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 29, 2018, 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 certain 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 plans and related charges, acquisition-related charges, amortization and impairment of acquired intangible assets, inventory adjustments related to restructured operations, and the estimated tax effect of these items. These charges and adjustments 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.
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 low power, small form factor programmable logic devices. Our FPGAs deliver intelligence, connectivity, and control solutions to the industrial, compute, communications, consumer, 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 | ||||||||||||
|
March 30,
2019 |
December 29,
2018 |
March 31,
2018 |
||||||||||
| Revenue | $ | 98,091 | $ | 95,977 | $ | 98,623 | ||||||
| Costs and expenses: | ||||||||||||
| Cost of sales | 40,439 | 41,671 | 42,102 | |||||||||
| Research and development | 19,665 | 19,296 | 22,941 | |||||||||
| Selling, general, and administrative | 20,781 | 21,168 | 27,043 | |||||||||
| Amortization of acquired intangible assets | 3,389 | 3,708 | 5,636 | |||||||||
| Restructuring | 1,341 | 11,854 | 1,029 | |||||||||
| Acquisition related charges | — | — | 667 | |||||||||
| 85,615 | 97,697 | 99,418 | ||||||||||
| Income (loss) from operations | 12,476 | (1,720 | ) | (795 | ) | |||||||
| Interest expense | (4,987 | ) | (5,018 | ) | (5,114 | ) | ||||||
| Other income (expense), net | 153 | (3 | ) | 554 | ||||||||
| Income (loss) before income taxes | 7,642 | (6,741 | ) | (5,355 | ) | |||||||
| Income tax expense | 234 | 380 | 597 | |||||||||
| Net income (loss) | $ | 7,408 | $ | (7,121 | ) | $ | (5,952 | ) | ||||
| Net income (loss) per share: | ||||||||||||
| Basic | $ | 0.06 | $ | (0.05 | ) | $ | (0.05 | ) | ||||
| Diluted | $ | 0.05 | $ | (0.05 | ) | $ | (0.05 | ) | ||||
| Shares used in per share calculations: | ||||||||||||
| Basic | 130,992 | 129,521 | 124,076 | |||||||||
| Diluted | 134,810 | 129,521 | 124,076 | |||||||||
| Lattice Semiconductor Corporation | |||||||
| Consolidated Balance Sheets | |||||||
| (in thousands) | |||||||
| (unaudited) | |||||||
|
March 30,
2019 |
December 29,
2018 |
||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 130,391 | $ | 119,051 | |||
| Short-term marketable securities | — | 9,624 | |||||
| Accounts receivable, net | 55,606 | 60,890 | |||||
| Inventories | 66,773 | 67,096 | |||||
| Other current assets | 28,993 | 27,762 | |||||
| Total current assets | 281,763 | 284,423 | |||||
| Property and equipment, net | 36,758 | 34,883 | |||||
| Operating lease right-of-use assets | 27,868 | — | |||||
| Intangible assets, net | 17,187 | 21,325 | |||||
| Goodwill | 267,514 | 267,514 | |||||
| Deferred income taxes | 215 | 215 | |||||
| Other long-term assets | 13,421 | 15,327 | |||||
| $ | 644,726 | $ | 623,687 | ||||
| Liabilities and Stockholders' Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable and other accrued liabilities | $ | 57,366 | $ | 61,128 | |||
| Current portion of long-term debt | 7,796 | 8,290 | |||||
| Current portion of operating lease liabilities | 5,027 | — | |||||
| Total current liabilities | 70,189 | 69,418 | |||||
| Long-term debt, net of current portion | 225,662 | 251,357 | |||||
| Long-term operating lease liabilities, net of current portion | 25,376 | — | |||||
| Other long-term liabilities | 42,344 | 44,455 | |||||
| Total liabilities | 363,571 | 365,230 | |||||
| Stockholders' equity | 281,155 | 258,457 | |||||
| $ | 644,726 | $ | 623,687 | ||||
| Lattice Semiconductor Corporation | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended | ||||||||
|
March 30,
2019 |
March 31,
2018 |
|||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | 7,408 | $ | (5,952 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 8,403 | 12,356 | ||||||
| Amortization of operating lease right-of-use assets | 1,487 | — | ||||||
| Amortization of debt issuance costs and discount | 686 | 507 | ||||||
| Gain on sale or maturity of marketable securities | (53 | ) | (1 | ) | ||||
| (Gain) loss on forward contracts | (84 | ) | 99 | |||||
| Stock-based compensation expense | 3,686 | 4,800 | ||||||
| Impairment of operating lease right-of-use asset (recorded in Restructuring charges) | 757 | — | ||||||
| Loss (gain) on disposal of fixed assets | 8 | (58 | ) | |||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable, net | 5,284 | (8,867 | ) | |||||
| Inventories | 323 | 2,356 | ||||||
| Prepaid expenses and other assets | (1,965 | ) | (3,253 | ) | ||||
| Accounts payable and accrued expenses (includes restructuring) | 330 | 1,567 | ||||||
| Accrued payroll obligations | (2,788 | ) | (1,441 | ) | ||||
| Operating lease liabilities, current and long-term portions | (2,089 | ) | — | |||||
| Income taxes payable | 365 | 413 | ||||||
| Deferred licensing and services revenue | — | (68 | ) | |||||
| Net cash provided by operating activities | 21,758 | 2,458 | ||||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sales of and maturities of short-term marketable securities | 9,655 | 2,500 | ||||||
| Purchases of marketable securities | — | (9,603 | ) | |||||
| Capital expenditures | (3,074 | ) | (1,804 | ) | ||||
| Cash paid for software licenses | (1,739 | ) | (1,837 | ) | ||||
| Net cash provided by (used in) investing activities | 4,842 | (10,744 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Restricted stock unit tax withholdings | (418 | ) | (459 | ) | ||||
| Proceeds from issuance of common stock | 11,986 | 1,608 | ||||||
| Repayment of debt | (26,875 | ) | (875 | ) | ||||
| Net cash (used in) provided by financing activities | (15,307 | ) | 274 | |||||
| Effect of exchange rate change on cash | 47 | 589 | ||||||
| Net increase (decrease) in cash and cash equivalents | 11,340 | (7,423 | ) | |||||
| Beginning cash and cash equivalents | 119,051 | 106,815 | ||||||
| Ending cash and cash equivalents | $ | 130,391 | $ | 99,392 | ||||
| Supplemental disclosure of cash flow information and non-cash investing and financing activities: | ||||||||
| Interest paid | $ | 4,383 | $ | 4,420 | ||||
| Operating lease payments | $ | 2,597 | $ | — | ||||
| Income taxes paid, net of refunds | $ | 280 | $ | 40 | ||||
| Accrued purchases of plant and equipment | $ | 1,417 | $ | 232 | ||||
| Operating lease right-of-use assets obtained in exchange for lease obligations | $ | 219 | $ | — | ||||
| Change in unrealized (gain) loss related to marketable securities, net of tax, included in Accumulated other comprehensive loss | $ | (42 | ) | $ | 7 | |||
| Lattice Semiconductor Corporation | ||||||||||||
| - Supplemental Historical Financial Information - | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
|
March 30,
2019 |
December 29,
2018 |
March 31,
2018 |
||||||||||
| Operations and Cash Flow Information | ||||||||||||
| Percent of Revenue | ||||||||||||
| Gross Margin | 58.8 | % | 56.6 | % | 57.3 | % | ||||||
| R&D Expense | 20.0 | % | 20.1 | % | 23.3 | % | ||||||
| SG&A Expense | 21.2 | % | 22.1 | % | 27.4 | % | ||||||
| Depreciation and amortization (in thousands) | $ | 8,403 | $ | 8,521 | $ | 12,356 | ||||||
| Stock-based compensation expense (in thousands) | $ | 3,686 | $ | 3,738 | $ | 4,800 | ||||||
| Restructuring and severance related charges (in thousands) | $ | 1,341 | $ | 11,854 | $ | 1,029 | ||||||
| Net cash provided by operating activities (thousands) | $ | 21,758 | $ | 30,898 | $ | 2,458 | ||||||
| Capital expenditures (in thousands) | $ | 3,074 | $ | 2,206 | $ | 1,804 | ||||||
| Repayment of debt (in thousands) | $ | 26,875 | $ | 15,875 | $ | 875 | ||||||
| Interest paid (in thousands) | $ | 4,383 | $ | 4,631 | $ | 4,420 | ||||||
| Taxes paid (cash, in thousands) | $ | 280 | $ | 338 | $ | 40 | ||||||
| Balance Sheet Information | ||||||||||||
| Current Ratio | 4.0 | 4.1 | 4.2 | |||||||||
| A/R Days Revenue Outstanding | 52 | 58 | 61 | |||||||||
| Inventory Months | 5.0 | 4.8 | 5.6 | |||||||||
| Revenue% (by Geography) | ||||||||||||
| Asia | 70 | % | 74 | % | 73 | % | ||||||
| Europe (incl. Africa) | 12 | % | 10 | % | 12 | % | ||||||
| Americas | 18 | % | 16 | % | 15 | % | ||||||
| Revenue% (by End Market) | ||||||||||||
| Communications and Computing | 36 | % | 34 | % | 28 | % | ||||||
| Mobile and Consumer | 20 | % | 22 | % | 27 | % | ||||||
| Industrial and Automotive | 37 | % | 37 | % | 41 | % | ||||||
| Licensing and Services | 7 | % | 7 | % | 4 | % | ||||||
| Revenue% (by Channel) | ||||||||||||
| Distribution | 79 | % | 76 | % | 87 | % | ||||||
| Direct | 21 | % | 24 | % | 13 | % | ||||||
| Lattice Semiconductor Corporation | ||||||||||||
| - Reconciliation of U.S. GAAP to Non-GAAP Financial Measures - | ||||||||||||
| (in thousands, except per share data) | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
|
March 30,
2019 |
December 29,
2018 |
March 31,
2018 |
||||||||||
| Gross Margin Reconciliation | ||||||||||||
| GAAP Gross margin | $ | 57,652 | $ | 54,306 | $ | 56,521 | ||||||
| Inventory adjustment related to restructured operations | (338 | ) | (160 | ) | — | |||||||
| Stock-based compensation - gross margin | 202 | 288 | 237 | |||||||||
| Non-GAAP Gross margin | $ | 57,516 | $ | 54,434 | $ | 56,758 | ||||||
| Gross Margin % Reconciliation | ||||||||||||
| GAAP Gross margin % | 58.8 | % | 56.6 | % | 57.3 | % | ||||||
| Cumulative effect of non-GAAP Gross Margin adjustments | (0.2 | )% | 0.1 | % | 0.3 | % | ||||||
| Non-GAAP Gross margin % | 58.6 | % | 56.7 | % | 57.6 | % | ||||||
| Operating Expenses Reconciliation | ||||||||||||
| GAAP Operating expenses | $ | 45,176 | $ | 56,026 | $ | 57,316 | ||||||
| Amortization of acquired intangible assets | (3,389 | ) | (3,708 | ) | (5,636 | ) | ||||||
| Restructuring charges | (1,341 | ) | (11,854 | ) | (1,029 | ) | ||||||
| Acquisition related charges (1) | — | — | (667 | ) | ||||||||
| Impairment of acquired intangible assets | 1,023 | 800 | — | |||||||||
| Stock-based compensation - operations | (3,484 | ) | (3,450 | ) | (4,563 | ) | ||||||
| Non-GAAP Operating expenses | $ | 37,985 | $ | 37,814 | $ | 45,421 | ||||||
| Income (Loss) from Operations Reconciliation | ||||||||||||
| GAAP Income (loss) from operations | $ | 12,476 | $ | (1,720 | ) | $ | (795 | ) | ||||
| Inventory adjustment related to restructured operations | (338 | ) | (160 | ) | — | |||||||
| Stock-based compensation - gross margin | 202 | 288 | 237 | |||||||||
| Amortization of acquired intangible assets | 3,389 | 3,708 | 5,636 | |||||||||
| Restructuring charges | 1,341 | 11,854 | 1,029 | |||||||||
| Acquisition related charges (1) | — | — | 667 | |||||||||
| Impairment of acquired intangible assets | (1,023 | ) | (800 | ) | — | |||||||
| Stock-based compensation - operations | 3,484 | 3,450 | 4,563 | |||||||||
| Non-GAAP Income from operations | $ | 19,531 | $ | 16,620 | $ | 11,337 | ||||||
| Income (Loss) from Operations % Reconciliation | ||||||||||||
| GAAP Income (loss) from operations % | 12.7 | % | (1.8 | )% | (0.8 | )% | ||||||
| Cumulative effect of non-GAAP Gross Margin and Operating adjustments | 7.2 | % | 19.1 | % | 12.3 | % | ||||||
| Non-GAAP Income from operations % | 19.9 | % | 17.3 | % | 11.5 | % | ||||||
| (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 30,
2019 |
December 29,
2018 |
March 31,
2018 |
||||||||||
| Income Tax Expense Reconciliation | ||||||||||||
| GAAP Income tax expense | $ | 234 | $ | 380 | $ | 597 | ||||||
| Estimated tax effect of non-GAAP adjustments (2) | (98 | ) | 88 | 62 | ||||||||
| Non-GAAP Income tax expense | $ | 136 | $ | 468 | $ | 659 | ||||||
| Net Income (Loss) Reconciliation | ||||||||||||
| GAAP Net income (loss) | $ | 7,408 | $ | (7,121 | ) | $ | (5,952 | ) | ||||
| Inventory adjustment related to restructured operations | (338 | ) | (160 | ) | — | |||||||
| Stock-based compensation - gross margin | 202 | 288 | 237 | |||||||||
| Amortization of acquired intangible assets | 3,389 | 3,708 | 5,636 | |||||||||
| Restructuring charges | 1,341 | 11,854 | 1,029 | |||||||||
| Acquisition related charges (1) | — | — | 667 | |||||||||
| Impairment of acquired intangible assets | (1,023 | ) | (800 | ) | — | |||||||
| Stock-based compensation - operations | 3,484 | 3,450 | 4,563 | |||||||||
| Estimated tax effect of non-GAAP adjustments (2) | 98 | (88 | ) | (62 | ) | |||||||
| Non-GAAP Net income | $ | 14,561 | $ | 11,131 | $ | 6,118 | ||||||
| Net Income (Loss) Per Share Reconciliation | ||||||||||||
| GAAP Net income (loss) per share - basic | $ | 0.06 | $ | (0.05 | ) | $ | (0.05 | ) | ||||
| Cumulative effect of Non-GAAP adjustments | 0.05 | 0.14 | 0.10 | |||||||||
| Non-GAAP Net income per share - basic | $ | 0.11 | $ | 0.09 | $ | 0.05 | ||||||
| GAAP Net income (loss) per share - diluted | $ | 0.05 | $ | (0.05 | ) | $ | (0.05 | ) | ||||
| Cumulative effect of Non-GAAP adjustments | 0.06 | 0.13 | 0.10 | |||||||||
| Non-GAAP Net income per share - diluted | $ | 0.11 | $ | 0.08 | $ | 0.05 | ||||||
| Shares used in per share calculations: | ||||||||||||
| Basic | 130,992 | 129,521 | 124,076 | |||||||||
| Diluted - GAAP (3) | 134,810 | 129,521 | 124,076 | |||||||||
| Diluted - Non-GAAP (3) | 134,810 | 132,471 | 125,144 | |||||||||
| (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. | ||||||||||||
