Business Wire | Oct 27, 2020 04:00PM EDT

Lattice Semiconductor Reports Third Quarter 2020 Results

Oct. 27, 2020

HILLSBORO, Ore.--(BUSINESS WIRE)--Oct. 27, 2020--Lattice Semiconductor Corporation (NASDAQ: LSCC), the low power programmable leader, announced financial results today for the fiscal third quarter ended September 26, 2020.

Jim Anderson, president and CEO, said, "We expanded operating profit in Q3 driven by year-over-year growth in our key markets of communications and computing, and industrial and automotive. In spite of a challenging environment this year, I am pleased with the progress we have made and excited about the continued potential of the company as we accelerate our product roadmap leadership, expand customer engagements and drive toward our long-term financial goals."

Sherri Luther, CFO, said, "We continued to see significant improvements in our key financial metrics for the third quarter of 2020 with diluted EPS increasing 13% on a GAAP basis and 12% on a non-GAAP basis compared to the prior quarter. Gross margin expanded on both a GAAP and non-GAAP basis sequentially and year-over-year, as we benefited from our ongoing pricing optimization strategy, product cost reductions, and some mix contribution. Year to date, we generated approximately $69 million of cash flow from operations, and ended the third quarter of 2020 with a positive net cash position further reinforcing our commitment to ongoing cash generation."

Selected Third Quarter 2020 Financial Results and Comparisons (in thousands, except per share data)

GAAP Quarterly Financial Results (unaudited)

Q3 2020 Q2 2020 Q3 2019 Q/Q Y/Y

Revenue $ 103,042 $ 100,589 $ 103,469 2.4% (0.4)%

Gross Margin % 60.5 % 60.2 % 59.4 % 30 bps 110 bps

R&D Expense % 21.8 % 22.3 % 19.4 % (50) 240 bps bps

SG&A Expense % 23.1 % 24.3 % 20.4 % (120) 270 bps bps

Operating Expense $ 49,492 $ 48,095 $ 44,751 2.9% 10.6%

Operating Income $ 12,814 $ 12,482 $ 16,688 2.7% (23.2) %

Net Income $ 12,607 $ 10,629 $ 13,539 18.6% (6.9)%

Net Income per Share - $ 0.09 $ 0.08 $ 0.10 $0.01 $Basic (0.01)

Net Income per Share - $ 0.09 $ 0.08 $ 0.10 $0.01 $Diluted (0.01)

Non-GAAP* Quarterly Financial Results (unaudited)

Q3 2020

Q2 2020

Q3 2019

Q/Q

Y/Y

Revenue

$

103,042

$

100,589

$

103,469

2.4%

(0.4)%

Gross Margin %

61.5

%

61.3

%

59.8

%

20 bps

170 bps

R&D Expense %

19.0

%

20.0

%

17.8

%

(100) bps

120 bps

SG&A Expense %

16.0

%

16.5

%

16.9

%

(50) bps

(90) bps

Operating Expense

$

36,008

$

36,640

$

35,883

(1.7)%

0.3%

Operating Income

$

27,320

$

25,038

$

26,009

9.1%

5.0%

Net Income

$

26,635

$

23,550

$

22,943

13.1%

16.1%

Net Income per Share - Basic

$

0.20

$

0.17

$

0.17

$ 0.03

$ 0.03

Net Income per Share - Diluted

$

0.19

$

0.17

$

0.17

$ 0.02

$ 0.02

* 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. Additional information relating to these measures is included below in "Non-GAAP Financial Measures." For a reconciliation of GAAP to non-GAAP results, see accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP Financial Measures."

Third Quarter 2020 Highlights

* Improved Financial Performance and Operating Profit Expansion: Operating profit of 12.4% on a GAAP basis and expansion to 26.5% on a non-GAAP basis in Q3 2020. Net income per diluted share was up 13% on a GAAP basis and up 12% on a non-GAAP basis in Q3 2020 compared to Q2 2020, with a 30 basis point improvement in gross margin on a GAAP basis and a 20 basis point improvement on a non-GAAP basis. * Launched Lattice Sentry(tm) Solutions Stack and the Lattice SupplyGuard(tm): Lattice Sentry solutions stack delivers a NIST-compliant, real-time, dynamic PFR software solution that reduces time-to-market. Lattice's SupplyGuard service preserves trust throughout unprotected supply chains by enhancing protection against counterfeiting and overbuilding. * Lattice CrossLink(tm)-NX FPGA Named Embedded Solution Product of the Year: Lattice CrossLink(tm)-NX FPGA was named Embedded Solution Product of the Year at the Electronics Industry Awards (EIA) * Lattice Added to PHLX Semiconductor Sector IndexSM: Lattice was added to the PHLX Semiconductor Sector Index, representing another milestone for the Company.

Business Outlook - Fourth Quarter of 2020:

* Revenue for the fourth quarter of 2020 is expected to be between $99 million and $107 million. * Gross margin percentage for the fourth quarter of 2020 is expected to be 61.0% plus or minus 1% on a non-GAAP basis. * Total operating expenses for the fourth quarter of 2020 are expected to be between $36.5 million and $37.5 million on a non-GAAP basis.

Non-GAAP Financial Measures: In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release makes reference to non-GAAP financial measures. With respect to the outlook for the fourth quarter of 2020, certain items that affect GAAP measurement of financial measures are out of the Company's control and/or cannot be reasonably predicted. Consequently, the Company is unable to provide a reasonable estimate of GAAP measurement for guidance or a corresponding reconciliation to GAAP for the quarter. Additional information regarding the reasons the Company uses non-GAAP measures, a reconciliation of these measures to the most directly comparable GAAP measures, and other information relating to these measures are included below, following the GAAP financial information.

Investor Conference Call / Webcast Details:

Lattice Semiconductor will review the Company's financial results for the fiscal third quarter 2020, and business outlook on Tuesday, October 27 at 5:00 p.m. Eastern Time. The dial-in number for the live audio call is 1-888-684-5603 or 1-918-398-4852 with conference identification number 6721419. A live webcast of the conference call will also be available on the investor relations section of 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.

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, but are not limited to, statements relating to: our belief in the continued potential of the company as it accelerates its product roadmap leadership, expands customer engagements and drives toward our long-term financial goals; and the statements under the heading "Business Outlook - Fourth Quarter of 2020." 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.

Estimates of future revenue are inherently uncertain due to such factors such as global economic conditions which may affect customer demand, pricing pressures, competitive actions, and international trade disputes and sanctions. In addition, the COVID-19 pandemic has negatively impacted the overall economy and, as a result of the foregoing, may negatively impact our operating results for future periods. 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, variations in manufacturing yields, the failure to sustain operational improvements, and the actual amount of compensation charges due to stock price changes. Actual results may differ materially from our expectations and are subject to 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 28, 2019, and Lattice's quarterly reports filed on Form 10-Q. COVID-19 may increase or change the severity of our other risks reported in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019. Lattice believes these and other risks and uncertainties could cause actual results to differ materially from the forward-looking statements. 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.

Non-GAAP Financial Measures:

Included within this press release and the accompanying tables and notes are certain 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 and related tax effects, restructuring plans and related charges, amortization of acquired intangible assets, and the estimated tax effect of these items. The non-GAAP net income for the third quarter of fiscal 2020 includes a change in the non-GAAP tax rate calculation to exclude profits from jurisdictions where there is a full valuation allowance on deferred tax assets to improve alignment of non-GAAP income tax expense to non-GAAP income before tax. These charges and adjustments 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.

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 the low power programmable leader. We solve customer problems across the network, from the Edge to the Cloud, in the growing communications, computing, industrial, automotive and consumer markets. Our technology, long-standing relationships, and commitment to world-class support lets our customers quickly and easily unleash their innovation to create a smart, secure and 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.

Non-GAAP* Quarterly Financial Results (unaudited)

Q3 2020 Q2 2020 Q3 2019 Q/Q Y/Y

Revenue $ 103,042 $ 100,589 $ 103,469 2.4% (0.4)%

Gross Margin % 61.5 % 61.3 % 59.8 % 20 bps 170 bps

R&D Expense % 19.0 % 20.0 % 17.8 % (100) 120 bps bps

SG&A Expense % 16.0 % 16.5 % 16.9 % (50) (90) bps bps

Operating Expense $ 36,008 $ 36,640 $ 35,883 (1.7)% 0.3%

Operating Income $ 27,320 $ 25,038 $ 26,009 9.1% 5.0%

Net Income $ 26,635 $ 23,550 $ 22,943 13.1% 16.1%

Net Income per Share - $ 0.20 $ 0.17 $ 0.17 $ 0.03 $ 0.03Basic

Net Income per Share - $ 0.19 $ 0.17 $ 0.17 $ 0.02 $ 0.02Diluted

* 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. Additional information relating to these measures is included below in "Non-GAAP Financial Measures." For a reconciliation of GAAP to non-GAAP results, see accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP Financial Measures."

Third Quarter 2020 Highlights

* Improved Financial Performance and Operating Profit Expansion: Operating profit of 12.4% on a GAAP basis and expansion to 26.5% on a non-GAAP basis in Q3 2020. Net income per diluted share was up 13% on a GAAP basis and up 12% on a non-GAAP basis in Q3 2020 compared to Q2 2020, with a 30 basis point improvement in gross margin on a GAAP basis and a 20 basis point improvement on a non-GAAP basis. * Launched Lattice Sentry(tm) Solutions Stack and the Lattice SupplyGuard(tm): Lattice Sentry solutions stack delivers a NIST-compliant, real-time, dynamic PFR software solution that reduces time-to-market. Lattice's SupplyGuard service preserves trust throughout unprotected supply chains by enhancing protection against counterfeiting and overbuilding. * Lattice CrossLink(tm)-NX FPGA Named Embedded Solution Product of the Year: Lattice CrossLink(tm)-NX FPGA was named Embedded Solution Product of the Year at the Electronics Industry Awards (EIA) * Lattice Added to PHLX Semiconductor Sector IndexSM: Lattice was added to the PHLX Semiconductor Sector Index, representing another milestone for the Company.

Business Outlook - Fourth Quarter of 2020:

* Revenue for the fourth quarter of 2020 is expected to be between $99 million and $107 million. * Gross margin percentage for the fourth quarter of 2020 is expected to be 61.0% plus or minus 1% on a non-GAAP basis. * Total operating expenses for the fourth quarter of 2020 are expected to be between $36.5 million and $37.5 million on a non-GAAP basis.

Non-GAAP Financial Measures: In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release makes reference to non-GAAP financial measures. With respect to the outlook for the fourth quarter of 2020, certain items that affect GAAP measurement of financial measures are out of the Company's control and/or cannot be reasonably predicted. Consequently, the Company is unable to provide a reasonable estimate of GAAP measurement for guidance or a corresponding reconciliation to GAAP for the quarter. Additional information regarding the reasons the Company uses non-GAAP measures, a reconciliation of these measures to the most directly comparable GAAP measures, and other information relating to these measures are included below, following the GAAP financial information.

Investor Conference Call / Webcast Details:

Lattice Semiconductor will review the Company's financial results for the fiscal third quarter 2020, and business outlook on Tuesday, October 27 at 5:00 p.m. Eastern Time. The dial-in number for the live audio call is 1-888-684-5603 or 1-918-398-4852 with conference identification number 6721419. A live webcast of the conference call will also be available on the investor relations section of 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.

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, but are not limited to, statements relating to: our belief in the continued potential of the company as it accelerates its product roadmap leadership, expands customer engagements and drives toward our long-term financial goals; and the statements under the heading "Business Outlook - Fourth Quarter of 2020." 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.

Estimates of future revenue are inherently uncertain due to such factors such as global economic conditions which may affect customer demand, pricing pressures, competitive actions, and international trade disputes and sanctions. In addition, the COVID-19 pandemic has negatively impacted the overall economy and, as a result of the foregoing, may negatively impact our operating results for future periods. 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, variations in manufacturing yields, the failure to sustain operational improvements, and the actual amount of compensation charges due to stock price changes. Actual results may differ materially from our expectations and are subject to 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 28, 2019, and Lattice's quarterly reports filed on Form 10-Q. COVID-19 may increase or change the severity of our other risks reported in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019. Lattice believes these and other risks and uncertainties could cause actual results to differ materially from the forward-looking statements. 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.

Non-GAAP Financial Measures:

Included within this press release and the accompanying tables and notes are certain 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 and related tax effects, restructuring plans and related charges, amortization of acquired intangible assets, and the estimated tax effect of these items. The non-GAAP net income for the third quarter of fiscal 2020 includes a change in the non-GAAP tax rate calculation to exclude profits from jurisdictions where there is a full valuation allowance on deferred tax assets to improve alignment of non-GAAP income tax expense to non-GAAP income before tax. These charges and adjustments 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.

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 the low power programmable leader. We solve customer problems across the network, from the Edge to the Cloud, in the growing communications, computing, industrial, automotive and consumer markets. Our technology, long-standing relationships, and commitment to world-class support lets our customers quickly and easily unleash their innovation to create a smart, secure and 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.

Lattice Semiconductor Corporation

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

Three Months Ended Nine Months Ended

September June 27, September September September 26, 28, 26, 28,

2020 2020 2019 2020 2019

Revenue $ 103,042 $ 100,589 $ 103,469 $ 300,947 $ 303,856

Cost of sales 40,736 40,012 42,030 120,502 124,727

Gross margin 62,306 60,577 61,439 180,445 179,129

Operating expenses:

Research and 22,439 22,458 20,032 66,590 59,074 development

Selling,general, and 23,758 24,488 21,078 70,797 61,618 administrative

Amortizationof acquired 603 603 3,389 3,846 10,168 intangibleassets

Restructuring 2,692 546 252 4,178 4,719

Totaloperating 49,492 48,095 44,751 145,411 135,579 expenses

Income from 12,814 12,482 16,688 35,034 43,550 operations

Interest (792 ) (1,045 ) (2,022 ) (2,914 ) (10,547 )expense

Other(expense) (70 ) 37 (61 ) (83 ) (2,017 )income, net

Income before 11,952 11,474 14,605 32,037 30,986 income taxes

Income tax(benefit) (655 ) 845 1,066 634 1,480 expense

Net income $ 12,607 $ 10,629 $ 13,539 $ 31,403 $ 29,506



Net income per share:

Basic $ 0.09 $ 0.08 $ 0.10 $ 0.23 $ 0.22

Diluted $ 0.09 $ 0.08 $ 0.10 $ 0.22 $ 0.21



Shares used inper share calculations:

Basic 135,598 134,857 132,997 134,903 132,065

Diluted 141,524 139,202 138,894 140,763 137,679

Lattice Semiconductor Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

September 26,

December 28,

2020

2019

Assets

Current assets:

Cash and cash equivalents

$

182,268

$

118,081

Accounts receivable, net

72,989

64,917

Inventories

59,488

54,980

Other current assets

24,205

24,452

Total current assets

338,950

262,430

Property and equipment, net

39,782

39,230

Operating lease right-of-use assets

21,614

23,591

Intangible assets, net

3,496

6,977

Goodwill

267,514

267,514

Deferred income taxes

483

478

Other long-term assets

10,592

11,796

$

682,431

$

612,016

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and other accrued liabilities

$

74,890

$

73,659

Current portion of long-term debt

8,382

21,474

Current portion of operating lease liabilities

4,562

4,686

Total current liabilities

87,834

99,819

Long-term debt, net of current portion

162,215

125,072

Long-term operating lease liabilities, net of current portion

19,505

21,438

Other long-term liabilities

35,984

38,028

Total liabilities

305,538

284,357

Stockholders' equity

376,893

327,659

$

682,431

$

612,016

Lattice Semiconductor Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

September December 26, 28,

2020 2019

Assets

Current assets:

Cash and cash equivalents $ 182,268 $ 118,081

Accounts receivable, net 72,989 64,917

Inventories 59,488 54,980

Other current assets 24,205 24,452

Total current assets 338,950 262,430



Property and equipment, net 39,782 39,230

Operating lease right-of-use assets 21,614 23,591

Intangible assets, net 3,496 6,977

Goodwill 267,514 267,514

Deferred income taxes 483 478

Other long-term assets 10,592 11,796

$ 682,431 $ 612,016



Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and other accrued liabilities $ 74,890 $ 73,659

Current portion of long-term debt 8,382 21,474

Current portion of operating lease liabilities 4,562 4,686

Total current liabilities 87,834 99,819



Long-term debt, net of current portion 162,215 125,072

Long-term operating lease liabilities, net of 19,505 21,438 current portion

Other long-term liabilities 35,984 38,028

Total liabilities 305,538 284,357



Stockholders' equity 376,893 327,659

$ 682,431 $ 612,016

Lattice Semiconductor Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Nine Months Ended

September 26,

September 28,

2020

2019

Cash flows from operating activities:

Net income

$

31,403

$

29,506

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

19,263

24,682

Stock-based compensation expense

30,228

13,335

Other non-cash adjustments

4,663

9,060

Net changes in assets and liabilities

(16,599

)

8,234

Net cash provided by operating activities

68,958

84,817

Cash flows from investing activities:

Capital expenditures

(9,781

)

(11,729

)

Other investing activities

(6,850

)

3,910

Net cash used in investing activities

(16,631

)

(7,819

)

Cash flows from financing activities:

Proceeds from issuance of long-term debt

50,000

206,500

Cash paid for debt issuance costs

-

(2,086

)

Repayment of long-term debt

(26,250

)

(311,408

)

Net cash flows related to stock compensation exercises

(12,789

)

8,365

Net cash provided by (used in) financing activities

10,961

(98,629

)

Effect of exchange rate change on cash

899

(7

)

Net increase in cash and cash equivalents

64,187

(21,638

)

Beginning cash and cash equivalents

118,081

119,051

Ending cash and cash equivalents

$

182,268

$

97,413

Supplemental disclosure of cash flow information and non-cash investing and financing activities:

Interest paid

$

2,849

$

9,932

Income taxes paid, net of refunds

$

2,317

$

1,922

Lattice Semiconductor Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Nine Months Ended

September September 26, 28,

2020 2019

Cash flows from operating activities:

Net income $ 31,403 $ 29,506

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 19,263 24,682

Stock-based compensation expense 30,228 13,335

Other non-cash adjustments 4,663 9,060

Net changes in assets and liabilities (16,599 ) 8,234

Net cash provided by operating activities 68,958 84,817

Cash flows from investing activities:

Capital expenditures (9,781 ) (11,729 )

Other investing activities (6,850 ) 3,910

Net cash used in investing activities (16,631 ) (7,819 )

Cash flows from financing activities:

Proceeds from issuance of long-term debt 50,000 206,500

Cash paid for debt issuance costs - (2,086 )

Repayment of long-term debt (26,250 ) (311,408 )

Net cash flows related to stock compensation (12,789 ) 8,365 exercises

Net cash provided by (used in) financing 10,961 (98,629 )activities

Effect of exchange rate change on cash 899 (7 )

Net increase in cash and cash equivalents 64,187 (21,638 )

Beginning cash and cash equivalents 118,081 119,051

Ending cash and cash equivalents $ 182,268 $ 97,413



Supplemental disclosure of cash flow information and non-cash investing and financing activities:

Interest paid $ 2,849 $ 9,932

Income taxes paid, net of refunds $ 2,317 $ 1,922

Lattice Semiconductor Corporation

Supplemental Historical Financial Information

(unaudited)

Three Months Ended

September 26,

June 27,

September 28,

2020

2020

2019

Balance Sheet Information

A/R Days Revenue Outstanding (DSO)

65

79

42

Inventory Days (DIO)

133

123

130

Revenue% (by Geography)

Asia

77

%

74

%

77

%

Americas

15

%

14

%

12

%

Europe (incl. Africa)

8

%

12

%

11

%

Revenue% (by End Market)

Communications and Computing

43

%

46

%

40

%

Industrial and Automotive

41

%

39

%

36

%

Consumer

10

%

11

%

18

%

Licensing and Services

6

%

4

%

6

%

Revenue% (by Channel)

Distribution

82

%

85

%

81

%

Direct

18

%

15

%

19

%

Lattice Semiconductor Corporation

Supplemental Historical Financial Information

(unaudited)

Three Months Ended

September 26, June 27, September 28,

2020 2020 2019

Balance Sheet Information

A/R Days Revenue Outstanding (DSO) 65 79 42

Inventory Days (DIO) 133 123 130



Revenue% (by Geography)

Asia 77 % 74 % 77 %

Americas 15 % 14 % 12 %

Europe (incl. Africa) 8 % 12 % 11 %



Revenue% (by End Market)

Communications and Computing 43 % 46 % 40 %

Industrial and Automotive 41 % 39 % 36 %

Consumer 10 % 11 % 18 %

Licensing and Services 6 % 4 % 6 %



Revenue% (by Channel)

Distribution 82 % 85 % 81 %

Direct 18 % 15 % 19 %

Lattice Semiconductor Corporation

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

Three Months EndedSeptember 26,

June 27,

September 28,

2020

2020

2019

Gross Margin ReconciliationGAAP Gross margin$62,306

$60,577

$61,439

Stock-based compensation - gross margin (1)1,022

1,101

453

Non-GAAP Gross margin$63,328

$61,678

$61,892

Gross Margin % ReconciliationGAAP Gross margin %60.5

%

60.2

%

59.4

%

Cumulative effect of non-GAAP Gross Margin adjustments1

%

1.1

%

0.4

%

Non-GAAP Gross margin %61.5

%

61.3

%

59.8

%

Research and Development Expene % (R&D Expense %) ReconciliationGAAP R&D Expense %21.8

%

22.3

%

19.4

%

Stock-based compensation - R&D (1)(2.8

)%

(2.3

)%

(1.6

)%

Non-GAAP R&D Expense %19

%

20

%

17.8

%

Selling, General, and Administrative Expense % (SG&A Expense %) ReconciliationGAAP SG&A Expense %23.1

%

24.3

%

20.4

%

Stock-based compensation - SG&A (1)(7.1

)%

(7.8

)%

(3.5

)%

Non-GAAP SG&A Expense %16

%

16.5

%

16.9

%

Operating Expenses ReconciliationGAAP Operating expenses$49,492

$48,095

$44,751

Stock-based compensation - operations (1)(10,189

)

(10,306

)

(5,227

)

Amortization of acquired intangible assets(603

)

(603

)

(3,389

)

Restructuring charges(2,692

)

(546

)

(252

)

Non-GAAP Operating expenses$36,008

$36,640

$35,883

Income from Operations ReconciliationGAAP Income from operations$12,814

$12,482

$16,688

Stock-based compensation - gross margin (1)1,022

1,101

453

Stock-based compensation - operations (1)10,189

10,306

5,227

Amortization of acquired intangible assets603

603

3,389

Restructuring charges2,692

546

252

Non-GAAP Income from operations$27,320

$25,038

$26,009

Income from Operations % ReconciliationGAAP Income from operations %12.4

%

12.4

%

16.1

%

Cumulative effect of non-GAAP Gross Margin and Operating adjustments14.1

%

12.5

%

9

%

Non-GAAP Income from operations %26.5

%

24.9

%

25.1

%

Lattice Semiconductor Corporation

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

Three Months Ended September June 27, September 26, 28,

2020 2020 2019

Gross Margin ReconciliationGAAP Gross margin $ 62,306 $ 60,577 $ 61,439

Stock-based compensation - gross margin 1,022 1,101 453(1)Non-GAAP Gross margin $ 63,328 $ 61,678 $ 61,892

Gross Margin % ReconciliationGAAP Gross margin % 60.5 % 60.2 % 59.4 %

Cumulative effect of non-GAAP Gross 1 % 1.1 % 0.4 %Margin adjustmentsNon-GAAP Gross margin % 61.5 % 61.3 % 59.8 %

Research and Development Expene % (R&DExpense %) ReconciliationGAAP R&D Expense % 21.8 % 22.3 % 19.4 %

(2.8 ) (2.3 ) (1.6 )Stock-based compensation - R&D (1) % % %

Non-GAAP R&D Expense % 19 % 20 % 17.8 %

Selling, General, and AdministrativeExpense % (SG&A Expense %) ReconciliationGAAP SG&A Expense % 23.1 % 24.3 % 20.4 %

(7.1 ) (7.8 ) (3.5 )Stock-based compensation - SG&A (1) % % %

Non-GAAP SG&A Expense % 16 % 16.5 % 16.9 %

Operating Expenses ReconciliationGAAP Operating expenses $ 49,492 $ 48,095 $ 44,751

Stock-based compensation - operations (1) (10,189 ) (10,306 ) (5,227 )

Amortization of acquired intangible (603 ) (603 ) (3,389 )assetsRestructuring charges (2,692 ) (546 ) (252 )

Non-GAAP Operating expenses $ 36,008 $ 36,640 $ 35,883

Income from Operations ReconciliationGAAP Income from operations $ 12,814 $ 12,482 $ 16,688

Stock-based compensation - gross margin 1,022 1,101 453(1)Stock-based compensation - operations (1) 10,189 10,306 5,227

Amortization of acquired intangible 603 603 3,389assetsRestructuring charges 2,692 546 252

Non-GAAP Income from operations $ 27,320 $ 25,038 $ 26,009

Income from Operations % ReconciliationGAAP Income from operations % 12.4 % 12.4 % 16.1 %

Cumulative effect of non-GAAP Gross 14.1 % 12.5 % 9 %Margin and Operating adjustmentsNon-GAAP Income from operations % 26.5 % 24.9 % 25.1 %

(1)

The non-GAAP adjustments for Stock-based compensation include related tax expenses.

(1) The non-GAAP adjustments for Stock-based compensation include related tax expenses.

Lattice Semiconductor Corporation

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

Three Months EndedSeptember 26,

June 27,

September 28,

2020

2020

2019

Income Tax (Benefit) Expense ReconciliationGAAP Income tax (benefit) expense$(655

)

$845

$1,066

Estimated tax effect of non-GAAP adjustments (2)478

(365

)

(83

)

Non-GAAP Income tax (benefit) expense$(177

)

$480

$983

Net Income ReconciliationGAAP Net income$12,607

$10,629

$13,539

Stock-based compensation - gross margin (1)1,022

1,101

453

Stock-based compensation - operations (1)10,189

10,306

5,227

Amortization of acquired intangible assets603

603

3,389

Restructuring charges2,692

546

252

Estimated tax effect of non-GAAP adjustments (2)(478

)

365

83

Non-GAAP Net income$26,635

$23,550

$22,943

Net Income Per Share ReconciliationGAAP Net income per share - basic$0.09

$0.08

$0.1

Cumulative effect of Non-GAAP adjustments0.11

0.09

0.07

Non-GAAP Net income per share - basic$0.2

$0.17

$0.17

GAAP Net income per share - diluted$0.09

$0.08

$0.1

Cumulative effect of Non-GAAP adjustments0.1

0.09

0.07

Non-GAAP Net income per share - diluted$0.19

$0.17

$0.17

Shares used in per share calculations:Basic135,598

134,857

132,997

Diluted - GAAP (3)141,524

139,202

138,894

Diluted - Non-GAAP (3)141,524

139,202

138,894

Lattice Semiconductor Corporation

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

Three Months Ended September June 27, September 26, 28,

2020 2020 2019

Income Tax (Benefit) Expense ReconciliationGAAP Income tax (benefit) expense $ (655 ) $ 845 $ 1,066

Estimated tax effect of non-GAAP 478 (365 ) (83 )adjustments (2)Non-GAAP Income tax (benefit) expense $ (177 ) $ 480 $ 983

Net Income ReconciliationGAAP Net income $ 12,607 $ 10,629 $ 13,539

Stock-based compensation - gross margin 1,022 1,101 453(1)Stock-based compensation - operations 10,189 10,306 5,227(1)Amortization of acquired intangible 603 603 3,389assetsRestructuring charges 2,692 546 252

Estimated tax effect of non-GAAP (478 ) 365 83adjustments (2)Non-GAAP Net income $ 26,635 $ 23,550 $ 22,943

Net Income Per Share ReconciliationGAAP Net income per share - basic $ 0.09 $ 0.08 $ 0.1

Cumulative effect of Non-GAAP 0.11 0.09 0.07adjustmentsNon-GAAP Net income per share - basic $ 0.2 $ 0.17 $ 0.17

GAAP Net income per share - diluted $ 0.09 $ 0.08 $ 0.1

Cumulative effect of Non-GAAP 0.1 0.09 0.07adjustmentsNon-GAAP Net income per share - diluted $ 0.19 $ 0.17 $ 0.17

Shares used in per share calculations:Basic 135,598 134,857 132,997

Diluted - GAAP (3) 141,524 139,202 138,894

Diluted - Non-GAAP (3) 141,524 139,202 138,894

(1)

The non-GAAP adjustments for Stock-based compensation include related tax expenses.

(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.

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CONTACT: MEDIA: Bob Nelson Lattice Semiconductor Corporation 408-826-6339 Bob.Nelson@latticesemi.com

CONTACT: INVESTORS: Rick Muscha Lattice Semiconductor Corporation 408-826-6000 Rick.Muscha@latticesemi.com