In addition to the foregoing, other factors that may cause actual results to differ materially from the forward-looking statements in this press release include global economic uncertainty, overall semiconductor market conditions, market acceptance and demand for our new products, the Company's dependencies on its silicon wafer suppliers, the impact of competitive products and pricing, technological and product development risks, the failure to achieve the anticipated benefits and synergies of the Silicon Image transaction. In addition, actual results are subject to other 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 31, 2016, and Lattice’s quarterly reports filed on Form 10-Q.

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 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 charges, acquisition-related charges, amortization of acquired intangible assets, impairment of intangible assets, purchase accounting adjustments, gain on sale of building, gain or loss on sale of business unit, and the estimated tax effect of these items. These charges and adjustments may be nonrecurring in nature but 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. 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 in calculating the annual excess cash flow debt payment. 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 a leader in smart connectivity solutions at the network edge, where the “things” of IoT live. Our low power FPGA, 60 GHz millimeter wave, video ASSP and IP products deliver edge intelligence, edge connectivity, and control solutions to the consumer, communications, industrial, compute, and automotive markets. Our unwavering commitment to our global customers enables them to accelerate their innovation, creating an ever better and more connected world.

For more information about Lattice please visit  www.latticesemi.com. You can also follow us via  LinkedIn,  Twitter,  Facebook,  YouTube, WeChat, Weibo or  Youku.

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												Twelve Months Ended
		December 30, 2017				September 30, 2017				December 31, 2016				December 30, 2017				December 31, 2016
Revenue		$	95,266			$	91,971			$	118,108			$	385,961			$	427,054
Costs and expenses:
Cost of sales		44,050				38,649				54,628				169,382				180,620
Research and development		23,500				25,648				26,248				103,357				117,518
Selling, general, and administrative		23,585				21,290				22,745				90,718				98,602
Amortization of acquired intangible assets		5,563				8,526				8,283				31,340				33,575
Restructuring		2,483				3,071				951				7,196				9,267
Acquisition related charges		573				681				6,211				3,781				6,305
Impairment of acquired intangible assets		(3,767		)		36,198				—				32,431				7,866
Gain on sale of building		—				(4,624		)		—				(4,624		)		—
		95,987				129,439				119,066				433,581				453,753
Loss from operations		(721		)		(37,468		)		(958		)		(47,620		)		(26,699		)
Interest expense		(4,695		)		(3,888		)		(5,070		)		(18,807		)		(20,327		)
Other (expense) income, net		(1,182		)		(2,027		)		371				(3,286		)		2,844
Loss before income taxes		(6,598		)		(43,383		)		(5,657		)		(69,713		)		(44,182		)
Income tax expense (benefit)		615				(331		)		2,507				849				9,917
Net loss		$	(7,213	)		$	(43,052	)		$	(8,164	)		$	(70,562	)		$	(54,099	)
Net loss per share, basic and diluted		$	(0.06	)		$	(0.35	)		$	(0.07	)		$	(0.58	)		$	(0.45	)
Shares used in per share calculations, basic and diluted		123,541				122,990				121,236				122,677				119,994

Lattice Semiconductor Corporation Consolidated Balance Sheets (in thousands) (unaudited)
		December 30, 2017				December 31, 2016
Assets
Current assets:
Cash, cash equivalents and short-term marketable securities		$	111,797			$	116,860
Accounts receivable, net		55,104				99,637
Inventories		79,903				79,168
Other current assets		16,567				19,035
Total current assets		263,371				314,700
Property and equipment, net		40,423				49,481
Intangible assets, net of amortization		51,308				118,863
Goodwill		267,514				269,758
Deferred income taxes		198				372
Other long-term assets		13,147				13,709
		$	635,961			$	766,883
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued liabilities		$	64,821			$	90,798
Current portion of long-term debt		1,508				33,767
Deferred income and allowances on sales to sell-through distributors and deferred license revenue		17,318				32,985
Total current liabilities		83,647				157,550
Long-term debt		299,667				300,855
Other long-term liabilities		34,954				38,048
Total liabilities		418,268				496,453
Stockholders' equity		217,693				270,430
		$	635,961			$	766,883

Lattice Semiconductor Corporation Consolidated Statements of Cash Flows (in thousands) (unaudited)
		Twelve Months Ended
		December 30, 2017				December 31, 2016
Cash flows from operating activities:
Net loss		$	(70,562	)		$	(54,099	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		57,861				61,806
Impairment of acquired intangible assets		32,431				7,866
Amortization of debt issuance costs and discount		1,982				1,350
Change in deferred income tax provision		(154		)		90
Loss on sale or maturity of marketable securities		252				79
Gain on forward contracts		(77		)		(184		)
Stock-based compensation expense		12,543				16,213
(Gain) loss on disposal of fixed assets		(75		)		597
Gain on sale of building		(4,624		)		—
Loss (gain) on sale of assets and business units		1,496				(2,646		)
Impairment of cost-method investment		1,761				1,459
Changes in assets and liabilities:
Accounts receivable, net		44,613				(11,419		)
Inventories		(902		)		(3,272		)
Prepaid expenses and other assets		889				(2,270		)
Accounts payable and accrued expenses (includes restructuring)		(23,588		)		8,338
Accrued payroll obligations		726				402
Income taxes payable		(556		)		3,216
Deferred income and allowances on sales to sell-through distributors		(15,007		)		14,391
Deferred licensing and services revenue		(495		)		(183		)
Net cash provided by operating activities		38,514				41,734
Cash flows from investing activities:
Proceeds from sales of and maturities of short-term marketable securities		12,689				14,897
Purchases of marketable securities		(7,420		)		(7,490		)
Proceeds from sale of building		7,895				—
Cash paid for costs of sale of building		(1,004		)		—
Capital expenditures		(12,855		)		(16,717		)
Proceeds from sale of assets and business unit, net of cash sold		967				1,972
Repayment received on short-term loan to cost-method investee		2,000				—
Short-term loan to cost-method investee		(2,000		)		—
Cash paid for a cost-method investment		—				(1,000		)
Cash paid for software licenses		(8,532		)		(9,035		)
Net cash used in investing activities		(8,260		)		(17,373		)
Lattice Semiconductor Corporation
Consolidated Statements of Cash Flows (continued)
(in thousands)
(unaudited)
		Twelve Months Ended
		December 30, 2017				December 31, 2016
Cash flows from financing activities:
Restricted stock unit withholdings		(3,267		)		(3,565		)
Proceeds from issuance of common stock		6,085				7,607
Repayment of debt		(35,429		)		(5,154		)
Net cash used in financing activities		(32,611		)		(1,112		)
Effect of exchange rate change on cash		2,620				(1,303		)
Net increase in cash and cash equivalents		263				21,946
Beginning cash and cash equivalents		106,552				84,606
Ending cash and cash equivalents		$	106,815			$	106,552
Supplemental cash flow information:
Change in unrealized loss related to marketable securities, net of tax, included in Accumulated other comprehensive loss		$	73			$	172
Income taxes paid, net of refunds		$	2,387			$	9,359
Interest paid		$	20,649			$	18,159
Accrued purchases of plant and equipment		$	588			$	1,028
Note receivable resulting from sale of assets and business units		$	3,050			$	—

Lattice Semiconductor Corporation - Supplemental Historical Financial Information - (unaudited)
	Three Months Ended									Twelve Months Ended
	December 30, 2017			September 30, 2017			December 31, 2016			December 30, 2017			December 31, 2016
Operations and Cash Flow Information
Percent of Revenue
Gross Margin	53.8	%		58.0	%		53.7	%		56.1	%		57.7	%
R&D Expense	24.7	%		27.9	%		22.2	%		26.8	%		27.5	%
SG&A Expense	24.8	%		23.1	%		19.3	%		23.5	%		23.1	%
Depreciation and amortization (in thousands)	12,270			15,094			13,898			57,861			61,806
Stock-based compensation expense (in thousands)	3,257			2,514			4,106			12,543			16,213
Restructuring and severance related charges (in thousands)	2,483			3,071			951			7,196			9,267
Net cash provided by operating activities (thousands)	2,768			24,232			22,416			38,514			41,734
Capital expenditures (in thousands)	530			5,290			2,726			12,855			16,717
Repayment of debt (in thousands)	1,750			—			875			35,429			5,154
Interest paid (in thousands)	4,270			4,285			4,310			20,649			18,159
Taxes paid (cash, in thousands)	79			1,332			2,109			2,387			9,359
Balance Sheet Information
Current Ratio	3.1			2.2			2.0
A/R Days Revenue Outstanding	53			78			77
Inventory Months	5.4			6.0			4.3
Revenue% (by Geography)
Asia	74	%		75	%		75	%		72	%		71	%
Europe (incl. Africa)	13	%		12	%		14	%		12	%		14	%
Americas	13	%		13	%		11	%		16	%		15	%
Revenue% (by End Market)
Communications and Computing	30	%		30	%		26	%		29	%		29	%
Mobile and Consumer	27	%		28	%		36	%		28	%		30	%
Industrial and Automotive	41	%		37	%		31	%		35	%		33	%
Licensing and Services	2	%		5	%		7	%		8	%		8	%
Revenue% (by Channel)
Sell-through distribution	71	%		68	%		68	%		66	%		61	%
Direct	29	%		32	%		32	%		34	%		39	%

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 30, 2017				September 30, 2017				December 31, 2016				December 30, 2017				December 31, 2016
Gross Margin Reconciliation
GAAP Gross margin		$	51,216			$	53,322			$	63,480			$	216,579			$	246,434
Inventory step-up expense		—				—				—				—				523
Stock-based compensation - gross margin		226				154				232				788				888
Non-GAAP Gross margin		$	51,442			$	53,476			$	63,712			$	217,367			$	247,845
Gross Margin % Reconciliation
GAAP Gross margin %		53.8		%		58.0		%		53.7		%		56.1		%		57.7		%
Cumulative effect of non-GAAP Gross Margin adjustments		0.2		%		0.1		%		0.2		%		0.2		%		0.3		%
Non-GAAP Gross margin %		54.0		%		58.1		%		53.9		%		56.3		%		58.0		%
Operating Expenses Reconciliation
GAAP Operating expenses		$	51,937			$	90,790			$	64,438			$	264,199			$	273,133
Amortization of acquired intangible assets		(5,563		)		(8,526		)		(8,283		)		(31,340		)		(33,575		)
Restructuring charges		(2,483		)		(3,071		)		(951		)		(7,196		)		(9,267		)
Acquisition related charges (1)		(573		)		(681		)		(6,211		)		(3,781		)		(6,305		)
Impairment of acquired intangible assets		3,767				(36,198		)		—				(32,431		)		(7,866		)
Stock-based compensation - operations		(3,031		)		(2,360		)		(3,874		)		(11,755		)		(15,325		)
Gain on sale of building		—				4,624				—				4,624				—
Non-GAAP Operating expenses		$	44,054			$	44,578			$	45,119			$	182,320			$	200,795
(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 30, 2017				September 30, 2017				December 31, 2016				December 30, 2017				December 31, 2016
(Loss) Income from Operations Reconciliation
GAAP Loss from operations		$	(721	)		$	(37,468	)		$	(958	)		$	(47,620	)		$	(26,699	)
Inventory step-up expense		—				—				—				—				523
Stock-based compensation - gross margin		226				154				232				788				888
Amortization of acquired intangible assets		5,563				8,526				8,283				31,340				33,575
Restructuring charges		2,483				3,071				951				7,196				9,267
Acquisition related charges (1)		573				681				6,211				3,781				6,305
Impairment of acquired intangible assets		(3,767		)		36,198				—				32,431				7,866
Stock-based compensation - operations		3,031				2,360				3,874				11,755				15,325
Gain on sale of building		—				(4,624		)		—				(4,624		)		—
Non-GAAP Income from operations		$	7,388			$	8,898			$	18,593			$	35,047			$	47,050
(Loss) Income from Operations % Reconciliation
GAAP Loss from operations %		(0.8		)%		(40.7		)%		(0.8		)%		(12.3		)%		(6.3		)%
Cumulative effect of non-GAAP Gross Margin and Operating adjustments		8.6		%		50.4		%		16.5		%		21.4		%		17.3		%
Non-GAAP Income from operations %		7.8		%		9.7		%		15.7		%		9.1		%		11.0		%
Other (Expense) Income, Net Reconciliation
GAAP Other (expense) income, net		$	(1,182	)		$	(2,027	)		$	371			$	(3,286	)		$	2,844
Loss (gain) on sale of assets and business units		—				1,796				—				1,496				(2,646		)
Non-GAAP Other (expense) income, net		$	(1,182	)		$	(231	)		$	371			$	(1,790	)		$	198
Income Tax Expense (Benefit) Reconciliation
GAAP Income tax expense (benefit)		$	615			$	(331	)		$	2,507			$	849			$	9,917
Estimated tax effect of non-GAAP adjustments (2)		(142		)		(218		)		(438		)		—				—
Non-GAAP Income tax expense (benefit)		$	473			$	(549	)		$	2,069			$	849			$	9,917
(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.”
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 30, 2017				September 30, 2017				December 31, 2016				December 30, 2017				December 31, 2016
Net (Loss) Income Reconciliation
GAAP Net loss		$	(7,213	)		$	(43,052	)		$	(8,164	)		$	(70,562	)		$	(54,099	)
Inventory step-up expense		—				—				—				—				523
Stock-based compensation - gross margin		226				154				232				788				888
Amortization of acquired intangible assets		5,563				8,526				8,283				31,340				33,575
Restructuring charges		2,483				3,071				951				7,196				9,267
Acquisition related charges (1)		573				681				6,211				3,781				6,305
Impairment of acquired intangible assets		(3,767		)		36,198				—				32,431				7,866
Stock-based compensation - operations		3,031				2,360				3,874				11,755				15,325
Gain on sale of building		—				(4,624		)		—				(4,624		)		—
Loss (gain) on sale of assets and business units		—				1,796				—				1,496				(2,646		)
Estimated tax effect of non-GAAP adjustments (2)		142				218				438				—				—
Non-GAAP Net income		$	1,038			$	5,328			$	11,825			$	13,601			$	17,004
Net (Loss) Income Per Share Reconciliation
GAAP Net loss per share - basic and diluted		$	(0.06	)		$	(0.35	)		$	(0.07	)		$	(0.58	)		$	(0.45	)
Cumulative effect of Non-GAAP adjustments		0.07				0.39				0.17				0.69				0.59
Non-GAAP Net income per share - basic and diluted		$	0.01			$	0.04			$	0.10			$	0.11			$	0.14
Shares used in per share calculations:
Basic		123,541				122,990				121,236				122,677				119,994
Diluted - GAAP (3)		123,541				122,990				121,236				122,677				119,994
Diluted - Non-GAAP (3)		124,370				124,225				123,621				124,499				121,957
(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.

Lattice Semiconductor Corporation
- Reconciliation of U.S. GAAP to Non-GAAP Financial Measures -
(in thousands, except per share data)
(unaudited)
		Three Months Ended
		March 31, 2018
Business Outlook - First Quarter 2018		Low -2%				Midpoint				High +2%
GAAP Operating expenses		$	52,700			$	53,800			$	54,900
Cumulative effect of Non-GAAP Operating expense adjustments (4)		(10,100		)		(10,300		)		(10,500		)
Non-GAAP Operating expenses		$	42,600			$	43,500			$	44,400

(4) Includes estimated Amortization of acquired intangible assets, Restructuring charges, and Stock-based

compensation included in Operating Expenses.

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