EX-99.1 2 lscc2018q3ex-991earningsre.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1

latticelogoa06a01a01a18.gif
NEWS RELEASE

CONTACTS
 
MEDIA:
INVESTORS:
Lattice Semiconductor Corporation
Global IR Partners
Doug Hunter, 503.268.8512
David Pasquale, 914-337-8801
doug.hunter@latticesemi.com
lscc@globalirpartners.com

LATTICE SEMICONDUCTOR REPORTS THIRD QUARTER OF 2018 RESULTS

Third Quarter 2018 Highlights:

•
Net Income increases to $0.05 per share on a GAAP basis and Net Income of $0.11 per share on a Non-GAAP Basis; highest level since the third quarter of 2014
•
Gross Margin improves to 57.5% on a GAAP basis and 57.4% on a non-GAAP basis
•
Company makes additional $15 million discretionary debt payment, following $10 million discretionary payment in the second quarter of 2018
•
Company makes several key executive leadership appointments; Appoints Jim Anderson, President and CEO; Esam Elashmawi, Chief Marketing and Strategy Officer; and Steve Douglass, Corporate Vice President, R&D
* GAAP represents U.S. Generally Accepted Accounting Principles. Non-GAAP represents GAAP excluding the impact of certain activities which the Company's management excludes in analyzing the Company's operating results and in understanding trends in the Company's earnings. For a reconciliation of GAAP to non-GAAP results, see accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP Financial Measures."
PORTLAND, OR - October 25, 2018 - Lattice Semiconductor Corporation (NASDAQ: LSCC), a leading provider of customizable smart connectivity solutions, announced financial results today for the fiscal third quarter ended September 29, 2018.
Selected Q3 2018 Financial Results and Comparisons (in thousands, except per share data)
 
 
GAAP — Three Months Ended
 
Non-GAAP — Three Months Ended
 
 
September 29,
2018
 
June 30,
2018
 
September 30,
2017 †
 
September 29,
2018
 
June 30,
2018
 
September 30,
2017 †
Revenue
 
$
101,484

 
$
102,715

 
$
91,971

 
$
101,484

 
$
102,715

 
$
91,971

Gross Margin %
 
57.5
%
 
48.9
%
 
58.0
%
 
57.4
%
 
57.2
%
 
58.1
%
Operating Expense
 
$
45,405

 
$
63,812

 
$
90,790

 
$
38,417

 
$
39,945

 
$
44,578

Net Income (Loss)
 
$
6,974

 
$
(20,223
)
 
$
(43,052
)
 
$
13,785

 
$
12,375

 
$
5,328

Net Income (Loss) per share, basic and diluted
 
$
0.05

 
$
(0.16
)
 
$
(0.35
)
 
$
0.11

 
$
0.10

 
$
0.04

†Results for periods in 2017 are presented in accordance with ASC 605, which was in effect during that fiscal year.

1


Jim Anderson, President and Chief Executive Officer, said, "Since joining Lattice as CEO in September, I have met with customers and team members worldwide as part of a strategic review. Our near term focus remains on driving profitable revenue growth, carefully managing OpEx, and paying down corporate debt. Over the mid-and longer-term we will work to expand our total addressable market with higher margin opportunities in both existing and adjacent markets, as we build greater value for the Company and shareholders. As part of our efforts, we strengthened our team with the addition of two highly experienced executives with nearly 70 years of combined FPGA, business and engineering experience. Steve Douglass, who joined Lattice as Corporate Vice President, R&D, and Esam Elashmawi, who joined Lattice as Chief Marketing and Strategy Officer, will help our team increase the alignment between our customers’ needs and our product roadmap and ensure that our customers can count on us for a steady cadence of new innovations over multiple product generations. This will allow us to build deeper, multi-generational partnerships with our customers and is central to our ability to drive steady revenue growth and sustained profitability.

Max Downing, Chief Financial Officer, added, "Our revenue for the quarter was $101.5 million, in line with our expectations, while our non-GAAP gross margin improved to 57.4%, led by focus on our core business and operating efficiency improvements. Our ongoing cost control actions delivered non-GAAP operating expenses of $38.4 million, which are down 4% from the second quarter and 14% from the third quarter of 2017. As a result, we achieved non-GAAP earnings of $0.11 per share - the highest level since the third quarter of 2014. During the quarter we generated $11 million in cash flow from operations, made a discretionary debt payment of $15 million, and ended the quarter with $117.5 million in cash and short-term investments.”

Business Outlook - Fourth Quarter of 2018:
•
Revenue for the fourth quarter of 2018 is expected to be between approximately $93 million and $97 million.  
•
Gross margin percentage for the fourth quarter of 2018 is expected to be approximately 57% plus or minus 2% on both a GAAP and non-GAAP basis.
•
Total operating expenses for the fourth quarter of 2018 are expected to be between approximately $52 million and $55 million on a GAAP basis and between approximately $37 million and $39 million on a non-GAAP basis. 
* For a reconciliation of GAAP to non-GAAP business outlook, see accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP Financial Measures."

Investor Conference Call / Webcast Details:
Lattice Semiconductor will review the Company's financial results for the fiscal third quarter of 2018 and business outlook for the fourth quarter of 2018 on Thursday, October 25 at 5:00 p.m. Eastern Time. The conference call-in number is 1-888-684-5603 or 1-918-398-4852 with conference identification number 6184766. An accompanying live webcast of the conference call will also be available on Lattice's website at www.latticesemi.com. The Company's financial guidance will be limited to the comments on its public quarterly earnings call and the public business outlook statements contained in this press release.
A replay of the call will be available approximately two hours after the conclusion of the live call through 11:59 p.m. Eastern Time on October 31, 2018, by telephone at 1-404-537-3406. To access the replay, use conference identification number 6184766. A webcast replay will also be available on the investor relations section of www.latticesemi.com.

2



Forward-Looking Statements Notice:
The foregoing paragraphs contain forward-looking statements that involve estimates, assumptions, risks and uncertainties. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. Such forward-looking statements include statements relating to: the Company's ability to drive profitable revenue growth, carefully manage operating expenses and pay down its corporate debt; to expand the Company's total addressable market with higher margin opportunities; to build greater value for the Company and shareholders; to increase the alignment between our customers’ needs and our product roadmap and ensure that our customers can count on us for a steady cadence of new innovations over multiple product generations; to build deeper, multi-generational partnerships with our customers to drive steady revenue growth and sustained profitability; and the statements under the heading “Business Outlook - Fourth Quarter of 2018.” Other forward-looking statements may be indicated by words such as “will,” “could,” “should,” “would,” “may,” “expect,” “plan,” “project,” “anticipate,” “intend,” “forecast,” “future,” “believe,” “estimate,” “predict,” “propose,” “potential,” “continue” or the negative of these terms or other comparable terminology; and our expectation that we will remain focused on maximizing the leverage of our operating model and reduce our outstanding debt balance. Lattice believes the factors identified below could cause actual results to differ materially from the forward-looking statements.
Estimates of future revenue are inherently uncertain due to such factors as global economic conditions, which may affect customer demand, pricing pressures, competitive actions, the demand for our Mature, Mainstream and New products, and in particular our iCE40™ and MachXO3L™ devices, the ability to supply products to customers in a timely manner, changes in our distribution relationships, or the volatility of our consumer business. Actual gross margin percentage and operating expenses could vary from the estimates on the basis of, among other things, changes in revenue levels, changes in product pricing and mix, changes in wafer, assembly, test and other costs, including commodity costs, variations in manufacturing yields, the failure to sustain operational improvements, the actual amount of compensation charges due to stock price changes. Any unanticipated declines in revenue or gross margin, any unanticipated increases in our operating expenses or unanticipated charges could adversely affect our profitability.
In addition to the foregoing, other factors that may cause actual results to differ materially from the forward-looking statements in this press release include global economic uncertainty, overall semiconductor market conditions, market acceptance and demand for our new products, the Company's dependencies on its silicon wafer suppliers, the impact of competitive products and pricing, technological and product development risks. In addition, actual results are subject to other risks and uncertainties that relate more broadly to our overall business, including those risks more fully described in Lattice’s filings with the SEC including its annual report on Form 10-K for the fiscal year ended December 30, 2017, and Lattice’s quarterly reports filed on Form 10-Q.
You should not unduly rely on forward-looking statements because actual results could differ materially from those expressed in any forward-looking statements. In addition, any forward-looking statement applies only as of the date on which it is made. The Company does not intend to update or revise any forward-looking statements, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.



3


Non-GAAP Financial Measures:
Included within this press release and the accompanying tables and notes are non-GAAP financial measures that supplement the Company's consolidated financial information prepared in accordance with U.S. GAAP. The non-GAAP measures presented exclude charges and adjustments primarily related to stock-based compensation, restructuring charges, acquisition-related charges, amortization of acquired intangible assets, impairment of intangible assets, inventory adjustments from the discontinuation of the Company's millimeter wave business, gain on sale of building, loss on sale of business unit, and the estimated tax effect of these items. These charges and adjustments may be nonrecurring in nature but are a result of periodic or non-core operating activities of the Company. The Company describes these non-GAAP financial measures and reconciles them to the most directly comparable GAAP measures in the tables and notes attached to this press release.
The Company's management believes that these non-GAAP financial measures provide an additional and useful way of viewing aspects of our performance that, when viewed in conjunction with our GAAP results, provide a more comprehensive understanding of the various factors and trends affecting our ongoing financial performance and operating results than GAAP measures alone. Management also uses these non-GAAP measures for strategic and business decision-making, internal budgeting, forecasting, and resource allocation processes and believes that investors should have access to similar data when making their investment decisions.
These non-GAAP measures are included solely for informational and comparative purposes and are not meant as a substitute for GAAP and should be considered together with the consolidated financial information located in the tables attached to this press release.


About Lattice Semiconductor Corporation:
Lattice Semiconductor (NASDAQ: LSCC) is a leader in smart connectivity solutions at the network edge, where the “things” of IoT live. Our low power FPGA and video ASSP products deliver edge intelligence, edge connectivity, and control solutions to the industrial, consumer, communications, compute, and automotive markets. Our unwavering commitment to our global customers enables them to accelerate their innovation, creating an even better and more connected world.
For more information about Lattice, please visit www.latticesemi.com. You can also follow us via LinkedIn, Twitter, Facebook, YouTube, WeChat, Weibo or Youku.
# # #


4


Lattice Semiconductor Corporation
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)

 
 
Three Months Ended
 
Nine Months Ended
 
 
September 29,
2018
 
June 30,
2018
 
September 30,
2017
 
September 29,
2018
 
September 30,
2017
Revenue
 
$
101,484

 
$
102,715

 
$
91,971

 
$
302,822

 
$
290,695

Costs and expenses:
 
 
 
 
 
 
 
 
 
 
Cost of sales
 
43,120

 
52,467

 
38,649

 
137,689

 
125,332

Research and development
 
19,131

 
21,081

 
25,648

 
63,153

 
79,857

Selling, general, and administrative
 
21,775

 
21,068

 
21,290

 
69,886

 
67,133

Amortization of acquired intangible assets
 
3,823

 
4,523

 
8,526

 
13,982

 
25,777

Restructuring
 
90

 
4,376

 
3,071

 
5,495

 
4,713

Acquisition related charges
 
—

 
864

 
681

 
1,531

 
3,208

Impairment of acquired intangible assets
 
586

 
11,900

 
36,198

 
12,486

 
36,198

Gain on sale of building
 
—

 
—

 
(4,624
)
 
—

 
(4,624
)
 
 
88,525

 
116,279

 
129,439

 
304,222

 
337,594

Income (loss) from operations
 
12,959

 
(13,564
)
 
(37,468
)
 
(1,400
)
 
(46,899
)
Interest expense
 
(5,500
)
 
(4,968
)
 
(3,888
)
 
(15,582
)
 
(14,112
)
Other expense, net
 
(452
)
 
(348
)
 
(2,027
)
 
(246
)
 
(2,104
)
Income (loss) before income taxes
 
7,007

 
(18,880
)
 
(43,383
)
 
(17,228
)
 
(63,115
)
Income tax expense (benefit)
 
33

 
1,343

 
(331
)
 
1,973

 
234

Net income (loss)
 
$
6,974

 
$
(20,223
)
 
$
(43,052
)
 
$
(19,201
)
 
$
(63,349
)
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share:
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.05

 
$
(0.16
)
 
$
(0.35
)
 
$
(0.15
)
 
$
(0.52
)
Diluted
 
$
0.05

 
$
(0.16
)
 
$
(0.35
)
 
$
(0.15
)
 
$
(0.52
)
 
 
 
 
 
 
 
 
 
 
 
Shares used in per share calculations:
 
 
 
 
 
 
 
 
 
 
Basic
 
127,816

 
124,843

 
122,990

 
125,578

 
122,393

Diluted
 
129,474

 
124,843

 
122,990

 
125,578

 
122,393



5


Lattice Semiconductor Corporation
Consolidated Balance Sheets
(in thousands)
(unaudited)
 
 
September 29,
2018
 
December 30,
2017
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
107,893

 
$
106,815

Short-term marketable securities
 
9,600

 
4,982

Accounts receivable, net
 
75,648

 
55,104

Inventories
 
66,381

 
79,903

Other current assets
 
24,143

 
16,567

Total current assets
 
283,665

 
263,371

 
 
 
 
 
Property and equipment, net
 
35,724

 
40,423

Intangible assets, net
 
24,977

 
51,308

Goodwill
 
267,514

 
267,514

Deferred income taxes
 
188

 
198

Other long-term assets
 
20,259

 
13,147

 
 
$
632,327

 
$
635,961

 
 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable and other accrued liabilities
 
$
56,788

 
$
64,821

Current portion of long-term debt
 
14,104

 
1,508

Deferred income and allowances on sales to distributors and deferred license revenue
 
—

 
17,318

Total current liabilities
 
70,892

 
83,647

 
 
 
 
 
Long-term debt
 
261,035

 
299,667

Other long-term liabilities
 
39,274

 
34,954

Total liabilities
 
371,201

 
418,268

 
 
 
 
 
Stockholders' equity
 
261,126

 
217,693

 
 
$
632,327

 
$
635,961



6


Lattice Semiconductor Corporation
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
Nine Months Ended
 
September 29, 2018
 
September 30, 2017
Cash flows from operating activities:
 
 
 
Net loss
$
(19,201
)
 
$
(63,349
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation and amortization
30,740

 
45,591

Impairment of acquired intangible assets
12,486

 
36,198

Amortization of debt issuance costs and discount
1,847

 
1,680

(Gain) loss on sale or maturity of marketable securities
(18
)
 
237

Gain on forward contracts
(105
)
 
(72
)
Stock-based compensation expense
9,908

 
9,286

Gain on disposal of fixed assets
(135
)
 
(197
)
Gain on sale of building
—

 
(4,624
)
Loss on sale of assets and business units
—

 
1,496

Impairment of cost-method investment
266

 
692

Changes in assets and liabilities:
 
 
 
Accounts receivable, net
(18,736
)
 
20,687

Inventories
13,892

 
1,519

Prepaid expenses and other assets
(11,729
)
 
3,839

Accounts payable and accrued expenses (includes restructuring)
1,661

 
(17,901
)
Accrued payroll obligations
(557
)
 
(2,002
)
Income taxes payable
309

 
(711
)
Deferred income and allowances on sales to distributors
—

 
3,862

Deferred licensing and services revenue
(68
)
 
(485
)
Net cash provided by operating activities
20,560

 
35,746

Cash flows from investing activities:
 
 
 
Proceeds from sales of and maturities of short-term marketable securities
5,000

 
9,689

Purchases of marketable securities
(9,603
)
 
(7,420
)
Proceeds from sale of building
—

 
7,895

Cash paid for costs of sale of building
—

 
(1,004
)
Capital expenditures
(6,178
)
 
(12,325
)
Proceeds from sale of assets and business unit, net of cash sold
—

 
967

Short-term loan to cost-method investee
—

 
(2,000
)
Cash paid for software licenses
(6,144
)
 
(6,472
)
Net cash used in investing activities
(16,925
)
 
(10,670
)
Cash flows from financing activities:
 
 
 
Restricted stock unit tax withholdings
(1,600
)
 
(2,787
)
Proceeds from issuance of common stock
28,051

 
3,452

Repayment of debt
(27,884
)
 
(33,679
)
Net cash used in financing activities
(1,433
)
 
(33,014
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

7


Lattice Semiconductor Corporation
Consolidated Statements of Cash Flows (continued)
(in thousands)
(unaudited)
 
 
 
 
 
Nine Months Ended
 
September 29,
2018
 
September 30,
2017
Effect of exchange rate change on cash
(1,124
)
 
1,381

Net increase (decrease) in cash and cash equivalents
1,078

 
(6,557
)
Beginning cash and cash equivalents
106,815

 
106,552

Ending cash and cash equivalents
$
107,893

 
$
99,995

 
 
 
 
Supplemental cash flow information:
 
 
 
Change in unrealized (gain) loss related to marketable securities, net of tax, included in Accumulated other comprehensive loss
$
(16
)
 
$
72

Income taxes paid, net of refunds
$
2,716

 
$
2,308

Interest paid
$
13,976

 
$
16,379

Accrued purchases of plant and equipment
$
332

 
$
51

Note receivable resulting from sale of assets and business units
$
—

 
$
3,050


8


Lattice Semiconductor Corporation
- Supplemental Historical Financial Information -
(unaudited)
 
Three Months Ended
 
Nine Months Ended
 
September 29,
2018
 
June 30,
2018
 
September 30,
2017
 
September 29,
2018
 
September 30,
2017
Operations and Cash Flow Information
 
 
 
 
 
 
 
 
Percent of Revenue
 
 
 
 
 
 
 
 
 
Gross Margin
57.5
%
 
48.9
%
 
58.0
%
 
54.5
%
 
56.9
%
R&D Expense
18.9
%
 
20.5
%
 
27.9
%
 
20.9
%
 
27.5
%
SG&A Expense
21.5
%
 
20.5
%
 
23.1
%
 
23.1
%
 
23.1
%
Depreciation and amortization (in thousands)
8,315

 
10,069

 
15,094

 
30,740

 
45,591

Stock-based compensation expense (in thousands)
2,708

 
2,400

 
2,514

 
9,908

 
9,286

Restructuring and severance related charges (in thousands)
90

 
4,376

 
3,071

 
5,495

 
4,713

Net cash provided by operating activities (thousands)
10,978

 
7,124

 
24,232

 
20,560

 
35,746

Capital expenditures (in thousands)
2,073

 
2,301

 
5,290

 
6,178

 
12,325

Repayment of debt (in thousands)
15,875

 
11,134

 
—

 
27,884

 
33,679

Interest paid (in thousands)
4,799

 
4,757

 
4,285

 
13,976

 
16,379

Taxes paid (cash, in thousands)
659

 
2,017

 
1,332

 
2,716

 
2,308

 
 
 
 
 
 
 
 
 
 
Balance Sheet Information
 
 
 
 
 
 
 
 
 
Current Ratio
4.0

 
3.1

 
2.2

 
 
 
 
A/R Days Revenue Outstanding
68

 
68

 
78

 
 
 
 
Inventory Months
4.6

 
3.8

 
6.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue% (by Geography)
 
 
 
 
 
 
 
 
 
Asia
76
%
 
76
%
 
75
%
 
75
%
 
71
%
Europe (incl. Africa)
12
%
 
12
%
 
12
%
 
12
%
 
11
%
Americas
12
%
 
12
%
 
13
%
 
13
%
 
18
%
 
 
 
 
 
 
 
 
 
 
Revenue% (by End Market)
 
 
 
 
 
 
 
 
 
Communications and Computing
32
%
 
29
%
 
30
%
 
30
%
 
29
%
Mobile and Consumer
27
%
 
24
%
 
28
%
 
26
%
 
29
%
Industrial and Automotive
37
%
 
43
%
 
37
%
 
40
%
 
33
%
Licensing and Services
4
%
 
4
%
 
5
%
 
4
%
 
9
%
 
 
 
 
 
 
 
 
 
 
Revenue% (by Channel) *
 
 
 
 
 
 
 
 
 
Distribution
82
%
 
86
%
 
80
%
 
85
%
 
75
%
Direct
18
%
 
14
%
 
20
%
 
15
%
 
25
%

*
During the first quarter of 2018, we updated our channel categories to group all forms of distribution into a single channel. Prior periods have been reclassified to match current period presentation.


9


Lattice Semiconductor Corporation
- Reconciliation of U.S. GAAP to Non-GAAP Financial Measures -
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 29,
2018
 
June 30,
2018
 
September 30,
2017
 
September 29,
2018
 
September 30,
2017
 
 
 
 
 
 
 
 
 
 
 
Gross Margin Reconciliation
GAAP Gross margin
 
$
58,364

 
$
50,248

 
$
53,322

 
$
165,133

 
$
165,363

Inventory adjustment related to restructured operations
 
(288
)
 
8,277

 
—

 
7,989

 
—

Stock-based compensation - gross margin
 
219

 
196

 
154

 
652

 
562

Non-GAAP Gross margin
 
$
58,295

 
$
58,721

 
$
53,476

 
$
173,774

 
$
165,925

 
Gross Margin % Reconciliation
GAAP Gross margin %
 
57.5
 %
 
48.9
 %
 
58.0
 %
 
54.5
 %
 
56.9
 %
Cumulative effect of non-GAAP Gross Margin adjustments
 
(0.1
)%
 
8.3
 %
 
0.1
 %
 
2.9
 %
 
0.2
 %
Non-GAAP Gross margin %
 
57.4
 %
 
57.2
 %
 
58.1
 %
 
57.4
 %
 
57.1
 %
 
Operating Expenses Reconciliation
GAAP Operating expenses
 
$
45,405

 
$
63,812

 
$
90,790

 
$
166,533

 
$
212,262

Amortization of acquired intangible assets
 
(3,823
)
 
(4,523
)
 
(8,526
)
 
(13,982
)
 
(25,777
)
Restructuring charges
 
(90
)
 
(4,376
)
 
(3,071
)
 
(5,495
)
 
(4,713
)
Acquisition related charges (1)
 
—

 
(864
)
 
(681
)
 
(1,531
)
 
(3,208
)
Impairment of acquired intangible assets
 
(586
)
 
(11,900
)
 
(36,198
)
 
(12,486
)
 
(36,198
)
Stock-based compensation - operations
 
(2,489
)
 
(2,204
)
 
(2,360
)
 
(9,256
)
 
(8,724
)
Gain on sale of building
 
—

 
—

 
4,624

 
—

 
4,624

Non-GAAP Operating expenses
 
$
38,417

 
$
39,945

 
$
44,578

 
$
123,783

 
$
138,266

 
Income (Loss) from Operations Reconciliation
GAAP Income (loss) from operations
 
$
12,959

 
$
(13,564
)
 
$
(37,468
)
 
$
(1,400
)
 
$
(46,899
)
Inventory adjustment related to restructured operations
 
(288
)
 
8,277

 
—

 
7,989

 
—

Stock-based compensation - gross margin
 
219

 
196

 
154

 
652

 
562

Amortization of acquired intangible assets
 
3,823

 
4,523

 
8,526

 
13,982

 
25,777

Restructuring charges
 
90

 
4,376

 
3,071

 
5,495

 
4,713

Acquisition related charges (1)
 
—

 
864

 
681

 
1,531

 
3,208

Impairment of acquired intangible assets
 
586

 
11,900

 
36,198

 
12,486

 
36,198

Stock-based compensation - operations
 
2,489

 
2,204

 
2,360

 
9,256

 
8,724

Gain on sale of building
 
—

 
—

 
(4,624
)
 
—

 
(4,624
)
Non-GAAP Income from operations
 
$
19,878

 
$
18,776

 
$
8,898

 
$
49,991

 
$
27,659

 
Income (Loss) from Operations % Reconciliation
GAAP Income (loss) from operations %
 
12.8
 %
 
(13.2
)%
 
(40.7
)%
 
(0.5
)%
 
(16.1
)%
Cumulative effect of non-GAAP Gross Margin and Operating adjustments
 
6.8
 %
 
31.5
 %
 
50.4
 %
 
17.0
 %
 
25.6
 %
Non-GAAP Income from operations %
 
19.6
 %
 
18.3
 %
 
9.7
 %
 
16.5
 %
 
9.5
 %
 
(1) Legal fees and outside services that were related to our proposed acquisition by Canyon Bridge Acquisition Company, Inc.

10


Lattice Semiconductor Corporation
- Reconciliation of U.S. GAAP to Non-GAAP Financial Measures -
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 29,
2018
 
June 30,
2018
 
September 30,
2017
 
September 29,
2018
 
September 30,
2017
 
Other Expense, Net Reconciliation
GAAP Other expense, net
 
$
(452
)
 
$
(348
)
 
$
(2,027
)
 
$
(246
)
 
$
(2,104
)
Loss on sale of assets and business units
 
—

 
—

 
1,796

 
—

 
1,496

Non-GAAP Other expense, net
 
$
(452
)
 
$
(348
)
 
$
(231
)
 
$
(246
)
 
$
(608
)
 
Income Tax Expense (Benefit) Reconciliation
GAAP Income tax expense (benefit)
 
$
33

 
$
1,343

 
$
(331
)
 
$
1,973

 
$
234

Estimated tax effect of non-GAAP adjustments (2)
 
108

 
(258
)
 
(218
)
 
(88
)
 
142

Non-GAAP Income tax expense (benefit)
 
$
141

 
$
1,085

 
$
(549
)
 
$
1,885

 
$
376

 
Net Income (Loss) Reconciliation
GAAP Net income (loss)
 
$
6,974

 
$
(20,223
)
 
$
(43,052
)
 
$
(19,201
)
 
$
(63,349
)
Inventory adjustment related to restructured operations
 
(288
)
 
8,277

 
—

 
7,989

 
—

Stock-based compensation - gross margin
 
219

 
196

 
154

 
652

 
562

Amortization of acquired intangible assets
 
3,823

 
4,523

 
8,526

 
13,982

 
25,777

Restructuring charges
 
90

 
4,376

 
3,071

 
5,495

 
4,713

Acquisition related charges (1)
 
—

 
864

 
681

 
1,531

 
3,208

Impairment of acquired intangible assets
 
586

 
11,900

 
36,198

 
12,486

 
36,198

Stock-based compensation - operations
 
2,489

 
2,204

 
2,360

 
9,256

 
8,724

Gain on sale of building
 
—

 
—

 
(4,624
)
 
—

 
(4,624
)
Loss on sale of assets and business unit
 
—

 
—

 
1,796

 
—

 
1,496

Estimated tax effect of non-GAAP adjustments (2)
 
(108
)
 
258

 
218

 
88

 
(142
)
Non-GAAP Net income
 
$
13,785

 
$
12,375

 
$
5,328

 
$
32,278

 
$
12,563

 
Net Income (Loss) Per Share Reconciliation
GAAP Net income (loss) per share - basic and diluted
 
$
0.05

 
$
(0.16
)
 
$
(0.35
)
 
$
(0.15
)
 
$
(0.52
)
Cumulative effect of Non-GAAP adjustments
 
0.06

 
0.26

 
0.39

 
0.41

 
0.62

Non-GAAP Net income per share - basic and diluted
 
$
0.11

 
$
0.10

 
$
0.04

 
$
0.26

 
$
0.10

 
 
 
 
 
 
 
 
 
 
 
Shares used in per share calculations:
 
 
 
 
 
 
 
 
 
 
Basic
 
127,816

 
124,843

 
122,990

 
125,578

 
122,393

Diluted - GAAP (3)
 
129,474

 
124,843

 
122,990

 
125,578

 
122,393

Diluted - Non-GAAP (3)
 
129,474

 
125,620

 
124,225

 
126,862

 
124,454

 
 
 
 
 
(1) Legal fees and outside services that were related to our proposed acquisition by Canyon Bridge Acquisition Company, Inc.
(2) We calculate non-GAAP tax expense by applying our tax provision model to year-to-date and projected income after adjusting
      for non-GAAP items. The difference between calculated values for GAAP and non-GAAP tax expense has been included as
      the “Estimated tax effect of non-GAAP adjustments.”
(3) Diluted shares are calculated using the GAAP treasury stock method. In a loss position, diluted shares equal basic shares.

11


Lattice Semiconductor Corporation
- Reconciliation of U.S. GAAP to Non-GAAP Financial Measures -
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
 
December 29, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Outlook - Fourth Quarter 2018
 
Low
 
Midpoint
 
High
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating expenses
 
$
52,000

 
$
53,500

 
$
55,000

 
 
 
 
Cumulative effect of Non-GAAP Operating expense adjustments (4)
 
(15,000
)
 
(15,500
)
 
(16,000
)
 
 
 
 
Non-GAAP Operating expenses
 
$
37,000

 
$
38,000

 
$
39,000

 
 
 
 

(4) Includes estimated Amortization of acquired intangible assets, Restructuring, and Stock-based compensation included in Operating Expenses


12