What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-14 compared with 2024-02-16 · 188 added, 169 removed, 793 unchanged (31% of the section changed)

17 unchanged sentences

Restructuring

Impairment of acquired intangible assets

Acquisition related

30 unchanged sentences

364,834 367,946

Property and equipment, net

Property and equipment, less accumulated depreciation of $ 125,901 at December 28, 2024 and $ 125,856 at December 30, 2023

52,988 49,546

3 unchanged sentences

315,358 315,358

Deferred income taxes

66,980 57,762

Other long-term assets

11 unchanged sentences

99,622 97,400

Long-term debt

Long-term operating lease liabilities, net of current portion

10,739 13,618

Other long-term liabilities

9 unchanged sentences

504,299 545,586

Retained earnings (Accumulated deficit)

Retained earnings

209,098 147,967

14 unchanged sentences

Change in deferred income tax provision

Change in noncurrent taxes payable

Amortization of right-of-use assets

Impairment of acquired intangible assets

Charge for expiring production materials

Write-off of non-recoverable cost-method investment

Impairment of operating lease right-of-use asset

12 unchanged sentences

Cash paid for software and intellectual property licenses

Cash paid for business acquisition, net of cash acquired

Net cash provided by (used in) investing activities

30 unchanged sentences

Repurchase of common stock

Balances, January 1, 2022

Balances, December 31, 2022

Components of comprehensive income, net of tax:

29 unchanged sentences

We report based on a 52 or 53 -week fiscal year ending on the Saturday closest to December 31.

Our fiscal 2023, 2022, and 2021 were all 52 -week years that ended on December 30, 2023, December 31, 2022, and January 1, 2022, respectively.

Our fiscal 2024, 2023, and 2022 were all 52 -week years that ended on December 28, 2024, December 30, 2023, and December 31, 2022, respectively.

Our fiscal 2025 will be a 53 -week year and will end on January 3, 2026.

All references to quarterly or annual financial results are references to the results for the relevant fiscal period.

Concentrations of Risk

Potential exposure to concentrations of risk may impact revenue, accounts receivable, a nd supply of wafers for our new products .

Distributors have historically accounted for a significant portion of our total revenue.

Potential exposure to concentrations of risk may impact revenue, trade accounts receivable, a nd supply of wafers for our new products .

Sales to distributors have historically accounted for a significant portion of our total revenue.

Certain of our largest distributors each account for more than 10% of our total revenue and our net accounts receivable.

Revenue attributable to distributors as a percentage of total revenue is presented in the following table:

December 30, December 31, January 1,

33 % 32 % 28 %

32 % 28 % 27 %

Other distributors

1 unchanged sentence

89 % 87 % 89 %

Three of these distributors each accounted for more than 10% of net accounts receivable at certain dates presented.

At December 30, 2023 and December 31, 2022 , Arrow accounted for approximately 29 % and 27 %, respectively, Weikeng accounted for approximately 36 % and 47 %, respectively, and Future accounted for approximately 18 % and 9 %, respectively, of net accounts receivable.

Concentration of credit risk with respect to accounts receivable is mitigated by our credit and collection process including active management of collections, credit limits, routine credit evaluations for essentially all customers, and secure transactions with letters of credit or advance payments where appropriate.

Certain of our distributors accounted for more than 10% of net accounts receivable at the dates presented.

At December 28, 2024 and December 30, 2023 , Arrow accounted for approximately 36 % and 29 %, respectively, and Weikeng accounted for approximately 45 % and 36 %, respectively.

Future accounted for approximately 18 % of net accounts receivable at December 30, 2023.

Concentration of credit risk with respect to trade accounts receivable is mitigated by our credit and collection process including active management of collections, credit limits, routine credit evaluations for essentially all customers, and secure transactions with letters of credit or advance payments where appropriate.

We regularly review our allowance for doubtful accounts and the aging of our accounts receivable.

49 unchanged sentences

Property and equipment are stated at cost.

Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets, generally three to five years for equipment and software, and one to three years for tooling.

Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets, generally three to seven years for equipment and software, and one to five years for tooling.

Leasehold improvements are amortized over the shorter of the non-cancelable lease term or the estimated useful life of the assets.

69 unchanged sentences

Stock-Based Compensation

We estimate the fair value of share-based awards consistent with the provisions of ASC 718, “ Compensation - Stock Compensation .” We value RSUs using the closing market price on the date of grant, and we value stock options using the Black-Scholes option pricing model.

We estimate the fair value of share-based awards consistent with the provisions of ASC 718, “ Compensation - Stock Compensation .” We value restricted stock units ("RSUs") restricted stock awards ("RSAs") using the closing market price on the date of grant, and we value stock options using the Black-Scholes option pricing model.

We have also granted RSUs with a market condition or a performance condition to certain executives.

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For RSUs, we issue new shares when awards vest and withhold a portion of these shares on behalf of employees to satisfy the minimum statutory tax withholding requirements.

Segment Information

As of December 30, 2023, we had one operating segment:

the core Lattice business, which includes silicon-based and silicon-enabling products, evaluation boards, development hardware, and related intellectual property licensing, services, and sales.

Our chief operating decision maker is the Chief Executive Officer, who reviews operating results and financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

New Accounting Pronouncements

In November 2023, the FASB issued ASU 2023 - 07, Segment Reporting (Topic 820 ), Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

In addition, the amendments enhance interim disclosure requirements, clarify the circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements.

The amendments require retrospective application to all periods presented.

The amendments are effective for the Company for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

We have adopted ASU 2023 - 07 with the addition of Note 15 - Segment Reporting , and it did not have a material impact on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ) Improvements to Income Tax Disclosures , which require greater disaggregation of income tax disclosures.

ASU 2023 - 09 aims to improve an entity’s income tax disclosures around its effective rate reconciliation, income taxes paid by jurisdiction, disaggregation of income before income taxes and income tax expense.

This ASU should be applied on a prospective basis, but retrospective application is permitted.

The guidance in this update is effective for fiscal years beginning after December 15, 2024.

We are currently evaluating the future effect of the adoption of this ASU will have on our consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024 - 03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

Disaggregation of Income Statement Expenses .

This new guidance requires public entities to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of income statement.

The ASU may be applied prospectively or retrospectively and is effective for fiscal years beginning after December 15, 2026 and for interim periods beginning after December 15, 2027.

Early adoption is permitted.

We are currently evaluating the impact of adoption of this new guidance on our consolidated financial statements disclosures.

Note 2 - Net Income Per Share

Our calculation of the diluted share count includes the number of shares from our equity awards with market conditions or performance conditions that would be issuable under the terms of such awards at the end of the reporting period.

We compute basic earnings per share based on the weighted average number of shares of common stock outstanding during the period.

We compute diluted earnings per share based on the weighted average number of shares of common stock outstanding plus potentially dilutive shares of common stock outstanding during the period, if applicable.

Potentially dilutive shares of common stock from employee equity incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options, the assumed vesting of outstanding RSUs and RSAs, and the assumed issuance of common stock under the stock purchase plan.

Our calculation of potentially dilutive shares includes the number of shares from our equity awards with market conditions or performance conditions that would be issuable under the terms of such awards at the end of the reporting period.

For equity awards with a market condition, the number of shares included in the diluted share count as of the end of each period presented is determined by measuring the achievement of the market condition as of the end of the respective reporting periods.

6 unchanged sentences

137,623 137,694 137,321

Dilutive effect of stock options, RSUs, ESPP shares, and equity awards with a market condition or performance condition

Dilutive effect of employee equity incentive plans

699 2,096 3,346

5 unchanged sentences

$ 0.44 $ 1.85 $ 1.27

The computation of diluted Net income per share excludes the effects of stock options, RSUs, ESPP shares, and equity awards with a market condition or performance condition that are antidilutive, aggregating to approximately the following number of shares:

(In thousands)

Stock options, RSUs, ESPP shares, and equity awards with a market condition or performance condition excluded as they are antidilutive

The computation of diluted Net income per share excludes the effects of employee equity incentive plans that are antidilutive, aggregating to approximately 1.0 million, 0.4 million, and 0.5 million, respectively, in fiscal 2024 , 2023, and 2022.

Note 3 - Revenue from Contracts with Customers

23 unchanged sentences

(In thousands)

Contract assets as of January 1, 2022

Contract assets as of December 31, 2022

Revenues recorded during the period

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(In thousands)

Contract liabilities as of January 1, 2022

Prepaid customer deposit

Contract liabilities as of December 31, 2022

Product shipments from prepaid customer deposit

Accruals for estimated future stock rotation and scrap returns

1 unchanged sentence

Contract liabilities as of December 30, 2023

Product shipments from prepaid customer deposit

Unperformed performance obligations

Accruals for estimated future stock rotation and scrap returns

22 unchanged sentences

(In thousands)

Liability for non-cancelable contracts

Current portion of liability for non-cancelable contracts

$ 13,534 $ 11,418

Contract liabilities

Liability for expiring production materials

Current portion of operating lease liabilities

3 unchanged sentences

$ 45,638 $ 36,048

Other Long-Term Liabilities

Included in Other long-term liabilities in the Consolidated Balance Sheets are the following balances:

(In thousands)

Long-term portion of liability for non-cancelable contracts

$ 16,022 $ 7,668

Long-term portion of uncertain tax positions

Other long-term liabilities

Total other long-term liabilities

$ 23,916 $ 40,735

Note 5 - Property and Equipment

24 unchanged sentences

Note 6 - Intangible Assets and Goodwill

In connection with our previous acquisitions, we have recorded identifiable intangible assets related to existing technology, customer relationships, trade names, and trademarks, based on guidance for determining fair value under the provisions of ASC 820, " Fair Value Measurements ." We are amortizing the intangible assets using the straight-line method over their estimated useful lives.

In connection with our previous acquisitions , we have recorded identifiable intangible assets related to existing technology, customer relationships, and trade name / trademarks, based on guidance for determining fair value under the provisions of ASC 820, " Fair Value Measurements ." We amortize the intangible assets using the straight-line method over their estimated useful lives.

Additionally, we have entered into license agreements for third -party technology and recorded them as intangible assets.

These licenses are being amortized to Research and development expense over their estimated useful lives.

Our review of our strategic long-range plan completed at the end of fiscal 2024 concluded that the originally acquired Mirametrix intangible assets had limited future revenue potential due to a decline in customer demand, which we determined was an indicator of impairment.

Our assessment of the fair value of these intangible assets concluded that they had been fully impaired as of December 28, 2024, and we recorded an impairment charge of $ 13.9 million for fiscal 2024 in the Consolidated Statements of Operations.

No impairment charges relating to acquired intangible assets were recorded for fiscal 2023 or 2022.

2 unchanged sentences

(In thousands)

Weighted Average Amortization Period (in years)

Weighted Average Amortization Period

Accumulated Amortization

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(In thousands)

Weighted Average Amortization Period (in years)

Weighted Average Amortization Period

Accumulated Amortization

17 unchanged sentences

$ 4,697 $ 4,552 $ 4,832

The annual expected amortization expense of acquired intangible assets is as follows:

The annual expected amortization expense related to intangible assets is as follows:

(In thousands)

3 unchanged sentences

Note 7 - Long-Term Debt

On September 1, 2022, we entered into an Amended and Restated Credit Agreement (the “2022 Credit Agreement”), which provides for a five -year secured revolving loan facility with an aggregate principal amount of up to $ 350 million, along with other components and options currently not in use.

We drew down an initial $ 150 million revolving loan at closing, which we used along with $ 1.9 million of cash to (i) repay the $ 150.5 million term loan, revolving loan, and accrued interest obligations outstanding under our previous credit agreement (the “2019 Credit Agreement”), and (ii) pay fees and expenses totaling $ 1.4 million incurred in connection with the 2022 Credit Agreement.

We intend to use the revolving loan facility for working capital and general corporate purposes.

2 unchanged sentences

In addition, we pay a quarterly commitment fee of 0.20 % on the unused portion of the revolving facility.

With the amendment of our 2019 Credit Agreement pursuant to the 2022 Credit Agreement, we capitalized $ 0.9 million of the new debt costs, and expensed $ 0.7 million of debt costs and existing original issue discount ("OID") as a loss on refinancing in Other income (expense), net on our Consolidated Statements of Operations for fiscal 2022.

We determine the Current portion of long-term debt, if any, as the sum of the required debt payments to be made over the next twelve months, reduced by the OID and the debt issuance costs to be amortized over the next twelve months.

The revolving loans under the 2022 Credit Agreement may be repaid and reborrowed at our discretion, with any remaining outstanding principal amount due and payable on the maturity date of the revolving loans on September 1, 2027.

During fiscal 2023, we made discretionary payments totaling $ 130 million on the revolving loans outstanding under the 2022 Credit Agreement.

The fair value of our long-term debt approximates the carrying value, which is reflected in our Consolidated Balance Sheets as follows:

(In thousands)

Principal amount

$ - $ 130,000

Unamortized original issuance discount and debt costs

Long-term debt, net of unamortized debt issue costs

$ - $ 128,752

At December 28, 2024 and December 30, 2023, we had no borrowings outstanding under the 2022 Credit Agreement, as we paid off the outstanding balance of our revolving loans during the third quarter of fiscal 2023.

Interest expense related to our long-term debt is included in Interest expense on our Consolidated Statements of Operations as follows:

6 unchanged sentences

Note 8 - Restructuring

In September 2024, our management commenced an internal restructuring plan ("the Q3 2024 Plan"), which includes a global workforce reduction.

Under this plan, we have incurred restructuring costs of approximately $ 7.6 million through December 28, 2024.

The Q3 2024 plan is expected to be largely complete in the first half of fiscal year 2025.

In the third quarter of 2023, our management approved and executed an internal restructuring plan (the “Q3 2023 Plan”), which included a targeted workforce reduction intended to reorganize critical roles and focus skillsets in key growth markets.

We incurred restructuring costs of approximately $ 2.0 million in fiscal 2023.

We incurred restructuring costs of approximately $ 5.3 million and $ 2.0 million, respectively, in fiscal 2024 and 2023.

Under this plan, approximately $ 7.3 million of total costs have been incurred through December 28, 2024.

The Q3 2023 plan is expected to be largely complete by the end of fiscal year 2024.

All actions planned under the Q3 2023 plan have been implemented.

In September 2022, our management approved and implemented additional contract cancellations and workforce reductions under the Q2 2019 Sales Plan, an internal restructuring plan that our management approved and executed in April 2019.

The Q2 2019 Sales Plan focused on a restructuring of the global sales organization through cancellation of certain contracts and a workforce reduction.

Under the Q2 2019 Sales Plan, we incurred no restructuring costs in fiscal 2023, approximately $ 1.0 million of incremental restructuring costs in fiscal 2022, and no restructuring costs in fiscal 2021.

Under the Q2 2019 Sales Plan, we recorded a credit adjustment of approximately $ 0.6 million in fiscal 2024, incurred no restructuring costs in fiscal 2023, and incurred approximately $ 1.0 million of incremental restructuring costs in fiscal 2022.

Under this plan, approximately $ 2.5 million of total expense has been incurred through December 28, 2024.

All actions planned under the Q2 2019 Sales Plan have been implemented.

In June 2017, our Board of Directors approved an internal restructuring plan (the "June 2017 Plan"), which included actions, among others, to reconfi gure our use of certain leased properties.

Under the June 2017 Plan, we incurred restructuring costs of approximately $ 0.1 million in fiscal 2023, approximately $ 1.6 million in fiscal 2022 (which includes approximately $ 1.1 million of incremental restructuring costs in fiscal 2022 related to an impairment of the operating lease right-of-use asset for our partially vacated facility in San Jose, California), and approximately $ 0.7 million in fiscal 2021.

Under this plan, we have incurred approximately $ 23.3 million of total expense through December 30, 2023.

All actions planned under the June 2017 Plan have been implemented.

These costs, and adjustments on previous plans, are recorded to Restructuring on our Consolidated Statements of Operations.

Other restructuring activity in the periods presented consisted of expense adjustments on previous plans.

Costs and adjustments on restructuring plans are recorded to Restructuring on our Consolidated Statements of Operations.

The restructuring accrual balance is presented in Accrued liabilities and in Other long-term liabilities on our Consolidated Balance Sheets.

9 unchanged sentences

( 154 ) ( 2,846 ) — ( 3,000 )

Accrued Restructuring at January 1, 2022

Accrued Restructuring at December 31, 2022

$ 400 $ 5,892 $ 640 $ 6,932

24 unchanged sentences

Amortization of right-of-use assets during the period

Impairment of right-of use asset during the period (recorded in Restructuring charges)

Adjustments for present value and foreign currency effects

3 unchanged sentences

Balance as of December 30, 2023

Lease liabilities incurred for new lease contracts during the period

Lease liabilities accrued for new lease contracts during the period

Accretion of lease liabilities

13 unchanged sentences

As of December 28, 2024, we have two active equity incentive plans, the "2023 Equity Incentive Plan" (which was adopted in 2023 and superseded the "2013 Incentive Plan", such that no additional shares will be granted under the 2013 Incentive Plan ) and the "2011 Non-Employee Director Equity Incentive Plan", under which shares remain available for grants to employees and non-employee directors, respectively.

As of January 10, 2025, we registered the “2025 Inducement Equity Plan”, under which shares will be available for grants to new hire employees.

"Incentive stock options" under Section 422 of the U.S.

Internal Revenue Code and restricted stock unit ("RSU") grants are part of our equity compensation practices for employees who receive equity grants.

Options and RSUs generally vest quarterly over a four -year period beginning on the grant date.

Internal Revenue Code, restricted stock unit ("RSU"), and restricted stock award ("RSA") grants are part of our equity compensation practices for employees who receive equity grants.

Options, RSUs, and RSAs generally vest quarterly over a four -year period beginning on the grant date.

The contractual terms of options granted do not exceed ten years.

4 unchanged sentences

At December 28, 2024 , a total of 6.9 million shares of our common stock were available for future grants under the 2023 Equity Incentive Plan and the 2011 Non-Employee Director Equity Incentive Plan.

Neither the 2023 Equity Incentive Plan nor the 2011 Non-Employee Director Equity Incentive Plan have any fungible share ratio or counting provision .

Shares subject to stock option grants that expire or are canceled, without delivery of such shares, generally become available for re-issuance under equity incentive plans.

The 2023 Equity Incentive Plan, 2011 Non-Employee Director Equity Incentive Plan, and the 2025 Inducement Equity Plan do not have any fungible share ratio or counting provision .

Shares subject to stock option grants that expire or are canceled, without delivery of such shares, and shares subject to performance-based restricted stock units that are not delivered due to a failure to not meet the maximum payout threshold, generally become available for re-issuance under equity incentive plans.

Stock-Based Compensation Expense

9 unchanged sentences

$ 52,985 $ 70,197 $ 55,530

The income tax benefit related to total stock-based compensation expense was $ 7.6 million for fiscal 2023, which is reflected in Income tax (benefit) expense in the Consolidated Statements of Operations.

The income tax benefit related to total stock-based compensation expense was $ 6.3 million and $ 7.6 million, respectively, for fiscal 2024 and 2023, which is reflected in Income tax (benefit) expense in the Consolidated Statements of Operations.

The income tax benefit related to awards vested or exercised during fiscal 2024 was $ 1.7 million.

The income tax benefits related to stock-based compensation were not significant for the periods presented prior to fiscal 2023 as they were offset by an increase in valuation allowance.

These amounts do not include the indirect effects of stock-based compensation, which primarily relate to the R&D tax credit.

The income tax benefit related to awards vested or exercised during fiscal 2023 was $ 10.4 million.

The income tax benefits related to stock-based compensation were not significant for fiscal 2022, as they were offset by an increase in the valuation allowance.

ESPP and Stock Options

15 unchanged sentences

We recorde d stock-based compensation expense related to the ESPP of approximately $ 1.8 million, $ 2.2 million, and $ 1.5 million in fiscal 2024 , 2023 , and 2022 , respectively.

Related to stock options, w e recorded no expense in fiscal 2023 and 2022 , and approximately $ 1.0 million in fiscal 2021 .

Related to stock options, w e recorded no expense in fiscal 2024, 2023 , and 2022 .

The following table summarizes our stock option activity and related information for the year ended December 28, 2024:

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Vested and expected to vest at December 28, 2024

428 $ 6.75 1.16 $ 26,626

Exercisable, December 28, 2024

428 $ 6.75 1.16 $ 26,626

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company's closing stock price on the last trading day of the fiscal year and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on that day.

1 unchanged sentence

Total intrinsic value of options exercised for fiscal 2024 , 2023 , and 2022 was $ 22.9 million, $ 37.3 million, and $ 24.3 million, respectively.

Time-Based Restricted Stock Unit Awards

The following table summarizes the activity for our time-based RSUs for the year ended December 30, 2023:

Time-Based Restricted Stock Unit Awards and Restricted Stock Awards

The following table summarizes the activity for our time-based RSUs and RSAs for the year ended December 28, 2024:

(Shares in thousands)

4 unchanged sentences

Forfeited or expired

( 557 ) 70.82

Balance, December 28, 2024

2,437 $ 65.19

At December 30, 2023, there was $ 121.3 million of unrecognized compensation expense related to unvested time-based RSUs.

Compensation expense for RSUs is recognized using the straight-line method over the related vesting period.

In fiscal 2023 , 2022 , and 2021 , we recorde d stock-based compensation expense related to time-based RSUs of approximately $ 41.5 million, $ 30.1 million, and $ 21.7 million, respectively.

At December 28, 2024, there was $ 155.6 million of unrecognized compensation expense related to unvested time-based RSUs and RSAs.

Compensation expense for RSUs and RSAs is recognized using the straight-line method over the related vesting period.

In fiscal 2024 , 2023 , and 2022 , we recorde d stock-based compensation expense related to time-based RSUs and RSAs of approximately $ 51.8 million, $ 41.5 million, and $ 30.1 million, respectively.

Market-Based and Performance-Based Awards

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Market-Based and Performance-Based Awards — Grants

In the first and third quarters of fiscal 2023, and in the first quarters of fiscal 2022 and 2021, we granted awards of RSUs with a market condition to certain executives.

Under the terms of these grants, the RSUs with a market condition vest over a three -year period based on the Company's total shareholder return ("TSR") relative to a specified index.

For the 2023 grants, the TSR condition is measured relative to the Russell 3000 index on either the third anniversary of the grant date, or equally on the first, second, and third anniversary of the grant date, depending on the executive.

For the 2022 and 2021 grants, the TSR condition is measured relative to the Russell 2000 index on the third anniversary of the grant date .

In fiscal 2024, 2023, and 2022, we granted awards of RSUs with a market condition to certain executives.

Under the terms of these grants, the RSUs with a market condition vest over a three -year period based on the Company's t otal shareholder return ("TSR") relative to a specified index.

For the 2024 and 2023 grants, the TSR condition is measured relative to the Russell 3000 index on either the third anniversary of the grant date, or equally on the first, second, and third anniversary of the grant date, depending on the executive.

For the 2022 grants, the TSR condition is measured relative to the Russell 2000 index on the third anniversary of the grant date .

The awards may vest at 250 % or 200 %, depending on the executive, if the 75th percentile of the market condition is achieved, with 100 % of the units vesting at the 55th percentile, zero vesting if relative TSR is below the 25th percentile, and vesting scaling for achievement between the 25th and 75th percentile.

In the first quarter of fiscal 2021, we also granted awards of RSUs with a performance condition to certain executives, to specifically drive additional executive attention and focus on the Company’s revenue growth priorities.

Under the terms of these grants, the RSUs with a performance condition will vest based on the Company generating specified levels of year-over-year revenue growth, which will be measured annually for one - fourth of the grants after each fiscal year-end through the end of fiscal 2024.

Vesting of these awards scales for achievement of year-over-year revenue growth compared to certain targets, with maximum vesting up to 200 %.

Vesting of each tranche of these awards occurs 13 months afte r the performance conditions is met, a nd the entire award cannot be fully earned until five years from grant.

For the second and third tranches of these awards, the Company had met the year-over-year revenue growth performance criteria at the 200 % and 116.3 % level of achievement, respectively, as of December 31, 2022 and December 30, 2023.

In fiscal 2024, we also granted awards of RSUs with a performance condition to certain executives.

Under the terms of these grants, the RSUs with a performance condition will vest if the Company achieves year-over-year revenue growth in excess of an industry benchmark, and the number of shares vested will scale for achievement of year-over-year revenue growth compared to certain targets, with maximum vesting up to 250 %.

The performance condition will be measured annually after each fiscal year-end for one - fourth of the grants beginning in fiscal 2025 through the end of fiscal 2028.

Vesting of these awards occurs 13 months after the end of each measurement period and the entire award cannot be fully earned until five and a half years from grant date.

In fiscal 2024, we also granted awards of RSUs with a market condition to our new chief executive officer with vesting tied to the Company's stock price appreciation.

The number of shares that become eligible to vest can range from 25 % to 250 % of the target number of shares, based on the Company's stock price growth over the 6 -year service period, which ranges from 25 % to 200 % stock price growth calculated based on the simple average of the closing Company share price for the trailing 60 trading days up to and including the measurement date.

No vesting occurs for stock price growth below 25 %.

Vesting will occur annually after 3 years for a portion of the vesting eligible RSUs.

Market-Based and Performance-Based Awards — Vesting

During fiscal

2024, the market condition for the majority of awards granted to certain executives in previous years exceeded the

75th percentile of their TSR condition, and these awards vested at

200 %, as applicable for the respective executive.

One award achieved the

54th percentile of its TSR condition and vested at approximately

one award did

not meet its minimum TSR threshold for vesting.

second tranche of awards granted in fiscal

2022 with a year-over-year revenue growth performance condition vested at the

200 % level of achievement, as the Company met the maximum year-over-year revenue growth performance criteria as of

December 31, 2022, and the

13 -month vesting period had been met.

third tranche of these awards, the Company met the year-over-year revenue growth performance criteria at the

116.3 % level of achievement as of

December 30, 2023.

During fiscal

2023, the market condition for awards granted to certain executives in previous years exceeded the

16 unchanged sentences

four -quarter periods as of the end of the respective measurement periods.

During fiscal

2021, the market condition for awards granted to certain executives in previous years exceeded the

75th percentile of their TSR condition, and applicable tranches of these awards vested at

200 % for the respective executives.

Also during fiscal

third tranches, each

33.3% of the base number of the awards with an EBITDA performance condition vested and released, as the Company had met the adjusted EBITDA performance criteria on a trailing

four -quarter basis for

two consecutive trailing

four -quarter periods as of the end of the respective measurement periods.

Additionally, as of

January 1, 2022, the Company had met the next adjusted EBITDA performance criteria on a trailing

four -quarter basis for

two consecutive trailing

four -quarter periods, and the

fourth tranche of the awards with an EBITDA performance condition qualified for vesting at

40% of the base number.

Market-Based and Performance-Based Awards — Compensation Expense

For our awards with a market condition or a performance condition, we incurred stock-based compensation expense of approximately $ 26.4 million, $ 24.0 million, and $ 22.1 million in fiscal years 2023 , 2022 , and 2021 , respectively, which is recorded as a component of total stock-based compensation.

For our awards with a market condition or a performance condition, we recorded benefits from forfeitures of approximately $ 29.0 million due to executive departures, partially offset by stock compensation expense of approximately $ 28.4 million, in fiscal 2024.

We incurred stock-based compensation expense of approximately $ 26.4 million and $ 24.0 million in fiscal years 2023 and 2022 , respectively.

These amounts are recorded as components of total stock-based compensation.

At December 28, 2024, there was $ 54.4 million of unrecognized compensation expense related to unvested RSUs with a market condition or a performance condition.

Awards with a TSR market condition were valued using a Monte Carlo simulation model.

Awards with a market condition were valued using Monte Carlo simulation models.

The following table summarizes the assumptions used at the grant date in the valuation of RSUs with a market or performance condition:

13 unchanged sentences

( 551 ) 68.32

( 634 ) 92.51

Balance, December 28, 2024

1,593 $ 62.24

Note 11 - Common Stock Repurchase Program

On August 8, 2022, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to $ 150 million of outstanding common stock could be repurchased from time to time (the "2023 Repurchase Program").

The duration of the 2023 Repurchase Program was through December 30, 2023.

During the fourth quarter of fiscal 2023, we repurchased 872,994 shares for $ 50.2 million, or an average price paid per share of $ 57.49 , under the 2023 Repurchase Program.

On November 30, 2023, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to $ 250 million of outstanding common stock could be repurchased from time to time (the "2024 Repurchase Program").

The duration of the 2024 Repurchase Program is through December 28, 2024.

During the fourth quarter of fiscal 2024, we repurchased 366,969 shares for $ 20.0 million, or an average price paid per share of $ 54.50 .

All repurchases were open market transactions funded from available working capital.

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We repurchased a total of 1,145,560 shares for $ 67.0 million, or an average price paid per share of $ 58.48 , during fiscal year 2024.

On November 30, 2023, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to an additional $ 250 million of outstanding common stock could be repurchased from time to time (the "2024 Repurchase Program").

On December 9, 2024, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to an additional $ 100 million of outstanding common stock could be repurchased from time to time (the "2025 Repurchase Program").

The duration of the 2025 Repurchase Program is through December 31, 2025.

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(In thousands)

$ 55,069 $ 30,362 $ 24,003

159,787 151,750 73,623

Income before taxes

$ 214,856 $ 182,112 $ 97,626

The components of Income tax (benefit) expense are as follows:

(In thousands)

$ 10,331 $ 748 $ 445

3,019 3,637 1,538

14,409 4,650 2,028

( 56,323 ) — —

( 2,291 ) ( 1,420 ) ( 324 )

( 58,614 ) ( 1,420 ) ( 324 )

Income tax (benefit) expense

$ ( 44,205 ) $ 3,230 $ 1,704

Income tax (benefit) expense differs from the amount of income tax determined by applying the applicable U.S.

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Federal tax credits

Excess tax benefit from stock-based compensation

Stock-based compensation

Foreign rate differential

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Effective income tax rate

We updated our evaluation of the valuation allowance position in the United States through December 30, 2023.

In making this evaluation, we considered our operating environment and estimates about our ability to generate taxable income in future periods within the United States.

As a result of our consistent and continued profitability over the preceding three -year period and our expectations about generating sufficient U.S.

Federal taxable income, we have determined that there is sufficient evidence that our U.S.

Federal deferred tax assets are more likely than not to be realized.

In the fourth quarter of fiscal 2023, we reduced the valuation allowance against a significant portion of our U.S.

deferred tax assets resulting in the inclusion of $ 56.9 million of U.S.

Federal deferred tax assets on our Consolidated Balance Sheets.

We continue to maintain a full valuation allowance against our state deferred tax assets due to insufficient income sources.

The decrease in provision for income taxes in fiscal year 2024 compared to fiscal year 2023 was primarily due to the release of the US federal valuation allowance in the prior year and the recognition of uncertain tax benefits in the current year.

We updated our evaluation of the valuation allowance position in the United States through December 28, 2024 and concluded that we should continue to maintain a full valuation allowance against our state deferred tax assets due to insufficient income sources.

We will continue to evaluate both positive and negative evidence in future periods to determine if we will realize the deferred tax assets.

We do not maintain a valuation allowance in any foreign jurisdictions as we have concluded it is more likely than not that we will realize those net deferred tax assets in future periods.

The amount of the deferred tax asset considered realizable could be adjusted if sufficient positive evidence exists.

We don't have a valuation allowance on a significant portion of our U.S.

Federal deferred tax assets or in any foreign jurisdictions as we have concluded that it is more likely than not that we will realize the net deferred tax assets in the future periods.

The components of our net deferred tax assets and liabilities are as follows:

(In thousands)

December 30, 2023 December 31, 2022

December 28, 2024

December 30, 2023

Deferred tax assets:

Intangible assets

$ 4,274 $ 6,264

Net operating loss carry forwards

13,829 15,362

Tax credit carry forwards

87,955 103,092

Accrued liabilities and reserves

23,249 12,932

Stock-based and deferred compensation

Total deferred tax assets

139,668 146,450

valuation allowance

( 79,100 ) ( 140,533 )

Net deferred tax assets

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Net deferred taxes

$ 51,584 $ ( 6,773 )

Deferred tax assets

$ 57,762 $ 1,022

Deferred tax liabilities (included in Other long-term liabilities)

( 6,178 ) ( 7,795 )

Net deferred taxes

$ 51,584 $ ( 6,773 )

The following table displays the activity related to changes in our valuation allowance for deferred tax assets:

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(In thousands)

of period expenses accounts period

December 28, 2024

$ 140,533 $ ( 61,433 ) $ — $ 79,100

December 30, 2023

$ 200,438 $ ( 59,905 ) $ — $ 140,533

January 1, 2022

$ 192,478 $ 7,960 $ — $ 200,438

December 31, 2022

At December 28, 2024, we had U.S.

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We also had federal credit carryforwards of $ 47.2 million that expire at various dates from 2035 through 2044, and $ 84.0 million state credit carryforwards, of which substantially all do not expire.

Future utilization of federal and state net operating losses and tax credit carry forwards may be limited if cumulative changes to ownership exceed 50% within any three -year period.

Future utilization of federal and state net operating losses and tax credit carryforwards may be limited if cumulative changes to ownership exceed 50% within any three -year period, which has not occurred through fiscal 2024.

However, if there is a significant change in ownership, future tax attribute utilization may be limited and NOL carryforwards and/or R&D credits will be reduced to reflect the limitation.

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Additions based on tax positions of prior years

Additions due to acquisition

Reduction as a result of lapse of applicable statute of limitations

Balance at January 1, 2022

Balance at December 31, 2022

Additions based on tax positions related to the current year

Additions based on tax positions of prior years

Reductions for tax positions of prior years

Reduction as a result of lapse of applicable statute of limitations

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Additions based on tax positions of prior years

Reductions for tax positions of prior years

Reduction as a result of lapse of applicable statute of limitations

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Our liability for uncertain tax positions (including penalties and interest) was $ 2.5 million and $ 21.9 million at December 28, 20 24 and December 30, 2023 , respectively, and is recorded as a component of Other long-term liabilities on our Consolidated Balance Sheets.

At December 30, 2023, it is reasonably possible that $ 0.3 million of unrecognized tax benefits and $ 0.1 million of associated interest and penalties could be recognized during the next twelve months.

At December 28, 2024, it is reasonably possible that $ 0.3 million of unrecognized tax benefits and less than $ 0.1 million of associated interest and penalties could be recognized during the next twelve months.

The years that remain subject to examination ar e 2021 for federal income taxes, 2020 for state income taxes, and 2018 for foreign income taxes, including years ending thereafter.

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We recorded matching contributions of approximately $ 2.8 million, $ 3.1 million, and $ 2.8 million in fiscal years 2024 , 2023 , and 2022 , respectively.

Cash Incentive Plans

For 2023 , 2022 , and 2021 , the Board of Directors of the Company, upon the recommendation of the Compensation Committee, approved the Cash Incentive Plan (the “Cash Plans”) for the respective fiscal year.

The chief executive officer, other executive officers, and other members of senior management, including vice presidents and director-level employees, together with all other employees of the Company not on the Company's sales incentive plan are eligible to participate in the Cash Plans.

Under the Cash Plans, individual cash incentive payments for the eligible employees will be based both on Company financial performance, as measured by achievement of operating income (before incentive plan accruals) and revenue goals within specified ranges established by the Compensation Committee, and Company performance, as measured by the achievement of personal management objectives.

Corporate Incentive Plan

For 2024 , 2023 , and 2022 , the Board of Directors of the Company, upon the recommendation of the Compensation Committee, approved the Corporate Incentive Plan (the “CIP”) for the respective fiscal year.

Under the CIP, individual cash incentive payments for the eligible employees will be based both on Company financial performance, as measured by achievement of operating income (before incentive plan accruals) and revenue goals within specified ranges established by the Compensation Committee, and Company performance, as measured by the achievement of personal management objectives.

The Compensation Committee determines the performance of the chief executive officer, the chief financial officer and other participants based on the achievement of the management objectives established by the Compensation Committee during the first quarter of the respective fiscal year.

We recorded approximately $ 15.0 million, $ 25.2 million, and $ 18.0 million of expense under the Cash Plans in fiscal 2023 , 2022 , and 2021 , respectively.

We recorded approximately $ 1.6 million, $ 15.0 million, and $ 25.2 million of expense under the CIP in fiscal 2024 , 2023 , and 2022 , respectively.

Note 14 - Contingencies

Legal Proceedings

On or about December 19, 2018, Steven A.W.

De Jaray, Perienne De Jaray and Darrell R.

Oswald (collectively, the “Plaintiffs”) commenced an action against the Company and several unnamed defendants in the Multnomah County Circuit Court of the State of Oregon, in connection with the sale of certain products by the Company to the Plaintiffs in or around 2008.

The Plaintiffs alleged that we violated the Lanham Act, engaged in negligence, fraud, and breach of contract by failing to disclose to the Plaintiffs the export-controlled status of the subject parts.

On or about December 19, 2018, Steven De Jaray, Perienne De Jaray and Darrell Oswald (collectively, the “Plaintiffs”) commenced an action against the Company in the Multnomah County Circuit Court of the State of Oregon, in connection with the sale of certain products by the Company to the Plaintiffs in or around 2008.

The Plaintiffs alleged the Company violated the Lanham Act, engaged in negligence, fraud, and breach of contract by failing to disclose to the Plaintiffs the export-controlled status of the subject parts.

In January 2019, we removed the action to the United States District Court for the District of Oregon (the “Court”).

On May 24, 2023, the Plaintiffs filed a second amended complaint, which added Apex-Micro Manufacturing Corporation as a plaintiff and removed the violation of the Lanham Act claim.

On May 24, 2023, the Plaintiffs filed a second amended complaint, which added Apex-Micro Manufacturing Corporation (“Apex-Micro”) as a plaintiff and removed the violation of the Lanham Act claim.

The Plaintiffs sought damages of $ 180 million, punitive damages, and other remedies.

On January 18, 2024, the court dismissed the claims against the Company by Perienne De Jaray and Darrell R.

The trial for the remainder of the claims was held from January 30, 2024 to February 15, 2024.

On February 13, 2024, after both parties rested their cases and prior to the submission of the case to the jury, the Company filed a Rule 50 motion for judgment as a matter of law as to all remaining claims due to insufficient evidence to support the claims.

The Court granted the Company’s Rule 50 motion in part and entered judgment in the Company’s favor as to all of Steven De Jaray’s claims and Apex-Micro Manufacturing Corporation’s negligence claims.

On February 15, 2023, the jury found that the Company was not liable for all outstanding claims and the presiding judge stated he would enter the judgment in favor of the Company.

On January 18, 2024, the court dismissed the claims against the Company by Ms.

De Jaray and Mr.

The trial for the remaining claims was held from January 30, 2024 to February 15, 2024.

On February 13, 2024, the Court granted the Company’s Rule 50 motion in part and entered judgment in the Company’s favor as to all of Mr.

De Jaray’s claims and Apex-Micro’s negligence claims.

On February 15, 2024, the jury found that the Company was not liable for all outstanding claims and judgment was entered in favor of the Company.

On March 15, 2024, Mr.

De Jaray and Apex-Micro filed a Notice of Appeal to the United States Court of Appeals for the Ninth Circuit.

On March 18, 2024, Ms.

De Jaray filed a separate Notice of Appeal.

De Jaray’s appeal was dismissed for failure to prosecute on August 1, 2024.

In response to Mr.

De Jaray and Apex Micro's request for an extension, their appeal opening brief was due October 7, 2024.

De Jaray and Apex Micro failed to file their appeal opening brief on October 7 th .

De Jaray's and Apex Micro's appeal was dismissed for failure to prosecute on October 30, 2024.

From time to time, we are exposed to certain additional asserted and unasserted potential claims.

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As additional information becomes available, we reassess the potential liability related to pending claims and litigation and may revise estimates.

Note 15 - Segment Reporting

ASC 280, Segment Reporting, establishes standards for the manner in which companies report financial information about operating segments, products, services, geographic areas and major customers.

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance.

The Company’s CODM is its Chief Executive Officer.

As of December 28, 2024, we have determined that the Company operates in a single operating and reportable segment:

the core Lattice business, which includes silicon-based and silicon-enabling products, evaluation boards, development hardware, and related intellectual property licensing, services, and sales.

Our CODM reviews operating results and financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

The following table sets forth the Company’s revenue, significant expenses, and net income by its single operating and reportable segment:

(In thousands)

$ 509,401 $ 737,154 $ 660,356

$ 340,400 $ 514,670 $ 452,050

Total operating expenses

$ 305,943 $ 302,400 $ 264,683

$ 61,131 $ 259,061 $ 178,882

Report of Independent Registered Public Accounting Firm

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As explained in “Note 1 - Basis of Presentation and Significant Accounting Policies” within the consolidated financial statements, the Company records inventory at the lower of cost or net realizable value, and writes down inventories to net realizable value if it is obsolete or if quantities are in excess of projected customer demand.

Auditing management’s estimates of excess and obsolete inventory was challenging because the estimate is judgmental and considers a number of factors that are affected by market and economic conditions that are outside of the Company’s control.

In particular, excess and obsolete inventory calculations are sensitive to significant assumptions that relate to projected customer demand for the Company’s products.

Auditing management’s inventory excess and obsolescence reserves was challenging because the calculation of the estimate is complex as it considers a number of factors that are affected by market and economic conditions, such as customer demand and product lifecycle.

How We Addressed the Matter in Our Audit

We evaluated and tested the design and operating effectiveness of the Company's internal controls over the calculation of excess and obsolete inventory, including the determination of projected customer demand and related application against on-hand inventory.

Our audit procedures included, among others, evaluating the significant assumptions stated above and the underlying data used in management's excess and obsolete inventory assessment.

We evaluated inventory levels compared to projected customer demand, historical sales, and specific product considerations.

We also assessed the historical accuracy of management's estimates and performed sensitivity analyses to evaluate the changes in inventory valuation that would result from changes in significant assumptions.

We evaluated and tested the design and operating effectiveness of the Company's internal controls over the calculation of excess and obsolete inventory, including the determination and application of the assumptions used to estimate the excess and obsolescence reserve.

Our audit procedures included, among others, evaluating the assumptions and the underlying data used in management's excess and obsolete inventory assessment.

We evaluated inventory levels compared to projected customer demand, historical sales, and product lifecycle.

We also assessed the historical accuracy of management's estimates and performed sensitivity analyses to evaluate the changes in inventory valuation that would result from changes in assumptions.

/s/ Ernst & Young LLP

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In our opinion, Lattice Semiconductor Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 28, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 30, 2023 and December 31, 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 30, 2023, and the related notes and our report dated February 16, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 28, 2024 and December 30, 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 28, 2024, and the related notes and our report dated February 14, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control OverFinancial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data