as needed.

Form 8-K filed October 27,
2005

5.     We
note that you present your non-GAAP measures in the form of non-GAAP statements
of operations. That format may be confusing to investors as it also reflects
several non-GAAP measures, including non-GAAP costs and expenses, loss from
operations, and (loss) income before provisions for income taxes, which have
not been described to investors. Please note that Instruction 2 to Item 2.02 of
Form 8-K requires that when furnishing information under this item you
must provide all the disclosures required by paragraph (e)(1)(i) of Item
10 of Regulation S-K and Question 8 of the FAQ Regarding the Use of Non-GAAP
Financial Measures dated June 13, 2003. Revise to include a reconciliation
to the directly comparable GAAP measure for each non-GAAP measure
presented and explain why you believe the measures provide useful information
to investors.

•      To eliminate investor confusion please remove the non-GAAP Statements of
Operations and disclose only those non-GAAP measures used by management with
the appropriate reconciliations.

•      Otherwise, confirm that you will revise your Forms 8-K in future periods
to provide all the disclosures required by Item 10(e)(1)(i) of Regulation
S-K for each non-GAAP measure presented in the statement, and provide us
with a sample of your proposed disclosure. We may have further comment.

Based
on the foregoing, we confirm that we will revise our Forms 8-K in future
periods to provide all disclosures required by Item 10(e)(1)(i) of
Regulation S-K for each non-GAAP measure presented in the statement.
Further, we are providing you with a sample of our proposed disclosure format
for our next 8-K filing of similar type to that filed on October 27, 2005.

Sample disclosure to be included in Item 2.02 on Form 8-K
and as a separate paragraph of our press release:

Our
disclosure of financial results for the periods contained herein are prepared
in accordance with GAAP and are accompanied by disclosures that are not
prepared in conformity with GAAP. These non-GAAP disclosures include certain
adjustments not reflected in the GAAP presentations such as non-cash
acquisition-related amortization of intangible assets and non-cash deferred
stock compensation that are not directly related to the Company’s ongoing
business results. We believe these non-GAAP financial measures

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provide
useful information to investors regarding results of operations, as they
exclude charges and expenses that are not directly related to ongoing business
results. These business results are used by management for evaluating
historical performance in addition to being used for the Company’s forecasting
and planning for future periods. These non-GAAP financial measures are used in
addition to and in conjunction with results presented in accordance with GAAP
and reflect an additional way of viewing aspects of our operations that, when
viewed with our GAAP results and the accompanying reconciliations to
corresponding GAAP financial measures, provide a more complete understanding of
factors and trends affecting our business. These non-GAAP factors should be
considered as a supplement to, and not as a substitute for, or superior to, the
corresponding measures calculated in accordance with generally accepted
accounting principles.

Sample format to disclose
reconciliations to be included in our press release, which is incorporated by
reference as Exhibit 99.1 on Form 8-K:

Reconciliation of GAAP Net Loss to Non-GAAP Net (Loss) Income

(unaudited)

  Three months ended

  Nine months ended

  Sept. 30,

  June 30,

  Sept. 30,

  Sept. 30,

  Sept. 30,

  2005

  2005

  2004

  2005

  2004

  GAAP net loss

  $

  (7,085

  )

  $

  (8,159

  )

  $

  (6,324

  )

  $

  (26,129

  )

  $

  (38,841

  )

  Reconciling
  items:

  Amortization of
  intangibles (1)

  3,968

  4,113

  5,785

  12,497

  41,490

  Non-GAAP net
  (loss) income

  $

  (3,117

  )

  $

  (4,046

  )

  $

  (539

  )

  $

  (13,632

  )

  $

  2,649

Reconciliation of GAAP Net Loss per Share to Non-GAAP
Net (Loss) Income per Share

(unaudited)

  Three
  months ended

  Nine
  Months Ended

  Sept.
  30,

  June 30,

  Sept.
  30,

  Sept.
  30,

  Sept.
  30,

  2005

  2005

  2004

  2005

  2004

  Basic and Diluted:

  GAAP net loss per share

  $

  (0.06

  )

  $

  (0.07

  )

  $

  (0.06

  )

  $

  (0.23

  )

  $

  (0.34

  )

  Reconciling items:

  Amortization of
  intangibles (1)

  $

  0.03

  $

  0.03

  $

  0.06

  $

  0.11

  $

  0.36

  Non-GAAP net
  (loss) income per share

  $

  (0.03

  )

  $

  (0.04

  )

  $

  (0.00

  )

  $

  (0.12

  )

  $

  0.02

(1) Amortization of intangibles related to our
acquisition of Cerdelinx Technologies, Inc. on August 26, 2002, the acquisition
of the FPGA business of Agere Systems, Inc. on January 18, 2002 and the
acquisition of Integrated Intellectual Property Inc. on March 16, 2001.
Includes $0.4 million, $0.6 million, and $0.7 million of deferred stock
compensation expense for the quarters ended September 30, 2005, June 30, 2005,
and September 30, 2004, respectively, and $1.6 million and $2.8 million for the
nine months ended September 30, 2005 and 2004, respectively, attributable to
research and development activities.

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We believe these changes are responsive to the Staff’s
foregoing comments. If the Staff has any questions on any of the information
set forth herein, please telephone the undersigned at

(503) 268-8802.

Sincerely,

  /s/ Jan
  Johannessen

  Jan Johannessen

  Senior Vice
  President

  Chief Financial
  Officer

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