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 to measure compliance with certain of its debt covenants. 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 Corporation (NASDAQ: LSCC) provides smart connectivity solutions powered by our low power FPGA, video ASSP, 60 GHz millimeter wave, and IP products to the consumer, communications, industrial, computing, and automotive markets worldwide. Our unwavering commitment to our customers enables them to accelerate their innovation, creating an ever better and more connected world.
For more information, visit www.latticesemi.com. You can also follow us via LinkedIn, Twitter, Facebook, YouTube or RSS.
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 | Nine Months Ended | |||||||||||||||||||
|
October 1,
2016 |
July 2,
2016 |
October 3,
2015 |
October 1,
2016 |
October 3,
2015 |
||||||||||||||||
| Revenue | $ | 113,225 | $ | 99,209 | $ | 109,715 | $ | 308,946 | $ | 304,772 | ||||||||||
| Costs and expenses: | ||||||||||||||||||||
| Cost of sales | 45,801 | 40,783 | 49,866 | 125,992 | 138,965 | |||||||||||||||
| Research and development | 27,747 | 30,915 | 37,619 | 91,270 | 104,813 | |||||||||||||||
| Selling, general and administrative | 29,244 | 23,005 | 23,819 | 75,857 | 73,096 | |||||||||||||||
| Amortization of acquired intangible assets | 8,260 | 8,311 | 8,941 | 25,292 | 20,824 | |||||||||||||||
| Restructuring charges | 317 | 2,568 | 6,818 | 8,316 | 15,780 | |||||||||||||||
| Acquisition related charges | — | — | 610 | 94 | 22,078 | |||||||||||||||
| Impairment of intangible assets | 7,866 | — | — | 7,866 | — | |||||||||||||||
| 119,235 | 105,582 | 127,673 | 334,687 | 375,556 | ||||||||||||||||
| Loss from operations | (6,010 | ) | (6,373 | ) | (17,958 | ) | (25,741 | ) | (70,784 | ) | ||||||||||
| Interest expense | (5,235 | ) | (5,062 | ) | (5,754 | ) | (15,257 | ) | (12,870 | ) | ||||||||||
| Other income (expense), net | 209 | 2,532 | (841 | ) | 3,558 | (1,095 | ) | |||||||||||||
| Loss before income taxes and equity in net loss of an unconsolidated affiliate | (11,036 | ) | (8,903 | ) | (24,553 | ) | (37,440 | ) | (84,749 | ) | ||||||||||
| Income tax expense | 971 | 4,539 | 309 | 7,410 | 29,030 | |||||||||||||||
| Equity in net loss of an unconsolidated affiliate, net of tax | (407 | ) | (368 | ) | — | (1,085 | ) | — | ||||||||||||
| Net loss | $ | (12,414 | ) | $ | (13,810 | ) | $ | (24,862 | ) | $ | (45,935 | ) | $ | (113,779 | ) | |||||
| Net loss per share, basic and diluted | $ | (0.10 | ) | $ | (0.12 | ) | $ | (0.21 | ) | $ | (0.38 | ) | $ | (0.97 | ) | |||||
| Shares used in per share calculations, basic and diluted | 120,584 | 119,445 | 117,669 | 119,596 | 117,151 | |||||||||||||||
| Lattice Semiconductor Corporation | |||||||
| Consolidated Balance Sheets | |||||||
| (in thousands) | |||||||
| (unaudited) | |||||||
|
October 1,
2016 |
January 2,
2016 |
||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash, cash equivalents and short-term marketable securities | $ | 98,914 | $ | 102,574 | |||
| Accounts receivable, net | 93,946 | 88,471 | |||||
| Inventories | 80,540 | 75,896 | |||||
| Other current assets | 18,614 | 18,922 | |||||
| Total current assets | 292,014 | 285,863 | |||||
| Property and equipment, net | 51,576 | 51,852 | |||||
| Intangible assets, net of amortization | 127,332 | 162,583 | |||||
| Goodwill | 269,771 | 267,549 | |||||
| Deferred income taxes | 473 | 578 | |||||
| Other long-term assets | 15,087 | 17,495 | |||||
| $ | 756,253 | $ | 785,920 | ||||
| Liabilities and Stockholders' Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable and other accrued liabilities | $ | 85,995 | $ | 83,761 | |||
| Current portion of long-term debt | 27,613 | 7,557 | |||||
| Deferred income and allowances on sales to sell-through distributors and deferred licensing and services revenue | 21,586 | 19,859 | |||||
| Total current liabilities | 135,194 | 111,177 | |||||
| Long-term debt | 307,747 | 330,870 | |||||
| Other long-term liabilities | 39,638 | 38,353 | |||||
| Total liabilities | 482,579 | 480,400 | |||||
| Stockholders' equity | 273,674 | 305,520 | |||||
| $ | 756,253 | $ | 785,920 | ||||
| LATTICE SEMICONDUCTOR CORPORATION | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| Nine Months Ended | ||||||||
|
October 1,
|
October 3,
|
|||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (45,935 | ) | $ | (113,779 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 47,908 | 42,916 | ||||||
| Impairment of intangible assets | 7,866 | — | ||||||
| Amortization of debt issuance costs and discount | 1,213 | 2,037 | ||||||
| Change in deferred income tax provision | — | 17,689 | ||||||
| Loss on sale or maturity of marketable securities | 72 | 336 | ||||||
| Stock-based compensation expense | 12,107 | 13,609 | ||||||
| Loss on disposal of fixed assets | 263 | — | ||||||
| Gain on sale of business unit | (2,646 | ) | — | |||||
| Equity in net loss of an unconsolidated affiliate, net of tax | 1,085 | — | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable, net | (5,728 | ) | 7,708 | |||||
| Inventories | (4,644 | ) | 6,738 | |||||
| Prepaid expenses and other current assets | (2,227 | ) | (2,776 | ) | ||||
| Accounts payable and accrued expenses (includes restructuring) | 6,294 | 7,786 | ||||||
| Accrued payroll obligations | (454 | ) | (10,309 | ) | ||||
| Income taxes payable | 1,335 | 971 | ||||||
| Deferred income and allowances on sales to sell-through distributors | 3,067 | 5,481 | ||||||
| Deferred licensing and services revenue | (258 | ) | 967 | |||||
| Net cash provided by (used in) operating activities | 19,318 | (20,626 | ) | |||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sales or maturities of short-term marketable securities | 11,977 | 142,956 | ||||||
| Purchases of marketable securities, net | (5,961 | ) | (4,005 | ) | ||||
| Cash paid for business acquisition, net of cash acquired | — | (431,068 | ) | |||||
| Capital expenditures, net | (13,991 | ) | (11,584 | ) | ||||
| Proceeds from sale of business unit, net of cash sold | 1,972 | — | ||||||
| Cash paid for a non-marketable investment | (1,000 | ) | (3,000 | ) | ||||
| Cash paid for software licenses | (7,370 | ) | (5,393 | ) | ||||
| Net cash used in investing activities | (14,373 | ) | (312,094 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net share settlement upon issuance of restricted stock units | (2,883 | ) | (2,660 | ) | ||||
| Purchases of treasury stock | — | (6,970 | ) | |||||
| Net proceeds from issuance of common stock | 5,353 | 3,382 | ||||||
| Net proceeds from issuance of long-term debt | — | 346,500 | ||||||
| Cash paid for debt issuance costs | — | (8,283 | ) | |||||
| Repayment of debt | (4,279 | ) | (1,750 | ) | ||||
| Net cash (used in) provided by financing activities | (1,809 | ) | 330,219 | |||||
| LATTICE SEMICONDUCTOR CORPORATION | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| Nine Months Ended | ||||||||
| (In thousands) | October 1, 2016 | October 3, 2015 | ||||||
| Effect of exchange rate change on cash | (579 | ) | (754 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | 2,557 | (3,255 | ) | |||||
| Beginning cash and cash equivalents | 84,606 | 115,611 | ||||||
| Ending cash and cash equivalents | $ | 87,163 | $ | 112,356 | ||||
| Supplemental cash flow information: | ||||||||
|
Change in unrealized gain (loss) related to marketable securities,
net of tax, included in
|
$ | (50 | ) | $ | (133 | ) | ||
| Income taxes paid, net of refunds | $ | 7,250 | $ | 5,403 | ||||
| Interest paid | $ | 13,849 | $ | 6,225 | ||||
| Accrued purchases of plant and equipment | $ | 402 | $ | 817 | ||||
| Lattice Semiconductor Corporation | |||||||||||||||
| - Supplemental Historical Financial Information - | |||||||||||||||
| (unaudited) | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
|
October 1,
2016 |
July 2,
2016 |
October 3,
2015 |
October 1,
2016 |
October 3,
2015 |
|||||||||||
| Operations Information | |||||||||||||||
| Percent of Revenue | |||||||||||||||
| Gross Margin | 59.5 | % | 58.9 | % | 54.5 | % | 59.2 | % | 54.4 | % | |||||
| R&D Expense | 24.5 | % | 31.2 | % | 34.3 | % | 29.5 | % | 34.4 | % | |||||
| SG&A Expense | 25.8 | % | 23.2 | % | 21.7 | % | 24.6 | % | 24.0 | % | |||||
| Depreciation and amortization (in thousands) | 15,556 | 15,021 | 17,553 | 47,908 | 42,916 | ||||||||||
| Capital expenditures (in thousands) | 3,889 | 4,402 | 4,552 | 13,991 | 11,584 | ||||||||||
| Stock-based compensation (in thousands) | 4,309 | 3,242 | 4,199 | 12,107 | 12,562 | ||||||||||
| Restructuring and severance related charges (in thousands) | 317 | 2,568 | 6,818 | 8,316 | 15,780 | ||||||||||
| Taxes paid (cash, in thousands) | 2,386 | 2,368 | 2,291 | 7,250 | 5,403 | ||||||||||
| Balance Sheet Information | |||||||||||||||
| Current Ratio | 2.2 | 2.0 | 2.7 | ||||||||||||
| A/R Days Revenue Outstanding | 76 | 78 | 71 | ||||||||||||
| Inventory Months | 5.3 | 6.4 | 4.8 | ||||||||||||
| Revenue% (by Geography) | |||||||||||||||
| Asia | 74 | % | 68 | % | 79 | % | 70 | % | 76 | % | |||||
| Europe (incl. Africa) | 12 | % | 15 | % | 12 | % | 14 | % | 14 | % | |||||
| Americas | 14 | % | 17 | % | 9 | % | 16 | % | 10 | % | |||||
| Revenue% (by End Market) (1) | |||||||||||||||
| Communications and Computing | 27 | % | 29 | % | 33 | % | 30 | % | 36 | % | |||||
| Mobile and Consumer | 31 | % | 24 | % | 34 | % | 27 | % | 31 | % | |||||
| Industrial and Automotive | 33 | % | 37 | % | 23 | % | 34 | % | 25 | % | |||||
| Licensing and Services | 9 | % | 10 | % | 10 | % | 9 | % | 8 | % | |||||
| Revenue% (by Channel) | |||||||||||||||
| Sell-through distribution | 62 | % | 59 | % | 46 | % | 58 | % | 45 | % | |||||
| Direct | 38 | % | 41 | % | 54 | % | 42 | % | 55 | % | |||||
