of STATS and ChipPac in August 2004, Mr. Potter served as Acting Chief Financial Officer of ChipPac, Inc. Mr. Potter also held senior positions at Honeywell International, Inc. and started his career with KPMG Peat Marwick Thorne. Mr. Potter is a member of the Board of Directors for Canadian Solar Inc.

Byron W. Milstead joined the Company in May 2008 as Corporate Vice President and General Counsel. Prior to joining the Company, Mr. Milstead served as Senior Vice President and General Counsel of Credence Systems Corporation from December 2005 to May 2008. Mr. Milstead served as Vice President and General Counsel of Credence Systems Corporation from November 2000 until December 2005. Prior to joining Credence Systems Corporation, Mr. Milstead practiced law at the Salt Lake City office of Parsons Behle & Latimer and the Portland offices of both Bogle and Gates and Ater Wynne.

~~Christopher M. Fanning~~ joined the Company in 1997 and was promoted to Corporate Vice President and General Manager, Low Density Solutions & Mixed Signal Solutions in 2008. Previously, he managed Lattice's software, intellectual property and technical support businesses as Corporate Vice President, Enterprise Solutions. He also served as Vice President of Strategic Planning. Prior to joining the Company, Mr. Fanning was employed by The Boston Consulting Group.

Sean Riley joined the Company in September ~~2008.~~2008 and became Corporate Vice President and General Manager, Infrastructure Business Unit in December 2011. Prior to joining the Company, Mr. Riley was Vice President of Marketing for MathStar from April 2005 to May 2008, a programmable logic startup company. Mr. Riley joined MathStar from Intel Corporation, where he worked from June 1992 to April 2005 in various marketing, engineering and general management roles.

Available Information

We make available, free of charge through our Investor Relations ~~portion~~section of our website at www.latticesemi.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and amendments to those reports and statements as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the SEC. You may also obtain free copies of these materials by contacting our Investor Relations Department at 5555 N.E. Moore Court, Hillsboro, Oregon 97124-6421, telephone (503) 268-8000. Our SEC filings are also available at the SEC's website at www.sec.gov.

Item 1A. Risk Factors

The following risk factors and other information included in this Annual Report should be carefully considered before making an investment decision relating to our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. If any of the following risks occur, our business, financial condition, operating results and cash flows could be materially adversely affected.

~~Global economic conditions~~Currently, Fujitsu Semiconductor Limited ("Fujitsu") is our sole source supplier of wafers for our newest FPGA and ~~uncertainty, as well as the highly cyclical nature of the~~PLD products.

As a semiconductor ~~industry, could adversely affect our revenue, gross margin~~company, we operate in a dynamic environment marked by rapid product obsolescence. The programmable logic market is characterized by rapid technology and ~~expenses, collectability of accounts receivable and supplier relationships, and ability~~product evolution followed by a slow ramp process to ~~access capital markets.~~

Our revenue and gross margin can fluctuate significantly due to downturns in the general economy or the semiconductor industry. These downturns are often severe and prolonged and can result in significant reductions in the demand for PLD and FPGA products in markets in which we compete. Global economic weakness or cyclical downturns have previously resulted from periods of economic recession, reduced access to credit markets, weakening or strengthening of the U.S. dollar relative to other currencies, weak end-user demand, excess industry capacity, political instability, terrorist activity, military actions, or general reductions in inventory levels by customers, and may cause a decrease in revenue, gross margin, earnings or growth rates and problems with our ability to manage inventory levels and collect customer receivables. Such economic conditions had a negative impact on our results of operations during much of 2009. Although business conditions improved in 2010, that trend may not continue. In addition, our relationships with our employees and suppliers and ability to access capital markets could be adversely affected. In addition, customer financial difficulties have previously resulted, and could result in the future, in increases in bad debt write-offs and additions to reserves in our accounts receivable. Global economic and cyclical downturns also may lead to restructuring actions and associated expenses. Uncertainty about future economic conditions makes it difficult for us to forecast operating results and to make decisions about future investments. Any or all of these factors could adversely affect our financial condition and results of operations in the future.

~~A downturn in the communications equipment end market could cause a reduction in demand for our products and limit~~volume production. Our success depends on our ability to ~~maintain revenue levels~~develop and ~~operating results.~~introduce new products that compete effectively on the basis of price and performance and which address the markets we serve. We work closely with foundries in our development of products meeting these market demands, and rely on the foundry to timely produce high quality products.

~~The majority~~We have entered into agreements with Fujitsu pursuant to which Fujitsu manufactures most of our ~~revenue (approximately49%~~new products on its 130 nanometer, 90 nanometer and 65 nanometer technologies. Fujitsu is our sole source supplier of ~~fiscal~~ ~~2010~~ ~~revenue)~~wafers for our newest FPGA and PLD products. The success of certain of our next generation products is derived from customers participating in the communications equipment end market. In addition, during fiscal year 2009, the Company participated in the China 3G telecommunications network build-out by selling products used by two large telecommunication equipment providers (one of which was supported through distribution), which accounted for a combined 19~~% of~~ ~~our aggregate revenue. This is primarily due to strength in the wireless segment of the communications end market. For the~~ ~~2010~~ fiscal year, the same two large telecommunication equipment providers accounted for a combined 12% of revenue. In the past, a general weakening in demand for programmable logic products from customers in the communications end market has adversely affected our revenue. In addition, telecommunication equipment providers are building networks for 4G networks in which we compete. Any deterioration in the communication end market,dependent on our ability to ~~compete~~successfully partner with Fujitsu or new foundry partners. If for any reason Fujitsu does not provide their facilities and support for our process technology development, we may have difficulty timely and effectively developing new ~~solutions in future telecommunications solutions~~products until we can find a replacement supplier. Similarly, if for any reason Fujitsu discontinues manufacturing our new products (e.g. ~~4G networks) or reduction in capital spending~~stop production on certain process technologies) we will have to ~~support this end market could lead~~switch to a ~~reduction~~new foundry. We may be unsuccessful in ~~demand~~establishing new foundry relationships for our next generation products, or may incur substantial cost and manufacturing delays until we form a new relationship, each of which could adversely affect our ~~revenue~~operating results.

In order to secure new or additional wafer supply, we may from time to time consider various financial arrangements including equity investments, advance purchase payments, loans, or similar arrangements with independent wafer manufacturers in exchange for committed wafer capacity. To the extent that we pursue any such additional financing arrangements, additional debt or equity financing may be required. There can be no assurance that such additional financing will be available when needed or, if available, will be on favorable terms. Any future equity financing will decrease existing stockholders’ equity percentage ownership and ~~results~~may, depending on the price at which the equity is sold, result in dilution.

Additionally, a disruption of ~~operations.~~Fujitsu's foundry operations as a result of a fire, earthquake, act of terrorism, political or labor unrest, governmental uncertainty, war, disease or other natural disaster or catastrophic event, or any other reason, could disrupt our wafer supply and could adversely affect our operating results.

Our ~~customer~~future revenue is dependent on programmable logic solutions. Customer design-in activity, and thus, future revenue growth is dependent on market acceptance of our new silicon and software design tool products and the continued market acceptance of our current products. Future revenue is inherently uncertain and could impact our ability to manage production or our ability to forecast sales.

We face uncertainties relating to the potential impact of customer design-in activity because it is unknown whether any particular customer design-in will ultimately result in sales of significant volume. After a specific customer design-in is obtained, many factors can impact the timing and amount of sales that ~~are~~we ultimately ~~realized.~~realize. Changes in the competitive position of our technology, the customer's product competitiveness or product strategy, the financial position of the customer, and other factors can impact the timing and amount of sales ultimately realized from any specific customer design-in.

We are presently shipping our latest generation FPGA, PLD and Programmable Mixed Signal product families that are critical to our ability to grow our overall revenue. We also plan to continue upgrading our customer design tool products and increase our offerings of intellectual property cores. Our future revenue growth is dependent on customer design-in activity, market acceptance of our new silicon and software design tool products and the continued market acceptance of our current products. The success of these products is dependent on a variety of specific technical factors including:


•	~~successful product definition;~~


•	~~timely and efficient completion of product design;~~


•	~~timely and efficient implementation of wafer manufacturing and assembly processes;~~


•	~~product performance;~~


•	~~product cost;~~


•	~~the quality and reliability of the product; and~~


•	~~ease of use.~~

successful product definition;

timely and efficient completion of product design;

timely and efficient implementation of wafer manufacturing and assembly processes;

product performance;

product cost;

the quality and reliability of the product; and

ease of use.

If, due to these or other factors, our new silicon and software products do not achieve market acceptance, or our current products do not maintain market acceptance, ~~our ability~~we may not be able to manage production levels or accurately forecast the future revenue ~~our~~and operating results may be adversely affected.

We depend on distributors, primarily those that use the sell-through distribution model, to generate a majority of our sales and complete order fulfillment. The failure of our distributors to sell our products and otherwise perform as expected could materially reduce our future sales.

We depend on our distribution partners to sell our products to end customers, generate a majority of our sales, complete

order fulfillment and stock our products. Our distributors also help us provide technical support and other value-added services to end customers. Our sales could be adversely affected if our distribution partners do not continue to effectively sell our products and provide related services.

We expect that the majority of our revenue in fiscal 2012 will be reported resale by our sell-through distributors. Our primary sell-through distributors, Arrow Electronics, Inc. including Nu Horizons Electronics Corp., (a wholly owned subsidiary of Arrow Electronics, Inc. USA), Avnet, Inc. ("Avnet"), and Weikeng (International and Industrial) Co. LTD made up approximately 53%, 49% and 34% of total revenue for fiscal years 2011, 2010 and 2009, respectively. We depend on the timeliness and accuracy of these resale reports from our distributors; late or inaccurate resale reports could have a detrimental effect on our ability to properly recognize revenue and our ability to predict future sales.

In addition, our distribution channels recently have experienced consolidation due to merger and acquisition activity in that business sector. Consolidation may result in our distributors allocating fewer resources to the distribution and sale of our products, which could adversely affect our financial results.

On December 31, 2011 our global franchise agreement with Avnet terminated. Revenue from Avnet made up approximately 17% of our total revenue for both years ended December 31, 2011, and January 1, 2011. We intend to serve the Avnet end customers through a network that includes a global distributor, regional distributors, manufacturer's representatives, and our direct sales team. If our end customers experience disruption in the supply of our products, or if our distributors and representatives are unable to provide technical support and other value-added services at least at historical levels, we may lose future sales and our financial results could be adversely affected.

At times, our sales are concentrated in a small number of distributors, which are in various international locations and of various financial strengths. Financial difficulties, inability to access capital markets, or other reasons may affect our distributors' performance, which could materially harm our business and our operating results.

Our success depends on our ability to rapidly develop and introduce new products. Failure to do so would have a material adverse effect on our business and negatively impact our financial condition and results of operations.

The programmable logic market is characterized by rapid technology and product evolution on some of the most advanced technologies. Our success depends on our ability to develop and introduce new products which compete effectively on the basis of price and performance and which address the markets we serve. We continually design next generation products that enable us to offer our customers lower power, lower cost, and more innovative products to maintain our competitive position. These new products typically are more technologically complex than their predecessors, and thus have increased potential for delays in their introduction.

The success of new product introductions is dependent upon several factors, including timely completion and introduction of new product designs, achievement of acceptable prices for wafer, package, assemble and test costs, yields and market acceptance. Our development of new products and our customers’ decisions to design them into their systems can take as long as three years, depending upon the complexity of the device and the application. Accordingly, new product development requires a long-term forecast of market trends and customer needs, and the successful introduction of our products may be adversely affected by competing products or by technologies serving the markets addressed by our products. If we experience delays in the introduction of new products, our operating results could be adversely affected.

In addition, new product introductions frequently depend on our development and implementation of new process technologies, and our growth will depend in part upon the successful development and market acceptance of these process technologies. Our products require technically sophisticated sales and marketing personnel to market these products successfully to customers. We are developing new products with lower power consumption, with smaller feature sizes, the fabrication of which will be substantially more complex than our current products. If we are unable to design, develop, manufacture, market and sell new products successfully, our operating results will be harmed. Our new product development, process development or execution to design and bring to market products that offer lower power, lower cost with more innovation marketing and sales efforts may not be successful. Furthermore, our new products may not achieve market acceptance and price expectations for our new products may not be achieved which could significantly harm our business and may have an adverse effect on our financial condition or operating results.

We may be unable to assimilate and integrate the operations, personnel, technologies, products, and information systems of SiliconBlue Technologies Ltd., APAC IC Layout Consultants, Inc., or future acquisitions, which may harm our business, financial condition or operating results.

One element of our business strategy includes expansion through the acquisition of businesses, assets, products or

technologies that allow us to complement our existing product offerings, expand our market coverage, increase our skilled engineering workforce or enhance our technological capabilities.

On December 9, 2011, we acquired SiliconBlue Technologies Ltd., a Cayman Islands exempted company ("SiliconBlue") which put us in a unique position in the mobile consumer segment of the programmable logic market. The purchase price, totaling $63.2 million was paid in cash. In addition, the Company recorded Goodwill of $43.9 million in connection with the purchase of SiliconBlue.

The acquisition of SiliconBlue may result in revenue and gross margin fluctuations due to seasonality, increased operating expenses, inventory valuation volatility and a more competitive pricing environment.

On July 15, 2011, we completed the purchase of Rise Technology Development Limited ("Rise"), a Hong Kong company, and its subsidiary, APAC IC Layout Consultants, Inc. ("APAC IC"), a Manila, Philippines based company engaged in engineering layout and design services, for approximately $1.0 million, which includes all assets and liabilities of the entity. This acquisition of Rise and APAC IC is part of our effort to improve our research and development and operations activities, reduce costs and streamline our supply chain for improved predictability and flexibility. In addition, the Company recorded Goodwill of $0.9 million in connection with the purchase of Rise and APAC IC.

Acquisitions similar to SiliconBlue and APAC, or future acquisitions typically entail many risks and we may encounter difficulties in assimilating and integrating the operations, personnel, technologies, products and information systems of the acquired companies or businesses. We may experience delays in the timing and successful integration of an acquired company’s technologies and product development as a result of:

volume production;

unanticipated costs and expenditures;

changing relationships with customers;

suppliers and strategic partners; or,

contractual, intellectual property or employment issues.

In addition, key personnel of an acquired company may decide not to work for us. The acquisition of another company or its products and technologies may also require us to enter into a geographic or business market in which we have little or no prior experience. These challenges could disrupt our ongoing business, distract our management and employees, harm our reputation and increase our expenses. These challenges are magnified as the size of the acquisition increases.

Acquisitions typically require large one-time charges and can result in increased debt or contingent liabilities, adverse tax consequences, and the recording and later amortization of amounts related to certain purchased intangible assets, any of which items could negatively impact our results of operations. In addition, we have or may record goodwill in connection with an acquisition and incur goodwill impairment charges in the future. Any of these charges could cause the price of our common stock to decline.

Acquisitions or asset purchases made entirely or partially for cash may reduce our cash reserves. We may seek to obtain additional cash to fund an acquisition by selling equity or debt securities. Any issuance of equity or convertible debt securities may be dilutive to our existing stockholders.

We cannot assure you that we will be able to consummate any future acquisitions or that we will realize any anticipated benefits from any of our historic or future acquisitions. We may not be able to find suitable acquisition opportunities that are available at attractive valuations, if at all. Even if we do find suitable acquisition opportunities, we may not be able to consummate the acquisitions on commercially acceptable terms, and any decline in the price of our common stock may make it significantly more difficult and expensive to initiate or consummate additional acquisitions.

We are required under U.S. GAAP to test goodwill for possible impairment on an annual basis and at any other time that circumstances arise indicating the carrying value may not be recoverable. At December 31, 2011, we had $44.8 million of goodwill. We completed our annual test of goodwill impairment in the fourth quarter of 2011 and concluded that we did not have any impairment at that time. There is no assurance that future impairment tests will indicate that Goodwill will be deemed recoverable. The success of any acquisition, including Rise and APAC IC and SiliconBlue, requires the integration of products, technologies, personnel and administrative resources, and could result in departures of key personnel, loss of key customers, distributors or vendors, equity dilution or acquisition of unknown liabilities. Furthermore, our ability to predict seasonality, end customer demand, and our customers' end customer demand for SiliconBlue products is limited. As a result, an acquisition similar to SiliconBlue and APAC, or future acquisitions could disrupt our operations and may have an adverse effect on our

business, financial condition or operating results.

A downturn in the communications equipment end market could cause a reduction in demand for our products and limit our ability to maintain revenue levels and operating results.

Historically the largest percentage of our revenue (approximately44% of fiscal 2011 revenue) has been derived from customers participating in the communications equipment end market. In addition, during fiscal year 2009, the Company participated in the China 3G telecommunications network build-out by selling products used by two large telecommunication equipment providers, which accounted for a combined 19% of our aggregate revenue. This is primarily due to strength in the wireless portion of the communications end market. For the 2011 fiscal year, the same two large telecommunication equipment providers accounted for a combined 12% of revenue. In the past, a general weakening in demand for programmable logic products from customers in the communications end market has adversely affected our revenue. In addition, telecommunication equipment providers are building networks for 4G networks in which we compete. Any deterioration in the communication end market, our ability to compete in future telecommunications solutions (e.g. 4G networks) or our end customers' reduction in capital spending to support this end market could lead to a reduction in demand for our products which could adversely affect our revenue and results of operations.

The consumer end market is characterized by rapid product obsolescence and requires that we have the right products at the right time for our customers to fulfill demand for products in the consumer end market. If we are unable to forecast demand for our products, or we don't have products to ship at the right time, our financial condition and results may be adversely affected.

Our revenue from the consumer end market consists primarily of revenue from our products designed and used in a broad range of products including flat panel displays, DVD players and recorders, digital cameras and camcorders, gaming consoles, set-top boxes, and smart handheld devices is characterized by rapidly changing market requirements and products. Our success in this market will depend principally on our ability to:

meet the market windows for consumer products;

to predict technology and market trends;

to develop products on a timely basis;

avoid cancellations or delay of products;

Any of the foregoing problems could materially and adversely affect our business, financial condition, and results of operations.

Global economic conditions and uncertainty, as well as the highly cyclical nature of the semiconductor industry, could adversely affect our revenue, gross margin and expenses, collectability of accounts receivable, supplier relationships, and ability to access capital markets.

Our revenue and gross margin can fluctuate significantly due to downturns in the general economy or the semiconductor industry. These downturns are often severe and prolonged and can result in significant reductions in the demand for PLD and FPGA products in markets in which we compete. Global economic weakness or cyclical downturns have previously resulted from periods of economic recession, reduced access to credit markets, weakening or strengthening of the U.S. dollar relative to other currencies, weak end-user demand, excess industry capacity, political instability, government fiscal policy, sovereign debt, terrorist activity, military actions, or general reductions in inventory levels by customers, and may cause a decrease in revenue, gross margin, earnings or growth rates and problems with our ability to manage inventory levels and collect customer receivables. In addition, our relationships with our suppliers and our ability to access capital markets could be adversely affected. In addition, customer financial difficulties have previously resulted and could in the future result in, increases in bad debt write-offs and additions to reserves in our accounts receivable. Global economic and cyclical downturns also may lead to restructuring actions and associated expenses. Uncertainty about future economic conditions makes it difficult for us to forecast operating results and to make decisions about future investments. Any or all of these factors could adversely affect our financial condition and results of operations in the future.

Because of our international business and operations, we are vulnerable to the economic conditions and tax policies of various jurisdictions and other business risks associated with conducting operations outside of the U.S. which could have a material adverse effect on our business and negatively impact our financial condition and results of operations.

In addition to our U.S. operations, we have significant international operations, including foreign sales offices to support our international customers and distributors, our operational centers in the Philippines and Singapore, and our research and

development sites in China, India and the Philippines. In connection with the restructuring we announced in 2011 our international operations grew as we relocated certain operational, design, and administrative functions outside the U.S. All of these activities are subject to the uncertainties associated with international business operations, including tax laws and regulations, trade barriers, economic sanctions, import and export regulations, duties and tariffs and other trade restrictions, changes in trade policies, foreign governmental regulations, potential vulnerability of and reduced protection for IP, longer receivable collection periods and disruptions or delays in production or shipments, any of which could have a material adverse effect on our business, financial condition and/or operating results. Moreover, our financial condition and results of operations could be affected in the event of political conflicts or economic crises in countries where our main wafer providers, end customers and contract manufacturers who provide assembly and test services worldwide, are located. Adverse change to the circumstances or conditions of our international business operations could have a material adverse effect on our business.

We may not be able to compete successfully ~~compete~~ in the highly competitive semiconductor industry.

The semiconductor industry is intensely competitive and many of our direct and indirect competitors have substantially greater financial, technological, manufacturing, marketing and sales resources. The current level of competition in the programmable logic market is high and may increase in the future. We currently compete directly with companies that have licensed our technology or have developed similar products, including ~~Actel Corporation (acquired by Microsemi Corporation in November 2010),~~ Altera Corporation, and Xilinx, Inc. We also compete indirectly with numerous semiconductor companies that offer products based on alternative solutions such as ASIC, ASSP, microcontroller, analog, and digital signal processing (DSP) technologies. These direct and indirect competitors are established, multinational semiconductor companies as well as emerging companies. If we are unable to compete successfully in this environment, our future results will be adversely affected.

Our revenue and gross margin are subject to fluctuations, including quarter over quarter, ~~are subject to fluctuations~~ due to many factors, which ~~makes~~make our future financial results ~~less predictable.~~difficult to predict.

Our operating results ~~including quarter over quarter,~~ have fluctuated in the past and may continue to ~~fluctuate.~~fluctuate, including quarter over quarter fluctuations. Consequently, our operating results may fail to meet the expectations of analysts and investors. Our revenue and gross margin may fluctuate due to product mix, seasonality, inventory fluctuations at our distributor end customers, market acceptance of new products, competitive pricing dynamics, geographical and market-segment pricing strategies, wafer, package and assembly prices and yields, overhead absorption, as well as provisions for warranty and excess and obsolete inventory.

We have limited ability to foresee changes or the pace of ~~changes~~change in sales by product classification. In the past we have also experienced periods of decline in sales of our mainstream and mature products. If, in any period, sales of our mature and mainstream products decline and sales of new products do not increase at a rate that is sufficient to counteract this decline, then our total revenue would decline. In addition, as mature products typically generate a higher gross margin than mainstream or new products, a faster than normal decline in sales of mature products could adversely impact our gross margins.

We also have experienced, and may experience in the future, gross margin declines in certain products or end markets, reflecting the effect of competitive pricing pressures, inventory write-downs, charges associated with the cancellation of planned production lines, costs associated with our ~~customers~~customers' unplanned demand to build inventory, and increases in component and manufacturing costs resulting from higher labor and material costs borne by our manufacturers and suppliers that, as a result of competitive pricing pressures or other factors, we are unable to pass on to our customers.

Further, our ability to predict seasonality, end customer demand, our customers' end customer demand, and resale of our products by our sell-through distributors is limited. Typically, a significant amount of our revenue comes from “turns orders,” which are orders placed and filled within the same period. By definition, turns orders are not captured in a backlog measurement at the beginning of a quarter. Accordingly, we cannot use backlog as a reliable measure offor predicting revenue.

~~Currently Fujitsu Semiconductor Limited (~~"Fujitsu") is our sole source supplier of wafers for our newest FPGA and PLD products. We may be unsuccessful in defining, developing and identifying manufacturing processes for the new programmable logic products required to maintain or expand our business.

As a semiconductor company, we operate in a dynamic environment marked by rapid product obsolescence. The programmable logic market is characterized by rapid technology and product evolution. Consequently, our future success depends on our ability to introduce new FPGA, PLD and associated software design tool products that meet evolving customer needs while achieving acceptable margins. We are presently shipping our latest generation product families that are critical to our ability to grow our overall revenue. We also plan to continue upgrading our customer design tool products and increase our offerings of intellectual property cores. If we fail to introduce new products in a timely manner, or if these products or future new products fail to achieve market acceptance, our operating results could be adversely affected.

The Company and Fujitsu have entered into agreements pursuant to which Fujitsu manufactures most of our new products on its 130 nanometer, 90 nanometer and 65 nanometer CMOS process technologies, as well as on 130, 90 and 65 nanometer technologies with embedded flash memory that we have jointly developed with Fujitsu. Fujitsu is our sole source supplier of wafers for our newest FPGA and PLD products. The success of certain of our next generation products is dependent on our ability to successfully partner with Fujitsu or new foundry partners. If for any reason we are unsuccessful in establishing new foundry relationships for our next generation products, our future operating results could be adversely affected.

To develop new products and maintain the competitiveness of existing products, we need to migrate to more advanced wafer manufacturing processes that use smaller device geometries. We also may need to use additional foundry partners. Because we depend upon foundry partners to provide their facilities and support for our process technology development, we may experience delays in the availability of advanced wafer manufacturing process technologies at existing or new wafer fabrication facilities. As a result, volume production of our advanced process technologies at fabrication facilities may not be achieved. This could adversely affect our operating results.

The introduction of new silicon and software design tool products in a dynamic market environment presents significant business challenges. Product development commitments and expenditures must be made well in advance of product sales. The market acceptance of new products depends on accurate projections of long-term customer demand, which by their nature are uncertain. In order to secure new or additional wafer supply, we may from time to time consider various financial arrangements including equity investments, advance purchase payments, loans, or similar arrangements with independent wafer manufacturers in exchange for committed wafer capacity. To the extent that we pursue any such additional financing

arrangements, additional debt or equity financing may be required. There can be no assurance that such additional financing will be available when needed or, if available, will be on favorable terms. Any future equity financing will decrease existing stockholders’ equity percentage ownership and may, depending on the price at which the equity is sold, result in dilution.

~~Export~~Foreign sales, primarily toin the Asia Pacific region, account for the majority of our revenue and may decline in the future due to economic and governmental uncertainties.

We derive the majority of our revenue from ~~export sales.~~sales outside of the United States. Accordingly, if we experience a decline in ~~export~~foreign sales, our operating results could be adversely affected. Our ~~export~~foreign sales are subject to numerous risks, including:


•	~~changes in local economic conditions;~~


•	~~exchange rate volatility;~~


•	~~governmental stimulus packages, controls and trade restrictions;~~


•	~~export license requirements and restrictions on the export of technology;~~


•	~~political instability, war, terrorism or pandemic disease;~~


•	~~changes in tax rates, tariffs or freight rates;~~


•	~~reduced protection for intellectual property rights in some countries;~~


•	~~longer receivable collection periods;~~

•

changes in local economic conditions;

exchange rate volatility;

governmental stimulus packages, controls and trade restrictions;

export license requirements and restrictions on the use of technology;

political instability, war, terrorism or pandemic disease;

changes in tax rates, tariffs or freight rates;

reduced protection for intellectual property rights in some countries;

longer receivable collection periods;

natural or man-made disasters in the countries where we ~~sell our products;~~


•	~~interruptions in transportation;~~


•	~~different labor regulations; and~~


•	~~difficulties in staffing and managing foreign sales offices.~~

~~We depend on distributors, primarily those that use the sell-through distribution model, to generate a majority of our sales and complete order fulfillment. The failure of our distributors to~~ sell our ~~products~~products;

interruptions in transportation;

different labor regulations; and ~~otherwise perform as expected could materially reduce our future sales.~~

difficulties in staffing and managing foreign sales offices.

We rely heavily on our distribution partners to sell our products to end customers, generate a majority of our sales, complete order fulfillment and stock our products. Our distributors also help us to provide technical support and other value-added services to end customers.

During fiscal 2009, the Company embarked on a program to restructure its distribution channels, primarily in the Asia Pacific region, from a sell-in to a sell-through distribution model. The sell-in distribution model allows the Company to recognize revenue upon shipment to the distributor. In the sell-through distribution model, distributors have price protection and rights of return on unsold merchandise. Consequently, revenue is recognized upon resale to an end customer. We expect that the majority of our revenue in fiscal 2011 will be reported resale by our sell-through distributors. We depend on the timeliness and accuracy of these resale reports from our distributors; late or inaccurate resale reports could have a detrimental effect on our ability to recognize revenue and our ability to predict future sales. In addition, our distribution channels recently have experienced consolidation due to merger and acquisition activity in that business sector. Consolidation may result in our distributors allocating fewer resources to the distribution and sale of our products, which could adversely affect our financial results.

Our primary sell-through distributors, Arrow Electronics, Inc., including Nu Horizons Electronics Corp., (a wholly owned subsidiary of Arrow Electronics, Inc. USA), Avnet, Inc., and Weikeng (International and Industrial) Co. LTD made up 49%, 34% and 28 % of total revenue for fiscal years 2010, 2009 and 2008, respectively. At times, our sales are concentrated in a small number of distributors, which are in various international locations and of various financial strength. Financial difficulties, inability to access capital markets, or other reasons, may affect our distributors’ performance, which could materially harm our business and our operating results. Additionally, any reduction in sales efforts, failure to provide good customer service or any other failure to perform by our distributors as expected, could materially reduce our future sales and adversely affect our operating results.

Product quality problems could lead to reduced revenue, gross margins and net income.

We generally warrant our products for varying lengths of time against non-conformance to our specifications and certain other defects. Because our products, including hardware, software and intellectual property cores, are highly complex and increasingly incorporate advanced technology, our quality assurance programs may not detect all defects, whether manufacturing defects in individual products or systematic defects that could affect numerous shipments. Inability to detect a defect could result in increased engineering expenses necessary to remediate the defect and also result in increased costs due to inventory impairment charges. On occasion we have also repaired or replaced certain components or made software fixes or

refunded the purchase price or license fee paid by our customers due to product or software defects. If there are material increases in product defects, the costs to remediate such defects, net of reimbursed amounts from our vendors, if any, or to resolve warranty claims compared with our historical experience, may adversely affect our revenue, gross margins and net income.

IfWe may experience a disruption of our ~~foundry partners~~business activities related to the successful execution of the 2011 restructuring plan.

During 2011, our Board of Directors adopted a restructuring plan (the “2011 restructuring plan”) to more efficiently implement our product development strategy and to better align our corporate strategy with the our sales resources to reduce development and operational costs and to streamline our supply chain for improved predictability and flexibility. Part of the 2011 restructuring plan includes extending silicon development capabilities and planning and logistics activities by locating personnel in Manila, Philippines. We expect this to initially increase certain supply chain and research and development costs until we complete the transition. During the third quarter of 2011, we incurred restructuring costs related to outsourcing certain non-core IT services. We may experience ~~quality or yield problems,~~disruption in our business activities as we ~~may face a shortage of products available for sale~~execute our 2011 restructuring plan, and our ~~revenue or gross margin~~relationships with employees, customers and suppliers could be adversely ~~affected.~~

affected by these disruptions. We ~~depend on our foundry partners~~expect to ~~deliver high quality silicon wafers with acceptable yields in a timely manner consistent with our safety stock inventory level and production plan. As is common in our industry,~~complete the 2011 restructuring plan by the first quarter of 2012. If we ~~have experienced wafer yield problems and delivery delays. The reliable manufacture of high performance programmable logic devices is a complicated and technically demanding process requiring:~~


•	~~a high degree of technical skill;~~


•	~~state-of-the-art equipment;~~


•	~~the availability of certain basic materials and supplies, such as chemicals, gases, polysilicon, silicon wafers and ultra-pure metals;~~


•	~~the absence of defects in production wafers;~~


•	~~the elimination of minute impurities and errors in each step of the fabrication process; and~~


•	~~effective cooperation between the wafer supplier and us.~~

~~As a result, our foundry partners may periodically experience difficulties in achieving acceptable quality and yield levels when manufacturing our silicon wafers. If our foundry partners~~ are unable ~~for a prolonged period~~ to ~~produce silicon wafers that meet~~successfully complete our ~~specifications with acceptable yields, or we do not have adequate safety stock in times of delivery delays,~~2011 restructuring plan, our ~~operating~~future results ~~could~~will be adversely affected.

~~If our assembly and test supply contractors experience quality or yield problems, we may face a shortage of products available for sale.~~

We rely on contractors to assemble and test our devices with acceptable quality and yield levels. As is common in our industry, we have experienced quality and yield problems in the past. The majority of our revenue is derived from semiconductor devices assembled in advanced packages. The assembly of advanced packages is a complex process requiring:


•	~~a high degree of technical skill;~~


•	~~state-of-the-art equipment;~~


•	~~the absence of defects in assembly and packaging manufacturing;~~


•	~~the elimination of raw material impurities and errors in each step of the process; and~~


•	~~effective cooperation between the assembly contractor and us.~~

As a result, our contractors may experience difficulties in achieving acceptable quality and yield levels when assembling and testing our semiconductor devices. If we experience prolonged quality or yield problems in the future and we do not have adequate levels of safety stock inventory on-hand, our operating results could be adversely affected.

If we are unable to adequately protect our intellectual property rights, our financial results and competitive position may suffer.

Our success depends in part on our proprietary technology. We intend to continue to protect our proprietary technology through patents, copyrights and trade secrets. Despite this intention, we may not be successful in achieving adequate protection. Claims allowed on any of our patents may not be sufficiently broad to protect our technology. Patents issued to us also may be challenged, invalidated or circumvented. Finally, our competitors may develop competing technologies. If any of these events occur, our competitive position could be adversely affected.

Companies in the semiconductor industry vigorously pursue and defend their intellectual property rights. We may be forced to pursue legal action to protect or enforce our intellectual property rights. If we become involved in protracted intellectual property disputes or litigation, we may be forced to use substantial financial and management resources, which could have an adverse ~~affect~~effect on our operating results.

We face a number of patent infringement claims and may be subject to other intellectual property disputes, which could require us to spend a significant sum to defend and could cause losses.

Our industry is characterized by increasingly frequent claims regarding patents and other intellectual property rights of others. We have been, and from time to time expect to be, notified of claims that we are infringing upon the intellectual property rights of others. For instance, we are exposed to certain asserted and unasserted potential claims, including the pending patent litigation brought against us by Lizy K. John, ~~Stragent and SeeSaw, Intellitech~~ and Intellectual Ventures I LLC and Intellectual Ventures II LLC as described in Item 3. Legal Proceedings, ~~above.~~below. If any third party makes a valid claim against us, we could face significant liability and could be required to make material changes to our products and processes. In response to ~~any~~ claims of infringement, we have incurred legal costs and committed management resources, and there can be no assurance that we would be ~~able to successfully defend~~successful

in our defense against the claims. Any such litigation could result in a substantial diversion of ~~our efforts and the use of substantial~~ management and financial resources, including legal costs incurred to defend claims, which by itself could have a material adverse effect on our financial condition and operating results. We may seek licenses under patents that we are alleged to be infringing; however, we may not be able to obtain a license on favorable terms, or at all, which could have an adverse effect on our operating results.

If our foundry partners and assembly and test contractors experience quality or yield problems, we may face a shortage of products available for sale and our revenue or gross margin could be adversely affected.

We depend on our foundry partners to deliver high quality silicon wafers with acceptable yields in a timely manner consistent with our safety stock inventory level and production plan. In addition, we rely on assembly and test contractors to assemble and test our devices with acceptable quality and yield levels. As is common in our industry, we have experienced wafer and device yield problems, quality or delivery delays in the past.

The reliable manufacture of silicon wafers and the assembly and test of high performance programmable logic devices are complicated and technically demanding process requiring:

a high degree of technical skill;

state-of-the-art equipment;

the availability of certain basic materials and supplies, such as chemicals, gases, polysilicon, silicon wafers, ultra-pure metals, gold and copper;

our ability to successfully replace gold with copper for assembled devices beginning in the second half of 2012;

the absence of defects in production wafers and assembly and packaging manufacturing;

the elimination of minute impurities and errors in each step of the fabrication, assembly and test process; and

effective cooperation between the foundry partners, and assembly and test contractors and us.

As a result, our foundry partners and or assembly and test contractors may periodically experience difficulties in achieving acceptable quality and yield levels in manufacturing, assembling and testing our products. If we experience prolonged quality or yield problems in the future and we do not have adequate levels of safety stock inventory on-hand, our operating results could be adversely affected.

Our wafer supply, which is sourced entirely from the Asia Pacific region, could be interrupted or reduced or, could experience increased costs, ~~or could be reduced,~~ which may result in a shortage of products available for sale or increased costs.

We do not internally manufacture finished silicon wafers and most of our products, including all of our newest products, are manufactured by a sole source. Currently, our silicon wafers are manufactured by Fujitsu in Japan, Seiko Epson Corporation in Japan, United Microelectronics Corporation in Taiwan, Taiwan Semiconductor Manufacturing Company Ltd. in Taiwan, and GLOBALFOUNDRIES in Singapore. If any of our current or future foundry partners significantly interrupts or reduces our wafer supply, increases wafer costs, or if any of our relationships with our partner suppliers ~~are~~is terminated, our operating results could be adversely affected.

~~In the past, we have experienced delays in obtaining wafers and in securing supply commitments from our foundry partners.~~ At present, we ~~anticipate~~believe that our supply commitments are adequate. However, these existing supply commitments may not be sufficient for us to satisfy customer demand in future periods. Additionally, notwithstanding our supply commitments, we may still have difficulty in obtaining wafer deliveries consistent with the supply commitments. We negotiate wafer prices and supply commitments from our suppliers on at least an annual basis. If any of our foundry partners were to reduce its supply commitment or increase its wafer prices, and we cannot find alternative sources of wafer supply, our operating results could be adversely affected.

Many other factors that could disrupt our wafer supply are beyond our control. Since worldwide manufacturing capacity ~~(and that of Fujitsu)~~ for silicon wafers is limited and inelastic, we could be harmed by significant industry-wide ~~(or our own)~~ increases in overall wafer demand or interruptions in wafer supply, or periods of increased wafer prices. During periods of economic uncertainty, our foundry partners may reduce or restructure their operations which may also affect the availability and price of wafers, and adversely affect our operating results. Additionally, a future disruption of any of our foundry partners’ foundry operations as a result of a fire, earthquake, act of terrorism, political unrest, governmental uncertainty, war, disease or other natural disaster or catastrophic event could disrupt our wafer supply and could adversely affect our operating results.

Our supply of assembled and tested products, all from the Asia Pacific region, could be interrupted, could experience increased costs or could be reduced, which may result in a shortage of products available for ~~sale.~~sale or increased costs.

We do not assemble our finished products or perform all testing of our products. Our finished silicon wafers are assembled and tested by independent contractors located in Indonesia, ~~Japan,~~ Malaysia, the Philippines, Singapore and South Korea. Economic, financial, social and political conditions in Asia have historically been volatile. Financial difficulties, the effects of currency fluctuation, governmental actions or restrictions, prolonged work stoppages, political unrest, war, natural disaster, cost of converting to more copper content, cost of assembly materials such as gold and copper, disease or any other difficulties experienced by our suppliers may disrupt our supply and could adversely affect our operating results. In addition, certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act may soon require us to report on “conflict materials” used in our products and the due diligence plan we put in place to track whether such minerals originate from the Democratic Republic of Congo and adjoining countries. The implementation of these requirements could affect the sourcing and availability of minerals used in certain of our products.

In the past, we have experienced delays in obtaining assembled and tested products and in securing assembly and test capacity commitments from our suppliers. At present, we anticipate that our assembly and test capacity commitments are adequate; however, these existing commitments may not be sufficient for us to satisfy customer demand in future periods. Additionally, notwithstanding our assembly and test capacity commitments, we may still have difficulty in obtaining deliveries of finished products consistent with the capacity commitments. We negotiate assembly and test prices and capacity commitments from our contractors on a periodic basis. If any of our assembly or test contractors were to reduce its capacity commitment or increase its prices, and we cannot find alternative sources, our operating results could be adversely affected.

Many other factors that could disrupt our supply of finished products are beyond our control. Because worldwide capacity for assembly and testing of semiconductor products is limited and inelastic, we could be harmed by significant industry-wide increases in overall demand or interruptions in supply. The assembly of complex packages requires a consistent supply of a variety of raw materials such as substrates, lead frames, gold, copper and mold compound. ~~The worldwide manufacturing capacity for these materials is also limited and inelastic.~~ A significant industry-wide increase in demand, or interruptions in the supply of these materials to our assembly or test contractors, could adversely ~~effect~~affect our operating results. Additionally, a future disruption of any of our assembly or test contractors’ operations as a result of a fire, earthquake, flooding, act of terrorism, political unrest, governmental uncertainty, war, disease or other natural disaster or catastrophic event could disrupt our supply of assembled and tested devices and could adversely affect our operating results.

In addition, our quarterly revenue levels may be affected to a significant extent by our ability to match inventory and current production mix with the product mix required to fulfill orders. The large number of individual parts we sell and the large number of customers for our products, combined with limitations on our and our customers’ ability to forecast orders accurately and our relatively lengthy manufacturing cycles, may make it difficult to achieve a match of inventory on hand, production units, and shippable orders sufficient to realize quarterly or annual revenue projections.

We ~~may experience a disruption~~rely on information technology systems to manage our business. Failure of these systems to function properly or our ~~business activities due~~failure to ~~the transition~~control unauthorized access to ~~a new Chief Executive Officer.~~

On October 12, 2010, the Company's Board of Directors announced the appointment of Darin G. Billerbeck as the Company's President and Chief Executive Officer, effective November 8, 2010. We may experience disruption in our business activities as we transition to a new chief executive officer, and our relationships with employees, customers and suppliers could be adversely affected by these disruptions. In addition, our competitors may seek to use this transition and the related potential disruptions to gain a competitive advantage over us. Our future operating results depend substantially upon the continued service of our key personnel and in significant part upon our ability to attract and retain qualified management personnel. Our business, financial condition and results of operations could be materially adversely affected by the loss of any of our key employees, by the failure of any key employee to perform in his or her current position, or by our inability to attract and retain skilled employees.

~~We may fail to retain or attract the specialized technical and management personnel required to successfully operate our business.~~

To a greater degree than most non-technology companies or larger technology companies, our future success depends on our ability to attract and retain highly qualified technical and management personnel. As a mid-sized company, we are particularly dependent on a relatively small group of key employees. Competition for skilled technical and management employees is intense within our industry. As a result, we may not be able to retain our existing key technical and management personnel. In addition, we may not be able to attract additional qualified employees in the future. If we are unable to retain existing key employees or are unable to hire new qualified employees, our operating results could be adversely affected.

~~We recently implemented a new enterprise-wide financial reporting system which~~systems may cause operating or reporting disruptions. The failure of these systems to function properly could result in business disruption.

~~In fiscal 2009, the Company initiated~~We rely in part on various information technology ("IT") systems to manage our operations, including financial reporting, and we regularly make changes to improve them as necessary. Consequently, we periodically implement new, or enhance existing, operational and IT systems, procedures and controls. Any delay in the implementation of, ~~an enterprise-wide~~or disruption in the transition to, new or enhanced systems, procedures or controls, could harm our ability to record and report financial ~~reporting (“ERP”) system to improve processes, enhance the access~~ and ~~timeliness of critical business~~management information and strengthen controls throughout the Company. We converted to this new system in October 2010. Many companies have experienced operating or reporting disruptions when converting to a new ERP system, including limitations on a ~~company’s ability~~timely and accurate basis. These systems are also subject to ~~deliver~~power and ~~bill for customer shipments, maintain current and complete books and records, maintain an effective internal control environment and meet external reporting deadlines.~~telecommunication outages or other general system failures. Failure of our IT systems or difficulties in managing them could result in business disruption. While we have not yet experienced any significant disruptions to our business, we may encounter some unexpected aspects of the conversion, outsourcing, or new systems implementations that cause difficulty in the new reporting system which could adversely affect ~~the Company’s~~our business, results of operations and cash flows.

Our legal organizational structure is complex, which could result in unanticipated unfavorable tax or other consequences including our ability to maintain or forecast a competitive corporate tax rate, which could have an adverse effect on our financial condition and results of operations.

On December 31, 2011, we began to implement a global tax structure to more effectively align our corporate structure and transaction flows with our geographic business operations including responsibility for sales and purchasing activities. We have numerous sales offices in foreign locations, operational centers in the Philippines and Singapore, and research and development sites in China, India and the Philippines. Revenues from foreign regions account for over 80% of all revenue. In addition, the large majority of our suppliers are located in the Asia Pacific region. Based on these factors we have created new and realigned existing legal entities, intercompany sales of rights to intellectual property, inventory and fixed assets across different tax jurisdictions, and implemented cost-sharing and intellectual property licensing and royalty agreements between

our U.S. and low cost tax jurisdictions. We currently operate legal entities in countries where we conduct manufacturing, design, and sales operations around the world. In some countries, we maintain multiple entities for tax or other purposes. Changes in tax laws, regulations, and related interpretations in the countries in which we operate may impact the taxes we pay or tax provision we record, which could adversely affect our results of operations.

We cannot give any assurance as to what taxes we pay or the ability to estimate our future effective tax rate because of, among other things, uncertainty regarding the tax policies of the jurisdictions where we operate. As a result, our actual effective tax rate, or taxes paid may vary materially from our expectations. Changes in tax laws, regulations, and related interpretations in the countries in which we operate may have an adverse effect on our business, financial condition or operating results.

If our independent software and hardware developers and suppliers are unable or unwilling to meet our contractual requirements, we may face a delay in the introduction of new products, a shortage of new or existing products, or a lack of support for new or existing products.

We rely on independent software and hardware developers for the design, development, supply and support of intellectual property cores, design and development software, and certain elements of evaluation boards. As a result, failure or significant delay to complete software or hardware under contract to deliver could disrupt the release of or introduction of new or existing products, which might be detrimental to the capability of our new products to win designs. Any of these delays or inability to complete the design or development could have an adverse effect on our business, financial condition, or operating results.

We depend upon a third party to provide inventory management, order fulfillment, and direct sales logistics.

We rely on a third party vendor located in Singapore to provide cost-effective and efficient supply chain services. Among other activities, these outsourced services relate to direct sales logistics, including order fulfillment, inventory management and warehousing, and distribution of inventory to third party distributors. If our third party supply chain partner were to discontinue services for us or its operations are disrupted as a result of a fire, earthquake, act of terrorism, political unrest, governmental uncertainty, war, disease or other natural disaster or catastrophic event, our ability to fulfill direct sales orders and distribute inventory timely, cost effectively, or at all, would be hindered, which could adversely affect our business.

IfUncertainties involving the ordering and shipment of our ~~independent software and hardware developers and suppliers are unable or unwilling to meet our contractual requirements, we may face a delay or shortage of the introduction of new~~ products ~~or the support of existing products.~~

could materially adversely affect us.

We ~~rely~~typically sell our products pursuant to individual purchase orders. We generally do not have long-term supply arrangements with our customers or minimum purchase requirements except that orders generally must be for standard pack quantities. Generally, our customers may cancel orders more than 30 days prior to shipment without incurring significant fees. We base our inventory levels on ~~independent software and hardware developers~~customers' estimates of demand for the design, development, supply and support of IP cores, design and development software, and certain elements of evaluation boards. As a result, failure or significant delay to complete software or hardware under contract to deliver could disrupt the release of or introduction of newtheir products, which ~~might be detrimental to~~may not accurately predict the ~~capability~~quantity or type of our ~~new~~ products that our customers will want in the future or ultimately end up purchasing. Our ability to ~~win designs. Any~~forecast demand is even further complicated when we sell indirectly through distributors, as our forecasts for demand are then based on estimates provided by multiple parties. Moreover, consumer end-markets are characterized by short product lifecycles, which can lead to rapid obsolescence and price erosion. In addition, our customers may change their inventory practices on short notice for any reason. We may build inventories during periods of ~~these delays~~anticipated growth, and the cancellation or ~~inability~~deferral of product orders or overproduction due to ~~complete the design~~failure of anticipated orders to materialize, could result in excess or ~~development~~obsolete inventory, which could ~~have~~result in write-downs of inventory and an adverse effect on ~~our business, financial condition,~~gross margins. Factors that may result in excess or ~~operating results.~~

~~Our entire long-term marketable securities portfolio is invested in auction rate securities,~~obsolete inventory, which at the time of purchase were investment grade and acquired within the guidelines of our then current investment policy. Subsequent to purchase, these auction rate securities were the subject of multiple failed auctions, which adversely affected their liquidity. If auction rate securities continue to experience unsuccessful auctions, or if the credit rating of the auction rate security or auction rate security issuer deteriorates, we may in the future be required to adjust the carrying value of the auction rate security through impairment charges, and any of these events could have a materially detrimental effect on our liquidity and results of operations.

At ~~January 1, 2011~~ ~~and~~ ~~January 2, 2010, the Company held auction rate securities with a par value of~~ ~~$11.6 million~~ ~~and $24.1 million, respectively. The Company intends to sell its auction rate securities as markets for these securities resume or reasonable offers become available. At~~ ~~January 1, 2011, due to continued multiple failed auctions and a determination of illiquidity, the~~ ~~$11.6 million~~ ~~par value of auction rate securities held by the Company had an estimated fair value of~~ ~~$10.2 million~~ and are classified as Long-term marketable securities. These auction rate securities are exposed to risks associated with student loan asset-backed notes. Such loans are insured by the federal government or guaranteed by the Federal Family Educational Loan Program.

If we were to liquidate our position in these securities, the amount realized could be materially different than the estimated fair value amounts at which we are carrying these securities and there could be a materially detrimental effect on our financial results.

~~An acquisition may harm our business, financial condition or operating results.~~

We have made acquisitions in the past to execute on our business strategy which create uncertainty to our future operating results and cash flows. We may acquire products, technologies or businesses from third parties. An acquisition will require considerable management time, may divert time away from operations, require substantial cash resources, require us to incur or assume debt, and involve the issuance of the Company’s equity securities. The success of any acquisition requires the integration of products, technologies, personnel and administrative resources, and could result in ~~departures~~write-downs of ~~key personnel, equity dilution~~ the value of our inventory, a reduction in the average selling price, and/or ~~acquisition~~a reduction in our gross margin include:

a sudden and significant decrease in demand for our products;

a higher incidence of ~~unknown liabilities. As~~ inventory obsolescence because of rapidly changing technology and customer requirements;

a ~~result, an acquisition~~failure to accurately estimate customer demand for our older products as our new products are introduced.

Because market conditions are uncertain, these and other factors could ~~disrupt~~materially adversely affect our ~~operations and may have an adverse effect on our business, financial condition or operating results.~~business.

We may have failed to adequately insure against certain risks, and, as a result, our financial condition and results may be adversely affected.

We carry insurance customary for companies in our industry, including, but not limited to, liability, property and casualty, worker's compensation and business interruption insurance. We also insure our employees for basic medical expenses. In

addition, we have insurance contracts that provide director and officer liability coverage for our directors and officers. Other than the specific areas mentioned above, we are self-insured with respect to most other risks and exposures, and the insurance we carry in many cases is subject to a significant policy deductible or other limitation before coverage applies. Based on management's assessment and judgment, we have determined that it is more cost effective to self-insure against certain risks than to incur the insurance premium costs. The risks and exposures for which we self-insure include, but are not limited to, natural disasters, product defects, political risk, theft, patent infringement and some employment practice matters. Should there be a catastrophic loss due to an uninsured event such as an earthquake or a loss due to adverse occurrences in any area in which we are self-insured, our financial condition or operating results could be adversely affected.

1922

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our corporate headquarters consists of land and 189,000 square feet of buildings we own in Hillsboro, Oregon. A portion of undeveloped land near the corporate headquarters is currently owned by the Company ~~but~~and listed for sale. In Shanghai, China, we own an 18,869 square foot research and development facility and lease an additional 6,481 square foot research and development facility. We currently lease a 66,350 square foot research and development facility in San Jose, California through December 2013. We also currently lease a ~~6,400~~6,334 square foot research and development facility in Illinois through August 2012, and ~~a 20,000~~an 18,114 square foot research and development facility in Pennsylvania through September 2014. In addition, we lease a 4,200 square foot facility in Singapore, with a term through February 2013, primarily to support supply chain activities. ~~In October 2010, we completed a~~We lease ~~agreement for~~ a 5,296 square foot research and development facility in Bangalore, India with a term through October 2012. In December 2011, we completed a lease agreement for a 17,114 square foot research and development facility in Manila, Philippines with a term lease through December 2016. As the result of our acquisition of SiliconBlue we assumed a lease for 11,863 square feet in Santa Clara, California, which terminates on March 31, 2012. We also lease office facilities in multiple 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.

Additionally, we ~~lease~~leased a 25,000 square foot facility in Austin, Texas through December 2011. ~~As part of our 2005 restructuring plan (see discussion under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”) in~~In December 2005, we ceased our research and development operations in this location, and have subleased the Austin facility through the end of 2011.

Item 3. Legal Proceedings.

On June 11, 2007, a patent infringement lawsuit was filed by Lizy K. John (“John”) against Lattice Semiconductor Corporation in the U.S. District Court for the Eastern District of Texas, Marshall Division. John seeks an injunction, unspecified damages, and attorneys' fees and expenses. The Company filed a request for re-examination of the patent by the United States Patent and Trademark Office (“PTO”), which was granted by the PTO, and the re-examination ~~is in progress.~~has concluded. The litigation ~~has been~~was stayed pending the results of the re-examination. The stay was lifted on January 1, 2012, but the court has not yet conducted a scheduling conference or set a trial date. At this stage of the proceedings, we do not have an estimate of the likelihood or the amount of any potential exposure to us. The Company believes it possesses defenses to these claims and intends to vigorously defend this litigation.

On April 30, 2010, Stragent, LLC (“Stragent”), a non-practicing entity, and its alleged assignee Seesaw Foundation (“Seesaw”), filed a patent infringement lawsuit against the Company and Freescale Semiconductor, Inc. in the U.S. District Court for the Eastern District of Texas, Tyler Division, seeking unspecified damages. At this stage of the proceedings, we do not have an estimate of the likelihood or the amount of any potential exposure to us.

On July 20, 2010, Intellitech Corporation (“Intellitech”) filed a patent infringement lawsuit against the Company, Altera Corporation and Xilinx, Inc. in the U.S. District Court for the District of Delaware, seeking unspecified damages. At this stage of the proceedings, we do not have an estimate of the likelihood or the amount of any potential exposure to us.

On December 8, 2010, Intellectual Ventures I LLC and Intellectual Ventures II LLC (“Intellectual Ventures”) filed a patent infringement lawsuit against the Company, Altera Corporation and Microsemi Corporation in the U.S. District Court for the District of Delaware, seeking unspecified damages. At this stage of the proceedings, we do not have an estimate of the likelihood or the amount of any potential exposure to us. The Company believes it possess defenses to these claims and intends to vigorously defend this litigation.

We are also exposed to certain other asserted and unasserted potential claims. There can be no assurance that, with respect to potential claims made against us, we could resolve such claims under terms and conditions that would not have a material adverse effect on our business, our liquidity or our financial results.

Item 4. ~~[Removed and Reserved]~~Mine Safety Disclosures.

Not applicable.

2023

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters & Issuer Purchases of Equity Securities.

Market Information

As of January 1, 2011, our common stock is traded on the NASDAQ Global Select Market under the symbol “LSCC”. For 2010 ~~and 2009~~ our stock traded on the NASDAQ Global Market. The following table sets forth the low and high intraday sale prices for our common stock for the last two fiscal years, as reported by NASDAQ.


	Low		High
					Low		High
2011:
First Quarter					$	5.51	$	7.38
Second Quarter					5.76		7.19
Third Quarter					4.70		6.79
Fourth Quarter					4.84		7.18
2010:
First Quarter	$	2.41	$	3.80	$	2.41	$	3.80
Second Quarter	3.69		5.97		3.69		5.97
Third Quarter	4.11		6.02		4.11		6.02
Fourth Quarter	4.24		6.17		4.24		6.17
2009:
First Quarter	$	1.06	$	1.74
Second Quarter	1.38		2.26
Third Quarter	1.66		2.71
Fourth Quarter	1.87		3.00

Holders

As of March ~~10, 2011,~~7, 2012, we had approximately ~~402~~378 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 the growth of our business. We have never paid cash dividends.

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities (most recent quarter only)

Period Total Number of Shares Purchased Average Price paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Dollar Value of Shares That May Yet Be Purchased Under the Program

November 28, 2010 through Janaury 1, 2011 371,090 $ 5.31 371,090 $ 18,029,000
Total 371,090 $ 5.31 371,090 $ 18,029,000



Period	Total Number of Shares Purchased	Average Price paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Dollar Value of Shares That May Yet Be Purchased Under the Program
October 2, 2011 through October 28, 2011	288,300	$	5.71	288,300	$	—

On February 24, 2012, the Company's Board of Directors approved a stock repurchase program pursuant to which up to $20.0 million of outstanding common stock may be repurchased from time to time. The duration of the repurchase program is twelve months. In connection with this stock repurchase program, the Company entered into a 10b5-1 plan. All repurchases will be open market transactions and funded from available working capital.

On October 21, 2010, ~~our~~the Company's Board of Directors ~~authorized~~approved a ~~share~~stock repurchase program ofpursuant to which up to $20.0 million of ~~the Company's~~outstanding common stock ~~over~~could have been repurchased. The duration of the ~~next~~repurchase program was twelve months from adoption. In connection with ~~the new~~this stock repurchase program, wethe Company entered into a 10b5-1 plan. During fiscal 2011, approximately 2.4 million shares were repurchased for $14.2 million. During fiscal 2010, approximately ~~371,000~~0.4

million shares were repurchased for $2.0 ~~million all of which~~million. All shares repurchased under this program were retired by December 31, 2011. All repurchases were open market transactions and were funded from available working capital. ~~All repurchased shares under this~~The program ~~were retired~~ended by its terms in ~~January~~October 2011. ~~How much common stock will be repurchased in the future will depend on market conditions, including the price of the common stock.~~

On December 13, 2008, our Board of Directors approved a stock repurchase program pursuant to which up to $20.0 million of outstanding common stock could have been repurchased. In connection with the stock repurchase program, we entered into a 10b5-1 plan. The duration of the repurchase program was twelve months from adoption, and expired on December 13, 2009. During fiscal 2009, approximately 263,000 shares were repurchased for $0.3 million, all of which were open market transactions and were funded from available working capital. All shares repurchased under this program were retired in 2010.

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 (“~~SOX”~~PHLX”) from December ~~2005~~2006 through December ~~2010~~2011. Cumulative stockholder return assumes $100 invested at the beginning of the period in our common stock, the S&P ~~500~~ and ~~SOX.~~PHLX. Historical stock price performance is not necessarily indicative of future stock price performance.

Lattice Cumulative Stockholder Return

2225

Item 6. Selected Financial Data.


	Year Ended														Year Ended
	January 1, 2011		January 2, 2010			January 3, 2009			December 29, 2007			December 30, 2006			December 31, 2011		January 1, 2011			January 2, 2010			January 3, 2009			December 29, 2007
	(in thousands, except per share data)														(in thousands, except per share data)
STATEMENT OF OPERATIONS DATA:
Revenue	$	297,768	$	194,420		$	222,262		$	228,709		$	245,459		$	318,366	$	297,768		$	194,420		$	222,262		$	228,709
Costs and expenses:
Cost of products sold	117,943		90,077			102,831			103,157			106,727			129,769		117,943			90,077			102,831			103,157
Research and development	60,326		56,133			68,610			82,977			81,968			71,855		60,326			56,133			68,610			82,977
Selling, general and administrative	64,359		52,545			58,680			58,485			58,450			68,838		64,359			52,545			58,680			58,485
Impairment loss on goodwill	—		—			—			223,556			—
Amortization of intangible assets	—		228			5,587			9,832			10,806
Impairment loss on goodwill (1)															—		—			—			—			223,556
Acquisition related and Amortization of intangible assets															536		—			228			5,587			9,832
Restructuring charges	11		3,689			6,789			2,372			311			6,079		11			3,689			6,789			2,372
	242,639		202,672			242,497			480,379			258,262			277,077		242,639			202,672			242,497			480,379

Income (loss) from operations	55,129		(8,252		)	(20,235		)	(251,670		)	(12,803		)	41,289		55,129			(8,252		)	(20,235		)	(251,670		)
Other income (expense), net	2,474		1,812			(17,791		)	12,540			16,951			1,434		2,474			1,812			(17,791		)	12,540
Income (loss) before provision for income taxes	57,603		(6,440		)	(38,026		)	(239,130		)	4,148
Provision for income taxes	531		517			180			686			1,055
Income (loss) before income taxes															42,723		57,603			(6,440		)	(38,026		)	(239,130		)
Benefit (provision) for income taxes (2)															35,509		(531		)	(517		)	(180		)	(686		)
Net income (loss)	$	57,072	$	(6,957	)	$	(38,206	)	$	(239,816	)	$	3,093		$	78,232	$	57,072		$	(6,957	)	$	(38,206	)	$	(239,816	)
Basic net income (loss) per share	$	0.49	$	(0.06	)	$	(0.33	)	$	(2.09	)	$	0.03		$	0.66	$	0.49		$	(0.06	)	$	(0.33	)	$	(2.09	)
Diluted net income (loss) per share	$	0.48	$	(0.06	)	$	(0.33	)	$	(2.09	)	$	0.03		$	0.65	$	0.48		$	(0.06	)	$	(0.33	)	$	(2.09	)
Shares used in per share calculations:
Basic	116,726		115,384			115,291			114,915			114,188			117,875		116,726			115,384			115,291			114,915
Diluted	120,143		115,384			115,291			114,915			115,019			121,139		120,143			115,384			115,291			114,915

	At														At
	January 1, 2011		January 2, 2010			January 3, 2009			December 29, 2007			December 30, 2006			December 31, 2011		January 1, 2011			January 2, 2010			January 3, 2009			December 29, 2007
	(in thousands)														(in thousands)
BALANCE SHEET DATA:
Cash, cash equivalents and Short-term marketable securities	$	238,220	$	164,540		$	65,909		$	85,063		$	233,208		$	210,134	$	238,220		$	164,540		$	65,909		$	85,063
Total assets	$	377,687	$	296,557		$	291,936		$	376,285		$	725,906		$	467,924	$	377,687		$	296,557		$	291,936		$	376,285
Convertible notes	$	—	$	—		$	—		$	40,000		$	109,600		$	—	$	—		$	—		$	—		$	40,000
Stockholders' equity	$	318,722	$	253,360		$	254,939		$	286,232		$	511,745		$	393,561	$	318,722		$	253,360		$	254,939		$	286,232

_______________

(1) At December 29, 2007, the estimated fair value of the Company was below book value. Therefore, the Company performed an impairment test on ~~Goodwill~~goodwill in accordance with ASC 350. We calculated the impairment loss based on an allocation of the fair value of the Company's equity to the fair value of the Company's assets and liabilities in a manner similar to a purchase price allocation in a business combination. Fair value was based on two primary valuation methodologies: the income approach, which used the discounted cash flow method, and the market approach, which used the market capitalization method. In the allocation, goodwill was determined to have no implied fair value, and, as a result, goodwill related to the acquisition of Vantis Corporation on June 15, 1999, the acquisition of Integrated Intellectual Properties, Inc. on March 16, 2001, and the acquisition of the FPGA business of Agere Systems, Inc. on January 18, 2002 totaling $223.6 million was written off and recorded as an Impairment loss on goodwill. As a result, we no longer have ~~Goodwill~~goodwill related to these acquisitions recorded on our Consolidated Balance Sheets.

(2) On December 31, 2011, we began to implement a global tax structure to more effectively align the Company's

2326

corporate structure and transaction flows with the Company's geographic business operations including responsibility for sales and purchasing activities. We have numerous sales offices in foreign locations, operational centers in the Philippines and Singapore, and research and development sites in China, India and the Philippines. Revenues from non-Domestic regions account for over 80% of all revenue. In addition, the large majority of our suppliers are located in the Asia Pacific region. Based on these factors we have created new and realigned existing legal entities, intercompany sales of rights to intellectual property, inventory and fixed assets across different tax jurisdictions, and implemented cost-sharing and intellectual property licensing and royalty agreements between our U.S. and low cost tax jurisdictions. These actions created a gain for tax purposes, for which we recorded a $76.8 million tax provision in the fourth quarter of fiscal 2011. This provision was fully offset by the release of valuation allowance on deferred tax assets of $76.8 million recorded as a tax benefit during the fourth quarter of fiscal 2011. We expect that the global tax structure will be completed during the first quarter of 2012 upon the intercompany sale of inventory and fixed assets, and we expect to record approximately $9.7 million in additional income tax provision during the first quarter of fiscal 2012.

During the fourth quarter of 2011, we also concluded that it was more likely than not that we would be able to realize the benefit of a portion of our remaining deferred tax assets. We based this conclusion on improved operating results over the past two years and our expectations about generating taxable income in the foreseeable future including the implementation of a global tax structure discussed above. Based on our assessment regarding the potential to realize deferred tax assets, we reversed additional valuation allowance, which when offset by the provision recorded related to our new global tax structure, resulted in an income tax benefit of $35.2 million. We exercised significant judgment and considered estimates about our ability to generate revenues, gross profits, operating income and taxable income in future periods under our new tax structure in reaching this decision.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Overview

Lattice Semiconductor Corporation (“Lattice” or the “Company”) designs, develops and markets ~~high performance~~ programmable logic products and related software. Programmable logic products are widely used semiconductor components that can be configured by ~~the~~ end ~~customer~~customers as specific logic circuits, ~~and enable the end customer to shorten~~enabling shorter design cycle times and ~~reduce~~reduced development costs. Our end customers are primarily original equipment manufacturers (“OEMs”) in the communications, computing, consumer, industrial, military, automotive, and medical end markets. Within the programmable logic market there are two groups of products - programmable logic devices (“PLD”) and field programmable gate arrays (“FPGA”) - each representing a distinct silicon architectural approach. Products based on the two alternative programmable logic architectures are generally optimal for different types of logic functions, although many logic functions can be implemented using either architecture. We believe that a substantial portion of programmable logic customers utilize both PLD and FPGA architectures. ~~Our end customers are primarily original equipment manufacturers in the communications, computing, industrial, consumer, automotive, medical and military end markets.~~

Critical Accounting Policies and Estimates

Critical accounting policies are those that are both most important to the portrayal of a company's financial condition and results and 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. A description of our critical accounting policies follows.

Use of Estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and classification of assets, such as marketable securities, accounts receivable, inventory, ~~and~~auction rate securities, goodwill (including the assessment of reporting unit), intangible assets, deferred income taxes and liabilities, such as accrued liabilities (including restructuring ~~charges)~~charges and bonus arrangements), income taxes and deferred income and allowances on sales to sell-through distributors, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the fiscal periods presented. Actual results could differ from those estimates.

Revenue Recognition and Deferred Income. Revenue from sales to customers is recognized upon shipment, or in the case of sales by our sell-through distributors, at the time of reported resale, provided that persuasive evidence of an arrangement exists, the price is fixed or determinable, title has transferred, collection of resulting receivables is reasonably assured, there are no customer remaining acceptance requirements and no remaining significant obligations. We sell our products directly to end customers or through a network of independent manufacturers' representatives and indirectly through a network of independent sell-in and sell-through distributors. Distributors provide us periodic data regarding the product, price, quantity, and end customer when products are resold as well as the quantities of our products they still have in stock. We must use estimates and apply judgment to reconcile sell-through distributors' reported inventories to their activities. Any error in our judgment could lead to inaccurate reporting of our Revenue, Cost of products sold, Deferred income and allowances on sales to sell-through distributors, and Net income (loss).

At the time of shipment to a sell-through distributor we invoice at published list price. The final price is set at the time of resale and is determined in accordance with a distributor price agreement. Invoices are recorded in Accounts receivable, net with a corresponding credit to Deferred income and allowances on sales to sell-though distributors and inventory is credited from Inventories with a corresponding charge to Deferred income and allowances on sales to sell-through distributors. At the time of shipment to a sell-through distributor amounts are invoiced at published list price. The final price is set at the time of resale and is determined in accordance with a distributor price agreement. Amounts invoiced are recorded in Accounts receivable, net and inventory is transferred from Inventories to Deferred income and allowances on sales to sell-through distributors. Revenue and cost of products sold to sell-through distributors are deferred until either the product is resold by the distributor or, in certain cases, return privileges terminate, at which time Revenue and Cost of products sold are reflected in Net income (loss). ~~Our estimate~~

The components of ~~inventory valued at published list price and held by sell-through distributors with right of return totaled $50.1 million and $31.7 million at January 1, 2011 and~~ ~~January 2, 2010, respectively. Distributor advances totaled $26.8 million and $16.5 million at January 1, 2011 and~~ ~~January 2, 2010, respectively and are recorded in~~ Deferred income and allowances on sales to sell-through ~~distributors. Deferred costs of sales related to inventory held by sell-through~~ distributors ~~totaled $7.6 million and $5.0 million at January 1, 2011 and~~ ~~January 2, 2010, respectively.~~are presented in the following table (in thousands):



	December 31, 2011			January 1, 2011
Inventory valued at published list price and held by sell-through distributors with right of return	$	40,147		$	50,085
Allowance for distributor advances	(23,300		)	(26,830		)
Deferred cost of sales related to inventory held by sell-through distributors	(6,086		)	(7,563		)
Total Deferred income and allowances on sales to sell-through distributors	$	10,761		$	15,692

During fiscal 2009, the Company embarked on a program to restructure our distribution channels primarily in the Asia Pacific region, from a sell-in to a sell-through distribution model. As a result, the majority of our revenue in fiscal 2011 and 2010 was from ~~reported~~ resale ~~from~~of our products by sell-through distributors. Resale of product by sell-through distributors as a percentage of our total revenue was ~~56%~~61%, ~~38%~~56% and ~~33%~~38% in fiscal 2011, 2010 ~~2009~~ and ~~2008,~~2009, respectively.

Revenue from software licensing was not material for the periods presented.

Fair Value of Financial Instruments. We invest in various financial instruments including corporate and government bonds, notes, commercial paper and auction rate securities. ~~The Company values~~We value these instruments at their fair value and ~~monitors its~~monitor our portfolio for impairment on a periodic basis. In the event that the carrying value of an investment exceeds its fair

value and the decline in value is determined to be other-than-temporary, ~~the Company records~~we record an impairment charge and ~~establishes~~establish a new carrying value. We assess other-than-temporary impairment of marketable securities in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) ASC 820, “Fair Value Measurements and Disclosures". The framework under the provisions of ASC 820 establishes three levels of inputs that may be used to measure fair value. Each level of input has different levels of subjectivity and difficulty involved in determining fair value.

Level 1 instruments generally represent quoted prices for identical assets or liabilities in active markets. Therefore, determining fair value for Level 1 instruments generally does not require significant management judgment, and the estimation is not difficult.

Level 2 instruments include inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices for identical instruments in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 instruments include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The determination of fair value for Level 3 instruments requires the most management judgment and subjectivity.

Inventory. ~~We value inventory~~Inventories are recorded at the lower of actual cost (approximated by standard cost) determined on a first-in-first-out basis or market. ~~In addition, we write down unproven,~~We establish provisions for inventory if it is in excess of projected customer demand, and ~~obsolete inventories~~the creation of such provisions results in a write-down of inventory to net realizable ~~value. To~~ value ~~our inventory, we make~~and a number of estimates and assumptions including market and economic conditions, product lifecycles and forecasted demand for our products. To the extent actual results differ from these estimates and assumptions, the balances of reported inventory andcharge to cost of ~~products sold will change accordingly.~~sales.

Impairment of Long-Lived Assets and Intangible Assets. We review our long-lived assets, primarily property and equipment and amortizable intangible assets, in accordance with ASC 360, “Property, Plant and Equipment", which requires us to review the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment is determined by comparing the estimated undiscounted cash flows to the carrying amount. A loss is recorded if the carrying amount of the asset exceeds the estimated undiscounted cash flow for the difference between carrying value and fair value.

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. We review goodwill for impairment annually during the fourth quarter and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The goodwill impairment test is a two-step test. Under the first step, 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, an indication of goodwill impairment exists for the reporting unit and the entity must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit's goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of the reporting unit is determined using a

discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed. For purposes of testing goodwill for impairment we operate as a single reporting unit. No impairment charges relating to goodwill was recorded for the fiscal year ended 2011.

Restructuring Charges. Expenses associated with exit or disposal activities are recognized when incurred under ASC 420, “Exit or Disposal Cost Obligations,” for everything but severance. Because ~~the Company has~~we have a history of paying severance benefits, the cost of severance benefits associated with a restructuring charge is recorded when such costs are probable and the amount can be reasonably estimated in accordance with ASC 712, “Compensation - Nonretirement Postemployment Benefits.” For leased facilities that are vacated, an amount equal to the total future lease obligations from the date of vacating the premises through the expiration of the lease, net of any future sublease income, is recorded as a part of restructuring charges.

Accounting for Income Taxes. ~~To report~~Our provision for income tax ~~expense related to operating results, we record~~is comprised of our current tax liability and change in deferred ~~income~~tax assets and liabilities. 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. U.S. income taxes and foreign withholding taxes were not provided for on a cumulative total of approximately $1.6 million of the undistributed earnings of our Chinese subsidiary. We intend to reinvest these earnings indefinitely in our ~~Consolidated Balance Sheet.~~ Chinese subsidiary. If these earnings were distributed to the U.S. in the form of dividends or otherwise, we would be subject to additional U.S. income taxes and foreign withholding taxes.

Our income tax calculations are based on application of the respective U.S. federal, state or foreign tax law. The Company’s tax filings, however, are subject to audit by the relevant tax authorities. Accordingly, we recognize tax liabilities based upon its 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 are recorded as income tax expense or benefit in the consolidated statements of operations.

In ~~determining~~assessing the ~~value~~realizability of ~~our~~ deferred tax assets, we ~~make estimates of future taxable income. At the end of fiscal years 2010, 2009~~evaluate both positive and 2008, we have recorded full valuation allowances for all of our U.S. deferred tax assets due to uncertainties regarding their realization. We have not recognized a valuation allowance against our foreign deferred tax assets as we believenegative evidence that may exist and considers 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.

~~We recognize uncertain tax positions in accordance with ASC 740, “Income Taxes,” We recognize estimated interest and penalties that would be assessed in relation~~Any adjustment to the ~~estimated settlement value of uncertain~~net deferred tax ~~positions~~asset valuation allowance is recorded in the ~~Provision~~consolidated statement of operations for ~~income taxes.~~the period that the adjustment is determined to be required.

Stock-Based Compensation. We use the Black-Scholes option pricing model to estimate the fair value of substantially all share-based awards consistent with the provisions of ASC 718. Option pricing models, including the Black-Scholes model, also require the use of input assumptions, including expected volatility, expected term, expected dividend rate, and expected risk-free rate of return. The assumptions for expected volatility and expected term are the two assumptions that significantly affect the grant date fair value.

Restricted stock unit grants are part of the Company's equity compensation practices for employees who receive equity grants. The restricted stock units granted to employees generally vest quarterly over a four-year period beginning on the grant date.

Results of operations

Key elements of our Consolidated Statements of Operations were as follows (dollars in thousands):


	Year Ended														Year Ended
	January 1, 2011				January 2, 2010					January 3, 2009					December 31, 2011				January 1, 2011				January 2, 2010
Revenue	$	297,768	100.0	%	$	194,420		100.0	%	$	222,262		100.0	%	$	318,366	100.0	%	$	297,768	100.0	%	$	194,420		100.0	%
Gross margin	179,825		60.4		104,343			53.7		119,431			53.8		188,597		59.2		179,825		60.4		104,343			53.7
Research and development	60,326		20.3		56,133			28.9		68,610			30.9		71,855		22.5		60,326		20.3		56,133			28.9
Selling, general and administrative	64,359		21.6		52,545			27.0		58,680			26.4		68,838		21.6		64,359		21.6		52,545			27.0
Amortization of intangible assets	—		—		228			0.1		5,587			2.5
Acquisition related charges															536		0.2		—		—		228			0.1
Restructuring charges	11		0.0		3,689			1.9		6,789			3.1		6,079		1.9		11		—		3,689			1.9
Income (loss) from operations	$	55,129	18.5	%	$	(8,252	)	4.2	%	$	(20,235	)	(9.1	)%	$	41,289	13.0	%	$	55,129	18.5	%	$	(8,252	)	(4.2	)%

Derivative Financial Instruments

At December 31, 2011, January 1, 2011, and January 2, 2010, ~~and~~ ~~January 3, 2009~~ ~~and for the fiscal years then ended,~~ we had ~~no outstanding derivatives, including~~open foreign exchange contracts of 140,000,000 JPY, zero, and zero, respectively. The contracts outstanding at December 31, 2011 were settled on January 26, 2012. Although such hedges mitigate our foreign currency exchange rate exposure from an economic perspective they were not designated as "effective" hedges for ~~the purchase~~accounting purposes and are adjusted to fair value through earnings. We do not hold or ~~sale of foreign currencies.~~issue derivative financial instruments for trading or speculative purposes.

Foreign Exchange and Translation of Foreign Currencies

A portion of our silicon wafer and other purchases are denominated in Japanese yen and we bill certain Japanese customers in yen. Gains or losses from foreign exchange rate fluctuations on balances denominated in foreign currencies are reflected in Other income (expense), net. Realized and unrealized gains or losses on foreign currency transactions were not significant for the years presented. 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. Translation adjustments related to the consolidation of foreign subsidiary financial statements are reflected in Accumulated other comprehensive income (loss) in Stockholders' equity.

Concentration Risk

Potential exposure to concentration risk consists primarily of cash and cash equivalents, marketable securities and trade receivables and supply of wafers for our new products. We place our investments primarily through three financial institutions and mitigate the concentration of credit risk by placing percentage limits on the maximum portion of the investment portfolio which may be invested in any one investment instrument. The Company's investment policy defines approved credit ratings for investment securities. Purchased securities must meet or exceed the ratings; however, due to liquidity issues in global credit and capital markets, some of our auction rate securities have fallen below our required credit ratings during the past year. Investments consisted primarily of money market instruments, “AA” or better corporate notes and bonds, “AA” or better rated U. S. municipal notes, and U.S. government agency obligations. See Note 24 for a discussion of the liquidity attributes of our marketable securities.

Concentration of credit risk with respect to trade receivables are mitigated by a geographically diverse customer base and our credit and collection process. Accounts receivable are recorded at the invoice amount, do not bear interest, and are shown net of allowances for doubtful accounts of ~~$0.9~~$0.9 million and ~~$1.0~~$0.9 million at ~~January 1,~~December 31, 2011 and January ~~2, 2010~~1, 2011, respectively. We perform 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. Write-offs for uncollected trade receivables have not been significant to date.

We rely on Fujitsu Limited ("Fujitsu") for ~~essentially all~~most of our wafer purchases for ~~our~~ new products.

Revenue Recognition and Deferred Income

Revenue from sales to customers is recognized upon shipment, or in the case of sales by our sell-through distributors, at the time of reported resale, provided that persuasive evidence of an arrangement exists, the price is fixed or determinable, title has transferred, collection of resulting receivables is reasonably assured, there are no customer remaining acceptance requirements and no remaining significant obligations. We sell our products directly to end customers or through a network of independent manufacturers' representatives and indirectly through a network of independent sell-in and sell-through distributors. Distributors provide us periodic data regarding the product, price, quantity, and end customer when products are resold as well as the quantities of our products they still have in stock. We must use estimates and apply judgment to reconcile

sell-through distributors' reported inventories to their activities. Any error in our judgment could lead to inaccurate reporting of our Revenue, Cost of products sold, Deferred income and allowances on sales to sell-through distributors, and Net income (loss).

At the time of shipment to a sell-through distributor ~~amounts are invoiced~~we invoice at published list price. The final price is set at the time of resale and is determined in accordance with a distributor price agreement. ~~Amounts invoiced~~Invoices are recorded in Accounts receivable, net with a corresponding credit to Deferred income and allowances on sales to sell-though distributors and inventory is ~~transferred~~credited from Inventories with a corresponding charge to Deferred income and allowances on sales to sell-through distributors. Revenue and cost of products sold to sell-through distributors are deferred until either the product is resold by the distributor or, in certain cases, return privileges terminate, at which time Revenue and Cost of products sold are reflected in Net income (loss). ~~Our estimate of inventory valued at published list price and held by sell-through distributors with right of return totaled $50.1 million and $31.7 million at January 1, 2011 and~~ ~~January 2, 2010, respectively. Distributor advances totaled $26.8 million and $16.5 million at January 1, 2011 and~~ ~~January 2, 2010~~, respectively and are recorded in Deferred income and allowances to sell-through distributors. Deferred costs of sales related to inventory held by sell-through distributors totaled $7.6 million and $5.0 million at January 1, 2011 and ~~January 2, 2010, respectively.~~



	December 31, 2011			January 1, 2011
Inventory valued at published list price and held by sell-through distributors with right of return	$	40,147		$	50,085
Allowance for distributor advances	(23,300		)	(26,830		)
Deferred cost of sales related to inventory held by sell-through distributors	(6,086		)	(7,563		)
Total Deferred income and allowances on sales to sell-through distributors	$	10,761		$	15,692

During fiscal 2009, the Company embarked on a program to restructure our distribution channels primarily in the Asia Pacific region, from a sell-in to a sell-through distribution model. As a result, the majority of our revenue in fiscal 2010 was from reported resale from our sell-through distributors. Resale of product by sell-through distributors as a percentage of our total revenue was ~~56%~~61%, ~~38%~~56% and ~~33%~~38% in fiscal 2011, 2010 ~~2009~~ and ~~2008,~~2009, respectively.

On August 28, 2011, our global franchise agreement with Avnet terminated, however, we mutually agreed to terms for the transition of inventory through December 31, 2011. We do not expect a significant disruption in our ability to service customers as a result of this change. We continue to serve our end customers with a network that includes a global distributor, regional distributors, manufacturer's representatives, and our direct sales team.

Revenue from software licensing was not material for the periods presented.

Inventories

Inventories are ~~stated~~recorded at the lower of ~~first-in, first-out~~actual cost (approximated by standard cost) determined on a first-in-first-out basis or market.

~~Long-Lived Assets~~

We ~~review our long-lived assets, primarily property~~establish provisions for inventory if it is in excess of projected customer demand, and ~~equipment and amortizable intangible assets,~~the creation of such provisions results in ~~accordance with ASC 360, “Property, Plant and Equipment” which requires us~~a write-down of inventory to review the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment is determined by comparing the estimated undiscounted cash flows to the carrying amount. A loss is recorded if the carrying amount of the asset exceeds the estimated undiscounted cash flow for the difference between carryingnet realizable value and ~~fair value.~~a charge to cost of sales.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method for financial reporting purposes over the estimated useful lives of the related assets, generally three to five years for equipment and software, one to three years for tooling and thirty years for buildings. 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 operations. Repair and maintenance costs are expensed as incurred.

Impairment of Long-Lived Assets

We review our long-lived assets, primarily property and equipment and purchased intangible assets subject to amortization, in accordance with ASC 360, “Property, Plant and Equipment", which requires us to review the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment is determined by comparing the estimated undiscounted cash flows to the carrying amount. A loss is recorded if the carrying amount of the asset exceeds the estimated undiscounted cash flow for the difference between carrying value and fair value.

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. The Company reviews goodwill for impairment annually during the fourth quarter and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The goodwill impairment test is a two-step test. Under the first step, 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, an indication of goodwill impairment exists for the reporting unit and the entity must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit's goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of the reporting unit is determined using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed. For purposes of testing goodwill for impairment the Company operates as a single reporting unit. No impairment charges relating to goodwill was recorded for the fiscal year ended 2011.

Leases

We lease office space and classify our leases as either operating or capital lease arrangements in accordance with the criteria of ASC 840, ~~“Leases.”~~“Leases”. Certain of our office space operating leases contain provisions under which monthly rent escalates over time and certain leases may also contain provisions for reimbursement of a specified amount of leasehold improvements. When lease agreements contain escalating rent clauses, we recognize expense on a straight-line basis over the term of the lease. When lease agreements provide allowances for leasehold improvements, we capitalize the leasehold improvement assets and amortize them on a straight-line basis over the lesser of the lease term or the estimated useful life of the asset, and reduce rent expense on a straight-line basis over the term of the lease by the amount of the asset capitalized.

Restructuring ~~charges~~Charges

Expenses associated with exit or disposal activities are recognized when incurred under ASC 420, “Exit or Disposal Cost ~~Obligations,”~~Obligations”, for everything but severance. Because the Company has a history of paying severance benefits, the cost of severance benefits associated with a restructuring charge is recorded when such costs are probable and the amount can be reasonably estimated in accordance with ASC 712, “Compensation - Nonretirement Postemployment ~~Benefits.”~~Benefits”. For leased facilities that were ~~vacated,~~ceased to be used, an amount equal to the total future lease obligations from the date of vacating the premises through the expiration of the lease, net of any future sublease income, was recorded as a part of restructuring charges.

Research and Development

Research and development costs are expensed as incurred.

Accounting for Income Taxes

~~To report~~The Company’s provision for income tax ~~expense related to operating results, we record~~is comprised of its current tax liability and change in deferred ~~income~~tax assets and liabilities. 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 ~~our Consolidated Balance Sheet. In determining~~ the ~~value of our~~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 ~~we make estimates of~~to an amount that in management’s judgment is more likely than not to be recoverable against future taxable income. AtU.S. income taxes and foreign withholding taxes were not provided for on a cumulative total of approximately $1.6 million of the ~~end of fiscal years 2010, 2009 and 2008, we have recorded full valuation allowances for all~~undistributed earnings of our Chinese subsidiary. We intend to reinvest these earnings indefinitely in our Chinese subsidiary. If these earnings were distributed to the U.S. in the form of dividends or otherwise, we would be subject to additional U.S. income taxes and foreign withholding taxes.

The Company’s income tax calculations are based on application of the respective U.S. federal, state or foreign tax law. The Company’s tax filings, however, are subject to audit by the relevant tax authorities. Accordingly, the Company recognizes tax liabilities based upon its 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 are recorded as income tax expense or benefit in the consolidated statements of operations.

In assessing the realizability of deferred tax assets, ~~due to uncertainties regarding their realization. We have not recognized a valuation allowance against our foreign deferred tax assets as we believe~~the Company evaluates both positive and negative evidence that may exist and considers 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.

~~We recognize uncertain tax positions in accordance with ASC 712, “Income Taxes.” We recognize estimated interest and penalties that would be assessed in relation~~Any adjustment to the ~~estimated settlement value of uncertain~~net deferred tax ~~positions~~asset valuation allowance is recorded in the ~~Provision~~consolidated statement of operations for ~~income taxes.~~the period that the adjustment is determined to be required.

Stock-Based Compensation

The Company records stock-based compensation expense related to employee and director stock options and the Employee Stock Purchase Plan (“ESPP”) in accordance with ASC 718, “Compensation - Stock ~~Compensation.”~~Compensation”. In addition, the Company records compensation expense over the offering period in connection with shares issuable under the ESPP.

Net Income (Loss) Per Share

~~Net~~We compute basic income (loss) per share ~~is computed based on~~by dividing net income (loss) available to common stockholders by the weighted average number of ~~shares of~~ common ~~stock and potentially dilutive securities assumed to be~~shares outstanding during the ~~period using~~period. To determine diluted share count, we apply the treasury stock method ~~and~~to determine the ~~“if converted” method for convertible securities. Potentially~~ dilutive ~~securities consist~~effect of outstanding stock ~~options,~~option shares, restricted stock units ~~(“RSUs”~~(RSUs"), ~~warrants to purchase common~~and ESPP shares. Our application of the treasury stock method includes as assumed proceeds the average unamortized stock-based compensation expense for the period and ~~Zero Coupon Convertible Subordinated Notes (“Convertible Notes”).~~the impact of the pro forma deferred tax benefit or cost associated with stock-based compensation expense.

A reconciliation of basic and diluted Net income (loss) per share is presented below (in thousands, except per share data):


	Year Ended								Year Ended
	January 1, 2011		January 2, 2010			January 3, 2009			December 31, 2011		January 1, 2011		January 2, 2010
Basic and diluted Net income (loss)	$	57,072	$	(6,957	)	$	(38,206	)	$	78,232	$	57,072	$	(6,957	)
Shares used in basic Net income (loss) per share	116,726		115,384			115,291			117,875		116,726		115,384
Dilutive effect of stock options, RSUs and ESPP shares	3,417		—			—			3,264		3,417		—
Shares used in diluted Net income (loss) per share	120,143		115,384			115,291			121,139		120,143		115,384
Basic Net income (loss) per share	$	0.49	$	(0.06	)	$	(0.33	)	$	0.66	$	0.49	$	(0.06	)
Diluted Net income (loss) per share	$	0.48	$	(0.06	)	$	(0.33	)	$	0.65	$	0.48	$	(0.06	)




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)



[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED ~~JANUARY 1,~~DECEMBER 31, 2011
	or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Delaware	93-0835214
(State of Incorporation)	(I.R.S. Employer Identification Number)
5555 NE Moore Court
Hillsboro, Oregon	97124-6421
(Address of principal executive offices)	(Zip Code)



(Title of Class)	(Name of each exchange on which registered)
Common Stock, $.01 par value	NASDAQ Global Select Market



Large accelerated filer o		Accelerated filer [X]
Non-accelerated filer o		Smaller reporting company o


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No [X]
Aggregate market value of voting stock held by non-affiliates of the registrant as of July 2, 2010	$	358,228,322
Number of shares of common stock outstanding as of March 10, 2011	118,102,766



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No [X]
Aggregate market value of voting stock held by non-affiliates of the registrant as of July 1, 2011	$	614,681.648
Number of shares of common stock outstanding as of March 7, 2012	118,417.447



ITEM OF FORM 10-K			Page
PART I

Item 1.	-	Business	4
Item 1A.	-	Risk Factors	12
Item 1B.	-	Unresolved Staff Comments	2023
Item 2.	-	Properties	2023
Item 3.	-	Legal Proceedings	2023
Item 4.	-	~~[Reserved]~~Mine Safety Disclosures	2023

PART II

Item 5.	-	Market for the Registrant's Common Equity, Related Stockholder Matters & Issuer Purchases of Equity Securities	2124
Item 6.	-	Selected Financial Data	2326
Item 7.	-	Management's Discussion and Analysis of Financial Condition and Results of Operations	2428
Item 7A.	-	Quantitative and Qualitative Disclosures About Market Risk	3440
Item 8.	-	Financial Statements and Supplementary Data	3542
Item 9.	-	Changes in and Disagreements with Accountants On Accounting and Financial Disclosure	6372
Item 9A.	-	Controls and Procedures	6372
Item 9B.	-	Other Information	6372

PART III

Item 10.	-	Directors, Executive Officers and Corporate Governance	6473
Item 11.	-	Executive Compensation	6473
Item 12.	-	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	6473
Item 13.	-	Certain Relationships and Related Transactions, and Director Independence	6473
Item 14.	-	Principal Accountant Fees and Services	6473

PART IV

Item 15.	-	Exhibits, Financial Statement Schedules	6574

Signatures			6978
Schedule II—Valuation and Qualifying Accounts			S-1




¹		IHS iSuppli, “Competitive Landscaping ~~Tool—~~Tool (CLT) Q4 ~~2010,~~2011,” Nov. 17, ~~2010~~2011

²		IHS iSuppli, “Core Silicon Q4 2011 Market ~~Tracker—Q4 2010,~~Tracker & Component AMFT,” ~~Dec. 23, 2010~~Jan. 30, 2012


FPGA Family	Year Introduced	Process Technology (nm)	Operating Voltage	Logic (K LUTs)	SERDES Channels	Max RAM (Mb)	I/O Pins (#)	Year Introduced	Process Technology (nm)	Operating Voltage	Logic (K LUTs)	SERDES Channels	Max RAM (Mb)	I/O Pins (#)
LatticeECP3 ^TM	2009	65	1.2	17-149	4-16	7.2	133-586	2009	65	1.2	17-149	4-16	7.2	116-586
LatticeXP2 ^TM	2007	90	1.2	5-40	—	1.0	86-540	2007	90	1.2	5-40	—	1.0	86-540


PLD Family	Year Introduced	Process Technology (nm)	Operating Voltage	Logic (Macrocells)	I/O Pins (#)	Year Introduced	Process Technology (nm)	Operating Voltage	Logic (Macrocells)	I/O Pins (#)
MachXO2	2010	65	3.3/2.5/1.2	128-3,432	18-335	2010	65	3.3/2.5/1.2	128-3,432	19-335
MachXO	2005	130	3.3/2.5/1.8/1.2	128-1,140	73-271	2005	130	3.3/2.5/1.8/1.2	128-1,140	73-271
Lattice iCE40^TM						2011	40	1.2	320-8,096	25-222
ispMACH 4000ZE	2008	180	1.8	32-256	32-108	2008	180	1.8	32-256	32-108
ispMACH 4000Z	2003	180	1.8	32-256	32-128	2003	180	1.8	32-256	32-128



Name	Age	Position
Darin G. Billerbeck	5152	President, Chief Executive Officer and Director
~~Michael G. Potter~~Joe Bedewi	4452	Corporate Vice President and Chief Financial Officer
Byron W. Milstead	5455	Corporate Vice President, General Counsel and Secretary
~~Christopher M. Fanning~~Sean Riley	4843	Corporate Vice President and General Manager, ~~Low Density Solutions & Mixed Signal Solutions~~
~~Sean Riley~~	42	~~Corporate Vice President and General Manager, High Density Solutions~~
		Infrastructure Business Unit



___________
* Product classification

New:	LatticeECP3, LatticeXP2, LatticeECP2/M, MachXO, Power Manager II, ispClockA/D/S, ispMACH 4000ZE, iCE40
Mainstream:	ispXPLD, ispGDX2, ispMACH 4000/Z, ispXPGA, LatticeSC, LatticeECP, LatticeXP, ispClock, Power Manager I, Software and IP
Mature:	FPSC, ORCA 2, ORCA 3, ORCA 4, ispPAC, ispLSI 8000V, ispMACH 5000B, ispMACH 2LV, ispMACH 5LV, ispLSI 2000V, ispLSI 5000V, ispMACH 5000VG, all 5-volt CPLDs, GDX/V, ispMACH 4/LV, iCE65, all SPLDs


Fiscal year	Operating leases(1)		Purchase order obligations(2)		Operating leases(1)		Purchase order obligations(2)
2011	$	3,831	$	20,168
2012	3,099		—		$	3,652	$	67,188
2013	2,802		—		3,060		—
2014	526		—		635		—
2015	39		—		98		—
2016					32		—
Thereafter	25		—		—		—
	$	10,322	$	20,168	$	7,477	$	67,188



_________
(1)	Certain of our facilities and equipment are leased under operating leases, which expire at various times through 2016. Included in the table above for operating leases is property located in Austin, Texas that was vacated as part of our 2005 restructuring plan. In fiscal 2007, we entered into a sublease agreement for this vacated property. For fiscal 2011, future minimum lease payments, net of such sublease receipts, based on agreements in place at January 1, 2011, total $0.1 million.
(2)	This column excludes amounts already recorded on our Consolidated Balance Sheet as current or long-term liabilities at ~~January 1,~~December 31, 2011.



	Year Ended
	December 31, 2011			January 1, 2011			January 2, 2010
	Total		%	Total		%	Total		%
United States	$	44,847	14	$	36,211	12	$	28,296	15

China	123,124		39	124,910		42	83,813		43
Europe	66,319		21	54,332		18	33,389		17
Japan	36,961		11	38,992		13	19,460		10
Taiwan	8,346		3	8,839		3	6,313		3
Other Asia	32,687		10	27,853		10	17,476		9
Other Americas	6,082		2	6,631		2	5,673		3
Total foreign revenue	273,519		86	261,557		88	166,124		85
Total revenue	$	318,366	100	$	297,768	100	$	194,420	100



		Page
Consolidated Financial Statements:

Consolidated Balance Sheets, at ~~January 1,~~December 31, 2011 and January ~~2, 2010~~1, 2011		3643

Consolidated Statements of Operations, for the Years ended December 31, 2011, January 1, 2011 and January 2, 2010 ~~and January 3, 2009~~		3744

Consolidated Statements of Changes in Stockholders' Equity and Comprehensive Income (Loss), for the Years ended December 31, 2011, January 1, 2011 and January 2, 2010 ~~and January 3, 2009~~		3845

Consolidated Statements of Cash Flows, for the Years ended December 31, 2011, January 1, 2011 and January 2, 2010 ~~and January 3, 2009~~		3946

Notes to Consolidated Financial Statements		4047

Report of Independent Registered Public Accounting Firm		6170

Consolidated Financial Statement Schedule:

Schedule II—Valuation and Qualifying Accounts		S-1


	Common Stock ($.01 par value)														Accumulated other
	Shares		Amount			Paid-in Capital			Treasury stock			Accumulated deficit			comprehensive income (loss)			Total			Common Stock ($.01 par value)														Accumulated other comprehensive (loss) income
Balances, December 29, 2007	115,134		$	1,151		$	611,508		$	—		$	(325,049	)	$	(1,378	)	$	286,232
Net loss for 2008	—		—			—			—			(38,206		)	—			(38,206		)
Unrealized gain, net, related to marketable securities and foundry investments	—		—			—			—			—			713			713
Translation adjustments	—		—			—			—			—			132			132
Comprehensive loss	—		—			—			—			—			—			(37,361		)
Common stock issued in connection with exercise of stock options, ESPP and net vested RSUs	335		4			437			—			—			—			441
Stock-based compensation expense related to stock options, ESPP and RSUs	—		—			5,575			—			—			—			5,575
Distribution of stock held by deferred stock compensation plan	—		—			52			—			—			—			52
																					Shares		Amount			Paid-in Capital			Treasury stock			Accumulated deficit			Accumulated other comprehensive (loss) income			Accumulated other comprehensive (loss) income				Total
Balances, January 3, 2009	115,469		1,155			617,572			—			(363,255		)	(533		)	254,939			115,469		$	1,155		$	617,572		$	—		$	(363,255	)		$	254,939	Accumulated other comprehensive (loss) income
Net loss for 2009	—		—			—			—			(6,957		)	—			(6,957		)	—		—			—			—			(6,957		)	—				(6,957		)
Unrealized gain, net, related to marketable securities	—		—			—			—			—			1,031			1,031			—		—			—			—			—			1,031				1,031
Recognized gain on redemption of marketable securities, previously unrealized	—		—			—			—			—			(284		)	(284		)	—		—			—			—			—			(284		)		(284		)
Translation adjustments	—		—			—			—			—			(56		)	(56		)	—		—			—			—			—			(56		)		(56		)
Comprehensive loss	—		—			—			—			—			—			(6,266		)	—		—			—			—			—			—				(6,266		)
Common stock issued in connection with exercise of stock options, ESPP and net vested RSUs	386		4			198			—			—			—			202			386		4			198			—			—			—				202
Stock repurchase	(263	)	(3		)	—			(326		)	—			—			(329		)	(263	)	(3		)	—			(326		)	—			—				(329		)
Retirement of treasury stock	—		—			(326		)	326			—			—			—			—		—			(326		)	326			—			—				—
Stock-based compensation expense related to stock options, ESPP and RSUs	—		—			4,576			—			—			—			4,576			—		—			4,576			—			—			—				4,576
Distribution of stock held by deferred stock compensation plan	—		—			238			—			—			—			238			—		—			238			—			—			—				238
Balances, January 2, 2010	115,592		1,156			622,258			—			(370,212		)	158			253,360			115,592		1,156			622,258			—			(370,212		)	158				253,360
Net income for 2010	—		—			—			—			57,072			—			57,072			—		—			—			—			57,072			—				57,072
Unrealized gain, net, related to marketable securities	—		—			—			—			—			581			581			—		—			—			—			—			581				581
Tax effect of change in fair market value of auction rate securities	—		—			—			—			—			(304		)	(304		)	—		—			—			—			—			(304		)		(304		)
Translation adjustments	—		—			—			—			—			64			64			—		—			—			—			—			64				64
Comprehensive income	—		—			—			—			—			—			57,413			—		—			—			—			—			—				57,413
Common stock issued in connection with exercise of stock options, ESPP and net vested RSUs	2,750		27			5,341			—			—			—			5,368			2,750		27			5,341			—			—			—				5,368
Stock repurchase	(371	)	(4		)	—			(1,966		)							(1,970		)	(371	)	(4		)	—			(1,966		)	—			—				(1,970		)
Retirement of treasury stock	—		—			(1,966		)	1,966			—			—			—			—		—			(1,966		)	1,966			—			—				—
Stock-based compensation expense related to stock options, ESPP and RSUs	—		—			4,551			—			—			—			4,551			—		—			4,551			—			—			—				4,551
Balances, January 1, 2011	117,971		$	1,179		$	630,184		$	—		$	(313,140	)	$	499		$	318,722		117,971		1,179			630,184			—			(313,140		)	499				318,722
Net income for 2011																					—		—			—			—			78,232			—				78,232
Fair value charge related to marketable securities																					—		—			—			—			—			(526		)		(526		)
Recognized gain on redemption of marketable securities, previously unrealized																					—		—			—			—			—			(133		)		(133		)
Translation adjustments																					—		—			—			—			—			(185		)		(185		)
Comprehensive income																					—		—			—			—			—			—				77,388
Common stock issued in connection with exercise of stock options, ESPP and net vested RSUs																					2,145		23			5,508			—			—			—				5,531
Stock repurchase																					(2,441	)	(25		)	—			(14,411		)	—			—				(14,436		)
Retirement of treasury stock																					—		—			(14,411		)	14,411			—			—				—
Stock-based compensation expense related to stock options, ESPP and RSUs																					—		—			6,356			—			—			—				6,356
Balances, December 31, 2011																					117,675		$	1,177		$	627,637		$	—		$	(234,908	)	$	(345	)		$	393,561



	Useful lives (in years)	Estimated Fair Values
Net tangible assets acquired		$	837
Acquired intangible assets:
Developed technology	7	10,700
Customer relationships	5.5	7,800
Goodwill		43,911
Total purchase price allocation		$	63,248



	Year Ended (unaudited)
	December 31, 2011		January 1, 2011
Revenues	$	325,950	$	302,367
Income from operations	22,697		34,831
Net income	59,203		36,338
Basic net income per share	$	0.50	$	0.31
Diluted net income per share	$	0.49	$	0.30


	January 1, 2011					January 2, 2010
	Par Value		Fair Value		S&P Credit rating	Par Value		Fair Value		S&P Credit rating
Long-term marketable securities:
Federally-insured student loans	$	11,600	$	10,232	AAA	$	15,725	$	12,743	AAA
Ambac Assurance Corporation	—		—		-	8,325		196		C
	$	11,600	$	10,232		$	24,050	$	12,939


	Fair value measurements as of January 1, 2011								Fair value measurements as of December 31, 2011								Fair value measurements as of January 1, 2011
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Short-term marketable securities	$	63,836	$	63,836	$	—	$	—	$	68,711	$	68,711	$	—	$	—	$	63,836	$	63,836	$	—	$	—
Long-term marketable securities	10,232		—		—		10,232		6,946		—		—		6,946		10,232		—		—		10,232
Foreign currency forward exchange contracts									18		—		18		—		—		—		—		—
	$	74,068	$	63,836	$	—	$	10,232	$	75,675	$	68,711	$	18	$	6,946	$	74,068	$	63,836	$	—	$	10,232



	Weighted Average Amortization Period (in years)	Gross		Accumulated Amortization			Intangible assets, net of amortization December 31, 2011
Developed technology	7.0	$	10,700	$	(64	)	$	10,636
Customer relationships	5.5	7,800		(59		)	7,741
Total	6.3	$	18,500	$	(123	)	$	18,377



	Fiscal year 2011
Professional fees	$	397
Amortization of developed technology	64
Amortization of customer relationships	59
Adjustment to $0.3 million step-up in inventory fair value at date of acquisition	16
Total	$	536



Fiscal year	Estimated Acquisition related charges
2012	$	3,196
2013	2,947
2014	2,947
2015	2,947
2016	2,947
2017	2,179
2018	1,463
Total	$	18,626



	Year Ended
	December 31,		January 1,		January 2,
	2011		2011		2010
Domestic	$	42,619	$	56,782	$	(8,588	)
Foreign	104		821		2,148
Income (loss) before income taxes	$	42,723	$	57,603	$	(6,440	)


Unrecognized tax benefit	Amount			Amount
Balance at December 30, 2007	$	4,940
Additions based on tax positions related to the current year	727
Additions based on tax positions of prior years	924
Reduction for tax positions of prior years	(235		)
Settlements	—
Reduction as a result of lapse of applicable statute of limitations	(118		)
Balance at January 3, 2009	6,238			$	6,238
Additions based on tax positions related to the current year	473			473
Additions based on tax positions of prior years	341			341
Reduction for tax positions of prior years	—			—
Settlements	—			—
Reduction as a result of lapse of applicable statute of limitations	(83		)	(83		)
Balance at January 2, 2010	6,969			6,969
Additions based on tax positions related to the current year	786			786
Additions based on tax positions of prior years	60			60
Reduction for tax positions of prior years	—			—
Settlements	—			—
Reduction as a result of lapse of applicable statute of limitations	(74		)	(74		)
Balance at January 1, 2011	$	7,741		7,741

Additions based on tax positions related to the current year				15,005
Additions based on tax positions of prior years				—
Additions for acquisition of SiliconBlue				298
Reduction for tax positions of prior years				(106		)
Settlements				(1,248		)
Reduction as a result of lapse of applicable statute of limitations				(138		)
Balance at December 31, 2011				$	21,552


	Balance at January 2, 2010		Charged to expense in fiscal 2010		Paid or settled			Adjustments to reserve credited to expense in fiscal 2010			Balance at January 1, 2011		Cumulative expense through year ended January 2, 2010		Aggregate expense and adjustments
2009 Restructuring Plan:
																	Balance at January 1, 2011		Charged to expense in fiscal 2011		Paid or settled			Adjustments to reserve credited to expense in fiscal 2011			Balance at December 31, 2011
2011 Restructuring Plan:
Severance and related costs	$	715	$	198	$	(443	)	$	(295	)	$	175	$	2,368	$	2,271	$	—	$	6,503	$	(4,678	)	$	(269	)	$	1,556
Lease loss reserve	1,169		50		(532		)	57			744		1,356		1,463
Other	13		—		—			—			13		31		31		—		830		(830		)	—			—
Subtotal	1,897		248		(975		)	(238		)	932		3,755		3,765		—		7,333		(5,508		)	(269		)	1,556

Pre-2009 Restructuring Plans:
Pre-2011 Restructuring Plans:
Severance and related costs																	175		—		—			(175		)	—
Lease loss reserve and other	339		1		(70		)	—			270		21,339		21,340		1,027		11		(191		)	(821		)	26
Total restructuring plans	$	2,236	$	249	$	(1,045	)	$	(238	)	$	1,202	$	25,094	$	25,105	$	1,202	$	7,344	$	(5,699	)	$	(1,265	)	$	1,582


	Year Ended						Year Ended
Line item:	January 1, 2011		January 2, 2010		January 3, 2009		December 31, 2011		January 1, 2011		January 2, 2010
Cost of products sold	$	312	$	353	$	422	$	461	$	312	$	353
Research and development	1,851		1,572		2,467		2,697		1,851		1,572
Selling, general and administrative	2,388		2,651		2,433		3,095		2,388		2,651
Restructuring charges	—		—		253		103		—		—
	$	4,551	$	4,576	$	5,575	$	6,356	$	4,551	$	4,576


	Shares		Weighted average exercise price		Weighted average remaining contractual term (years)	Aggregate Intrinsic Value
Balance, January 2, 2010	12,437		$	2.88
								Shares		Weighted average exercise price		Weighted average remaining contractual term (years)	Aggregate Intrinsic Value
Balance, January 1, 2011								9,871		$	3.38
Granted	1,614		5.00					2,804		6.28
Exercised	(2,110	)	2.46					(1,842	)	3.00
Forfeited or expired	(2,068	)	2.63					(1,546	)	4.03
Balance, January 1, 2011	9,873		$	3.38
Vested and expected to vest at January 1, 2011	9,873		$	3.38	5.27	$	27,575
Exercisable, January 1, 2011	4,269		$	4.12	4.36	$	9,362
Balance, December 31, 2011								9,287		$	4.22
Vested and expected to vest at December 31, 2011								9,287		$	4.22	4.91	$	17,537
Exercisable, December 31, 2011								4,421		$	3.97	3.94	$	9,520


	Shares		Weighted average grant date fair value
Balance, January 2, 2010	925		$	2.52
					Shares		Weighted average grant date fair value
Balance at January 1, 2011					423		$	2.42
Granted	—		—		1,100		6.53
Vested	(460	)	2.65		(283	)	2.71
Forfeited	(42	)	2.22		(163	)	5.22
Balance at January 1, 2011	423		$	2.42
Balance at December 31, 2011					1,077		$	6.12




Exhibit Number		Description
2.1		Agreement and Plan of Merger, dated as of December 9, 2011, by and among Lattice Corp., Lattice Semiconductor, Ltd., a Bermuda exempted company and a wholly owned subsidiary of Lattice Corp., Aff Inv Acquisition Corporation, a Cayman Islands exempted company and a wholly owned subsidiary of Lattice Ltd., SiliconBlue Technologies Ltd., a Cayman Islands exempted company, and Fortis Advisors LLC, as the representative for SiliconBlue's security holders (Incorporated by reference to Exhibit 2.1 filed with the Company's Current Report on Form 8-K filed on December 19, 2011).

3.1		The Company's Restated Certificate of Incorporation filed February 24, 2004 (Incorporated by reference to Exhibit 3.1 filed with the Company's Annual Report on Form 10-K for the year ended January 3, 2004).

3.2		The Company's Bylaws, as amended and restated as of January 31, 2006 (Incorporated by reference to Exhibit 99.1 filed with the Company's Current Report on Form 8-K filed February 3, 2006).

4.4		Indenture, dated as of June 20, 2003, between the Company and U.S. Bank National Association (Incorporated by reference to Exhibit 4.1 filed with the Company's Registration Statement on Form S-3 on August 13, 2003).

4.5		Form of Note for the Company's Zero Coupon Convertible Subordinated Notes (Incorporated by reference to Exhibit 4.2 filed with the Company's Registration Statement on Form S-3 on August 13, 2003).

10.23		Advance Production Payment Agreement dated March 17, 1997 among Lattice Semiconductor Corporation and Seiko Epson Corporation and S MOS Systems, Inc. (Incorporated by reference to Exhibit 10.23 filed with the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2005)(1).

10.24*		Lattice Semiconductor Corporation 1996 Stock Incentive Plan, as amended, and Related Form of Option Agreement (Incorporated by reference to Exhibits (d)(1) and (d)(2) to the Company's Schedule TO filed on February 13, 2003).



Exhibit Number		Description
10.33*		2001 Outside Directors' Stock Option Plan, as amended and restated effective May 1, 2007 (Incorporated by reference to the Appendix A filed with the Company's 2007 Definitive Proxy Statement on Schedule 14A filed on April 5, 2007).


~~Exhibit Number~~		~~Description~~
10.34*		2001 Stock Plan, as amended, and related Form of Option Agreement (Incorporated by reference to Exhibits (d)(3) and (d)(4) to the Company's Schedule TO filed on February 13, 2003).

10.35		Intellectual Property Agreement by and between Agere Systems Inc. and Agere Systems Guardian Corporation and Lattice Semiconductor Corporation as Buyer, dated January 18, 2002 (Incorporated by reference to Exhibit 10.35 filed with the Company's Annual Report on Form 10-K for the year ended December 29, 2001).

10.37*		Lattice Semiconductor Corporation Executive Deferred Compensation Plan, as amended and restated effective as of August 11, 1997 (Incorporated by reference to Exhibit 99.3 filed with the Company's Registration Statement on Form S-3, as amended, dated October 17, 2002).

10.38*		Amendment No. 1, to the Lattice Semiconductor Corporation Executive Deferred Compensation Plan, as amended, dated November 19, 1999 (Incorporated by reference to Exhibit 99.4 filed with the Company's Registration Statement on Form S-3, as amended, dated October 17, 2002).

10.39		Registration Rights Agreement, dated as of June 20, 2003, between the Company and the initial purchaser named therein (Incorporated by reference to Exhibit 4.3 filed with the Company's Registration Statement on Form S-3 on August 13, 2003).

10.41*		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 year ended January 3, 2004).

10.42		Amendment dated March 25, 2004 to Advance Production Payment Agreement dated March 17, 1997, as amended, among Lattice Semiconductor Corporation and Seiko Epson Corporation and S MOS Systems, Inc. (Incorporated by reference to Exhibit 10.42 filed with the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 2004)(1).

10.43		Advance Payment and Purchase Agreement dated September 10, 2004 between Lattice Semiconductor Corporation and Fujitsu Limited (Incorporated by reference to Exhibit 10.1 filed with the Company's Quarterly Report on Form 10-Q for the quarter ended October 2, 2004)(1).

10.44*		Employment Agreement between Lattice Semiconductor Corporation and Stephen A. Skaggs dated August 9, 2005 (Incorporated by reference to Exhibit 99.1 filed with the Company's Current Report on Form 8-K filed on August 12, 2005).

10.45*		Compensation Arrangement between Lattice Semiconductor Corporation and Patrick S. Jones, Chairman of the Board of Directors (Incorporated by reference to Exhibit 99.2 filed with the Company's Current Report on Form 8-K filed on August 12, 2005).

10.46*		Employment Agreement between Lattice Semiconductor Corporation and Jan Johannessen dated November 1, 2005 (Incorporated by reference to Exhibit 10.1 filed with the Company's Quarterly Report on Form 10-Q filed on November 4, 2005).

10.47*		Employment Agreement between Lattice Semiconductor Corporation and Martin R. Baker dated November 1, 2005 (Incorporated by reference to Exhibit 10.2 filed with the Company's Quarterly Report on Form 10-Q filed on November 4, 2005).

10.48*		Employment Agreement between Lattice Semiconductor Corporation and Stephen M. Donovan dated November 1, 2005 (Incorporated by reference to Exhibit 10.3 filed with the Company's Quarterly Report on Form 10-Q filed on November 4, 2005).

10.50*		Compensation Arrangement between Lattice Semiconductor Corporation and Chairpersons for Committees of the Board of Directors (Incorporated by reference to Exhibit 99.1 filed with the Company's Current Report on Form 8-K filed on December 12, 2005).

10.51*		Form of Amendment to Stock Option Agreements for 1996 Stock Incentive Plan, as amended, and 2001 Stock Plan, as amended (Incorporated by reference to Exhibit 99.3 filed with the Company's Current Report on Form 8-K filed on December 12, 2005).

10.52*		2006 Executive Bonus Plan (Incorporated by reference to Exhibit 99.4 filed with the Company's Current Report on Form 8-K filed on December 12, 2005).



Exhibit Number		Description
10.53		Addendum dated March 22, 2006 to the Advance Payment and Purchase Agreement dated September 10, 2004 between Lattice Semiconductor Corporation and Fujitsu Limited (Incorporated by reference to Exhibit 10.53 filed with the Company's Quarterly Report on Form 10-Q filed on November 7, 2006).


~~Exhibit Number~~		~~Description~~
10.54		Addendum No. 2 dated effective October 1, 2006 to the Advance Payment and Purchase Agreement dated September 10, 2004 between Lattice Semiconductor Corporation and Fujitsu Limited (Incorporated by reference to Exhibit 10.54 filed with the Company's Quarterly Report on Form 10-Q filed on November 7, 2006)(1).

10.55*		2007 Executive Variable Compensation Plan, as amended (Incorporated by reference to Exhibit 99.1 filed with the Company's Current Report on Form 8-K filed on December 7, 2006, as amended as described in the Company's Current Report on Form 8-K filed on February 8, 2007).

10.56*		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).

10.57*		2008 Executive Variable Compensation Plan, as amended (Incorporated by reference to Exhibit 99.1 filed with the Company's Current Report on Form 8-K filed on December 7, 2007).

10.58*		Letter Agreement between Lattice Semiconductor Corporation and Stephen A. Skaggs dated January 31, 2008 (Incorporated by reference to Exhibit 10.58 filed with the Company's Annual Report on Form 10-K filed on March 13, 2008).

10.59*		Employment Agreement between Lattice Semiconductor Corporation and Bruno Guilmart dated May 14, 2008 (Incorporated by reference to Exhibit 99.1 filed with the Company's Current Report on Form 8-K filed on June 16, 2008).

10.60*		Employment Agreement between Lattice Semiconductor Corporation and Byron Milstead dated May 14, 2008 (Incorporated by reference to Exhibit 10.60 filed with the Company's Current Report on Form 10-Q filed on August 8, 2008).

10.61*		Form of Inducement Stock Option Agreement (Incorporated by reference to Exhibit 10.61 filed with the Company's Current Report on Form 10-Q filed on November 5, 2008).

10.62*		Employment Agreement between Lattice Semiconductor Corporation and Michael G. Potter dated February 4, 2009 (Incorporated by reference to Exhibit 99.2 filed with the Company's Current Report on Form 8-K filed on February 4, 2009).

10.63*		2009 Bonus Plan of Lattice Semiconductor Corporation (Incorporated by reference to Exhibit 10.63 filed with the Company's Annual Report on Form 10-K filed on March 13, 2009).

10.64		Addendum #4 dated effective December 18, 2009 to the Advanced Payment and Purchase Agreement dated September 10, 2004 between Lattice Semiconductor Corporation and Fujitsu Limited (Incorporated by reference to Exhibit 10.64 filed with the Company's Annual Report on Form 10-K filed on March 13, 2009).

10.65		Letter Agreement effective December 18, 2008 re Repayment of Advance Payment between Lattice Semiconductor Corporation and Fujitsu Microelectronics Limited and Fujitsu Microelectronics America, Inc. (Incorporated by reference to Exhibit 10.65 filed with the Company's Annual Report on Form 10-K filed on March 13, 2009).

10.66*		Employment Agreement between Lattice Semiconductor Corporation and Byron Milstead effective as of December 30, 2008. (Incorporated by reference to Exhibit 10.66 filed with the Company's Annual Report on Form 10-K filed on March 13, 2009).

10.67*		Employment Agreement between Lattice Semiconductor Corporation and Sean Riley dated September 22, 2008 (Incorporated by reference to Exhibit 10.67 filed with the Company's Current Report on Form 10-Q filed on April 4, 2009).

10.68*		Employment Agreement between Lattice Semiconductor Corporation and Christopher M. Fanning amended and restated as of December 15, 2008 (Incorporated by reference to Exhibit 10.68 filed with the Company's Current Report on Form 10-Q filed on April 4, 2009).

10.69*		Lattice Semiconductor Corporation 2010 Cash Incentive Compensation Plan (Incorporated by reference to Exhibit 10.69 filed with the Company's Annual Report on Form 10-K filed on March 10, 2010).