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, purchase accounting adjustments, 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. 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 | |||||||||||||||
|
April 1,
2017 |
December 31,
2016 |
April 2,
2016 |
|||||||||||||
| Revenue | $ | 104,587 | $ | 118,108 | $ | 96,512 | |||||||||
| Costs and expenses: | |||||||||||||||
| Cost of sales | 43,755 | 54,628 | 39,408 | ||||||||||||
| Research and development | 27,389 | 26,248 | 32,608 | ||||||||||||
| Selling, general, and administrative | 23,905 | 22,745 | 23,608 | ||||||||||||
| Amortization of acquired intangible assets | 8,514 | 8,283 | 8,721 | ||||||||||||
| Restructuring | 66 | 951 | 5,431 | ||||||||||||
| Acquisition related charges | 1,660 | 6,211 | 94 | ||||||||||||
| 105,289 | 119,066 | 109,870 | |||||||||||||
| Loss from operations | (702 | ) | (958 | ) | (13,358 | ) | |||||||||
| Interest expense | (5,568 | ) | (5,070 | ) | (4,960 | ) | |||||||||
| Other (expense) income, net | (148 | ) | 745 | 817 | |||||||||||
| Loss before income taxes and equity in net loss of an unconsolidated affiliate | (6,418 | ) | (5,283 | ) | (17,501 | ) | |||||||||
| Income tax expense | 518 | 2,507 | 1,900 | ||||||||||||
| Equity in net loss of an unconsolidated affiliate, net of tax | (339 | ) | (374 | ) | (310 | ) | |||||||||
| Net loss | $ | (7,275 | ) | $ | (8,164 | ) | $ | (19,711 | ) | ||||||
| Net loss per share, basic and diluted | $ | (0.06 | ) | $ | (0.07 | ) | $ | (0.17 | ) | ||||||
| Shares used in per share calculations, basic and diluted | 121,800 | 121,236 | 118,833 | ||||||||||||
|
Lattice Semiconductor Corporation Consolidated Balance Sheets (in thousands) (unaudited) |
||||||||||
|
April 1,
2017 |
December 31,
2016 |
|||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash, cash equivalents and short-term marketable securities | $ | 109,448 | $ | 116,860 | ||||||
| Accounts receivable, net | 66,074 | 99,637 | ||||||||
| Inventories | 77,775 | 79,168 | ||||||||
| Other current assets | 19,660 | 19,035 | ||||||||
| Total current assets | 272,957 | 314,700 | ||||||||
| Property and equipment, net | 48,780 | 49,481 | ||||||||
| Intangible assets, net of amortization | 106,695 | 118,863 | ||||||||
| Goodwill | 269,758 | 269,758 | ||||||||
| Deferred income taxes | 384 | 372 | ||||||||
| Other long-term assets | 12,802 | 13,709 | ||||||||
| $ | 711,376 | $ | 766,883 | |||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable and other accrued liabilities | $ | 53,340 | $ | 90,798 | ||||||
| Current portion of long-term debt | 23,154 | 33,767 | ||||||||
| Deferred income and allowances on sales to sell-through distributors and deferred license revenue | 29,829 | 32,985 | ||||||||
| Total current liabilities | 106,323 | 157,550 | ||||||||
| Long-term debt | 301,621 | 300,855 | ||||||||
| Other long-term liabilities | 35,937 | 38,048 | ||||||||
| Total liabilities | 443,881 | 496,453 | ||||||||
| Stockholders' equity | 267,495 | 270,430 | ||||||||
| $ | 711,376 | $ | 766,883 | |||||||
|
Lattice Semiconductor Corporation Consolidated Statements of Cash Flows (in thousands) (unaudited) |
|||||||||||
| Three Months Ended | |||||||||||
| April 1, 2017 | April 2, 2016 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | (7,275 | ) | $ | (19,711 | ) | |||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 15,296 | 17,331 | |||||||||
| Amortization of debt issuance costs and discount | 933 | 241 | |||||||||
| Loss on sale or maturity of marketable securities | 170 | — | |||||||||
| (Gain) loss on forward contracts | (78 | ) | 152 | ||||||||
| Stock-based compensation expense | 3,843 | 4,556 | |||||||||
| Equity in net loss of an unconsolidated affiliate, net of tax | 339 | 310 | |||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable, net | 33,563 | 4,072 | |||||||||
| Inventories | 1,393 | (6,702 | ) | ||||||||
| Prepaid expenses and other assets | 1,137 | 1,457 | |||||||||
| Accounts payable and accrued expenses (includes restructuring) | (35,029 | ) | 17,881 | ||||||||
| Accrued payroll obligations | (1,706 | ) | (3,448 | ) | |||||||
| Income taxes payable | (1,765 | ) | (101 | ) | |||||||
| Deferred income and allowances on sales to sell-through distributors | (2,720 | ) | 6,907 | ||||||||
| Deferred licensing and services revenue | (436 | ) | 179 | ||||||||
| Net cash provided by operating activities | 7,665 | 23,124 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Proceeds from sales of and maturities of short-term marketable securities | 5,700 | 5,997 | |||||||||
| Purchases of marketable securities | (7,420 | ) | — | ||||||||
| Capital expenditures | (3,374 | ) | (5,700 | ) | |||||||
| Cash paid for software licenses | (1,617 | ) | (3,362 | ) | |||||||
| Net cash used in investing activities | (6,711 | ) | (3,065 | ) | |||||||
| Cash flows from financing activities: | |||||||||||
| Restricted stock unit withholdings | (693 | ) | (525 | ) | |||||||
| Proceeds from issuance of common stock | 1,144 | 1,117 | |||||||||
| Repayment of debt | (10,780 | ) | (875 | ) | |||||||
| Net cash used in financing activities | (10,329 | ) | (283 | ) | |||||||
| Effect of exchange rate change on cash | 274 | 237 | |||||||||
| Net (decrease) increase in cash and cash equivalents | (9,101 | ) | 20,013 | ||||||||
| Beginning cash and cash equivalents | 106,552 | 84,606 | |||||||||
| Ending cash and cash equivalents | $ | 97,451 | $ | 104,619 | |||||||
| Supplemental cash flow information: | |||||||||||
| Change in unrealized loss related to marketable securities, net of tax, included in Accumulated other comprehensive loss | $ | 43 | $ | 28 | |||||||
| Income taxes paid, net of refunds | $ | 222 | $ | 2,496 | |||||||
| Interest paid | $ | 5,025 | $ | 4,671 | |||||||
| Accrued purchases of plant and equipment | $ | 1,297 | $ | 1,494 | |||||||
|
Lattice Semiconductor Corporation - Supplemental Historical Financial Information - (unaudited) |
||||||||||||
| Three Months Ended | ||||||||||||
|
April 1,
2017 |
December 31,
2016 |
April 2,
2016 |
||||||||||
| Operations Information | ||||||||||||
| Percent of Revenue | ||||||||||||
| Gross Margin | 58.2 | % | 53.7 | % | 59.2 | % | ||||||
| R&D Expense | 26.2 | % | 22.2 | % | 33.8 | % | ||||||
| SG&A Expense | 22.9 | % | 19.3 | % | 24.5 | % | ||||||
| Depreciation and amortization (in thousands) | 15,296 | 13,898 | 17,331 | |||||||||
| Capital expenditures (in thousands) | 3,374 | 2,726 | 5,700 | |||||||||
| Stock-based compensation expense (in thousands) | 3,843 | 4,106 | 4,556 | |||||||||
| Restructuring and severance related charges (in thousands) | 66 | 951 | 5,431 | |||||||||
| Taxes paid (cash, in thousands) | 222 | 2,109 | 2,496 | |||||||||
| Balance Sheet Information | ||||||||||||
| Current Ratio | 2.6 | 2.0 | 2.4 | |||||||||
| A/R Days Revenue Outstanding | 57 | 77 | 80 | |||||||||
| Inventory Months | 5.3 | 4.3 | 6.3 | |||||||||
| Revenue% (by Geography) | ||||||||||||
| Asia | 70 | % | 75 | % | 68 | % | ||||||
| Europe (incl. Africa) | 11 | % | 14 | % | 17 | % | ||||||
| Americas | 19 | % | 11 | % | 15 | % | ||||||
| Revenue% (by End Market) | ||||||||||||
| Communications and Computing | 29 | % | 26 | % | 34 | % | ||||||
| Mobile and Consumer | 30 | % | 36 | % | 26 | % | ||||||
| Industrial and Automotive | 30 | % | 31 | % | 31 | % | ||||||
| Licensing and Services | 11 | % | 7 | % | 9 | % | ||||||
| Revenue% (by Channel) | ||||||||||||
| Sell-through distribution | 60 | % | 68 | % | 53 | % | ||||||
| Direct | 40 | % | 32 | % | 47 | % | ||||||
|
Lattice Semiconductor Corporation - Reconciliation of U.S. GAAP to Non-GAAP Financial Measures - (in thousands, except per share data) (unaudited) |
|||||||||||||||
| Three Months Ended | |||||||||||||||
|
April 1,
2017 |
December 31,
2016 |
April 2,
2016 |
|||||||||||||
| Gross Margin Reconciliation | |||||||||||||||
| GAAP Gross margin | $ | 60,832 | $ | 63,480 | $ | 57,104 | |||||||||
| Inventory step-up expense | — | — | 523 | ||||||||||||
| Stock-based compensation - gross margin | 228 | 232 | 259 | ||||||||||||
| Non-GAAP Gross margin | $ | 61,060 | $ | 63,712 | $ | 57,886 | |||||||||
| Gross Margin % Reconciliation | |||||||||||||||
| GAAP Gross margin % | 58.2 | % | 53.7 | % | 59.2 | % | |||||||||
| Cumulative effect of non-GAAP Gross Margin adjustments | 0.2 | % | 0.2 | % | 0.8 | % | |||||||||
| Non-GAAP Gross margin % | 58.4 | % | 53.9 | % | 60.0 | % | |||||||||
| Operating Expenses Reconciliation | |||||||||||||||
| GAAP Operating expenses | $ | 61,534 | $ | 64,438 | $ | 70,462 | |||||||||
| Amortization of acquired intangible assets | (8,514 | ) | (8,283 | ) | (8,721 | ) | |||||||||
| Restructuring charges | (66 | ) | (951 | ) | (5,431 | ) | |||||||||
| Acquisition related charges (1) | (1,660 | ) | (6,211 | ) | (94 | ) | |||||||||
| Stock-based compensation - operations | (3,615 | ) | (3,874 | ) | (4,297 | ) | |||||||||
| Non-GAAP Operating expenses | $ | 47,679 | $ | 45,119 | $ | 51,919 | |||||||||
| Income (Loss) from Operations Reconciliation | |||||||||||||||
| GAAP Loss from operations | $ | (702 | ) | $ | (958 | ) | $ | (13,358 | ) | ||||||
| Inventory step-up expense | — | — | 523 | ||||||||||||
| Stock-based compensation - gross margin | 228 | 232 | 259 | ||||||||||||
| Amortization of acquired intangible assets | 8,514 | 8,283 | 8,721 | ||||||||||||
| Restructuring charges | 66 | 951 | 5,431 | ||||||||||||
| Acquisition related charges (1) | 1,660 | 6,211 | 94 | ||||||||||||
| Stock-based compensation - operations | 3,615 | 3,874 | 4,297 | ||||||||||||
| Non-GAAP Income from operations | $ | 13,381 | $ | 18,593 | $ | 5,967 | |||||||||
| Income (Loss) from Operations % Reconciliation | |||||||||||||||
| GAAP Loss from operations % | (0.7 | )% | (0.8 | )% | (13.8 | )% | |||||||||
| Cumulative effect of non-GAAP Gross Margin and Operating adjustments | 13.5 | % | 16.5 | % | 20.0 | % | |||||||||
| Non-GAAP Income from operations % | 12.8 | % | 15.7 | % | 6.2 | % | |||||||||
| (1) Legal fees and outside services in connection with our pending 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 | |||||||||||||||
|
April 1,
2017 |
December 31,
2016 |
April 2,
2016 |
|||||||||||||
| Income Tax Expense Reconciliation | |||||||||||||||
| GAAP Income tax expense | $ | 518 | $ | 2,507 | $ | 1,900 | |||||||||
| Estimated tax effect of non-GAAP adjustments (2) | (303 | ) | (438 | ) | 548 | ||||||||||
| Non-GAAP Income tax expense | $ | 215 | $ | 2,069 | $ | 2,448 | |||||||||
| Net Income (Loss) Reconciliation | |||||||||||||||
| GAAP Net loss | $ | (7,275 | ) | $ | (8,164 | ) | $ | (19,711 | ) | ||||||
| Inventory step-up expense | — | — | 523 | ||||||||||||
| Stock-based compensation - gross margin | 228 | 232 | 259 | ||||||||||||
| Amortization of acquired intangible assets | 8,514 | 8,283 | 8,721 | ||||||||||||
| Restructuring charges | 66 | 951 | 5,431 | ||||||||||||
| Acquisition related charges (1) | 1,660 | 6,211 | 94 | ||||||||||||
| Stock-based compensation - operations | 3,615 | 3,874 | 4,297 | ||||||||||||
| Estimated tax effect of non-GAAP adjustments (2) | 303 | 438 | (548 | ) | |||||||||||
| Non-GAAP Net income (loss) | $ | 7,111 | $ | 11,825 | $ | (934 | ) | ||||||||
| Net Income (Loss) Per Share Reconciliation | |||||||||||||||
| GAAP Net loss per share - basic and diluted | $ | (0.06 | ) | $ | (0.07 | ) | $ | (0.17 | ) | ||||||
| Cumulative effect of Non-GAAP adjustments | 0.12 | 0.17 | 0.16 | ||||||||||||
| Non-GAAP Net income (loss) per share - basic and diluted | $ | 0.06 | $ | 0.10 | $ | (0.01 | ) | ||||||||
| Shares used in per share calculations: | |||||||||||||||
| Basic | 121,800 | 121,236 | 118,833 | ||||||||||||
| Diluted - GAAP (3) | 121,800 | 121,236 | 118,833 | ||||||||||||
| Diluted - Non-GAAP (3) | 124,343 | 123,621 | 118,833 | ||||||||||||
| (1) Legal fees and outside services in connection with our pending acquisition by Canyon Bridge Acquisition Company, Inc. | |||||||||||||||
| (2) During the second quarter of fiscal 2016, we refined our calculation of 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.” Prior periods have been similarly recalculated to conform to the current presentation. | |||||||||||||||
| (3) Diluted shares are calculated using the GAAP treasury stock method. In a loss position, diluted shares equal basic shares. | |||||||||||||||
