Lattice Semiconductor Reports Fourth Quarter and Full Year 2019 Results

Lattice Semiconductor Corporation (NASDAQ: LSCC), the low power programmable leader, announced financial results today for the fiscal fourth quarter and full year ended December 28, 2019.

Jim Anderson, President and Chief Executive Officer, said, "We made solid progress in 2019, as we drove a 210 basis point improvement in gross margin on a non-GAAP basis, and an 88% increase in non-GAAP net income for the full year. We are seeing the benefits of our business and product strategy, which is aligned with our customers and 100% focused on power efficient FPGAs. We remain focused on driving further improvements as we increase our cadence of new hardware products, solutions, and software stacks, including the launch of Nexus, our next-generation FPGA platform. The launch was ahead of schedule and serves as a testament to the execution of our product roadmap."

Sherri Luther, Chief Financial Officer, said, "We achieved significant improvements across our key financial metrics in 2019. For the full year 2019, GAAP diluted EPS increased 252% compared to the full year 2018 and improved 300% in Q4 2019 as compared to Q4 2018. We increased cash flow from operations by 141% for the full year 2019, continuing our focus on cash generation. Our improved financial performance allowed us to significantly reduce our leverage ratio to 1.3, as defined in our credit agreement, compared to a leverage ratio of 3.0 in the year ago fourth quarter. We remain focused on profitability and cash generation as we drive additional progress towards our target model."

Selected Fourth Quarter and Full Year 2019 Financial Results and Comparisons (in thousands, except per share data)

 

 

 

GAAP Financial Results (unaudited)

 

 

Q4 2019

 

Q3 2019

 

Q4 2018

 

Q/Q

 

Y/Y

 

FY 2019

 

FY 2018

 

FY/FY

Revenue

 

$

 

 

100,237

 

 

$

 

 

103,469

 

 

$

 

 

95,977

 

 

(3.1

%)

 

+ 4.4

%

 

$

 

 

404,093

 

 

$

 

 

398,799

 

 

+ 1.3

%

Gross Margin %

 

 

59.2

%

 

 

59.4

%

 

 

56.6

%

 

(20) bps

 

+ 260 bps

 

 

59.0

%

 

 

55.0

%

 

+ 400 bps

R&D Expense %

 

 

19.5

%

 

 

19.4

%

 

 

20.1

%

 

+ 10 bps

 

(60) bps

 

 

19.5

%

 

 

20.7

%

 

(120) bps

SG&A Expense %

 

 

20.9

%

 

 

20.4

%

 

 

22.1

%

 

+ 50 bps

 

(120) bps

 

 

20.4

%

 

 

22.8

%

 

(240) bps

Operating Expense

 

$

 

 

43,802

 

 

$

 

 

44,751

 

 

$

 

 

56,026

 

 

(2.1

%)

 

(21.8

%)

 

$

 

 

179,381

 

 

$

 

 

222,559

 

 

(19.4

%)

Operating Income (Loss)

 

$

 

 

15,491

 

 

$

 

 

16,688

 

 

$

 

 

(1,720

)

 

(7.2

%)

 

n/m

 

 

$

 

 

59,041

 

 

$

 

 

(3,120

)

 

n/m

 

Net Income (Loss)

 

$

 

 

13,987

 

 

$

 

 

13,539

 

 

$

 

 

(7,121

)

 

+ 3.3

%

 

n/m

 

 

$

 

 

43,493

 

 

$

 

 

(26,322

)

 

n/m

 

Net Income (Loss) per Share - Basic

 

$

 

 

0.10

 

 

$

 

 

0.10

 

 

$

 

 

(0.05

)

 

 

+ $0.15

 

$

 

 

0.33

 

 

$

 

 

(0.21

)

 

+ $0.54

Net Income (Loss) per Share - Diluted

 

$

 

 

0.10

 

 

$

 

 

0.10

 

 

$

 

 

(0.05

)

 

 

+ $0.15

 

$

 

 

0.32

 

 

$

 

 

(0.21

)

 

+ $0.53

 

 

 

Non-GAAP* Financial Results (unaudited)

 

 

Q4 2019

 

Q3 2019

 

Q4 2018

 

Q/Q

 

Y/Y

 

FY 2019

 

FY 2018

 

FY/FY

Revenue

 

$

 

 

100,237

 

 

$

 

 

103,469

 

 

$

 

 

95,977

 

 

(3.1

%)

 

+ 4.4

%

 

$

 

 

404,093

 

 

$

 

 

398,799

 

 

+ 1.3

%

Gross Margin %

 

 

59.6

%

 

 

59.8

%

 

 

56.7

%

 

(20) bps

 

+ 290 bps

 

 

59.3

%

 

 

57.2

%

 

+ 210 bps

R&D Expense %

 

 

17.9

%

 

 

17.8

%

 

 

18.7

%

 

+ 10 bps

 

(80) bps

 

 

18.1

%

 

 

19.6

%

 

(150) bps

SG&A Expense %

 

 

17.4

%

 

 

16.9

%

 

 

19.9

%

 

+ 50 bps

 

(250) bps

 

 

17.5

%

 

 

20.7

%

 

(320) bps

Operating Expense

 

$

 

 

35,343

 

 

$

 

 

35,883

 

 

$

 

 

37,814

 

 

(1.5

%)

 

(6.5

%)

 

$

 

 

144,705

 

 

$

 

 

161,597

 

 

(10.5

%)

Operating Income

 

$

 

 

24,390

 

 

$

 

 

26,009

 

 

$

 

 

16,620

 

 

(6.2

%)

 

+ 46.8

%

 

$

 

 

94,801

 

 

$

 

 

66,611

 

 

+ 42.3

%

Net Income

 

$

 

 

22,897

 

 

$

 

 

22,943

 

 

$

 

 

11,131

 

 

(0.2

%)

 

+ 105.7

%

 

$

 

 

81,488

 

 

$

 

 

43,409

 

 

+ 87.7

%

Net Income per Share - Basic

 

$

 

 

0.17

 

 

$

 

 

0.17

 

 

$

 

 

0.09

 

 

 

+ $0.08

 

$

 

 

0.62

 

 

$

 

 

0.34

 

 

+ $0.28

Net Income per Share - Diluted

 

$

 

 

0.17

 

 

$

 

 

0.17

 

 

$

 

 

0.08

 

 

 

+ $0.09

 

$

 

 

0.59

 

 

$

 

 

0.33

 

 

+ $0.26

* 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."

2019 Highlights

  • Improved Financial Performance and Increased Profitability: Increased net income per diluted share on a GAAP basis to $0.32 in the full year 2019 from a loss of $0.21 in the full year 2018, or $0.59 and $0.33, respectively, on a non-GAAP basis, with a 400 basis point improvement in gross margin on a GAAP basis and a 210 basis point improvement on a non-GAAP basis.
  • Debt Refinance and De-lever: Total full year 2019 debt payments of $117 million, which reduced the leverage ratio to 1.3 compared to 3.0 at the end of 2018, as defined in the credit agreement. The Company reduced the interest rate by a total of 300 basis points in 2019.
  • Nexus Next Generation FDSOI Platform and CrossLink-NX™ FPGA Launched: Nexus, Lattice's next generation 28nm FDSOI platform, launched on December 10, 2019, ahead of schedule. Based on FDSOI technology, the Nexus platform delivers up to a 75% reduction in power versus competitors' products. Lattice's CrossLink-NX™, the first FPGA developed on Lattice's Nexus platform, provides the small form factor, reliability, and performance that developers need to create innovative embedded vision and AI solutions for communications, compute, industrial, automotive, and consumer systems.
  • Enhanced Radiant™ Software Design Tool: Lattice launched the latest version of its popular software design tool for FPGAs, Lattice Radiant™ 2.0. The updated design tool offers new features that make it faster and easier than ever to develop Lattice FPGA-based designs.
  • Launched New MachXO3D™ Platform Security Product: The new platform security product was developed specifically for customers seeking to simplify the implementation of robust, comprehensive and flexible hardware-based security. MachXO3D can protect, detect and recover firmware components from unauthorized firmware access at every stage of a system’s lifecycle, from the point of manufacturing all the way to the system’s end of life. The National Institute of Standards and Technology ("NIST") independently certified that Lattice's MachXO3D is compliant with the U.S. government's standard for cryptographic software.
  • Higher Performance, Award-Winning sensAI™ Solutions Stack: Lattice launched major performance and design flow enhancements to its award-winning AI solutions stack. The Lattice sensAI stack provides a comprehensive hardware and software solution for implementing low power, always-on AI functionality in smart devices operating at the Edge. sensAI was awarded the EDN Hot 100 Product Award, Tools & Development Category, the AI Breakthrough Award, Best AI-Based Solution for Engineering, the Electronics Industry Award, and the Internet of Things Product of the Year.

Business Outlook - First Quarter of 2020:

  • Revenue for the first quarter of 2020 is expected to be between $96 million and $104 million.
  • Gross margin percentage for the first quarter of 2020 is expected to be 59.5% plus or minus 1% on a non-GAAP basis.
  • Total operating expenses for the first quarter of 2020 are expected to be between $36 million and $37 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 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 fourth quarter and full year 2019, and business outlook on Tuesday, February 11 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 6890144. 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 will increase our cadence of new hardware products, solutions, and software stacks, including the launch of Nexus, our next-generation FPGA platform; our belief that we achieve our financial model targets; and the statements under the heading “Business Outlook - First 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. 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 29, 2018, and Lattice’s quarterly reports filed on Form 10-Q. 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, restructuring plans and related charges, acquisition-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. 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 LinkedInTwitterFacebookYouTubeWeChatWeibo or  Youku.

 

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

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 28,
2019

 

September 28,
2019

 

December 29,
2018

 

December 28,
2019

 

December 29,
2018

Revenue

 

$

 

100,237

 

 

$

 

103,469

 

 

$

 

95,977

 

 

$

 

404,093

 

 

$

 

398,799

 

Cost of sales

 

 

40,944

 

 

 

42,030

 

 

 

41,671

 

 

 

165,671

 

 

 

179,360

 

Gross margin

 

 

59,293

 

 

 

61,439

 

 

 

54,306

 

 

 

238,422

 

 

 

219,439

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

19,543

 

 

 

20,032

 

 

 

19,296

 

 

 

78,617

 

 

 

82,449

 

Selling, general, and administrative

 

 

20,924

 

 

 

21,078

 

 

 

21,168

 

 

 

82,542

 

 

 

91,054

 

Amortization of acquired intangible assets

 

 

3,390

 

 

 

3,389

 

 

 

3,708

 

 

 

13,558

 

 

 

17,690

 

Restructuring

 

 

(55

)

 

 

252

 

 

 

11,854

 

 

 

4,664

 

 

 

17,349

 

Impairment of acquired intangible assets

 

 

 

 

 

 

 

 

 

 

12,486

 

Acquisition related charges

 

 

 

 

 

 

 

 

 

 

1,531

 

Total operating expenses

 

 

43,802

 

 

 

44,751

 

 

 

56,026

 

 

 

179,381

 

 

 

222,559

 

Income (loss) from operations

 

 

15,491

 

 

 

16,688

 

 

 

(1,720

)

 

 

59,041

 

 

 

(3,120

)

Interest expense

 

 

(1,184

)

 

 

(2,022

)

 

 

(5,018

)

 

 

(11,731

)

 

 

(20,600

)

Other expense, net

 

 

(228

)

 

 

(61

)

 

 

(3

)

 

 

(2,245

)

 

 

(249

)

Income (loss) before income taxes

 

 

14,079

 

 

 

14,605

 

 

 

(6,741

)

 

 

45,065

 

 

 

(23,969

)

Income tax expense

 

 

92

 

 

 

1,066

 

 

 

380

 

 

 

1,572

 

 

 

2,353

 

Net income (loss)

 

$

 

13,987

 

 

$

 

13,539

 

 

$

 

(7,121

)

 

$

 

43,493

 

 

$

 

(26,322

)

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 

0.10

 

 

$

 

0.10

 

 

$

 

(0.05

)

 

$

 

0.33

 

 

$

 

(0.21

)

Diluted

 

$

 

0.10

 

 

$

 

0.10

 

 

$

 

(0.05

)

 

$

 

0.32

 

 

$

 

(0.21

)

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

133,691

 

 

 

132,997

 

 

 

129,521

 

 

 

132,471

 

 

 

126,564

 

Diluted

 

 

138,196

 

 

 

138,894

 

 

 

129,521

 

 

 

137,274

 

 

 

126,564

 

Lattice Semiconductor Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

 

 

 

December 28,
2019

 

December 29,
2018

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

 

118,081

 

 

$

 

119,051

 

Short-term marketable securities

 

 

 

 

9,624

 

Accounts receivable, net

 

 

64,917

 

 

 

60,890

 

Inventories

 

 

54,980

 

 

 

67,096

 

Other current assets

 

 

24,452

 

 

 

27,762

 

Total current assets

 

 

262,430

 

 

 

284,423

 

 

 

 

 

 

Property and equipment, net

 

 

39,230

 

 

 

34,883

 

Operating lease right-of-use assets

 

 

23,591

 

 

 

Intangible assets, net

 

 

6,977

 

 

 

21,325

 

Goodwill

 

 

267,514

 

 

 

267,514

 

Deferred income taxes

 

 

478

 

 

 

215

 

Other long-term assets

 

 

11,796

 

 

 

15,327

 

 

 

$

 

612,016

 

 

$

 

623,687

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and other accrued liabilities

 

$

 

73,650

 

 

$

 

61,128

 

Current portion of long-term debt

 

 

21,474

 

 

 

8,290

 

Current portion of operating lease liabilities

 

 

4,686

 

 

 

Total current liabilities

 

 

99,810

 

 

 

69,418

 

 

 

 

 

 

Long-term debt, net of current portion

 

 

125,072

 

 

 

251,357

 

Long-term operating lease liabilities, net of current portion

 

 

21,438

 

 

 

Other long-term liabilities

 

 

38,028

 

 

 

44,455

 

Total liabilities

 

 

284,348

 

 

 

365,230

 

 

 

 

 

 

Stockholders' equity

 

 

327,668

 

 

 

258,457

 

 

 

$

 

612,016

 

 

$

 

623,687

 

Lattice Semiconductor Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

 

Twelve Months Ended

 

December 28,
2019

 

December 29,
2018

Cash flows from operating activities:

 

 

 

Net income (loss)

$

 

43,493

 

 

$

 

(26,322

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

33,056

 

 

 

39,261

 

Impairment of acquired intangible assets

 

 

 

12,486

 

Stock-based compensation expense

 

18,899

 

 

 

13,646

 

Other non-cash adjustments

 

10,294

 

 

 

2,151

 

Net changes in assets and liabilities

 

18,395

 

 

 

10,236

 

Net cash provided by operating activities

 

124,137

 

 

 

51,458

 

Cash flows from investing activities:

 

 

 

Capital expenditures

 

(15,590

)

 

 

(8,384

)

Other investing activities

 

54

 

 

 

(12,726

)

Net cash used in investing activities

 

(15,536

)

 

 

(21,110

)

Cash flows from financing activities:

 

 

 

Proceeds from issuance of long-term debt

 

206,500

 

 

 

Original issue discount and debt issuance costs

 

(2,086

)

 

 

Repayment of long-term debt

 

(321,408

)

 

 

(43,759

)

Net cash flows related to stock compensation exercises

 

7,082

 

 

 

26,918

 

Net cash used in financing activities

 

(109,912

)

 

 

(16,841

)

Effect of exchange rate change on cash

 

341

 

 

 

(1,271

)

Net (decrease) increase in cash and cash equivalents

 

(970

)

 

 

12,236

 

Beginning cash and cash equivalents

 

119,051

 

 

 

106,815

 

Ending cash and cash equivalents

$

 

118,081

 

 

$

 

119,051

 

 

 

 

 

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

Interest paid

$

 

10,995

 

 

$

 

18,607

 

Income taxes paid, net of refunds

$

 

3,393

 

 

$

 

3,054

 

 

Lattice Semiconductor Corporation
Supplemental Historical Financial Information
(unaudited)

 

 

Three Months Ended

 

Twelve Months Ended

 

December 28,
 2019

 

September 28,
 2019

 

December 29,
 2018

 

December 28,
 2019

 

December 29,
 2018

Balance Sheet Information

 

 

 

 

 

 

 

 

 

A/R Days Revenue Outstanding (DSO)

59

 

42

 

58

 

 

 

 

Inventory Days (DIO)

123

 

130

 

147

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue% (by Geography)

 

 

 

 

 

 

 

 

 

Asia

73%

 

77%

 

74%

 

74%

 

75%

Europe (incl. Africa)

11%

 

11%

 

10%

 

12%

 

11%

Americas

16%

 

12%

 

16%

 

14%

 

14%

 

 

 

 

 

 

 

 

 

 

Revenue% (by End Market)

 

 

 

 

 

 

 

 

 

Communications and Computing

38%

 

40%

 

34%

 

39%

 

31%

Industrial and Automotive

39%

 

36%

 

37%

 

37%

 

39%

Consumer

18%

 

18%

 

22%

 

19%

 

25%

Licensing and Services

5%

 

6%

 

7%

 

5%

 

5%

 

 

 

 

 

 

 

 

 

 

Revenue% (by Channel)

 

 

 

 

 

 

 

 

 

Distribution

84%

 

81%

 

76%

 

82%

 

83%

Direct

16%

 

19%

 

24%

 

18%

 

17%

Lattice Semiconductor Corporation

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

(in thousands, except per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 28,
 2019

 

September 28,
 2019

 

December 29,
 2018

 

December 28,
 2019

 

December 29,
 2018

 

 

 

 

 

 

 

 

 

 

 

Gross Margin Reconciliation

GAAP Gross margin

 

$

59,293

 

 

$

61,439

 

 

$

54,306

 

 

$

238,422

 

 

$

219,439

 

Stock-based compensation - gross margin

 

440

 

 

453

 

 

288

 

 

1,422

 

 

940

 

Inventory adjustment related to restructured operations

 

 

 

 

 

(160

)

 

(338

)

 

7,829

 

Non-GAAP Gross margin

 

$

59,733

 

 

$

61,892

 

 

$

54,434

 

 

$

239,506

 

 

$

228,208

 

 

Gross Margin % Reconciliation

GAAP Gross margin %

 

59.2

%

 

59.4

%

 

56.6

%

 

59.0

%

 

55.0

%

Cumulative effect of non-GAAP Gross Margin adjustments

 

0.4

%

 

0.4

%

 

0.1

%

 

0.3

%

 

2.2

%

Non-GAAP Gross margin %

 

59.6

%

 

59.8

%

 

56.7

%

 

59.3

%

 

57.2

%

 

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

GAAP R&D Expense  %

 

19.5

%

 

19.4

%

 

20.1

%

 

19.5

%

 

20.7

%

Stock-based compensation - R&D

 

(1.6

)%

 

(1.6

)%

 

(1.4

)%

 

(1.4

)%

 

(1.1

)%

Non-GAAP R&D Expense  %

 

17.9

%

 

17.8

%

 

18.7

%

 

18.1

%

 

19.6

%

 

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

GAAP SG&A Expense  %

 

20.9

%

 

20.4

%

 

22.1

%

 

20.4

%

 

22.8

%

Stock-based compensation - SG&A

 

(3.5

)%

 

(3.5

)%

 

(2.2

)%

 

(2.9

)%

 

(2.1

)%

Non-GAAP SG&A Expense  %

 

17.4

%

 

16.9

%

 

19.9

%

 

17.5

%

 

20.7

%

 

Operating Expenses Reconciliation

GAAP Operating expenses

 

$

43,802

 

 

$

44,751

 

 

$

56,026

 

 

$

179,381

 

 

$

222,559

 

Stock-based compensation - operations

 

(5,124

)

 

(5,227

)

 

(3,450

)

 

(17,477

)

 

(12,706

)

Amortization of acquired intangible assets

 

(3,390

)

 

(3,389

)

 

(3,708

)

 

(13,558

)

 

(17,690

)

Restructuring charges

 

55

 

 

(252

)

 

(11,854

)

 

(4,664

)

 

(17,349

)

Impairment of acquired intangible assets

 

 

 

 

 

800

 

 

1,023

 

 

(11,686

)

Acquisition related charges

 

 

 

 

 

 

 

 

 

(1,531

)

Non-GAAP Operating expenses

 

$

35,343

 

 

$

35,883

 

 

$

37,814

 

 

$

144,705

 

 

$

161,597

 

 

Income from Operations Reconciliation

GAAP Income (loss) from operations

 

$

15,491

 

 

$

16,688

 

 

$

(1,720

)

 

$

59,041

 

 

$

(3,120

)

Stock-based compensation - gross margin

 

440

 

 

453

 

 

288

 

 

1,422

 

 

940

 

Inventory adjustment related to restructured operations

 

 

 

 

 

(160

)

 

(338

)

 

7,829

 

Stock-based compensation - operations

 

5,124

 

 

5,227

 

 

3,450

 

 

17,477

 

 

12,706

 

Amortization of acquired intangible assets

 

3,390

 

 

3,389

 

 

3,708

 

 

13,558

 

 

17,690

 

Restructuring charges

 

(55

)

 

252

 

 

11,854

 

 

4,664

 

 

17,349

 

Impairment of acquired intangible assets

 

 

 

 

 

(800

)

 

(1,023

)

 

11,686

 

Acquisition related charges

 

 

 

 

 

 

 

 

 

1,531

 

Non-GAAP Income from operations

 

$

24,390

 

 

$

26,009

 

 

$

16,620

 

 

$

94,801

 

 

$

66,611

 

 

 

 

 

 

 

 

 

 

 

 

Income from Operations % Reconciliation

GAAP Income (loss) from operations %

 

15.5

%

 

16.1

%

 

(1.8

)%

 

14.6

%

 

(0.8

)%

Cumulative effect of non-GAAP Gross Margin and Operating adjustments

 

8.8

%

 

9.0

%

 

19.1

%

 

8.9

%

 

17.5

%

Non-GAAP Income from operations %

 

24.3

%

 

25.1

%

 

17.3

%

 

23.5

%

 

16.7

%

Lattice Semiconductor Corporation

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

(in thousands, except per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 28,
 2019

 

September 28,
 2019

 

December 29,
 2018

 

December 28,
 2019

 

December 29,
 2018

 

Other Expense, Net Reconciliation

GAAP Other expense, net

 

$

(228

)

 

$

(61

)

 

$

(3

)

 

$

(2,245

)

 

$

(249

)

Loss on refinancing of long-term debt

 

 

 

 

 

 

 

2,235

 

 

 

Non-GAAP Other expense, net

 

$

(228

)

 

$

(61

)

 

$

(3

)

 

$

(10

)

 

$

(249

)

 

Income Tax Expense Reconciliation

GAAP Income tax expense

 

$

92

 

 

$

1,066

 

 

$

380

 

 

$

1,572

 

 

$

2,353

 

Estimated tax effect of non-GAAP adjustments (1)

 

(11

)

 

(83

)

 

88

 

 

 

 

 

Non-GAAP Income tax expense

 

$

81

 

 

$

983

 

 

$

468

 

 

$

1,572

 

 

$

2,353

 

 

Net Income Reconciliation

GAAP Net income (loss)

 

$

13,987

 

 

$

13,539

 

 

$

(7,121

)

 

$

43,493

 

 

$

(26,322

)

Stock-based compensation - gross margin

 

440

 

 

453

 

 

288

 

 

1,422

 

 

940

 

Inventory adjustment related to restructured operations

 

 

 

 

 

(160

)

 

(338

)

 

7,829

 

Stock-based compensation - operations

 

5,124

 

 

5,227

 

 

3,450

 

 

17,477

 

 

12,706

 

Amortization of acquired intangible assets

 

3,390

 

 

3,389

 

 

3,708

 

 

13,558

 

 

17,690

 

Restructuring charges

 

(55

)

 

252

 

 

11,854

 

 

4,664

 

 

17,349

 

Impairment of acquired intangible assets

 

 

 

 

 

(800

)

 

(1,023

)

 

11,686

 

Acquisition related charges

 

 

 

 

 

 

 

 

 

1,531

 

Loss on refinancing of long-term debt

 

 

 

 

 

 

 

2,235

 

 

 

Estimated tax effect of non-GAAP adjustments (1)

 

11

 

 

83

 

 

(88

)

 

 

 

 

Non-GAAP Net income

 

$

22,897

 

 

$

22,943

 

 

$

11,131

 

 

$

81,488

 

 

$

43,409

 

 

Net Income Per Share Reconciliation

GAAP Net income (loss) per share - basic

 

$

0.10

 

 

$

0.10

 

 

$

(0.05

)

 

$

0.33

 

 

$

(0.21

)

Cumulative effect of Non-GAAP adjustments

 

0.07

 

 

0.07

 

 

0.14

 

 

0.29

 

 

0.55

 

Non-GAAP Net income per share - basic

 

$

0.17

 

 

$

0.17

 

 

$

0.09

 

 

$

0.62

 

 

$

0.34

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income (loss) per share - diluted

 

$

0.10

 

 

$

0.10

 

 

$

(0.05

)

 

$

0.32

 

 

$

(0.21

)

Cumulative effect of Non-GAAP adjustments

 

0.07

 

 

0.07

 

 

0.13

 

 

0.27

 

 

0.54

 

Non-GAAP Net income per share - diluted

 

$

0.17

 

 

$

0.17

 

 

$

0.08

 

 

$

0.59

 

 

$

0.33

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

Basic

 

133,691

 

 

132,997

 

 

129,521

 

 

132,471

 

 

126,564

 

Diluted - GAAP (2)

 

138,196

 

 

138,894

 

 

129,521

 

 

137,274

 

 

126,564

 

Diluted - Non-GAAP (2)

 

138,196

 

 

138,894

 

 

132,471

 

 

137,274

 

 

129,766

 

(1)

 

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.”

(2)

 

Diluted shares are calculated using the GAAP treasury stock method. In a loss position, diluted shares equal basic shares.