Lattice Semiconductor Reports Fourth Quarter and Full Year 2018 Results

• Fourth Quarter Net Loss Per Share Reduced by $0.01 on a Year Over Year
  GAAP Basis; Net Income Per Share Increased $0.07 on a Year Over Year
  Non-GAAP Basis
• 2018 Net Loss Per Share Reduced by 64% on a GAAP Basis, From $0.58 in
  2017 to $0.21 in 2018; Net Income Per Share Tripled to $0.33 in 2018
  from $0.11 in 2017 on a Non-GAAP Basis
• Expanded Operating Cash Flow to $30.9 million in the Fourth Quarter
  from $11 million in the Third Quarter, and $51.5 Million for 2018
  Compared to $38.5 Million in 2017

* 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.”

PORTLAND, Ore.–(BUSINESS WIRE)–Lattice Semiconductor Corporation (NASDAQ: LSCC), a leading provider of
programmable logic devices, announced financial results today for the
fiscal fourth quarter and full year ended December 29, 2018.

Jim Anderson, President and Chief Executive Officer, said, “We are
pleased to report that for the full year 2018, we substantially improved
Lattice’s profitability, earnings per share and operating cash flow. We
simplified the Company’s operating structure and have attracted an
experienced executive team to lead all critical business areas. Despite
uncertainty in the current macroeconomic climate, we are positioned to
benefit over the long term from multiple catalysts in our business,
including growth in computing, industrial and automotive, and the global
5G buildout. We are excited about 2019 as we unlock additional value for
the company and its shareholders.”

Sherri Luther, Chief Financial Officer, said, “The fourth quarter of
2018 demonstrated continued improvement in operations, with net loss per
share at $0.05 on a GAAP basis, and net income of $0.08 per share on a
non-GAAP basis. For the full year of 2018, we reduced our net loss per
share on a GAAP basis to $0.21 from a loss of $0.58, and tripled our net
income per share on a non-GAAP basis to $0.33 from $0.11. Importantly,
we improved operating cash flow to $51.5 million in 2018 from $38.5
million in 2017 and made a total of $40 million in discretionary debt
payments in 2018. We remain committed to delivering improved operating
leverage.”

Selected Fourth Quarter and Full Year 2018 Financial Results and
Comparisons (in thousands, except per share data)

^†Results for periods in 2017 are presented in accordance
with ASC 605, which was in effect during that fiscal year.

Full Year 2018 Highlights

• Improved Financial Performance: Lattice exited 2018 in a
  stronger, more profitable position. We implemented initiatives to
  improve gross margin, reduce operating expenses, increase cash flow,
  and actively delever the balance sheet.
• Strategic Repositioning: Lattice completed a strategic
  repositioning in 2018 to focus on its profitable programmable logic
  business, while also improving efficiencies across its global
  operations. Actions taken included discontinuing its non-core
  millimeter wave business to focus entirely on programmable solutions
  moving forward, as well as optimizing the R&D project list to focus
  investments on areas with the greatest potential return. These actions
  are in-line with management’s strategy to drive profitable growth and
  increase shareholder value.
• New Management Team Added: Lattice strengthened its executive
  team with highly experienced, proven leaders with both broader
  semiconductor industry experience and deep FPGA knowledge. The new
  team and simplified structure is now in place across R&D, sales,
  marketing, operations and finance.

• Jim Anderson joined Lattice in September from AMD as the Company’s
  President and Chief Executive Officer;
• Steve Douglass joined Lattice in September from Xilinx, Inc. as
  Corporate Vice President, R&D
• Esam Elashmawi joined Lattice in September from Microsemi Corporation
  as Chief Marketing and Strategy Officer;
• Glenn O’Rourke joined Lattice in December from Xilinx, Inc. as
  Corporate Vice President, Global Operations;
• Sherri Luther joined Lattice in January from Coherent, Inc. as Chief
  Financial Officer;
• Mark Nelson joined Lattice in January from Intel Corporation’s
  Programmable Solutions Group (PSG) as Corporate Vice President of
  Worldwide Sales.

• New Product Introductions in 2018: Lattice further built upon
  its strong product portfolio with notable 2018 developments including:

• Introduction and expansion of the ultra-low power Lattice sensAI^TM
  solution stack with a full ecosystem to help speed time-to-market for
  developers of low-power machine learning applications;
• Initial samples of Lattice’s new security solution for Platform
  Firmware Resilience delivered to top server manufacturers;
• Expansion of Lattice’s FPGA based modular video interface platform to
  simplify video connectivity for embedded vision system designs;
• Launch of Lattice’s Radiant^TM next-generation FPGA software
  with enhanced ease-of-use for broad market low power applications.

Business Outlook – First Quarter of 2019:

• Revenue for the first quarter of 2019 is expected to be between
  approximately $94 million and $98 million.
• Gross margin percentage for the first quarter of 2019 is expected to
  be approximately 57.5% plus or minus 2% on a non-GAAP basis.
• Total operating expenses for the first quarter of 2019 are expected to
  be between approximately $37 million and $39 million on a non-GAAP
  basis.

Non-GAAP Financial Measures: In addition to financial measures
prepared in accordance with generally accepted accounting principles
(GAAP), this earnings release makes reference to non-GAAP measures. With
respect to the outlook for the first quarter of 2019, certain items that
affect GAAP measurement of financial metrics are out of the
Company’s control and/or cannot be reasonably predicted. Consequently,
the Company is unable to provide a reasonable estimate of GAAP
measurement for guidance or a corresponding reconciliation to GAAP for
the quarter. Additional information regarding the reasons the Company
uses non-GAAP measures, a reconciliation of these measures to the most
directly comparable GAAP measures, and other information relating to
these measures are included below, following the GAAP financial
information.

Investor Conference Call / Webcast Details:

Lattice Semiconductor will review the Company’s financial results for
the fiscal fourth quarter and full year 2018 and business outlook on
Tuesday, February 12 at 5:00 p.m. Eastern Time. The dial-in number for
the live audio call is 1-888-684-5603 or 1-918-398-4852 with conference
identification number 8287936. A live webcast and replay of the
conference call will also be available on the investor relations section
of www.latticesemi.com.
The Company’s financial guidance will be limited to the comments on its
public quarterly earnings call and the public business outlook
statements contained in this press release.

Forward-Looking Statements Notice:

The foregoing paragraphs contain forward-looking statements that involve
estimates, assumptions, risks and uncertainties. Any statements about
our expectations, beliefs, plans, objectives, assumptions or future
events or performance are not historical facts and may be
forward-looking. Such forward-looking statements include statements
relating to: our belief that we are positioned to benefit over the long
term from multiple catalysts in our business, including growth in
computing, industrial and automotive, and the global 5G buildout; that
we will unlock additional value for the company and its shareholders;
and the statements under the heading “Business Outlook – First Quarter
of 2019.” Other forward-looking statements may be indicated by words
such as “will,” “could,” “should,” “would,” “may,” “expect,” “plan,”
“project,” “anticipate,” “intend,” “forecast,” “future,” “believe,”
“estimate,” “predict,” “propose,” “potential,” “continue” or the
negative of these terms or other comparable terminology; and our
expectation that we will remain focused on maximizing the leverage of
our operating model and reduce our outstanding debt balance. Lattice
believes the factors identified below could cause actual results to
differ materially from the forward-looking statements.

Estimates of future revenue are inherently uncertain due to such factors
as global economic conditions, which may affect customer demand, pricing
pressures, competitive actions, the demand for our Mature, Mainstream
and New products, and in particular our iCE40™ and MachXO3L™ devices,
international trade disputes and sanctions, the ability to supply
products to customers in a timely manner, changes in our distribution
relationships, or the volatility of our consumer business. Actual gross
margin percentage and operating expenses could vary from the estimates
on the basis of, among other things, changes in revenue levels, changes
in product pricing and mix, changes in wafer, assembly, test and other
costs, including commodity costs, variations in manufacturing yields,
the failure to sustain operational improvements, the actual amount of
compensation charges due to stock price changes. Any unanticipated
declines in revenue or gross margin, any unanticipated increases in our
operating expenses or unanticipated charges could adversely affect our
profitability.

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 30, 2017, 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 of acquired
intangible assets, impairment of intangible assets, inventory
adjustments from the discontinuation of the Company’s millimeter wave
business, gain on sale of building, loss on sale of business unit, 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.
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Contacts

MEDIA:
Lattice Semiconductor Corporation
Doug Hunter,
503.268.8512
doug.hunter@latticesemi.com

INVESTORS:
Global
IR Partners
David Pasquale, 914.337.8801
lscc@globalirpartners.com

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