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Lattice Semiconductor Corporation Consolidated Statements of Operations (in thousands, except per share data) (unaudited) Three Months Ended Year Ended ------------------------------- -------------------- December September December December December 28, 2013 28, 2013 29, 2012 28, 2013 29, 2012 --------- ---------- --------- --------- --------- Revenue $ 89,519 $ 87,154 $ 65,875 $ 332,525 $ 279,256 Costs and expenses: Cost of products sold 40,916 40,778 30,202 154,281 128,499 Research and development 22,331 20,254 18,655 80,966 77,610 Selling, general and administrative 17,189 16,385 17,269 67,144 72,317 Acquisition related charges (1) 737 737 760 2,960 4,178 Restructuring (2) 131 85 5,375 388 6,018 --------- ---------- --------- --------- --------- 81,304 78,239 72,261 305,739 288,622 --------- ---------- --------- --------- --------- Income (loss) from operations 8,215 8,915 (6,386) 26,786 (9,366) Other (loss) income, net (540) 346 (341) (300) 505 --------- ---------- --------- --------- --------- Income (loss) before provision for income taxes 7,675 9,261 (6,727) 26,486 (8,861) Provision for income taxes (3) 1,128 417 448 4,165 20,745 --------- ---------- --------- --------- --------- Net income (loss) $ 6,547 $ 8,844 $ (7,175) $ 22,321 $ (29,606) ========= ========== ========= ========= ========= Net income (loss) per share (4): Basic $ 0.06 $ 0.08 $ (0.06) $ 0.19 $ (0.25) ========= ========== ========= ========= ========= Diluted $ 0.06 $ 0.08 $ (0.06) $ 0.19 $ (0.25) ========= ========== ========= ========= ========= Shares used in per share calculations (4): Basic 115,718 116,055 115,943 115,701 117,194 ========= ========== ========= ========= ========= Diluted 117,156 117,349 115,943 117,081 117,194 ========= ========== ========= ========= ========= Notes: (1) During fiscal 2012, the Company recorded consulting, legal costs, severance related integration costs and amortization of intangible assets associated with the acquisition of SiliconBlue. During fiscal 2013, Acquisition related charges consist of amortization of intangible assets. (2) Represents costs and adjustments incurred primarily related to the corporate restructuring plans announced on October 12, 2012 and April 21, 2011. (3) The tax provision for the year ended December 29, 2012 reflects our new global tax structure and the resulting intercompany sale of inventory and fixed assets. (4) For the three and twelve month periods in fiscal 2013, the computation of diluted earnings per share includes the effects of stock options and restricted stock units as they are dilutive. For the three and twelve month periods in fiscal 2012, the computation of diluted earnings per share excludes the effects of stock options, restricted stock units and ESPP shares as they are antidilutive. ESPP shares are included if dilutive. Lattice Semiconductor Corporation Consolidated Balance Sheets (in thousands) (unaudited) December 28, December 29, 2013 2012 ------------- ------------- Assets Current assets: Cash, cash equivalents and short-term marketable securities $ 215,815 $ 183,401 Accounts receivable, net 50,085 46,947 Inventories 46,222 44,194 Other current assets (1) 13,679 12,527 ------------- ------------- Total current assets 325,801 287,069 Property and equipment, net 41,719 40,384 Long-term marketable securities 5,241 4,717 Other long-term assets 6,120 6,854 Intangible assets, net of amortization 12,484 15,430 Goodwill 44,808 44,808 Deferred income taxes (1) 11,703 15,357 $ 447,876 $ 414,619 ============= ============= Liabilities and Stockholders' Equity Current liabilities: Accounts payable and other accrued liabilities $ 51,113 $ 42,540 Deferred income and allowances on sales to sell- through distributors 7,495 10,553 ------------- ------------- Total current liabilities 58,608 53,093 Other long-term liabilities (1) 3,588 3,976 ------------- ------------- Total liabilities 62,196 57,069 Stockholders' equity 385,680 357,550 ------------- $ 447,876 $ 414,619 ============= ============= Notes: (1) In June 2013 the company adopted, with retrospective application, the requirements of ASU 2013-11 Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. Accordingly, previous periods have been revised to conform with current period presentation. This resulted in both long-term taxes payable and deferred tax assets declining by approximately $14 million for all periods presented. Lattice Semiconductor Corporation - Supplemental Historical Financial Information - Three Months Ended Year Ended --------------------------------- ---------------------- 12/28/2013 9/28/2013 12/29/2012 12/28/2013 12/29/2012 ---------- --------- ---------- ---------- ---------- Operations Information Percent of Revenue Gross Margin 54.3% 53.2% 54.2% 53.6% 54.0% R&D Expense 24.9% 23.2% 28.3% 24.3% 27.8% SG&A Expense 19.2% 18.8% 26.2% 20.2% 25.9% Depreciation and amortization (in thousands) 5,634 5,210 5,987 20,807 22,149 Capital expenditures (in thousands) 2,263 3,400 2,363 12,500 13,593 Stock compensation expense (in thousands) 2,537 2,562 1,757 9,522 7,510 Restructuring and severance related charges (in thousands) 167 376 5,299 797 8,515 Taxes paid (cash, in thousands) 289 126 172 1,370 908 Balance Sheet Information Current Ratio 5.6 5.2 5.4 A/R Days Revenue Outstanding 50 55 64 Inventory Months 3.4 3.1 4.4 Revenue% (by Product Family) PLD 68% 70% 68% 69% 66% FPGA 32% 30% 32% 31% 34% Revenue% (by Product Classification) (1) New 46% 51% 29% 46% 22% Mainstream 43% 41% 53% 43% 56% Mature 11% 8% 18% 11% 22% Revenue% (by Geography) Asia 76% 76% 69% 74% 68% Europe (incl. Africa) 12% 14% 16% 14% 17% Americas 12% 10% 15% 12% 15% Revenue% (by End Market) (2) Communications 41% 35% 38% 38% 42% Industrial & Other 23% 20% 31% 23% 32% Computing 9% 9% 13% 9% 13% Consumer 27% 36% 18% 30% 13% Revenue% (by Channel) Sell-through distribution 45% 41% 55% 45% 55% Direct 55% 59% 45% 55% 45% (1) New: MachXO3, LatticeECP3, MachXO2, Power Manager II, and iCE40 Mainstream: ispMACH 4000ZE, ispMACH 4000/Z, LatticeSC, LatticeECP2/M, LatticeECP, LatticeXP2, LatticeXP, MachXO, ispClock A/D/S, Software and IP Mature: ispXPLD, ispXPGA, FPSC, ORCA 2, ORCA 3, ORCA 4, ispPAC, isplsi 8000V, ispMACH 5000B, ispMACH 2LV, ispMACH 5LV, ispLSI 2000V, ispLSI 5000V, ispMACH 5000VG, all 5-volt CPLDs, ispGDX2, GDX/V, ispMACH 4/LV, iCE65, ispClock, Power Manager I, all SPLDs * Product categories are modified as appropriate relative to our portfolio of products and the generation within each major product family. New products consist of our latest generation of products, while Mainstream and Mature are older or based on unique late stage customer- based production needs. Generally, product categories are adjusted every two to three years, at which time prior periods are reclassified to conform to the new categorization. In the first fiscal quarter 2012 we reclassified our New, Mainstream and Mature product categories to better reflect our current product portfolio. (2) During the first quarter of 2013, the Company refined its methodology for assigning revenue by End Market categories. All periods presented have been revised to conform to this methodology.