N@N

Lattice AnnouncesQ2 2011 Financial Results

^{Published on 2011-08-15 12:47:22 - Market Wire}
 

PENNSAUKEN, N.J.--([ BUSINESS WIRE ])--[ Lattice Incorporated ] (OTCBB: LTTC), a provider of secure technology solutions to key government agencies and enterprise customers, announced today the companya™s financial results for the second quarter ended June 30, 2011.

"We believe the CLR acquisition and the new management team of Lattice Government Services will enable us to successfully work through the current changes and will lead us to a solid track record in growing government contracting businesses"

Total revenue for the quarter ended June 30, 2011 was $3.2 million compared to $3.4 million for the quarter ended June 30, 2010. Net loss was ($1,966,800) or EPS of ($0.08) compared with net loss of ($59,000) or EPS of $0.00 in 2010.

Telecom servicessegment revenues increased 40% to $1.2 million compared to $0.85 million in the same quarter a year ago, and comprised 37% of the total revenues for the second quarter, up from 25% a year ago. Included in the net loss for the quarter was a non-cash impairment charge of nearly $1.6 million related to the ending of the companya™s role as SPAWAR prime contractor.

CEO Paul Burgess said, aThis was a difficult quarter for Lattice. Our Government services segment revenues decreased 21% in the quarter compared with the prior year. Only partially offsetting the decrease were new revenues from the Cummings Creek/CLR acquisition of $572,000, not present a year ago. The decrease, excluding CLR, was mainly due to a major restructuring of our prime SPAWAR contract vehicle, which was rebid and awarded on May 15th to a new prime contractor. We expect to continue to participate in services under this SPAWAR contract vehicle, given our partnering relationship with the winning bidder. In addition, government cutbacks resulted in decreased funding for our direct or in-house labor staffing on the SPAWAR contract. We expect our results will continue to be impaired through next quarter as we move through this transition from prime contractor to a teaming arrangement supporting the new prime contractor. We anticipate it being a short transition back to the resumption of growth in the government services segment.

aOn the positive side, we are steadily building momentum in our telecom business. Lattice now provides call management services for over 10,000 inmates at 49 secure facilities in the U.S. as well as the U.K. and Gibraltar. During the quarter our communications segment revenues increased by 40% to $1,197,000 from $855,000 in the prior year. The increase in revenues was attributable to volume growth from the continuing increase in the number of facilities contracted where we provide direct telecommunication services combined with an increase in technology equipment and software sales wholesaled to other service providers.

aBecause of the major impact of the changes in our SPAWAR business, we are restructuring Lattice to maximize our revenue and earnings capability in our new role as a SPAWAR subcontractor under the teaming arrangement. We recorded a non-cash impairment charge to the carrying value of goodwill of $1,575,000 based on a write down of projected revenues and cash flows in our Government services reporting unit reflecting the end of our role as primary contractor combined with some uncertainty of funding on this contract going forward. We have estimated the annual impact to revenues and cash flows to be approximately $5,000,000 and $800,000 respectively.

aWe took several steps to offset the SPAWAR loss. These include steps which reduce our costs, increase our revenues and add to our operating cash flow, such as from the Cumming Creek/CLR acquisition with expectations of producing annual addition revenue of $4,000,000, cost savings of $800,000 and resulting in an addition of $400,000 to cash flow. We have also obtained wins for direct labor position task orders, which are expected to result in additional annual revenues of $1,000,000 and $300,000 in operating cash flows. Further, our direct telecom business is expected to increase during the latter part of 2011, contributing further to our financial performance.

aWe believe the CLR acquisition and the new management team of Lattice Government Services will enable us to successfully work through the current changes and will lead us to a solid track record in growing government contracting businesses,a Burgess said.

Lattice will host a conference call with CEO Paul Burgess and CFO Joseph Noto today, Monday, August 15 at 4:30 p.m. EDT. To participate in this call, dial 1-877-941-8416 after 4:20 p.m. EDT. International callers should dial 1-480-629-9808. If an operator is needed at anytime during the call press the star followed by the zero button.

An audio replay of the call will be available at [ http://www.hawkassociates.com ] for approximately 90 days after the call.

Financial tables are attached.

About Lattice Incorporated

Lattice Incorporated is a provider of advanced information and communications technology solutions to the government and commercial markets. The companya™s Government Services division designs, deploys, and manages secure technology solutions at key government agencies. Latticea™s Communications Solutions division develops customized software applications and systems for secure facilities.

A complete profile of Lattice, including copies of press releases and a current price quote, may be found at [ http://www.latticeinc.com ].

Safe Harbor Statement

Safe-Harbor Statement under the Private Securities Litigation Reform Act of 1995: This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the company, its directors or its officers with respect to, among other things: (i) the company's financing plans; (ii) trends affecting the company's financial condition or results of operations; (iii) the company's growth strategy and operating strategy; and (iv) the risk factors disclosed in the Company's periodic reports filed with the SEC. The words "may," "would," "will," "expect," "estimate," "anticipate," "believe," "intend" and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company's ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the risk factors disclosed in the company's Forms 10-K previously filed with the SEC.