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. 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 30, 2017, 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, inventory written off from the discontinuation of the Company's millimeter wave business, 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, and video ASSP 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 even 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 Consolidated Statements of Operations (in thousands, except per share data) (unaudited)
				Three Months Ended												Six Months Ended
				June 30, 2018				March 31, 2018				July 1, 2017				June 30, 2018				July 1, 2017
Revenue				$	102,715			$	98,623			$	94,137			$	201,338			$	198,724
Costs and expenses:
Cost of sales				52,467				42,102				42,928				94,569				86,683
Research and development				21,081				22,941				26,820				44,022				54,209
Selling, general, and administrative				21,068				27,043				21,938				48,111				45,843
Amortization of acquired intangible assets				4,523				5,636				8,737				10,159				17,251
Restructuring				4,376				1,029				1,576				5,405				1,642
Acquisition related charges				864				667				867				1,531				2,527
Impairment of acquired intangible assets				11,900				—				—				11,900				—
				116,279				99,418				102,866				215,697				208,155
Loss from operations				(13,564		)		(795		)		(8,729		)		(14,359		)		(9,431		)
Interest, net				(4,968		)		(5,114		)		(4,656		)		(10,082		)		(10,224		)
Other (expense) income, net				(348		)		554				410				206				(77		)
Loss before income taxes				(18,880		)		(5,355		)		(12,975		)		(24,235		)		(19,732		)
Income tax expense				1,343				597				47				1,940				565
Net loss				$	(20,223	)		$	(5,952	)		$	(13,022	)		$	(26,175	)		$	(20,297	)
Net loss per share, basic and diluted				$	(0.16	)		$	(0.05	)		$	(0.11	)		$	(0.21	)		$	(0.17	)
Shares used in per share calculations, basic and diluted				124,843				124,076				122,390				124,460				122,095

Lattice Semiconductor Corporation Consolidated Balance Sheets (in thousands) (unaudited)
				June 30, 2018				December 30, 2017
Assets
Current assets:
Cash, cash equivalents and short-term marketable securities				$	105,785			$	111,797
Accounts receivable, net				76,566				55,104
Inventories				65,586				79,903
Other current assets				21,729				16,567
Total current assets				269,666				263,371
Property and equipment, net				36,418				40,423
Intangible assets, net				29,189				51,308
Goodwill				267,514				267,514
Deferred income taxes				192				198
Other long-term assets				20,225				13,147
				$	623,204			$	635,961
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and other accrued liabilities				$	62,200			$	64,821
Current portion of long-term debt				24,526				1,508
Deferred income and allowances on sales to distributors and deferred license revenue				—				17,318
Total current liabilities				86,726				83,647
Long-term debt				265,699				299,667
Other long-term liabilities				40,159				34,954
Total liabilities				392,584				418,268
Stockholders' equity				230,620				217,693
				$	623,204			$	635,961

Lattice Semiconductor Corporation Consolidated Statements of Cash Flows (in thousands) (unaudited)
				Six Months Ended
				June 30, 2018				July 1, 2017
Cash flows from operating activities:
Net loss				$	(26,175	)		$	(20,297	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization				22,425				30,497
Impairment of acquired intangible assets				11,900				—
Amortization of debt issuance costs and discount				1,058				1,354
(Gain) loss on sale or maturity of marketable securities				(1		)		200
Gain on forward contracts				(36		)		(26		)
Stock-based compensation expense				7,200				6,772
Gain on disposal of fixed assets				(93		)		(61		)
Gain on sale of assets and business units				—				(300		)
Impairment of cost-method investment				—				493
Changes in assets and liabilities:
Accounts receivable, net				(19,654		)		12,846
Inventories				14,687				689
Prepaid expenses and other assets				(7,891		)		2,822
Accounts payable and accrued expenses (includes restructuring)				7,095				(13,554		)
Accrued payroll obligations				(1,716		)		(1,894		)
Income taxes payable				851				(355		)
Deferred income and allowances on sales to distributors				—				(7,342		)
Deferred licensing and services revenue				(68		)		(330		)
Net cash provided by operating activities				9,582				11,514
Cash flows from investing activities:
Proceeds from sales of and maturities of short-term marketable securities				2,500				7,200
Purchases of marketable securities				(9,603		)		(7,420		)
Capital expenditures				(4,105		)		(7,035		)
Proceeds from sale of assets and business unit, net of cash sold				—				300
Short-term loan to cost-method investee				—				(1,000		)
Cash paid for software licenses				(3,981		)		(4,149		)
Net cash used in investing activities				(15,189		)		(12,104		)
Cash flows from financing activities:
Restricted stock unit withholdings				(1,369		)		(1,748		)
Proceeds from issuance of common stock				6,409				2,931
Repayment of debt				(12,009		)		(33,679		)
Net cash used in financing activities				(6,969		)		(32,496		)
Effect of exchange rate change on cash				(540		)		950
Net decrease in cash and cash equivalents				(13,116		)		(32,136		)
Beginning cash and cash equivalents				106,815				106,552
Ending cash and cash equivalents				$	93,699			$	74,416
Supplemental cash flow information:
Change in unrealized (gain) loss related to marketable securities, net of tax, included in Accumulated other comprehensive loss				$	(2	)		$	71
Income taxes paid, net of refunds				$	2,057			$	976
Interest paid				$	9,177			$	12,094
Accrued purchases of plant and equipment				$	354			$	2,216

Lattice Semiconductor Corporation - Supplemental Historical Financial Information - (unaudited)
					Three Months Ended									Six Months Ended
					June 30, 2018			March 31, 2018			July 1, 2017			June 30, 2018			July 1, 2017
Operations and Cash Flow Information
Percent of Revenue
Gross Margin					48.9	%		57.3	%		54.4	%		53.0	%		56.4	%
R&D Expense					20.5	%		23.3	%		28.5	%		21.9	%		27.3	%
SG&A Expense					20.5	%		27.4	%		23.3	%		23.9	%		23.1	%
Depreciation and amortization (in thousands)					10,069			12,356			15,201			22,425			30,497
Stock-based compensation expense (in thousands)					2,400			4,800			2,929			7,200			6,772
Restructuring and severance related charges (in thousands)					4,376			1,029			1,576			5,405			1,642
Net cash provided by operating activities (thousands)					7,124			2,458			3,849			9,582			11,514
Capital expenditures (in thousands)					2,301			1,804			3,661			4,105			7,035
Repayment of debt (in thousands)					11,134			875			22,899			12,009			33,679
Interest paid (in thousands)					4,757			4,420			7,069			9,177			12,094
Taxes paid (cash, in thousands)					2,017			40			754			2,057			976
Balance Sheet Information
Current Ratio					3.1			4.2			2.3
A/R Days Revenue Outstanding					68			61			84
Inventory Months					3.8			5.6			5.5
Revenue% (by Geography)
Asia					76	%		73	%		69	%		74	%		70	%
Europe (incl. Africa)					12	%		12	%		11	%		12	%		11	%
Americas					12	%		15	%		20	%		14	%		19	%
Revenue% (by End Market)
Communications and Computing					29	%		28	%		29	%		29	%		29	%
Mobile and Consumer					24	%		27	%		27	%		25	%		29	%
Industrial and Automotive					43	%		41	%		32	%		42	%		30	%
Licensing and Services					4	%		4	%		12	%		4	%		12	%
Revenue% (by Channel) *
Distribution					86	%		87	%		76	%		87	%		73	%
Direct					14	%		13	%		24	%		13	%		27	%

*	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												Six Months Ended
				June 30, 2018				March 31, 2018				July 1, 2017				June 30, 2018				July 1, 2017
Gross Margin Reconciliation
GAAP Gross margin				$	50,248			$	56,521			$	51,209			$	106,769			$	112,041
Inventory write-off related to restructured operations				8,277				—				—				8,277				—
Stock-based compensation - gross margin				196				237				180				433				408
Non-GAAP Gross margin				$	58,721			$	56,758			$	51,389			$	115,479			$	112,449
Gross Margin % Reconciliation
GAAP Gross margin %				48.9		%		57.3		%		54.4		%		53.0		%		56.4		%
Cumulative effect of non-GAAP Gross Margin adjustments				8.3		%		0.3		%		0.2		%		4.4		%		0.2		%
Non-GAAP Gross margin %				57.2		%		57.6		%		54.6		%		57.4		%		56.6		%
Operating Expenses Reconciliation
GAAP Operating expenses				$	63,812			$	57,316			$	59,938			$	121,128			$	121,472
Amortization of acquired intangible assets				(4,523		)		(5,636		)		(8,737		)		(10,159		)		(17,251		)
Restructuring charges				(4,376		)		(1,029		)		(1,576		)		(5,405		)		(1,642		)
Acquisition related charges (1)				(864		)		(667		)		(867		)		(1,531		)		(2,527		)
Impairment of acquired intangible assets				(11,900		)		—				—				(11,900		)		—
Stock-based compensation - operations				(2,204		)		(4,563		)		(2,749		)		(6,767		)		(6,364		)
Non-GAAP Operating expenses				$	39,945			$	45,421			$	46,009			$	85,366			$	93,688
(Loss) Income from Operations Reconciliation
GAAP Loss from operations				$	(13,564	)		$	(795	)		$	(8,729	)		$	(14,359	)		$	(9,431	)
Inventory write-off related to restructured operations				8,277				—				—				8,277				—
Stock-based compensation - gross margin				196				237				180				433				408
Amortization of acquired intangible assets				4,523				5,636				8,737				10,159				17,251
Restructuring charges				4,376				1,029				1,576				5,405				1,642
Acquisition related charges (1)				864				667				867				1,531				2,527
Impairment of acquired intangible assets				11,900				—				—				11,900				—
Stock-based compensation - operations				2,204				4,563				2,749				6,767				6,364
Non-GAAP Income from operations				$	18,776			$	11,337			$	5,380			$	30,113			$	18,761
(Loss) Income from Operations % Reconciliation
GAAP Loss from operations %				(13.2		)%		(0.8		)%		(9.3		)%		(7.1		)%		(4.7		)%
Cumulative effect of non-GAAP Gross Margin and Operating adjustments				31.5		%		12.3		%		15.0		%		22.1		%		14.1		%
Non-GAAP Income from operations %				18.3		%		11.5		%		5.7		%		15.0		%		9.4		%
(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												Six Months Ended
				June 30, 2018				March 31, 2018				July 1, 2017				June 30, 2018				July 1, 2017
Income Tax Expense Reconciliation
GAAP Income tax expense				$	1,343			$	597			$	47			$	1,940			$	565
Estimated tax effect of non-GAAP adjustments (2)				(258		)		62				663				(196		)		360
Non-GAAP Income tax expense				$	1,085			$	659			$	710			$	1,744			$	925
Net (Loss) Income Reconciliation
GAAP Net loss				$	(20,223	)		$	(5,952	)		$	(13,022	)		$	(26,175	)		$	(20,297	)
Inventory write-off related to restructured operations				8,277				—				—				8,277				—
Stock-based compensation - gross margin				196				237				180				433				408
Amortization of acquired intangible assets				4,523				5,636				8,737				10,159				17,251
Restructuring charges				4,376				1,029				1,576				5,405				1,642
Acquisition related charges (1)				864				667				867				1,531				2,527
Impairment of acquired intangible assets				11,900				—				—				11,900				—
Stock-based compensation - operations				2,204				4,563				2,749				6,767				6,364
Gain on sale of business unit				—				—				(300		)		—				(300		)
Estimated tax effect of non-GAAP adjustments (2)				258				(62		)		(663		)		196				(360		)
Non-GAAP Net income				$	12,375			$	6,118			$	124			$	18,493			$	7,235
Net (Loss) Income Per Share Reconciliation
GAAP Net loss per share - basic and diluted				$	(0.16	)		$	(0.05	)		$	(0.11	)		$	(0.21	)		$	(0.17	)
Cumulative effect of Non-GAAP adjustments				0.26				0.10				0.11				0.36				0.23
Non-GAAP Net income per share - basic and diluted				$	0.10			$	0.05			$	—			$	0.15			$	0.06
Shares used in per share calculations:
Basic				124,843				124,076				122,390				124,460				122,095
Diluted - GAAP (3)				124,843				124,076				122,390				124,460				122,095
Diluted - Non-GAAP (3)				125,620				125,144				124,527				125,432				124,276
(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
				September 29, 2018
Business Outlook - Third Quarter 2018				Low				Midpoint				High
GAAP Operating expenses				$	44,000			$	45,500			$	47,000
Cumulative effect of Non-GAAP Operating expense adjustments (4)				(5,000		)		(5,500		)		(6,000		)
Non-GAAP Operating expenses				$	39,000			$	40,000			$	41,000

(4) Includes estimated Amortization of acquired intangible assets and Stock-based compensation included in Operating Expenses