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, 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. 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 | ||||||||||||
|
March 31,
2018 |
December 30,
2017 |
April 1,
2017 |
||||||||||
| Revenue | $ | 98,623 | $ | 95,266 | $ | 104,587 | ||||||
| Costs and expenses: | ||||||||||||
| Cost of sales | 42,102 | 44,050 | 43,755 | |||||||||
| Research and development | 22,941 | 23,500 | 27,389 | |||||||||
| Selling, general, and administrative | 27,043 | 23,585 | 23,905 | |||||||||
| Amortization of acquired intangible assets | 5,636 | 5,563 | 8,514 | |||||||||
| Restructuring | 1,029 | 2,483 | 66 | |||||||||
| Acquisition related charges | 667 | 573 | 1,660 | |||||||||
| Impairment of acquired intangible assets | — | (3,767 | ) | — | ||||||||
| 99,418 | 95,987 | 105,289 | ||||||||||
| Loss from operations | (795 | ) | (721 | ) | (702 | ) | ||||||
| Interest expense | (5,114 | ) | (4,695 | ) | (5,568 | ) | ||||||
| Other income (expense), net | 554 | (1,182 | ) | (487 | ) | |||||||
| Loss before income taxes | (5,355 | ) | (6,598 | ) | (6,757 | ) | ||||||
| Income tax expense | 597 | 615 | 518 | |||||||||
| Net loss | $ | (5,952 | ) | $ | (7,213 | ) | $ | (7,275 | ) | |||
| Net loss per share, basic and diluted | $ | (0.05 | ) | $ | (0.06 | ) | $ | (0.06 | ) | |||
| Shares used in per share calculations, basic and diluted | 124,076 | 123,541 | 121,800 | |||||||||
| Lattice Semiconductor Corporation | |||||||
| Consolidated Balance Sheets | |||||||
| (in thousands) | |||||||
| (unaudited) | |||||||
|
March 31,
2018 |
December 30,
2017 |
||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash, cash equivalents and short-term marketable securities | $ | 111,470 | $ | 111,797 | |||
| Accounts receivable, net | 65,779 | 55,104 | |||||
| Inventories | 77,917 | 79,903 | |||||
| Other current assets | 25,405 | 16,567 | |||||
| Total current assets | 280,571 | 263,371 | |||||
| Property and equipment, net | 37,674 | 40,423 | |||||
| Intangible assets, net | 45,595 | 51,308 | |||||
| Goodwill | 267,514 | 267,514 | |||||
| Deferred income taxes | 200 | 198 | |||||
| Other long-term assets | 13,279 | 13,147 | |||||
| $ | 644,833 | $ | 635,961 | ||||
| Liabilities and Stockholders' Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable and other accrued liabilities | $ | 64,249 | $ | 64,821 | |||
| Current portion of long-term debt | 1,813 | 1,508 | |||||
| Deferred income and allowances on sales to distributors and deferred license revenue | — | 17,318 | |||||
| Total current liabilities | 66,062 | 83,647 | |||||
| Long-term debt | 298,995 | 299,667 | |||||
| Other long-term liabilities | 34,104 | 34,954 | |||||
| Total liabilities | 399,161 | 418,268 | |||||
| Stockholders' equity | 245,672 | 217,693 | |||||
| $ | 644,833 | $ | 635,961 | ||||
| Lattice Semiconductor Corporation | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended | ||||||||
|
March 31,
2018 |
April 1,
2017 |
|||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (5,952 | ) | $ | (7,275 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 12,356 | 15,296 | ||||||
| Amortization of debt issuance costs and discount | 507 | 933 | ||||||
| (Gain) loss on sale or maturity of marketable securities | (1 | ) | 170 | |||||
| Loss (gain) on forward contracts | 99 | (78 | ) | |||||
| Stock-based compensation expense | 4,800 | 3,843 | ||||||
| Gain on disposal of fixed assets | (58 | ) | — | |||||
| Impairment of cost-method investment | — | 339 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable, net | (8,867 | ) | 33,563 | |||||
| Inventories | 2,356 | 1,393 | ||||||
| Prepaid expenses and other assets | (3,253 | ) | 1,137 | |||||
| Accounts payable and accrued expenses (includes restructuring) | 1,567 | (35,029 | ) | |||||
| Accrued payroll obligations | (1,441 | ) | (1,706 | ) | ||||
| Income taxes payable | 413 | (1,765 | ) | |||||
| Deferred income and allowances on sales to distributors | — | (2,720 | ) | |||||
| Deferred licensing and services revenue | (68 | ) | (436 | ) | ||||
| Net cash provided by operating activities | 2,458 | 7,665 | ||||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sales of and maturities of short-term marketable securities | 2,500 | 5,700 | ||||||
| Purchases of marketable securities | (9,603 | ) | (7,420 | ) | ||||
| Capital expenditures | (1,804 | ) | (3,374 | ) | ||||
| Cash paid for software licenses | (1,837 | ) | (1,617 | ) | ||||
| Net cash used in investing activities | (10,744 | ) | (6,711 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Restricted stock unit withholdings | (459 | ) | (693 | ) | ||||
| Proceeds from issuance of common stock | 1,608 | 1,144 | ||||||
| Repayment of debt | (875 | ) | (10,780 | ) | ||||
| Net cash provided by (used in) financing activities | 274 | (10,329 | ) | |||||
| Effect of exchange rate change on cash | 589 | 274 | ||||||
| Net decrease in cash and cash equivalents | (7,423 | ) | (9,101 | ) | ||||
| Beginning cash and cash equivalents | 106,815 | 106,552 | ||||||
| Ending cash and cash equivalents | $ | 99,392 | $ | 97,451 | ||||
| Supplemental cash flow information: | ||||||||
| Change in unrealized loss related to marketable securities, net of tax, included in Accumulated other comprehensive loss | $ | 7 | $ | 43 | ||||
| Income taxes paid, net of refunds | $ | 40 | $ | 222 | ||||
| Interest paid | $ | 4,420 | $ | 5,025 | ||||
| Accrued purchases of plant and equipment | $ | 232 | $ | 1,297 | ||||
| Lattice Semiconductor Corporation | |||||||||
| - Supplemental Historical Financial Information - | |||||||||
| (unaudited) | |||||||||
| Three Months Ended | |||||||||
|
March 31,
2018 |
December 30,
2017 |
April 1,
2017 |
|||||||
| Operations and Cash Flow Information | |||||||||
| Percent of Revenue | |||||||||
| Gross Margin | 57.3 | % | 53.8 | % | 58.2 | % | |||
| R&D Expense | 23.3 | % | 24.7 | % | 26.2 | % | |||
| SG&A Expense | 27.4 | % | 24.8 | % | 22.9 | % | |||
| Depreciation and amortization (in thousands) | 12,356 | 12,270 | 15,296 | ||||||
| Stock-based compensation expense (in thousands) | 4,800 | 3,257 | 3,843 | ||||||
| Restructuring and severance related charges (in thousands) | 1,029 | 2,483 | 66 | ||||||
| Net cash provided by operating activities (thousands) | 2,458 | 2,768 | 7,665 | ||||||
| Capital expenditures (in thousands) | 1,804 | 530 | 3,374 | ||||||
| Repayment of debt (in thousands) | 875 | 1,750 | 10,780 | ||||||
| Interest paid (in thousands) | 4,420 | 4,270 | 5,025 | ||||||
| Taxes paid (cash, in thousands) | 40 | 79 | 222 | ||||||
| Balance Sheet Information | |||||||||
| Current Ratio | 4.2 | 3.1 | 2.6 | ||||||
| A/R Days Revenue Outstanding | 61 | 53 | 57 | ||||||
| Inventory Months | 5.6 | 5.4 | 5.3 | ||||||
| Revenue% (by Geography) | |||||||||
| Asia | 73 | % | 74 | % | 70 | % | |||
| Europe (incl. Africa) | 12 | % | 13 | % | 11 | % | |||
| Americas | 15 | % | 13 | % | 19 | % | |||
| Revenue% (by End Market) | |||||||||
| Communications and Computing | 28 | % | 30 | % | 29 | % | |||
| Mobile and Consumer | 27 | % | 27 | % | 30 | % | |||
| Industrial and Automotive | 41 | % | 41 | % | 30 | % | |||
| Licensing and Services | 4 | % | 2 | % | 11 | % | |||
| Revenue% (by Channel) * | |||||||||
| Distribution | 87 | % | 83 | % | 71 | % | |||
| Direct | 13 | % | 17 | % | 29 | % | |||
| * | 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) | ||||||||||||
| Three Months Ended | ||||||||||||
|
March 31,
2018 |
December 30,
2017 |
April 1,
2017 |
||||||||||
| Gross Margin Reconciliation | ||||||||||||
| GAAP Gross margin | $ | 56,521 | $ | 51,216 | $ | 60,832 | ||||||
| Stock-based compensation - gross margin | 237 | 226 | 228 | |||||||||
| Non-GAAP Gross margin | $ | 56,758 | $ | 51,442 | $ | 61,060 | ||||||
| Gross Margin % Reconciliation | ||||||||||||
| GAAP Gross margin % | 57.3 | % | 53.8 | % | 58.2 | % | ||||||
| Cumulative effect of non-GAAP Gross Margin adjustments | 0.3 | % | 0.2 | % | 0.2 | % | ||||||
| Non-GAAP Gross margin % | 57.6 | % | 54.0 | % | 58.4 | % | ||||||
| Operating Expenses Reconciliation | ||||||||||||
| GAAP Operating expenses | $ | 57,316 | $ | 51,937 | $ | 61,534 | ||||||
| Amortization of acquired intangible assets | (5,636 | ) | (5,563 | ) | (8,514 | ) | ||||||
| Restructuring charges | (1,029 | ) | (2,483 | ) | (66 | ) | ||||||
| Acquisition related charges (1) | (667 | ) | (573 | ) | (1,660 | ) | ||||||
| Impairment of acquired intangible assets | — | 3,767 | — | |||||||||
| Stock-based compensation - operations | (4,563 | ) | (3,031 | ) | (3,615 | ) | ||||||
| Non-GAAP Operating expenses | $ | 45,421 | $ | 44,054 | $ | 47,679 | ||||||
| (Loss) Income from Operations Reconciliation | ||||||||||||
| GAAP Loss from operations | $ | (795 | ) | $ | (721 | ) | $ | (702 | ) | |||
| Stock-based compensation - gross margin | 237 | 226 | 228 | |||||||||
| Amortization of acquired intangible assets | 5,636 | 5,563 | 8,514 | |||||||||
| Restructuring charges | 1,029 | 2,483 | 66 | |||||||||
| Acquisition related charges (1) | 667 | 573 | 1,660 | |||||||||
| Impairment of acquired intangible assets | — | (3,767 | ) | — | ||||||||
| Stock-based compensation - operations | 4,563 | 3,031 | 3,615 | |||||||||
| Non-GAAP Income from operations | $ | 11,337 | $ | 7,388 | $ | 13,381 | ||||||
| (Loss) Income from Operations % Reconciliation | ||||||||||||
| GAAP Loss from operations % | (0.8 | )% | (0.8 | )% | (0.7 | )% | ||||||
| Cumulative effect of non-GAAP Gross Margin and Operating adjustments | 12.3 | % | 8.6 | % | 13.5 | % | ||||||
| Non-GAAP Income from operations % | 11.5 | % | 7.8 | % | 12.8 | % | ||||||
| (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 | ||||||||||||
|
March 31,
2018 |
December 30,
2017 |
April 1,
2017 |
||||||||||
| Income Tax Expense Reconciliation | ||||||||||||
| GAAP Income tax expense | $ | 597 | $ | 615 | $ | 518 | ||||||
| Estimated tax effect of non-GAAP adjustments (2) | 62 | (142 | ) | (303 | ) | |||||||
| Non-GAAP Income tax expense | $ | 659 | $ | 473 | $ | 215 | ||||||
| Net (Loss) Income Reconciliation | ||||||||||||
| GAAP Net loss | $ | (5,952 | ) | $ | (7,213 | ) | $ | (7,275 | ) | |||
| Stock-based compensation - gross margin | 237 | 226 | 228 | |||||||||
| Amortization of acquired intangible assets | 5,636 | 5,563 | 8,514 | |||||||||
| Restructuring charges | 1,029 | 2,483 | 66 | |||||||||
| Acquisition related charges (1) | 667 | 573 | 1,660 | |||||||||
| Impairment of acquired intangible assets | — | (3,767 | ) | — | ||||||||
| Stock-based compensation - operations | 4,563 | 3,031 | 3,615 | |||||||||
| Estimated tax effect of non-GAAP adjustments (2) | (62 | ) | 142 | 303 | ||||||||
| Non-GAAP Net income | $ | 6,118 | $ | 1,038 | $ | 7,111 | ||||||
| Net (Loss) Income Per Share Reconciliation | ||||||||||||
| GAAP Net loss per share - basic and diluted | $ | (0.05 | ) | $ | (0.06 | ) | $ | (0.06 | ) | |||
| Cumulative effect of Non-GAAP adjustments | 0.10 | 0.07 | 0.12 | |||||||||
| Non-GAAP Net income per share - basic and diluted | $ | 0.05 | $ | 0.01 | $ | 0.06 | ||||||
| Shares used in per share calculations: | ||||||||||||
| Basic | 124,076 | 123,541 | 121,800 | |||||||||
| Diluted - GAAP (3) | 124,076 | 123,541 | 121,800 | |||||||||
| Diluted - Non-GAAP (3) | 125,144 | 124,370 | 124,343 | |||||||||
| (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 | ||||||||||||
| June 30, 2018 | ||||||||||||
| Business Outlook - Second Quarter 2018 | Low -2% | Midpoint | High +2% | |||||||||
| GAAP Operating expenses | $ | 50,500 | $ | 51,500 | $ | 52,500 | ||||||
| Cumulative effect of Non-GAAP Operating expense adjustments (4) | (7,400 | ) | (7,500 | ) | (7,600 | ) | ||||||
| Non-GAAP Operating expenses | $ | 43,100 | $ | 44,000 | $ | 44,900 | ||||||
| (4) Includes estimated Amortization of acquired intangible assets and Stock-based compensation included in Operating Expenses |
