|
Lattice Semiconductor Corporation Consolidated Statements of Operations (in thousands, except per share data) (unaudited) |
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| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
|
December 29,
2018 |
September 29,
2018 |
December 30,
2017 |
December 29,
2018 |
December 30,
2017 |
||||||||||||||||
| Revenue | $ | 95,977 | $ | 101,484 | $ | 95,266 | $ | 398,799 | $ | 385,961 | ||||||||||
| Costs and expenses: | ||||||||||||||||||||
| Cost of sales | 41,671 | 43,120 | 44,050 | 179,360 | 169,382 | |||||||||||||||
| Research and development | 19,296 | 19,131 | 23,500 | 82,449 | 103,357 | |||||||||||||||
| Selling, general, and administrative | 21,168 | 21,775 | 23,585 | 91,054 | 90,718 | |||||||||||||||
| Amortization of acquired intangible assets | 3,708 | 3,823 | 5,563 | 17,690 | 31,340 | |||||||||||||||
| Restructuring | 11,854 | 90 | 2,483 | 17,349 | 7,196 | |||||||||||||||
| Acquisition related charges | — | — | 573 | 1,531 | 3,781 | |||||||||||||||
| Impairment of acquired intangible assets | — | 586 | (3,767 | ) | 12,486 | 32,431 | ||||||||||||||
| Gain on sale of building | — | — | — | — | (4,624 | ) | ||||||||||||||
| 97,697 | 88,525 | 95,987 | 401,919 | 433,581 | ||||||||||||||||
| (Loss) income from operations | (1,720 | ) | 12,959 | (721 | ) | (3,120 | ) | (47,620 | ) | |||||||||||
| Interest expense | (5,018 | ) | (5,500 | ) | (4,695 | ) | (20,600 | ) | (18,807 | ) | ||||||||||
| Other expense, net | (3 | ) | (452 | ) | (1,182 | ) | (249 | ) | (3,286 | ) | ||||||||||
| (Loss) income before income taxes | (6,741 | ) | 7,007 | (6,598 | ) | (23,969 | ) | (69,713 | ) | |||||||||||
| Income tax expense | 380 | 33 | 615 | 2,353 | 849 | |||||||||||||||
| Net (loss) income | $ | (7,121 | ) | $ | 6,974 | $ | (7,213 | ) | $ | (26,322 | ) | $ | (70,562 | ) | ||||||
| Net (loss) income per share: | ||||||||||||||||||||
| Basic | $ | (0.05 | ) | $ | 0.05 | $ | (0.06 | ) | $ | (0.21 | ) | $ | (0.58 | ) | ||||||
| Diluted | $ | (0.05 | ) | $ | 0.05 | $ | (0.06 | ) | $ | (0.21 | ) | $ | (0.58 | ) | ||||||
| Shares used in per share calculations: | ||||||||||||||||||||
| Basic | 129,521 | 127,816 | 123,541 | 126,564 | 122,677 | |||||||||||||||
| Diluted | 129,521 | 129,474 | 123,541 | 126,564 | 122,677 | |||||||||||||||
|
Lattice Semiconductor Corporation Consolidated Balance Sheets (in thousands) (unaudited) |
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|
December 29,
2018 |
December 30,
2017 |
||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 119,051 | $ | 106,815 | |||
| Short-term marketable securities | 9,624 | 4,982 | |||||
| Accounts receivable, net | 60,890 | 55,104 | |||||
| Inventories | 67,096 | 79,903 | |||||
| Other current assets | 27,762 | 16,567 | |||||
| Total current assets | 284,423 | 263,371 | |||||
| Property and equipment, net | 34,883 | 40,423 | |||||
| Intangible assets, net | 21,325 | 51,308 | |||||
| Goodwill | 267,514 | 267,514 | |||||
| Deferred income taxes | 215 | 198 | |||||
| Other long-term assets | 15,327 | 13,147 | |||||
| $ | 623,687 | $ | 635,961 | ||||
| Liabilities and Stockholders' Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable and other accrued liabilities | $ | 61,128 | $ | 64,821 | |||
| Current portion of long-term debt | 8,290 | 1,508 | |||||
| Deferred income and allowances on sales to distributors and deferred license revenue | — | 17,318 | |||||
| Total current liabilities | 69,418 | 83,647 | |||||
| Long-term debt | 251,357 | 299,667 | |||||
| Other long-term liabilities | 44,455 | 34,954 | |||||
| Total liabilities | 365,230 | 418,268 | |||||
| Stockholders' equity | 258,457 | 217,693 | |||||
| $ | 623,687 | $ | 635,961 | ||||
|
Lattice Semiconductor Corporation Consolidated Statements of Cash Flows (in thousands) (unaudited) |
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| Twelve Months Ended | ||||||||
| December 29, | December 30, | |||||||
| 2018 | 2017 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (26,322 | ) | $ | (70,562 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 39,261 | 57,861 | ||||||
| Impairment of acquired intangible assets | 12,486 | 32,431 | ||||||
| Amortization of debt issuance costs and discount | 2,230 | 1,982 | ||||||
| Change in deferred income tax provision | (96 | ) | (154 | ) | ||||
| (Gain) loss on sale or maturity of marketable securities | (18 | ) | 252 | |||||
| Gain on forward contracts | (53 | ) | (77 | ) | ||||
| Stock-based compensation expense | 13,646 | 12,543 | ||||||
| Gain on disposal of fixed assets | (178 | ) | (75 | ) | ||||
| Gain on sale of building | — | (4,624 | ) | |||||
| Loss on sale of assets and business units | — | 1,496 | ||||||
| Impairment of cost-method investment | 266 | 1,761 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable, net | (3,978 | ) | 44,613 | |||||
| Inventories | 13,177 | (902 | ) | |||||
| Prepaid expenses and other assets | (11,667 | ) | 889 | |||||
| Accounts payable and accrued expenses (includes restructuring) | 13,325 | (23,588 | ) | |||||
| Accrued payroll obligations | (1,051 | ) | 726 | |||||
| Income taxes payable | 498 | (556 | ) | |||||
| Deferred income and allowances on sales to distributors | — | (15,007 | ) | |||||
| Deferred licensing and services revenue | (68 | ) | (495 | ) | ||||
| Net cash provided by operating activities | 51,458 | 38,514 | ||||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sales of and maturities of short-term marketable securities | 5,000 | 12,689 | ||||||
| Purchases of marketable securities | (9,603 | ) | (7,420 | ) | ||||
| Proceeds from sale of building | — | 7,895 | ||||||
| Cash paid for costs of sale of building | — | (1,004 | ) | |||||
| Capital expenditures | (8,384 | ) | (12,855 | ) | ||||
| Proceeds from sale of assets and business unit, net of cash sold | — | 967 | ||||||
| Repayment received on short-term loan to cost-method investee | — | 2,000 | ||||||
| Short-term loan to cost-method investee | — | (2,000 | ) | |||||
| Cash paid for software licenses | (8,123 | ) | (8,532 | ) | ||||
| Net cash used in investing activities | (21,110 | ) | (8,260 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Restricted stock unit tax withholdings | (2,370 | ) | (3,267 | ) | ||||
| Proceeds from issuance of common stock | 29,288 | 6,085 | ||||||
| Repayment of debt | (43,759 | ) | (35,429 | ) | ||||
| Net cash used in financing activities | (16,841 | ) | (32,611 | ) | ||||
| Effect of exchange rate change on cash | (1,271 | ) | 2,620 | |||||
| Net increase in cash and cash equivalents | 12,236 | 263 | ||||||
| Beginning cash and cash equivalents | 106,815 | 106,552 | ||||||
| Ending cash and cash equivalents | $ | 119,051 | $ | 106,815 | ||||
| Supplemental cash flow information: | ||||||||
| Change in unrealized (gain) loss related to marketable securities, net of tax, included in Accumulated other comprehensive loss | $ | (41 | ) | $ | 73 | |||
| Income taxes paid, net of refunds | $ | 3,054 | $ | 2,387 | ||||
| Interest paid | $ | 18,607 | $ | 20,649 | ||||
| Accrued purchases of plant and equipment | $ | 110 | $ | 588 | ||||
| Note receivable resulting from sale of assets and business units | $ | — | $ | 3,050 | ||||
|
Lattice Semiconductor Corporation - Supplemental Historical Financial Information - (unaudited) |
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| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| December 29, | September 29, | December 30, | December 29, | December 30, | ||||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
| Operations and Cash Flow Information | ||||||||||||||||||||
| Percent of Revenue | ||||||||||||||||||||
| Gross Margin | 56.6 | % | 57.5 | % | 53.8 | % | 55.0 | % | 56.1 | % | ||||||||||
| R&D Expense | 20.1 | % | 18.9 | % | 24.7 | % | 20.7 | % | 26.8 | % | ||||||||||
| SG&A Expense | 22.1 | % | 21.5 | % | 24.8 | % | 22.8 | % | 23.5 | % | ||||||||||
| Depreciation and amortization (in thousands) | $ | 8,521 | $ | 8,315 | $ | 12,270 | $ | 39,261 | $ | 57,861 | ||||||||||
| Stock-based compensation expense (in thousands) | $ | 3,738 | $ | 2,708 | $ | 3,257 | $ | 13,646 | $ | 12,543 | ||||||||||
| Restructuring and severance related charges (in thousands) | $ | 11,854 | $ | 90 | $ | 2,483 | $ | 17,349 | $ | 7,196 | ||||||||||
| Net cash provided by operating activities (thousands) | $ | 30,898 | $ | 10,978 | $ | 2,768 | $ | 51,458 | $ | 38,514 | ||||||||||
| Capital expenditures (in thousands) | $ | 2,206 | $ | 2,073 | $ | 530 | $ | 8,384 | $ | 12,855 | ||||||||||
| Repayment of debt (in thousands) | $ | 15,875 | $ | 15,875 | $ | 1,750 | $ | 43,759 | $ | 35,429 | ||||||||||
| Interest paid (in thousands) | $ | 4,631 | $ | 4,799 | $ | 4,270 | $ | 18,607 | $ | 20,649 | ||||||||||
| Taxes paid (cash, in thousands) | $ | 338 | $ | 659 | $ | 79 | $ | 3,054 | $ | 2,387 | ||||||||||
| Balance Sheet Information | ||||||||||||||||||||
| Current Ratio | 4.1 | 4.0 | 3.1 | |||||||||||||||||
| A/R Days Revenue Outstanding | 58 | 68 | 53 | |||||||||||||||||
| Inventory Months | 4.8 | 4.6 | 5.4 | |||||||||||||||||
| Revenue% (by Geography) | ||||||||||||||||||||
| Asia | 74 | % | 76 | % | 74 | % | 75 | % | 72 | % | ||||||||||
| Europe (incl. Africa) | 10 | % | 12 | % | 13 | % | 11 | % | 12 | % | ||||||||||
| Americas | 16 | % | 12 | % | 13 | % | 14 | % | 16 | % | ||||||||||
| Revenue% (by End Market) | ||||||||||||||||||||
| Communications and Computing | 34 | % | 32 | % | 30 | % | 31 | % | 29 | % | ||||||||||
| Mobile and Consumer | 22 | % | 27 | % | 27 | % | 25 | % | 28 | % | ||||||||||
| Industrial and Automotive | 37 | % | 37 | % | 41 | % | 39 | % | 35 | % | ||||||||||
| Licensing and Services | 7 | % | 4 | % | 2 | % | 5 | % | 8 | % | ||||||||||
| Revenue% (by Channel) * | ||||||||||||||||||||
| Distribution | 76 | % | 82 | % | 83 | % | 83 | % | 77 | % | ||||||||||
| Direct | 24 | % | 18 | % | 17 | % | 17 | % | 23 | % | ||||||||||
| * | During the first quarter of 2018, we updated our channel categories to group all forms of distribution into a single channel. Prior periods have been reclassified to match current period presentation. |
|
Lattice Semiconductor Corporation - Reconciliation of U.S. GAAP to Non-GAAP Financial Measures - (in thousands, except per share data) (unaudited) |
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| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| December 29, | September 29, | December 30, | December 29, | December 30, | ||||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
| Gross Margin Reconciliation | ||||||||||||||||||||
| GAAP Gross margin | $ | 54,306 | $ | 58,364 | $ | 51,216 | $ | 219,439 | $ | 216,579 | ||||||||||
| Inventory adjustment related to restructured operations | (160 | ) | (288 | ) | — | 7,829 | — | |||||||||||||
| Stock-based compensation - gross margin | 288 | 219 | 226 | 940 | 788 | |||||||||||||||
| Non-GAAP Gross margin | $ | 54,434 | $ | 58,295 | $ | 51,442 | $ | 228,208 | $ | 217,367 | ||||||||||
| Gross Margin % Reconciliation | ||||||||||||||||||||
| GAAP Gross margin % | 56.6 | % | 57.5 | % | 53.8 | % | 55.0 | % | 56.1 | % | ||||||||||
| Cumulative effect of non-GAAP Gross Margin adjustments | 0.1 | % | (0.1 | )% | 0.2 | % | 2.2 | % | 0.2 | % | ||||||||||
| Non-GAAP Gross margin % | 56.7 | % | 57.4 | % | 54.0 | % | 57.2 | % | 56.3 | % | ||||||||||
| Operating Expenses Reconciliation | ||||||||||||||||||||
| GAAP Operating expenses | $ | 56,026 | $ | 45,405 | $ | 51,937 | $ | 222,559 | $ | 264,199 | ||||||||||
| Amortization of acquired intangible assets | (3,708 | ) | (3,823 | ) | (5,563 | ) | (17,690 | ) | (31,340 | ) | ||||||||||
| Restructuring charges | (11,854 | ) | (90 | ) | (2,483 | ) | (17,349 | ) | (7,196 | ) | ||||||||||
| Acquisition related charges (1) | — | — | (573 | ) | (1,531 | ) | (3,781 | ) | ||||||||||||
| Impairment of acquired intangible assets | 800 | (586 | ) | 3,767 | (11,686 | ) | (32,431 | ) | ||||||||||||
| Stock-based compensation - operations | (3,450 | ) | (2,489 | ) | (3,031 | ) | (12,706 | ) | (11,755 | ) | ||||||||||
| Gain on sale of building | — | — | — | — | 4,624 | |||||||||||||||
| Non-GAAP Operating expenses | $ | 37,814 | $ | 38,417 | $ | 44,054 | $ | 161,597 | $ | 182,320 | ||||||||||
| (Loss) Income from Operations Reconciliation | ||||||||||||||||||||
| GAAP (Loss) income from operations | $ | (1,720 | ) | $ | 12,959 | $ | (721 | ) | $ | (3,120 | ) | $ | (47,620 | ) | ||||||
| Inventory adjustment related to restructured operations | (160 | ) | (288 | ) | — | 7,829 | — | |||||||||||||
| Stock-based compensation - gross margin | 288 | 219 | 226 | 940 | 788 | |||||||||||||||
| Amortization of acquired intangible assets | 3,708 | 3,823 | 5,563 | 17,690 | 31,340 | |||||||||||||||
| Restructuring charges | 11,854 | 90 | 2,483 | 17,349 | 7,196 | |||||||||||||||
| Acquisition related charges (1) | — | — | 573 | 1,531 | 3,781 | |||||||||||||||
| Impairment of acquired intangible assets | (800 | ) | 586 | (3,767 | ) | 11,686 | 32,431 | |||||||||||||
| Stock-based compensation - operations | 3,450 | 2,489 | 3,031 | 12,706 | 11,755 | |||||||||||||||
| Gain on sale of building | — | — | — | — | (4,624 | ) | ||||||||||||||
| Non-GAAP Income from operations | $ | 16,620 | $ | 19,878 | $ | 7,388 | $ | 66,611 | $ | 35,047 | ||||||||||
| (Loss) Income from Operations % Reconciliation | ||||||||||||||||||||
| GAAP (Loss) income from operations % | (1.8 | )% | 12.8 | % | (0.8 | )% | (0.8 | )% | (12.3 | )% | ||||||||||
| Cumulative effect of non-GAAP Gross Margin and Operating adjustments | 19.1 | % | 6.8 | % | 8.6 | % | 17.5 | % | 21.4 | % | ||||||||||
| Non-GAAP Income from operations % | 17.3 | % | 19.6 | % | 7.8 | % | 16.7 | % | 9.1 | % | ||||||||||
| (1) Legal fees and outside services that were related to our proposed acquisition by Canyon Bridge Acquisition Company, Inc. | ||||||||||||||||||||
| 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 29, | September 29, | December 30, | December 29, | December 30, | ||||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
| Other Expense, Net Reconciliation | ||||||||||||||||||||
| GAAP Other expense, net | $ | (3 | ) | $ | (452 | ) | $ | (1,182 | ) | $ | (249 | ) | $ | (3,286 | ) | |||||
| Loss on sale of assets and business units | — | — | — | — | 1,496 | |||||||||||||||
| Non-GAAP Other expense, net | $ | (3 | ) | $ | (452 | ) | $ | (1,182 | ) | $ | (249 | ) | $ | (1,790 | ) | |||||
| Income Tax Expense Reconciliation | ||||||||||||||||||||
| GAAP Income tax expense | $ | 380 | $ | 33 | $ | 615 | $ | 2,353 | $ | 849 | ||||||||||
| Estimated tax effect of non-GAAP adjustments (2) | 88 | 108 | (142 | ) | — | — | ||||||||||||||
| Non-GAAP Income tax expense | $ | 468 | $ | 141 | $ | 473 | $ | 2,353 | $ | 849 | ||||||||||
| Net (Loss) Income Reconciliation | ||||||||||||||||||||
| GAAP Net (loss) income | $ | (7,121 | ) | $ | 6,974 | $ | (7,213 | ) | $ | (26,322 | ) | $ | (70,562 | ) | ||||||
| Inventory adjustment related to restructured operations | (160 | ) | (288 | ) | — | 7,829 | — | |||||||||||||
| Stock-based compensation - gross margin | 288 | 219 | 226 | 940 | 788 | |||||||||||||||
| Amortization of acquired intangible assets | 3,708 | 3,823 | 5,563 | 17,690 | 31,340 | |||||||||||||||
| Restructuring charges | 11,854 | 90 | 2,483 | 17,349 | 7,196 | |||||||||||||||
| Acquisition related charges (1) | — | — | 573 | 1,531 | 3,781 | |||||||||||||||
| Impairment of acquired intangible assets | (800 | ) | 586 | (3,767 | ) | 11,686 | 32,431 | |||||||||||||
| Stock-based compensation - operations | 3,450 | 2,489 | 3,031 | 12,706 | 11,755 | |||||||||||||||
| Gain on sale of building | — | — | — | — | (4,624 | ) | ||||||||||||||
| Loss on sale of assets and business unit | — | — | — | — | 1,496 | |||||||||||||||
| Estimated tax effect of non-GAAP adjustments (2) | (88 | ) | (108 | ) | 142 | — | — | |||||||||||||
| Non-GAAP Net income | $ | 11,131 | $ | 13,785 | $ | 1,038 | $ | 43,409 | $ | 13,601 | ||||||||||
| Net (Loss) Income Per Share Reconciliation | ||||||||||||||||||||
| GAAP Net (loss) income per share - basic | $ | (0.05 | ) | $ | 0.05 | $ | (0.06 | ) | $ | (0.21 | ) | $ | (0.58 | ) | ||||||
| Cumulative effect of Non-GAAP adjustments | 0.14 | 0.06 | 0.07 | 0.55 | 0.69 | |||||||||||||||
| Non-GAAP Net income per share - basic | $ | 0.09 | $ | 0.11 | $ | 0.01 | $ | 0.34 | $ | 0.11 | ||||||||||
| GAAP Net (loss) income per share - diluted | $ | (0.05 | ) | $ | 0.05 | $ | (0.06 | ) | $ | (0.21 | ) | $ | (0.58 | ) | ||||||
| Cumulative effect of Non-GAAP adjustments | 0.13 | 0.06 | 0.07 | 0.54 | 0.69 | |||||||||||||||
| Non-GAAP Net (loss) income per share - diluted | $ | 0.08 | $ | 0.11 | $ | 0.01 | $ | 0.33 | $ | 0.11 | ||||||||||
| Shares used in per share calculations: | ||||||||||||||||||||
| Basic | 129,521 | 127,816 | 123,541 | 126,564 | 122,677 | |||||||||||||||
| Diluted - GAAP (3) | 129,521 | 129,474 | 123,541 | 126,564 | 122,677 | |||||||||||||||
| Diluted - Non-GAAP (3) | 132,471 | 129,474 | 124,370 | 129,766 | 124,499 | |||||||||||||||
|
|
||||||||||||||||||||
|
(1) |
Legal fees and outside services that were related to our proposed acquisition by Canyon Bridge Acquisition Company, Inc. |
|
|
(2) |
We calculate non-GAAP tax expense by applying our tax provision model to year-to-date and projected income after adjusting for non-GAAP items. The difference between calculated values for GAAP and non-GAAP tax expense has been included as the “Estimated tax effect of non-GAAP adjustments.” |
|
|
(3) |
Diluted shares are calculated using the GAAP treasury stock method. In a loss position, diluted shares equal basic shares. |
