FULLTEXT DEL 2 AV 2
10-K – 2026-02-13 – lscc20260103_10k.htm
Our cybersecurity risk management process is a component of our overall enterprise risk management process, through which our Chief Executive Officer and other members of senior management assess, identify, and manage material risks from cybersecurity threats we face. Our cybersecurity process seeks to protect our information systems by managing and reducing material risks from cybersecurity threats and by responding to and mitigating cybersecurity incidents. The Board of Directors (the “Board”), and the Audit Committee of the Board (the “Audit Committee”), provide oversight of our cybersecurity risk management process. The Audit Committee reviews our cybersecurity program and cybersecurity risk management process quarterly, and our Board reviews our cybersecurity program annually. Our cybersecurity program is directly managed by the Chief Information Officer (“CIO”), who is experienced in information systems and cybersecurity and whose team is responsible for leading enterprise-wide cybersecurity strategy, policy, standards, architecture, and processes. The CIO provides routine updates to our Board and Audit Committee, as well as our Chief Executive Officer and other members of our senior management. These updates cover the Company’s material cybersecurity threats, the status of projects to strengthen our cybersecurity posture, and assessments of the cybersecurity program. Our cybersecurity risk management process is evaluated by internal and external cybersecurity experts, and the material results of those reviews are reported to senior management and the Board and Audit Committee as part of their oversight role. We also engage with third-party service providers deemed to have subject matter expertise in cybersecurity matters, industry participants, and law enforcement communities as part of our continuing efforts to evaluate and enhance the effectiveness of our cybersecurity policies and processes. We require each third-party service provider to certify that they implement and maintain appropriate security measures in connection with their work with us, and to promptly report any suspected breach of its security measures that may affect us. We use various tools and methodologies to manage cybersecurity risk and to prevent, detect, and mitigate cybersecurity incidents. Our tools and methodologies are tested regularly, including vulnerability scans, red-teaming exercises and other penetration testing, and review of cybersecurity threat intelligence feeds. We face risks from cybersecurity threats that could have a material adverse effect on our business, financial condition, results of operations, cash flows or reputation. We have experienced, and will continue to experience, cybersecurity incidents in the normal course of our business. However, prior cybersecurity incidents have not had a material adverse effect on our business, financial condition, results of operations, or cash flows. See “Risk Factors – Factors Related to Overall Business & Operations – Our business depends on the use of information technology systems. A failure of these systems, cybersecurity incidents, or cyber-fraud may cause business disruptions, compromise our intellectual property or other sensitive information, or result in losses.”
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Item 2. Properties
We lease a 47,800 square foot space in Hillsboro, Oregon as our corporate headquarters and a research and development facility through October 2028. In San Jose, California, we lease 98,874 square feet through November 2033, which we use for research and development, engineering support, administrative, and other operational purposes.
In Metro Manila, Philippines, we lease a total of 50,503 square feet through May 2035 and another 8,333 square feet through March 2029 for research and development, operations, and administrative facilities. In Pune, India, we lease 42,728 square feet through March 2029 for research and development. In Penang, Malaysia, we lease 28,161 square feet through September 2029 for research and development and operations facilities. In Shanghai, China, we lease 24,251 square feet through February 2028 primarily for research and development operations. We also lease office facilities in multiple other metropolitan locations for our domestic and international sales staff. We believe that our existing facilities are suitable and adequate for our current and foreseeable future needs.
Item 3. Legal Proceedings
The information contained under the heading "Legal Matters" in Note 14 - Contingencies to our Consolidated Financial Statements in Part II, Item 8 of this report is incorporated by reference into this Part I, Item 3. Also, see “Litigation and unfavorable results of legal proceedings could adversely affect our financial condition and operating results” in “Risk Factors” in Item 1A of Part I of this Annual Report on Form 10-K.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
Market Information
Our common stock is traded on the NASDAQ Global Select Market under the symbol "LSCC".
Holders
As of February 9, 2026, we had approximately 137 stockholders of record.
Dividends
The payment of dividends on our common stock is within the discretion of our Board of Directors. We intend to retain earnings to finance our business. We have never paid cash dividends.
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
On December 9, 2024, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to $100 million of outstanding common stock could be repurchased from time to time (the "2025 Repurchase Program"). The duration of the 2025 Repurchase Program was through December 31, 2025. During the fourth quarter of fiscal 2025, we repurchased 217,506 shares for $14.1 million, or an average price paid per share of $65.03. All repurchases were open market transactions funded from available working capital. All shares repurchased pursuant to the 2025 Repurchase Program were retired upon settlement. During fiscal year 2025, we repurchased a total of 1,763,053 shares for $100.0 million, or an average price paid per share of $56.72.
On December 5, 2025, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to an additional $250 million of outstanding common stock could be repurchased from time to time (the "2026 Repurchase Program"). The 2026 Repurchase Program has no termination date and may be suspended or discontinued at any time. No shares were repurchased under the 2026 Repurchase Program during the fourth quarter of fiscal 2025.
The following table contains information regarding our repurchases of our common stock that is registered pursuant to Section 12 of the Securities Exchange Act of 1934 during the fourth quarter of fiscal 2025:
Period
Total Number of Shares Purchased
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a)
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($M) (b)
September 28, 2025 through October 25, 2025
—
$
—
—
$
14.1
October 26, 2025 through November 22, 2025
217,506
$
65.03
217,506
$
—
November 22, 2025 through January 3, 2026
—
$
—
—
$
250.0
Total
217,506
$
65.03
217,506
$
250.0
(a)
All repurchases during the quarter were open-market transactions funded from available working capital made under the authorization from our Board of Directors to purchase up to $100.0 million of our common stock announced December 9, 2024.
(b)
At January 3, 2026, this amount consists of the remaining portion of the $250 million authorization that was announced December 5, 2025 .
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Comparison of Total Cumulative Stockholder Return
The following graph shows the five-year comparison of cumulative stockholder return on our common stock, the Standard and Poor's (“S&P”) 500 Index and the Philadelphia Semiconductor Index (“PHLX”) from December 2020 through December 2025. Cumulative stockholder return assumes $100 invested at the beginning of the period in our common stock, the S&P and PHLX. Historical stock price performance is not necessarily indicative of future stock price performance.
Lattice Cumulative Stockholder Return
Item 6. Reserved
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
Lattice develops technologies that we monetize through differentiated programmable logic semiconductor products, silicon-enabling products, system solutions, design services, and technology licenses. Lattice is the low power programmable leader. We solve customer problems across the network, from the Edge to the Cloud, in the Communications, Computing, Industrial, Automotive, and Consumer markets. Our technology, long-standing relationships, and commitment to world-class support lets our customers quickly and easily unleash their innovation to create a smart, secure, and connected world.
Lattice has focused its strategy on delivering programmable logic products and related solutions based on low power, small size, and ease of use. We also serve our customers with IP licensing and various other services. Our product development activities include new proprietary products, advanced packaging, existing product enhancements, software development tools, soft IP, and system solutions for high-growth applications such as Edge AI, wireless and wireline infrastructure, platform security, and factory automation.
This discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated financial statements and accompanying notes included in Part II, Item 8. "Financial Statements and Supplementary Data" of this report. Discussions of results for prior periods (fiscal 2024 compared to fiscal 2023) are incorporated by reference from our Annual Report on Form 10-K for the year ended December 28, 2024 .
Critical Accounting Policies and Use of Estimates
Critical accounting policies are those that are both most important to the portrayal of a company's financial condition and results of operations, and that require management's most difficult, subjective, and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments affecting the amounts reported in our consolidated financial statements and the accompanying notes. We base our estimates and judgments on historical experience, knowledge of current conditions, and our beliefs of what could occur in the future considering available information. While we believe that our estimates, assumptions, and judgments are reasonable, they are based on information available when made, and because of the uncertainty inherent in these matters, actual results may differ materially from these estimates under different assumptions or conditions. We evaluate our estimates and judgments on an ongoing basis.
We believe the following accounting policies and the related estimates are critical in the portrayal of our financial condition and results of operations, and require management's most difficult, subjective, or complex judgments. See Note 1 - Basis of Presentation and Significant Accounting Policies to our Consolidated Financial Statements in Part II, Item 8 of this report for further information on the significant accounting policies and methods used in the preparation of the consolidated financial statements.
Revenue from Contracts with Customers
We recognize revenue upon satisfaction of performance obligations when control of promised goods or services has been transferred to our customers. We measure revenue based on the amount of consideration we expect to be entitled to in exchange for products or services. For revenue recognized on both sales to distributors and related to royalties, the amount of consideration we expect to be entitled to receive is based on estimates that require assumptions and judgments relating to trends in recent and historical activity. See Note 1 - Basis of Presentation and Significant Accounting Policies to our Consolidated Financial Statements in Part II, Item 8 of this report for further information on our recognition of revenue. Sales to most distributors are made under terms allowing certain price adjustments upon sale to their end customers and limited rights of return of our products held in their inventory. The revenue recognized based on estimated price adjustments and stock rotation reserves may be materially different from the actual consideration received if the actual distributor price adjustments and stock rotation returns differ significantly from the historical trends used in the estimates.
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Inventories and Cost of Revenue
Inventories are stated at the lower of actual cost (determined using the first-in, first-out method) or net realizable value. We review and set standard costs quarterly to approximate current actual manufacturing costs. Our manufacturing overhead standards for product costs are calculated assuming full absorption of actual costs. The valuation of inventory requires us to estimate excess or obsolete inventory. Material assumptions we use to estimate necessary inventory carrying value adjustments can be unique to each product and are based on specific facts and circumstances. In determining provisions for excess or obsolete products, we consider assumptions such as changes in business and economic conditions, projected customer demand for our products, and changes in technology or customer requirements. The creation of such provisions results in a write-down of inventory to net realizable value and a charge to Cost of revenue. If in any period we anticipate a change in assumptions such as future market or economic conditions to be less favorable than our previous estimates, additional inventory write-downs may be required and would be reflected in Cost of revenue, resulting in a negative impact to our gross margin in that period. If in any period we are able to sell inventories that had been written down to a level below the ultimate realized selling price in a previous period, related revenue would be recorded with a lower or no offsetting charge to Cost of revenue resulting in a net benefit to our gross margin in that period.
Accounting for Income Taxes
We are required to estimate our provision for income taxes and amounts ultimately payable or recoverable in numerous tax jurisdictions around the world. These estimates involve significant judgment and interpretations of regulations and are inherently complex. Resolution of income tax treatments in individual jurisdictions may not be known for many years after completion of the applicable year. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements using enacted tax rates and laws that will be in effect when the difference is expected to reverse.
Valuation allowances are provided to reduce deferred tax assets to an amount that in management’s judgment is more-likely-than-not to be recoverable against future taxable income. The determination of a valuation allowance and when it should be released requires complex judgment. In assessing the ability to realize deferred tax assets, we regularly evaluate both positive and negative evidence that may exist and consider whether it is more-likely-than-not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. In determining the need to establish or maintain a valuation allowance, we consider the four sources of jurisdictional taxable income: (i) future reversals of existing taxable temporary differences; (ii) future taxable income exclusive of reversing temporary differences and carryforwards; (iii) taxable income in prior carryback year(s) if carryback is permitted under the tax law; and (iv) viable and prudent tax planning strategies.
We 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. The amount of the deferred tax asset considered realizable could be adjusted if sufficient positive evidence exists. We do not maintain 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 those net deferred tax assets in the future periods.
As part of our regular financial review process, we also assess the likelihood that our tax reporting positions will ultimately be sustained on examination by the taxing authorities, based on the technical merits of the position. To the extent it is determined it is more likely than not (a likelihood of more than 50 percent) that some portion or all of a tax reporting position will ultimately not be recognized and sustained, a provision for unrecognized tax benefit is provided by either reducing the applicable deferred tax asset or accruing an income tax liability. Our judgment regarding the sustainability of our tax reporting positions may change in the future due to changes in U.S. or international tax laws and other factors. These changes, if any, may require material adjustments to the related deferred tax assets or accrued income tax liabilities and an accompanying reduction or increase in income tax expense which may result in a corresponding increase or decrease in net income in the period when such determinations are made. The expiration of statutes of limitations may decrease our uncertain tax positions.
We recognize the tax impact of including certain foreign earnings in U.S. taxable income as a period cost. We recognize deferred income taxes for local country income and withholding taxes that could be incurred on distributions of certain non-U.S. earnings or for outside basis differences in our subsidiaries, where we do not plan to indefinitely reinvest such earnings and basis differences.
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Results of Operations
Key elements of our Consolidated Statements of Operations, including as a percentage of revenue, are presented in the following table:
Year Ended
January 3,
December 28,
December 30,
(In thousands)
2026
2024
2023
Revenue
$
523,262
100.0
%
$
509,401
100.0
%
$
737,154
100.0
%
Gross margin
356,943
68.2
340,400
66.8
514,670
69.8
Research and development
187,983
35.9
159,302
31.3
159,770
21.7
Selling, general and, administrative
153,632
29.4
116,942
23.0
137,244
18.6
Amortization of acquired intangible assets
52
0.0
3,479
0.7
3,478
0.5
Restructuring and other
4,044
0.8
12,291
2.4
1,908
0.3
Impairment of acquired intangible assets
—
—
13,929
2.7
—
—
Income from operations
$
11,232
2.1
%
$
34,457
6.8
%
$
212,270
28.8
%
Revenue
Year Ended
January 3,
December 28,
December 30,
% Change in
(In thousands)
2026
2024
2023
2025
2024
Revenue
$
523,262
$
509,401
$
737,154
2.7
%
(30.9
)%
Revenue increased $13.9 million, or 3%, in fiscal 2025 compared to fiscal 2024, primarily due to stronger demand in data center applications, including general-purpose and AI-specific servers, as well as wireline networking components, partially offset by softer Industrial and Automotive end market demand and from continued inventory normalization by customers.
Revenue by End Market
We sell our products globally to a broad base of customers in three primary end market groups: Communications and Computing, Industrial and Automotive, and Consumer. Across our end markets, our products are increasingly used in AI-related applications, including device usage in AI-optimized servers in data centers, AI-enabled PCs, and AI-enabled robotics and ADAS systems, among others. We also provide IP licensing and services to these end markets.
Within these end markets, there are multiple drivers, including:
•
Communications and Computing: data center servers and networking equipment, client computing platforms, and wireless and wireline communications infrastructure deployments.
•
Industrial and Automotive: factory automation, robotics, automotive electronics, and industrial IoT.
•
Consumer: smart home, prosumer, and other applications.
The end market data we use is derived from data provided to us by our distributors and end customers. With a diverse base of customers who may manufacture end products spanning multiple end markets, the assignment of revenue to a specific end market requires the use of judgment. We also recognize certain revenue for which end customers and end markets are not yet known. We assign this revenue first to a specific end market using historical and anticipated usage of the specific products, if possible, and allocate the remainder to the end markets based on either historical usage for each product family or industry application data for certain product types.
The following are examples of end market applications for the fiscal years presented:
Communications and Computing
Industrial and Automotive
Consumer
Wireless
Security and Surveillance
Cameras
Wireline
Machine Vision
Displays
Data Networking
Industrial Automation
Wearables
Server Computing
Robotics
Televisions
Client Computing
Automotive
Home Theater
Data Storage
Drones
Sound Systems
Cloud
Factory Automation
Hyperscalers
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The composition of our revenue by end market is presented in the following table:
Year Ended
January 3,
December 28,
December 30,
% Change in
(In thousands)
2026
2024
2023
2025
2024
Communications and Computing
$
292,716
55.9
%
$
228,145
44.8
%
$
257,536
34.9
%
28.3
%
(11.4
)%
Industrial and Automotive
193,965
37.1
236,949
46.5
433,482
58.8
(18.1
)
(45.3
)
Consumer
36,581
7.0
44,307
8.7
46,136
6.3
(17.4
)
(4.0
)
Total revenue
$
523,262
100.0
%
$
509,401
100.0
%
$
737,154
100.0
%
2.7
%
(30.9
)%
Revenue from the Communications and Computing end market increased by 28% in fiscal 2025 compared to fiscal 2024 primarily due to stronger demand in data center applications, including general-purpose and AI-specific servers, as well as wireline networking components.
Revenue from the Industrial and Automotive end market decreased by 18% in fiscal 2025 compared to fiscal 2024, primarily due to softer end market demand and from continued inventory normalization by customers.
While we do not consider AI applications as a distinct end market, we expect AI-related revenue to grow over the next few years based on the growing pipeline of AI-related design wins in a diverse set of applications across all three of our end market segments.
Revenue by Geography
We have a diverse base of customers where distributors represent a significant portion of our total revenue. Our revenue by geographical market is based on the ship-to location of our customers, which can vary from time to time. Revenue in all regions for fiscal 2025 compared to fiscal 2024 has been impacted by the global macroeconomic environment.
The composition of our revenue by geography is presented in the following table:
Year Ended
January 3,
December 28,
December 30,
% Change in
(In thousands)
2026
2024
2023
2025
2024
Asia
$
353,699
67.6
%
$
332,747
65.3
%
$
443,765
60.2
%
6.3
%
(25.0
)%
Americas
102,758
19.6
101,217
19.9
145,839
19.8
1.5
(30.6
)
Europe
66,805
12.8
75,437
14.8
147,550
20.0
(11.4
)
(48.9
)
Total revenue
$
523,262
100.0
%
$
509,401
100.0
%
$
737,154
100.0
%
2.7
%
(30.9
)%
Revenue from Customers
We sell our products to independent distributors and directly to customers. Distributors have historically accounted for a significant portion of our total revenue, and the distributors noted below individually accounted for more than 10% of our total revenue in certain periods covered by this report.
The composition of our revenue by customer is presented in the following table:
% of Total Revenue
Year Ended
January 3,
December 28,
December 30,
2026
2024
2023
Distributor A
30.9
%
33.3
%
31.6
%
Distributor B
37.9
31.2
20.5
Distributor C
3.8
11.2
10.8
Distributor D
—
3.5
12.6
Other distributors
11.2
10.2
11.9
All distributors
83.8
89.4
87.4
Direct customers
16.2
10.6
12.6
Total revenue
100.0
%
100.0
%
100.0
%
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Gross margin
The composition of our gross margin, including as a percentage of revenue, is presented in the following table:
Year Ended
January 3,
December 28,
December 30,
(In thousands)
2026
2024
2023
Gross margin
$
356,943
$
340,400
$
514,670
Gross margin percentage
68.2
%
66.8
%
69.8
%
Gross margin percentage increased 140 basis points from fiscal 2024 to fiscal 2025. Higher margins resulted primarily from the non-recurrence of an approximately $7.0 million one-time charge for expiring production materials in the prior year. Gross margin also benefitted from changes in product mix between the periods, partially offset by higher stock-based compensation associated with market and performance-based awards in the current year.
Operating Expenses
Operating expenses increased year-over-year primarily due to higher stock-based compensation in the current year periods; excluding stock-based compensation, operating expenses decreased year-over-year. See Note 10 – Stock-Based Compensation Plans for additional details.
Research and Development Expense
The composition of our Research and development expense, including as a percentage of revenue, is presented in the following table:
Year Ended
January 3,
December 28,
December 30,
% Change in
(In thousands)
2026
2024
2023
2025
2024
Research and development
$
187,983
$
159,302
$
159,770
18.0
%
(0.3
)%
Percentage of revenue
35.9
%
31.3
%
21.7
%
Research and development expense includes headcount-related costs, including cash- and stock-based compensation and benefits, R&D equipment expenses, engineering wafers, licenses, and outside engineering services. These expenditures are for the design of new products, IP cores, processes, packaging, and software solutions.
The increase in Research and development expense for fiscal 2025 compared to fiscal 2024 was primarily due to higher stock-based compensation associated with market-based and performance-based awards in the current year periods coupled with the prior year reduction in stock compensation expense from the forfeiture of equity awards by departing executives.
We believe that investing in research and development is important to delivering innovative products to our customers. We expect research and development expense to increase in the future, but to decline as a percentage of revenue.
Selling, General, and Administrative Expense
The composition of our Selling, general, and administrative expense, including as a percentage of revenue, is presented in the following table:
Year Ended
January 3,
December 28,
December 30,
% Change in
(In thousands)
2026
2024
2023
2025
2024
Selling, general, and administrative
$
153,632
$
116,942
$
137,244
31.4
%
(14.8
)%
Percentage of revenue
29.4
%
23.0
%
18.6
%
Selling, general, and administrative expense includes headcount-related costs, including cash- and stock-based compensation and benefits, related to selling, general, and administrative employees, commissions, depreciation, professional and outside services, trade show, and travel expenses.
The increase in Selling, general, and administrative expense for fiscal 2025 compared to fiscal 2024 was primarily due to higher stock-based compensation associated with market-based and performance-based awards in the current year periods coupled with the prior year reduction in stock compensation expense from the forfeiture of equity awards by departing executives.
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Amortization of Acquired Intangible Assets
The composition of our Amortization of acquired intangible assets, including as a percentage of revenue, is presented in the following table:
Year Ended
January 3,
December 28,
December 30,
% Change in
(In thousands)
2026
2024
2023
2025
2024
Amortization of acquired intangible assets
$
52
$
3,479
$
3,478
(98.5
)%
0.0
%
Percentage of revenue
0.0
%
0.7
%
0.5
%
The decrease in Amortization of acquired intangible assets for fiscal 2025 compared to fiscal 2024 was primarily due to the full impairment of the Mirametrix intangible assets in the fourth quarter of fiscal 2024.
Restructuring and other
The composition of our Restructuring activity, including as a percentage of revenue, is presented in the following table:
Year Ended
January 3,
December 28,
December 30,
% Change in
(In thousands)
2026
2024
2023
2025
2024
Restructuring and other
$
4,044
$
12,291
$
1,908
(67.1
)%
100+%
Percentage of revenue
0.8
%
2.4
%
0.3
%
Restructuring and other activity is generally comprised of expenses resulting from workforce reductions, cancellation of contracts, and consolidation of our facilities. Details of our restructuring plans and expenses incurred under them are discussed in Note 8 - Restructuring to our Consolidated Financial Statements in Part II, Item 8 of this report.
Restructuring costs decreased in fiscal 2025 compared to fiscal 2024 primarily due to lower costs in the current year for severance under the Q3 2024 Plan as compared to higher costs in the prior year for severance under both the Q3 2024 and Q3 2023 Plans.
Interest Income (Expense), net
The composition of our Interest income (expense), net, including as a percentage of revenue, is presented in the following table:
Year Ended
January 3,
December 28,
December 30,
% Change in
(In thousands)
2026
2024
2023
2025
2024
Interest income (expense), net
$
2,896
$
3,948
$
2,041
(26.6
)%
93.4
%
Percentage of revenue
0.6
%
0.8
%
0.3
%
Interest income (expense) for fiscal 2025 compared to fiscal 2024 decreased primarily due to lower interest rates on cash and cash equivalents between the periods.
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Other Income (Expense), net
The composition of our Other income (expense), net, including as a percentage of revenue, is presented in the following table:
Year Ended
January 3,
December 28,
December 30,
% Change in
(In thousands)
2026
2024
2023
2025
2024
Other income (expense), net
$
(751
)
$
(2,176
)
$
545
(65.5
)%
100+%
Percentage of revenue
(0.1
)%
(0.4
)%
0.1
%
For fiscal 2025 compared to fiscal 2024, the change in Other income (expense), net was primarily due to a $2.0 million write-off of a non-recoverable cost-method investment in the prior year period, and to foreign currency effects.
Income Taxes
The composition of our Income tax (benefit) expense is presented in the following table:
Year Ended
January 3,
December 28,
December 30,
% Change in
(In thousands)
2026
2024
2023
2025
2024
Income tax expense (benefit)
$
10,293
$
(24,902
)
$
(44,205
)
(141.3
)%
(43.7
)%
Our income tax expense (benefit) for fiscal 2025 was driven primarily by nondeductible expenses related to stock‑based compensation, partially offset by federal tax credits. The income tax benefit in fiscal 2024 includes $27.7 million of income tax benefits due to the expiration of statutes of limitations that reduced our uncertain tax positions, combined with federal tax credits and the impact of stock‑based compensation.
We updated our evaluation of the valuation allowance position in the United States through January 3, 2026. 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.
We 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 those deferred tax assets. The amount of the deferred tax asset considered realizable could be adjusted if sufficient positive evidence exists. We do not maintain a valuation allowance in any foreign jurisdictions as we have concluded that it is more likely than not that we will realize those net deferred tax assets in the future periods. Details of our deferred tax assets and valuation allowance are discussed in Note 12 - Income Taxes to our Consolidated Financial Statements in Part II, Item 8 of this report.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure that we define as net income before net interest income (expense), income tax expense (benefit), depreciation and amortization, stock-based compensation, and other items that are considered unusual or not representative of underlying trends of our business, including but not limited to: legal expense outside the ordinary course of business, transformation charges incurred in connection with our multi‑year strategic initiative to realign our organizational structure and modernize our technology platforms, restructuring, impairments, and other charges, if applicable for the periods presented.
We believe that the exclusion of the items eliminated in calculating Adjusted EBITDA provides useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides useful information in understanding and evaluating our operating results in the same manner as our management and our Board of Directors. Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. Other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of Adjusted EBITDA as a tool for comparison.
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There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which is the most directly comparable financial measure calculated in accordance with GAAP. Some of the limitations of Adjusted EBITDA include (i) Adjusted EBITDA does not properly reflect capital commitments to be paid in the future, and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these potential capital expenditures. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or non-recurring items, as in the future we may incur expenses similar to the adjustments in this presentation. Evaluation of our performance should consider Adjusted EBITDA alongside other financial performance measures, including our net income and other GAAP results.
A reconciliation of Net income to Adjusted EBITDA, including as a percentage of revenue, is presented in the following table:
Year Ended
January 3,
December 28,
December 30,
(In thousands)
2026
2024
2023
GAAP Net income
$
3,084
$
61,131
$
259,061
GAAP Net income margin
0.6
%
12.0
%
35.1
%
Interest (income) expense, net
(2,896
)
(3,948
)
(2,041
)
Income tax expense (benefit)
10,293
(24,902
)
(44,205
)
Amortization of acquired intangible assets
52
3,479
3,478
Depreciation and other amortization
34,333
34,502
30,562
Stock-based compensation (1)
116,294
53,718
71,952
Incentive compensation to be settled in equity (2)
6,605
—
—
Transformation charges
5,388
2,770
—
Legal expenses (3)
1,107
5,248
3,928
Restructuring and other
4,044
12,291
1,908
Impairment charges
3,497
13,929
—
Other EBITDA adjustments
1,154
3,748
44
Adjusted EBITDA
$
182,955
$
161,966
$
324,687
Adjusted EBITDA margin
35.0
%
31.8
%
44.0
%
(1)
Includes stock-based compensation and related payroll tax expenses.
(2)
Includes accruals for the portion of our annual incentive plan that we intend to settle in equity.
(3)
Includes legal expenses outside the ordinary course of business, including those incurred defending against claims described in our 2024 10-K.
Adjusted EBITDA increased for fiscal 2025 compared to fiscal 2024 primarily as a result of higher revenue, the non-recurrence of an approximately $7.0 million one-time charge for expiring production materials in the prior year, and lower costs for outside services.
Liquidity and Capital Resources
The following sections discuss material changes in our financial condition from the end of fiscal 2024, including the effects of changes in our Consolidated Balance Sheets, and the effects of our credit arrangements and contractual obligations on our liquidity and capital resources. There continues to be uncertainty around the extent of market volatility, inflationary pressures, interest rate changes, recessionary concerns, uncertainty in the financial and banking industry, and geopolitical tension, which may impact our liquidity and working capital needs in future periods.
We have historically financed our operating and capital resource requirements through cash flows from operations, and from the issuance of long-term debt to fund acquisitions. Cash provided by or used in operating activities will fluctuate from period to period due to fluctuations in operating results, the timing and collection of accounts receivable, and required inventory levels, among other things.
We believe that our financial resources, including current cash and cash equivalents, cash flow from operating activities, and our credit facilities, will be sufficient to meet our liquidity and working capital needs through at least the next 12 months. On September 1, 2022, we entered into our 2022 Credit Agreement, as described in Note 7 - Long-Term Debt to our Consolidated Financial Statements in Part II, Item 8 of this report. As of January 3, 2026, we did not have significant long-term commitments for capital expenditures. For further information on our cash commitments for operating lease liabilities, see Note 9 - Leases to our Consolidated Financial Statements in Part II, Item 8 of this report.
In the future, we may continue to consider acquisition opportunities to further extend our product or technology portfolios and further expand our product offerings. In connection with funding capital expenditures, acquisitions, securing additional wafer supply, increasing our working capital, or other operations, we may seek to obtain equity or additional debt financing. We may also seek to obtain equity or additional debt financing if we experience downturns or cyclical fluctuations in our business that are more severe or longer than we anticipated when determining our current working capital needs.
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Liquidity
Cash and cash equivalents
(In thousands)
January 3, 2026
December 28, 2024
$ Change
% Change
Cash and cash equivalents
$
133,886
$
136,291
$
(2,405
)
(1.8
)%
As of January 3, 2026, we had Cash and cash equivalents of $133.9 million, of which approximately $73.6 million was held by our foreign subsidiaries. We manage our global cash requirements considering, among other things, (i) available funds among our subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances. The repatriation of non-US earnings may require us to withhold and pay foreign income tax on dividends. This should not result in our recording significant additional tax expense as we have accrued expense based on current withholding rates. As of January 3, 2026, we could access all cash held by our foreign subsidiaries without incurring significant additional expense.
The net decrease in Cash and cash equivalents of $2.4 million between December 28, 2024 and January 3, 2026 was primarily driven by cash flows from the following activities:
Operating activities — Cash provided by operating activities results from net income adjusted for certain non-cash items and changes in assets and liabilities. Cash provided by operating activities was $175.1 million in fiscal 2025 compared to $140.9 million in fiscal 2024. This increase of $34.2 million was primarily driven by $17.9 million more cash provided by net income adjusted for non-cash items coupled with $16.3 million of net changes in working capital.
Investing activities — Investing cash flows consist primarily of transactions related to capital expenditures and payments for software and intellectual property licenses . Net cash used by investing activities in fiscal 2025 was $62.3 million compared to $37.7 million in fiscal 2024.
Financing activities — Financing cash flows consist primarily of repurchases of common stock, tax payments related to the net share settlement of restricted stock units, and proceeds from the acquisition of common stock under our e mployee stock purchase plan . Net cash used by financing activities in fiscal 2025 was $115.7 million compared to $94.5 million in fiscal 2024. This $21.2 million increase was due to the following activities. During fiscal 2025, we repurchased approximately 1.8 million shares of common stock for $100.0 million compared to fiscal 2024, where we repurchased approximately 1.1 million shares of common stock for $67.0 million. Payments for tax withholdings on vesting of RSUs partially offset by purchases under the employee stock purchase plan used net cash flows of $15.7 million in fiscal 2025, a decrease of approximately $11.8 million from the net $27.5 million used in fiscal 2024.
Accounts receivable, net
(In thousands)
January 3, 2026
December 28, 2024
$ Change
% Change
Accounts receivable, net
$
102,277
$
81,060
$
21,217
26.2
%
Days sales outstanding
64
63
1
Accounts receivable, net as of January 3, 2026 increased by approximately $21.2 million, or approximately 26%, compared to December 28, 2024. This increase was due to order scheduling through the fourth quarter. We calculate Days sales outstanding on the basis of a 365-day year as Accounts receivable, net at the end of the quarter divided by sales during the quarter annualized and then multiplied by 365.
Inventories
(In thousands)
January 3, 2026
December 28, 2024
$ Change
% Change
Inventories
$
89,202
$
103,410
$
(14,208
)
(13.7
)%
Days of inventory on hand
178
207
(29
)
Inventories as of January 3, 2026 decreased $14.2 million, or approximately 14%, compared to December 28, 2024 primarily as a result of our continued optimization of inventory to efficient levels for the business, which also decreased Days of inventory on hand over the period.
The Days of inventory on hand ratio compares the inventory balance at the end of a quarter to the cost of sales in that quarter. We calculate Days of inventory on hand on the basis of a 365-day year as Inventories at the end of the quarter divided by Cost of sales during the quarter annualized and then multiplied by 365 .
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Credit Arrangements
On September 1, 2022, we entered into our 2022 Credit Agreement. The details of this arrangement are described in Note 7 - Long-Term Debt to our Consolidated Financial Statements in Part II, Item 8 of this report. As of January 3, 2026, we had no used or unused credit arrangements beyond the secured revolving loan facility described in the 2022 Credit Agreement.
Share Repurchase Program
See "Issuer Purchases of Equity Securities" under Part II, Item 5 of this Annual Report on Form 10-K for more information about the share repurchase program.
New Accounting Pronouncements
The information contained under the heading "New Accounting Pronouncements" in Note 1 - Basis of Presentation and Significant Accounting Policies to our Consolidated Financial Statements in Part II, Item 8 of this report is incorporated by reference into this Part II, Item 7.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates and interest rates. We assess these risks on a regular basis and have established policies that are designed to protect against the adverse effects of these and other potential exposures.
Foreign Currency Exchange Rate Risk
While our revenues and the majority of our expenses are denominated in U.S. dollars, our financial position and results of operations are subject to foreign currency exchange rate risk as a result of having various international subsidiary and branch operations. Historically, exposure to foreign currency exchange rate risk has not had a material impact on our results from operations. We may enter into foreign currency forward exchange contracts in relation to certain activities, which mitigate the foreign currency exchange rate exposure from an economic perspective and may be designated as "effective" hedges under U.S. GAAP.
Interest Rate Risk
Interest Income
Our interest income is sensitive to changes in the general level of interest rates. As of January 3, 2026, a hypothetical 100 basis point change in interest rates would have resulted in less than $1.5 million change in interest income.
Interest Expense
We may be exposed to interest rate risk via the terms of our 2022 Credit Agreement, which specifies an interest rate on revolving loans that consists of a variable-rate of interest and an applicable margin. While we have drawn from this credit facility in the past, we have no borrowings outstanding as of January 3, 2026. If we borrow from the credit facility in the future, we will again be exposed to interest rate fluctuations.
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Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements:
Page
Consolidated Statements of Operations
42
Consolidated Statements of Comprehensive Income
43
Consolidated Balance Sheets
44
Consolidated Statements of Cash Flows
45
Consolidated Statements of Stockholders' Equity
46
Notes to Consolidated Financial Statements
47
Reports of Independent Registered Public Accounting Firm (Ernst & Young LLP)
(PCAOB ID: 42 ) 67
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LATTICE SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended
January 3,
December 28,
December 30,
(In thousands, except per share data)
2026
2024
2023
Revenue
$ 523,262 $ 509,401 $ 737,154
Cost of revenue
166,319 169,001 222,484
Gross margin
356,943 340,400 514,670
Operating expenses:
Research and development
187,983 159,302 159,770
Selling, general, and administrative
153,632 116,942 137,244
Amortization of acquired intangible assets
52 3,479 3,478
Restructuring and other
4,044 12,291 1,908
Impairment of acquired intangible assets
— 13,929 —
Total operating expenses
345,711 305,943 302,400
Income (loss) from operations
11,232 34,457 212,270
Interest income (expense), net
2,896 3,948 2,041
Other income (expense), net
( 751 ) ( 2,176 ) 545
Income (loss) before income taxes
13,377 36,229 214,856
Income tax expense (benefit)
10,293 ( 24,902 ) ( 44,205 )
Net income
$ 3,084 $ 61,131 $ 259,061
Net income per share:
Basic
$ 0.02 $ 0.44 $ 1.88
Diluted
$ 0.02 $ 0.44 $ 1.85
Shares used in per share calculations:
Basic
137,091 137,623 137,694
Diluted
138,238 138,322 139,790
The accompanying notes are an integral part of these Consolidated Financial Statements.
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LATTICE SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year Ended
January 3,
December 28,
December 30,
(In thousands)
2026
2024
2023
Net income
$ 3,084 $ 61,131 $ 259,061
Other comprehensive income (loss):
Translation adjustment
159 ( 694 ) ( 16 )
Change in actuarial valuation of defined benefit pension, net of tax
540 ( 242 ) ( 476 )
Comprehensive income
$ 3,783 $ 60,195 $ 258,569
The accompanying notes are an integral part of these Consolidated Financial Statements.
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LATTICE SEMICONDUCTOR CORPORATION
CONSOLIDATED BALANCE SHEETS
January 3,
December 28,
(In thousands, except share and par value data)
2026
2024
ASSETS
Current assets:
Cash and cash equivalents
$ 133,886 $ 136,291
Accounts receivable, net
102,277 81,060
Inventories, net
89,202 103,410
Prepaid expenses and other current assets
38,509 44,073
Total current assets
363,874 364,834
Property and equipment, less accumulated depreciation of $ 123,654 at January 3, 2026 and $ 125,901 at December 28, 2024
77,032 52,988
Operating lease right-of-use assets
39,459 13,870
Intangible assets, net
4,143 4,587
Goodwill
315,358 315,358
Deferred income taxes
62,675 66,980
Other long-term assets
20,579 25,286
Total assets
$ 883,120 $ 843,903
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$ 56,518 $ 36,828
Accrued liabilities
30,594 45,638
Accrued payroll obligations
30,561 17,156
Total current liabilities
117,673 99,622
Long-term operating lease liabilities, net of current portion
36,127 9,433
Other long-term liabilities
15,266 23,916
Total liabilities
169,066 132,971
Contingencies (Note 14)
Stockholders' equity:
Preferred stock, $ .01 par value, 10,000,000 shares authorized, none issued and outstanding
— —
Common stock, $ .01 par value, 300,000,000 shares authorized; 136,771,000 shares issued and outstanding as of January 3, 2026 and 137,704,000 shares issued and outstanding as of December 28, 2024
1,368 1,377
Additional paid-in capital
503,647 504,299
Retained earnings
212,182 209,098
Accumulated other comprehensive loss
( 3,143 ) ( 3,842 )
Total stockholders' equity
714,054 710,932
Total liabilities and stockholders' equity
$ 883,120 $ 843,903
The accompanying notes are an integral part of these Consolidated Financial Statements.
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LATTICE SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended
January 3,
December 28,
December 30,
(In thousands)
2026
2024
2023
Cash flows from operating activities:
Net income
$ 3,084 $ 61,131 $ 259,061
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization
35,481 38,737 34,432
Stock-based compensation expense
115,613 52,985 70,197
Change in deferred income tax provision
5,187 ( 12,069 ) ( 58,614 )
Change in noncurrent taxes payable
( 384 ) ( 19,370 ) 299
Amortization of right-of-use assets
6,834 7,530 6,764
Impairment charges
3,497 13,929 —
Charge for expiring production materials
— 7,019 —
Other non-cash adjustments
1,124 2,690 253
Changes in assets and liabilities:
Accounts receivable, net
( 21,217 ) 23,313 ( 10,355 )
Inventories, net
14,208 ( 4,584 ) 11,549
Prepaid expenses and other assets
5,364 ( 11,065 ) ( 6,001 )
Accounts payable
19,690 2,341 ( 7,549 )
Accrued liabilities
( 19,540 ) ( 3,515 ) ( 12,963 )
Accrued payroll obligations
13,405 ( 9,709 ) ( 10,005 )
Operating lease liabilities, current and long-term portions
( 7,239 ) ( 8,487 ) ( 7,480 )
Net cash provided by (used in) operating activities
175,107 140,876 269,588
Cash flows from investing activities:
Capital expenditures
( 42,527 ) ( 20,985 ) ( 20,098 )
Cash paid for software and intellectual property licenses
( 19,781 ) ( 16,708 ) ( 13,152 )
Net cash provided by (used in) investing activities
( 62,308 ) ( 37,693 ) ( 33,250 )
Cash flows from financing activities:
Restricted stock unit tax withholdings
( 23,285 ) ( 33,646 ) ( 52,078 )
Proceeds from issuance of common stock
7,588 6,184 8,365
Repurchase of common stock
( 100,000 ) ( 66,998 ) ( 80,004 )
Repayment of long-term debt
— — ( 130,000 )
Net cash provided by (used in) financing activities
( 115,697 ) ( 94,460 ) ( 253,717 )
Effect of exchange rate change on cash
493 ( 749 ) ( 26 )
Net increase (decrease) in cash and cash equivalents
( 2,405 ) 7,974 ( 17,405 )
Beginning cash and cash equivalents
136,291 128,317 145,722
Ending cash and cash equivalents
$ 133,886 $ 136,291 $ 128,317
Supplemental disclosure of cash flow information and non-cash investing and financing activities:
Interest paid
$ — $ — $ 3,240
Income taxes paid, net of refunds
$ 7,768 $ 8,587 $ 15,754
Operating lease payments
$ 8,330 $ 9,567 $ 8,344
Accrued purchases of plant and equipment
$ 6,768 $ 2,132 $ 392
Operating lease right-of-use assets obtained in exchange for lease obligations
$ 32,548 $ 7,428 $ 3,718
The accompanying notes are an integral part of these Consolidated Financial Statements.
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LATTICE SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Retained Accumulated
Common Stock Additional Earnings Other
($.01 par value)
Paid-in
(Accumulated
Comprehensive
(In thousands, except par value data)
Shares
Amount
Capital
Deficit)
Income (Loss)
Total
Balances, December 31, 2022
137,099 $ 1,371 $ 599,300 $ ( 111,094 ) $ ( 2,414 ) $ 487,163
Components of comprehensive income, net of tax:
Net income
— — — 259,061 — 259,061
Other comprehensive income (loss)
— — — — ( 492 ) ( 492 )
Total comprehensive income
258,569
Common stock issued in connection with employee equity incentive awards, net of shares withheld for employee taxes
1,465 14 ( 43,727 ) — — ( 43,713 )
Stock-based compensation expense
— — 70,197 — — 70,197
Repurchase of common stock
( 1,224 ) ( 12 ) ( 80,184 ) — — ( 80,196 )
Balances, December 30, 2023
137,340 $ 1,373 $ 545,586 $ 147,967 $ ( 2,906 ) $ 692,020
Components of comprehensive income, net of tax:
Net income
— — — 61,131 — 61,131
Other comprehensive income (loss)
— — — — ( 936 ) ( 936 )
Total comprehensive income
60,195
Common stock issued in connection with employee equity incentive awards, net of shares withheld for employee taxes
1,509 15 ( 27,477 ) — — ( 27,462 )
Stock-based compensation expense
— — 52,985 — — 52,985
Repurchase of common stock
( 1,145 ) ( 11 ) ( 66,795 ) — — ( 66,806 )
Balances, December 28, 2024
137,704 $ 1,377 $ 504,299 $ 209,098 $ ( 3,842 ) $ 710,932
Components of comprehensive income, net of tax:
Net income
— — — 3,084 — 3,084
Other comprehensive income (loss)
— — — — 699 699
Total comprehensive income
3,783
Common stock issued in connection with employee equity incentive awards, net of shares withheld for employee taxes
830 8 ( 15,705 ) — — ( 15,697 )
Stock-based compensation expense
— — 115,613 — — 115,613
Repurchase of common stock
( 1,763 ) ( 17 ) ( 100,560 ) — — ( 100,577 )
Balances, January 3, 2026
136,771 $ 1,368 $ 503,647 $ 212,182 $ ( 3,143 ) $ 714,054
The accompanying notes are an integral part of these Consolidated Financial Statements.
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LATTICE SEMICONDUCTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation and Significant Accounting Policies
Basis of Presentation and Use of Estimates
The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP") and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). They include the accounts of Lattice and its subsidiaries after the elimination of all intercompany balances and transactions.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments affecting the amounts reported in our consolidated financial statements and the accompanying notes. We base our estimates and judgments on historical experience, knowledge of current conditions, and our beliefs of what could occur in the future considering available information. While we believe that our estimates, assumptions, and judgments are reasonable, they are based on information available when made, and because of the uncertainty inherent in these matters, the actual results that we experience may differ materially from these estimates under different assumptions or conditions. We evaluate our estimates and judgments on an ongoing basis.
Certain prior year balances have been reclassified to conform to the current year’s presentation.
Fiscal Reporting Periods
We report based on a 52 or 53 -week fiscal year ending on the Saturday closest to December 31. Our fiscal 2025 was a 53 -week year that ended on January 3, 2026. Our fiscal 2024 and 2023 were both 52 -week years that ended on December 28, 2024 and December 30, 2023, respectively. Our fiscal 2026 will be a 52 -week year and will end on January 2, 2027. 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, trade accounts receivable, cash and cash equivalents, 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:
Year Ended
January 3,
December 28,
December 30,
2026
2024
2023
Distributor A
31 % 33 % 32 %
Distributor B
38 31 21
Distributor C
4 11 11
Distributor D
— 4 13
Other distributors
11 10 10
Revenue attributable to distributors
84 % 89 % 87 %
Certain of our distributors accounted for more than 10% of net accounts receivable at the dates presented. At January 3, 2026 and December 28, 2024 , Distributor A accounted for approximately 28 % and 36 %, respectively, and Distributor B accounted for approximately 62 % and 45 %, respectively.
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.
We limit our risk exposure related to cash and cash equivalents by placing our cash with high credit quality financial institutions. At times, such deposits may exceed Federal Deposit Insurance Corporation insurance limits. We have not experienced any losses on our deposits of cash and cash equivalents.
We rely on a limited number of foundries for our wafer purchases. We seek to mitigate the concentration of supply risk by establishing, maintaining, and managing multiple foundry relationships; however, certain of our products are sourced from a single foundry and changing from one foundry to another can have a significant cost, or create delays in production or shipments, among other factors.
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Cash and Cash Equivalents
We consider all investments that are readily convertible into cash and that have original maturities of three months or less to be cash equivalents. Cash equivalents consist primarily of highly liquid investments in time deposits or money market accounts and are carried at cost, which approximates fair value.
Foreign Exchange and Translation of Foreign Currencies
While our revenues and the majority of our expenses are denominated in U.S. dollars, we also have international subsidiaries and branch operations that conduct some transactions in currencies that differ from the functional currency of that entity. Gains or losses from foreign exchange rate fluctuations on balances denominated in currencies that differ from the functional currencies are reflected in Other income (expense), net.
We translate accounts denominated in foreign currencies in accordance with ASC 830, “ Foreign Currency Matters ,” using the current rate method under which asset and liability accounts are translated at the current rate, while stockholders' equity accounts are translated at the appropriate historical rates, and revenue and expense accounts are translated at average monthly exchange rates. Translation adjustments related to the consolidation of foreign subsidiary financial statements are reflected in Accumulated other comprehensive loss in Stockholders' equity (See our Consolidated Statements of Stockholders' Equity).
Revenue Recognition
Under the terms of ASC 606, "Revenue from Contracts with Customers" , we recognize revenue when we satisfy performance obligations as evidenced by the transfer of control of our products or services to customers. For sales to distributors, we have concluded that our contracts are with the distributor, rather than with the distributor’s end customer, as we hold a contract bearing enforceable rights and obligations only with the distributor. Our revenue is derived primarily from sales of silicon-based products, with additional revenue from sales of silicon-enabling products. We consider customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. For each contract, we consider our promise to transfer each distinct product to be the identified performance obligations. Revenue for product sales is recognized at the time of product shipment, as determined by the agreed upon contract shipping terms.
Our Licensing and services revenue is comprised of revenue from our IP core licensing activity, patent monetization activities, design services, and royalty and adopter fee revenue from our standards activities. These activities are complementary to our product sales and help us to monetize our IP associated with our technology and standards. We consider licensing arrangements with our customers and agreements with the standards consortia of which we are a member to be the contract. For each contract, we consider the promise to deliver a license that grants the customer the right to use the IP, as well as any professional services provided under the contract, as distinct performance obligations. We recognize license revenue at the point in time that control of the license transfers to the customer, which is generally upon delivery, or as usage occurs.
We measure revenue based on the amount of consideration we expect to be entitled to in exchange for products or services. Variable consideration is estimated and reflected as an adjustment to the transaction price. We determine variable consideration, which consists primarily of various sales price concessions, by estimating the most likely amount of consideration we expect to receive from the customer based on an analysis of historical rebate claims over a period of time considered adequate to account for current pricing and business trends. Sales rebates earned by customers are offset against their receivable balances. Rebates earned by customers when they do not have outstanding receivable balances are recorded within Accrued liabilities. Revenue related to licensing and services, which includes HDMI and MHL standards revenue, as well as certain IP licenses, includes variable consideration in the form of usage-based royalties.
We generally provide an assurance warranty that our products will substantially conform to the published specifications for twelve months from the date of shipment. In some cases, the warranty period may be longer than twelve months. We do not separately price or sell the assurance warranty. Our liability is limited to either a credit equal to the purchase price or replacement of the defective part. Under the practical expedient provided by ASC 340, we generally expense sales commissions when incurred because the amortization period would be less than one year. We record these costs within Selling, general, and administrative expenses. Substantially all of our performance obligations are satisfied within twelve months.
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Inventories and Cost of Revenue
Inventories are stated at the lower of actual cost (determined using the first -in, first -out method) or net realizable value. We review and set standard costs quarterly to approximate current actual manufacturing costs. Our manufacturing overhead standards for product costs are calculated assuming full absorption of actual costs. The valuation of inventory requires us to estimate excess or obsolete inventory. Material assumptions we use to estimate necessary inventory carrying value adjustments can be unique to each product and are based on specific facts and circumstances. In determining provisions for excess or obsolete products, we consider assumptions such as changes in business and economic conditions, projected customer demand for our products, and changes in technology or customer requirements. The creation of such provisions results in a write-down of inventory to net realizable value and a charge to Cost of revenue. Lower of cost or net realizable value is based on assumptions such as recent historical sales activity and selling prices, as well as estimates of future sales activity and selling prices. Shipping and handling costs are included in Cost of revenue in our Consolidated Statements of Operations.
Property and Equipment
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 seven years for equipment and software, and one to five years for tooling. Leasehold improvements are amortized over the shorter of the non-cancellable lease term or the estimated useful life of the assets. We capitalize costs for the fabrication of masks used by our foundry partners to manufacture our products. The capitalized mask costs begin depreciating to Cost of revenue once the products go into production, and depreciation is straight-lined over a three -year period, which is the expected useful life of the mask. Upon disposal of property and equipment, the accounts are relieved of the costs and related accumulated depreciation and amortization, and resulting gains or losses are reflected in the Consolidated Statements of Operations for recognized gains and losses. Repair and maintenance costs are expensed as incurred.
Business Combinations
Business combinations are accounted for using the acquisition method of accounting, under which we allocate the purchase price paid for a company to identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Goodwill is measured as the excess of purchase price over the fair value of identifiable assets acquired and liabilities assumed. Determining the fair value of identifiable tangible and intangible assets acquired and liabilities assumed requires management to make assumptions, estimates, and judgments that are based on all available information, including comparable market data and information obtained from our management and the management of the acquired companies. The estimation of the fair values of the intangible assets requires significant judgment and the use of valuation techniques including primarily the income approach. Consideration is given to all relevant factors that might affect the fair value such as estimates of future revenues and costs, present value factors, and the estimated useful lives of intangible assets. We expense acquisition-related costs in the period incurred.
Impairment of Long-Lived Assets
Long-lived assets, which consist primarily of property and equipment, amortizable intangible assets, and right-of-use assets, are carried on our financial statements based on their cost less accumulated depreciation or amortization. We monitor the carrying value of our long-lived assets for potential impairment and test the recoverability of such assets whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. These events or changes in circumstances, including management decisions pertaining to such assets, are referred to as impairment indicators. If an impairment indicator occurs, we perform a test of recoverability by comparing the carrying value of the asset group to its undiscounted expected future cash flows. If the carrying values are in excess of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset group to its carrying value. Fair value is generally determined by considering (i) internally developed discounted projected cash flow analysis of the asset group; (ii) actual third -party valuations; and/or (iii) information available regarding the current market for similar asset groups. If the fair value of the asset group is determined to be less than the carrying amount of the asset group, an impairment in the amount of the difference is recorded in the period that the impairment indicator occurs and is included in our Consolidated Statements of Operations. Estimating future cash flows requires significant judgment and projections may vary from the cash flows eventually realized, which could impact our ability to accurately assess whether an asset has been impaired.
Valuation of Goodwill
Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is not amortized, but is instead tested for impairment annually during the fourth quarter and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. When evaluating whether goodwill is impaired, we make a qualitative assessment to determine if it is more likely than not that the reporting unit's fair value is less than the carrying amount. If the qualitative assessment determines that it is more likely than not that the fair value is less than the carrying amount, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, then goodwill impairment exists for the reporting unit. The impairment loss, if any, is recognized for the amount by which the carrying value exceeds the fair value. If the fair value of the reporting unit exceeds its carrying value, no further impairment analysis is needed. For purposes of testing goodwill for impairment, we currently operate as a single reporting unit.
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Leases
We account for leases under the terms of ASC 842, " Leases ," which requires lessees to record assets and liabilities on the balance sheet for all leases with terms longer than 12 months. Under this guidance, we apply the practical expedient to not separate lease and non-lease components for all asset classes.
Right-of-use ("ROU") assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized on the commencement date of the lease based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we determine the present value of lease payments using an incremental borrowing rate based on information from our commercial bank for an equivalent borrowing and term in the respective region as of the lease commencement date. At inception, we determine if an arrangement is a lease, if it includes options to extend or terminate the lease, and if it is reasonably certain that we will exercise the options. Lease cost, representing lease payments over the term of the lease and any capitalizable direct costs less any incentives received, is recognized on a straight-line basis over the lease term as lease expense. We have operating leases for corporate offices, sales offices, research and development facilities, storage facilities, and a data center.
The exercise of lease renewal options is at our sole discretion. When deemed reasonably certain of exercise, the renewal options are included in the determination of the lease term and lease payment obligation, respectively. For our leases that contain variable lease payments, residual value guarantees, or restrictive covenants, we have concluded that these inputs are not significant to the determination of the ROU asset and lease liability.
Research and Development
Research and development expenses include costs for compensation and benefits, engineering wafers, depreciation and amortization, licenses and masks, and outside engineering services. These expenditures are for the design of new products, intellectual property cores, processes, packaging, and software solutions. Research and development costs are generally expensed as incurred, with certain licensed technology agreements capitalized as intangible assets and amortized to Research and development expense over their estimated useful lives.
Restructuring
Expenses associated with exit or disposal activities are recognized when incurred under ASC 420, “ Exit or Disposal Cost Obligations ,” for everything except severance expenses and vacated leased facilities. Because we have a history of paying severance benefits, the cost of severance benefits associated with a restructuring plan is recorded when such costs are probable and the amount can be reasonably estimated in accordance with ASC 712, “ Compensation - Nonretirement Postemployment Benefits. ” When leased facilities are vacated, the amount of any ROU asset impairment is calculated in accordance with ASC 360, " Property, Plant, and Equipment " and recorded as a part of Restructuring. Expenses from other exit or disposal activities, including the cancellation of software contracts and engineering tools or the abandonment of long-lived assets, are recorded as a part of Restructuring.
Accounting for Income Taxes
We are required to estimate our provision for income taxes and amounts ultimately payable or recoverable in numerous tax jurisdictions around the world. These estimates involve significant judgment and interpretations of regulations and are inherently complex. Resolution of income tax treatments in individual jurisdictions may not be known for many years after completion of the applicable year. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements using enacted tax rates and laws that will be in effect when the difference is expected to reverse. Valuation allowances are provided to reduce deferred tax assets to an amount that in management’s judgment is more-likely-than- not to be recoverable against future taxable income. The determination of a valuation allowance and when it should be released requires complex judgment.
In assessing the ability to realize deferred tax assets, we evaluate both positive and negative evidence that may exist and consider whether it is more-likely-than- not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Any adjustment to the net deferred tax asset valuation allowance is recorded in the Consolidated Statements of Operations for the period that the adjustment is determined to be required.
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Our income tax calculations are based on application of the respective U.S. federal, state or foreign tax law . Our tax filings, however, are subject to audit by the relevant tax authorities. Accordingly, we recognize tax liabilities based upon our estimate of whether, and the extent to which, additional taxes will be due when such estimates are more-likely-than- not to be sustained. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. To the extent the final tax liabilities are different than the amounts originally accrued, the increases or decreases as well as any interest or penalties are recorded as income tax expense or benefit in the Consolidated Statements of Operations. We recognize the tax impact of including certain foreign earnings in U.S. taxable income as a period cost.
Stock-Based Compensation
We estimate the fair value of stock-based awards consistent with the provisions of ASC 718, “ Compensation - Stock Compensation ” and recognize stock-based compensation expense on a straight-line basis over the requisite service period, with forfeitures accounted for as they occur. We value restricted stock units ("RSUs") restricted stock awards ("RSAs") using the closing market price on the date of grant, and we value our employee stock purchase plan ("ESPP") using the Black-Scholes option pricing model. We have also granted RSUs with a market condition or a performance condition to certain executives. The terms of these grants, including achievement criteria and vesting schedules, are detailed under the heading " Market-Based and Performance-Based Awards — Grants" in Note 10 - Stock-Based Compensation Plans. Our current practice is to issue new shares to satisfy ESPP purchases. 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.
New Accounting Pronouncements
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.
In September 2025, the FASB issued ASU 2025 - 06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350 - 40 ): Targeted Improvements to the Accounting for Internal-Use Software . This ASU is intended to simplify the recognition and disclosure guidance related to capitalized internal-use software costs by removing all references to software development project stages and introducing a more judgment-based framework. ASU 2025 - 06 is effective for fiscal years beginning after December 15, 2027, and for interim periods within those fiscal years, with early adoption permitted as of the beginning of a fiscal year. This standard may be applied prospectively, retrospectively, or via a modified prospective transition method. We are currently evaluating the impact of adoption of this new guidance on our consolidated financial statements and disclosures.
Note 2 - Net Income Per Share
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. For equity awards with a performance condition, the number of shares that qualified for vesting as of the end of each period presented are included in the diluted share count when the condition for their issuance was satisfied by the end of the respective reporting periods. See " Note 10 - Stock-Based Compensation Plans " to our consolidated financial statements for further discussion of our equity awards with market conditions or performance conditions.
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A summary of basic and diluted Net income per share is presented in the following table:
Year Ended
January 3,
December 28,
December 30,
(In thousands, except per share data)
2026
2024
2023
Net income
$ 3,084 $ 61,131 $ 259,061
Shares used in basic Net income per share
137,091 137,623 137,694
Dilutive effect of employee equity incentive awards
1,147 699 2,096
Shares used in diluted Net income per share
138,238 138,322 139,790
Basic Net income per share
$ 0.02 $ 0.44 $ 1.88
Diluted Net income per share
$ 0.02 $ 0.44 $ 1.85
The computation of diluted Net income per share excludes the effects of employee equity incentive plans that are antidilutive, aggregating to approximately 0.7 million, 1.0 million, and 0.4 million, respectively, in fiscal 2025 , 2024, and 2023.
Note 3 - Revenue from Contracts with Customers
Disaggregation of Revenue
The following tables provide information about revenue from contracts with customers disaggregated by channel and by geographical market. Revenue is attributed to geographic regions based on the ship-to location of the customer. The Greater China geography includes revenue associated with shipments to both Hong Kong and mainland China. Products shipped to Hong Kong may subsequently be transferred to mainland China or other destinations, and products shipped to mainland China may similarly move through intermediary locations
Year Ended
Revenue by Channel
January 3,
December 28,
December 30,
(In thousands)
2026
2024
2023
Distributors
$ 438,455 84 % $ 455,160 89 % $ 644,181 87 %
Direct
84,807 16 % 54,241 11 % 92,973 13 %
Total revenue
$ 523,262 100 % $ 509,401 100 % $ 737,154 100 %
Revenue by Geographical Market
(In thousands)
Greater China
$ 273,246 52 % $ 206,380 40 % 239,192 32 %
Japan
28,602 6 % 81,043 16 % 110,403 15 %
Other Asia
51,851 10 % 45,324 9 % 94,170 13 %
Asia
353,699 68 % 332,747 65 % 443,765 60 %
Americas
102,758 19 % 101,217 20 % 145,839 20 %
Europe
66,805 13 % 75,437 15 % 147,550 20 %
Total revenue
$ 523,262 100 % $ 509,401 100 % $ 737,154 100 %
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Contract Balances
Our contract assets relate primarily to our rights to consideration for licenses and royalties due to us as a member of the HDMI Founders consortium. The balance results primarily from the amount of estimated revenue related to HDMI that we have recognized to date, but which has not yet been distributed to us by the HDMI licensing agent. Contract assets are recorded in Prepaid expenses and other current assets in our Consolidated Balance Sheets.
The following table summarizes activity during the periods presented:
(In thousands)
Contract assets as of December 30, 2023
$ 11,194
Revenues recorded during the period
14,408
Transferred to Accounts receivable or collected
( 7,724 )
Contract assets as of December 28, 2024
$ 17,878
Revenues recorded during the period
25,854
Transferred to Accounts receivable or collected
( 36,063 )
Contract assets as of January 3, 2026
$ 7,669
Contract liabilities are included in Accrued liabilities on our Consolidated Balance Sheets. The following table summarizes activity during the periods presented:
(In thousands)
Contract liabilities as of December 30, 2023
$ 5,304
Unperformed performance obligations
6,945
Accruals for estimated future stock rotation and scrap returns
13,051
Less: Release of accruals for recognized stock rotation and scrap returns
( 14,118 )
Contract liabilities as of December 28, 2024
$ 11,182
Revenue recognized from satisfied performance obligations
( 6,945 )
Accruals for estimated future stock rotation and scrap returns
6,131
Less: Release of accruals for recognized stock rotation and scrap returns
( 6,362 )
Contract liabilities as of January 3, 2026
$ 4,006
Note 4 - Balance Sheet Components
Accounts Receivable
Accounts receivable do not bear interest and are shown net of an allowance for expected lifetime credit losses, which reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine this allowance through an assessment of known troubled accounts, analysis of our accounts receivable aging, historical experience, expectations for future economic conditions, management judgment, and other available evidence.
January 3,
December 28,
(In thousands)
2026
2024
Accounts receivable
$ 102,277 $ 81,060
Less: Allowance for credit losses
— —
Accounts receivable, net
$ 102,277 $ 81,060
We had no material bad debt expense in fiscal 2025, 2024, or 2023.
Inventories
January 3,
December 28,
(In thousands)
2026
2024
Work in progress
$ 69,031 $ 82,273
Finished goods
20,171 21,137
Total inventories, net
$ 89,202 $ 103,410
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Accrued Liabilities
Included in Accrued liabilities in the Consolidated Balance Sheets are the following balances:
January 3,
December 28,
(In thousands)
2026
2024
Current portion of liability for non-cancellable contracts
$ 13,296 $ 13,534
Contract liabilities
4,006 11,182
Liability for expiring production materials
1,714 7,019
Current portion of operating lease liabilities
5,980 5,818
Other accrued liabilities
5,598 8,085
Total accrued liabilities
$ 30,594 $ 45,638
Other Long-Term Liabilities
Included in Other long-term liabilities in the Consolidated Balance Sheets are the following balances:
January 3,
December 28,
(In thousands)
2026
2024
Long-term portion of liability for non-cancellable contracts
$ 8,962 $ 16,022
Other long-term liabilities
6,304 7,894
Total other long-term liabilities
$ 15,266 $ 23,916
Note 5 - Property and Equipment
January 3, December 28,
(In thousands)
2026 2024
Production equipment and software
$ 186,653 $ 161,525
Leasehold improvements
12,190 15,387
Office furniture and equipment
1,843 1,977
200,686 178,889
Accumulated depreciation and amortization
( 123,654 ) ( 125,901 )
Total property and equipment, net
$ 77,032 $ 52,988
For fiscal years 2025 , 2024 , and 2023 depreciation and amortization expense for property and equipment was $ 19.9 million, $ 19.3 million, and $ 17.3 million, respectively.
Property and Equipment – Geographic Information
Our Property and equipment, net by country at the end of each period was as follows:
January 3, December 28,
(In thousands)
2026 2024
United States
$ 40,338 $ 26,578
Taiwan
11,524 11,234
Philippines
6,544 6,086
India
11,825 2,165
China
2,552 2,504
Other
4,249 4,421
Total foreign property and equipment, net
36,694 26,410
Total property and equipment, net
$ 77,032 $ 52,988
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Note 6 - Intangible Assets and Goodwill
In connection with our previous acquisitions , we have recorded identifiable intangible assets related to existing technology, customer relationships, and trade name / trademarks. 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. No impairment charges relating to acquired intangible assets were recorded for fiscal 2025 or 2023. In fiscal 2024, we recorded an impairment charge of $ 13.9 million relating to acquired intangible assets.
The following tables summarize the details of our Intangible assets, net as of January 3, 2026 and December 28, 2024 :
January 3, 2026
(In thousands)
Weighted Average Amortization Period
(in years)
Gross
Accumulated Amortization
Intangible assets, net
Existing technology
7.0 $ 125,037 $ ( 124,539 ) $ 498
Customer relationships
— 32,734 ( 32,734 ) —
Trade name / trademarks
— 1,500 ( 1,500 ) —
Licensed technology
5.0 10,618 ( 6,973 ) 3,645
Total identified intangible assets
$ 169,889 $ ( 165,746 ) $ 4,143
December 28, 2024
(In thousands)
Weighted Average Amortization Period
(in years)
Gross
Accumulated Amortization
Intangible assets, net
Existing technology
— $ 124,487 $ ( 124,487 ) $ —
Customer relationships
— 32,734 ( 32,734 ) —
Trade name / trademarks
— 1,500 ( 1,500 ) —
Licensed technology
5.4 9,366 ( 4,779 ) 4,587
Total identified intangible assets
$ 168,087 $ ( 163,500 ) $ 4,587
We recorded amortization expense related to intangible assets on the Consolidated Statements of Operations as presented in the following table:
Year Ended
January 3,
December 28,
December 30,
(In thousands)
2026
2024
2023
Research and development
$ 2,194 $ 1,218 $ 1,074
Amortization of acquired intangible assets
52 3,479 3,478
$ 2,246 $ 4,697 $ 4,552
The annual expected amortization expense related to intangible assets is as follows:
Fiscal year
(In thousands)
2026
$ 2,232
2027
1,456
2028
193
2029
79
2030
79
Thereafter
104
Total
$ 4,143
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Goodwill
Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and intangible assets. The goodwill balance at January 3, 2026 is comprised of approximately $ 315.4 million from prior acquisitions. No impairment charges relating to goodwill were recorded for fiscal 2025 , 2024, or 2023.
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. We have a zero drawn balance on this facility and, effective December 10, 2025, we deliberately reduced the aggregate available principal amount from up to $ 350 million to up to $ 200 million. This reduction lowered our carrying costs. We intend to use the revolving loan facility for working capital and general corporate purposes as appropriate.
At our option, the revolving loans accrue interest at a per annum rate based on ranges determined by our consolidated total leverage ratio of either (i) the base rate (as defined in the 2022 Credit Agreement) plus a margin ranging from 0.25 % to 1.00 %, or (ii) the adjusted Term Secured Overnight Financing Rate ("SOFR") for interest periods of 1, 3 or 6 months plus a margin ranging from 1.25 % to 2.00 %. Interest is due and payable in arrears quarterly for loans bearing interest at the base rate and at the end of an interest period (or at each three -month interval in the case of loans with interest periods greater than three months) in the case of loans bearing interest at the adjusted Term SOFR. In addition, we pay a quarterly commitment fee of 0.20 % on the unused portion of the revolving facility.
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 loan on September 1, 2027. At January 3, 2026 and December 28, 2024, we had no borrowings outstanding under the 2022 Credit Agreement.
Interest expense related to our long-term debt is included in Interest expense on our Consolidated Statements of Operations as follows:
Year Ended
January 3,
December 28,
December 30,
(In thousands)
2026
2024
2023
Contractual interest
$ — $ — $ 2,701
Amortization of original issuance discount and debt costs
264 266 266
Total interest expense related to long-term debt
$ 264 $ 266 $ 2,967
Note 8 - Restructuring
In the third quarter of 2024, our management commenced an internal restructuring plan ("the Q3 2024 Plan"), which includes a global workforce reduction. Under this plan, we incurred restructuring costs of approximately $ 3.4 million and $ 7.6 million, respectively, in fiscal 2025 and 2024. Under this plan, approximately $ 11.0 million of total costs have been incurred through January 3, 2026. The Q3 2024 Plan is expected to be largely complete by the end of the first quarter of fiscal year 2026.
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 no restructuring costs during fiscal 2025, and 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 January 3, 2026. All actions planned under the Q3 2023 plan have been implemented.
Other restructuring activity in the periods presented consisted of expense adjustments on previous plans. Costs and adjustments on restructuring plans are recorded to Restructuring and other 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.
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The following table displays the activity related to our restructuring plans:
(In thousands)
Severance & Related
Lease Termination & Fixed Assets
Other (1)
Total
Accrued Restructuring at December 31, 2022
$ 400 $ 5,892 $ 640 $ 6,932
Restructuring
1,848 56 4 1,908
Costs paid or otherwise settled
( 758 ) ( 1,440 ) ( 24 ) ( 2,222 )
Accrued Restructuring at December 30, 2023
$ 1,490 $ 4,508 $ 620 $ 6,618
Restructuring
12,896 15 ( 620 ) 12,291
Costs paid or otherwise settled
( 12,481 ) ( 1,559 ) — ( 14,040 )
Accrued Restructuring at December 28, 2024
$ 1,905 $ 2,964 $ — $ 4,869
Restructuring
3,438 50 — 3,488
Costs paid or otherwise settled
( 4,387 ) ( 3,014 ) — ( 7,401 )
Accrued Restructuring at January 3, 2026
$ 956 $ — $ — $ 956
( 1 )
Includes termination fees on the cancellation of certain contracts
Note 9 - Leases
We have operating leases for corporate offices, sales offices, research and development facilities, storage facilities, and a data center, all of which are leased under operating leases that expire at various times through 2035. Our leases have remaining lease terms of less than 1 year to 10 years, some of which include options to extend for up to 5 years, and some of which include options to terminate within 1 year. The weighted-average remaining lease term was 6.4 years and the weighted-average discount rate was 4.9 % as of January 3, 2026. We recorded fixed operating lease expense of $ 8.1 million, $ 8.5 million, and $ 7.8 million, respectively, for fiscal 2025 , 2024, and 2023.
The following table presents the lease balance classifications within the Consolidated Balance Sheets and summarizes their activity during fiscal 2025 :
Operating lease right-of-use assets
(In thousands)
Balance as of December 28, 2024
$ 13,870
Right-of-use assets obtained for new or renewed lease contracts during the period
32,548
Amortization of right-of-use assets during the period
( 6,834 )
Adjustments for present value and foreign currency effects
( 125 )
Balance as of January 3, 2026
$ 39,459
Operating lease liabilities
(In thousands)
Balance as of December 28, 2024
$ 15,251
Lease liabilities accrued for new or renewed lease contracts during the period
32,548
Lease liability for renewed lease on facility restructured prior to adoption of ASC 842
1,547
Accretion of lease liabilities
1,250
Operating cash used for payments on lease liabilities
( 8,330 )
Adjustments for present value and foreign currency effects
( 159 )
Balance as of January 3, 2026
42,107
Less: Current portion of operating lease liabilities (included in Accrued liabilities)
( 5,980 )
Long-term operating lease liabilities, net of current portion
$ 36,127
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Maturities of operating lease liabilities as of January 3, 2026 are as follows:
Fiscal year
(In thousands)
2026
$ 7,798
2027
8,570
2028
7,821
2029
5,424
2030
5,457
Thereafter
14,718
Total lease payments
49,788
Less: amount representing interest
( 7,681 )
Total lease liabilities
$ 42,107
Note 10 - Stock-Based Compensation Plans
Employee and Director Restricted Stock and ESPP Plans
As of January 3, 2026, we have three active equity incentive plans, including the "2023 Equity 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. We also have the “2025 Inducement Equity Plan”, under which shares will be available for grants to new hire employees. Restricted stock unit ("RSU"), and restricted stock award ("RSA") grants are part of our equity compensation practices for employees who receive equity grants. RSUs and RSAs generally vest quarterly over a four -year period beginning on the grant date.
We also maintain the 2012 Employee Stock Purchase Plan ( "2012 ESPP"), pursuant to which eligible employees may contribute through payroll deductions up to 10 % of base compensation, subject to certain income limits, to purchase shares of our common stock. The purchase price of the shares is the lower of 85 % of the fair market value of the stock at the beginning of each six -month offering period or 85 % of the fair market value at the end of such period. We have treated the 2012 ESPP as a compensatory plan. At January 3, 2026 , a total of 0.7 million shares of our common stock were available for future purchases under the 2012 ESPP.
A t January 3, 2026, a total of 4.9 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. At the same date, 1.3 million shares were available for issuance under the 2025 Inducement Equity Plan, which is a standalone, non‑shareholder‑approved plan that may be used only for inducement awards to new hires. The 2023 Equity Incentive Plan, 2011 Non‑Employee Director Equity Incentive Plan, and the 2025 Inducement Equity Plan do not have any fungible share‑counting provisions. Shares subject to performance‑based restricted stock units that are not delivered due to failure to meet the maximum payout threshold generally become available for re‑issuance under the applicable equity incentive plans.
Stock-Based Compensation Expense
Total stock-based compensation expense included in our Consolidated Statements of Operations is presented in the following table:
Year Ended
January 3,
December 28,
December 30,
(In thousands)
2026
2024
2023
Cost of revenue
$ 5,363 $ 2,731 $ 4,506
Research and development
49,873 29,033 27,782
Selling, general, and administrative
60,377 21,221 37,909
Total stock-based compensation
$ 115,613 $ 52,985 $ 70,197
The income tax benefit related to total stock-based compensation expense was $ 8.5 million, $ 6.3 million, and $ 7.6 million, respectively, for fiscal 2025, 2024, and 2023, which is reflected in Income tax expense (benefit) in the Consolidated Statements of Operations. There was no income tax benefit related to awards vested during 2025 due to shortfalls ( actual tax deductions were lower than the U.S. GAAP compensation cost). The income tax benefit related to awards vested or exercised during fiscal 2024 and 2023, respectively, was $ 1.7 million and $ 10.4 million. These amounts do not include the indirect effects of stock-based compensation, which primarily relate to the R&D tax credit.
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Employee Stock Purchase Plan
The fair values of the shares expected to be issued under the employee stock purchase plan were estimated using the Black-Scholes valuation model and the assumptions noted in the following table. The expected volatility of ESPP shares is based on the daily historical volatility of our stock price, measured over the ESPP purchase period. The risk-free interest rate is based on the implied yield on a U.S. Treasury zero -coupon issue with a remaining term closest to the expected term of the offering period. Dividend yield has no valuation impact, as we have not paid any cash dividends since inception and do not intend to pay any cash dividends in the foreseeable future.
The following table summarizes the assumptions used in the valuation of ESPP compensation for the periods presented:
Year Ended
January 3,
December 28,
December 30,
2026
2024
2023
Employee Stock Purchase Plan
Weighted average expected volatility
41.6 %
52.6 %
48.2 %
Weighted average risk-free interest rate
3.95 %
4.88 %
5.37 %
Expected term (in months)
6
6
6
The weighted average fair values for the ESPP, calculated using the Black-Scholes option pricing model with the noted assumptions for the ESPP, were $ 18.30 , $ 15.50 , and $ 24.38 for fiscal years 2025 , 2024 , and 2023 , respectively.
Compensation expense for the ESPP is recognized using the straight-line method. We recorde d stock-based compensation expense related to the ESPP of approximately $ 2.3 million, $ 1.8 million, and $ 2.2 million in fiscal 2025 , 2024 , and 2023 , respectively.
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 January 3, 2026:
(Shares in thousands)
Shares
Weighted average grant date fair value
Balance, December 28, 2024
2,692 $ 63.78
Granted
1,841 51.54
Vested
( 982 ) 64.55
Forfeited or expired
( 296 ) 62.92
Balance, January 3, 2026
3,255 $ 56.71
At January 3, 2026, there was $ 162.9 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 2025 , 2024 , and 2023 , we recorde d stock-based compensation expense related to time-based RSUs and RSAs of approximately $ 70.2 million, $ 51.8 million, and $ 41.5 million, respectively.
Market-Based and Performance-Based Awards
In 2023 through 2025 , we granted awards of RSUs with either a market condition or a performance condition to certain executives.
Market-Based and Performance-Based Awards — Grants
In fiscal 2025, 2024, and 2023, 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 the Russell 3000 index, which condition is measured for the grants 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 . 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 fiscal 2025, 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 the Gartner Non-Memory Semiconductor Revenue Growth benchmark, and the number of shares that vest will scale based on achievement of year-over-year revenue growth compared to certain targets, with maximum vesting up to 250 %.
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During fiscal 2025, the Compensation Committee of the Board of Directors approved a modification to the performance condition periods and vesting criteria associated with these revenue growth performance awards and similar awards that were granted to certain executives in fiscal 2024 to align the awards with the Company's growth strategy. The modification extended the beginning and end dates of each measurement period by one year, such that the performance condition will be measured annually after each fiscal year-end for one - fourth of the grants with the first measurement period beginning in fiscal 2026 and the last measurement period ending at the end of fiscal 2029. Additionally, the awards were modified such that the measurement and vesting for each tranche will occur on the later of the filing date of the Company’s Annual Report on Form 10 -K for the applicable measurement period, or the date the Gartner Non-Memory Semiconductor Revenue Growth benchmark is published. Vesting of these awards occurs approximately 4 months after the end of each measurement period. All other terms of the modified awards including the size of the awards and performance criteria remain the same. This modification had no material impact on stock-based compensation expense upon adoption.
Also during fiscal 2025, we granted additional awards of RSUs with a performance condition to the majority of our employee population. Under the terms of these grants, the RSUs with a performance condition will vest if the Company achieves year-over-year revenue growth targets, 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 200 % depending on the employee's level. The performance condition will be measured annually after each fiscal year-end for one -half of the grants with the first measurement period beginning in fiscal 2026 and the last measurement period ending at the end of fiscal 2027. Vesting of these awards occurs approximately 4 months after the end of each measurement period.
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
2025, the market condition for awards granted to certain executives in previous years exceeded the
55th percentile of their TSR condition, and these awards vested at
134 %. Also during
2025, the
third tranche of awards granted in fiscal
2021 and
2022 with a year-over-year revenue growth performance condition vested at the
116.3 % level of achievement, based on the Company's year-over-year revenue growth performance as of
December 30, 2023. For the
fourth tranche of these awards, the Company did
not meet the year-over-year revenue growth performance criteria as of
December 28, 2024.
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
250 % or
200 %, as applicable for the respective executive. One award achieved the
54th percentile of its TSR condition and vested at approximately
97 %, while
one award did
not meet its minimum TSR threshold for vesting. Also during
2024, the
second tranche of awards granted in fiscal
2021 and
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. For the
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
75th percentile of their TSR condition, and applicable tranches of these awards vested at
250 % or
200 % for the respective executives. Also during
2023, the
first tranche of awards granted in fiscal
2021 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
January 1, 2022, and the
13 -month vesting period had been met.
Market-Based and Performance-Based Awards — Compensation Expense
For our awards with a market condition or a performance condition, we incurred stock compensation expense in fiscal 2025 of approximately $ 43.1 million. In fiscal 2024, 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 2023, we incurred stock-based compensation expense of approximately $ 26.4 million. These amounts are recorded as components of total stock-based compensation. At January 3, 2026, there was $ 66.2 million of unrecognized compensation expense related to unvested RSUs with a market condition or a performance condition. Awards with a market condition were valued using Monte Carlo simulation models.
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The following table summarizes the assumptions used at the grant date in the valuation of RSUs with a market condition:
Year Ended
January 3,
December 28,
December 30,
2026
2024
2023
Executive RSUs with a market condition
Weighted average expected volatility
52.75 % to 53.01 %
51.04 % to 53.96 %
50.97 % to 54.31 %
Weighted average risk-free interest rate
3.95 % to 4.25 %
3.39 % to 4.53 %
4.28 % to 4.59 %
Expected term (years)
3
3 to 6
3
The valuation of RSUs with a performance condition is based on the closing market price on the date of grant.
The following table summarizes the activity for our awards with a market condition or performance condition:
(Shares in thousands)
Shares
Weighted average grant date fair value
Balance, December 28, 2024
1,593 $ 62.24
Granted
833 60.32
Effect of vesting multiplier
19
Vested
( 101 ) 75.87
Canceled
( 229 ) 72.66
Balance, January 3, 2026
2,115 $ 59.69
Note 11 - Common Stock Repurchase Program
On December 9, 2024, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to $ 100 million of outstanding common stock could be repurchased from time to time (the "2025 Repurchase Program"). The duration of the 2025 Repurchase Program was through December 31, 2025. During the fourth quarter of fiscal 2025, we repurchased 217,506 shares for $ 14.1 million, or an average price paid per share of $ 65.03 . All repurchases were open market transactions funded from available working capital. All shares repurchased pursuant to the 2025 Repurchase Program were retired upon settlement. We repurchased a total of 1,763,053 shares for $ 100.0 million, or an average price paid per share of $ 56.72 , during fiscal year 2025.
On December 5, 2025, 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 "2026 Repurchase Program"). The 2026 Repurchase Program has no termination date and may be suspended or discontinued at any time. No shares were repurchased under the 2026 Repurchase Program during the fourth quarter of fiscal 2025.
Note 12 - Income Taxes
We are subject to federal and state income tax as well as income tax in the various foreign jurisdictions in which we operate.
The domestic and foreign components of Income before income taxes were as follows:
Year Ended
January 3,
December 28,
December 30,
(In thousands)
2026
2024
2023
Domestic
$ ( 1,792 ) $ 2,595 $ 55,069
Foreign
15,169 33,634 159,787
Income before taxes
$ 13,377 $ 36,229 $ 214,856
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The components of Income tax expense (benefit) are as follows:
Year Ended
January 3,
December 28,
December 30,
(In thousands)
2026
2024
2023
Current:
Federal
$ 2,317 $ ( 15,866 ) $ 10,331
State
( 10 ) 460 1,059
Foreign
2,799 2,573 3,019
5,106 ( 12,833 ) 14,409
Deferred:
Federal
4,912 ( 7,530 ) ( 56,323 )
State
— — —
Foreign
275 ( 4,539 ) ( 2,291 )
5,187 ( 12,069 ) ( 58,614 )
Income tax expense (benefit)
$ 10,293 $ ( 24,902 ) $ ( 44,205 )
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 around the effective rate reconciliation. The guidance in this update is effective for fiscal years beginning after December 15, 2024, and the Company adopted it prospectively for the year ended January 3, 2026. Income tax expense (benefit) for the year ended January 3, 2026 differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax income as a result of the following differences:
Year Ended
January 3, 2026
(In thousands)
Amount
%
U.S Federal Statutory Tax Rate
$ 2,809 21.0
State Income Taxes, Net of Federal Benefit*
( 4 ) —
Foreign Tax Effects
Bermuda
Statutory tax rate difference between Bermuda and United States
( 360 ) ( 2.7 )
Taiwan
Withholding tax
1,239 9.3
Canada
Research and Development tax credits
( 226 ) ( 1.7 )
Stock-based payment awards
683 5.1
Other
( 142 ) ( 1.1 )
Other
570 4.1
Effects of Changes in Tax Law
— —
Nontaxable or Nondeductible Items
Stock-based compensation
15,271 114.2
Other
132 1.0
Effects of Cross Border Tax Effects
Global Intangible low-taxed income
( 196 ) ( 1.5 )
Foreign-Derived Intangible Income
( 2,243 ) ( 16.8 )
Subpart F Income
1,027 7.7
Tax Credits
R&D Credits
( 2,400 ) ( 17.9 )
Foreign Tax Credits
( 7,180 ) ( 53.7 )
Change in Valuation Allowance
627 4.7
Changes in Unrecognized Tax Benefits
( 6 ) —
Other
692 5.2
Effective Tax Rate
$ 10,293 76.9
*State taxes in Oregon made up the majority (greater than 50 percent) of the tax effect in this category.
The increase in provision for income taxes in fiscal year 2025 compared to fiscal year 2024 was primarily due to nondeductible stock compensation and the recognition of uncertain tax benefits in the previous year.
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As previously disclosed for the years ended December 28, 2024 and December 30, 2023, prior to the adoption of ASU 2023 - 09, income tax expense (benefit) differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax income as a result of the following differences:
Year Ended
December 28,
December 30,
2024
2023
%
%
Statutory federal rate
21
21
Adjustments for tax effects of:
State taxes, net
(8)
(1)
Federal tax credits
(16)
(4)
Stock-based compensation
9
(2)
Foreign rate differential
(25)
(15)
U.S. tax on foreign operations
18
9
Valuation allowance
10
(29)
Change in uncertain tax benefit accrual
(75)
—
Other
(3)
—
Effective income tax rate
(69)
(21)
The decrease in benefit 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 fiscal year 2023 and the recognition of uncertain tax benefits in fiscal year 2024.
On July 4, 2025, the United States enacted tax legislation (the “Tax Act”). The Tax Act includes significant provisions, such as the permanent extension of certain expiring provisions of The 2017 Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates with certain provisions effective in 2025. The impacts of provisions effective in 2025 have been incorporated into the income tax provision in fiscal 2025 and did not have a material impact on our effective tax rate.
We updated our evaluation of the valuation allowance position in the United States through January 3, 2026 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. 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)
January 3, 2026 December 28, 2024
Deferred tax assets:
Net operating loss carry forwards
$ 12,291 $ 13,332
Tax credit carry forwards
104,199 100,820
Accrued liabilities and reserves
25,136 26,638
Stock-based and deferred compensation
3,107 2,238
Lease liability
8,106 3,831
Other
3,467 5,483
Total deferred tax assets
156,306 152,342
Less: valuation allowance
( 86,268 ) ( 82,684 )
Net deferred tax assets
70,038 69,658
Deferred tax liabilities:
Unremitted earnings
1,568 720
Right of use asset
7,596 3,486
Other
1,469 826
Total deferred tax liabilities
10,633 5,032
Net deferred taxes
$ 59,405 $ 64,626
Reported as:
Deferred tax assets
$ 62,675 $ 66,980
Deferred tax liabilities (included in Other long-term liabilities)
( 3,270 ) ( 2,354 )
Net deferred taxes
$ 59,405 $ 64,626
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The following table displays the activity related to changes in our valuation allowance for deferred tax assets:
Fiscal Years Ended
Balance at beginning
Charged (Credit) to costs and
Charged (credit) to other
Balance at end of
(In thousands)
of period expenses accounts period
January 3, 2026
$ 82,684 $ 3,584 $ — $ 86,268
December 28, 2024
$ 79,100 $ 3,584 $ — $ 82,684
December 30, 2023
$ 140,533 $ ( 61,433 ) $ — $ 79,100
As of January 3, 2026, we had U.S. federal net operating loss ("NOL") carryforwards (pretax) of approximately $ 5.7 million which will expire between 2027 and 2031. We had state NOL carryforwards (pretax) of approximately $ 125.5 million that substantially all expire at various dates from 2026 through 2044. We also had federal credit carryforwards of $ 47.4 million that expire at various dates from 2036 through 2045, and $ 88.2 million state credit carryforwards of which substantially all do not expire.
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 2025. 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.
At January 3, 2026 and December 28, 2024, our unrecognized tax benefits associated with uncertain tax positions were $ 30.1 million, and $ 29.3 million, respectively, of which $ 27.0 million and $ 26.3 million, respectively, if recognized, would affect the effective tax rate, subject to valuation allowance. As of January 3, 2026 and December 28, 2024, interest and penalties associated with unrecognized tax benefits were $ 0.3 million and $ 0.4 million, respectively, which are not reflected in the table below. We accrue interest and penalties related to uncertain tax positions in Income tax expense.
The following table summarizes the changes to unrecognized tax benefits for the fiscal years presented:
(In thousands)
Balance at January 1, 2023
$ 58,889
Additions based on tax positions related to the current year
2,247
Additions based on tax positions of prior years
1,128
Reductions for tax positions of prior years
( 156 )
Reduction as a result of lapse of applicable statute of limitations
( 696 )
Balance at December 30, 2023
61,412
Additions based on tax positions related to the current year
3,362
Additions based on tax positions of prior years
552
Reductions for tax positions of prior years
—
Reduction as a result of lapse of applicable statute of limitations
( 36,028 )
Balance at December 28, 2024
29,298
Additions based on tax positions related to the current year
1,083
Additions based on tax positions of prior years
113
Reductions for tax positions of prior years
—
Reduction as a result of lapse of applicable statute of limitations
( 440 )
Balance at January 3, 2026
$ 30,054
Our liability for uncertain tax positions (including penalties and interest) was $ 2.1 million and $ 2.5 million at January 3, 2026 and December 28, 2024 , respectively, and is recorded as a component of Other long-term liabilities on our Consolidated Balance Sheets.
The years that remain subject to examination are 2022 for federal income taxes, 2021 for state income taxes, and 2020 for foreign income taxes, including years ending thereafter. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses or tax credits were generated and carried forward, and make adjustments up to the amount of the net operating losses or credit carryforward amount.
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Cash Taxes Paid
The Company adopted ASU
2023 -
09, Income Taxes (Topic
740 ) prospectively for the year ended
January 3, 2026 and included the following table as a result of our adoption, which presents Income taxes paid, net of refunds, as follows:
Year Ended
January 3,
December 28,
December 30,
(In thousands)
2026
2024
2023
Federal
$ 3,006 $ 2,113 $ 9,780
State:
Minnesota
— 574 —
Oregon
459 730 —
Other
( 26 ) 113 1,299
Total State
433 1,417 1,299
Foreign:
Canada
( 1,035 ) — —
China
703 1,432 —
Netherlands
— 439 —
Singapore
1,218 1,666 1,624
Taiwan
1,996 — 1,372
Other
1,447 1,520 1,679
Total Foreign
4,329 5,057 4,675
Income taxes paid, net of refunds
$ 7,768 $ 8,587 $ 15,754
Note 13 - Employee Benefit Plans
Qualified Investment Plan
In 1990, we adopted a 401 (k) tax-deferred savings plan, which provides all employees in the United States who meet certain eligibility requirements with an opportunity to accumulate funds for retirement. Participants may contribute up to the amount allowable as a deduction for federal income tax purposes. The plan does not allow investments in the Company's common stock. The plan allows for the Company to make discretionary matching contributions in cash. We recorded matching contributions of approximately $ 2.7 million, $ 2.8 million, and $ 3.1 million in fiscal years 2025 , 2024 , and 2023 , respectively.
Corporate Incentive Plan
For fiscal 2025 , 2024 , and 2023 , 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. 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 CIP. Under the CIP, individual cash or equity 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 $ 16.6 million, $ 1.6 million, and $ 15.0 million of expense under the CIP in fiscal 2025 , 2024 , and 2023 , respectively.
Under our Corporate Incentive Plan, incentive payments
may be made in cash or in shares of our Common Stock, or a combination of both, as determined at the discretion of the Compensation Committee of our Board of Directors. To the extent incentive payments are settled in equity under the
2023 Equity Incentive Plan, the number of RSUs to be issued is determined by dividing the eligible employee’s incentive payment value by the
30 -calendar day average closing price of our Common Stock during the period ending the day before the date of settlement. Under this methodology, the value of RSUs issued on the settlement date could differ from the incentive payment value accrued.
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Note 14 - Contingencies
Legal Proceedings
From time to time, we are exposed to certain additional asserted and unasserted potential claims. We review the status of each significant matter and assess its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and a range of possible losses can be estimated, we then accrue a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based only on the best information available at the time. 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 January 3, 2026, 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:
Year Ended
January 3,
December 28,
December 30,
(In thousands)
2026
2024
2023
Revenue
$ 523,262 $ 509,401 $ 737,154
Cost of revenue
$ 166,319 $ 169,001 $ 222,484
Gross margin
$ 356,943 $ 340,400 $ 514,670
Total operating expenses
$ 345,711 $ 305,943 $ 302,400
Net income
$ 3,084 $ 61,131 $ 259,061
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Lattice Semiconductor Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Lattice Semiconductor Corporation (the Company) as of January 3, 2026 and December 28, 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended January 3, 2026, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 3, 2026 and December 28, 2024, and the results of its operations and its cash flows for each of the three years in the period ended January 3, 2026, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 3, 2026, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 13, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Inventory Valuation
Description of the Matter The Company's net inventory totaled $89.2 million as of January 3, 2026. 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 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 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
We have served as the Company's auditor since 2020.
San Jose, California
February 13, 2026
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Lattice Semiconductor Corporation
Opinion on Internal Control Over Financial Reporting
We have audited Lattice Semiconductor Corporation’s internal control over financial reporting as of January 3, 2026, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Lattice Semiconductor Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 3, 2026, 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 sheets of the Company as of January 3, 2026 and December 28, 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended January 3, 2026, and the related notes and our report dated February 13, 2026 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 Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
San Jose, California
February 13, 2026
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Item 9. Changes in and Disagreements with Accountants On Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
In connection with the filing of this Annual Report on Form 10-K, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of January 3, 2026. These disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that we accumulate and communicate correct information to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls are effective as of January 3, 2026.
Management's Report on Internal Control Over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) or 15d-15(f) under the Securities Exchange Act of 1934. The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding reliability of financial reporting and the preparation and fair presentation of published financial statements for external purposes in accordance with generally accepted accounting principles.
Our internal control over financial reporting includes those policies and procedures that:
(i)
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
(ii)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
(iii)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
We do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met, and may not prevent or detect misstatements. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's internal control over financial reporting as of January 3, 2026. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013) . Based on this assessment, management concluded that, as of January 3, 2026, the Company's internal control over financial reporting was effective.
Ernst & Young LLP, our independent registered public accounting firm, has audited the Company's internal control over financial reporting and has issued its opinion on the effectiveness of the Company's internal control over financial reporting, which appears on page 68 in this Annual Report on Form 10-K.
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Changes in Internal Control over Financial Reporting
There were no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) that occurred during the fourth quarter of fiscal 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
Rule 10b5 - 1 Trading Plans
On November 19, 2025 , Tonya Stevens , Corporate Vice President and Chief Accounting Officer , adopted a Rule 10b5 - 1 trading arrangement intended to satisfy the affirmative defense condition of Rule 10b5 - 1 (c), pursuant to which an estimated aggregate of 19,095 shares of our Common Stock may be sold. The aggregate number of shares sold may differ based on tax withholdings for vesting stock awards, actual market achievement for performance RSUs, and actual number of future shares purchased under the Employee Stock Purchase Plan. The duration of the trading arrangement is until December 31, 2026 , or earlier if all transactions under the trading arrangement are completed.
On December 3, 2025, Esam Elashmawi , Senior Vice President and Chief Strategy and Marketing Officer , adopted a Rule 10b5 - 1 trading arrangement intended to satisfy the affirmative defense condition of Rule 10b5 - 1 (c), pursuant to which an estimated aggregate of 38,000 shares of our Common Stock may be sold. The aggregate number of shares sold may differ based on tax withholdings for vesting stock awards, actual market achievement for performance RSUs, and actual number of future shares purchased under the Employee Stock Purchase Plan. The duration of the trading arrangement is until November 20, 2026 , or earlier if all transactions under the trading arrangement are completed.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Certain information required by Part III is incorporated by reference from our definitive proxy statement (the “Proxy Statement”) for the 2026 Annual Meeting of Stockholders, pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, which we will file not later than 120 days after the end of the fiscal year covered by this report. With the exception of the information expressly incorporated by reference from the Proxy Statement, the Proxy Statement is not to be deemed filed as a part of this report.
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2026 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after January 3, 2026.
Information about our Corporate Governance Policies and written committee charters for our Audit Committee, Compensation Committee, and Nominating and Governance Committee are available free of charge on the Company's website at www.latticesemi.com and are available in print to any shareholder upon request.
We have adopted a Code of Conduct that applies to all of our directors, employees, including our principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions, consultants, contractors, and agents. The Code of Conduct is posted on our website at www.latticesemi.com . In fiscal 2022, we rescinded our Director Code of Ethics and expanded our Code of Conduct to cover directors, consultants, and agents. In addition, we revised our Code of Conduct to provide general guidance on how to handle ethical business decisions, and to expand and/or clarify provisions in the Code of Conduct related to antitrust, conflicts of interest, improper conduct and activities, and public disclosures. We also revised our Corporate Governance Policies to incorporate any items previously addressed in the Director Code of Conduct that the revised Code of Conduct did not address. Amendments to the Code of Conduct or any grant of a waiver from a provision of the Code of Conduct requiring disclosure under applicable SEC rules, if any, will be disclosed on our website at www.latticesemi.com .
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Insider Trading Policy
We have adopted an insider trading policy governing the purchase, sale, and other dispositions of our securities by our directors, officers, employees and other individuals associated with us that we believe is reasonably designed to promote compliance with insider trading laws, rules and regulations, and any applicable listing standards. A copy of our insider trading policy is filed as Exhibit 19.1 to this Annual Report on Form 10 -K.
The Company complies with insider trading laws, rules and regulations and any applicable listing standards in any transactions involving its own securities.
Item 11. Executive Compensation
The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2026 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after January 3, 2026.
Clawback Policy
We have adopted a written compensation recovery policy in accordance with applicable Nasdaq rules, a copy of which is filed as exhibit 97.1 to this Annual Report on Form 10 -K. The policy provides that the Company will seek to recover any incentive-based compensation erroneously awarded to any current or former executive officer due to the material noncompliance with any financial reporting requirement under the securities laws during the three completed fiscal years immediately preceding the date the Company determines that an accounting restatement is required.
Disclosure Policies and Practices Related to the Grant of Equity Awards Close in Time to the Release of Material Nonpublic Information
We do not grant stock options or similar awards as part of our standard equity compensation programs. Certain of the performance-based restricted stock units awarded to Mr. Tamer have a stock price appreciation component, and were not granted within a period of four business days before or one business day after the filing of a Form 10 -Q, Form 10 -K, or Form 8 -K that disclosed material non-public information, other than the Form 8 -K related to the appointment of Mr. Tamer as our CEO. No other named executive officer was awarded options or similar awards during the fiscal year ended January 3, 2026. We do not schedule equity award grants in anticipation of the release of material non-public information, nor does we time the release of material non-public information based on equity grant dates.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2026 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after January 3, 2026.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2026 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after January 3, 2026.
Item 14. Principal Accountant Fees and Services
The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2026 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after January 3, 2026.
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PART IV
Item 15. Exhibits
(a) List of Documents Filed as Part of this Report
(1) All financial statements
The following financial statements are filed as part of this report under Item 8.
Consolidated Financial Statements:
Page
Consolidated Statements of Operations
42
Consolidated Statements of Comprehensive Income
43
Consolidated Balance Sheets
44
Consolidated Statements of Cash Flows
45
Consolidated Statements of Stockholders' Equity
46
Notes to Consolidated Financial Statements
47
All other schedules have been omitted because the required information is included in the Consolidated Financial Statements or the notes thereto, or is not applicable or required.
(2) Exhibits
Exhibit Number
Description
3.1
The Company’s Restated Certificate of Incorporation, as amended on June 4, 2009 (Incorporated by reference to Exhibit 3.1 filed with the Company's Current Report on Form 8-K filed June 4, 2009).
3.2
The Company’s Bylaws, as amended as of December 14, 2023 (Incorporated by reference to Exhibit 3.1 filed with the Company's Current Report on Form 8-K filed December 15, 2023).
4.1
Description of Securities (Incorporated by reference to Exhibit 4.1 filed with the Company's Annual Report on Form 10-K filed on February 16, 2024).
10.1*
Form of Indemnification Agreement executed by each director and executive officer of the Company and certain other officers and employees of the Company and its subsidiaries (Incorporated by reference to Exhibit 10.41 filed with the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2004).
10.2*
Form of Notice of Grant of Restricted Stock Units to Executive Officer (Incorporated by reference to Exhibit 99.1 filed with the Company’s Current Report on Form 8-K filed on February 8, 2007).
10.3*
Lattice Semiconductor Corporation 2012 Employee Stock Purchase Plan (Incorporated by reference to Annex 1 to the Company's Definitive Proxy Statement on Schedule 14A for the 2012 Annual Meeting of Stockholders filed on April 12, 2012).
10.4*
Lattice Semiconductor Corporation 2011 Non-Employee Director Equity Incentive Plan (Incorporated by reference to Exhibit 99.2 filed with the Company’s Registration Statement on Form S-8 filed June 25, 2019).
10.5*
Form of 2011 Non-Employee Director Equity Incentive Plan Outside Director Option Agreement (Incorporated by reference to Exhibit 10.5 filed with the Company's Annual Report on Form 10-K filed on February 17, 2023).
10.6*
Form of 2011 Non-Employee Director Equity Incentive Plan Restricted Stock Unit Agreement (Incorporated by reference to Exhibit 10.6 filed with the Company's Annual Report on Form 10-K filed on February 17, 2023).
*
Management contract or compensatory plan or arrangement required to be filed as an Exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) thereof.
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Exhibit Number
Description
10.7*
Lattice Semiconductor Corporation 2023 Equity Incentive Plan and related form agreements (Incorporated by reference to Exhibit 10.2 filed with the Registrant’ s Current Report on Form 8-K, filed with the Commission on May 8, 2023).
10.8*
Lattice Semiconductor Corporation 2023 Equity Incentive Plan Form of Restricted Stock Award Agreement ( Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on November 4, 2024).
10.9*
Lattice Semiconductor Corporation 2023 Equity Incentive Plan Form of Restricted Stock Unit Award Agreement (Performance-Based) ( Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q filed on November 4, 2024).
10.10
Lattice Semiconductor Corporation Form of Indemnification Agreement (Incorporated by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K, filed with the Commission on May 8, 2023).
10.11
Amended and Restated Credit Agreement, dated as of September 1, 2022, by and among Lattice Semiconductor Corporation, as borrower, the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent (Incorporated by reference to Exhibit 10.1 filed with the Company's Current Report on Form 8-K filed September 2, 2022).
10.12*
Lattice Semiconductor Corporation 2023 Cash Incentive Plan (Incorporated by reference to Exhibit 10.12 filed with the Company's Annual Report on Form 10-K filed on February 16, 2024).
10.13*
Lattice Semiconductor Corporation 2024 Corporate Incentive Plan (Incorporated by reference to Exhibit 10.14 filed with the Company's Annual Report on Form 10-K filed on February 14, 2025).
10.14*
Lattice Semiconductor Corporation 2025 Corporate Incentive Plan.
10.15*
Form of Amended Employment Agreement (Incorporated by reference to Exhibit 10.24 of the Company’s Annual Report on Form 10-K filed on February 24, 2020).
10.16*
Offer Letter with Ford Tamer, dated September 14, 2024 (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on September 16, 2024).
10.17*
2025 Inducement Equity Incentive Plan and related form agreements (Incorporated by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K, filed with the Commission on January 10, 2025).
10.18*
Employment Agreement with Lorenzo Flores, entered into as of February 10, 2025 (Incorporated by reference to Exhibit 10.1 filed with the Registrant's Current Report on Form 8-K, filed with the Commission on February 10, 2025).
19.1
Lattice Semiconductor Corporation Insider Trading Policy. (Incorporated by reference to Exhibit 19.1 filed with the Company's Annual Report on Form 10-K filed on February 14, 2025).
21.1
Subsidiaries of the Registrant.
23.1
Consent of Independent Registered Public Accounting Firm (Ernst & Young LLP).
24.1
Power of Attorney (reference is made to the signature page hereto).
*
Management contract or compensatory plan or arrangement required to be filed as an Exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) thereof.
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Exhibit Number
Description
31.1
Certification of Chief Executive Officer pursuant to the Securities Exchange Act of 1934 Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Chief Financial Officer pursuant to the Securities Exchange Act of 1934 Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97.1
Lattice Semiconductor Corporation Compensation Recovery Policy (Incorporated by reference to Exhibit 97.1 filed with the Company’s Annual Report on Form 10-K filed on February 16, 2024).
101.INS
Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File - formatted in Inline XBRL and included in Exhibit 101
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
LATTICE SEMICONDUCTOR CORPORATION
(Registrant)
By:
/s/ Lorenzo A. Flores
Lorenzo A. Flores
Senior Vice President, Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
Date:
February 13, 2026
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ford Tamer and Lorenzo A. Flores, or either of them, his or her attorneys-in-fact, each with the power of substitution, for such person in any and all capacities, to sign any amendments to this report and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that either of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated and on the dates indicated:
Signature
Title
Date
/s/ Ford Tamer
February 13, 2026
Ford Tamer
President, Chief Executive Officer, and Director
(Principal Executive Officer)
/s/ Lorenzo A. Flores
February 13, 2026
Lorenzo A. Flores
Senior Vice President, Chief Financial Officer
(Principal Financial Officer)
/s/ Tonya Stevens
February 13, 2026
Tonya Stevens
Corporate Vice President Chief Accounting Officer
(Principal Accounting Officer)
/s/ Robin Abrams
February 13, 2026
Robin Abrams
Director
/s/ Doug Bettinger
February 13, 2026
Doug Bettinger
Director
/s/ Que Thanh Dallara
February 13, 2026
Que Thanh Dallara
Director
/s/ John Forsyth
February 13, 2026
John Forsyth
Director
/s/ Mark Jensen
February 13, 2026
Mark Jensen
Director
/s/ James Lederer
February 13, 2026
James Lederer
Director
/s/ Jeff Richardson
February 13, 2026
Jeff Richardson
Director
/s/ Elizabeth Schwarting
February 13, 2026
Elizabeth Schwarting
Director
75