Lattice Semiconductor Reports Third Quarter 2016 Results

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. In particular, investors may find the non-GAAP measures useful in reviewing our operating performance without the significant accounting charges resulting from the Silicon Image acquisition, alongside the comparably adjusted prior year results. Management also uses these non-GAAP measures for strategic and business decision-making, internal budgeting, forecasting, and resource allocation processes and believes that investors should have access to similar data when making their investment decisions.

In addition, the Company uses Adjusted EBITDA to measure compliance with certain of its debt covenants. 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 Corporation (NASDAQ: LSCC) provides smart connectivity solutions powered by our low power FPGA, video ASSP, 60 GHz millimeter wave, and IP products to the consumer, communications, industrial, computing, and automotive markets worldwide. Our unwavering commitment to our customers enables them to accelerate their innovation, creating an ever better and more connected world.

For more information, visit www.latticesemi.com. You can also follow us via LinkedIn, Twitter, Facebook, YouTube or RSS.

Lattice Semiconductor Corporation, Lattice (& design), L (& design), iCE40 and MachXO3L, and specific product designations are either registered trademarks or trademarks of Lattice Semiconductor Corporation or its subsidiaries in the United States and/or other countries.

GENERAL NOTICE: Other product names used in this publication are for identification purposes only and may be trademarks of their respective holders.


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

	Three Months Ended									Nine Months Ended
	October 1, 2016			July 2, 2016			October 3, 2015			October 1, 2016			October 3, 2015
Revenue	$	113,225		$	99,209		$	109,715		$	308,946		$	304,772
Costs and expenses:
Cost of sales	45,801			40,783			49,866			125,992			138,965
Research and development	27,747			30,915			37,619			91,270			104,813
Selling, general and administrative	29,244			23,005			23,819			75,857			73,096
Amortization of acquired intangible assets	8,260			8,311			8,941			25,292			20,824
Restructuring charges	317			2,568			6,818			8,316			15,780
Acquisition related charges	—			—			610			94			22,078
Impairment of intangible assets	7,866			—			—			7,866			—
	119,235			105,582			127,673			334,687			375,556
Loss from operations	(6,010		)	(6,373		)	(17,958		)	(25,741		)	(70,784		)
Interest expense	(5,235		)	(5,062		)	(5,754		)	(15,257		)	(12,870		)
Other income (expense), net	209			2,532			(841		)	3,558			(1,095		)
Loss before income taxes and equity in net loss of an unconsolidated affiliate	(11,036		)	(8,903		)	(24,553		)	(37,440		)	(84,749		)
Income tax expense	971			4,539			309			7,410			29,030
Equity in net loss of an unconsolidated affiliate, net of tax	(407		)	(368		)	—			(1,085		)	—
Net loss	$	(12,414	)	$	(13,810	)	$	(24,862	)	$	(45,935	)	$	(113,779	)


Net loss per share, basic and diluted	$	(0.10	)	$	(0.12	)	$	(0.21	)	$	(0.38	)	$	(0.97	)

Shares used in per share calculations, basic and diluted	120,584			119,445			117,669			119,596			117,151


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

	October 1, 2016		January 2, 2016
Assets
Current assets:
Cash, cash equivalents and short-term marketable securities	$	98,914	$	102,574
Accounts receivable, net	93,946		88,471
Inventories	80,540		75,896
Other current assets	18,614		18,922
Total current assets	292,014		285,863

Property and equipment, net	51,576		51,852
Intangible assets, net of amortization	127,332		162,583
Goodwill	269,771		267,549
Deferred income taxes	473		578
Other long-term assets	15,087		17,495
	$	756,253	$	785,920

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued liabilities	$	85,995	$	83,761
Current portion of long-term debt	27,613		7,557
Deferred income and allowances on sales to sell-through distributors and deferred licensing and services revenue	21,586		19,859
Total current liabilities	135,194		111,177

Long-term debt	307,747		330,870
Other long-term liabilities	39,638		38,353
Total liabilities	482,579		480,400

Stockholders' equity	273,674		305,520
	$	756,253	$	785,920


LATTICE SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

	Nine Months Ended
	October 1, 2016			October 3, 2015
Cash flows from operating activities:
Net loss	$	(45,935	)	$	(113,779	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	47,908			42,916
Impairment of intangible assets	7,866			—
Amortization of debt issuance costs and discount	1,213			2,037
Change in deferred income tax provision	—			17,689
Loss on sale or maturity of marketable securities	72			336
Stock-based compensation expense	12,107			13,609
Loss on disposal of fixed assets	263			—
Gain on sale of business unit	(2,646		)	—
Equity in net loss of an unconsolidated affiliate, net of tax	1,085			—
Changes in assets and liabilities:
Accounts receivable, net	(5,728		)	7,708
Inventories	(4,644		)	6,738
Prepaid expenses and other current assets	(2,227		)	(2,776		)
Accounts payable and accrued expenses (includes restructuring)	6,294			7,786
Accrued payroll obligations	(454		)	(10,309		)
Income taxes payable	1,335			971
Deferred income and allowances on sales to sell-through distributors	3,067			5,481
Deferred licensing and services revenue	(258		)	967
Net cash provided by (used in) operating activities	19,318			(20,626		)
Cash flows from investing activities:
Proceeds from sales or maturities of short-term marketable securities	11,977			142,956
Purchases of marketable securities, net	(5,961		)	(4,005		)
Cash paid for business acquisition, net of cash acquired	—			(431,068		)
Capital expenditures, net	(13,991		)	(11,584		)
Proceeds from sale of business unit, net of cash sold	1,972			—
Cash paid for a non-marketable investment	(1,000		)	(3,000		)
Cash paid for software licenses	(7,370		)	(5,393		)
Net cash used in investing activities	(14,373		)	(312,094		)
Cash flows from financing activities:
Net share settlement upon issuance of restricted stock units	(2,883		)	(2,660		)
Purchases of treasury stock	—			(6,970		)
Net proceeds from issuance of common stock	5,353			3,382
Net proceeds from issuance of long-term debt	—			346,500
Cash paid for debt issuance costs	—			(8,283		)
Repayment of debt	(4,279		)	(1,750		)
Net cash (used in) provided by financing activities	(1,809		)	330,219



LATTICE SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands)
(unaudited)

	Nine Months Ended
(In thousands)	October 1, 2016			October 3, 2015
Effect of exchange rate change on cash	(579		)	(754		)
Net increase (decrease) in cash and cash equivalents	2,557			(3,255		)
Beginning cash and cash equivalents	84,606			115,611
Ending cash and cash equivalents	$	87,163		$	112,356

Supplemental cash flow information:
Change in unrealized gain (loss) related to marketable securities, net of tax, included in Accumulated other comprehensive loss	$	(50	)	$	(133	)
Income taxes paid, net of refunds	$	7,250		$	5,403
Interest paid	$	13,849		$	6,225
Accrued purchases of plant and equipment	$	402		$	817


Lattice Semiconductor Corporation
- Supplemental Historical Financial Information -
(unaudited)

	Three Months Ended						Nine Months Ended
	October 1, 2016		July 2, 2016		October 3, 2015		October 1, 2016		October 3, 2015
Operations Information
Percent of Revenue
Gross Margin	59.5	%	58.9	%	54.5	%	59.2	%	54.4	%
R&D Expense	24.5	%	31.2	%	34.3	%	29.5	%	34.4	%
SG&A Expense	25.8	%	23.2	%	21.7	%	24.6	%	24.0	%
Depreciation and amortization (in thousands)	15,556		15,021		17,553		47,908		42,916
Capital expenditures (in thousands)	3,889		4,402		4,552		13,991		11,584
Stock-based compensation (in thousands)	4,309		3,242		4,199		12,107		12,562
Restructuring and severance related charges (in thousands)	317		2,568		6,818		8,316		15,780
Taxes paid (cash, in thousands)	2,386		2,368		2,291		7,250		5,403


Balance Sheet Information
Current Ratio	2.2		2.0		2.7
A/R Days Revenue Outstanding	76		78		71
Inventory Months	5.3		6.4		4.8


Revenue% (by Geography)
Asia	74	%	68	%	79	%	70	%	76	%
Europe (incl. Africa)	12	%	15	%	12	%	14	%	14	%
Americas	14	%	17	%	9	%	16	%	10	%


Revenue% (by End Market) (1)
Communications and Computing	27	%	29	%	33	%	30	%	36	%
Mobile and Consumer	31	%	24	%	34	%	27	%	31	%
Industrial and Automotive	33	%	37	%	23	%	34	%	25	%
Licensing and Services	9	%	10	%	10	%	9	%	8	%


Revenue% (by Channel)
Sell-through distribution	62	%	59	%	46	%	58	%	45	%
Direct	38	%	41	%	54	%	42	%	55	%

« Previous Page 1 | 2 | 3 | 4 | 5 Next Page »