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												Year Ended
				December 31, 2016				October 1, 2016				January 2, 2016				December 31, 2016				January 2, 2016
Revenue				$	118,108			$	113,225			$	101,194			$	427,054			$	405,966
Costs and expenses:
Cost of sales				54,628				45,801				47,092				180,620				186,057
Research and development				26,248				27,747				32,055				117,518				136,868
Selling, general, and administrative				22,745				29,244				24,253				98,602				97,349
Amortization of acquired intangible assets				8,283				8,260				8,756				33,575				29,580
Restructuring				951				317				3,459				9,267				19,239
Acquisition related charges				6,211				—				372				6,305				22,450
Impairment of goodwill and intangible assets				—				7,866				21,655				7,866				21,655
				119,066				119,235				137,642				453,753				513,198
Loss from operations				(958		)		(6,010		)		(36,448		)		(26,699		)		(107,232		)
Interest expense				(5,070		)		(5,235		)		(5,519		)		(20,327		)		(18,389		)
Other income (expense), net				745				209				515				4,303				(580		)
Loss before income taxes and equity in net loss of an unconsolidated affiliate				(5,283		)		(11,036		)		(41,452		)		(42,723		)		(126,201		)
Income tax expense				2,507				971				3,510				9,917				32,540
Equity in net loss of an unconsolidated affiliate, net of tax				(374		)		(407		)		(492		)		(1,459		)		(492		)
Net loss				$	(8,164	)		$	(12,414	)		$	(45,454	)		$	(54,099	)		$	(159,233	)
Net loss per share, basic and diluted				$	(0.07	)		$	(0.10	)		$	(0.38	)		$	(0.45	)		$	(1.36	)
Shares used in per share calculations, basic and diluted				121,236				120,584				118,095				119,994				117,387

Lattice Semiconductor Corporation Consolidated Balance Sheets (in thousands) (unaudited)
				December 31, 2016				January 2, 2016
Assets
Current assets:
Cash, cash equivalents and short-term marketable securities				$	116,860			$	102,574
Accounts receivable, net				99,637				88,471
Inventories				79,168				75,896
Other current assets				19,035				18,922
Total current assets				314,700				285,863
Property and equipment, net				49,481				51,852
Intangible assets, net of amortization				118,863				162,583
Goodwill				269,758				267,549
Deferred income taxes				372				578
Other long-term assets				13,709				17,495
				$	766,883			$	785,920
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued liabilities				$	90,798			$	83,761
Current portion of long-term debt				15,862				7,557
Deferred income and allowances on sales to sell-through distributors and deferred license revenue				32,985				19,859
Total current liabilities				139,645				111,177
Long-term debt				318,760				330,870
Other long-term liabilities				38,048				38,353
Total liabilities				496,453				480,400
Stockholders' equity				270,430				305,520
				$	766,883			$	785,920

Lattice Semiconductor Corporation Consolidated Statements of Cash Flows (in thousands) (unaudited)
				Year Ended
				December 31, 2016				January 2, 2016
Cash flows from operating activities:
Net loss				$	(54,099	)		$	(159,233	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization				61,806				60,808
Impairment of intangible assets				7,866				21,655
Amortization of debt issuance costs and discount				1,350				2,835
Change in deferred income tax provision				90				21,367
Loss on sale or maturity of marketable securities				79				333
Gain on forward contracts				(184		)		—
Stock-based compensation expense				16,213				18,396
Loss on disposal of fixed assets				597				—
Gain on sale of business unit				(2,646		)		—
Equity in net loss of an unconsolidated affiliate, net of tax				1,459				492
Changes in assets and liabilities:
Accounts receivable, net				(11,419		)		4,578
Inventories				(3,272		)		9,868
Prepaid expenses and other current assets				(2,270		)		(6,710		)
Accounts payable and accrued expenses (includes restructuring)				8,338				6,301
Accrued payroll obligations				402				(10,202		)
Income taxes payable				3,216				1,749
Deferred income and allowances on sales to sell-through distributors				14,391				2,920
Deferred licensing and services revenue				(183		)		1,958
Net cash provided by (used in) operating activities				41,734				(22,885		)
Cash flows from investing activities:
Proceeds from sales of and maturities of short-term marketable securities				14,897				142,956
Purchases of marketable securities, net				(7,490		)		(15,982		)
Cash paid for business acquisition, net of cash acquired				—				(431,068		)
Capital expenditures				(16,717		)		(18,209		)
Proceeds from sale of business unit, net of cash sold				1,972				—
Cash paid for a non-marketable equity method investment				(1,000		)		(5,000		)
Cash paid for software licenses				(9,035		)		(9,515		)
Net cash used in investing activities				(17,373		)		(336,818		)
Cash flows from financing activities:
Proceeds from issuance of restricted stock units, net of withholding taxes				(3,565		)		(3,493		)
Purchases of treasury stock				—				(6,970		)
Net proceeds from issuance of common stock				7,607				5,679
Net proceeds from issuance of long-term debt				—				346,500
Cash paid for debt issuance costs				—				(8,283		)
Repayment of debt				(5,154		)		(2,625		)
Cash paid to redeem noncontrolling interest				—				(867		)
Net cash (used in) provided by financing activities				(1,112		)		329,941
Lattice Semiconductor Corporation
Consolidated Statements of Cash Flows (continued)
(in thousands)
(unaudited)
				Year Ended
				December 31, 2016				January 2, 2016
Effect of exchange rate change on cash				(1,303		)		(1,243		)
Net increase (decrease) in cash and cash equivalents				21,946				(31,005		)
Beginning cash and cash equivalents				84,606				115,611
Ending cash and cash equivalents				$	106,552			$	84,606
Supplemental cash flow information:
Change in unrealized gain (loss) related to marketable securities, net of tax, included in Accumulated other comprehensive loss				$	(93	)		$	(69	)
Income taxes paid, net of refunds				$	9,359			$	8,339
Interest paid				$	18,159			$	11,071
Accrued purchases of plant and equipment				$	(249	)		$	799
Transfer of residual temporary equity to additional paid-in capital on redemption of noncontrolling interest				$	—			$	6,773

Lattice Semiconductor Corporation - Supplemental Historical Financial Information - (unaudited)
				Three Months Ended									Year Ended
				December 31, 2016			October 1, 2016			January 2, 2016			December 31, 2016			January 2, 2016
Operations Information
Percent of Revenue
Gross Margin				53.7	%		59.5	%		53.5	%		57.7	%		54.2	%
R&D Expense				22.2	%		24.5	%		31.7	%		27.5	%		33.7	%
SG&A Expense				19.3	%		25.8	%		24.0	%		23.1	%		24.0	%
Depreciation and amortization (in thousands)				13,898			15,556			17,892			61,806			60,808
Capital expenditures (in thousands)				2,726			3,889			6,624			16,717			18,209
Stock-based compensation expense (in thousands)				4,106			4,309			4,788			16,213			17,350
Stock-based compensation included in acquisition related charges (in thousands)				—			—			—			—			4,293
Restructuring and severance related charges (in thousands)				951			317			3,459			9,267			19,239
Severance costs included in acquisition related charges (in thousands)				—			—			—			—			4,017
Taxes paid (cash, in thousands)				2,109			2,386			2,936			9,359			8,339
Balance Sheet Information
Current Ratio				2.3			2.2			2.6
A/R Days Revenue Outstanding				77			76			80
Inventory Months				4.3			5.3			4.8
Revenue% (by Geography)
Asia				75	%		74	%		75	%		71	%		76	%
Europe (incl. Africa)				14	%		12	%		12	%		14	%		14	%
Americas				11	%		14	%		13	%		15	%		10	%
Revenue% (by End Market) (1)
Communications and Computing				26	%		27	%		35	%		29	%		35	%
Mobile and Consumer				36	%		31	%		30	%		30	%		31	%
Industrial and Automotive				31	%		33	%		23	%		33	%		25	%
Licensing and Services				7	%		9	%		12	%		8	%		9	%
Revenue% (by Channel)
Sell-through distribution				68	%		62	%		44	%		61	%		45	%
Direct				32	%		38	%		56	%		39	%		55	%

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