Second Quarter 2016 Financial Highlights*:

• Revenue of $99.2 million.
• On a GAAP basis, Net loss of $13.8 million or $0.12 per basic and diluted share.
• On a Non-GAAP basis, Net income of $0.2 million or $0.00 per basic and diluted share.
• On a GAAP basis, Operating expenses of $64.8 million.
• On a Non-GAAP basis, Operating expenses of $50.8 million.
• Gross margin of 58.9% on a GAAP basis and 59.1% on a non-GAAP basis.

* GAAP represents U.S. Generally Accepted Accounting Principles. Non-GAAP represents GAAP excluding the impact of certain activities which the Company's management excludes in analyzing the Company's operating results and in understanding trends in the Company's earnings. For a reconciliation of GAAP to non-GAAP results, see accompanying tables "Reconciliation of U.S. GAAP to Non-GAAP Financial Measures." During the second quarter of fiscal 2016, the Company revised its calculation method for non-GAAP tax expense; prior periods have been recalculated to conform to current presentation.

PORTLAND, Ore. — (BUSINESS WIRE) — August 9, 2016 — Lattice Semiconductor Corporation (NASDAQ: LSCC), the global leader in smart connectivity solutions, announced financial results today for the fiscal second quarter ended July 2, 2016.

The Company reported revenue for the second quarter of 2016 of $99.2 million, which increased 2.8% sequentially, as compared to the first quarter 2016 revenue of $96.5 million, and decreased 6.8%, as compared to the second quarter 2015 revenue of $106.5 million on a GAAP basis (Lattice closed its acquisition of Silicon Image on March 10, 2015). Gross margin on a GAAP basis was 58.9% for the second quarter of 2016, as compared to the first quarter of 2016 gross margin of 59.2% and 54.6% for the second quarter of 2015. Gross margin for the second quarter of 2016 was 59.1% on a non-GAAP basis, as compared to 60.0% for the first quarter of 2016 and 56.9% for the second quarter of 2015. Total operating expenses for the second quarter of 2016 were $64.8 million on a GAAP basis as compared to $70.5 million for the first quarter of 2016 and $84.0 million for the second quarter of 2015. Total operating expenses were $50.8 million for the second quarter of 2016 on a non-GAAP basis, as compared to $51.9 million for the first quarter of 2016 and $63.2 million for the second quarter of 2015.

GAAP net loss for the second quarter was $13.8 million ($0.12 per basic and diluted share), with net income of $0.2 million ($0.00 per basic and diluted share) on a non-GAAP basis. GAAP results for the second quarter of 2016 reflect $2.6 million in restructuring charges, $4.5 million in tax expense, $8.3 million in amortization of acquired intangible assets, and $3.2 million in stock-based compensation expense. This compares to a net loss on a GAAP basis in the prior quarter of $19.7 million ($0.17 per basic and diluted share), with a net loss on a non-GAAP basis in the prior quarter of $0.9 million ($0.01 per basic and diluted share), and compares to a net loss on a GAAP basis in the year ago period of $35.6 million ($0.30 per basic and diluted share), or a net loss of $11.9 million ($0.10 per basic and diluted share) on a non-GAAP basis. GAAP results for the first quarter of 2016 reflect $5.4 million in restructuring charges, less than $0.1 million in acquisition related charges, $1.9 million in tax expense, $8.7 million in amortization of acquired intangible assets, and $4.6 million in stock-based compensation expense. GAAP results for the second quarter of 2015 reflect $4.1 million in restructuring charges, $3.3 million in acquisition related charges, $4.1 million in tax expense, $8.9 million in amortization of acquired intangible assets, and $5.0 million in stock-based compensation expense.

Darin G. Billerbeck, President and Chief Executive Officer, said, "We are excited that we exited the second quarter of 2016 with FPGA shipments of greater than 1 million units a day. Revenue for the second quarter came in as expected with gross margin slightly above the high-end of expectations. Non-GAAP operating expenses in the second quarter decreased sequentially but were approximately $2.0 million above the high-end of guidance, as short term variable spending was higher than anticipated. In the third quarter of 2016, we expect double-digit revenue growth along with double-digit reductions in spending. We remain encouraged by the increased traction in our FPGA business, continued success in the broader consumer market with both FPGAs and Imaging products, as well as growth in our industrial and licensing businesses."

Max Downing, Interim Chief Financial Officer, added, "Second quarter of 2016 gross margin was 58.9% on a GAAP basis and 59.1% on a non-GAAP basis, reflecting increased IP royalties and license revenues. We continue to expect gross margin for the full year 2016 to be more in-line with our long-term, mid-50’s percent target, as our consumer business is beginning to ramp significantly. We finalized our sale of Qterics in the second quarter and recognized a gain of $2.6 million in our GAAP results. We ended the second quarter with $119.3 million in cash and short term investments after $9.5 million in cash flow provided by operations, and as compared to a balance of $116.5 million at the end of the prior quarter."