Lattice Semiconductor Reports Fourth Quarter and Full Year 2019 Results

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Lattice Semiconductor Corporation
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 28,
2019

 

September 28,
2019

 

December 29,
2018

 

December 28,
2019

 

December 29,
2018

Revenue

 

$

 

100,237

 

 

$

 

103,469

 

 

$

 

95,977

 

 

$

 

404,093

 

 

$

 

398,799

 

Cost of sales

 

 

40,944

 

 

 

42,030

 

 

 

41,671

 

 

 

165,671

 

 

 

179,360

 

Gross margin

 

 

59,293

 

 

 

61,439

 

 

 

54,306

 

 

 

238,422

 

 

 

219,439

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

19,543

 

 

 

20,032

 

 

 

19,296

 

 

 

78,617

 

 

 

82,449

 

Selling, general, and administrative

 

 

20,924

 

 

 

21,078

 

 

 

21,168

 

 

 

82,542

 

 

 

91,054

 

Amortization of acquired intangible assets

 

 

3,390

 

 

 

3,389

 

 

 

3,708

 

 

 

13,558

 

 

 

17,690

 

Restructuring

 

 

(55

)

 

 

252

 

 

 

11,854

 

 

 

4,664

 

 

 

17,349

 

Impairment of acquired intangible assets

 

 

 

 

 

 

 

 

 

 

12,486

 

Acquisition related charges

 

 

 

 

 

 

 

 

 

 

1,531

 

Total operating expenses

 

 

43,802

 

 

 

44,751

 

 

 

56,026

 

 

 

179,381

 

 

 

222,559

 

Income (loss) from operations

 

 

15,491

 

 

 

16,688

 

 

 

(1,720

)

 

 

59,041

 

 

 

(3,120

)

Interest expense

 

 

(1,184

)

 

 

(2,022

)

 

 

(5,018

)

 

 

(11,731

)

 

 

(20,600

)

Other expense, net

 

 

(228

)

 

 

(61

)

 

 

(3

)

 

 

(2,245

)

 

 

(249

)

Income (loss) before income taxes

 

 

14,079

 

 

 

14,605

 

 

 

(6,741

)

 

 

45,065

 

 

 

(23,969

)

Income tax expense

 

 

92

 

 

 

1,066

 

 

 

380

 

 

 

1,572

 

 

 

2,353

 

Net income (loss)

 

$

 

13,987

 

 

$

 

13,539

 

 

$

 

(7,121

)

 

$

 

43,493

 

 

$

 

(26,322

)

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 

0.10

 

 

$

 

0.10

 

 

$

 

(0.05

)

 

$

 

0.33

 

 

$

 

(0.21

)

Diluted

 

$

 

0.10

 

 

$

 

0.10

 

 

$

 

(0.05

)

 

$

 

0.32

 

 

$

 

(0.21

)

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

133,691

 

 

 

132,997

 

 

 

129,521

 

 

 

132,471

 

 

 

126,564

 

Diluted

 

 

138,196

 

 

 

138,894

 

 

 

129,521

 

 

 

137,274

 

 

 

126,564

 

Lattice Semiconductor Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

 

 

 

December 28,
2019

 

December 29,
2018

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

 

118,081

 

 

$

 

119,051

 

Short-term marketable securities

 

 

 

 

9,624

 

Accounts receivable, net

 

 

64,917

 

 

 

60,890

 

Inventories

 

 

54,980

 

 

 

67,096

 

Other current assets

 

 

24,452

 

 

 

27,762

 

Total current assets

 

 

262,430

 

 

 

284,423

 

 

 

 

 

 

Property and equipment, net

 

 

39,230

 

 

 

34,883

 

Operating lease right-of-use assets

 

 

23,591

 

 

 

Intangible assets, net

 

 

6,977

 

 

 

21,325

 

Goodwill

 

 

267,514

 

 

 

267,514

 

Deferred income taxes

 

 

478

 

 

 

215

 

Other long-term assets

 

 

11,796

 

 

 

15,327

 

 

 

$

 

612,016

 

 

$

 

623,687

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and other accrued liabilities

 

$

 

73,650

 

 

$

 

61,128

 

Current portion of long-term debt

 

 

21,474

 

 

 

8,290

 

Current portion of operating lease liabilities

 

 

4,686

 

 

 

Total current liabilities

 

 

99,810

 

 

 

69,418

 

 

 

 

 

 

Long-term debt, net of current portion

 

 

125,072

 

 

 

251,357

 

Long-term operating lease liabilities, net of current portion

 

 

21,438

 

 

 

Other long-term liabilities

 

 

38,028

 

 

 

44,455

 

Total liabilities

 

 

284,348

 

 

 

365,230

 

 

 

 

 

 

Stockholders' equity

 

 

327,668

 

 

 

258,457

 

 

 

$

 

612,016

 

 

$

 

623,687

 

Lattice Semiconductor Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

 

Twelve Months Ended

 

December 28,
2019

 

December 29,
2018

Cash flows from operating activities:

 

 

 

Net income (loss)

$

 

43,493

 

 

$

 

(26,322

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

33,056

 

 

 

39,261

 

Impairment of acquired intangible assets

 

 

 

12,486

 

Stock-based compensation expense

 

18,899

 

 

 

13,646

 

Other non-cash adjustments

 

10,294

 

 

 

2,151

 

Net changes in assets and liabilities

 

18,395

 

 

 

10,236

 

Net cash provided by operating activities

 

124,137

 

 

 

51,458

 

Cash flows from investing activities:

 

 

 

Capital expenditures

 

(15,590

)

 

 

(8,384

)

Other investing activities

 

54

 

 

 

(12,726

)

Net cash used in investing activities

 

(15,536

)

 

 

(21,110

)

Cash flows from financing activities:

 

 

 

Proceeds from issuance of long-term debt

 

206,500

 

 

 

Original issue discount and debt issuance costs

 

(2,086

)

 

 

Repayment of long-term debt

 

(321,408

)

 

 

(43,759

)

Net cash flows related to stock compensation exercises

 

7,082

 

 

 

26,918

 

Net cash used in financing activities

 

(109,912

)

 

 

(16,841

)

Effect of exchange rate change on cash

 

341

 

 

 

(1,271

)

Net (decrease) increase in cash and cash equivalents

 

(970

)

 

 

12,236

 

Beginning cash and cash equivalents

 

119,051

 

 

 

106,815

 

Ending cash and cash equivalents

$

 

118,081

 

 

$

 

119,051

 

 

 

 

 

Supplemental disclosure of cash flow information and non-cash investing and financing activities:

Interest paid

$

 

10,995

 

 

$

 

18,607

 

Income taxes paid, net of refunds

$

 

3,393

 

 

$

 

3,054

 

 

Lattice Semiconductor Corporation
Supplemental Historical Financial Information
(unaudited)

 

 

Three Months Ended

 

Twelve Months Ended

 

December 28,
 2019

 

September 28,
 2019

 

December 29,
 2018

 

December 28,
 2019

 

December 29,
 2018

Balance Sheet Information

 

 

 

 

 

 

 

 

 

A/R Days Revenue Outstanding (DSO)

59

 

42

 

58

 

 

 

 

Inventory Days (DIO)

123

 

130

 

147

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue% (by Geography)

 

 

 

 

 

 

 

 

 

Asia

73%

 

77%

 

74%

 

74%

 

75%

Europe (incl. Africa)

11%

 

11%

 

10%

 

12%

 

11%

Americas

16%

 

12%

 

16%

 

14%

 

14%

 

 

 

 

 

 

 

 

 

 

Revenue% (by End Market)

 

 

 

 

 

 

 

 

 

Communications and Computing

38%

 

40%

 

34%

 

39%

 

31%

Industrial and Automotive

39%

 

36%

 

37%

 

37%

 

39%

Consumer

18%

 

18%

 

22%

 

19%

 

25%

Licensing and Services

5%

 

6%

 

7%

 

5%

 

5%

 

 

 

 

 

 

 

 

 

 

Revenue% (by Channel)

 

 

 

 

 

 

 

 

 

Distribution

84%

 

81%

 

76%

 

82%

 

83%

Direct

16%

 

19%

 

24%

 

18%

 

17%

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 28,
 2019

 

September 28,
 2019

 

December 29,
 2018

 

December 28,
 2019

 

December 29,
 2018

 

 

 

 

 

 

 

 

 

 

 

Gross Margin Reconciliation

GAAP Gross margin

 

$

59,293

 

 

$

61,439

 

 

$

54,306

 

 

$

238,422

 

 

$

219,439

 

Stock-based compensation - gross margin

 

440

 

 

453

 

 

288

 

 

1,422

 

 

940

 

Inventory adjustment related to restructured operations

 

 

 

 

 

(160

)

 

(338

)

 

7,829

 

Non-GAAP Gross margin

 

$

59,733

 

 

$

61,892

 

 

$

54,434

 

 

$

239,506

 

 

$

228,208

 

 

Gross Margin % Reconciliation

GAAP Gross margin %

 

59.2

%

 

59.4

%

 

56.6

%

 

59.0

%

 

55.0

%

Cumulative effect of non-GAAP Gross Margin adjustments

 

0.4

%

 

0.4

%

 

0.1

%

 

0.3

%

 

2.2

%

Non-GAAP Gross margin %

 

59.6

%

 

59.8

%

 

56.7

%

 

59.3

%

 

57.2

%

 

Research and Development Expense % (R&D Expense %) Reconciliation

GAAP R&D Expense  %

 

19.5

%

 

19.4

%

 

20.1

%

 

19.5

%

 

20.7

%

Stock-based compensation - R&D

 

(1.6

)%

 

(1.6

)%

 

(1.4

)%

 

(1.4

)%

 

(1.1

)%

Non-GAAP R&D Expense  %

 

17.9

%

 

17.8

%

 

18.7

%

 

18.1

%

 

19.6

%

 

Selling, General, and Administrative Expense % (SG&A Expense %) Reconciliation

GAAP SG&A Expense  %

 

20.9

%

 

20.4

%

 

22.1

%

 

20.4

%

 

22.8

%

Stock-based compensation - SG&A

 

(3.5

)%

 

(3.5

)%

 

(2.2

)%

 

(2.9

)%

 

(2.1

)%

Non-GAAP SG&A Expense  %

 

17.4

%

 

16.9

%

 

19.9

%

 

17.5

%

 

20.7

%

 

Operating Expenses Reconciliation

GAAP Operating expenses

 

$

43,802

 

 

$

44,751

 

 

$

56,026

 

 

$

179,381

 

 

$

222,559

 

Stock-based compensation - operations

 

(5,124

)

 

(5,227

)

 

(3,450

)

 

(17,477

)

 

(12,706

)

Amortization of acquired intangible assets

 

(3,390

)

 

(3,389

)

 

(3,708

)

 

(13,558

)

 

(17,690

)

Restructuring charges

 

55

 

 

(252

)

 

(11,854

)

 

(4,664

)

 

(17,349

)

Impairment of acquired intangible assets

 

 

 

 

 

800

 

 

1,023

 

 

(11,686

)

Acquisition related charges

 

 

 

 

 

 

 

 

 

(1,531

)

Non-GAAP Operating expenses

 

$

35,343

 

 

$

35,883

 

 

$

37,814

 

 

$

144,705

 

 

$

161,597

 

 

Income from Operations Reconciliation

GAAP Income (loss) from operations

 

$

15,491

 

 

$

16,688

 

 

$

(1,720

)

 

$

59,041

 

 

$

(3,120

)

Stock-based compensation - gross margin

 

440

 

 

453

 

 

288

 

 

1,422

 

 

940

 

Inventory adjustment related to restructured operations

 

 

 

 

 

(160

)

 

(338

)

 

7,829

 

Stock-based compensation - operations

 

5,124

 

 

5,227

 

 

3,450

 

 

17,477

 

 

12,706

 

Amortization of acquired intangible assets

 

3,390

 

 

3,389

 

 

3,708

 

 

13,558

 

 

17,690

 

Restructuring charges

 

(55

)

 

252

 

 

11,854

 

 

4,664

 

 

17,349

 

Impairment of acquired intangible assets

 

 

 

 

 

(800

)

 

(1,023

)

 

11,686

 

Acquisition related charges

 

 

 

 

 

 

 

 

 

1,531

 

Non-GAAP Income from operations

 

$

24,390

 

 

$

26,009

 

 

$

16,620

 

 

$

94,801

 

 

$

66,611

 

 

 

 

 

 

 

 

 

 

 

 

Income from Operations % Reconciliation

GAAP Income (loss) from operations %

 

15.5

%

 

16.1

%

 

(1.8

)%

 

14.6

%

 

(0.8

)%

Cumulative effect of non-GAAP Gross Margin and Operating adjustments

 

8.8

%

 

9.0

%

 

19.1

%

 

8.9

%

 

17.5

%

Non-GAAP Income from operations %

 

24.3

%

 

25.1

%

 

17.3

%

 

23.5

%

 

16.7

%

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 28,
 2019

 

September 28,
 2019

 

December 29,
 2018

 

December 28,
 2019

 

December 29,
 2018

 

Other Expense, Net Reconciliation

GAAP Other expense, net

 

$

(228

)

 

$

(61

)

 

$

(3

)

 

$

(2,245

)

 

$

(249

)

Loss on refinancing of long-term debt

 

 

 

 

 

 

 

2,235

 

 

 

Non-GAAP Other expense, net

 

$

(228

)

 

$

(61

)

 

$

(3

)

 

$

(10

)

 

$

(249

)

 

Income Tax Expense Reconciliation

GAAP Income tax expense

 

$

92

 

 

$

1,066

 

 

$

380

 

 

$

1,572

 

 

$

2,353

 

Estimated tax effect of non-GAAP adjustments (1)

 

(11

)

 

(83

)

 

88

 

 

 

 

 

Non-GAAP Income tax expense

 

$

81

 

 

$

983

 

 

$

468

 

 

$

1,572

 

 

$

2,353

 

 

Net Income Reconciliation

GAAP Net income (loss)

 

$

13,987

 

 

$

13,539

 

 

$

(7,121

)

 

$

43,493

 

 

$

(26,322

)

Stock-based compensation - gross margin

 

440

 

 

453

 

 

288

 

 

1,422

 

 

940

 

Inventory adjustment related to restructured operations

 

 

 

 

 

(160

)

 

(338

)

 

7,829

 

Stock-based compensation - operations

 

5,124

 

 

5,227

 

 

3,450

 

 

17,477

 

 

12,706

 

Amortization of acquired intangible assets

 

3,390

 

 

3,389

 

 

3,708

 

 

13,558

 

 

17,690

 

Restructuring charges

 

(55

)

 

252

 

 

11,854

 

 

4,664

 

 

17,349

 

Impairment of acquired intangible assets

 

 

 

 

 

(800

)

 

(1,023

)

 

11,686

 

Acquisition related charges

 

 

 

 

 

 

 

 

 

1,531

 

Loss on refinancing of long-term debt

 

 

 

 

 

 

 

2,235

 

 

 

Estimated tax effect of non-GAAP adjustments (1)

 

11

 

 

83

 

 

(88

)

 

 

 

 

Non-GAAP Net income

 

$

22,897

 

 

$

22,943

 

 

$

11,131

 

 

$

81,488

 

 

$

43,409

 

 

Net Income Per Share Reconciliation

GAAP Net income (loss) per share - basic

 

$

0.10

 

 

$

0.10

 

 

$

(0.05

)

 

$

0.33

 

 

$

(0.21

)

Cumulative effect of Non-GAAP adjustments

 

0.07

 

 

0.07

 

 

0.14

 

 

0.29

 

 

0.55

 

Non-GAAP Net income per share - basic

 

$

0.17

 

 

$

0.17

 

 

$

0.09

 

 

$

0.62

 

 

$

0.34

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income (loss) per share - diluted

 

$

0.10

 

 

$

0.10

 

 

$

(0.05

)

 

$

0.32

 

 

$

(0.21

)

Cumulative effect of Non-GAAP adjustments

 

0.07

 

 

0.07

 

 

0.13

 

 

0.27

 

 

0.54

 

Non-GAAP Net income per share - diluted

 

$

0.17

 

 

$

0.17

 

 

$

0.08

 

 

$

0.59

 

 

$

0.33

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

Basic

 

133,691

 

 

132,997

 

 

129,521

 

 

132,471

 

 

126,564

 

Diluted - GAAP (2)

 

138,196

 

 

138,894

 

 

129,521

 

 

137,274

 

 

126,564

 

Diluted - Non-GAAP (2)

 

138,196

 

 

138,894

 

 

132,471

 

 

137,274

 

 

129,766

 

(1)

 

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.”

(2)

 

Diluted shares are calculated using the GAAP treasury stock method. In a loss position, diluted shares equal basic shares.


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