Business Wire | Feb 16, 2021 04:01PM EST

Lattice Semiconductor Reports Fourth Quarter and Full Year 2020 Results

Feb. 16, 2021

HILLSBORO, Ore.--(BUSINESS WIRE)--Feb. 16, 2021--Lattice Semiconductor Corporation (NASDAQ: LSCC), the low power programmable leader, announced financial results today for the fiscal fourth quarter and full year ended January 2, 2021.

Jim Anderson, president and CEO, said, "Profitability increased significantly for the full year 2020, as we continued to execute on our strategy. We saw double-digit year-over-year revenue growth in our two largest markets, communications and computing, and industrial and automotive, which are long-term growth drivers. We executed well on our hardware and software roadmaps, with the successful launch of two new Nexus(tm) products and three new software products. We are pleased with the momentum we are building with our customers and look to accelerate the Company's growth moving forward."

Sherri Luther, CFO, said, "We expanded diluted earnings per share by 6.3% on a GAAP basis for the full year 2020 compared to the full year 2019, and 16.9% on a non-GAAP basis, as we continued to drive profit expansion. With approximately $92 million in cash generated from operations for the full year 2020, we further strengthened our balance sheet ending the year with a positive net cash position."

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

GAAP Financial Results (unaudited)

Q4 2020 Q3 2020 Q4 2019 Q/Q Y/Y FY 2020 FY 2019 FY/FY

Revenue $ 107,173 $ 103,042 $ 100,237 4.0% 6.9% $ 408,120 $ 404,093 1.0%

Gross Margin % 60.5 % 60.5 % 59.2 % - 130 60.1 % 59.0 % 110 bps bps

R&D Expense % 21.1 % 21.8 % 19.5 % (70) 160 21.9 % 19.5 % 240 bps bps bps

SG&A Expense % 22.9 % 23.1 % 20.9 % (20) 200 23.4 % 20.4 % 300 bps bps bps

Operating Expense $ 47,529 $ 49,492 $ 43,802 (4.0) 8.5% $ 192,940 $ 179,381 7.6% %

Operating Income $ 17,332 $ 12,814 $ 15,491 35.3% 11.9% $ 52,366 $ 59,041 (11.3) %

Net Income $ 15,989 $ 12,607 $ 13,987 26.8% 14.3% $ 47,392 $ 43,493 9.0%

Net Income per Share $ 0.12 $ 0.09 $ 0.10 $0.03 $0.02 $ 0.35 $ 0.33 $0.02- Basic

Net Income per Share $ 0.11 $ 0.09 $ 0.10 $0.02 $0.01 $ 0.34 $ 0.32 $0.02- Diluted

Non-GAAP Financial Results (unaudited)

Q4 2020

Q3 2020

Q4 2019

Q/Q

Y/Y

FY 2020

FY 2019

FY/FY

Revenue

$

107,173

$

103,042

$

100,237

4.0%

6.9%

$

408,120

$

404,093

1.0%

Gross Margin %

61.6

%

61.5

%

59.6

%

10 bps

200 bps

61.0

%

59.3

%

170 bps

R&D Expense %

18.5

%

19.0

%

17.9

%

(50) bps

60 bps

19.2

%

18.1

%

110 bps

SG&A Expense %

16.5

%

16.0

%

17.4

%

50 bps

(90) bps

16.6

%

17.5

%

(90) bps

Operating Expense

$

37,475

$

36,008

$

35,343

4.1%

6.0%

$

146,230

$

144,705

1.1%

Operating Income

$

28,490

$

27,320

$

24,390

4.3%

16.8%

$

102,894

$

94,801

8.5%

Net Income

$

27,540

$

26,635

$

22,897

3.4%

20.3%

$

97,920

$

81,488

20.2%

Net Income per Share - Basic

$

0.20

$

0.20

$

0.17

$-

$0.03

$

0.72

$

0.62

$0.10

Net Income per Share - Diluted

$

0.19

$

0.19

$

0.17

$-

$0.02

$

0.69

$

0.59

$0.10

2020 Highlights:

Non-GAAP Financial Results (unaudited)

Q4 2020 Q3 2020 Q4 2019 Q/Q Y/Y FY 2020 FY 2019 FY/FY

Revenue $ 107,173 $ 103,042 $ 100,237 4.0% 6.9% $ 408,120 $ 404,093 1.0%

Gross Margin % 61.6 % 61.5 % 59.6 % 10 200 61.0 % 59.3 % 170 bps bps bps

R&D Expense % 18.5 % 19.0 % 17.9 % (50) 60 19.2 % 18.1 % 110 bps bps bps

SG&A Expense % 16.5 % 16.0 % 17.4 % 50 (90) 16.6 % 17.5 % (90) bps bps bps

Operating Expense $ 37,475 $ 36,008 $ 35,343 4.1% 6.0% $ 146,230 $ 144,705 1.1%

Operating Income $ 28,490 $ 27,320 $ 24,390 4.3% 16.8% $ 102,894 $ 94,801 8.5%

Net Income $ 27,540 $ 26,635 $ 22,897 3.4% 20.3% $ 97,920 $ 81,488 20.2%

Net Income per Share $ 0.20 $ 0.20 $ 0.17 $- $0.03 $ 0.72 $ 0.62 $0.10- Basic

Net Income per Share $ 0.19 $ 0.19 $ 0.17 $- $0.02 $ 0.69 $ 0.59 $0.10- Diluted

2020 Highlights:

Gross Margin and Profit Expansion: Gross margin increased 110 basis points ? on a GAAP basis and 170 basis points on a non-GAAP basis for the full year 2020 compared to the full year 2019. Net income on a GAAP basis increased from 10.8% to 11.6%, and increased from 20.2% to 24.0% on a non-GAAP basis.

Strengthened Balance Sheet: Lattice ended 2020 with a net cash balance for ? the first time in six years, while repurchasing approximately 400,000 of the company's common shares for approximately $15 million under its stock buyback program.

Launched Two New Lattice NexusTm Devices: As promised and on schedule, the ? company launched the Lattice CertusTm-NX, our general-purpose FPGA, and the Lattice MachTm-NX second-generation security FPGA.

Launched Three New Software Products: Expanded the company's software solutions portfolio with the introduction of the Lattice mVisionTm ? solutions stack for low power embedded vision design, the Lattice PropelTm embedded system design environment, and the Lattice SentryTm solution stack for Platform Firmware Resilience (PFR).

Recognized with 2020 Global Semiconductor Alliance Award: Lattice received ? the 2020 Global Semiconductor Alliance (GSA) Most Respected Public Semiconductor Company Award among peer companies with annual revenue of $100 million to $500 million.

Business Outlook - First Quarter of 2021:

? Revenue for the first quarter of 2021 is expected to be between $106 million and $114 million.

? Gross margin percentage for the first quarter of 2021 is expected to be 61.5% plus or minus 1% on a non-GAAP basis.

? Total operating expenses for the first quarter of 2021 are expected to be between $38 million and $39 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 first quarter of 2021, 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 fourth quarter and full year 2020, and business outlook on Tuesday, February 16 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 4589457. 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 that we are building momentum with our customers and that we may accelerate the Company's growth moving forward; and the statements under the heading "Business Outlook - First Quarter of 2021." 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 and impairment of acquired intangible assets, inventory adjustments related to restructured operations, loss on refinancing of long-term debt, and the estimated tax effect of these items. The non-GAAP net income for the third and fourth quarters 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 Year Ended

January 2, September December January 2, December 26, 28, 28,

2021 2020 2019 2021 2019

Revenue $ 107,173 $ 103,042 $ 100,237 $ 408,120 $ 404,093

Cost of sales 42,312 40,736 40,944 162,814 165,671

Gross margin 64,861 62,306 59,293 245,306 238,422

Operating expenses:

Research and 22,633 22,439 19,543 89,223 78,617 development

Selling,general, and 24,534 23,758 20,924 95,331 82,542 administrative

Amortizationof acquired 603 603 3,390 4,449 13,558 intangibleassets

Restructuring (241 ) 2,692 (55 ) 3,937 4,664

Totaloperating 47,529 49,492 43,802 192,940 179,381 expenses

Income from 17,332 12,814 15,491 52,366 59,041 operations

Interest (788 ) (792 ) (1,184 ) (3,702 ) (11,731 )expense

Other expense, (125 ) (70 ) (228 ) (208 ) (2,245 )net

Income before 16,419 11,952 14,079 48,456 45,065 income taxes

Income taxexpense 430 (655 ) 92 1,064 1,572 (benefit)

Net income $ 15,989 $ 12,607 $ 13,987 $ 47,392 $ 43,493



Net income per share:

Basic $ 0.12 $ 0.09 $ 0.10 $ 0.35 $ 0.33

Diluted $ 0.11 $ 0.09 $ 0.10 $ 0.34 $ 0.32



Shares used inper share calculations:

Basic 136,104 135,598 133,691 135,220 132,471

Diluted 141,713 141,524 138,196 141,276 137,274

Lattice Semiconductor Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

January 2,

December 28,

2021

2019

Assets

Current assets:

Cash and cash equivalents

$

182,332

$

118,081

Accounts receivable, net

64,581

64,917

Inventories, net

64,599

54,980

Other current assets

22,331

24,452

Total current assets

333,843

262,430

Property and equipment, net

39,666

39,230

Operating lease right-of-use assets

22,178

23,591

Intangible assets, net

6,321

6,977

Goodwill

267,514

267,514

Deferred income taxes

577

478

Other long-term assets

9,968

11,796

$

680,067

$

612,016

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

27,530

$

44,350

Accrued expenses

21,411

20,591

Accrued payroll obligations

18,028

13,404

Current portion of long-term debt

12,762

21,474

Total current liabilities

79,731

99,819

Long-term debt, net of current portion

157,934

125,072

Long-term operating lease liabilities, net of current portion

18,906

21,438

Other long-term liabilities

39,069

38,028

Total liabilities

295,640

284,357

Stockholders' equity

384,427

327,659

$

680,067

$

612,016

Lattice Semiconductor Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

January 2, December 28,

2021 2019

Assets

Current assets:

Cash and cash equivalents $ 182,332 $ 118,081

Accounts receivable, net 64,581 64,917

Inventories, net 64,599 54,980

Other current assets 22,331 24,452

Total current assets 333,843 262,430



Property and equipment, net 39,666 39,230

Operating lease right-of-use assets 22,178 23,591

Intangible assets, net 6,321 6,977

Goodwill 267,514 267,514

Deferred income taxes 577 478

Other long-term assets 9,968 11,796

$ 680,067 $ 612,016



Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ 27,530 $ 44,350

Accrued expenses 21,411 20,591

Accrued payroll obligations 18,028 13,404

Current portion of long-term debt 12,762 21,474

Total current liabilities 79,731 99,819



Long-term debt, net of current portion 157,934 125,072

Long-term operating lease liabilities, net of 18,906 21,438 current portion

Other long-term liabilities 39,069 38,028

Total liabilities 295,640 284,357



Stockholders' equity 384,427 327,659

$ 680,067 $ 612,016

Lattice Semiconductor Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Year Ended

January 2,

December 28,

2021

2019

Cash flows from operating activities:

Net income

$

47,392

$

43,493

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

Depreciation and amortization

25,140

33,056

Stock-based compensation expense

40,372

18,899

Other non-cash adjustments

6,104

10,294

Net changes in assets and liabilities

(27,321

)

18,395

Net cash provided by operating activities

91,687

124,137

Cash flows from investing activities:

Capital expenditures

(12,121

)

(15,590

)

Other investing activities

(8,747

)

54

Net cash used in investing activities

(20,868

)

(15,536

)

Cash flows from financing activities:

Proceeds from long-term debt

50,000

206,500

Cash paid for debt issuance costs

-

(2,086

)

Repayment of long-term debt

(26,250

)

(321,408

)

Purchase of treasury stock

(14,989

)

-

Net cash flows related to stock compensation exercises

(16,862

)

7,082

Net cash used in financing activities

(8,101

)

(109,912

)

Effect of exchange rate change on cash

1,533

341

Net increase (decrease) in cash and cash equivalents

64,251

(970

)

Beginning cash and cash equivalents

118,081

119,051

Ending cash and cash equivalents

$

182,332

$

118,081

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

Interest paid

$

3,700

$

10,995

Income taxes paid, net of refunds

$

1,868

$

3,393

Lattice Semiconductor Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Year Ended

January 2, December 28,

2021 2019

Cash flows from operating activities:

Net income $ 47,392 $ 43,493

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

Depreciation and amortization 25,140 33,056

Stock-based compensation expense 40,372 18,899

Other non-cash adjustments 6,104 10,294

Net changes in assets and liabilities (27,321 ) 18,395

Net cash provided by operating activities 91,687 124,137

Cash flows from investing activities:

Capital expenditures (12,121 ) (15,590 )

Other investing activities (8,747 ) 54

Net cash used in investing activities (20,868 ) (15,536 )

Cash flows from financing activities:

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

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

Repayment of long-term debt (26,250 ) (321,408 )

Purchase of treasury stock (14,989 ) -

Net cash flows related to stock compensation (16,862 ) 7,082 exercises

Net cash used in financing activities (8,101 ) (109,912 )

Effect of exchange rate change on cash 1,533 341

Net increase (decrease) in cash and cash 64,251 (970 )equivalents

Beginning cash and cash equivalents 118,081 119,051

Ending cash and cash equivalents $ 182,332 $ 118,081



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

Interest paid $ 3,700 $ 10,995

Income taxes paid, net of refunds $ 1,868 $ 3,393

Lattice Semiconductor Corporation

Supplemental Historical Financial Information

(unaudited)

Three Months Ended

Year Ended

January 2,

September 26,

December 28,

January 2,

December 28,

2021

2020

2019

2021

2019

Balance Sheet Information

A/R Days Revenue Outstanding (DSO)

55

65

59

Inventory Days (DIO)

139

133

123

Revenue% (by Geography)

Asia

77

%

77

%

73

%

75

%

74

%

Americas

15

%

15

%

11

%

15

%

14

%

Europe (incl. Africa)

8

%

8

%

16

%

10

%

12

%

Revenue% (by End Market)

Communications and Computing

43

%

43

%

38

%

43

%

39

%

Industrial and Automotive

43

%

41

%

39

%

41

%

37

%

Consumer

10

%

10

%

18

%

11

%

19

%

Licensing and Services

4

%

6

%

5

%

5

%

5

%

Revenue% (by Channel)

Distribution

88

%

82

%

84

%

83

%

82

%

Direct

12

%

18

%

16

%

17

%

18

%

Lattice Semiconductor Corporation

Supplemental Historical Financial Information

(unaudited)

Three Months Ended Year Ended

January September December January December 2, 26, 28, 2, 28,

2021 2020 2019 2021 2019

Balance Sheet Information

A/R Days Revenue 55 65 59 Outstanding (DSO)

Inventory Days (DIO) 139 133 123



Revenue% (by Geography)

Asia 77 % 77 % 73 % 75 % 74 %

Americas 15 % 15 % 11 % 15 % 14 %

Europe (incl. Africa) 8 % 8 % 16 % 10 % 12 %



Revenue% (by End Market)

Communications and 43 % 43 % 38 % 43 % 39 %Computing

Industrial and 43 % 41 % 39 % 41 % 37 %Automotive

Consumer 10 % 10 % 18 % 11 % 19 %

Licensing and Services 4 % 6 % 5 % 5 % 5 %



Revenue% (by Channel)

Distribution 88 % 82 % 84 % 83 % 82 %

Direct 12 % 18 % 16 % 17 % 18 %

Lattice Semiconductor Corporation

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

(in thousands, except per share data)

(unaudited)

Three Months Ended

Year Ended

January 2,

September 26,

December 28,

January 2,

December 28,

2021

2020

2019

2021

2019

Gross Margin Reconciliation

GAAP Gross margin

$

64,861

$

62,306

$

59,293

$

245,306

$

238,422

Stock-based compensation - gross margin (1)

1,104

1,022

440

3,818

1,422

Inventory adjustment related to restructured operations

-

-

-

-

(338

)

Non-GAAP Gross margin

$

65,965

$

63,328

$

59,733

$

249,124

$

239,506

Lattice Semiconductor Corporation

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

(in thousands, except per share data)

(unaudited)

Three Months Ended Year Ended

January 2, September December January 2, December 26, 28, 28,

2021 2020 2019 2021 2019



Gross Margin Reconciliation

GAAP Gross $ 64,861 $ 62,306 $ 59,293 $ 245,306 $ 238,422 margin

Stock-basedcompensation - 1,104 1,022 440 3,818 1,422 gross margin(1)

Inventoryadjustmentrelated to - - - - (338 )restructuredoperations

Non-GAAP Gross $ 65,965 $ 63,328 $ 59,733 $ 249,124 $ 239,506 margin

Gross Margin % Reconciliation

GAAP Gross margin %

60.5

%

60.5

%

59.2

%

60.1

%

59.0

%

Cumulative effect of non-GAAP Gross Margin adjustments

1.1

%

1.0

%

0.4

%

0.9

%

0.3

%

Non-GAAP Gross margin %

61.6

%

61.5

%

59.6

%

61.0

%

59.3

%

Gross Margin % Reconciliation

GAAP Gross margin % 60.5 % 60.5 % 59.2 % 60.1 % 59.0 %

Cumulative effect ofnon-GAAP Gross Margin 1.1 % 1.0 % 0.4 % 0.9 % 0.3 %adjustments

Non-GAAP Gross margin % 61.6 % 61.5 % 59.6 % 61.0 % 59.3 %

Research and Development Expense % (R&D Expense %) Reconciliation

GAAP R&D Expense %

21.1

%

21.8

%

19.5

%

21.9

%

19.5

%

Stock-based compensation - R&D (1)

(2.6

)%

(2.8

)%

(1.6

)%

(2.7

)%

(1.4

)%

Non-GAAP R&D Expense %

18.5

%

19.0

%

17.9

%

19.2

%

18.1

%

Research and DevelopmentExpense % (R&D Expense %) Reconciliation

GAAP R&D Expense % 21.1 % 21.8 % 19.5 % 21.9 % 19.5 %

Stock-based compensation (2.6 ) (2.8 ) (1.6 ) (2.7 ) (1.4 )- R&D (1) % % % % %

Non-GAAP R&D Expense % 18.5 % 19.0 % 17.9 % 19.2 % 18.1 %

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

GAAP SG&A Expense %

22.9

%

23.1

%

20.9

%

23.4

%

20.4

%

Stock-based compensation - SG&A (1)

(6.4

)%

(7.1

)%

(3.5

)%

(6.8

)%

(2.9

)%

Non-GAAP SG&A Expense %

16.5

%

16.0

%

17.4

%

16.6

%

17.5

%

Selling, General, andAdministrative Expense % (SG&A Expense %)Reconciliation

GAAP SG&A Expense % 22.9 % 23.1 % 20.9 % 23.4 % 20.4 %

Stock-based compensation (6.4 ) (7.1 ) (3.5 ) (6.8 ) (2.9 )- SG&A (1) % % % % %

Non-GAAP SG&A Expense % 16.5 % 16.0 % 17.4 % 16.6 % 17.5 %

Operating Expenses Reconciliation

GAAP Operating expenses

$

47,529

$

49,492

$

43,802

$

192,940

$

179,381

Stock-based compensation - operations (1)

(9,692

)

(10,189

)

(5,124

)

(38,324

)

(17,477

)

Amortization of acquired intangible assets

(603

)

(603

)

(3,390

)

(4,449

)

(13,558

)

Restructuring charges

241

(2,692

)

55

(3,937

)

(4,664

)

Impairment of acquired intangible assets

-

-

-

-

1,023

Non-GAAP Operating expenses

$

37,475

$

36,008

$

35,343

$

146,230

$

144,705

OperatingExpenses Reconciliation

GAAP Operating $ 47,529 $ 49,492 $ 43,802 $ 192,940 $ 179,381 expenses

Stock-basedcompensation - (9,692 ) (10,189 ) (5,124 ) (38,324 ) (17,477 )operations (1)

Amortizationof acquired (603 ) (603 ) (3,390 ) (4,449 ) (13,558 )intangibleassets

Restructuring 241 (2,692 ) 55 (3,937 ) (4,664 )charges

Impairment ofacquired - - - - 1,023 intangibleassets

Non-GAAPOperating $ 37,475 $ 36,008 $ 35,343 $ 146,230 $ 144,705 expenses

(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 Ended

Year Ended

January 2,

September 26,

December 28,

January 2,

December 28,

2021

2020

2019

2021

2019

Income from Operations Reconciliation

GAAP Income from operations

$

17,332

$

12,814

$

15,491

$

52,366

$

59,041

Stock-based compensation - gross margin (1)

1,104

1,022

440

3,818

1,422

Inventory adjustment related to restructured operations

-

-

-

-

(338

)

Stock-based compensation - operations (1)

9,692

10,189

5,124

38,324

17,477

Amortization of acquired intangible assets

603

603

3,390

4,449

13,558

Restructuring charges

(241

)

2,692

(55

)

3,937

4,664

Impairment of acquired intangible assets

-

-

-

-

(1,023

)

Non-GAAP Income from operations

$

28,490

$

27,320

$

24,390

$

102,894

$

94,801

Lattice Semiconductor Corporation

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

(in thousands, except per share data)

(unaudited)

Three Months Ended Year Ended

January 2, September December January 2, December 26, 28, 28,

2021 2020 2019 2021 2019



Income fromOperations Reconciliation

GAAP Incomefrom $ 17,332 $ 12,814 $ 15,491 $ 52,366 $ 59,041 operations

Stock-basedcompensation - 1,104 1,022 440 3,818 1,422 gross margin(1)

Inventoryadjustmentrelated to - - - - (338 )restructuredoperations

Stock-basedcompensation - 9,692 10,189 5,124 38,324 17,477 operations (1)

Amortizationof acquired 603 603 3,390 4,449 13,558 intangibleassets

Restructuring (241 ) 2,692 (55 ) 3,937 4,664 charges

Impairment ofacquired - - - - (1,023 )intangibleassets

Non-GAAPIncome from $ 28,490 $ 27,320 $ 24,390 $ 102,894 $ 94,801 operations

Income from Operations % Reconciliation

GAAP Income from operations %

16.2

%

12.4

%

15.5

%

12.8

%

14.6

%

Cumulative effect of non-GAAP Gross Margin and Operating adjustments

10.4

%

14.1

%

8.8

%

12.4

%

8.9

%

Non-GAAP Income from operations %

26.6

%

26.5

%

24.3

%

25.2

%

23.5

%

Income from Operations % Reconciliation

GAAP Income from 16.2 % 12.4 % 15.5 % 12.8 % 14.6 %operations %

Cumulative effect ofnon-GAAP Gross Margin 10.4 % 14.1 % 8.8 % 12.4 % 8.9 %and Operatingadjustments

Non-GAAP Income from 26.6 % 26.5 % 24.3 % 25.2 % 23.5 %operations %

Other Expense Reconciliation

GAAP Other expense

$

(125

)

$

(70

)

$

(228

)

$

(208

)

$

(2,245

)

Loss on refinancing of long-term debt

-

-

-

-

2,235

Non-GAAP Other expense

$

(125

)

$

(70

)

$

(228

)

$

(208

)

$

(10

)

Other Expense Reconciliation

GAAP Other expense $ (125 ) $ (70 ) $ (228 ) $ (208 ) $ (2,245 )

Loss on refinancing of - - - - 2,235 long-term debt

Non-GAAP Other expense $ (125 ) $ (70 ) $ (228 ) $ (208 ) $ (10 )

Income Tax Expense (Benefit) Reconciliation

GAAP Income tax expense (benefit)

$

430

$

(655

)

$

92

$

1,064

$

1,572

Estimated tax effect of non-GAAP adjustments (2)

(393

)

478

(11

)

-

-

Non-GAAP Income tax expense (benefit)

$

37

$

(177

)

$

81

$

1,064

$

1,572

Income Tax Expense(Benefit) Reconciliation

GAAP Income tax expense $ 430 $ (655 ) $ 92 $ 1,064 $ 1,572 (benefit)

Estimated tax effect ofnon-GAAP adjustments (393 ) 478 (11 ) - - (2)

Non-GAAP Income tax $ 37 $ (177 ) $ 81 $ 1,064 $ 1,572 expense (benefit)

(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."

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

We calculate non-GAAP tax expense by applying our tax provision model to(2) 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."

Lattice Semiconductor Corporation

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

(in thousands, except per share data)

(unaudited)

Three Months Ended

Year Ended

January 2,

September 26,

December 28,

January 2,

December 28,

2021

2020

2019

2021

2019

Net Income Reconciliation

GAAP Net income

$

15,989

$

12,607

$

13,987

$

47,392

$

43,493

Stock-based compensation - gross margin (1)

1,104

1,022

440

3,818

1,422

Inventory adjustment related to restructured operations

-

-

-

-

(338

)

Stock-based compensation - operations (1)

9,692

10,189

5,124

38,324

17,477

Amortization of acquired intangible assets

603

603

3,390

4,449

13,558

Restructuring charges

(241

)

2,692

(55

)

3,937

4,664

Impairment of acquired intangible assets

-

-

-

-

(1,023

)

Loss on refinancing of long-term debt

-

-

-

-

2,235

Estimated tax effect of non-GAAP adjustments (2)

393

(478

)

11

-

-

Non-GAAP Net income

$

27,540

$

26,635

$

22,897

$

97,920

$

81,488

Lattice Semiconductor Corporation

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

(in thousands, except per share data)

(unaudited)

Three Months Ended Year Ended

January 2, September December January 2, December 26, 28, 28,

2021 2020 2019 2021 2019



Net Income Reconciliation

GAAP Net $ 15,989 $ 12,607 $ 13,987 $ 47,392 $ 43,493 income

Stock-basedcompensation - 1,104 1,022 440 3,818 1,422 gross margin(1)

Inventoryadjustmentrelated to - - - - (338 )restructuredoperations

Stock-basedcompensation - 9,692 10,189 5,124 38,324 17,477 operations (1)

Amortizationof acquired 603 603 3,390 4,449 13,558 intangibleassets

Restructuring (241 ) 2,692 (55 ) 3,937 4,664 charges

Impairment ofacquired - - - - (1,023 )intangibleassets

Loss onrefinancing of - - - - 2,235 long-term debt

Estimated taxeffect ofnon-GAAP 393 (478 ) 11 - - adjustments(2)

Non-GAAP Net $ 27,540 $ 26,635 $ 22,897 $ 97,920 $ 81,488 income

Net Income Per Share Reconciliation

GAAP Net income per share - basic

$

0.12

$

0.09

$

0.10

$

0.35

$

0.33

Cumulative effect of Non-GAAP adjustments

0.08

0.11

0.07

0.37

0.29

Non-GAAP Net income per share - basic

$

0.20

$

0.20

$

0.17

$

0.72

$

0.62

GAAP Net income per share - diluted

$

0.11

$

0.09

$

0.10

$

0.34

$

0.32

Cumulative effect of Non-GAAP adjustments

0.08

0.10

0.07

0.35

0.27

Non-GAAP Net income per share - diluted

$

0.19

$

0.19

$

0.17

$

0.69

$

0.59

Shares used in per share calculations:

Basic

136,104

135,598

133,691

135,220

132,471

Diluted

141,713

141,524

138,196

141,276

137,274

Net Income PerShare Reconciliation

GAAP Netincome per $ 0.12 $ 0.09 $ 0.10 $ 0.35 $ 0.33 share - basic

Cumulativeeffect of 0.08 0.11 0.07 0.37 0.29 Non-GAAPadjustments

Non-GAAP Netincome per $ 0.20 $ 0.20 $ 0.17 $ 0.72 $ 0.62 share - basic



GAAP Netincome per $ 0.11 $ 0.09 $ 0.10 $ 0.34 $ 0.32 share -diluted

Cumulativeeffect of 0.08 0.10 0.07 0.35 0.27 Non-GAAPadjustments

Non-GAAP Netincome per $ 0.19 $ 0.19 $ 0.17 $ 0.69 $ 0.59 share -diluted



Shares used inper share calculations:

Basic 136,104 135,598 133,691 135,220 132,471

Diluted 141,713 141,524 138,196 141,276 137,274

(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."

View source version on businesswire.com: https://www.businesswire.com/news/home/20210216006137/en/

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