David Pasquale – IR, Global IR Partners Bruno Guilmart – President & CEO Michael Potter – Corporate VP & CFO

Tristan Gerra – Robert W. Baird Richard Shannon – Northland Securities Apurva Patel – Ticonderoga Securities Ruben Roy – Pacific Crest Securities Irea Kall – Eaton Vance Greg Weaver – Invicta Capital David Duley – Steelhead Securities Josh Goldberg – G2

Good afternoon. My name is Vinita and I will be your conference operator today. At this time, I’d like to welcome everyone to the Lattice Semiconductor first quarter 2010 conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question and answer session. (Operator instructions) As a reminder today's call will be available for replay. The conference ID number is 66-33-47-76. The number to dial-in for the replay is 706-645-9291. At this time, I'd like to turn the call over to David Pasquale of Global IR Partners. Sir, you may begin your conference.

Thank you, operator. Welcome everyone to Lattice Semiconductor’s first quarter 2010 results conference call. Joining us from the Company today are Mr. Bruno Guilmart, the Company’s President and CEO, and Mr. Michael G. Potter Lattice’s Corporate Vice President and Chief Financial Officer. Both executives will be available for Q&A after the prepared comments. If you have not yet received a copy of today’s results release please e-mail Global IR Partners using lscc@globalirpartners.com or you can get a copy of the release off the Investor Relations section of Lattice Semiconductor’s Web site. Before we begin the formal remarks, I will review the Safe Harbor statement. It is our intention that this call will comply with the requirements of SEC Regulation FD. This call includes and constitutes the Company's official guidance for the second quarter of fiscal 2010. If at any time after this call, we communicate any material changes to this guidance, we intend that such updates will be done using a public form, such as a press release or publicly announced conference call. The matters that we discuss today other than historical information includes forward-looking statements relating to our future financial performance and other performance expectations. Investors are cautioned that forward-looking statements are neither promises nor guarantees. They involve risks and uncertainties that may cause actual results to differ materially from those projected in the forward-looking statements. Some of those risks and uncertainties are detailed in our filings with the Securities and Exchange Commission, including our fiscal year 2009 Form 10-K filed on March 10 and our quarterly reports on Form 10-Q. The Company disclaims any obligation to publicly update or revise any such forward-looking statements to reflect the events or circumstances that occur after this call. Our prepared remarks will also be presented within the requirements of SEC Regulation G regarding Generally Accepted Accounting Principles or GAAP. I will now turn the call over to Mr. Bruno Guilmart. Please go ahead, sir.

Thank you, David and thank you everyone for joining our call today. Our results again exceeded our quarterly related guidance .We believe that these results which show evidence of the measure of a broad-based global economic recovery, also continued to evaluate the business model and strategy where we implemented to achieve both robust and sustainable profitability at Lattice. Specifically, during the quarter, we achieved revenue growth of 28% compared to 4Q'09 and 63% compared to a year ago quarter. Our order bookings remain strong throughout the quarter and we strictly manage our inventory, exceeding the quarter with lean inventory levels. We are very pleased to have recorded our second consecutive quarter of profitability. With that said, we think our business can achieve much more and we will continue to aggressively pursue growth opportunities, improve (inaudible) efficiencies and higher profitability In terms of highlights all end markets, geographies, product lines grew sequentially. In fact, Q1 was the strongest quarter ever for our new FPGAs, MachXO family and our mixing of products. The MachXO products are on track became the Company’s biggest product family this year. All geographies and markets experienced double-digit growth. Based on our results we believe that we are gaining market share and we are optimistic about our business moving forward. Our strategic focus on high value and low power solutions continues to gain traction as customers seek to optimize costs and power consumption of their designs. We continued to build momentum with our XO, ECP3, XP2 and Power Manager family with season wins in communications, computing and consumers. In addition, as part of our ongoing commitment to strengthen our distribution channels we have recently announced the addition of Nu Horizon electronics for our North American and European regions. Nu Horizon was already distributed in Asia. We expect that Nu Horizon will allocate back technical resources to Lattice and leverage its proven worldwide distribution network to help us generate new demand and better serve our existing customers. We presently do not foresee any other major changes to our distribution network that there is always subject to any future opportunities arising that would permit us to further strengthen our sales channels. We officially opened our Singapore operations center last February and already have close to 20 local employees actively contributing to the further streamlining of our supply chain. With over two-third of our shipments now to Asia, these efforts will help both lower our costs and benefit our customers. In addition, we now shipped over 90% of our products from Singapore and our operating results this quarter include the benefit of our warehouse move, prominently reducing shipping expenses. Let me now give you some color on the quarter. As noted at the start, revenue in every sector of our business was again up in Q1 on a sequential basis. While all life cycle categories expense quarter-on-quarter growth revenue for our new products was particularly strong. Mainstream and mature products also posted sequential increases as our copy of the business remains very health. The mix of new mainstream and mature was 40%, 35% and 25% of revenue respectively in Q1. This compares to new at 38%, mainstream at 37% and mature at 25% in Q4. New products were up 34% quarter-on-quarter and more than doubled year-on-year. Growth was again driven by our non-volatile MachXO family, our mid range ECP families and our mix signal families. MachXO grew 27% quarter-on-quarter and was up almost 150% year-over-year. Revenue from our ECP3 family grew over 30% quarter-on-quarter. Revenue for all mid range ECP families grew over 40% quarter-on-quarter and over 65% year-over- year. Our mix signal products continue to perform well delivering growth of 23% quarter-on-quarter and 48% year-over-year and now represent greater than 5% of our revenue. Revenue from FPGA products represented 33% of total revenue in Q1, up 40% from Q4. Revenue growth for FPGA products was again driven by quarter-on-quarter growth in every new FPGA family. PLD products represented 67% of total revenue in Q1, up 22% compared to Q4. Our PLD families were strong across multiple end markets. On a geographic basis, revenue from Asia including Japan was 67% of revenue in Q1 compared to 70% in Q4. Revenue from North America was up in dollar terms remaining at 15% of revenue, Europe was 18% of revenue, up from 15% in Q4. Overall, on a market basis, communications were 52% of revenue in Q1 compared to 51% in Q4. Communication growth worldwide was particularly strong. Computing which again grew in absolute dollars were 15% of total revenue compared to 17% in Q4, primarily driven by momentum in the server market. Industry on average came in at 21% of revenue in Q1 compared to 20% in Q4. This reflects the overall market's recovery we are seeing. Consumer (inaudible) were up in dollar terms remaining at 12% of revenue quarter-on-quarter. I will now turn the call over to Michael for a more detailed financial review. Michael?

Thank you, Bruno. As noted earlier, revenue for the first quarter was $70.4 million, up 28% from the prior quarter, and up 63% from the year ago period. From a capacity standpoint we received and expect to continue to receive adequate supply from our fab and assembly and test partners. In general, we are able to maintain standard lead times and we are not allocating product, we expect that to continue for the second quarter. As is normal, we evaluated our new mainstream and mature product category that updated them to more promptly reflect the current life cycles of our products. Our press release contains the split use, using the new characterization. For information, if we had not changed the characterization new mainstream and mature would have been 49%, 32% and 19% respectively. Gross margin for Q1 came in at 58.5%. This was above our guidance and higher than the gross margin posted in Q4, primarily due to favorable volume and mix, combined with continued strict cost control. As a result of higher volume we benefited from good overhead absorption, as our revenue and production ramped up over our last quarter. Our strength and mature products contributed to a more favorable margin mix. Total operating expenses for the first quarter came in at $30.2 million compared to $27.1 million in the fourth quarter. The majority of the increase comes from increased R&D spending, based on performance against certain annual targets and employee and representative commissions related to our higher sales volume. Q1 GAAP net income was 11.1 million or $0.10 per share as compared to the $5.6 million or $0.05 per share in the fourth quarter, and compared to a net loss of 5.8 million or $0.05 per share in the year ago period. All per share amounts are on a fully diluted basis. Moving on our balance sheet was further strengthened in the quarter. We generated an additional $20.9 million of cash from operations, ending the quarter with the cash, cash equivalents and short-term marketable securities balance of $183.5 million. We have an additional balance of approximately $5 million in advance credits from Fujitsu, which we expect to use over the next three months. The approximately $5 million is recorded in other current assets. Not included in the liquidity discussion I just went through is the remaining balance of our auction rate securities with the fair value of $12.9 million. Due to the illiquid market for these types of investments, auction rate securities are classified as long-term marketable securities. Accounts receivable at April 3, were $48.3 million compared to $33.6 million at the end of last quarter and days sales outstanding were 62 days compared to 55 days last quarter and 53 days in Q1 2009. Although our actual collection times have not materially changed, the DSO metric has been and will continue to be impacted by our transition to higher sell-through transactions which causes higher gross billings. Inventory at April 3, 2010 was $24.7 million, down from $25.9 million last quarter and down from $30.3 million in the year ago period. Months of inventory now stands at 2.5 months compared to 3.2 months at the end of Q 2009 and 4.4 months in Q1 2009. Inventory in our distribution channel one of the increases during the quarter. We spent approximately $2 million on capital expenditures during the first quarter, down from $2.7 million in Q4, with the quarterly depreciation and amortization expense at $3.5 million, compared to $3.3 million in the prior quarter. We plan on tightly controlling headcount in 2010. Most common paid hires would be in lower cost overseas geographies with the cost of total additions kept well below our revenue percentage increase. As such our fixed cost base will remain fairly constant during the year. We will make some selective investments in our low density and mixed signal businesses, but the only planned increase in expenses due to higher revenue is in the area of commissions. Our shorter-term target which led to deliver an operating income of 15%, but we will improve on that wherever possible as we focus on growth and improved profitability. This includes the financial review portion of the cal. I’ll now turn things back over to Bruno for the second quarter business outlook. Please go ahead, Bruno.

Thank you, Michael. In summary, we feel very positive about our business moving forward. We believe we have the right combination of product families and customers needs positive momentum with new design wins while operating with improved visibility given our distribution changes. We will continue to focus on growing revenues, improving profitability and strategically investing in R&D while continuing to exploit opportunities to bring additional efficiencies to operations and supply chain. We are confident we can further grow our market share and our customer base as our new product families become more widely used this quarter. We continue to win new business with XO, XP2, ECP3 and mixing of families in all geographies and end markets. We are confident we can further improve our profitability in 2010 as we drive revenue growth while keeping strict control over all operating expenses. We are maintaining a lean infrastructure and hiring headcount very selectively. On the R&D side, we are excited about the progress we have made, executing on our new product roadmap. We believe that these products will further improve our current offering and provide differentiated and reasonable market positions. Let me turn over to expectations. In terms of specific guidance we expect revenues to be sequentially up 6% to 10% and we are entering Q2 with a higher backlog than in Q1. Q2 gross margins are expected to be in the range of 57% to 59%, essentially flat over Q1. Operating expenses are expected to be approximately $31 million as we continue to tightly control costs. The increase from Q1 2010 includes higher sales expenses associated with our higher revenue. As noted in our earnings release, we expect continued profitability in the second quarter. In closing, our business continues to get momentum and we expect further progress and look forward to updating you as we move through 2010. This concludes our prepared remarks. Operator, we will now be happy to take any questions.

(Operator instructions) Your first question comes from the line of Tristan Gerra with Robert W. Baird. Tristan Gerra – Robert W. Baird: Hi, good afternoon. Given the supply constraints, are you seeing potential with price increases later this year? And also if you could talk about any potential changes in your pricing strategy near-term?

Hi, Tristan, this is Bruno. Let me just address first the supply. We are not actually seeing any constraints in our supply chain right now. As you know we have two main foundry suppliers, Seiko Epson for the Metro Technologies [ph] and Fujitsu for the more advanced technologies and in a way I would say we feel pretty good about having Fujitsu as a partner and Fujitsu as you know is not a tier one player in the foundry business so we have been able to basically secure all capacities that we need for obviously our current business and also to secure our gross as going forward and I would say on assembly and test we have multiple suppliers and we have not had any issue from a capacity perspective. So I think we are in pretty good shape from a supply perspective. On pricing, obviously, I mean, we continue to manage pricing as we move forward. The combination of existing business and what’s necessary as well to take on new business. I guess that’s where our stuff on pricing for now. Tristan Gerra – Robert W. Baird: And did you say on the call that your product was one of the mix reasons that helped gross margin in the quarter?

Yes, our mature products were strong during the quarter and for us our mature products have higher average margins than the rest of our business. Tristan Gerra – Robert W. Baird: And then finally in terms of 65-nanometer, when do you think we get to the point where we get in volume? And maybe you want a way to quantify this. When do you think you could get your first million in revenues on a quarterly run rate at 65-nanometer? Would it be next year or is it further out?

Tristan, while our rating volume at 65-nanometer, the ECP3 which was introduced in February last year is a 65-nanometer product, okay. So we have two processes that Fujitsu qualify on 65-nanometer. The SRAM process on which we have the ECP3 which has been starting to ramp in volume in Q3 of last year and doing actually very well and we have also nominated flash process on similar 65-nanometer process, which is basically part of the new products we have on the roadmap. So we are shipping volume at 65-nanometer. Tristan Gerra – Robert W. Baird: Great, thank you.

Your next question comes from the line of Richard Shannon with Northland Securities. Richard Shannon – Northland Securities: Hi, guys. How are you?

Hi, Richard, how are you? Richard Shannon – Northland Securities: I’m doing fine, thanks. Congratulations, a very nice numbers. I guess, first of all on the guidance for the second quarter. You mentioned your backlog is higher than the first quarter. Curious what’s your percentage of that guidance is coming from turns or especially relative to what the first quarter is and what’s normal for you?

In terms of Q1 we were slightly above 60% in backlog and slightly below 40% in turn. We expect a little bit less turns in Q2 so we expect more of our revenue to come from backlog and that is in our forecast. Although our supply isn’t particularly constraint, people are being careful when they’re placing orders right now. So we think that our Q2 pattern shows people putting orders in a little bit more in advance.

Your next question comes from the line of Apurva Patel with Ticonderoga Securities. Apurva Patel – Ticonderoga Securities: Can you go back to 1Q, in terms of end market, where do you see the substantial growth? It seems like the numbers were well above your mid-quarter update. Can you just help us understand where the growth came from or what changed between the mid quarter update to end of the quarter?

I think the only thing that happens from the mid quarter to the end of the quarter is that we would expect the things to tail off a little bit at the end of the quarter. That’s a little bit more usual for us, as people kind of look forward and adjust how much inventory they take in, but actually, demand remain extremely robust through the whole quarter. We didn’t have any one end market that was very strong. I think our European end market in terms of geography grew a little bit in per cent, so there was a little bit of return of business in Europe and that helped us for the total results. Apurva Patel – Ticonderoga Securities: Mike, on gross margin, obviously, there’s multiple things going on. You have the mix, you have volume and also you have cost controls. Which one is the highest contributor to the upside in gross margins?

Over Q4, it was volume is the primary driver and the mix was helped by our cost controls. For example, moving the warehouse to Singapore significantly saves in shipping expense. So we shipped a very high volume and we spent close to what we would have spent last year in terms of shipping expenses. So that was a pretty good savings for us. The mix did help, I mean, the fact that mature business did not decline during the quarter, did help our margins overall. So those are the reasons why our margins were very good during Q1. Apurva Patel – Ticonderoga Securities: And then in your guidance for Q3 in terms of gross margin, is it still going to be a combination of favorable mix, cost controls and favorable market trends? Or is it going to be just one or two out of the three?

We’re going to get continued volume benefit, because we expect revenue be up quarter-over-quarter and we continue to control our expenses. So we don’t anticipate overhead rising significantly so that will give us a benefit there. Mix wise we don’t expect to have continued mature strength throughout the year so we won’t get as much of the mix left in Q2. And there is a couple other miscellaneous things going on, inventory that came back from our distributed transition at the end of the last year in Asia, that will have slightly impact margins in a negative sense and we have a little bit of conservatism built-in because of the transition we’re making now to the Nu Horizons online. So that’s one of the factors we took into account when we give the range. As Bruno said the expectations we think it’d be essentially flat quarter-over-quarter. Apurva Patel – Ticonderoga Securities: Great. And then in terms of R&D, you mentioned new products; can you give us any color? Is it new node or is it more new tape-outs?

R&D expenses? Apurva Patel – Ticonderoga Securities: Yes.

It’s basically, I mean, fabulous, so we don’t invest in technology development, manufacturing process development that much. We do some together. With Fujitsu it’s pretty much everything has been done already because as I mentioned earlier we’re currently running volume at 65-nanometer processes. So, yes, it’s basically mostly tape outs related to new products. That’s what’s happening for the R&D expenses going forward. Apurva Patel – Ticonderoga Securities: Looking out in the second half of 2010, just directionally, do you expect the trends to kind of continue? I mean it seems like; in general, a lot of strength in the cycle, if you can help us understand in terms of just end market demand? Any color would be great. Do you expect this type of growth to continue? There’s some demand that’s coming much stronger than expected. Any color would be great.

We only guide for the second quarter so we don’t typically give longer-term outlooks on the industry. We always caution that we’re tied to the general economy as a whole. So economic conditions need to remain at least at this normal level right now when you’re looking longer-term out. I also think if you look at our market positions and the customers we serve you can make an educated guess on where things should go for the rest of the year. Apurva Patel – Ticonderoga Securities: I guess the last question from me on product cycles. Any color on there in terms of what the product cycle we should be looking out for while coming back from 4Q to 1Q seems to be substantial growth and even for 2Q, just trying to understand what kind of product cycle we should be looking out for as we enter 2Q?

Are you talking about lifecycles? Because our new products continue to gain traction and grow rapidly, and that’s the main driver for our growth. Our mainstream, as expected, are growing, I mean, mainstream is normally growing, but fairly slow growth. I think the difference in Q1 is that we normally model our mature products to the client overtime and they actually grew a little bit in Q1. So balance wise that was what our Q1 growth was driven by.

I guess overall, we have obviously targeted the market. This year, the ECB3 family is more targeted towards communication. The XP2 is little bit more targeted towards video surveillance type application and the XO is really a broad-based product that really goes into a number of end markets from communications to industrial to consumer and to computer. So we’ve given you the color on our end market (inaudible) so you can make some projections based on that, that we basically have new products addressing all end markets. Apurva Patel – Ticonderoga Securities: Great, thank you.

(Operator instructions) Your next question comes from the line of Ruben Roy with Pacific Crest Securities. Ruben Roy – Pacific Crest Securities: Thank you. First for Bruno. Bruno, can you talk a little bit more about the communications business? And just visibility given your exposure to Asia would seem that some of the communications strength you’ve been seeing recently is coming from that geography. And as you look out to the second half and beyond, there’ve been some headlines around capital spending reductions, etc., there. Kind of what your longer-term visibility is on that business? And then also are you seeing some stabilization recovery growth, etc., out of North America and Europe, communications?

Let me try to address the first piece of your question about communication. As Michael stated we won’t comment further than Q2, but yes, Asia is definitely an area of strengths, large markets for us, but we’ve also gained traction with the major suppliers in Europe as well as in Japan. So it’s really a broad-based recovery and I want to point one more time that in China the big players are not only benefiting from the captive deployment that are happening in China, but more so actually of their export business, which is now not only going to developing economies, but even to market such as US and Europe and we do anticipate to continue to benefit from that. Your next question is about the recovery in US and Europe. Yes, we’ve started to see some recovery in the US actually in Q4 of last year. We are a little bit conscious at the beginning of the year with Europe but we have seen some strengths in Europe, not only in the communication sector, as I just mentioned and also in the industrial market, which basically tend to indicate that it’s a broader type recovery.

I just want to reemphasize the point that we measure a geographic markets by the ship to location, so it’s not by the headquarters of the customer, but where we ship the product to, obviously, a lot of our customers may be headquartered outside of Asia, but their manufacturing operations are in Asia and that’s where we’ve shipped our product to. That’s how we measure it. And again like we’ve said even the large Chinese telecom equipment makers that we sell to they sell to all over the world not just into Asia. Now, we may ship it to them in Asia, but where they ship the product to is fairly broad-based. Ruben Roy – Pacific Crest Securities: Right, right. And thank you, Michael, for that. When you look at your design wins and gaining momentum and communications, would you say that you’re taking sockets that typically would have been occupied by an FPGA or CPLD, are you winning sockets where potentially they’re being ASSP or is it a mixture? Can you kind of describe what you’re seeing in terms of design wins?

Overall, I think it’s a mixture. We have really two products that are addressing communication and in communication really what we are mostly going after is wireless communication, wireless infrastructure. The ECP3 is doing very well across all geographies at all the main players, it’s one of the best solution on a market today with that offers the right level of performance at the right price with low power, then we also have the XO, which is a low density product, which is doing very well, which is more generic if you want type product low density to basically, helped improving design over time. So that’s again across geographies and across all major suppliers. So it’s kind of a mixed bag, if you will. Ruben Roy – Pacific Crest Securities: Okay. And then just a final question for, Michael. Can you kind of tell me what your lead times are on average and any changes versus last quarter?

For the average product it’s about eight weeks. So we use a range eight weeks to ten weeks, that’s about the average. We try and buffer anticipated demand both at our distribution channel and with our own inventory in case there is a spike, but it’s been pretty consistently between eight weeks to ten weeks for the last two years at least. I think the difference is that we’re getting people placing orders more in advance so we’re planning out a little further in advance. And as both I and Bruno mentioned we have not had an issue with getting capacity at our fab partners, no other assembly and test partners so far, we have been very pleased and they have been very, very good at serving Lattice. Ruben Roy – Pacific Crest Securities: Okay. So with bookings going further out, Michael, I assume you’re booking a bit for Q3 and while you’re not guiding obviously for Q3, but can you just talk about kind of where you are this year as you look out to those out quarter bookings versus where you’ve been in the past?

With eight weeks to ten weeks lead times, our planning group for orders coming in now that we don’t have inventory in place, we’ll be starting to place it for next quarter’s production and we really prefer not to talk too much about next quarter, may be when we do our mid-quarter updates that will be a little closer to the next quarter and if appropriate we will comment a little bit on that. But right now our bookings, our backlog starting this quarter is stronger than our backlog starting last quarter and that’s reflected in our expectations of a 6% to 10% up in revenue. Ruben Roy – Pacific Crest Securities: Fair enough. Thank you, Michael.

Your next question comes from the line of Irea Kall with Eaton Vance. Irea Kall – Eaton Vance: Good afternoon, and again, congratulations on the results for your hard work. Two questions, one on R&D, one on distribution. You made a number of changes in distribution in the middle of 2009 in Asia. And can you just better explain how the changes in the distributors you’re dealing with have been able to boost sales for Lattice?

What we’ve done I think we’d covered that in previous conference calls. Irea Kall – Eaton Vance: Right, this is my first conference call.

Okay so what we did in Asia was basically converting network of distribution that was a selling model into a sell-through model. As you are probably aware in US and Europe and also now a lot in Asia, typically, you do not recognize revenue until the distributor resell that product to the end customer so that provides obviously a better visibility on pricing also a lot more transparency and what’s happening in the market so we didn’t have that visibility in Asia because if you were selling to these distributors as the same thing as an end customers and they were reselling that in turns to their own customers so we change that so now in Asia except for Japan we have a sell-through model and we have a real good transparency and visibility on what’s going on. That’s the major change we’ve done in Asia in 2009. What we’ve done this quarter is realignment of our US and European channels where our distributor was appointed as a new distributor in Asia as part of his restructuring. We have expanded their role to cover not only Asia, but also US and Europe. And obviously, there are a lot of feet on the ground and the FPGA business is very technically intensive from a design, from an application engineering perspective and that comes and compliments our own resources as we have more feet in the street to sell our products and that in turn obviously help to grow design wins and revenues. Irea Kall – Eaton Vance: Okay. And then on the R&D side, as you well know before you joined in 2008, Lattice spent hundreds of millions of dollars in R&D and sales just continued to decline for many years. What have you been doing more effectively in R&D in the past 18 months with fewer dollars? You’re actually able to drive sales growth that wasn’t possible five years ago.

It’s a combination of things, number one, we’ve renewed focus on certain products that we felt where had not been the primary focus of the other companies such as the low density product, mixed signal, XO and we relaunched the products and we’re getting new momentum out of some existing products that in a little bit luck in translation. At the same time we’ve also redefined a new product roadmap that we can afford. We made it clear that we can’t compete heads on with the bigger guys, we are a smaller player and therefore, we got to compete where we think we can win. And where we can win is the mid range where we have a clear product roadmap going forward and that’s basically the ECP3 product was the first I would say Magstone [ph] delivered around that roadmap and we will have more in the future, targeting more specifically, wireless communication, video surveillance and also displays. And we also have a roadmap that addresses low density products, where the XO today is the main driver for that, but we have next-generation products to address that. So if you want we are very focused on low density and mixed signal solution as well as mid range, as opposed to try to go after the leading edge, bleeding edge type technology. Irea Kall – Eaton Vance: And just lastly, in terms of hiring design engineers? What are you doing I guess to retain people and also track new people that you do hire when people heard of Altara and others clearly and Lattice less so?

Well, I think we are always looking for some talents, as Michael mentioned earlier, we are mostly adding talents in lower cost geographies where there are fairly large R&D centre in Shanghai, is about a 130 people or so, we are also looking at other geographies such as India and it’s a combination of things. I mean the advantage of the attraction for some engineers to come and work for company like Lattice is that to be in a smaller structure and be able to contribute more or see the contribution more than they would maybe in the larger organization. So again I think from overall the sale growing up, the company being back to profitability, these are pretty good retention tools to make sure that we keep talented workforce around. Irea Kall – Eaton Vance: Great, thank you.

We have a follow-up question from the line of Richard Shannon with Northland Securities. Richard Shannon – Northland Securities: Hi, guys. I’m not sure when I got cut off my last question, but I’ve got a couple of follow-ups. First, kind of a couple of questions together are, related to your expectations in the second quarter for mature products, is there any element of growth you’re expecting there and to the extent of which that helps to the gross margin guidance for the quarter?

Yes, we expect it to be flattish, steady decline during the second quarter. We almost always expect our mature product to fully decline over time just because where they are in a life cycle. We don’t think Q2 is going to be that different than our normal expectation. Richard Shannon – Northland Securities: Okay. So you think you can keep the gross margins in relatively the same level given the mature products declining slightly as you say?

Yes, I don’t think it’s going to make a huge difference in the mix and we do have the uplift of additional volume as well. So we factored in, expected mix, expected volume and a couple other miscellaneous things when we came up with our forecast range. Richard Shannon – Northland Securities: Okay, great. Second question, probably also for you, Michael. Inventory, your turns number, I thought I saw my models about four and a half times or so. What’s the level of comfort? Where would you like to see the turns number? And therefore, would you like to see your inventory finish the current quarter at?

Yes, we actually position a little bit more inventory in the form of a dye bank by the end of the quarter. That’s a little bit cheaper way to hold inventory and flexible in terms of releasing it into package and we spend a lot of time over the last year really we are evaluating what inventory we hold, what should be held in a distribution channel with the transition that sell-through that helps us a lot in. And part cycle into the consumer market we tend to hold a bigger buffer because revenue turns on faster and you can very quickly get a spike in orders, you need to be able to quickly respond to that so we’ve been trying to shift a little bit more inventory into that segment. Otherwise, the focus is then controlling our inventory levels and making sure we have enough to serve our customers. I don’t know if you have another question or not. Richard Shannon – Northland Securities: Yes, sorry, my phone just went blank there for about ten seconds. Just want to be clear you’re comfortable where you finished your other quarter with inventory and where you think you can be during the second quarter?

Yes, I mean you could always find one or two part numbers that somebody has got demand for it, you don’t quite have everything you need, but overall, our lead times has not been extending, we’ve been shifting at a very high level, our shipment to customer requires time. So I would say we have adequate inventory now and we have adequate response from our supply chain that we can meet the growth targets we have for ourselves. Richard Shannon – Northland Securities: And in one of the previous questions, regarding what you’re doing with distribution, it seems like you’ve been gaining some nice share in your low density CPLD products with the MachXO. Seems like you made some strategic improvements there in terms of reference designs and more directly addressing the channel. Kind of curious to the extent of which you think those changes have borne out in terms of revenue growth and share versus what you think can still come from those changes over the next few quarters or next couple of years or so?

Well, we definitely think that we still have some room to grow on the low density side I mean where we have seen the quarter-on-quarter and year-on-year growth, especially with the MachXO, we continue to develop new reference designs, demo boards, make more IP available to customers, make also the product a lot more easier to use and we are improving, expanding our channel, so we definitely think there is a more room to grow for low density business going forward. Richard Shannon – Northland Securities: And once again, congratulations on the nice performance, guys.

Thank you.

Your next question is coming from the line of Greg Weaver with Invicta Capital Greg Weaver – Invicta Capital: Hi, in terms of the surprising growth on the mature products, is that a function of units or ASPs going up?

We did do some selected ASP raises during the quarter, but for the most part it was driven by unit. Greg Weaver – Invicta Capital: Okay, great. And how large was your biggest customer in terms of percent of revenue?

It’s a little bit difficult to measure that because we have to kind of look to route where the final customers are. So some of our distributors were over a 10%, but if you look through the end customer we had nobody over 10%. Greg Weaver – Invicta Capital: And just in terms of the Nu Horizons transition, I think you mentioned, Michael, about baking a little conservatism into the gross margin for Q2 outlook. I guess why gross margin versus revenue risk given the transition? Were the costs going up associated with the transition?

When we transition some distributors in Asia at the end of last year, inventory was came back during Q1 and essentially near the end of Q1 is when it was all came back. When we resell that inventory it will be at slightly lower margins than if we had just made it from new. And we are also going to get some inventory back in the channel from the US and from Europe because we’re transitioning from one distributor to another distributor with the addition of Nu Horizons. So although we don’t think it will be significant we do have a little bit of conservatism baked in because we don’t know 100% what the final mix of the inventory coming back will be. Greg Weaver – Invicta Capital: I see. Okay, that’s helpful. And I guess just lastly, in terms of you alluded to it, but on the operating margin side of things, obviously, you had a great number this quarter, exceeding your 15% target I guess. Do we have a new goal?

Well I think I characterize as a new goal is trying to do better than where we are now and grow revenue, grow profitability and keep your operating expenses under control It’s just very short while ago our target was to get the profitability and that look like a very hard slog to reach that target. So now that we are at nicely profitable level we want to continue to maintain that profitability and to grow off of that base. Greg Weaver – Invicta Capital: Okay. It sounds like from the way you couch it that from an OpEx perspective, where we should be expecting a fair amount of flow through, right? It sounds like you’re trying to keep that pretty much in check.

We guided to about $31 million of operating expenses. So that’s at a lower increase rate when compared to our revenue increase rate. And if we keep doing that you should get a flow through. Greg Weaver – Invicta Capital: Okay, great, nice job. Thank you.

Your next question comes from the line of David Duley with Steelhead Securities. David Duley – Steelhead Securities: Congratulations on a nice quarter. I was wondering, I notice you changed your classifications. Could you just remind us what the biggest product line you took out of the new bucket was? And I assume you put that into mature.

We have it in the release you could see what are the new classification is. There really was no large product to move from one to another. So it was a couple of smaller products that we’re a little bit later in the product cycle and the sales cycle indicate that more of a mainstream product then we moved a couple of our older products that started to tail off in revenue and expectations down into mature. So it really wasn’t that bigger change. I give an example. I don’t knew we moved DSC the first XP product, the first tower manager and clock products and the ECP, the original ECP product down into mainstream from mature. David Duley – Steelhead Securities: Okay, great, thank you. That’s very helpful. Do the strong business trends that you recognize throughout the quarter and the March quarter continue in the month of April?

I think that we’ve guided our revenue to grow up quarter-over-quarter. So I would say that the strength that we saw was reflected both in the factor we had a stronger backlog entering Q2 than we did in Q1. And the fact that we are expecting revenue to continue to increase even on top of a very strong quarter. David Duley – Steelhead Securities: Okay. And I don’t recall did you mention what your book-to-bill was during the quarter or is that a number you guys don’t disclose?

We didn’t and I think we’ve talked about this a few quarters in a row. Because we get our bookings at distributor price and you don’t always try to know what the sell-through is going to be, we don’t think it particularly relevant statistics; focus a lot of attention on. Our backlog is stronger entering Q2 than it was entering Q1. So that’s the color we gave on it. I also mentioned that our forecast includes assumption of slightly less terms in what we had in Q1. David Duley – Steelhead Securities: Great. And final question from me is you’re kind of starting to flirt with the 60% gross margin. I’m just wondering what is the event that would allow you to show a 60% margin. Is it volume driven solely or is it mix or yields or what do you think are the factors that get you to that magic number?

Yes, we’ve always said it’s more of a function of size and scale than anything else that increase size and scale helps our margins more in the short-term than any individual factor. Size and scale allows you to purchase things for a lot less and that also allows you to leverage offers you establish cost-based and get more revenue out of the same overhead expenses. David Duley – Steelhead Securities: Thanks.

Your next question is coming from the line of Josh Goldberg with G2. Josh Goldberg – G2: Hey, guys. Just a couple quick ones here. First of all, on the Nu Horizon contract, that relationship starts in the third quarter?

They are actually a franchise distributor now, but it will take them a little while to ramp up, get starts properly and have their FAEs and other sales people trained in our product line, but as of today they’ve actually booked a few orders. Josh Goldberg – G2: Okay. I guess because in March, Nu Horizon talked about how they lost Altara as a supplier for them.

That should Xilinx. Josh Goldberg – G2: I’m sorry; Xilinx They mentioned that was around $200 million of revenue. And just checking with some of the other people in the industry it seems like Nu Horizon doesn’t have another FPGA appeal to the supplier. Do you feel like that's a reasonable amount of revenue that you think you can generate from Nu Horizon over, call it next 12 months to 18 months?

I am not going to comment on Nu Horizon, but obviously, on the prospect for their business, but obviously the attraction for us to expand Nu Horizon’s role beyond Asia whereas the fact that they had a fully trained workforce existing, we want some of the FPGA business so we took advantage obviously of that opportunity. Josh Goldberg – G2: So it was more kind of a fortunate occurrence that Xilinx moved away from theirs and you were opportunistic, is it the best way to look at it?

Fortunate for us maybe, I don’t know if they would characterize it as fortunate, but it is attractive to us because we would be the only FPGA line they carry. So we don’t have internal competition within for resources. They also executed extremely well for us in Asia and we’re quite pleased with the starting of the relationship we had with them. So when there was an opportunity both companies decided it was a good, good step to take. Josh Goldberg – G2: How much revenue do you do with them right now?

We don’t disclose guys at a below 10% and there are new distributors they just started with us in Asia towards the end of last year. So they are not over a 10% customer yet. Josh Goldberg – G2: Okay. And Arrow was $20 million last fiscal year. And they were just in US and Europe or they were also Asia as well?

They did some fulfillment in Asia, but their franchise was US and Europe. Josh Goldberg – G2: Okay. And maybe you can just comment a little bit more about what you’re seeing in communications and specifically, what some of the Chinese vendors that sounds like they’re gaining a lot of share overall in Asia and with some of the CapEx numbers coming in, it looks like CapEx in China itself might be a little bit stronger in 2011 versus 2010. Do you feel like that’s your fastest growing end market right now?

Well, definitely, I mean communication is an area of growth for us but as I have mentioned earlier in the call, remember, that the big vendors in China are not only selling in China, but also outside of China where a lot of their goods is coming from and so we are benefiting of that. So at the end of the day all products end up in China, but a lot of their products and non-emerging economies has reduced to (inaudible) space where they would win big business, but also in regions such as Europe and US as well. Josh Goldberg – G2: But is the guidance of 6% to 10% in the June quarter, is that coming from one end market in particular? Where would you see the most strength?

It’s broad-based. Josh Goldberg – G2: It is broad-based, okay. And the Nu Horizon relationship isn’t really ramping yet so that could actually help you in the back half of the year.

In theory, they have a lot of dedicated technical resources that would help us generate more revenue, that’s one of the reasons why we’re excited to have them as a new distribution partner, but we’re not making any comments on revenue expectations past Q2. Josh Goldberg – G2: Okay. But if we look out, call it 12 months to 18 months; do you expect them to be at least a 10% customer?

We actually don’t have specific guidance in terms of what our business level is expected to be with them. If you have questions about their business I would recommend that you call and discuss it with their management. Josh Goldberg – G2: Okay. And then just in terms of your cash generation, are you expected to continue to generate cash throughout this year?

We expect even last year when we were profitable we were still generating some cash so we expect with continued profitability to continue generating cash, yes. Josh Goldberg – G2: One last thing. I read through some of your filings of your tax rate. What’s your total NOLs at this point? And when do you foresee paying more full income taxes?

We don’t foresee paying income taxes in quite a while, we have very extensive NOL. So certainly not in when annual time arises. Josh Goldberg – G2: I think I read somewhere north of $150 million, is that right?

It’s quite substantial. So it’s actually more than that. Josh Goldberg – G2: All right, fantastic. Just last one for me. In terms of your product that’s gaining some traction in, and maybe some notebooks, where would that be in your segment? Would that be on the computing side or the consumer side?

We keep it in the consumer side. So our main product has been talked about in the past in this area of notebooks is in the consumer side. It’s sort of into our consumer field. We do a lot of sales into computing as well. Obviously, as you can see from the end market, those are products that go into servers. So we’re sort of traditionally for the server-based products into computing. The function is the notebook, the notebook devices using right now is in the area of video and displays. Josh Goldberg – G2: Right. Okay. Are you gaining some more traction in that segment as there’s been more demand for products like yours?

In the area of notebooks? Josh Goldberg – G2: Yes.

We continue to be happy with our performance there, but we don’t comment more specifically than that. Josh Goldberg – G2: Okay, great. Well, continued success. Thank you so much.

Thank you.

(Operator instructions) At this time, there are no further questions. Management, are there any closing remarks?

Well, I want to thank everybody for joining our call today and we are looking forward to talking to you again next quarter, thank you.

Thank you.

This concludes today’s teleconference call. You may now disconnect.