If we fail to maintain our foundry and manyOSAT relationships, if these partners do not provide facilities and support for our development efforts, if they are insolvent or experience financial difficulty, if their operations are interrupted by the COVID-19 pandemic, or if we elect or are required to change foundries or OSATs, we may incur significant costs and delays. If our foundry or OSAT partners are unable to, or do not, manufacture sufficient quantities of our directproducts at acceptable yields, we may be required to allocate the affected products among our customers, prematurely limit or discontinue the sales of certain products, or incur significant costs to transfer products to other foundries or OSATs, which could adversely affect our customer relationships and indirect competitors have substantially greater financial, technological, manufacturing, marketing,operating results.

Our margins are dependent on our achieving continued yield improvement.

We rely on obtaining yield improvements and sales resources. Consolidationcorresponding cost reductions in our industry may increasingly meanthe manufacture of existing products and on introducing new products that incorporate advanced features and other price/performance factors that enable us to increase revenues while maintaining acceptable margins. To the extent that such cost reductions and new product introductions do not occur in a timely manner, because of inflation, increases in personnel costs, employee turnover, or other factors, or that our competitorsproducts do not achieve market acceptance or market acceptance at acceptable pricing, our forecasts of future revenue, financial condition, and operating results could be materially adversely affected.

Shortages in, or increased costs of, wafers and materials could adversely impact our gross margins and lead to reduced revenues.

Worldwide manufacturing capacity for silicon wafers is relatively inelastic. If the demand for silicon wafers or assembly material exceeds market supply, or if suppliers increase prices to cover the cost of rising inflation, our supply of silicon wafers or assembly material could quickly become limited or prohibitively expensive. We typically have greater consolidated resources,short-term wafer supply agreements that do not ensure long-term supply or allocation commitments. A shortage in manufacturing capacity could hinder our ability to meet product demand and therefore reduce our revenue. In addition, silicon wafers constitute a material portion of our product cost. If we are unable to purchase wafers at favorable prices, due to supply constraints, inflation, or other synergies,factors, our financial condition and results of operations will be adversely affected.

We may be subject to warranty claims and other costs related to our products.

In general, we 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 these are specific manufacturing defects affecting individual products or these are systematic defects that could put us ataffect numerous shipments. Inability to detect a competitive disadvantage. We currently compete directly with companies that have licensed our technology or have developed similar products, as well as numerous semiconductor companies that offer products based on alternative solutions, such as applications processor, application specific standard product, microcontroller, analog, and digital signal processing technologies. Competition from these semiconductor companies may intensify as we offer more productsdefect could result in anya diversion of our end markets. These competitors include established, multinational semiconductor companies, as well as emerging companies.

Our business strategy includes licensing our intellectual property to companies that incorporate it into their technologies that address multiple markets, including markets where we participate and compete. Our Licensing and services revenue may be impacted by the introduction of new technologies by customers in place of the technologies we license, changes in the law that may weaken our ability to prevent the use of our patented technology by others, the expiration of our patents, and changes of demand or selling prices for products using licensed patents. We cannot assure that our licensing customers will continue to license our technology on commercially favorable terms or at all, or that these customers will introduce and sell products incorporating our technology, accurately report royalties owed to us, pay agreed upon royalties, honor agreed upon market restrictions, or maintain the confidentiality of our proprietary information, or will not infringe upon or misappropriate our intellectual property. Our intellectual property licensing agreements are complex and may depend upon many factors that require significant judgments, including completion of milestones, allocation of values to delivered items and customer acceptance.

We have generated revenue from the sale of certain patents from our portfolio in the past, generally for non-core technology that we are no longer actively developing. While we plan to continue to monetize our patent portfolio through sales of non-core patents, we may not be able to realize adequate interest or prices for those patents. Accordingly, we cannot provide assurance that we will continue to generate revenue from these sales. In addition, although we seek to be strategic in our decisions to sell patents, we might incur reputational harm if a purchaser of our patents sues one of our customers for infringement of the purchased patent, and we might later decide to enter a space that requires the use of one or more of the patents we sold. In addition, as we sell groups of patents, we no longer have the opportunity to further sell or to license those patents and receive a continuing royalty stream.

Our Licensing and services revenue fluctuates, sometimes significantly, from period to period because it is heavily dependent on a few key transactions being completed in a given period, the timing of which is difficult to predict and may not match our expectations. Licensing and services revenue may include revenue from the sales of patents, which may be difficult to complete and which may have complex terms for the payment which affects revenue recognition. Because of its high margin, the Licensing and services revenue portion of our overall revenue can have a disproportionate impact on gross profit and profitability. In addition, generating revenue from patent sales and intellectual property licenses is a lengthy and complex process that may last beyond the period in which our efforts begin, and the accounting rules governing the recognition of revenue from patent sales and intellectual property licensing transactions are increasingly complex and subject to interpretation.require significant judgment. As a result, the amount of license revenue recognized in any period may differ significantly from our expectations.

Litigation and unfavorable results of legal proceedings could adversely affect our financial condition and operating results.

From time to time we are subject to various legal proceedings and claims that arise out of the ordinary conduct of our business. Certain claims may not yet be resolved, including but not limited to any that are discussed under "Note 15 - Contingencies" contained in the Notes to Consolidated Financial Statements, and additional claims may arise in the future. Results of legal proceedings cannot be predicted with certainty. Regardless of merit or outcome, claims or litigation may be both time-consuming and disruptive to our operations and cause significant expense and diversion of management attention and we may enter into material settlements to avoid these risks. Should we fail to prevail in certain matters or enter into a material settlement, we may be faced with significant monetary damages or injunctive relief against us that could materially and adversely affect our financial condition and operating results and certain portions of our business.

Our participation in the HDMI standard is evolving. We no longer act as agent for the HDMI standard, and our share of adopter fees and royalties for the HDMI standard is subject to variability.

We acted as agent of the HDMI consortium until December 31, 2016 and were responsible for promoting and administering the specification. We received all of the adopter fees paid by adopters of the HDMI specification in connection with our role as agent. In September 2016, the Founders of the HDMI consortium, of which we are a member, amended the Founders Agreement resulting in changes to our role as agent for the HDMI consortium and to the model for sharing adopter fee revenues. Under the terms of the agreement, our role as the agent was terminated effective January 1, 2017 and a new independent entity was appointed to act as the new HDMI licensing agent with responsibility for licensing and the distribution of royalties among Founders. As a result of the amended model for sharing adopter fee revenue, we are entitled to a share of the adopter fees paid by parties adopting the HDMI standard.

We share HDMI royalties with the other HDMI Founders based on an allocation formula, which is reviewed generally every three years. In the fourth quarter of fiscal 2019, the HDMI Founders adopted a new agreement covering the five-year period beginning January 1, 2018. The amount of our portion of the royalty allocation is dependent on the royalties generated by adopter sales of royalty-bearing HDMI technology, which are subject to variability in economic trends particularly in the market for consumer electronics.

If we are unable to adequately protect our new and existing intellectual property rights, our financial results and our ability to compete effectively may suffer.

Our success depends in part on our proprietary technology and we rely upon patent, copyright, trade secret, mask work, and trademark laws to protect our intellectual property. We intend to continue to protect our proprietary technology, however, we may be unsuccessful in asserting our intellectual property rights or such rights may be invalidated, violated, circumvented, or challenged. From time to time, third parties, including our competitors, have asserted against us patent, copyright, and other intellectual property rights to technologies that are important to us. Third parties may attempt to misappropriate our intellectual property through electronic or other means or assert infringement claims against us in the future. Such assertions by third parties may result in costly litigation, indemnity claims, or other legal actions, and we may not prevail in such matters or be able to license any valid and infringed patents from third parties on commercially reasonable terms. This could result in the loss of our ability to import and sell our products or require us to pay costly royalties to third parties in connection with sales of our products. Any infringement claim, indemnification claim, or impairment or loss of use of our intellectual property could materially adversely affect our financial condition and results of operations.

Factors Related to Overall General Business & Operations

Our business depends on the proper functioning of internal processes and information technology systems. A failure of these processes and systems, data breaches, cyber-attacks, or cyber-fraud may cause business disruptions, compromise our intellectual property or other sensitive information, or result in losses.

We rely on various information technology ("IT") networks and systems to manage our operations, including financial reporting, and we regularly make changes to improve them as necessary by periodically implementing new, or upgrading or enhancing existing, operational and IT systems, procedures, and controls. These systems are supported by subcontractors, and they may also be subject to power and telecommunication outages or other general system failures. The legal, regulatory and contractual environments surrounding information security, data privacy, and data protection are complex and evolving. We continue to commit significant resources to implementing new systems to standardize our processes worldwide and to develop our capabilities in these areas. We are focused on realizing the full analytical functionality of these conversions, which can be extremely complex, in part, because of the wide range of legacy systems and processes that must be integrated.

In the normal course of business, we may implement new or updated IT systems and, as a result, we may experience delays or disruptions in the integration of these systems, or the related procedures or controls. The policies and security measures established with our IT systems may be vulnerable to security breaches and incidents, cyber-attacks, or fraud. We may also encounter errors in corruption or loss of data, an inability to accurately process or record transactions, and security or technical reliability issues. All of these could harm our ability to conduct core operating functions such as processing invoices, shipping and receiving, recording and reporting financial and management information on a timely and accurate basis, and could impact our internal control compliance efforts. If the technical solution or end user training are inadequate, it could limit our ability to manufacture and ship products as planned. We have various systems that remain that may be nearing the end of their useful life or vendor support, which will ultimately need to be replaced. Moreover, the proper functioning of the internal processes that the IT systems and networks support relies on qualified employees. Competition for qualified employees has generally increased across the economy in the United States, which, if we experience employee turnover, could lead to disruptions in our processes, inadequate end user training or difficulty updating our IT systems and networks.

We maintain sensitive data on our networks and the networks of our business partners and third-party providers, including proprietary and confidential information relating to our intellectual property, personnel, and business, and that of our customers and third-party providers. Companies have been increasingly subject to a wide variety of security incidents, cyber-attacks, hacking, phishing, malware, ransomware, and other attempts to gain unauthorized access to systems or data, or to engage in fraudulent behavior. Cyber-attacks have become more prevalent, sophisticated and much harder to detect and defend against and it is often difficult to anticipate or detect such incidents on a timely basis and to assess the damage caused by them. Our policies and security measures cannot guarantee security, and our information technology infrastructure, including our networks and systems, may be vulnerable to security breaches and incidents, cyber-attacks, or fraud. In the past, third parties have attempted to penetrate and/or infect our network and systems with malicious software and phishing attacks in an effort to gain access to our network and systems. In addition, we are subject to the risk of third parties falsifying invoices and similar fraud, frequently by obtaining unauthorized access to our vendors’ and business partners’ networks.

In some circumstances, we may partner with third-party providers and provide them with certain data, including sensitive data, or the ability to access or otherwise process such data. These third parties also face substantial security risks from a variety of sources. There can be no assurance that any security measures that we or our third-party service providers have implemented will be effective against current or future security threats, and we cannot guarantee that our systems and networks or those of our third-party service providers have not been breached or otherwise compromised, or that they and any software in our or their supply chains do not contain bugs, vulnerabilities, or compromised code that could result in a breach of or disruption to our systems and networks or the systems and networks of third parties that support us and our services. If any of our third-party providers fails to adopt or adhere to adequate data security practices, or suffers a security breach or incident, any data, including sensitive data, that we provide them or that they otherwise may access or process for us may be improperly accessed, used, disclosed, modified, lost, destroyed, or rendered unavailable. Any security breaches or incidents that we or our third-party providers may suffer could compromise our intellectual property, expose sensitive business information and otherwise result in unauthorized access to or disclosure, modification, misuse, loss or destruction of sensitive information. We may need to expend significant financial and development resources to analyze, correct, eliminate, or work around errors or defects or to eliminate or otherwise address security vulnerabilities, and we and our third-party service providers may face difficulties or delays in identifying or otherwise responding to any potential security breach or incident.

Further, the increase in cyber-attacks has resulted in an increased focus on cybersecurity by certain government agencies. Any cyber-attack or other security breach or incident that we or our third-party providers may suffer, or the perception that any such attack, breach, or incident has occurred, could result in a loss of customer confidence in our security measures, damage to our brand, reputation, and market position, result in unauthorized access to or disclosure, modification, misuse, loss, corruption, unavailability, or destruction of our data or other sensitive data that we or our third-party providers process or maintain, disrupt normal business operations, require us to spend material resources to investigate or correct any breach or incident and to prevent future security breaches and incidents, expose us to legal claims and liabilities, including litigation, regulatory investigations and enforcement actions, and indemnity obligations, and adversely affect our revenues and operating results. Further, any such actual or perceived breach or incident, and any claims, demands, litigation, or investigations or enforcement actions related to cybersecurity could cause us to incur significant remediation costs, result in product development delays, disrupt key business operations, and divert attention of management and key information technology resources. In addition, we may incur loss as a result of cyber-fraud, such as those experienced by other companies by making unauthorized payments irrespective of robust internal controls.

Failure or disruptions of our IT systems or difficulties or delays in maintaining, managing, and integrating them could adversely affect our controls and procedures and could impact our ability to perform necessary operations, which could materially adversely affect our business.

We cannot be certain that our insurance coverage will be adequate for data security liabilities incurred and, will cover any indemnification claims against us relating to any incident, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.

We regularly test for goodwill and other impairments as required under U.S. GAAP, and we may incur future impairments.

We are required under U.S. GAAP to test goodwill for possible impairment on an annual basis and to test goodwill and long-lived assets, including amortizable intangible assets, for impairment at any other time that circumstances arise indicating the carrying value may not be recoverable.For purposes of testing goodwill for impairment, the Company currently operates as one reporting unit: the core Lattice ("Core") business, which includes intellectual property and semiconductor devices. We had no impairment charges in fiscal years 2021, 2020, or 2019. Impairment charges related to amortizable intangible assets from the Silicon Image acquisition totaled approximately $12.5 million in fiscal 2018. There is no certainty that future impairment tests will indicate that goodwill or amortizable intangible assets will be deemed recoverable. As we continue to review our business operations and test for impairment or in connection with possible sales of assets, we may have impairment charges in the future, which may be material.

Changes to financial accounting standards may affect our results of operations and could cause us to change our business practices.

We prepare our consolidated financial statements to conform to generally accepted accounting principles in the United States. These accounting principles are subject to interpretation by the American Institute of Certified Public Accountants, the SEC and various bodies formed to interpret and create accounting rules and regulations. Changes in these rules, such as the adoption of ASC 842 - Leases in fiscal 2019, has had a material effect on our financial results and affected portions of our business differently. Future changes to these rules, or in the guidance relating to interpretation and adoption of the rules, could have a significant effect on our financial results and could affect portions of our business differently.

Changes in effective tax rates, tax laws and our global organizational structure and operations could expose us to unanticipated tax consequences.

We are subject to taxation in the United States and other countries. Certain tax positions may remain open to examination for several years. Challenges by tax authorities to our previous tax positions and intercompany transfer pricing arrangements, and continuing assessments of our tax exposures may have an adverse effect on our provision for income taxes and cash tax liability. We have a global tax structure that aligns our corporate structure with our global business operations, and we currently operate legal entities in multiple countries. We may choose to consolidate or integrate certain of these entities, and these integration activities, as well as changes in composition of our earnings in jurisdictions with different tax rates, may impact the taxes we pay or tax provision we record, which could adversely affect our results of operations. Furthermore, various levels of government are focused on tax reform and other legislative actions to increase tax revenue. The current U.S. administration has various proposals that, if enacted, would increase U.S. federal income taxes on corporations. Further changes in the tax laws of foreign jurisdictions could arise as a result of the base erosion and profit shifting project undertaken by the Organisation for Economic Co-operation and Development, which represents a coalition of member countries and recommended changes to numerous long-standing tax principles. If implemented by taxing authorities, such changes, as well as changes in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions, could have a material adverse effect on our business, results of operations, or financial condition. In addition, future effective tax rates could be affected by changes in the valuation of deferred tax assets and liabilities.

Weakness in our internal control over financial reporting could adversely affect our business and financial results.

We are required to maintain internal controls over financial reporting. We review these controls regularly and deficiencies may be identified from time to time. For example, during the quarter ended December 28, 2019, we evaluated and remediated certain deficiencies in our information technology controls over system access and no material weakness existed at the end of the period. In the future, we may identify material weaknesses in our internal controls over financial reporting. Any failure to maintain an effective system of internal controls over financial reporting could limit our ability to report our financial results accurately and timely, which could adversely affect our business, financial results, and stock price.

We compete with others to attract and retain key personnel, and any loss of, or inability to attract, such personnel could adversely affect our ability to compete effectively.

We depend on the efforts and abilities of certain key members of management and other technical personnel. Our future success depends, in part, upon our ability to retain such personnel and attract and retain other highly qualified personnel, particularly product engineers who can respond to market demands and required product innovation. Competition for such personnel is intense and has been increasing generally throughout the economy, and we may not be successful in hiring or retaining new or existing qualified personnel. If we lose existing qualified personnel or are unable to hire new qualified personnel, as needed, we could have difficulty competing in our highly competitive and innovative environment.

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; workers' 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, certain natural disasters, certain product defects, certain matters for which we indemnify third parties, political risk, certain theft, patent infringement, and 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.

Our outstanding indebtedness could reduce our strategic flexibility and liquidity and may have other adverse effects on our results of operations.

As of January 1, 2022, we had approximately $158.8 million outstanding under a credit agreement, dated May 17, 2019 (the “Current Credit Agreement”). Our obligations under the Current Credit Agreement are guaranteed by our U.S. subsidiaries, and include a requirement to pay quarterly installments of approximately $4.4 million with the remaining balance due upon maturity in May 2024. Our ability to meet our debt service obligations depends upon our operating and financial performance, which is subject to general economic and competitive conditions and to financial, business and other factors affecting our operations, many of which are beyond our control. If we are unable to service our debt, we may need to sell material assets, restructure or refinance our debt, or seek additional equity capital. Prevailing economic conditions and global credit markets could adversely impact our ability to sell material assets, restructure or refinance our debt on terms acceptable to us, or at all, or we may not be able to restructure or refinance our debt without incurring significant additional fees and expenses.

The Current Credit Agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Company to, among other things, incur debt, grant liens, undergo certain fundamental changes, make investments, make certain restricted payments, dispose of assets, enter into transactions with affiliates, and enter into burdensome agreements, in each case, subject to limitations and exceptions set forth in the Current Credit Agreement. We are also required to maintain compliance with a total leverage ratio and an interest coverage ratio, in each case, determined in accordance with the terms of the Current Credit Agreement.

The amount and terms of our indebtedness, as well as our credit rating, could have important consequences, including the following:

If we breach a loan covenant, the lenders could accelerate the repayment of the facility. We might not have sufficient assets to repay our indebtedness upon acceleration. If we are unable to repay or refinance the indebtedness upon acceleration or at maturity, the lenders could initiate a bankruptcy proceeding against us or collection proceedings with respect to our assets and subsidiaries securing the facility, which could materially decrease the value of our common stock.

Factors Related to Our Markets and Product Development

The semiconductor industry routinely experiences cyclical market patterns and our products are used across different end markets, and amarkets. A significant downturn in the industry or in any of these end markets could cause a meaningful reduction in demand for our products and adversely affect our operating results.

Our revenue and gross margin can fluctuate significantly due to downturns in the highly cyclical semiconductor industry. These downturns can be severe and prolonged and can result in price erosion and weak demand for our products.

Additionally, our products are used across different end markets, and demand for our products is difficult to predict and may vary within or among our Industrial and Automotive, Communications and Computing, and Mobile and Consumer end markets. Our target markets may not grow or develop as we currently expect, and demand may increase or change in one or more of our end markets, and changes in demand may reduce our revenue, lower our gross margin and effect our operating results. We have experienced concentrations of revenue at certain customers and within certain end markets, and we regularly compete for design opportunities at these customers and within these markets. Any deterioration in these end markets, reductions in the magnitude of revenue streams, our inability to meet design and pricing requirements, or volatility in demand for our products could lead to a reduction in our revenue and adversely affect our operating results. Our success in our end markets depends on many factors, including the strength or financial performance of the companiescustomers in our end markets, our ability to timely meet rapidly changing product requirements, market needs, and our ability to maintain design wins across different markets and customers to dampen the effects of market volatility. Our inabilityThe dynamics of the markets in which we operate make prediction of and timely reaction to such events difficult.

Due to these and other factors, our past results may not be reliable predictors of our future results. If we are unable to accomplish any of the foregoing, or to offset the volatility of cyclical changes in the semiconductor industry or our end markets through diversification into other markets, these factors could materially and adversely affect our business, financial condition, and results of operations.

We compete in a dynamic environment characterized by rapid technology and product evolution, generally followed by a relatively longer process of ramping up to volume production on advanced featurestechnologies. Our end customers’ continued use of our products is frequently reevaluated, as certain of our customers' product life cycles are relatively short and they continually develop new products. The selection process for our products to be included in our customers' new products is highly competitive. There are no guarantees that our products will be included in the next generation of products introduced by these customers. Additionally, our markets are also characterized by evolving industry standards and increased demand for higher levels of integration and smaller process geometry. Our competitive position and success depend on our ability to innovate, develop, and introduce new products that compete effectively on the basis of price, density, functionality, power consumption, form factor, and performance, and our addressing the evolving needs of the markets we serve, among other price/performance factors that enable usthings. With increased introduction of new products, we expect revenue related to increase revenues while maintaining acceptable margins. Tomature products to decline over time in a normal product life cycle. As a result, we may be increasingly dependent on revenue derived from our newer products.

Our future growth and the extent such cost reductions andsuccess of new product introductions do not occur in a timely manner, or thatdepend upon numerous factors, including:

The failure of any of these factors, among others, could adversely affect our products do not achieve market acceptance or market acceptance at acceptable pricing,product innovation, development and introduction efforts and our forecasts of future revenue, financial condition and results of operations.

We compete against companies that have significantly greater resources than us and numerous other product solutions.

The semiconductor industry is highly competitive and many of our direct and indirect competitors have substantially greater financial, technological, manufacturing, marketing, and sales resources than us. Consolidation in our industry may increasingly mean that our competitors have greater consolidated resources, or other synergies, including the ability to attract qualified employee or incorporate higher costs into product and service prices, that could put us at a competitive disadvantage. We currently compete directly with companies that have licensed our technology or have developed similar products, as well as numerous semiconductor companies that offer products based on alternative solutions, such as applications processor, application specific standard product, microcontroller, analog, and digital signal processing technologies. Competition from these semiconductor companies may intensify as we offer more products in any of our end markets. These competitors include established, multinational semiconductor companies, as well as emerging companies.

We depend on independent contractors and third parties to provide key services in our product development and operations, and any disruption of their services, or an increase in cost of these services, could negatively impact our financial condition and results of operations.

We depend on subcontractors to provide cost effective and efficient services in our product development and supply chain functions, including test and assembly services, software and hardware development, support of intellectual property cores, inventory management, order fulfillment and direct sales logistics.

Our operations and operating results couldmay be materially adversely affected.

A number of factors, including how products are manufactured to support end markets, yield, wafer pricing, cost of packaging raw materials, product mix, market acceptance of our new products, competitive pricing dynamics, product quality, geographic and/or end market mix, and pricing strategies, can cause our revenue, gross margins and net income to fluctuate significantly either positively or negatively from period to period.

We have limited visibility into the demand for our products, particularly new products, because demand for our products depends upon our products being designed into our end customers' products and those products achieving market acceptance. During our sales cycle, our customers typically test and evaluate our products prior to deciding to include our products into the design of their own products, and then require additional time to begin volume production of their products. This lengthy sales cycle may cause us to incur significant expenses, which could be exacerbated by rising inflation, experience significant production delays and to incur additional inventory costs before we receive a customer order that may be delayed or never get placed. A key strategic customer may demand certain design or production resources to meet their requirements or work on a specific solution, which could cause delays in our normal development schedule and result in significant investment of our resources or missed opportunities with other potential customers. We may incur these expenses without generating revenue from our products to offset the expenses.

While our sales cycles are typically long, our average product life cycles tend to be short as a result of the rapidly changing technology environment in which we operate. Our inventory levels may be higher than historical norms, from time to time, due to inventory build decisions aimed at meeting expected demand from a single large customer, reducing direct material cost or enabling responsiveness to expected demand. In the event the expected demand does not materialize, or if our short sales cycle does not generate sufficient revenue, we may be subject to incremental excess and obsolescence costs.

These factors make it difficult for us to accurately forecast future sales and project quarterly revenues. The difficulty in forecasting future sales weakens our ability to project our inventory requirements, which could result, and in the past has resulted, in inventory write-downs or failure to meet customer product demands in a timely manner. While we may give guidance, the difficulty in forecasting revenues as well as the relative customer and product mix of those revenues limits our ability to provide accurate forward-looking revenue and gross margin guidance.

Item 2. Properties

In the first quarter of 2019, we relocated our corporate headquarters from Portland, Oregon to our facility in Hillsboro, Oregon.

We lease a 47,800 square foot of space in Hillsboro, Oregon as our corporate headquarters and a research and development facility through November 2022. During 2018, our corporate headquarters and executive office were located in a 23,680 square foot of space leased in Portland, Oregon through March 2025. We plan to fully vacate the space in Portland, Oregon in early 2019 and intend to sublease the vacated space.October 2028. In San Jose, California, we have 98,874 square feet under lease through September 2016,2026, of which we use 49,579 square feet as a research and development facility, while we vacated 49,295 square feet during the fourth quarter of 2018 and intend to sublease the vacated space. During 2019, we vacated a 23,680 square foot office space in Portland, Oregon, which we have subleased through the end of the lease in March 2025.

In Muntinlupa City, Philippines, we lease a total of 48,56550,503 square feet through May 2025 and 1,938 square feet through June 2025 for research and development and operations facilities. In this location, we also leased another 2,856 square feet through April 2018 as storage space that has been consolidated into other facilities.

In Shanghai, China, we lease 68,027 square feet through May 20212024 for research and development operations. We also owned an 18,869 square foot research and development facility in Shanghai, China, which we sold in August 2017.

We also lease office facilities in multiple other metropolitan locations for our domestic and international sales staff. We believe that our existing facilities are suitable and adequate for our current and foreseeable future needs.

Item 3. Legal Proceedings

On or about December 19, 2018, Steven A.W. De Jaray, Perienne De Jaray and Darrell R. Oswald (collectively,

The information contained under the “Plaintiffs”) commenced an action against the Company and several unnamed defendantsheading "Legal Matters" in the Multnomah County Circuit Court of the State of Oregon,Note 15 - Contingencies to our Consolidated Financial Statements in connection with the sale of certain productsPart II, Item 8 is incorporated by the Company to defendants in or around 2008. Plaintiffs allege that the Company violated the Lanham Act, engaged in negligence and fraud by failing to disclose to purchaser the export-controlled status of the subject parts. Plaintiffs seek damages of $138 million, treble damages, and other remedies. In January 2019, the Company removed the action to the United States District Court for the District of Oregon. Atreference into this stage of the proceedings, the Company does not have an estimate of the likelihood or the amount of any potential exposure to the Company; however, the Company believes that these claims are without merit and intends to vigorously defend the action. SeePart I, Item 3. Also, see “Litigation and unfavorable results of legal proceedings could adversely affect our financial condition and operating results” in “Risk Factors” in Item 1A of Part I of this Annual Report on Form 10-K.

From time to time, we are exposed to certain asserted and unasserted potential claims. Periodically, we review the status of each significant matter and assess its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and a range of possible losses can be estimated, we then accrue a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based only on the best information available at the time. As additional information becomes available, we reassess the potential liability related to pending claims and litigation and may revise estimates.

Item 4. Mine Safety Disclosures

Not applicable.

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Table of Contents

PART II

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

Market Information

Our common stock is traded on the NASDAQ Global Select Market under the symbol "LSCC".

Holders

As of February 21, 2019,17, 2022, we had approximately 227182 stockholders of record.

Dividends

The payment of dividends on our common stock is within the discretion of our Board of Directors. We intend to retain earnings to finance our business. We have never paid cash dividends.

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

On February 19, 2021, our Board of Directors approved a stock repurchase program pursuant to which up to $60.0 million of outstanding common stock could be repurchased from time to time (the "2021 Repurchase Program"). The duration of the 2021 Repurchase Program is twelve months. Under the 2021 Repurchase Program during the fourth quarter of fiscal 2021, we repurchased approximately 60,800 shares for approximately $4.9 million, or an average price paid per share of $80.55. All shares repurchased pursuant to the 2021 Repurchase Program were retired by the end of the 2021 fiscal year.

On November 8, 2021, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to an additional $100.0 million of outstanding common stock could be repurchased from time to time (the "2022 Repurchase Program"). The duration of the 2022 Repurchase Program is through the end of December 2022. Under the 2022 Repurchase Program during the fourth quarter of fiscal 2021, we repurchased approximately 125,400 shares for $10.1 million, or an average price paid per share of $80.55. All shares repurchased pursuant to the 2022 Repurchase Program were retired by the end of the 2021 fiscal year.

The following table contains information regarding our repurchases of our common stock that is registered pursuant to Section 12 of the Securities Exchange Act of 1934 during the fourth quarter of fiscal 2021:

Period		Total Number of Shares Purchased				Average Price Paid per Share				Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a)				Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($M) (b)
October 3, 2021 through October 30, 2021			—			$	—				—			$	4.9
October 31, 2021 through November 27, 2021			186,200			$	80.55				186,200			$	89.9
November 28, 2021 through January 1, 2022			—			$	—				—			$	89.9
Total			186,200			$	80.55				186,200			$	89.9

(a)		All repurchases during the quarter were open-market transactions funded from available working capital made under the authorization from our board of directors to purchase up to $60.0 million of LSCC common stock announced February 19, 2021 and under the authorization from our board of directors to purchase up to $100.0 million of LSCC common stock announced November 8, 2021.
(b)		As of January 1, 2022 this amount consisted of the remaining portion of the $100.0 million program authorized through the end of December 2022 that was announced November 8, 2021. We do not plan to make further repurchases pursuant to the 2021 Repurchase Program, which was due to expire in February 2022, because as of November 27, 2021 we had repurchased the maximum dollar value of shares authorized under the 2021 Repurchase Program.

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None.

Comparison of Total Cumulative Stockholder Return

The following graph shows the five-year comparison of cumulative stockholder return on our common stock, the Standard and Poor's (“S&P”) 500 Index and the Philadelphia Semiconductor Index (“PHLX”) from December 20132016 through December 2018.2021. Cumulative stockholder return assumes $100 invested at the beginning of the period in our common stock, the S&P and PHLX. Historical stock price performance is not necessarily indicative of future stock price performance.

Lattice Cumulative Stockholder Return

Item 6. SelectedReserved

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Item 7. Management's Discussion and Analysis of Financial Data

		Year Ended (1)
STATEMENT OF OPERATIONS:		December 29, 2018				December 30, 2017				December 31, 2016				January 2, 2016 (3)				January 3, 2015 (2)
(In thousands, except per share data)
Revenue:
Product		$	380,468			$	356,502			$	390,704			$	369,200			$	366,127
Licensing and services		18,331				29,459				36,350				36,766				—
Total Revenue		398,799				385,961				427,054				405,966				366,127
Costs and expenses:
Cost of product revenue		179,101				164,657				179,983				184,914				159,940
Cost of licensing and services revenue		259				4,725				637				1,143				—
Research and development		82,449				103,357				117,518				136,868				88,079
Selling, general, and administrative		91,054				90,718				98,602				97,349				73,527
Amortization of acquired intangible assets		17,690				31,340				33,575				29,580				2,948
Restructuring charges		17,349				7,196				9,267				19,239				17
Acquisition related charges		1,531				3,781				6,305				22,450				—
Impairment of goodwill and acquired intangible assets		12,486				32,431				7,866				21,655				—
Gain on sale of building		—				(4,624		)		—				—				—
Total costs and expenses		401,919				433,581				453,753				513,198				324,511
(Loss) income from operations		(3,120		)		(47,620		)		(26,699		)		(107,232		)		41,616
Interest expense		(20,600		)		(18,807		)		(20,327		)		(18,389		)		(172		)
Other (expense) income, net		(249		)		(3,286		)		2,844				(1,072		)		1,497
(Loss) income before income taxes		(23,969		)		(69,713		)		(44,182		)		(126,693		)		42,941
Income tax expense (benefit)		2,353				849				9,917				32,540				(5,639		)
Net (loss) income		$	(26,322	)		$	(70,562	)		$	(54,099	)		$	(159,233	)		$	48,580
Net (loss) income per share:
Basic		$	(0.21	)		$	(0.58	)		$	(0.45	)		$	(1.36	)		$	0.41
Diluted		$	(0.21	)		$	(0.58	)		$	(0.45	)		$	(1.36	)		$	0.40
Shares used in per share calculations:
Basic		126,564				122,677				119,994				117,387				117,708
Diluted		126,564				122,677				119,994				117,387				120,245
BALANCE SHEET:		December 29, 2018				December 30, 2017				December 31, 2016				January 2, 2016				January 3, 2015
(In thousands)
Cash, cash equivalents, and short-term marketable securities		$	128,675			$	111,797			$	116,860			$	102,574			$	254,844
Total assets		$	623,687			$	635,961			$	766,883			$	785,920			$	510,530
Long term liabilities		$	295,812			$	334,621			$	338,903			$	369,223			$	8,809
Total liabilities		$	365,230			$	418,268			$	496,453			$	480,400			$	69,555
Total stockholders' equity		$	258,457			$	217,693			$	270,430			$	305,520			$	440,975
(1)	Results for periods prior to 2018 are presented in accordance with ASC 605, which was in effect during those fiscal years.
(2)	The year ended January 3, 2015 was a 53-week year as compared to the other years presented, which were based on our standard 52-week year.
(3)	Our results for the year ended January 2, 2016 include the results associated with the acquisition of Silicon Image for the approximately 10-month period from March 11, 2015 through January 2, 2016. Results presented for the period prior to fiscal 2015 are those historically reported for Lattice only.

ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Condition and Results of Operations

Overview

Lattice Semiconductor Corporation and its subsidiaries (“Lattice,” the “Company,” “we,” “us,” or “our”) is a Delaware corporation that develops semiconductordevelop technologies that we monetize through differentiated programmable logic semiconductor products, silicon-enabling products, system solutions, design services, and licenses. Lattice is the low power programmable leader. We engagesolve customer problems across the network, from the Edge to the Cloud, in smart connectivity, control,the growing communications, computing, industrial, automotive, and compute solutions, providing intellectual property ("IP")consumer markets. Our technology, long-standing relationships, and low-power, small form-factor programmable logic devices that enable globalcommitment to world-class support lets our customers to quickly and easily develop innovative,unleash their innovation to create a smart, secure, and connected products.world.

Lattice has focused its strategy on delivering programmable logic products and related solutions based on low power, small size, and ease of use. We help their products become more aware, interact more intelligently, and make better and faster connections. In an increasingly intense global technology market, we helpalso serve our customers get their products to market faster than their competitors. Our broad end-market exposure extends from mobile devices and consumer electronics to industrial and automotive equipment, communications and computing infrastructure, andwith IP licensing and various other services. Lattice was foundedOur product development activities include new proprietary products, advanced packaging, existing product enhancements, software development tools, soft IP, and system solutions for high-growth applications such as Edge AI, 5G infrastructure, platform security, and factory automation.

This discussion and analysis of financial condition and results of operations should be read in 1983 and is headquartered in Hillsboro, Oregon.

Discontinuation of millimeter wave business

In the second quarter of 2018, we made the strategic decision to discontinue our millimeter wave business, which included certain assets related to our Wireless products, and our Board of Directors approved a related internal restructuring plan. This action was designed to improve profitability, reduce our infrastructure costs, and re-focus on our core business activities. Approximately $24.1 million of total expense was recorded in our Consolidated Statements of Operations in fiscal 2018, including $11.9 million charged to Impairment of acquired intangible assets, $8.0 million charged to Cost of product revenue for inventory reserves, and $4.2 million charged to Restructuring charges for severance and other personnel costs, and for other asset restructuring. See Notes 6, 8, 10, and 15 toconjunction with our consolidated financial statements presentedand accompanying notes included in Part 2, Item 88. "Financial Statements and Supplementary Data" of this report. Discussions of results for prior periods (fiscal 2020 compared to fiscal 2019) are incorporated by reference from our Annual Report on Form 10-K for the year ended January 2, 2021.

Impact of the COVID-19 pandemic on our Business

The COVID-19 pandemic has caused, and may continue to cause, a global slowdown of economic activity (including the decrease in demand for certain goods and services), and volatility in and disruption to financial markets, labor markets, and supply chains. The severity, magnitude and duration of the COVID-19 pandemic and its economic consequences have been and continue to be uncertain, evolving and difficult to predict, and the pandemic’s impact on our operations and financial performance, as well as its impact on our ability to successfully execute our business strategy and initiatives, remains uncertain. We continue to take actions to safeguard the health and well-being of our employees and our business. We implemented social distancing policies at our locations around the world, including working from home and eliminating substantially all travel. Furthermore, we continue to manage our cash position and liquidity needs in light of the rapidly changing environment, and we have additional detailsresources available under our Current Credit Agreement, if needed.

The full extent of the effects of the COVID-19 pandemic and the related governmental, business and travel restrictions in order to contain the virus are continuing to evolve globally, including in response to variants of the virus. We anticipate that these actions and the global health crisis caused by the COVID-19 pandemic will continue to negatively impact business activity across the globe. Demand for our products may be impacted given the global reach and economic impact of the virus. For example, governmental actions or policies or other initiatives to contain the virus could lead to reductions in our end customers’ demand for our products, which could have a negative impact on our revenue. We have previously seen and could again see delays or disruptions in our supply chain due to governmental restrictions or voluntary precautionary measures adopted by our suppliers. If our suppliers experience similar impacts, we may have difficulty sourcing materials necessary to fulfill customer production requirements and transporting completed products to our end customers. It is difficult for us to predict the chargesscope, magnitude, and costs relatedlength of supply chain disruptions. Supply chain delays and disruptions may also affect the ability of our customers to obtain materials or products from other suppliers which may constrain or delay their demand for our products.

We will continue to actively monitor the situation and may take further actions altering our business operations that we determine are in the best interests of our employees, customers, partners, suppliers, and stakeholders, or as required by federal, state, or local authorities. It is not clear what the potential effects of any such alterations or modifications may have on our business, including the effects on our customers, employees, and prospects, or on our financial condition or results of operations. The potential impact of the COVID-19 pandemic on our business, results of operations and financial position is currently uncertain and will depend on many factors that are not within our control, including, but not limited to: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the discontinuationpandemic; general economic uncertainty in key global markets and financial market volatility; global economic conditions and levels of our millimeter wave business.

economic growth; and the pace of recovery when the COVID-19 pandemic subsides. See the section entitled “Risk Factors” in Item 1A of Part I of this report for further information about related risks and uncertainties.

Critical Accounting Policies and Use of Estimates

Critical accounting policies are those that are both most important to the portrayal of a company's financial condition and results of operations, and that require management's most difficult, subjective, and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

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The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("U.S. GAAP")GAAP requires management to make estimates and assumptions that affectjudgments affecting the amounts reported amounts and classification of assets, such as marketable securities, accounts receivable, contract assets included in prepaid expenses and other current assets, inventory, goodwill (including the assessment of reporting unit), intangible assets, current and deferred income taxes, accrued liabilities (including restructuring charges and bonus arrangements), disclosure of contingent assets and liabilities at the date of theour consolidated financial statements amounts used in acquisition valuations and purchase accounting, impairment assessments, the fair value of equity awards, and the reported amounts of product revenue, licensing and services revenue, and expenses during the fiscal periods presented.

accompanying notes. We base our estimates and judgments on historical experience, knowledge of current conditions, and our beliefs of what could occur in the future considering available information. While we believe that our estimates, assumptions, and judgments are reasonable, they are based on information available when made, and because of the uncertainty inherent in these matters, actual results may differ materially from these estimates under different assumptions or conditions. We evaluate our estimates and judgments on an ongoing basis.

We believe the following accounting policies and the related estimates are critical in the portrayal of our financial condition and results of operations, and require management's most difficult, subjective, or complex judgments. See "Note 1 - Nature of Operations and Significant Accounting Policies" under Part II, Item 8 of this report for further information on the significant accounting policies and methods used in the preparation of the consolidated financial statements.

Revenue from Contracts with Customers

We adopted ASC 606, Revenue from Contracts with Customers, effective on December 31, 2017, the first day of our 2018 fiscal year, using the modified retrospective method. Under this standard, we recognize revenue under the core principleupon satisfaction of depicting the transferperformance obligations when control of controlpromised goods or services has been transferred to our customers. We measure revenue based on the amount of consideration we expect to be entitled to in exchange for products or services. For revenue recognized on both sales to distributors and related to HDMI and other royalties, the amount of consideration we expect to be entitled to receive is based on estimates that require assumptions and judgments relating to trends in recent and historical activity. See "Note 21 - Revenue from Contracts with CustomersBasis of Presentation and Significant Accounting Policies" under Part II, Item 8 of this report for further information on our recognition of revenue.

Sales to most distributors are made under terms allowing certain price adjustments upon sale to their end customers and limited rights of return of our products held in their inventory or upon sale to their end customers. Such price adjustments are estimated using the expected value method based on an analysis of historical price adjustments, at the distributor and product level, over a period of time considered adequate to account for current pricing and business trends, typically 6 months. Any differences between the estimated consideration and the actual amount received from the customer is recorded in the period that the actual consideration becomes known. To date, these differences have not been material. Most of our distributors are entitled to limited rights of return, referred to as stock rotation, not to exceed 5% of billings, net of returns and price adjustments. Stock rotation reserves are based on historical return rates and recorded as a reduction to revenue with a corresponding reduction to cost of goods sold for the estimated cost of inventory that we expect to be returned.inventory. The revenue recognized based on estimated price adjustments and stock rotation reserves may be materially different from the actual consideration received if the actual distributor price adjustments and stock rotation returns differ significantly from the historical trends.

HDMI royalty revenue is determined by a contractual allocation formula agreed to by used in the founders of the HDMI consortium ("Founders"). The contractual allocation formula is subject to periodic adjustment, generally every three years. An agreement covering the period beginning January 1, 2018 is yet to be signed. While a new royalty sharing agreement is being negotiated with the other Founders of the HDMI consortium, the HDMI agent is unable to distribute the majority of the royalties collected to the Founders. We are recording revenue based on our estimated share of the royalties, which we determine using an analytical model that combines historical and forecasted collection trends with our expected share of those collections. This estimate will be adjusted once the Founders finalize the agreement for the period beginning January 1, 2018. Under a new agreement, our share of HDMI collections may change significantly from our current assumptions, and our estimated revenue could differ martially from actual royalty sharing amounts received.

estimates.

Inventories and Cost of Product Revenue

Inventories are recordedstated at the lower of averageactual cost determined(determined using the first-in, first-out method) or net realizable value. We review and set standard costs quarterly to approximate current actual manufacturing costs. Our manufacturing overhead standards for product costs are calculated assuming full absorption of actual spending over actual costs. The valuation of inventory requires us to estimate excess or obsolete inventory. Material assumptions we use to estimate necessary inventory carrying value adjustments can be unique to each product and are based on a first-in-first-out basis or market. We establishspecific facts and circumstances. In determining provisions for inventory if it isexcess or obsolete orproducts, we hold quantities which areconsider assumptions such as changes in excess ofbusiness and economic conditions, projected customer demand.demand for our products, and changes in technology or customer requirements. The creation of such provisions results in a write-down of inventory to net realizable value and a charge to Cost of product revenue.

Restructuring Charges

Expenses associated If in any period we anticipate a change in assumptions such as future market or economic conditions to be less favorable than our previous estimates, additional inventory write-downs may be required and would be reflected in Cost of revenue, resulting in a negative impact to our gross margin in that period. If in any period we are able to sell inventories that had been written down to a level below the ultimate realized selling price in a previous period, related revenue would be recorded with exita lower or disposal activitiesno offsetting charge to Cost of revenue resulting in a net benefit to our gross margin in that period.

Business Combinations

Business combinations are recognized when incurredaccounted for using the acquisition method of accounting, under ASC 420, “Exit or Disposal Cost Obligations,”which we allocate the purchase price paid for everything but severance expenses, which are recognized under ASC 712, “Compensation - Nonretirement Postemployment Benefits.” When leased facilities are vacated, an amount equala company to the total future lease obligations fromidentifiable assets acquired and liabilities assumed based on their estimated fair values at the date of vacatingacquisition. Goodwill is measured as the premises through the expiration of the lease, net of any future sublease income, is recorded as a part of restructuring charges. Expenses from other exit or disposal activities, including the cancellation of software contracts and engineering tools or the abandonment of long lived assets, is recorded as a part of restructuring charges. Because we have a history of paying severance benefits, the cost of severance benefits associated with a restructuring plan is recorded when such costs are probable and the amount can be reasonably estimated in accordance with ASC 712.

Impairment of Long-Lived Assets

Long-lived assets, including amortizable intangible assets, are carried on our financial statements based on their cost less accumulated depreciation or amortization. We monitor the carrying value of our long-lived assets for potential impairment and test the recoverability of such assets annually during the fourth quarter and whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. These events or changes in circumstances, including management decisions pertaining to such assets, are referred to as impairment indicators. If an impairment indicator occurs, we perform a test of recoverability by comparing the carrying value of the asset group to its undiscounted expected future cash flows. If the carrying values are in excess of undiscounted expected future cash flows, we measure any impairment by comparingpurchase price over the fair value of the asset group to its carrying value. Fair value is generally determined by considering (i) internally developed discounted projected cash flow analysis of the asset group; (ii) actual third-party valuations; and/or (iii) information available regarding the current market for similar asset groups. Ifidentifiable assets acquired and liabilities assumed. Determining the fair value of assets acquired and liabilities assumed requires management to make assumptions, estimates, and judgments that are based on all available information, including comparable market data and information obtained from our management and the asset group is determined to be less than the carrying amountmanagement of the asset group, an impairment inacquired companies. These judgments affect the amount of the differenceconsideration paid that is recordedallocable to identified tangible and intangible assets acquired and liabilities assumed in the period thatbusiness combination. The estimation of the impairment indicator occurs and is included in our Consolidated Statementsfair values of Operations. Estimating future cash flowsthe intangible assets requires significant judgment and projections may vary from the cash flows eventually realized, which could impact our abilityuse of valuation techniques including primarily the income approach. Consideration is given to accurately assess whether an asset has been impaired.

all relevant factors that might affect the fair value such as estimates of future revenues and costs, present value factors, and the estimated useful lives of intangible assets.

Accounting for Income Taxes

Our

We are required to estimate our provision for income taxes and amounts ultimately payable or recoverable in numerous tax is comprisedjurisdictions around the world. These estimates involve significant judgment and interpretations of our currentregulations and are inherently complex. Resolution of income tax liability and changestreatments in deferred tax assets and liabilities.individual jurisdictions may not be known for many years after completion of the applicable year. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements using enacted tax rates and laws that will be in effect when the difference is expected to reverse.

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Valuation allowances are provided to reduce deferred tax assets to an amount that in management’s judgment is more-likely-than-not to be recoverable against future taxable income. The determination of a valuation allowance and when it should be released requires complex judgment. In assessing the ability to realize deferred tax assets, we regularly evaluate both positive and negative evidence that may exist and consider whether it is more-likely-than-not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

As part of our regular financial review process, we also assess the likelihood that our tax reporting positions will ultimately be sustained.sustained on examination by the taxing authorities, based on the technical merits of the position. To the extent it is determined it is more likely than not (a likelihood of more than 50 percent) that some portion or all of a tax reporting position will ultimately not be recognized and sustained, a provision for unrecognized tax benefit is provided by either reducing the applicable deferred tax asset or accruing an income tax liability. Our judgment regarding the sustainability of our tax reporting positions may change in the future due to changes in U.S. or international tax laws and other factors. These changes, if any, may require material adjustments to the related deferred tax assets or accrued income tax liabilities and an accompanying reduction or increase in income tax expense which may result in a corresponding increase or decrease in net income in the period when such determinations are made.

We recognize the tax impact of including certain foreign earnings in U.S. taxable income as a period cost.

Results of Operations

Key elements of our Consolidated Statements of Operations, including as a percentage of revenue, are presented in the following table:

	Year Ended *
(In thousands)	December 29, 2018							December 30, 2017							December 31, 2016
Revenue	$	398,799			100.0	%		$	385,961			100.0	%		$	427,054			100.0	%
Gross margin	219,439				55.0			216,579				56.1			246,434				57.7
Research and development	82,449				20.7			103,357				26.8			117,518				27.5
Selling, general, and administrative	91,054				22.8			90,718				23.5			98,602				23.1
Amortization of acquired intangible assets	17,690				4.4			31,340				8.1			33,575				7.9
Restructuring charges	17,349				4.4			7,196				1.9			9,267				2.2
Acquisition related charges	1,531				0.4			3,781				1.0			6,305				1.5
Impairment of acquired intangible assets	12,486				3.1			32,431				8.4			7,866				1.8
Gain on sale of building	—				—			(4,624		)		(1.2	)		—				—
Loss from operations	$	(3,120	)		(0.8	)%		$	(47,620	)		(12.3	)%		$	(26,699	)		(6.3	)%

		Year Ended *
		January 1,								January 2,								December 28,
(In thousands)		2022								2021								2019
Revenue		$	515,327				100.0	%		$	408,120				100.0	%		$	404,093				100.0	%
Gross margin			321,675				62.4				245,306				60.1				238,422				59.0
Research and development			110,518				21.4				89,223				21.9				78,617				19.5
Selling, general and, administrative			105,617				20.5				95,331				23.4				82,542				20.4
Amortization of acquired intangible assets			2,613				0.5				4,449				1.1				13,558				3.4
Restructuring charges			940				0.2				3,937				1.0				4,664				1.2
Acquisition related charges			1,171				0.2				—				—				—				—
Income from operations		$	100,816				19.6	%		$	52,366				12.8	%		$	59,041				14.6	%

* Results for 2017 and 2016 areThe year ended January 2, 2021 was a 53-week year as compared to the other years presented, in accordance with ASC 605, which was in effect during those fiscal years.

We adopted ASC 606, Revenue from Contracts with Customers,were based on December 31, 2017 using the modified retrospective method. We have not restated any prior financial statements presented. See "Note 2 - Revenue from Contracts with Customers" to our consolidated financial statements and the standard 52-week year.

Revenue discussions, below, for the impact of the adoption of ASC 606.

Revenue

	Year Ended *												% Change in
(In thousands)	December 29, 2018				December 30, 2017				December 31, 2016				2018		2017
Revenue	$	398,799			$	385,961			$	427,054			3		(10	)

* Results for 2017 and 2016 are presented in accordance with ASC 605, which was in effect during those fiscal years.

		Year Ended
		January 1,				January 2,				December 28,				% Change in
(In thousands)		2022				2021				2019				2021				2020
Revenue		$	515,327			$	408,120			$	404,093				26.3	%			1.0	%

Revenue increased $12.8$107.2 million, or 3%26.3%, in fiscal 20182021 compared to fiscal 2017,2020, primarily driven by (1) increased demand for our products that perform control applications in server reference designs, (2) broad market increases from industrial market customers, particularly in growth from the products supporting industrial video applications and factory automation robotics applications, (3) growth in products used by several handset screen replacement customers, (4) increased demand for products used in home automation devices,client computing solutions, 5G wireless infrastructure, and (5) increasesindustrial and robotics applications.

Revenue by End Market

We sell our products globally to a broad base of customers in royalties that we recognized asthree primary end markets groups: Communications and Computing, Industrial and Automotive, and Consumer. We also provide Intellectual Property licensing and services to these end markets.

Within these end markets, there are multiple segment drivers, including:

	•	Communications and Computing: 5G infrastructure deployments, client computing platforms, and cloud and enterprise servers,
	•	Industrial and Automotive: industrial IoT, factory automation, robotics, and automotive electronics,
	•	Consumer: smart home, and prosumer.

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We also generate revenue in fiscal 2018 under ASC 606. These were partially offset by a decline in demand for products supporting a major handset manufacturer, byfrom the discontinuationlicensing of our millimeter wave business,IP, the collection of certain royalties, patent sales, the revenue related to our participation in consortia and by a patent sale that was recognized in fiscal 2017 but which did not recur in fiscal 2018.

For fiscal 2018, adoption of ASC 606 increased our revenues by $15.6 million compared to revenue that would have been recognized under previous guidance. Of this amount, $14.1 million was due to the acceleration of revenue recognition on sales to certain distributors,standard-setting activities, and an additional $1.5 million was due to increases inservices. While these activities may be associated with multiple markets, Licensing and services revenue from the timing of revenue recognition from HDMI royalties and audit settlements.

Revenue decreased $41.1 million, or 10%, in fiscal 2017 compared to fiscal 2016, primarily driven by lower revenue from consumer mobile handsets and reductions from Digital Television ("DTV") and Home Theater related devices. This was coupled withis reported as a decline from the line item reduction caused by the obsoleting of tin leaded assembly material in one of the complex programmable logic devices ("CPLD") in the industrial and communications markets, for which shipments predominately occurred in fiscal 2016 but did not recur in fiscal 2017. These decreases were partially offset by a broad market increase in programmable logic device revenue in the Industrial and Automotiveseparate end market and the production ramp ofas it has characteristics that differ from other categories, most notably a server reference design being widely adopted in the computing market. Additionally, in fiscal 2017 we saw growth in our XO2/XO3 and EC5 product families, revenue from a patent sale transaction, and modest growth in the 60GHz wireless silicon products.

Revenue by End Market

higher gross margin.

The end market data below is derived from data provided to us by our distributors and end customers. With a diverse base of customers who may manufacture end products spanning multiple end markets, the assignment of revenue to a specific end market requires the use of estimates and judgment. Therefore, actual results may differ from those reported.

Under ASC 606, weWe also recognize certain revenue for which end customers and end markets are not yet known. We assign this revenue first to a specific end market using historical and anticipated usage of the specific products, if possible, and allocate proportionallythe remainder to the end markets if we cannot identify a specific end market.

Our Licensing and services end market includes revenue from the licensing of our IP, the collection ofbased on either historical usage for each product family or industry application data for certain royalties, patent sales, the revenue related to our participation in consortia and standard-setting activities, and services. While Licensing products are primarily sold into the Mobile and Consumer market, Licensing and services revenue is reported as a separate end market as it has characteristics that differ from other categories, most notably its higher gross margin.

product types.

The following are examples of end market applications for the fiscal years presented:

Communications and Computing	Mobile and Consumer	Industrial and Automotive	Consumer	Licensing and Services
Wireless	Smart-phones	Security and Surveillance	Cameras	IP Royalties
Wireline	Cameras	Machine Vision	Displays	Adopter Fees
Data Backhaul	Displays	Industrial Automation	Wearables	IP Licenses
Client Server Computing	Wearables Robotics	Human Computer Interaction Televisions	Patent Sales
Data Center Client Computing	Televisions Automotive	Automotive Home Theater	Testing Services
Data Storage	Home Theater Drones	Drones	Design Services

The composition of our revenue by end market is presented in the following table:

	Year Ended *																					% Change in
(In thousands)	December 29, 2018							December 30, 2017							December 31, 2016							2018			2017
Communications and Computing	$	123,195			31	%		$	113,019			29	%		$	123,021			29	%		9			(8	)
Mobile and Consumer	99,294				25			108,844				28			127,405				30			(9	)		(15	)
Industrial and Automotive	157,979				39			134,639				35			140,278				33			17			(4	)
Licensing and Services	18,331				5			29,459				8			36,350				8			(38	)		(19	)
Total revenue	$	398,799			100	%		$	385,961			100	%		$	427,054			100	%		3			(10	)

* Results for 2017 and 2016 are presented in accordance with ASC 605, which was in effect during those fiscal years.

Our revenue in

		Year Ended
		January 1,								January 2,								December 28,								% Change in
(In thousands)		2022								2021								2019								2021				2020
Communications and Computing		$	217,960				42.3	%		$	174,656				42.8	%		$	155,821				38.6	%			24.8	%			12.1	%
Industrial and Automotive			226,240				43.9				168,323				41.2				151,607				37.5				34.4				11.0
Consumer			50,652				9.8				45,523				11.2				75,120				18.6				11.3				(39.4	)
Licensing and Services			20,475				4.0				19,618				4.8				21,545				5.3				4.4				(8.9	)
Total revenue		$	515,327				100.0	%		$	408,120				100.0	%		$	404,093				100.0	%			26.3	%			1.0	%

Revenue from the Communications and Computing end market is largely dependent on a small number of large telecommunications equipment providers. For fiscal 2018, Communications and Computing end market revenue increased 9% primarily due to continued demand increases for server products, partially offset by the discontinuation of our millimeter wave business. For fiscal 2017, Communications and Computing end market revenue declined 8% primarily in the communications market, which saw a significant decrease in revenue from a major telecommunications customer whose business was affected by Commerce department actions, and by conversion of materials from 200mm to 300mm wafers. This was partially offset by growth in the Communications and Computing end market due to the initial production ramp of the server platform reference design being widely adopted in that sector.

Mobile and Consumer end market revenue decreased 9%25% in fiscal 2018, after decreasing 15% in2021 compared to fiscal 2017. Mobile and Consumer end market revenue decreased in fiscal 20182020 primarily due to a decline in demand for products supporting a major handset manufacturer, partially offset by increased demand for home automationapplications in data center servers, client computing platforms, and handset screen replacement products. Consumer end market revenue decreased in fiscal 2017 primarily due to a significant decrease in volume for a major mobile handset provider. The production volume for this mobile handset peaked in5G infrastructure.

Revenue from the fourth quarter of fiscal 2016, and the associated revenue stream has declined in subsequent quarters as the end product completes its lifecycle. These decreases were coupled with declines in revenue from HDMI devices used in DTV and Home Theater related products and from MHL devices used in mobile handsets.

For fiscal 2018, Industrial and Automotive end market revenue increased 17% whenby 34% in fiscal 2021 compared to fiscal 2017. This is 2020, primarily due to increased demand for our products across multiple applications such as industrial automation and robotics, as well as in Automotive led by adoption in ADAS and infotainment applications.

Revenue from the Consumer end market increased by 11% in fiscal 2021 compared to fiscal 2020 primarily due to broad market increasesincreased demand for our products in the IndustrialConsumer end market as well as growth from the products supporting industrial video applications and factory automation robotics applications. For fiscal 2017, Industrial and Automotive end market revenue decreased 4% when compared to fiscal 2016. This is primarily due to a decline from the line item reduction caused by the obsoleting of tin leaded assembly material in one of the CPLD devices for which shipments predominately occurred in fiscal 2016 but did not recur in fiscal 2017. This decrease was substantially offset by broad market growth in this end market, especially from our XO2/XO3 FPGA product families.

Revenue from the Licensing and Services end market decreasedincreased by 38%4% in fiscal 20182021 compared to fiscal 2017 predominantly due to revenue from a patent sale in the first half of fiscal 2017 that did not recur in the current year, and by the absence of revenue from Simplay Labs testing activities after the transfer of certain assets related to that business unit at the end of the third quarter of fiscal 2017. These decreases are partially offset by HDMI royalties that we recognized as revenue in fiscal 2018 under ASC 606 but were not able to recognize in fiscal 2017 under the previous guidance.

Licensing and Services revenue decreased by 19% in fiscal 20172020 primarily due to lower revenue from HDMIincreased licensing and adopter fees as a new royalty sharing agreement had not been finalized, and by the termination of our role as agent for the HDMI consortium. As a result of the amended model for sharing revenue and the appointment of a new independent agent for the HDMI consortium, we will be entitled to a reduced share of adopter fees paid by parties adopting the HDMI standard in 2017 and future years. The termination of our role as agent for the HDMI consortium resulted in a decrease of approximately $11 million for fiscal 2017 compared to fiscal 2016. While a new royalty sharing agreement is being negotiated, the HDMI agent is collecting royalties but is unable to distribute a majority of the royalties to the Founders. Given that a new royalty sharing agreement was not fully executed under previous revenue guidance, the fixed and determinable revenue recognition criteria was not met, and we were unable to recognize all of the HDMI royalty revenue in fiscal 2017. Revenue attributable to HDMI royalties is down approximately $9 million for fiscal 2017 compared to fiscal 2016 mainly as a result of the royalty sharing formula not being finalized. The decrease related to HDMI was partially offset by a patent sale transaction of $18 million in fiscal 2017.

We share HDMI royalties with the other HDMI Founders based on an allocation formula, which is reviewed every three years. The most recent royalty sharing formula covered the period from January 1, 2014 through December 31, 2016, and an interim agreement covering the period from January 1, 2017 through December 31, 2017 was signed in the second quarter of fiscal 2018. However, a new agreement covering the period beginning January 1, 2018 is yet to be signed. As a result of the signing of the HDMI Founders royalty sharing agreement for 2017, we received $6.4 million in cash during the second quarter of fiscal 2018 for fiscal 2017 HDMIIP royalties. Collection of this amount had no impact on our reported revenues and was recorded as a reduction to the contract asset recorded in Prepaid expenses and other current assets in our Consolidated Balance Sheets. This contract asset was recorded in the first quarter of fiscal 2018 with an offset to Accumulated deficit as a cumulative effect adjustment for the adoption of ASC 606.

HDMI royalties are considered variable consideration under the new revenue standard and recognized as royalty revenue as usage occurs. While a new royalty sharing agreement is being negotiated with the other Founders of the HDMI consortium for fiscal 2018, we are estimating our share of royalty revenues under an anticipated new agreement. Before the HDMI royalty sharing agreement is signed, we estimate that we will recognize $1 million to $2 million of additional Licensing and Services revenue every quarter under ASC 606 that we would not have recognized under previous guidance. Once the HDMI royalty sharing agreement is signed, ongoing HDMI royalty revenue recognition under both ASC 606 and previous guidance will be consistent during the term of that sharing agreement.

For fiscal 2018, adoption of ASC 606 increased our revenues by $15.6 million compared to revenue that would have been recognized under previous guidance. Of this amount, $14.1 million was due to the acceleration of revenue recognition on sales to certain distributors, with $4.7 million attributed to Communications and Computing, $4.6 million attributed to Mobile and Consumer, and $4.8 million attributed to Industrial and Automotive. An additional $1.5 million was due to increases in Licensing and Services revenue comprised of an increase of $7.9 million, mainly in HDMI royalties and audit settlements for fiscal 2018, partially offset by $6.4 million in 2017 HDMI royalties collected that were not recorded as revenue in either fiscal 2018 under ASC 606 or in fiscal 2017 under previous guidance.

Revenue by Geography

We assign revenue to geographies based on ship-to location of the end customer, where available, and based upon the location of the distributor to which the product was shipped otherwise.

customer.

The composition of our revenue by geography is presented in the following table:

		Year Ended
		January 1,								January 2,								December 28,								% Change in
(In thousands)		2022								2021								2019								2021				2020
Asia		$	384,568				74.6	%		$	305,183				74.8	%		$	298,765				73.9	%			26.0	%			2.1	%
Americas			80,870				15.7				62,137				15.2				57,936				14.4				30.1				7.3
Europe			49,889				9.7				40,800				10.0				47,392				11.7				22.3				(13.9	)
Total revenue		$	515,327				100.0	%		$	408,120				100.0	%		$	404,093				100.0	%			26.3	%			1.0	%

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	Year Ended *																					% Change in
(In thousands)	December 29, 2018							December 30, 2017							December 31, 2016							2018			2017
Asia	$	298,119			75	%		$	277,638			72	%		$	305,093			71	%		7			(9	)
Europe	45,546				11			44,547				12			59,835				14			2			(26	)
Americas	55,134				14			63,776				16			62,126				15			(14	)		3
Total revenue	$	398,799			100	%		$	385,961			100	%		$	427,054			100	%		3			(10	)

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* Results for 2017 and 2016 are presented in accordance with ASC 605, which was in effect during those fiscal years.

Revenue in Asia increased 7% in fiscal 2018. Asia revenue is heavily affected by revenue from all of the end markets we serve. The increase in fiscal 2018 was predominately due to increasing demand forCustomers

We sell our products performing control applications in servers, significant growth in the Consumer space from several handset screen replacement customers, increased demand from Industrial broad market customers,to independent distributors and strength at a major telecommunications customer. These increases were partially offset by decline in demand from a major handset manufacturer.

In fiscal 2017, revenue decreased 9% in Asia primarily duedirectly to a significant decrease in Communications and Computing end market revenue from a major telecommunications customer whose business was affected by government regulations, and by conversion of materials from 200mm to 300mm wafers. Additionally, the Mobile and Consumer end market saw a significant decrease in volume for a major North American mobile handset provider. The production volume for this mobile handset peaked in the fourth quarter of fiscal 2016, and the associated revenue stream has declined in subsequent quarters as the end product completes its lifecycle. This was coupled with decreased revenue from DTV and Home Theater related devices.

Revenue in Europe increased 2% in fiscal 2018 as the region is showing renewed growth in the broad market, especially in the Industrial end market. Revenue in Europe decreased 26% in fiscal 2017 primarily due to a decline in the line item reduction caused by the obsoleting of tin leaded assembly material in one of the CPLD devices, for which shipments predominately occurred in fiscal 2016 but did not recur in fiscal 2017.

Revenue from the Americas decreased 14% in fiscal 2018 primarily due to a patent sale that was recognized in fiscal 2017 but which did not recur in fiscal 2018. This was partially offset by other royalty revenue and broad market growth in the region. Revenue from the Americas increased 3% in fiscal 2017 primarily due to a patent sale transaction for $18.0 million recognized in fiscal 2017, substantially offset by a decline in the line item reduction and CPLD conversion program, for which shipments predominately occurred in fiscal 2016 but did not recur in fiscal 2017.

Revenue from foreign sales as a percentage of total revenue was 90%, 87%, and 88% for fiscal 2018, 2017 and 2016, respectively.

For fiscal 2018, adoption of ASC 606 increased our revenues by $15.6 million compared to revenue that would have been recognized under previous guidance. Of this amount, $14.1 million was due to the acceleration of revenue recognition on sales to certain distributors, with $12.3 million of this amount attributed to Asia, and $2.0 million attributed to the Americas, partially offset by a $0.2 million decrease attributed to Europe. An additional $1.5 million was due to increases in Licensing and Services revenue, attributed to the Americas, described above.

Revenue from End Customers

Our top five end customers accounted for approximately 18% of our total revenue in fiscal 2018, compared to approximately 26% and 27% in fiscal years 2017 and 2016, respectively, primarily due to a more diverse customer base in recent years.

During fiscal years 2018, 2017 and 2016, no end customer accounted for more than 10% of total revenue. Our largest end customer in fiscal 2018 accounted for approximately 6.1% of total revenue. Our largest end customer in fiscal 2017 accounted for approximately 7.3% of total revenue, while our largest end customer in fiscal 2016 accounted for approximately 9.9% of total revenue.

Under ASC 606, we did not have enough information to assign end customers to approximately $14.1 million of revenue recognized in fiscal 2018 on shipments to distributors that have not sold through to end customers.

Revenue from Distributors

Distributors have historically accounted for a significant portion of our total revenue. Revenue attributable torevenue, and the two distributor groups noted below individually accounted for more than 10% of our primary distributorstotal revenue in the periods covered by this report.

The composition of our revenue by customer is presented in the following table:

	Year Ended *
	December 29, 2018			December 30, 2017			December 31, 2016
Arrow Electronics Inc.	29	%		24	%		24	%
Weikeng Group	25			27			22
All others	29			26			27
All distributors **	83	%		77	%		73	%

*	Results for 2017 and 2016 are presented in accordance with ASC 605, which was in effect during those fiscal years.
**	During the first quarter of 2018, we updated our channel categories to group all forms of distribution into a single channel. Prior periods have been reclassified to match current period presentation.

For both fiscal 2018 compared to fiscal 2017 and for fiscal 2017 compared to fiscal 2016, revenue attributable to revenue streams other than distributors decreased, resulting in increases in distribution revenue as a percentage of total revenue.

The most significant impact of the adoption of ASC 606 was to accelerate the timing of revenue recognition on product shipments to most of our distributors, resulting in an additional $14.1 million of revenue in fiscal 2018. Assuming all other revenue recognition criteria have been met, the new guidance requires us to recognize revenue and costs relating to such sales upon the transfer of control of the products to the distributor, whereby the transaction price recognized as revenue is estimated considering price adjustments and returns, rather than upon the ultimate sale by the distributor to its end customer when the final transaction price is known, as was our practice under previous guidance. The impact of this change will depend primarily on the level of inventory held by distributors at the beginning and end of each period. To the extent these inventory levels fluctuate significantly, revenue under the new standard could be materially different than that under the previous standard.

		% of Total Revenue
		Year Ended
		January 1,				January 2,				December 28,
		2022				2021				2019
Weikeng Group			37.2	%			34.8	%			29.8	%
Arrow Electronics Inc.			27.1				25.1				25.4
Other distributors			23.0				23.2				26.9
All distributors			87.3				83.1				82.1	%
Direct customers			8.7				12.1				12.6
Licensing and services revenue			4.0				4.8				5.3
Total revenue			100.0	%			100.0	%			100.0	%

Gross margin

The composition of our gross margin, including as a percentage of revenue, is presented in the following table:

	Year Ended
(In thousands)	December 29, 2018				December 30, 2017				December 31, 2016
Gross margin	$	219,439			$	216,579			$	246,434
Percentage of revenue	55.0		%		56.1		%		57.7		%
Product gross margin %	52.9		%		53.8		%		53.9		%
Licensing and services gross margin %	98.6		%		84.0		%		98.2		%

		Year Ended
		January 1,				January 2,				December 28,
(In thousands)		2022				2021				2019
Gross margin		$	321,675			$	245,306			$	238,422
Gross margin percentage			62.4	%			60.1	%			59.0	%
Product gross margin %			60.9	%			58.1	%			56.7	%
Licensing and services gross margin %			100.0	%			100.0	%			100.0	%

Gross margin as a percentage of revenue, decreased 1.1 percentageincreased 230 basis points from fiscal 20172020 to fiscal 2018. The overall2021. Improved margins were driven by benefits from our pricing optimization and gross margin was influenced by the relative mix between product revenue and licensing and services revenue, and this decline resulted primarily from lower licensing and services revenue. Licensing and services accounted for approximately 4.6% of total revenue in fiscal 2018 compared to 7.6% during fiscal 2017. Additionally, with the discontinuation of our millimeter wave business, there were inventory reserves taken on eliminated product lines during 2018 that further decreased gross margin.

The primary driver of the 0.9 percentage point decrease in product gross margin in fiscal 2018 was specific inventory reserves of $8.0 million taken on products that were eliminated with the discontinuation of our millimeter wave business. This was partially offset by decreased volume and costs from the Mobile and Consumer end market.

The 14.6 percentage point increase in licensing and services gross margin in fiscal 2018, compared to fiscal 2017, was due primarily to the $18.0 million patent sale that was recognized in two installments during the first and second quarters of fiscal 2017. The costs associated with the patent sale of $3.6 million, primarily the net book value of the patents acquired in our acquisition of Silicon Image, were greater than usual for this category and had a substantial impact on licensing and services gross margin.

Gross margin, as a percentage of revenue, decreased 1.6 percentage points from fiscal 2016 to fiscal 2017 primarily due to the decrease in licensing and services gross margin, which decreased 14.2 percentage points from fiscal 2016 to fiscal 2017. This was primarily due to the $18.0 million patent sale in fiscal 2017. The costs associated with the patent sale of $3.6 million, primarily the net book value of the patents acquired in our acquisition of Silicon Image, were greater than usual for this category and had a substantial impact on licensing and services gross margin.

expansion strategy.

Because of its higher margin, the licensing and services portion of our overall revenue can have a disproportionate impact on gross margin and profitability. For programmable and standard products, we expect that product, end market, and customer mix will subject our gross margin to fluctuation, while we expect downward pressure on average selling price to adversely affect our gross margin in the future. If we are unable to realize additional or sufficient product cost reductions in the future to balance changes in product and customer mix, we may experience degradation in our product grossGross margin.

Operating Expenses

Research and development expense

Development Expense

The composition of our Research and development expense, including as a percentage of revenue, is presented in the following table:

	Year Ended												% Change in
(In thousands)	December 29, 2018				December 30, 2017				December 31, 2016				2018			2017
Research and development	$	82,449			$	103,357			$	117,518			(20.2	)%		(12.1	)%
Percentage of revenue	20.7		%		26.8		%		27.5		%
Mask costs included in Research and development	$	987			$	931			$	3,328			6.0	%		(72.0	)%

		Year Ended
		January 1,				January 2,				December 28,				% Change in
(In thousands)		2022				2021				2019				2021				2020
Research and development		$	110,518			$	89,223			$	78,617				23.9	%			13.5	%
Percentage of revenue			21.4	%			21.9	%			19.5	%

Research and development expense includes costs for compensation and benefits, stock compensation, development masks, engineering wafers, depreciation, licenses, and outside engineering services. These expenditures are for the design of new products, IP cores, processes, packaging, and software solutions.

The increase in Research and development expense for fiscal 2021 compared to supportfiscal 2020 was due primarily to increased headcount-related costs as we continue to invest in the expansion of our product portfolio and the acceleration of our new products.

product introduction cadence.

We believe that a continued commitment to researchResearch and development is essential to maintaining product leadership and providing innovative new product offerings and, therefore, we expect to continue to make significant future investments in Research and development.

The decreaseincrease our investment in Research and development, expense for fiscal 2018 compared to fiscal 2017 is due mainly toparticularly with expanded investment in the cost reductions realized from restructuring actionsdevelopment of software solutions.

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Selling, General, and from the sale of assets and discontinuation of a business unit. These savings were predominantly from headcount related expenses, including lower stock compensation expense, and from reductions in both time-based licenses and depreciation.

The decrease in Research and development expense for fiscal 2017 compared to fiscal 2016 is due mainly to the cost reductions realized from the restructuring actions and integration of operations undertaken since the acquisition of Silicon Image, including the sales of assets and discontinuation of business units. These savings were predominantly from headcount reductions and site consolidations. Additionally, we saw reduced mask, wafer, and assembly costs, and depreciation expense, partially offset by higher bonus and IP insourcing expenses.

Selling, general, and administrative expense

Administrative Expense

The composition of our Selling, general, and administrative expense, including as a percentage of revenue, is presented in the following table:

	Year Ended												% Change in
(In thousands)	December 29, 2018				December 30, 2017				December 31, 2016				2018			2017
Selling, general, and administrative	$	91,054			$	90,718			$	98,602			0.4	%		(8.0	)%
Percentage of revenue	22.8		%		23.5		%		23.1		%

		Year Ended
		January 1,				January 2,				December 28,				% Change in
(In thousands)		2022				2021				2019				2021				2020
Selling, general, and administrative		$	105,617			$	95,331			$	82,542				10.8	%			15.5	%
Percentage of revenue			20.5	%			23.4	%			20.4	%

Selling, general, and administrative expense includes costs for compensation and benefits related to selling, general, and administrative employees, commissions, depreciation, professional and outside services, trade show, and travel expenses.

The increase in Selling, general, and administrative expense for fiscal 20182021 compared to fiscal 2017 is2020 was due mainlyprimarily to the costs associated with our executive transitions, including accelerated increased stock compensation, salaries, and severance expense, and search fees. These were partially offset by decreases in legal fees and bonus expense.

The decrease in Selling, general, and administrative expense for fiscal 2017 compared to fiscal 2016 was due mainly to lower bad debt expense in 2017. We also saw lower legal and accounting fees that were partially offset by increased bonus, travel, and depreciationvariable compensation related expenses.

Amortization of acquired intangible assets

Acquired Intangible Assets

The composition of our Amortization of acquired intangible assets, including as a percentage of revenue, is presented in the following table:

	Year Ended												% Change in
(In thousands)	December 29, 2018				December 30, 2017				December 31, 2016				2018			2017
Amortization of acquired intangible assets	$	17,690			$	31,340			$	33,575			(43.6	)%		(6.7	)%
Percentage of revenue	4.4		%		8.1		%		7.9		%

		Year Ended
		January 1,				January 2,				December 28,				% Change in
(In thousands)		2022				2021				2019				2021				2020
Amortization of acquired intangible assets		$	2,613			$	4,449			$	13,558				(41.3	)%			(67.2	)%
Percentage of revenue			0.5	%			1.1	%			3.4	%

The decrease in Amortization of acquired intangible assets for fiscal 20182021 compared to fiscal 2017 is primarily2020 was due to the reductionend of certain intangibles as a resultthe amortization period for the majority of patent sales and impairment charges in current and previous periods.

For fiscal 2017 compared to fiscal 2016, Amortization ofour legacy acquired intangible assets decreased due toduring the reductionfirst quarter of certain intangibles as a result of impairment charges, patent sales, and sale of the Qterics business unit,fiscal 2020, partially offset by additional amortization due toexpense for new intangible assets added in the completionfourth quarter of certain in-process research and development projects acquired from Silicon Image.

fiscal 2021 through the acquisition of Mirametrix, Inc.

Restructuring charges

Charges

The composition of our Restructuring charges, including as a percentage of revenue, is presented in the following table:

	Year Ended												% Change in
(In thousands)	December 29, 2018				December 30, 2017				December 31, 2016				2018		2017
Restructuring charges	$	17,349			$	7,196			$	9,267			100+%		(22.3	)%
Percentage of revenue	4.4		%		1.9		%		2.2		%

		Year Ended
		January 1,				January 2,				December 28,				% Change in
(In thousands)		2022				2021				2019				2021				2020
Restructuring charges		$	940			$	3,937			$	4,664				(76.1	)%			(15.6	)%
Percentage of revenue			0.2	%			1.0	%			1.2	%

Restructuring charges includeare comprised of expenses resulting from reductions in our worldwide workforce, consolidation of our facilities, removal of fixed assets from service, and cancellation of software contracts and engineering tools.

In December 2018, our management approved and executed an internal restructuring plan (the “December 2018 Plan”), which included a global workforce reduction. This plan also included the abandonment of long lived assets related to the restructuring Details of our agreements with a privately-held investee. Approximately $4.8 million of restructuring expense has beenplans and expenses incurred through December 29, 2018 under the December 2018 Plan, and we believe this amount approximates the total costs under the plan.

In June 2018, our Board of Directors approved an internal restructuring plan (the "June 2018 Plan"), which included the discontinuation of our millimeter wave business and the use of certain assets relatedthem are discussed in "Note 9 - Restructuring" to our Wireless products, and a workforce reduction. The June 2018 Plan is designed to reduce our infrastructure costs and re-focus on our core business activities. Approximately $4.2 millionConsolidated Financial Statements in Part II, Item 8 of restructuring expense has been incurred through December 29, 2018 under the June 2018 Plan, and we believe this amount approximates the total costs under the plan.

In June 2017, our Board of Directors approved an additional internal restructuring plan (the "June 2017 Plan"), which included the sale of 100% of the equity of our Hyderabad, India subsidiary and the transfer of certain assets related to our Simplay Labs testing and certification business, a worldwide workforce reduction, and an initiative to reduce our infrastructure costs, including reconfiguring our use of certain leased properties. Under this initiative approved by the Board in 2017, we vacated approximately 50% or our facility in San Jose, California in the fourth quarter of fiscal 2018 and recorded approximately $6.9 million of report.

Restructuring charges from ceasing use of this space. These actions are part of an overall plan to achieve financial targets and to enhance our financial and competitive position by better aligning our revenue and operating expenses. Approximately $16.4 million of total expense has been incurred through December 29, 2018 under the June 2017 Plan, and we expect the total cost to be approximately $21.5 million to $23.0 million.

The $10.2 million increase in Restructuring chargesdecreased in fiscal 20182021 compared to fiscal 2017 was driven by2020, as we had no significant severance, abandoned lease, and software license restructuring chargesactivity in the current year related to the December 2018 Plan, the June 2018 Plan and the June 2017 Plan versus smaller charges in the previous year under the June 2017 Plan.

The $2.1 million decrease in Restructuring charges from fiscal 2016 to fiscal 2017 is primarily the result of significant lease restructuring charges in the prior year related to the March 2015 Plan versus a significantly smaller charge in the current year under the June 2017 Plan. Increased restructuring charges for engineering and systems software licenses in fiscal year 2017 were substantially offset by reduced severance and other restructuring charges.

year.

Acquisition related charges

Related Charges

The composition of our Acquisition related charges, including as a percentage of revenue, is presented in the following table:

		Year Ended
		January 1,				January 2,				December 28,				% Change in
(In thousands)		2022				2021				2019				2021				2020
Acquisition related charges		$	1,171			$	—			$	—				100+%				—	%
Percentage of revenue			0.2	%			—	%			—	%

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	Year Ended												% Change in
(In thousands)	December 29, 2018				December 30, 2017				December 31, 2016				2018			2017
Acquisition related charges	$	1,531			$	3,781			$	6,305			(59.5	)%		(40.0	)%
Percentage of revenue	0.4		%		1.0		%		1.5		%

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Acquisition related charges include legal and professional fees directly related to acquisitions.

For fiscal years 2018, 2017, and 2016,2021, Acquisition related charges were entirely attributable to legal fees and outside services in connection with our proposed acquisition by Canyon Bridge Acquisition Company, Inc. Although the acquisition was terminated, we had continued to incur certain residual legal charges directly related to this transaction. We do not expect any future costs related to this matter.

Impairment of acquired intangible assets

The composition of our Impairment of acquired intangible assets, including as a percentage of revenue, is presented in the following table:

	Year Ended												% Change in
(In thousands)	December 29, 2018				December 30, 2017				December 31, 2016				2018			2017
Impairment of acquired intangible assets	$	12,486			$	32,431			$	7,866			(61.5	)%		100+%
Percentage of revenue	3.1		%		8.4		%		1.8		%

During our review of our strategic long-range plan completed at the end of the third quarter of fiscal 2018, we concluded that a certain product line had limited future revenue potential due to a decline in customer demand for that product. We determined that this conclusion constituted an impairment indicator to the related specific developed technology intangible asset acquired in our acquisition of Silicon Image. Our assessmentMirametrix in November 2021 and were comprised primarily of the fair value of this intangible asset concluded that it had been fully impairedprofessional services including legal and accounting fees, as of September 29, 2018, and we recorded an impairment charge of $0.6 million in the Consolidated Statements of Operations.

In the second quarter of 2018, we made the strategic decision to discontinue our millimeter wave business, which included certain wireless technology intangible assets. We determined that this action constituted an impairment indicator related to certain of the developed technology intangible assets acquired in our acquisition of Silicon Image. Our assessment of the fair value of these intangible assets concluded that they had been fully impairedwell as of June 30, 2018, and we recorded an impairment charge of $11.9 million in the Consolidated Statements of Operations.

In the third quarter of fiscal 2017, we updated our annual strategic long-range plan, which resulted in revised forecasts. We also sold 100% of the equity of our Hyderabad, India subsidiary and transferred certain assets related to our Simplay Labs testing and certification business to an unrelated third party. We determined that these activities constituted impairment indicators related to certain of the developed technology intangible assets acquired in our acquisition of Silicon Image. Our assessment of the fair value of these intangible assets concluded that they had been impaired as of September 30, 2017, and we recorded a preliminary $36.2 million impairment charge in the Consolidated Statements of Operations. During the fourth quarter of fiscal 2017, we completed our detailed analysis and evaluation of the information and assumptions used in the determination of the impairment charge, which included reviewing information, inputs, assumptions, and valuation methodologies used to estimate the fair value of these intangible assets, and finalization of review by an independent valuation expert. As a result, we recorded a $3.8 million reduction to the preliminary impairment charge recorded in the third quarter of fiscal 2017, for a net impairment charge of $32.4 million in fiscal 2017.

In September 2016, the founders of the HDMI consortium ("Founders"), of which we are a member, updated the Founders Agreement as part of a regular amendment process resulting in changes to our role as agent for the HDMI consortium and to the model for sharing adopter fee revenues. Under the terms of the amendment agreement, our role as the agent was terminated effective January 1, 2017 and a new independent entity was appointed to act as the new HDMI licensing agent with responsibility for licensing and the distribution of royalties among Founders. As a result of the amended model for sharing revenue, we will be entitled to a reduced share of adopter fees paid by parties adopting the HDMI standard. We determined that this modification constituted an impairment indicator related to the intangible assets acquired in the Silicon Image acquisition associated with future HDMI adopter fees. Our assessment of the fair value of these intangible assets concluded that they had been impaired as of October 1, 2016, and we recorded a $7.9 million impairment charge in the Consolidated Statements of Operations.

Gain on sale of building

In August 2017, we sold building space which we owned in Shanghai, China for gross proceeds of approximately $7.9 million. The building space was vacated in fiscal 2015 upon consolidation of facilities to a single site in Shanghai following our acquisition of Silicon Image. As of the sale date, the building had a historical cost of $3.6 million, accumulated depreciation of $1.4 million, and we incurred $1.1 million of direct selling costs, resulting in a net gain on sale of $4.6 million, which is presented as Gain on sale of building in our Consolidated Statements of Operations.

closing costs.

Interest Expense

The composition of our Interest expense, including as a percentage of revenue, is presented in the following table:

	Year Ended												% Change in
(In thousands)	December 29, 2018				December 30, 2017				December 31, 2016				2018			2017
Interest expense	$	(20,600	)		$	(18,807	)		$	(20,327	)		9.5	%		(7.5	)%
Percentage of revenue	(5.2		)%		(4.9		)%		(4.8		)%

		Year Ended
		January 1,				January 2,				December 28,				% Change in
(In thousands)		2022				2021				2019				2021				2020
Interest expense		$	(2,738	)		$	(3,702	)		$	(11,731	)			(26.0	)%			(68.4	)%
Percentage of revenue			(0.5	)%			(0.9	)%			(2.9	)%

Interest expense is primarily related to our long-term debt, acquired to partially fund the Silicon Image acquisition, which is further discussed under the "Credit Arrangements" heading in the Credit Arrangements section under Liquidity and Capital Resources.Resources section, below. This interest expense is comprised of contractual interest and amortization of original issue discount and debt issuance costs based on the effective interest method.

The increasedecrease in Interest expense for fiscal 20182021 compared to fiscal 2017 2020 was largely driven by the increasesignificant reduction in the effective interest rate on our long-termlong term debt partially offset bycoupled with the reduction in the principal balance of our long-term debt as a result of the additional principal payments made during fiscal 2018.

The decrease in Interest expense for fiscal 2017 compared to fiscal 2016 was largely driven by the reduction in the principal balance of our long-term debt as a result of the additional principal payments made in the first six months of fiscal 2017.

debt.

Other (expense) income,(Expense) Income, net

The composition of our Other (expense) income, net, including as a percentage of revenue, is presented in the following table:

	Year Ended												% Change in
(In thousands)	December 29, 2018				December 30, 2017				December 31, 2016				2018			2017
Other (expense) income, net	$	(249	)		$	(3,286	)		$	2,844			(92	)%		100+%
Percentage of revenue	(0.1		)%		(0.9		)%		0.7		%

		Year Ended
		January 1,				January 2,				December 28,				% Change in
(In thousands)		2022				2021				2019				2021				2020
Other (expense) income, net		$	(452	)		$	(208	)		$	(2,245	)			117.3	%			(90.7	)%
Percentage of revenue			(0.1	)%			(0.1	)%			(0.6	)%

For fiscal 20182021 compared to fiscal 2017,2020, the changeincrease in Other (expense) income, net is primarilywas largely driven by non-recurrence in 2018 of the $1.8 million loss on the sale of 100% of the equity of our Hyderabad, India subsidiary and the transfer of certain assets related to our Simplay Labs testing and certification business to an unrelated third party in the third quarter of fiscal 2017. Additionally, in fiscal 2018, the impairment adjustments against our cost-method investment were approximately $1.5 million lower than in fiscal 2017.

As of December 30, 2017, we held a 22.7% preferred stock and convertible debt ownership interest in a privately-held company that designs human-computer interaction technology. We accounted for this investment under the cost method and assessed it for impairment as of December 30, 2017 by applying a fair value analysis using a revenue multiple approach. This yielded a fair value for our ownership stake of $2.3 million, which was less than its carrying value at the date of assessment. We determined that this impairment was other-than-temporary and adjusted the carrying value to the fair value. The total impairment adjustments against this cost-investment that we recognized in fiscal 2017 were $1.8 million.

Additionally for fiscal 2017 compared to fiscal 2016, Other (expense) income, net is comprised of a $1.8 million loss on the sale of 100% of the equity of our Hyderabad, India subsidiary and certain assets related to our Simplay Labs testing and certification business to an unrelated third party, partially offset by a $0.3 million gain recognized in fiscal 2017 on the receipt of a final escrow payment released from the fiscal 2016 sale of Qterics.

higher foreign currency exchange losses.

Income taxes

Taxes

The composition of our Income tax expense is presented in the following table:

	Year Ended												% Change in
(In thousands)	December 29, 2018				December 30, 2017				December 31, 2016				2018		2017
Income tax expense	$	2,353			$	849			$	9,917			100+%		(91.4)%

		Year Ended
		January 1,				January 2,				December 28,				% Change in
(In thousands)		2022				2021				2019				2021				2020
Income tax expense		$	1,704			$	1,064			$	1,572				60.2	%			(32.3	)%

Our Income tax expense for fiscal 2018 and fiscal 2017 is composed primarily of foreign income and withholding taxes, partially offset by benefits resulting from the release of uncertain tax positions ("UTP") due to statute of limitation expirations that occurred in the respective periods. The increase in expense in fiscal 20182021 as compared to fiscal 20172020 is primarily due to increased foreign withholding taxes related to HDMI royalty distributions receivedchanges in fiscal 2018 coupled with a reduced benefit in the current year from the statute of limitation expiration.

The decrease in income tax expense in fiscal 2017 as compared to fiscal 2016 is primarily due to the decrease in foreign withholding taxes as a result of the termination of our role as the agent of the HDMI consortium.

We are not currently paying U.S. federal income taxes and do not expect to pay such taxes until we fully utilize our tax net operating loss and credit carryforwards. We expect to pay a nominal amount of state income tax. We are paying foreign income taxes, which are primarily related to withholding taxes on income from foreign royalties, foreign sales, and the cost of operating offshore research and development, marketing, and sales subsidiaries. We accrue interest and penalties related to uncertain tax positions and increased worldwide income.

We updated our evaluation of the valuation allowance position in incomethe United States through January 1, 2022 and concluded that we should continue to maintain a full valuation allowance against the net federal and state deferred tax expense onassets. We continue to evaluate future projected financial performance to determine whether such performance is sufficient evidence to support a reduction in or reversal of the valuation allowance. We will continue to evaluate both positive and negative evidence in future periods to determine if we will realize the deferred tax assets. The amount of the deferred tax asset considered realizable could be adjusted if sufficient positive evidence exists. Details of our deferred tax assets and valuation allowance are discussed in "Note 13 - Income Taxes" to our Consolidated Financial Statements in Part II, Item 8 of Operations. The inherent uncertainties related to the geographical distribution and relative level of profitability among various high and low tax jurisdictions make it difficult to estimate the impact of the global tax structure on our future effective tax rate.

The Tax Cuts and Jobs Act, enacted December 22, 2017, contains provisions that affect Lattice.  Our new U.S. federal tax rate decreased from 35% to 21%. The new limitation on net interest expense will limit current deductibility of some of the interest on our debt, although this deduction may be carried forward for utilization in future years. The Global Intangible Low-Taxed Income (“GILTI”) may result in additional U.S. taxable income due to non-U.S. sourced income. To the extent we are required to recognize additional taxable income under these provisions, we have approximately $365 million in net operating loss carry forwards as of December 29, 2018 available for offset. Adoption of the territorial system concept will facilitate our ability to repatriate future foreign earnings without incurring additional U.S. tax. The new Base Erosion Anti-Abuse Tax (“BEAT”), which effectively requires U.S. companies with related non-U.S. persons to pay a minimum amount of U.S. tax, does not apply to us currently as we are below the $500 million revenue threshold.

report.

Liquidity and Capital Resources

The following sections discuss material changes in our financial condition from the end of fiscal 2020, including the effects of changes in our Consolidated Balance Sheets, and the effects of our credit arrangements and contractual obligations on our liquidity and capital resources,resources. There is significant uncertainty around the extent and duration of the disruption to our share repurchase program,business from the COVID-19 pandemic, and our liquidity and working capital needs may be impacted in future periods as well as our non-GAAP measures.

We classify our marketable securities as short-term based on their nature and availability for use in current operations. Our cash equivalents and short-term marketable securities consist primarilya result of high quality, investment-grade securities.the effects of the COVID-19 pandemic.

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We have historically financed our operating and capital resource requirements through cash flows from operations.operations, and from the issuance of long-term debt to fund acquisitions. Cash provided by or used in operating activities will fluctuate from period to period due to fluctuations in operating results, the timing and collection of accounts receivable, and required inventory levels, among other things.

We believe that our financial resources, including current cash and cash equivalents, cash flow from operating activities, and our credit facilities, will be sufficient to meet our liquidity and working capital needs through at least the next 12 months. As of December 29, 2018,January 1, 2022, we did not have significant long-term commitments for capital expenditures. For further information on our cash commitments for operating lease liabilities and required future principal payments on our long-term debt, see Note 10 - Leases and Note 8 - Long-Term Debt, respectively, under Part II, Item 8 of this report.

In the future, and to the extent our Credit Agreement permits, we may continue to consider acquisition opportunities to further extend our product or technology portfolios and further expand our product offerings. In connection with funding capital expenditures, completing other acquisitions, securing additional wafer supply, or increasing our working capital, or other operations, we may seek to obtain equity or additional debt financing, or advance purchase payments or similar arrangements with wafer manufacturers.financing. We may also needseek to obtain equity or additional debt financing if we experience downturns or cyclical fluctuations in our business that are more severe or longer than we anticipated when determining our current working capital needs, which financing may now be more difficult to obtain in lightneeds.

Liquidity

Cash and cash equivalents

(In thousands)		January 1, 2022				January 2, 2021				$ Change				% Change
Cash and cash equivalents		$	131,570			$	182,332			$	(50,762	)			(27.8	)%

As of our indebtedness related to the Credit Agreement.

Liquidity

January 1, 2022, we had Cash and cash equivalents and Short-term marketable securities

(In thousands)	December 29, 2018				December 30, 2017				$ Change				%Change
Cash and cash equivalents	$	119,051			$	106,815			$	12,236			11	%
Short-term marketable securities	9,624				4,982				4,642				93	%
Total Cash and cash equivalents and Short-term marketable securities	$	128,675			$	111,797			$	16,878			15	%

As of December 29, 2018, we had total Cash, cash equivalents, and short-term marketable securities of $128.7$131.6 million, of which approximately $74.9$59.1 million in Cash and cash equivalents was held by our foreign subsidiaries.

We manage our global cash requirements considering, among other things, (i) available funds among theour subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances. The repatriation of non-US earnings may require us to withhold and pay foreign income tax on the dividends. This should not result in our recording significant additional tax expense as we have accrued expense based on current withholding rates. As of December 29, 2018,January 1, 2022, we could access all cash held by our foreign subsidiaries without incurring significant additional expense.

The net increasedecrease in Cash and cash equivalents and short-term marketable securities of $16.9$50.8 million between December 30, 2017January 2, 2021 and December 29, 2018,January 1, 2022 was primarily driven by $51.5cash flows from the following activities:

Operating activities — Cash provided by operating activities results from net income adjusted for certain non-cash items and changes in assets and liabilities. Cash provided by operating activities was $167.7 million in fiscal 2021 compared to $91.7 million in fiscal 2020. This increase of $76.0 million was primarily driven by an increase of $54.2 million provided by improved operating performance, coupled with $21.8 million of favorable changes in working capital. We are using cash provided by operations,operating activities to fund our operations.

Investing activities — Investing cash flows consist primarily of transactions related to capital expenditures and $26.9payments for software and intellectual property licenses, and a business acquisition in fiscal 2021. Net cash used by investing activities in fiscal 2021 was $89.8 million compared to $20.9 million in fiscal 2020. This $68.9 million increase was primarily due to the acquisition of Mirametrix in the current year, which used cash, provided by the issuancenet of common stock uponcash acquired, of $68.1 million. Total cash used for capital expenditures and payments for software and intellectual property licenses increased $0.8 million to $21.7 million in fiscal 2021 from $20.9 million in fiscal 2020.

Financing activities — Financing cash flows consist primarily of activity on our long-term debt, proceeds from the exercise of options to acquire common stock, options,tax payments related to the net share settlement of withholding taxesrestricted stock units, and repurchases of common stock. Net cash used by financing activities in fiscal 2021 was $128.6 million compared to $8.1 million in fiscal 2020. This $120.5 million increase was due to the following mix of activities. During fiscal 2021, we paid required quarterly installments on our long-term debt totaling $13.1 million. During fiscal 2020, we drew $50.0 million on our revolving loan facility to further strengthen our liquidity position, and we paid quarterly installments totaling $26.3 million on our long-term debt, which fulfilled the required quarterly installments through the first quarter of fiscal 2021. Payments for tax withholdings on vesting of RSUs partially offset by $43.8employee exercises of stock options used net cash flows of $45.4 million cashin fiscal 2021, an increase of approximately $28.5 million from the net $16.9 million used in the repaymentfiscal 2020. During fiscal 2021, we also repurchased approximately 1.3 million shares of debt and $16.5common stock for $70.1 million compared to repurchases in fiscal 2020 of cash used in capital expenditures and paymentapproximately 0.4 million shares of common stock for software licenses.$15.0 million.

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Accounts receivable, net

(In thousands)	December 29, 2018				December 30, 2017				$Change				%Change
Accounts receivable, net	$	60,890			$	55,104			$	5,786			11	%
Days sales outstanding - Overall	58				53				5

(In thousands)		January 1, 2022				January 2, 2021				Change				% Change
Accounts receivable, net		$	79,859			$	64,581			$	15,278				23.7	%
Days sales outstanding - Overall			51				55				(4	)

Accounts receivable, net as of December 29, 2018January 1, 2022 increased by $5.8approximately $15.3 million, or 10.5%approximately 24%, compared to December 30, 2017. A majority of the increaseJanuary 2, 2021. This resulted primarily from increased distributor revenue and billingsshipments in the fourth quarter of fiscal 2021 compared to support the near-term demand from increasing server deployments and consumer applications, partially offset byfourth quarter of fiscal 2020. We calculate Days sales outstanding on the timingbasis of collections and by additional ship and debit and return accruals recorded in fiscal 2018 due to adoption of ASC 606 that were not recordeda 365-day year as ofAccounts receivable, net at the end of fiscal 2017.

The increase in overall daysthe quarter divided by sales outstanding to 58 days at December 29, 2018 from 53 days at December 30, 2017 is mainly dueduring the changes in distributor accounts receivable as a result of increased distributor inventoryquarter annualized and adoption of ASC 606 discussed above.

then multiplied by 365.

Inventories

(In thousands)	December 29, 2018				December 30, 2017				$Change				%Change
Inventories	$	67,096			$	79,903			$	(12,807	)		(16	)%
Months of inventory on hand	4.8				5.4				(0.6		)

(In thousands)		January 1, 2022				January 2, 2021				Change				% Change
Inventories		$	67,594			$	64,599			$	2,995				4.6	%
Days of inventory on hand			122				139				(17	)

Inventories as of December 29, 2018 decreased $12.8January 1, 2022 increased $3.0 million, or 16.0%approximately 5%, compared to December 30, 2017,January 2, 2021 primarily as a resultto meet the increased demands of managing inventory levels based on improved system visibility of product demand and reductions resulting from our exit from the millimeter wave products business. These reductions were partially offset by an increase related to the ramp up of a major new product.

customers.

The monthsDays of inventory on hand ratio compares the inventory balance at the end of a periodquarter to the cost of sales in that period. Our monthsquarter. We calculate Days of inventory on hand decreased to 4.8 monthson the basis of a 365-day year as Inventories at December 29, 2018 from 5.4 months at December 30, 2017, as the costend of the quarter divided by Cost of sales decreased between these periods whileduring the inventory also decreased due to the reasons noted above.

quarter annualized and then multiplied by 365.

Credit Arrangements

On March 10, 2015,May 17, 2019, we entered into a secured credit agreement (the "Credit Agreement") with Jefferies Finance, LLC and certain other lenders for purposes of funding, in part, our acquisition of Silicon Image. TheCurrent Credit Agreement provided for a $350 million term loan (the "Term Loan") maturing on March 10, 2021 (the "Term Loan Maturity Date"). We received $346.5 million, netwith Wells Fargo Bank, National Association, as administrative agent, and other lenders. The details of an original issue discount of $3.5 million and we paid debt issuance costs of $8.3 million. The Term Loan bears variable interest equal to the one-month LIBOR, subject to a 1.00% floor, plus a spread of 4.25%. The current effective interest rate on the Term Loan is 7.30%.

The Term Loan is payable through a combination of (i) quarterly installments of approximately $0.9 million, (ii) annual excess cash flow payments as definedthis arrangement are described in "Note 8 - Long-Term Debt" in the Credit Agreement, which are due 95 days after the last day of our fiscal year, and (iii) any payments due upon certain issuances of additional indebtedness and certain asset dispositions, with any remaining outstanding principal amount due and payable on the Term Loan Maturity Date. The percentage of excess cash flow we are requiredaccompanying Notes to pay ranges from 0% to 75%, depending on our leverage and other factors as defined in the Credit Agreement.Consolidated Financial Statements. As of December 29, 2018, the Credit Agreement required a 75% excess cash flow payment.

In the first quarter of fiscal 2018, we made a required quarterly installment payment of $0.9 million. In the second quarter of fiscal 2018, we made a required excess cash flow payment of $0.2 million, a required quarterly installment payment of $0.9 million, and an additional $10.0 million principal payment. In the third quarter of fiscal 2018, we made a required quarterly installment payment of $0.9 million, and an additional $15.0 million principal payment. In the fourth quarter of fiscal 2018, we made a required quarterly installment payment of $0.9 million, and an additional $15.0 million principal payment. As of December 29, 2018,January 1, 2022, we had approximately $263.0 million outstanding under the Credit Agreement.

While the Credit Agreement does not contain financial covenants, it does contain informational covenants and certain restrictive covenants, including limitations on liens, mergers and consolidations, sales of assets, payment of dividends, and indebtedness. We were in compliance with all such covenants in all material respects at December 29, 2018.

As of December 29, 2018, we had no significant long-term purchase commitments for capital expenditures or existing used or unused credit arrangements.

Contractual Cash Obligations

The following table summarizes our contractual cash obligations at December 29, 2018:

(In thousands)
Fiscal year		Operating leases (1)			Long-term Debt (2)
2019		$	7,090		$	23,756
2020		6,893			74,331
2021		5,452			191,699
2022		4,658			—
2023		4,229			—
Thereafter		9,930			—
		$	38,252		$	289,786

(1) Certainarrangements beyond the secured revolving loan facility described in the Current Credit Agreement.

Share Repurchase Program

See "Issuer Purchases of our facilities and equipment are leasedEquity Securities" under operating leases, which expire at various times through 2026.

(2) Cash payments due for long-term debt include estimated interest payments, which are based on outstanding principal amounts, currently effective interest rates as of December 29, 2018, timing of scheduled payments and the debt term. See Liquidity section ofPart II, Item 7 for further discussion pertaining to our Credit Arrangements.

Our significant operating leases are for our facilities in Portland and Hillsboro, Oregon; San Jose, California; Muntinlupa City, Philippines; and Shanghai, China.

In November 2014, we entered into a lease for our former corporate headquarters facility in Portland, Oregon which expires in March 2025. Annual rental costs are estimated at $0.7 million with average annual increases of approximately 5%. We commenced operations at that location in March 2015. Under a previously approved restructuring plan, we plan to fully vacate the space in Portland, Oregon in early 2019 and intend to sublease the vacated space.

In November 2014, we sold the property where our headquarters was formerly located in Hillsboro, Oregon for net proceeds of $14.6 million. We leased back the majority5 of this facility from November 2014 until March 2015, after which we leased a smaller portion ofAnnual Report on Form 10-K for more information about the facility until November 2022. Annual rental costs are estimated at $0.6 million with 3% annual increases. In the first quarter of 2019, we relocated our corporate headquarters to our facility in Hillsboro, Oregon.

Our lease in San Jose, California expires September 2026 with total annual rental costs estimated to be $2.4 million and annual increases of approximately 3%. Under a previously approved restructuring plan, we vacated approximately 50% or our facility in San Jose, California in the fourth quarter of fiscal 2018 and intend to sublease the vacated space.

Two of our leases in Muntinlupa City, Philippines expire in May 2025 and June 2025, with total annual rental costs estimated to be $0.7 million and annual increases of approximately 5%. Our lease in Shanghai expires in May 2021, with total annual rental costs estimated to be $1.8 million. Leasehold improvements are amortized over the shorter of the non-cancelable lease term or the estimated useful life of the assets.

share repurchase program.

New Accounting Pronouncements

The information contained under the heading "New Accounting Pronouncements" in Note 1 - Nature of Operations and Significant Accounting Policies to our Consolidated Financial Statements in Part II, Item 8 is incorporated by reference into this Part II, Item 7.

Off-Balance Sheet Arrangements

As of December 29, 2018, we did not have any off-balance sheet arrangements of the type described by Item 303(a)(4) of SEC Regulation S-K.

Non-GAAP Financial Measures

To supplement our consolidated financial results presented in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), we also present certain non-GAAP financial measures which are adjusted from the most directly comparable U.S. GAAP financial measures. The non-GAAP measures set forth below exclude charges and adjustments primarily related to stock-based compensation, restructuring plans and related charges, acquisition-related charges, amortization of acquired intangible assets, impairment of intangible assets, inventory adjustments from the discontinuation of the Company's millimeter wave business, gain on sale of building, gain or loss on sale of business unit, and the estimated tax effect of these items. These charges and adjustments may be recurring in nature but are a result of periodic or non-core operating activities of the Company.

Management believes that these non-GAAP financial measures provide an additional and useful way of viewing aspects of our performance that, when viewed in conjunction with our U.S. GAAP results, provide a more comprehensive understanding of the various factors and trends affecting our ongoing financial performance and operating results than GAAP measures alone. Management also uses these non-GAAP measures for strategic and business decision-making, internal budgeting, forecasting, and resource allocation processes and believes that investors should have access to similar data. In addition, these non-GAAP financial measures facilitate management’s internal comparisons to our historical operating results and comparisons to competitors’ operating results.

These non-GAAP measures are included solely for informational and comparative purposes and are not meant as a substitute for GAAP and should be considered together with the consolidated financial information located in this report. Pursuant to the requirements of Regulation S-K and to make clear to our investors the adjustments we make to U.S. GAAP measures, we have provided the following reconciliations of non-GAAP measures to the most directly comparable U.S. GAAP financial measures.

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures

(In thousands, except per share amounts)		Year Ended
(unaudited)		December 29, 2018				December 30, 2017				December 31, 2016
Gross Margin Reconciliation
GAAP Gross margin		$	219,439			$	216,579			$	246,434
Inventory adjustment related to restructured operations		7,829				—				—
Acquisition related inventory fair value effect (1)		—				—				523
Stock-based compensation expense - gross margin		940				788				888
Non-GAAP Gross margin		$	228,208			$	217,367			$	247,845
Gross Margin % Reconciliation
GAAP Gross margin %		55.0		%		56.1		%		57.7		%
Cumulative effect of non-GAAP Gross Margin adjustments		2.2		%		0.2		%		0.3		%
Non-GAAP Gross margin %		57.2		%		56.3		%		58.0		%
Operating Expenses Reconciliation
GAAP Operating expenses		$	222,559			$	264,199			$	273,133
Amortization of acquired intangible assets		(17,690		)		(31,340		)		(33,575		)
Restructuring charges		(17,349		)		(7,196		)		(9,267		)
Acquisition related charges (2)		(1,531		)		(3,781		)		(6,305		)
Impairment of acquired intangible assets		(11,686		)		(32,431		)		(7,866		)
Stock-based compensation expense - operations		(12,706		)		(11,755		)		(15,325		)
Gain on sale of building		—				4,624				—
Non-GAAP Operating expenses		$	161,597			$	182,320			$	200,795
(Loss) Income from Operations Reconciliation
GAAP Loss from operations		$	(3,120	)		$	(47,620	)		$	(26,699	)
Inventory adjustment related to restructured operations		7,829				—				—
Acquisition related inventory fair value effect (1)		—				—				523
Stock-based compensation expense - gross margin		940				788				888
Amortization of acquired intangible assets		17,690				31,340				33,575
Restructuring charges		17,349				7,196				9,267
Acquisition related charges (2)		1,531				3,781				6,305
Impairment of goodwill and acquired intangible assets		11,686				32,431				7,866
Stock-based compensation expense - operations		12,706				11,755				15,325
Gain on sale of building		—				(4,624		)		—
Non-GAAP Income from operations		$	66,611			$	35,047			$	47,050
(Loss) Income from Operations % Reconciliation
GAAP Loss from operations %		(0.8		)%		(12.3		)%		(6.3		)%
Cumulative effect of non-GAAP Gross Margin and Operating adjustments		17.5		%		21.4		%		17.3		%
Non-GAAP Income from operations %		16.7		%		9.1		%		11.0		%
(1)	Fair value adjustment for inventory step-up from purchase accounting.
(2)	Legal fees and outside services that were related to our proposed acquisition by Canyon Bridge Acquisition Company, Inc.

Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts)		Year Ended
(unaudited)		December 29, 2018				December 30, 2017				December 31, 2016
Other (Expense) Income, Net Reconciliation
GAAP Other (expense) income, net		$	(249	)		$	(3,286	)		$	2,844
Loss (gain) on sale of assets and business units		—				1,496				(2,646		)
Non-GAAP Other (expense) income, net		$	(249	)		$	(1,790	)		$	198
Income Tax Expense Reconciliation
GAAP Income tax expense		$	2,353			$	849			$	9,917
Estimated tax effect of non-GAAP adjustments (3)		—				—				—
Non-GAAP Income tax expense		$	2,353			$	849			$	9,917
Net (Loss) Income Reconciliation
GAAP Net loss		$	(26,322	)		$	(70,562	)		$	(54,099	)
Inventory adjustment related to restructured operations		7,829				—				—
Acquisition related inventory fair value effect (1)		—				—				523
Stock-based compensation expense - gross margin		940				788				888
Amortization of acquired intangible assets		17,690				31,340				33,575
Restructuring charges		17,349				7,196				9,267
Acquisition related charges (2)		1,531				3,781				6,305
Impairment of acquired intangible assets		11,686				32,431				7,866
Stock-based compensation expense - operating expense		12,706				11,755				15,325
Gain on sale of building		—				(4,624		)		—
Loss (gain) on sale of assets and business units		—				1,496				(2,646		)
Estimated tax effect of non-GAAP adjustments (3)		—				—				—
Non-GAAP Net income		$	43,409			$	13,601			$	17,004
Net (Loss) Income Per Share Reconciliation
GAAP Net loss per share - basic		$	(0.21	)		$	(0.58	)		$	(0.45	)
Cumulative effect of Non-GAAP adjustments		0.55				0.69				0.59
Non-GAAP Net income per share - basic		$	0.34			$	0.11			$	0.14
GAAP Net (loss) income per share - diluted		$	(0.21	)		$	(0.58	)		$	(0.45	)
Cumulative effect of Non-GAAP adjustments		0.54				0.69				0.59
Non-GAAP Net income per share - diluted		$	0.33			$	0.11			$	0.14
Shares used in per share calculations:
Basic		126,564				122,677				119,994
Diluted - GAAP (4)		126,564				122,677				119,994
Diluted - non-GAAP (4)		129,766				124,499				121,957
(1)	Fair value adjustment for inventory step-up from purchase accounting.
(2)	Legal fees and outside services that were related to our proposed acquisition by Canyon Bridge Acquisition Company, Inc.
(3)	We calculate non-GAAP tax expense by applying our tax provision model to year-to-date and projected income after adjusting for non-GAAP items. The difference between calculated values for GAAP and non-GAAP tax expense has been included as the “Estimated tax effect of non-GAAP adjustments.” For the fiscal years presented, the calculated non-GAAP tax expense is equal to our GAAP tax expense, and the Estimated tax effect of non-GAAP adjustments is zero.
(4)	Diluted shares are calculated using the GAAP treasury stock method. In a loss position, diluted shares equal basic shares.

Item 7A. Quantitative and Qualitative Disclosures Aboutabout Market Risk

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates and interest rates. We assess these risks on a regular basis and have established policies that are designed to protect against the adverse effects of these and other potential exposures.

Foreign Currency Exchange Rate Risk

While our revenues and the majority of our expenses are denominated in U.S. dollars, we collect an annual Japanese consumption tax refund in yen, and as a result of having various international subsidiary and branch operations, our financial position and results of operations are subject to foreign currency exchange rate risk.

We mitigate the resultingrisk as a result of having various international subsidiary and branch operations. Historically, exposure to foreign currency exchange rate exposure by enteringrisk has not had a material impact on our results from operations. At times in the past, we have entered into foreign currency forward exchange contracts details ofin relation to certain activities, which are presented inmitigated the following table:

		December 29, 2018				December 30, 2017
Total cost of contracts for Japanese yen (thousands)		$	1,955			$	2,204
Number of contracts		2				2
Settlement month		June 2019				June 2018

Although these hedges mitigate our foreign currency exchange rate exposure from an economic perspective, theybut these were not designated as "effective" hedges under U.S. GAAP and as such are adjusted to fair value through Other (expense) income, net. We do not engage in speculative trading in any financial or capital market.

The net fair value of these contracts was favorable by approximately $0.1 million at both December 29, 2018 and December 30, 2017. A hypothetical 10% unfavorable exchange rate change in the yen against the U.S. dollar would have resulted in an unfavorable change in net fair value of approximately $0.2 million at both December 29, 2018 and December 30, 2017. Changes in fair value resulting from foreign exchange rate fluctuations would be substantially offset by the change in value of the underlying hedged transactions.

GAAP.

Interest Rate Risk

We are exposed to interest rate risk related to our indebtedness. At December 29, 2018,January 1, 2022, we had $263.0$158.8 million outstanding on the $350 million gross term loan outstanding under our Current Credit Agreement, with a variable contractual interest rate based on the one-month LIBOR as of December 29, 2018, subject to a 1.00% floor, plus a spread of 4.25%.Agreement. A hypothetical increase in the one-month LIBOR by 1% (100 basis points) would increase our future interest expense by approximately $2.6$0.4 million per year.quarter.

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Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements Page Consolidated Financial Statements:   Consolidated Balance Sheets 45 Page Consolidated Statements of Operations 4633 Consolidated Statements of Comprehensive LossIncome 4734 Consolidated Balance Sheets 35 Consolidated Statements of Cash Flows 36 Consolidated Statements of Stockholders' Equity 4837 Consolidated Statements of Cash Flows 49 Notes to Consolidated Financial Statements 5138 Reports of Independent Registered Public Accounting Firm (Ernst & Young LLP) (PCAOB ID: 42) 58 Report of Independent Registered Public Accounting Firm (KPMG LLP) (PCAOB ID: 185) 8061 32 Table of Contents

LATTICE SEMICONDUCTOR CORPORATION

CONSOLIDATED BALANCE SHEETSSTATEMENTS OF OPERATIONS

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		Year Ended
		January 1,				January 2,				December 28,
(In thousands, except per share data)		2022				2021				2019
Revenue		$	515,327			$	408,120			$	404,093
Cost of revenue			193,652				162,814				165,671
Gross margin			321,675				245,306				238,422
Operating expenses:
Research and development			110,518				89,223				78,617
Selling, general, and administrative			105,617				95,331				82,542
Amortization of acquired intangible assets			2,613				4,449				13,558
Restructuring charges			940				3,937				4,664
Acquisition related charges			1,171				0				0
Total operating expenses			220,859				192,940				179,381
Income from operations			100,816				52,366				59,041
Interest expense			(2,738	)			(3,702	)			(11,731	)
Other (expense) income, net			(452	)			(208	)			(2,245	)
Income before income taxes			97,626				48,456				45,065
Income tax expense			1,704				1,064				1,572
Net income		$	95,922			$	47,392			$	43,493
Net income per share:
Basic		$	0.70			$	0.35			$	0.33
Diluted		$	0.67			$	0.34			$	0.32
Shares used in per share calculations:
Basic			136,619				135,220				132,471
Diluted			142,143				141,276				137,274

---

(In thousands, except share and par value data)	December 29, 2018				December 30, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	119,051			$	106,815
Short-term marketable securities	9,624				4,982
Accounts receivable, net of allowance for doubtful accounts	60,890				55,104
Inventories	67,096				79,903
Prepaid expenses and other current assets	27,762				16,567
Total current assets	284,423				263,371
Property and equipment, net	34,883				40,423
Intangible assets, net	21,325				51,308
Goodwill	267,514				267,514
Deferred income taxes	215				198
Other long-term assets	15,327				13,147
Total assets	$	623,687			$	635,961
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses (includes restructuring)	$	51,763			$	54,405
Accrued payroll obligations	9,365				10,416
Current portion of long-term debt	8,290				1,508
Deferred income and allowances on sales to distributors	—				17,250
Deferred licensing and services revenue	—				68
Total current liabilities	69,418				83,647
Long-term debt	251,357				299,667
Other long-term liabilities	44,455				34,954
Total liabilities	365,230				418,268
Commitments and contingencies (Notes 13 and 19)	—				—
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued and outstanding	—				—
Common stock, $.01 par value, 300,000,000 shares authorized; 129,728,000 shares issued and outstanding as of December 29, 2018 and 123,895,000 shares issued and outstanding as of December 30, 2017	1,297				1,239
Additional paid-in capital	736,274				695,768
Accumulated deficit	(476,783		)		(477,862		)
Accumulated other comprehensive loss	(2,331		)		(1,452		)
Total stockholders' equity	258,457				217,693
Total liabilities and stockholders' equity	$	623,687			$	635,961

The accompanying notes are an integral part of these Consolidated Financial StatementsStatements.

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LATTICE SEMICONDUCTOR CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONSCOMPREHENSIVE INCOME

---

		Year Ended
		January 1,				January 2,				December 28,
(In thousands)		2022				2021				2019
Net income		$	95,922			$	47,392			$	43,493
Other comprehensive income (loss):
Translation adjustment			(75	)			1,533				341
Change in actuarial valuation of defined benefit pension, net of tax			372				(678	)			(602	)
Unrealized gain related to marketable securities, net of tax			0				0				42
Reclassification adjustment for gains related to marketable securities included in Other expense, net of tax			0				0				(53	)
Comprehensive income		$	96,219			$	48,247			$	43,221

---

		Year Ended
(In thousands, except per share data)		December 29, 2018				December 30, 2017				December 31, 2016
Revenue:
Product		$	380,468			$	356,502			$	390,704
Licensing and services		18,331				29,459				36,350
Total revenue		398,799				385,961				427,054
Costs and expenses:
Cost of product revenue		179,101				164,657				179,983
Cost of licensing and services revenue		259				4,725				637
Research and development		82,449				103,357				117,518
Selling, general, and administrative		91,054				90,718				98,602
Amortization of acquired intangible assets		17,690				31,340				33,575
Restructuring charges		17,349				7,196				9,267
Acquisition related charges		1,531				3,781				6,305
Impairment of acquired intangible assets		12,486				32,431				7,866
Gain on sale of building		—				(4,624		)		—
Total costs and expenses		401,919				433,581				453,753
Loss from operations		(3,120		)		(47,620		)		(26,699		)
Interest expense		(20,600		)		(18,807		)		(20,327		)
Other (expense) income, net		(249		)		(3,286		)		2,844
Loss before income taxes		(23,969		)		(69,713		)		(44,182		)
Income tax expense		2,353				849				9,917
Net loss		$	(26,322	)		$	(70,562	)		$	(54,099	)
Net loss per share, basic and diluted		$	(0.21	)		$	(0.58	)		$	(0.45	)
Shares used in per share calculations, basic and diluted		126,564				122,677				119,994

The accompanying notes are an integral part of these Consolidated Financial StatementsStatements.

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LATTICE SEMICONDUCTOR CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSSBALANCE SHEETS

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		January 1,				January 2,
(In thousands, except share and par value data)		2022				2021
ASSETS
Current assets:
Cash and cash equivalents		$	131,570			$	182,332
Accounts receivable, net of allowance for credit losses			79,859				64,581
Inventories, net			67,594				64,599
Prepaid expenses and other current assets			22,328				22,331
Total current assets			301,351				333,843
Property and equipment, net			38,094				39,666
Operating lease right-of-use assets			23,818				22,178
Intangible assets, net			29,782				6,321
Goodwill			315,358				267,514
Other long-term assets			18,091				10,545
Total assets		$	726,494			$	680,067
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	34,597			$	27,530
Accrued expenses			26,444				21,411
Accrued payroll obligations			27,967				18,028
Current portion of long-term debt			17,173				12,762
Total current liabilities			106,181				79,731
Long-term debt, net of current portion			140,760				157,934
Long-term operating lease liabilities, net of current portion			19,248				18,906
Other long-term liabilities			48,672				39,069
Total liabilities			314,861				295,640
Contingencies (Note 15)
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued and outstanding			0				0
Common stock, $.01 par value, 300,000,000 shares authorized; 137,239,000 shares issued and outstanding as of January 1, 2022 and 136,236,000 shares issued and outstanding as of January 2, 2021			1,372				1,362
Additional paid-in capital			701,688				770,711
Accumulated deficit			(289,976	)			(385,898	)
Accumulated other comprehensive loss			(1,451	)			(1,748	)
Total stockholders' equity			411,633				384,427
Total liabilities and stockholders' equity		$	726,494			$	680,067

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		Year Ended
(In thousands)		December 29, 2018				December 30, 2017				December 31, 2016
Net loss		$	(26,322	)		$	(70,562	)		$	(54,099	)
Other comprehensive loss:
Unrealized gain (loss) related to marketable securities, net of tax		41				(73		)		(172		)
Reclassification adjustment for (gains) losses related to marketable securities included in other (expense) income, net		(18		)		252				79
Translation adjustment, net of tax		(1,271		)		2,620				(1,303		)
Change in actuarial valuation of defined benefit pension		369				(95		)		150
Comprehensive loss		$	(27,201	)		$	(67,858	)		$	(55,345	)

The accompanying notes are an integral part of these Consolidated Financial StatementsStatements.

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LATTICE SEMICONDUCTOR CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYCASH FLOWS

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		Year Ended
		January 1,				January 2,				December 28,
(In thousands)		2022				2021				2019
Cash flows from operating activities:
Net income		$	95,922			$	47,392			$	43,493
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			24,429				25,140				33,056
Stock-based compensation expense			46,475				40,372				18,899
Amortization of right-of-use assets			6,587				5,960				5,797
Amortization of debt issuance costs and discount			362				400				1,659
Loss on refinancing of long-term debt			0				0				2,235
Impairment of operating lease right-of-use asset			0				0				977
Other non-cash adjustments			(601	)			(256	)			(374	)
Changes in assets and liabilities:
Accounts receivable, net			(12,013	)			336				(4,027	)
Inventories, net			(2,995	)			(9,619	)			12,116
Prepaid expenses and other assets			1,918				(6,441	)			3,740
Accounts payable			7,046				(16,820	)			12,470
Accrued expenses			(2,855	)			6,314				(3,047	)
Accrued payroll obligations			9,692				4,624				4,039
Operating lease liabilities, current and long-term portions			(6,245	)			(5,715	)			(6,896	)
Net cash provided by (used in) operating activities			167,722				91,687				124,137
Cash flows from investing activities:
Cash paid for business acquisition, net of cash acquired			(68,099	)			0				0
Capital expenditures			(9,835	)			(12,121	)			(15,590	)
Cash paid for software and intellectual property licenses			(11,862	)			(8,747	)			(9,601	)
Proceeds from sales of and maturities of short-term marketable securities			0				0				9,655
Net cash provided by (used in) investing activities			(89,796	)			(20,868	)			(15,536	)
Cash flows from financing activities:
Restricted stock unit tax withholdings			(54,191	)			(26,965	)			(10,084	)
Proceeds from issuance of common stock			8,827				10,103				17,166
Repurchase of common stock			(70,124	)			(14,989	)			0
Proceeds from long-term debt			0				50,000				206,500
Original issue discount and debt issuance costs			0				0				(2,086	)
Repayment of long-term debt			(13,125	)			(26,250	)			(321,408	)
Net cash provided by (used in) financing activities			(128,613	)			(8,101	)			(109,912	)
Effect of exchange rate change on cash			(75	)			1,533				341
Net increase (decrease) in cash and cash equivalents			(50,762	)			64,251				(970	)
Beginning cash and cash equivalents			182,332				118,081				119,051
Ending cash and cash equivalents		$	131,570			$	182,332			$	118,081
Supplemental disclosure of cash flow information and non-cash investing and financing activities:
Interest paid		$	2,313			$	3,700			$	10,995
Operating lease payments		$	7,639			$	7,713			$	8,425
Income taxes paid, net of refunds		$	3,304			$	1,868			$	3,393
Accrued purchases of plant and equipment		$	1,360			$	975			$	826
Operating lease right-of-use assets obtained in exchange for lease obligations		$	8,134			$	2,645			$	747

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	Common Stock ($.01 par value)							Additional Paid-in capital				Accumulated deficit				Accumulated other comprehensive loss
(In thousands, except par value data)	Shares			Amount																Total
Balances, January 2, 2016	118,651			$	1,187			$	660,089			$	(352,846	)		$	(2,910	)		$	305,520
Net loss for 2016	—			—				—				(54,099		)		—				(54,099		)
Unrealized loss related to marketable securities, net of tax	—			—				—				—				(172		)		(172		)
Recognized loss on redemption of marketable securities, previously unrealized	—			—				—				—				79				79
Translation adjustments, net of tax	—			—				—				—				(1,303		)		(1,303		)
Common stock issued in connection with the exercise of stock options, ESPP and vested RSUs, net of tax	2,994			29				4,013				—				—				4,042
Stock-based compensation expense related to options, ESPP and RSUs	—			—				16,213				—				—				16,213
Defined benefit pension, net of actuarial valuation adjustments	—			—				—				—				150				150
Balances, December 31, 2016	121,645			$	1,216			$	680,315			$	(406,945	)		$	(4,156	)		$	270,430
Net loss for 2017	—			—				—				(70,562		)		—				(70,562		)
Unrealized loss related to marketable securities, net of tax	—			—				—				—				(73		)		(73		)
Recognized loss on redemption of marketable securities, previously unrealized	—			—				—				—				252				252
Translation adjustments, net of tax	—			—				—				—				2,620				2,620
Common stock issued in connection with the exercise of stock options, ESPP and vested RSUs, net of tax	2,250			23				2,795				—				—				2,818
Stock-based compensation expense related to stock options, ESPP and RSUs (1)	—			—				12,658				—				—				12,658
Defined benefit pension, net of actuarial valuation adjustments	—			—				—				—				(95		)		(95		)
Accounting method transition adjustment (2)	—			—				—				(355		)		—				(355		)
Balances, December 30, 2017	123,895			$	1,239			$	695,768			$	(477,862	)		$	(1,452	)		$	217,693
Net loss for 2018	—			—				—				(26,322		)		—				(26,322		)
Unrealized gain related to marketable securities, net of tax	—			—				—				—				41				41
Recognized gain on redemption of marketable securities, previously unrealized	—			—				—				—				(18		)		(18		)
Translation adjustments, net of tax	—			—				—				—				(1,271		)		(1,271		)
Common stock issued in connection with the exercise of stock options, ESPP and vested RSUs, net of tax	5,833			58				26,860				—				—				26,918
Stock-based compensation expense related to stock options, ESPP and RSUs	—			—				13,646				—				—				13,646
Defined benefit pension, net of actuarial valuation adjustments	—			—				—				—				369				369
Accounting method transition adjustment (3)	—			—				—				27,401				—				27,401
Balances, December 29, 2018	129,728			$	1,297			$	736,274			$	(476,783	)		$	(2,331	)		$	258,457

(1)    In the third quarter of fiscal 2017, in relation to the sale of 100% of the equity of our Hyderabad, India subsidiary and certain assets related to our Simplay

Labs testing and certification business, certain stock compensation was accelerated due to a change of control agreement. As a result of this acceleration,

the equity effect of stock compensation shown above includes approximately $0.1 million that was charged to restructuring expense as part of the June

2017 Plan (see "Note 15 - Restructuring").

(2)    During the first quarter of fiscal 2017, we early adopted ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.

This guidance is required to be applied on a modified retrospective basis through a cumulative-effect adjustment to the balance sheet as of the beginning

of the fiscal year of adoption. As a result of this adoption, we recorded a nominal amount to Accumulated deficit, as detailed in the table above.

(3)    As of the beginning of fiscal 2018, we adopted ASC 606, Revenue from Contracts With Customers, using the modified retrospective transition method. As

a result of this adoption, we recorded a cumulative-effect adjustment to Accumulated deficit, as shown in the table above.

The accompanying notes are an integral part of these Consolidated Financial StatementsStatements.

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LATTICE SEMICONDUCTOR CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWSSTOCKHOLDERS' EQUITY

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																		Accumulated
		Common Stock								Additional								Other
		($.01 par value)								Paid-in				Accumulated				Comprehensive
(In thousands, except par value data)		Shares				Amount				Capital				Deficit				Income (Loss)				Total
Balances, December 29, 2018			129,728			$	1,297			$	736,274			$	(476,783	)		$	(2,331	)		$	258,457
Components of comprehensive income, net of tax:
Net income			—				0				0				43,493				0				43,493
Other comprehensive income (loss)			—				0				0				0				(272	)			(272	)
Total comprehensive income							0				0				0				0				43,221
Common stock issued in connection with employee equity incentive plans, net of shares withheld for employee taxes			4,155				42				7,040				0				0				7,082
Stock-based compensation expense			—				0				18,899				0				0				18,899
Balances, December 28, 2019			133,883			$	1,339			$	762,213			$	(433,290	)		$	(2,603	)		$	327,659
Components of comprehensive income, net of tax:
Net income			—				0				0				47,392				0				47,392
Other comprehensive income (loss)			—				0				0				0				855				855
Total comprehensive income							0				0				0				0				48,247
Common stock issued in connection with employee equity incentive plans, net of shares withheld for employee taxes			2,738				27				(16,889	)			0				0				(16,862	)
Stock-based compensation expense			—				0				40,372				0				0				40,372
Repurchase of common stock			(385	)			(4	)			(14,985	)			0				0				(14,989	)
Balances, January 2, 2021			136,236			$	1,362			$	770,711			$	(385,898	)		$	(1,748	)		$	384,427
Components of comprehensive income, net of tax:
Net income			—				0				0				95,922				0				95,922
Other comprehensive income (loss)			—				0				0				0				297				297
Total comprehensive income							0				0				0				0				96,219
Common stock issued in connection with employee equity incentive plans, net of shares withheld for employee taxes			2,270				23				(45,387	)			0				0				(45,364	)
Stock-based compensation expense			—				0				46,475				0				0				46,475
Repurchase of common stock			(1,267	)			(13	)			(70,111	)			0				0				(70,124	)
Balances, January 1, 2022			137,239			$	1,372			$	701,688			$	(289,976	)		$	(1,451	)		$	411,633

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	Year Ended
(In thousands)	December 29, 2018				December 30, 2017				December 31, 2016
Cash flows from operating activities:
Net loss	$	(26,322	)		$	(70,562	)		$	(54,099	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	39,261				57,861				61,806
Impairment of acquired intangible assets	12,486				32,431				7,866
Amortization of debt issuance costs and discount	2,230				1,982				1,350
Change in deferred income tax provision	(96		)		(154		)		90
(Gain) loss on sale or maturity of marketable securities	(18		)		252				79
Gain on forward contracts	(53		)		(77		)		(184		)
Stock-based compensation expense	13,646				12,543				16,213
(Gain) loss on disposal of fixed assets	(178		)		(75		)		597
Gain on sale of building	—				(4,624		)		—
Loss (gain) on sale of assets and business units	—				1,496				(2,646		)
Impairment of cost-method investment	266				1,761				1,459
Changes in assets and liabilities:
Accounts receivable, net	(3,978		)		44,613				(11,419		)
Inventories	13,177				(902		)		(3,272		)
Prepaid expenses and other assets	(11,667		)		889				(2,270		)
Accounts payable and accrued expenses (includes restructuring)	13,325				(23,588		)		8,338
Accrued payroll obligations	(1,051		)		726				402
Income taxes payable	498				(556		)		3,216
Deferred income and allowances on sales to distributors	—				(15,007		)		14,391
Deferred licensing and services revenue	(68		)		(495		)		(183		)
Net cash provided by operating activities	51,458				38,514				41,734
Cash flows from investing activities:
Proceeds from sales of and maturities of short-term marketable securities	5,000				12,689				14,897
Purchase of marketable securities	(9,603		)		(7,420		)		(7,490		)
Proceeds from sale of building	—				7,895				—
Cash paid for costs of sale of building	—				(1,004		)		—
Capital expenditures	(8,384		)		(12,855		)		(16,717		)
Proceeds from sale of assets and business units, net of cash sold	—				967				1,972
Repayment received on short-term loan to cost-method investee	—				2,000				—
Short-term loan to cost-method investee	—				(2,000		)		—
Cash paid for a cost-method investment	—				—				(1,000		)
Cash paid for software licenses	(8,123		)		(8,532		)		(9,035		)
Net cash used in investing activities	$	(21,110	)		$	(8,260	)		$	(17,373	)
The accompanying notes are an integral part of these Consolidated Financial Statements

LATTICE SEMICONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
	Year Ended
(In thousands)	December 29, 2018				December 30, 2017				December 31, 2016
Cash flows from financing activities:
Restricted stock unit tax withholdings	$	(2,370	)		$	(3,267	)		$	(3,565	)
Proceeds from issuance of common stock	29,288				6,085				7,607
Repayment of debt	(43,759		)		(35,429		)		(5,154		)
Net cash used in financing activities	$	(16,841	)		$	(32,611	)		$	(1,112	)
Effect of exchange rate change on cash	$	(1,271	)		$	2,620			$	(1,303	)
Net increase in cash and cash equivalents	12,236				263				21,946
Beginning cash and cash equivalents	106,815				106,552				84,606
Ending cash and cash equivalents	$	119,051			$	106,815			$	106,552
Supplemental cash flow information:
Change in unrealized (gain) loss related to marketable securities, net of tax, included in Accumulated other comprehensive loss	$	(41	)		$	73			$	172
Income taxes paid, net of refunds	$	3,054			$	2,387			$	9,359
Interest paid	$	18,607			$	20,649			$	18,159
Accrued purchases of property and equipment	$	110			$	588			$	1,028
Note receivable resulting from sale of assets and business units	$	—			$	3,050			$	—

The accompanying notes are an integral part of these Consolidated Financial StatementsStatements.

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LATTICE SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Note 1 - NatureBasis of OperationsPresentation and Significant Accounting Policies

Nature

Basis of Operations

Lattice SemiconductorPresentation and its subsidiaries (“Lattice,” the “Company,” “we,” “us,” or “our”) is a Delaware corporation that develops semiconductor technologies that we monetize through products, solutions, design services, and licenses. We engage in smart connectivity, control, and compute solutions, providing intellectual property ("IP") and low-power, small form-factor programmable logic devices that enable global customers to quickly and easily develop innovative, smart, and connected products. We help their products become more aware, interact more intelligently, and make better and faster connections. In an increasingly intense global technology market, we help our customers get their products to market faster than their competitors. Our broad end-market exposure extends from mobile devices and consumer electronics to industrial and automotive equipment, communications and computing infrastructure, and licensing and services. Lattice was founded in 1983 and is headquartered in Hillsboro, Oregon.

We do not manufacture our own silicon wafers. We maintain strategic relationships with large, established semiconductor foundries located in Asia to source our finished silicon wafers. In addition, allUse of our assembly operations and most of our test and logistics operations are performed by outside suppliers located in Asia. We perform certain test operations and reliability and quality assurance processes internally.

We place substantial emphasis on new product development and believe that continued investment in this area is required to maintain and improve our competitive position. Our product development activities emphasize new proprietary products, advanced packaging, enhancement of existing products and process technologies, and improvement of software development tools. Research and development activities occur primarily in: Hillsboro, Oregon; San Jose, California; Shanghai, China; and Muntinlupa City, Philippines.

Fiscal Reporting Period

We report based on a 52 or 53-week fiscal year ending on the Saturday closest to December 31. Our fiscal 2018, 2017, and 2016 were 52-week years that ended December 29, 2018, December 30, 2017, and December 31, 2016 respectively. Our fiscal 2019 will be a 52-week year and will end on December 28, 2019. All references to quarterly or yearly financial results are references to the results for the relevant fiscal period.

Principles of Consolidation

Estimates

The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). They include the accounts of Lattice and its subsidiaries after the elimination of all intercompany balances and transactions.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("U.S. GAAP")GAAP requires management to make estimates and assumptions that affectjudgments affecting the amounts reported amounts and classification of assets, such as marketable securities, accounts receivable, contract assets (included in prepaid expenses and other current assets), inventory, goodwill (including the assessment of reporting units), intangible assets, current and deferred income taxes, accrued liabilities (including restructuring charges and bonus arrangements), disclosure of contingent assets and liabilities at the date of theour consolidated financial statements amounts used in acquisition valuations and purchase accounting, impairment assessments, the fair value of equity awards, and the reported amountsaccompanying notes. We base our estimates and judgments on historical experience, knowledge of product revenue, licensingcurrent conditions, and services revenue,our beliefs of what could occur in the future considering available information. While we believe that our estimates, assumptions, and expenses during the fiscal periods presented. Becausejudgments are reasonable, they are based on information available when made, and because of the uncertainty inherent in these matters, the actual results could that we experience may differ materially from those estimates.these estimates under different assumptions or conditions. We evaluate our estimates and judgments on an ongoing basis.

Certain prior year balances have been reclassified to conform to the current year’s presentation.

Fiscal Reporting Periods

We report based on a 52 or 53-week fiscal year ending on the Saturday closest to December 31. Our fiscal 2021 was a 52-week year that ended on January 1, 2022. Our fiscal 2020 was a 53-week year that ended on January 2,2021, and our fiscal 2019 was a 52-week year that ended on December 28, 2019. All references to quarterly or annual financial results are references to the results for the relevant fiscal period.

Concentrations of Risk

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

Distributors have historically accounted for a significant portion of our total revenue. Our two largest distributor groups, the Weikeng Group ("Weikeng") and Arrow Electronics, Inc. ("Arrow"), each account for more than 10% of our total revenue and our net accounts receivable. Revenue attributable to distributors as a percentage of total revenue is presented in the following table:

		Year Ended
		January 1,				January 2,				December 28,
		2022				2021				2019
Weikeng Group			37	%			35	%			30	%
Arrow Electronics Inc.			27				25				25
Other distributors			23				23				27
Revenue attributable to distributors			87	%			83	%			82	%

At January 1, 2022 and January 2, 2021, Weikeng accounted for 59% and 47%, respectively, and Arrow accounted for 28% and 45%, respectively, of net accounts receivable.

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

We rely on a limited number of foundries for our wafer purchases. We seek to mitigate the concentration of supply risk by establishing, maintaining and managing multiple foundry relationships; however, certain of our products are sourced from a single foundry and changing from one foundry to another can have a significant cost, or create delays in production or shipments, among other factors.

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Cash and Cash Equivalents and Marketable Securities

We consider all investments that are readily convertible into cash and that have original maturities of three months or less to be cash equivalents. Cash equivalents consist primarily of highly liquid investments in time deposits or money market accounts and are carried at cost. We account for marketable securities as available-for-sale investments, as defined by U.S. GAAP, and record unrealized gains or losses to Accumulated other comprehensive loss on our Consolidated Balance Sheets, unless losses are considered other than temporary, incost, which case, those are recorded directly to the Consolidated Statements of Operations and Consolidated Statements of Comprehensive Loss.approximates fair value. Deposits with financial institutions at times exceed Federal Deposit Insurance Corporation insurance limits.

Fair Value of Financial Instruments

We invest in various financial instruments, which may include corporate and government bonds, notes, and commercial paper. We value these instruments at their fair value and 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, we would record an impairment charge and 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”) 820, “Fair Value Measurements.” 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 1instruments 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. Our Level 1 instruments consist of U.S. Government agency obligations, corporate notes and bonds, and commercial paper that are traded in active markets and are classified as Short-term marketable securities on our Consolidated Balance Sheets.

Level 2instruments 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. Our Level 2 instruments consist of foreign currency exchange contracts, entered into to hedge against fluctuation in the Japanese yen.

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. As a result, the determination of fair value for Level 3 instruments requires significant management judgment and subjectivity. We did not have any Level 3 instruments during the periods presented.

Foreign Exchange and Translation of Foreign Currencies

While our revenues and the majority of our expenses are denominated in U.S. dollars, we also have international subsidiaries and branch operations that conduct some transactions in foreign currencies and we collect an annual Japanese consumption tax refund in yen.that differ from the functional currency of that entity. Gains or losses from foreign exchange rate fluctuations on balances denominated in foreigncurrencies that differ from the functional currencies are reflected in Other (expense) income,expense, net. Realized gains or losses on foreign currency transactions were not significant for the periods 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, and revenue and expense accounts are translated at average monthly exchange rates. Translation adjustments related to the consolidation of foreign subsidiary financial statements are reflected in Accumulated other comprehensive loss in Stockholders' equity (See our Consolidated Statements of Stockholders' Equity)Equity).

Derivative Financial Instruments

We mitigate foreign currency exchange rate risk by entering into foreign currency forward exchange contracts, details

Revenue Recognition

Under the terms of which are presented in the following table:

		December 29, 2018				December 30, 2017
Total cost of contracts for Japanese yen (in thousands)		$	1,955			$	2,204
Number of contracts		2				2
Settlement month		June 2019				June 2018

Although these hedges mitigate our foreign currency exchange rate exposureASC 606,"Revenue from an economic perspective, they were not designated as "effective" hedges under U.S. GAAP and as such are adjusted to fair value through Other (expense) income, net,Contracts with gains of approximately $0.1 million for each of the years ended December 29, 2018 and December 30, 2017. We do not hold or issue derivative financial instruments for trading or speculative purposes.

Concentration Risk

Potential exposure to concentration risk may impactCustomers", we recognize revenue trade receivables, marketable securities, and supply of wafers for our new products.

Customer concentration risk may impact revenue. The percentage of total revenue attributable to our top five identified end customers and largest identified end customer is presented in the following table:

		Year Ended
		December 29, 2018			December 30, 2017			December 31, 2016
Revenue attributable to top five end customers		18	%		26	%		27	%
Revenue attributable to largest end customer		6.1	%		7.3	%		9.9	%

No end customer accounted for more than 10% of total revenue during these periods. We did not have enough information to assign end customers to approximately $14.1 million of revenue recognized for fiscal 2018 on shipments to distributors that have not sold through to end customers.

Distributors have historically accounted for a significant portion of our total revenue. Our two largest distributor groups, Arrow Electronics, Inc. ("Arrow") and the Weikeng Group ("Weikeng"), each account for substantial portions of our total revenue and our net trade receivables. Revenue attributable to distributors as a percentage of total revenue is presented in the following table:

	Year Ended
	December 29, 2018			December 30, 2017			December 31, 2016
Arrow Electronics Inc.	29	%		24	%		24	%
Weikeng Group	25			27			22
All others	29			26			27
Revenue attributable to distributors*	83	%		77	%		73	%

*	During the first quarter of 2018, we updated our channel categories to group all forms of distribution into a single channel. Prior periods have been reclassified to match the current period presentation.

At December 29, 2018 and December 30, 2017, Arrow accounted for 41% and 66%, respectively, and Weikeng accounted for 23% and 0%, respectively, of net trade receivables. No other distributor group or end customer accounted for more than 10% of net trade receivables at these dates.

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

Accounts receivable do not bear interest and are shown net of allowances for doubtful accounts of $0.2 million and $9.4 million at December 29, 2018 and December 30, 2017, respectively. The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on assessment of known troubled accounts, analysis of the aging of our accounts receivable, historical experience, management judgment, and other currently available evidence. We write off accounts receivable against the allowance when we determine a balance is uncollectible and no longer actively pursue collectionsatisfy performance obligations as evidenced by the transfer of the receivable. During fiscal 2018, we wrote off $9.0 million of accounts receivable from a bankrupt distributor group. This write off had no impact on Accounts Receivable in fiscal 2018, as we had recorded a full allowance against our accounts receivable, net of deferred revenue, from the bankrupt distributor group in fiscal 2016, resulting in an increase in allowance for doubtful accounts of $9.0 million and bad debt expense of $7.5 million in that fiscal year. Bad debt expense was negligible for both fiscal 2018 and 2017.

We place our investments primarily through one financial institution and mitigate the concentration of credit risk by limiting the maximum portion of the investment portfolio which may be invested in any one instrument. Our investment policy defines approved credit ratings for investment securities. Investments on-hand in marketable securities consisted primarily of money market instruments and U.S. government agency obligations. See "Note 4 - Marketable Securities" for a discussion of the liquidity attributes of our marketable securities.

We rely on a limited number of foundries for our wafer purchases including Fujitsu Limited, Seiko Epson Corporation, Taiwan Semiconductor Manufacturing Company, Ltd, and United Microelectronics Corporation. We seek to mitigate the concentration of supply risk by establishing, maintaining and managing multiple foundry relationships; however, certaincontrol of our products or services to customers. For sales to distributors, we have concluded that our contracts are sourcedwith the distributor, rather than with the distributor’s end customer, as we hold a contract bearing enforceable rights and obligations only with the distributor. Our revenue is derived primarily from sales of silicon-based products, with additional revenue from sales of silicon-enabling products. We consider customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a single foundrycustomer. For each contract, we consider our promise to transfer each distinct product to be the identified performance obligations. Revenue for product sales is recognized at the time of product shipment, as determined by the agreed upon contract shipping terms.

Our Licensing and changingservices revenue is comprised of revenue from one foundryour IP core licensing activity, patent monetization activities, design services, and royalty and adopter fee revenue from our standards activities. These activities are complementary to another canour product sales and help us to monetize our IP associated with our technology and standards. We consider licensing arrangements with our customers and agreements with the standards consortia of which we are a member to be the contract. For each contract, we consider the promise to deliver a license that grants the customer the right to use the IP, as well as any professional services provided under the contract, as distinct performance obligations. We recognize license revenue at the point in time that control of the license transfers to the customer, which is generally upon delivery, or as usage occurs.

We measure revenue based on the amount of consideration we expect to be entitled to in exchange for products or services. Variable consideration is estimated and reflected as an adjustment to the transaction price. We determine variable consideration, which consists primarily of various sales price concessions, by estimating the most likely amount of consideration we expect to receive from the customer based on an analysis of historical rebate claims over a period of time considered adequate to account for current pricing and business trends. Sales rebates earned by customers are offset against their receivable balances. Rebates earned by customers when they do not have outstanding receivable balances are recorded within Accrued expenses. Licensing and services revenue, which includes HDMI and MHL standards revenue, as well as certain IP licenses, includes variable consideration in the form of usage-based royalties.

We generally provide an assurance warranty that our products will substantially conform to the published specifications for twelve months from the date of shipment. In some cases, the warranty period may be longer than twelve months. We do not separately price or sell the assurance warranty. Our liability is limited to either a significant cost, among other factors.credit equal to the purchase price or replacement of the defective part. Under the practical expedient provided by ASC 340, we generally expense sales commissions when incurred because the amortization period would be less than one year. We record these costs within Selling, general, and administrative expenses. Substantially all of our performance obligations are satisfied within twelve months.

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Inventories and Cost of Product Revenue

Inventories are recordedstated at the lower of averageactual cost determined(determined using the first-in, first-out method) or net realizable value. We review and set standard costs quarterly to approximate current actual manufacturing costs. Our manufacturing overhead standards for product costs are calculated assuming full absorption of actual spending over actual costs. The valuation of inventory requires us to estimate excess or obsolete inventory. Material assumptions we use to estimate necessary inventory carrying value adjustments can be unique to each product and are based on a first-in-first-out basis or market. We establishspecific facts and circumstances. In determining provisions for inventory if it isexcess or obsolete orproducts, we hold quantities which areconsider assumptions such as changes in excess ofbusiness and economic conditions, projected customer demand.demand for our products, and changes in technology or customer requirements. The creation of such provisions results in a write-down of inventory to net realizable value and a charge to Cost of revenue. Lower of cost or net realizable value is based on assumptions such as recent historical sales activity and selling prices, as well as estimates of product revenue.future sales activity and selling prices. Shipping and handling costs are included in Cost of product revenue in our Consolidated Statements of Operations.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method for financial reporting purposes over the estimated useful lives of the related assets, generally three to five years for equipment and software, and one to three years for tooling, and thirty years for buildings and building space.tooling. Leasehold improvements are amortized over the shorter of the non-cancelable lease term or the estimated useful life of the assets. We capitalize costs for the fabrication of masks used by our foundry partners to manufacture our products. The capitalized mask costs begin depreciating to Cost of revenue once the products go into production, and depreciation is straight-lined over a three-year period, which is the expected useful life of the mask. Upon disposal of property and equipment, the accounts are relieved of the costs and related accumulated depreciation and amortization, and resulting gains or losses are reflected in the Consolidated Statements of Operations for recognized gains and losses, or in the Consolidated Balance Sheets for deferred gains and losses. Repair and maintenance costs are expensed as incurred.

Equity Investments in Privately Held Companies

Equity investments in privately held companies that we are not required to consolidate

Business Combinations

Business combinations are accounted for using the acquisition method of accounting, under which we allocate the cost method,purchase price paid for a company to identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Goodwill is measured as assessed under ASC 325-20, "Cost Method Investments." These investments are reviewed on a quarterly basis to determine if their values have been impaired and adjustments are recorded as necessary. We assess the potential impairmentexcess of these investments by applying apurchase price over the fair value analysis using a revenue multiple approach. Declines inof identifiable assets acquired and liabilities assumed. Determining the fair value of identifiable tangible and intangible assets acquired and liabilities assumed requires management to make assumptions, estimates, and judgments that are judgedbased on all available information, including comparable market data and information obtained from our management and the management of the acquired companies. The estimation of the fair values of the intangible assets requires significant judgment and the use of valuation techniques including primarily the income approach. Consideration is given to be other-than-temporary are reported in Other (expense) income, netall relevant factors that might affect the fair value such as estimates of future revenues and costs, present value factors, and the estimated useful lives of intangible assets. We expense acquisition-related costs in the accompanying Consolidated Statements of Operations with a commensurate decrease in the carrying value of the investment (see "Note 11 - Cost Method Investment and Collaborative Arrangement"). Upon disposition of these investments, the specific identification method is used to determine the cost basis in computing realized gains or losses.

period incurred.

Impairment of Long-Lived Assets

Long-lived assets, includingwhich consist primarily of property and equipment, amortizable intangible assets, and right-of-use assets, are carried on our financial statements based on their cost less accumulated depreciation or amortization. We monitor the carrying value of our long-lived assets for potential impairment and test the recoverability of such assets annually during the fourth quarter and whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. These events or changes in circumstances, including management decisions pertaining to such assets, are referred to as impairment indicators. If an impairment indicator occurs, we perform a test of recoverability by comparing the carrying value of the asset group to its undiscounted expected future cash flows. If the carrying values are in excess of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset group to its carrying value. Fair value is generally determined by considering (i) internally developed discounted projected cash flow analysis of the asset group; (ii) actual third-partythird-party valuations; and/or (iii) information available regarding the current market for similar asset groups. If the fair value of the asset group is determined to be less than the carrying amount of the asset group, an impairment in the amount of the difference is recorded in the period that the impairment indicator occurs and is included in our Consolidated Statements of Operations. Estimating future cash flows requires significant judgment and projections may vary from the cash flows eventually realized, which could impact our ability to accurately assess whether an asset has been impaired. The results

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Table of our assessments are detailed in "Note 10 - Impairment of Acquired Intangible AssetsContents."

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 goodwillGoodwill is not amortized, but is instead tested for impairment annually during the fourth quarter and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. When evaluating whether goodwill is impaired, we make a qualitative assessment to determine if it is more likely than not that the reporting unit's fair value is less than the carrying amount. If the qualitative assessment determines that it is more likely than not that the fair value is less than the carrying amount, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, then goodwill impairment exists for the reporting unit. The impairment loss, if any, is recognized for the amount by which the carrying value exceeds the fair value. If the fair value of the reporting unit exceeds its carrying value, no further impairment analysis is needed. For purposes of testing goodwill for impairment, we currently operate as a single reporting unit:unit.

Leases

We account for leases under the core Latticeterms of ASC 842, "Leases," which requires lessees to record assets and liabilities on the balance sheet for all leases with terms longer than 12 months. Upon adoption, we elected the "package of practical expedients" that would allow us to carryforward our historical lease classifications, not reassess historical contracts to determine if they contain leases, and not reassess the initial direct costs for any existing leases. We also elected the practical expedient to not separate lease and non-lease components, which we applied to all asset classes. Concurrent with our adoption of Topic 842, we early adopted ASU 2019-01,Leases (Topic 842): Codification Improvements, which granted disclosure relief for interim periods during the year in which a company adopted Topic 842.

Right-of-use ("Core"ROU") business, which includes intellectual propertyassets represent our right to use an underlying asset for the lease term, and semiconductor devices. The resultslease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized on the commencement date of the lease based on the present value of lease payments over the lease term. As most of our assessments are detailedleases do not provide an implicit rate, we determine the present value of lease payments using an incremental borrowing rate based on information from our commercial bank for an equivalent borrowing and term in "Note 8 - Discontinuationthe respective region as of Business Unit, Sales of Assetsthe lease commencement date. At inception, we determine if an arrangement is a lease, if it includes options to extend or terminate the lease, and Business Units, and Goodwill."

Leases

The following describes our lease policy during fiscal 2018. In fiscal 2019,if it is reasonably certain that we will adopt ASU 2016-02, Leases (Topic 842). See "New Accounting Pronouncements" later in this Note 1 for a discussionexercise the options. Lease cost, representing lease payments over the term of the impact of adoption on our accounting for 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.” 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 expenseany capitalizable direct costs less any incentives received, is recognized on a straight-line basis over the lease term as lease expense. We have operating leases for corporate offices, sales offices, research and development facilities, storage facilities, and a data center.

The exercise of lease renewal options is at our sole discretion. When deemed reasonably certain of exercise, the lease. When lease agreements provide allowances for leasehold improvements, we capitalizerenewal options are included in the leasehold improvement assets and amortize them on a straight-line basis over the lesserdetermination of the lease term and lease payment obligation, respectively. For our leases that contain variable lease payments, residual value guarantees, or restrictive covenants, we have concluded that these inputs are not significant to the determination of the ROU asset and lease liability.

Research and Development

Research and development expenses include costs for compensation and benefits, engineering wafers, depreciation, licenses, and outside engineering services. These expenditures are for the design of new products, intellectual property cores, processes, packaging, and software solutions. Research and development costs are generally expensed as incurred, with certain licensed technology agreements capitalized as intangible assets and amortized to Research and development expense over their estimated useful 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.

lives.

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. Whenexcept severance expenses and vacated leased facilities 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. Expenses from other exit or disposal activities, including the cancellation of software contracts and engineering tools or the abandonment of long lived assets, is recorded as a part of restructuring charges.facilities. Because we have a history of paying severance benefits, the cost of severance benefits associated with a restructuring plan is recorded when such costs are probable and the amount can be reasonably estimated in accordance with ASC 712, “Compensation - Nonretirement Postemployment Benefits.Benefits.”

Research When leased facilities are vacated, the amount of any ROU asset impairment is calculated in accordance with ASC 360, "Property, Plant, and Development

ResearchEquipment" and development expenses include costs for compensationrecorded as a part of restructuring charges. Expenses from other exit or disposal activities, including the cancellation of software contracts and benefits, development masks, engineering wafers, depreciation, licenses, and outside engineering services. These expenditures are fortools or the designabandonment of new products, intellectual property cores, processes, packaging, and software to support new products. Research and development costs are expensedlong-lived assets, is recorded as incurred.a part of Restructuring charges.

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Accounting for Income Taxes

Our

We are required to estimate our provision for income taxes and amounts ultimately payable or recoverable in numerous tax is comprisedjurisdictions around the world. These estimates involve significant judgment and interpretations of our currentregulations and are inherently complex. Resolution of income tax liability and changestreatments in deferred tax assets and liabilities.individual jurisdictions may not be known for many years after completion of the applicable year. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements using enacted tax rates and laws that will be in effect when the difference is expected to reverse. Valuation allowances are provided to reduce deferred tax assets to an amount that in management’s judgment is more-likely-than-notmore-likely-than-not to be recoverable against future taxable income. The determination of a valuation allowance and when it should be released requires complex judgment.

In assessing the ability to realize deferred tax assets, we evaluate both positive and negative evidence that may exist and consider whether it is more-likely-than-notmore-likely-than-not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Any adjustment to the net deferred tax asset valuation allowance is recorded in the Consolidated Statements of Operations for the period that the adjustment is determined to be required.

Our income tax calculations are based on application of the respective U.S. federal, state or foreign tax law. law. Our tax filings, however, are subject to audit by the relevant tax authorities. Accordingly, we recognize tax liabilities based upon our estimate of whether, and the extent to which, additional taxes will be due when such estimates are more-likely-than-notmore-likely-than-not to be sustained. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. To the extent the final tax liabilities are different than the amounts originally accrued, the increases or decreases as well as any interest or penalties are recorded as income tax expense or benefit in the Consolidated Statements of Operations.

U.S. We recognize the tax reform required a deemed repatriationimpact of including certain foreign earnings in U.S. taxable income as of December 30, 2017 and no future U.S. taxes will be due on these earnings because of enactment of a 100% dividends received deduction. Foreign earnings may be subject to withholding taxes in local jurisdictions if they are distributed and repatriated to Lattice in the United States.

period cost.

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, “Compensation - Stock Compensation.” Option pricing models, includingWe value RSUs using the closing market price on the date of grant, and we value stock options using the Black-Scholes model, 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 most significantly affect the grant date fair value.

We have also granted stock options and RSUs with a market condition to certain executives. We determined and fixed the fair value of the awards with a market condition using a lattice-based option-pricingoption pricing model. The valuation of these awards incorporated a Monte-Carlo simulation, and considered the likelihood that we would achieve the market condition. The awards with a market condition generally have a two- or three-year vesting period and vest between 0% and 250% of the target amount, based on the Company's relative Total Shareholder Return ("TSR") when compared to the TSR of a component of companies of the PHLX Semiconductor Sector Index over the measurement period. TSR is a measure of stock price appreciation plus dividends paid, if any, in the performance period. We have also granted RSUs with a market condition or a performance condition to certain executives. The terms of these grants, including achievement criteria and vesting schedules, are detailed under the heading "Market-Based and Performance-Based Awards — Grants" in "Note 11 - Stock-Based Compensation Plans" to our Presidentconsolidated financial statements. Our current practice is to issue new shares to satisfy option exercises. For RSUs, we issue new shares when awards vest andwithhold a portion of these shares on behalf of employees to satisfy the minimum statutory tax withholding requirements.

Segment Information

As of January 1, 2022, we had one operating segment: the core Lattice business, which includes silicon-based and silicon-enabling products, evaluation boards, development hardware, and related intellectual property licensing, services, and sales. Our chief operating decision maker is the Chief Executive Officer, which will vestwho reviews operating results and become payable based upon the Company’s generating specified “adjusted” EBITDA levelsfinancial information presented on a trailing four-quarterconsolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

Note 2 - Net Income Per Share

Our calculation of the diluted share count includes the number of shares from our equity awards with market conditions or performance conditions that would be issuable under the terms of such awards at the end of the reporting period. For equity awards with a market condition, the number of shares included in any two consecutive trailing four-quarterthe diluted share count as of the end of each period presented is determined by measuring the achievement of the market condition as of the end of the respective reporting periods. We valued the RSUsFor equity awards with a performance condition, using the market price on the daynumber of grant.

New Accounting Pronouncements

Recently Issued Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires the recognition of assets and liabilities arising from lease transactions on the balance sheet and will also require significant additional disclosures about the amount, timing, and uncertainty of cash flows from leases. Substantially all leases, including current operating leases, will be recognized by lessees on their balance sheet as a lease assetshares that qualified for its right to use the underlying asset and a lease liability for the corresponding lease obligation. For public business entities, the standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  We will adopt this standard on its effective date. ASU 2016-02 initially required entities to adopt the standard using a modified retrospective transition method. In July 2018, the FASB issued certain updates including ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provide optional transition practical expedients allowing companies to adopt the new standard with a cumulative effect adjustmentvesting as of the beginningend of each period presented are included in the diluted share count when the condition for their issuance was satisfied by the end of the year of adoption with prior year comparative financial information and disclosures remaining as previously reported. We planrespective reporting periods. See "Note 11 - Stock-Based Compensation Plans" to elect this optional practical expedient, and do not expect a material adjustment to beginning retained earnings.

We evaluated the transition and presentation approaches available as well as the impact of the new guidance on our consolidated financial statements for further discussion of our equity awards with market or performance conditions.

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A summary of basic and related disclosures, including the increasediluted Net income per share is presented in the assets and liabilities on our balance sheet, andfollowing table:

 

		Year Ended
		January 1,				January 2,				December 28,
(in thousands, except per share data)		2022				2021				2019
Net income		$	95,922			$	47,392			$	43,493
Shares used in basic Net income per share			136,619				135,220				132,471
Dilutive effect of stock options, RSUs, ESPP shares, and equity awards with a market condition or performance condition			5,524				6,056				4,803
Shares used in diluted Net income per share			142,143				141,276				137,274
Basic Net income per share		$	0.70			$	0.35			$	0.33
Diluted Net income per share		$	0.67			$	0.34			$	0.32

The computation of diluted Net income per share excludes the impact on our current lease portfolio from both a lessor and lessee perspective. To facilitate this, we utilized a comprehensive approach to review our lease portfolio, as well as assessed system requirements and control implications. We expect to elect the ‘package of practical expedients’ that would allow us to carryforward our historical lease classifications, not reassess historical contracts to determine if they contain leases, and not reassess the initial direct costs for any existing leases. We also expect to elect further practical expedients that allow companies to account for leases based on the class of the underlying asset and not separate lease and non-lease components, and to not recognize right-of-use assets and lease liabilities for leases whose term to maturity upon inception is less than 12 months. Adoption of ASU 2016-02 is expected to result in the recognition of additionalright-of-use assets and lease liabilities for operating leases in the range of $25 million to $30 million. We do not expect the new standard to have a material impact on our consolidated income statement, cash flows, or liquidity measures.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which improves the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and simplifies the application of the hedge accounting guidance. This standard is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. We do not expect the adoption of this accounting standard update to have a material impact on our consolidated financial statements and related disclosures.

In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The new guidance allows an entity to reclassify the income tax effects of stock options, RSUs, ESPP shares, and equity awards with a market condition or performance condition that are antidilutive, aggregating to approximately the Public Law 115-97 "An Act to Provide Reconciliation Pursuant to Titles II and Vfollowing number of the Concurrent Resolution on the Budget for Fiscal Year 2018", commonly known as the Tax Cuts and Job Act of 2017 (the "2017 Tax Act") on items within accumulated other comprehensive income/(loss) to accumulated deficit. This new guidance is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The new standard must be adopted retrospectively to each period in which a taxpayer recognizes the effect of the change in the U.S. federal corporate income tax rate from the 2017 Tax Act. We are currently assessing the impact of ASU 2018-02 on our consolidated financial statements and related disclosures.shares:

		Year Ended
		January 1,				January 2,				December 28,
(in thousands)		2022				2021				2019
Stock options, RSUs, ESPP shares, and equity awards with a market condition or performance condition excluded as they are antidilutive			638				646				890

In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which largely aligns the measurement and classification guidance for share-based payments to nonemployees with the guidance for share-based payments to employees. The ASU also clarifies that any share-based payment issued to a customer should be evaluated under ASC 606, Revenue from Contracts with Customers. The ASU requires a modified retrospective transition approach. This new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. We do not expect the adoption of this accounting standard update to have a material impact on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), which clarifies the accounting for implementation costs in cloud computing arrangements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. We are currently assessing the impact of ASU 2018-15 on our consolidated financial statements and related disclosures.

Note 23 - Revenue from Contracts with Customers

We adopted ASC 606 effective on December 31, 2017, the first day

Disaggregation of our 2018 fiscal year, using the modified retrospective method. Under the guidance in effect prior to the adoption of ASC 606, we deferred the recognition of revenue and the cost ofRevenue

The following tables provide information about revenue from certain sales until the distributors of our products reported that they had sold the products to theircontracts with customers at which point the selling price of these products became fixeddisaggregated by channel and determinable (known as “sell-through” revenue recognition). Under ASC 606, we recognize revenueby geographical market, based on sales to all distributors when controlship-to location of the products transfers to the distributors, and we estimate the transaction price to which we ultimately expect to be entitled. Under ASC 606, we will also recognize certain licensing revenues that were not recognizable under previous GAAP due to the fixed and determinable revenue recognition criteria not being met. Under the modified retrospective transition method, we have not restated any prior financial statements presented. As a result of this adoption, we revised our accounting policy for revenue recognition as detailed below.

We recognize revenue under the core principle of depicting the transfer of control to our customers in an amount reflecting the consideration we expect to be entitled. In order to achieve that core principle, we apply the following five step approach, as further described below: (1) identify thecustomer:

		Year Ended
Revenue by Channel		January 1,								January 2,								December 28,
(In thousands)		2022								2021								2019
Product revenue - Distributors		$	449,650				87	%		$	339,100				83	%		$	331,941				82	%
Product revenue - Direct			45,202				9	%			49,402				12	%			50,607				13	%
Licensing and services			20,475				4	%			19,618				5	%			21,545				5	%
Total revenue		$	515,327				100	%		$	408,120				100	%		$	404,093				100	%
Revenue by Geographical Market
(In thousands)
United States		$	60,176				12	%		$	43,945				11	%		$	44,330				11	%
Other Americas			20,694				4	%			18,192				4	%			13,606				3	%
Americas			80,870				16	%			62,137				15	%			57,936				14	%
China			281,237				55	%			213,714				52	%			206,107				51	%
Japan			47,915				9	%			25,435				6	%			42,658				11	%
Other Asia			55,416				10	%			66,034				17	%			50,000				12	%
Asia			384,568				74	%			305,183				75	%			298,765				74	%
Europe			49,889				10	%			40,800				10	%			47,392				12	%
Total revenue		$	515,327				100	%		$	408,120				100	%		$	404,093				100	%

Contract Balances

Our contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to each performance obligation in the contract, and (5) recognize revenue when applicable performance obligations are satisfied.

Product Revenue

Identify the contract with a customer - Our product revenues consist of sales to original equipment manufacturers, or OEMs, and distributors. We consider customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. In certain cases we consider firm forecasts that are agreed to by both us and the customer to be contracts. For sales to distributors, we have concluded that our contracts are with the distributor, rather than with the distributor’s end customer, as we hold a contract bearing enforceable rights and obligations only with the distributor. As part of our consideration of the contract, we evaluate certain factors including the customer’s ability to pay (or credit risk).

Identify the performance obligations in the contract - For each contract, we consider our promise to transfer each distinct product to be the identified performance obligations.

Determine the transaction price - In determining the transaction price, we evaluate whether the set contract price is subject to refund or adjustment to determine the net consideration to which we expect to be entitled. As our standard payment terms are less than one year, we have elected to apply the practical expedient to not assess whether a contract has a significant financing component.

Sales to most distributors are made under terms allowing certain price adjustments and limited rights of return of our products held in their inventory or upon sale to their end customers. Revenue from sales to distributors is recognized upon the transfer of control to the distributor, which generally occurs upon shipment of product to the distributor. Frequently, distributors need to sell at a price lower than the standard distribution price in order to win business. At the time the distributor invoices its customer or soon thereafter, the distributor submits a “ship and debit” price adjustment claim to us to adjust the distributor’s cost from the standard price to the pre-approved lower price. After we verify that the claim was pre-approved, we issue a credit memo to the distributor for the ship and debit claim. In determining the transaction price, we consider ship and debit price adjustments to be variable consideration. Such price adjustments are estimated using the expected value method based on an analysis of historical ship and debit claims, at the distributor and product level, over a period of time considered adequate to account for current pricing and business trends, typically 6 months. Any differences between the estimated consideration and the actual amount received from the customer is recorded in the period that the actual consideration becomes known. Most of our distributors are entitled to limited rights of return, referred to as stock rotation, not to exceed 5% of billings, net of returns and ship and debit price adjustments. Stock rotation reserves are based on historical return rates and recorded as a reduction to revenue with a corresponding reduction to cost of goods sold for the estimated cost of inventory that we expect to be returned.

Sales to OEMs and certain distributors are made under terms that do not include rights of return or price concessions after we ship the product. Accordingly, the transaction price equals the invoice price and there is no variable consideration.

Allocate the transaction price to each performance obligation in the contract - Because our product revenue contracts generally include the delivery of a certain quantity of semiconductors as the single performance obligation, we do not allocate revenue across distinct performance obligations. However, we frequently receive orders for products to be delivered over multiple dates that may extend across several reporting periods. We invoice for each delivery upon shipment and recognize revenues for each distinct product delivered, assuming transfer of control has occurred. Payment term for invoices are generally 30 to 60 days.

Recognize revenue when applicable performance obligations are satisfied - Revenue is recognized when control of the product is transferred to the customer (i.e., when our performance obligation is satisfied), which typically occurs at shipment. In determining whether control has transferred, we also consider if there is a present right to payment and legal title, along with whether the risks and rewards of ownership have transferred to the customer. We have certain vendor-managed inventory arrangements with certain OEM customers whereby we ship product into an inventory hub location but for which control does not transfer until the customer consumes the inventory. In such cases, we recognize revenue upon customer consumption.

Licensing and Services Revenue

Identify the contract with a customer - Our Licensing and services revenue is comprised of revenue from our intellectual property ("IP") core licensing activity, patent monetization activities, design services, and royalty and adopter fee revenue from our standards activities. These activities are complementary to our product sales and help us to monetize our IP associated with our technology and standards. We consider licensing arrangements with our customers to be the contract.

Identify the performance obligations in the contract - For each contract, we consider the promise to deliver a license that grants the customer the right to use the IP, as well as any professional services provided under the contract, as distinct performance obligations.

Determine the transaction price - Our HDMI and MHL standards revenue, as well as certain IP licenses, include variable consideration in the form of usage-based royalties. We apply the provisions of ASC 606 in accounting for these types of arrangements, whereby we do not include estimated royalties in the transaction price at the origination of the contract but rather recognize royalty revenue as usage occurs.

HDMI royalty revenue is determined by a contractual allocation formula agreed to by the Founders of the HDMI consortium. The contractual allocation formula is subject to periodic adjustment, generally every three years. The most recent royalty sharing formula covered the period from January 1, 2014 through December 31, 2016, and an interim agreement covering the period from January 1, 2017 through December 31, 2017 was signed in the second quarter of fiscal 2018. However, a new agreement covering the period beginning January 1, 2018 is yet to be signed. While a new royalty sharing agreement is being negotiated with the other Founders of the HDMI consortium, the HDMI agent is unable to distribute the majority of the royalties collected to the Founders. We are recording revenue based on our estimated share of the royalties, which we determine using an analytical model that combines historical and forecasted collection trends with our expected share of those collections. This estimate will be adjusted once the Founders finalize the agreement for the period beginning January 1, 2018.

Allocate the transaction price to each performance obligation in the contract - For contracts that include multiple performance obligations (most commonly those that include licenses and professional services, but which also may include inventory), we allocate revenue to each performance obligation based on the best estimate of the standalone selling price of each obligation. We do not believe that the judgments regarding the allocation of revenue on licensing arrangements are material to our financial statements.

Recognize revenue when applicable performance obligations are satisfied - We recognize license revenue at the point in time that control of the license transfers to the customer, which is generally upon delivery. We recognize professional service revenue as we perform the services. Royalty revenues are recognized as customers sell products that include our IP and are legally obligated to remit royalties to us. We receive payments from customers based on contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Payment terms on invoiced amounts are typically 30 days.

Impact on Financial Statements

We adopted ASC 606 on December 31, 2017, the first day of our 2018 fiscal year, using the modified retrospective method. Under this transition method, we applied the provisions of the new standard to all open customer contracts as of the date of adoption and recorded the cumulative effect of adoption to Accumulated deficit on December 31, 2017. We have not restated any prior financial statements presented. ASC 606 requires us to disclose the effect of adoption on each financial statement line item in the current reporting period during 2018 as compared to the revenue recognition accounting standard that was in effect in 2017, and an explanation of the reasons for significant changes. Such information is as follows:

Condensed Consolidated Statement of Operations
		Year ended December 29, 2018
(In thousands, except per share data)		As reported under new standard			Adjustments			Pro forma as if previous standard was in effect
Product revenue		380,468			(14,098	)		366,370
Licensing and services revenue		18,331			(1,478	)		16,853
Cost of product revenue		179,101			(6,399	)		172,702
Net loss		(26,322	)		(9,177	)		(35,499	)
Net loss per share, basic and diluted		(0.21	)		(0.07	)		(0.28	)

Condensed Consolidated Balance Sheets
		As of December 29, 2018
(In thousands)		As reported under new standard			Adjustments			Pro forma as if previous standard was in effect
Accounts receivable, net of allowance for doubtful accounts		60,890			6,600			67,490
Inventories		67,096			78			67,174
Prepaid expenses and other current assets		27,762			(9,775	)		17,987
Total assets		623,687			(3,097	)		620,590
Accounts payable and accrued expenses (includes restructuring)		51,763			(1,156	)		50,607
Deferred income and allowances on sales to distributors		—			34,637			34,637
Accumulated deficit		(476,783	)		(36,578	)		(513,361	)
Total liabilities and stockholders' equity		623,687			(3,097	)		620,590

Condensed Consolidated Statement of Cash Flows
		Year ended December 29, 2018
(In thousands)		As reported under new standard			Adjustments			Pro forma as if previous standard was in effect
Cash flows from operating activities:
Net loss		(26,322	)		(9,177	)		(35,499	)
Accounts receivable, net		(3,978	)		(8,408	)		(12,386	)
Inventories		13,177			(448	)		12,729
Prepaid expenses and other assets		(11,667	)		2,260			(9,407	)
Accounts payable and accrued expenses (includes restructuring)		13,325			(1,614	)		11,711
Deferred income and allowances on sales to distributors		—			17,387			17,387

The significant impacts of the new standard were to accelerate the recognition of revenues on both sales to certain distributors and certain licensing activities. As a result of adopting this standard, we recorded a cumulative effect adjustment of $27.4 million as a reduction to Accumulated deficit on December 31, 2017, resulting primarily from a net $20.2 million of previously deferred distributor revenues and costs and $6.6 million of previously unrecognized licensing revenues.

Other Matters

We generally provide an assurance warranty that our products will substantially conform to the published specifications for twelve months from the date of shipment. In some case the warranty period may be longer than twelve months. We do not separately price or sell the assurance warranty. Our liability is limited to either a credit equal to the purchase price or replacement of the defective part. Returns under warranty have historically been immaterial. As such, we do not record a specific warranty reserve or consider activities related to such warranty, if any, to be a separate performance obligation.

Under the practical expedient provided by ASC 340, we generally expense sales commissions when incurred because the amortization period would have been less than one year. We record these costs within Selling, general, and administrative expenses.

Substantially all of our performance obligations are satisfied within twelve months. Accordingly, under the optional exemption provided by ASC 606, we do not disclose revenues allocated to future performance obligations of partially completed contracts.

We do not have any material contract liabilities recorded as of December 29, 2018.

Contract assets relate to our rights to consideration for licenses and royalties due to us as a member of the HDMI consortium, with collection dependent on events other than the passage of time, such as collection of licenses and royalties from customers by the HDMI licensing agent andagent. The balance results primarily from the finalizationamount of a new royalty sharing agreement. The contractestimated revenue related to HDMI that we have recognized to date, but which has not yet been collected by the agent. Contract assets are recorded in Prepaid expenses and other current assets in our Consolidated Balance Sheets, and they are transferred to Accounts receivable when the rights become unconditional. In addition to collections related to current year revenue, we received $6.4 million in cash during the second quarterSheets.

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Table of fiscal 2018 for fiscal 2017 HDMI royalties as a result of the signing of the HDMI Founders royalty sharing agreement for 2017. Collection of this amount had no impact on our reported revenues as it had been accrued to our cumulative effect adjustment, and it was recorded as a reduction to the contract asset during the quarter received.Contents

The following table summarizes the activity for our contract assets during fiscal 2018:

(In thousands)
Balance as of December 31, 2017	$	7,515
Revenues recorded during the period	11,618
Transferred to accounts receivable or collected	(9,990		)
Balance as of December 29, 2018	$	9,143

Disaggregation of Revenue

The following tables provide information about revenue from contracts with customers disaggregated by major class of revenue and by geographical market, based on ship-to location of the end customer, where available, and ship-to location of distributor otherwise:

	Major Class of Revenue		Year Ended *
	(In thousands)		December 29, 2018			December 30, 2017			December 31, 2016
	Product revenue - Distributors		330,719			297,736			310,163
	Product revenue - Direct		49,749			58,766			80,541
	Licensing and services revenue		18,331			29,459			36,350
	Total revenue		398,799			385,961			427,054
	Revenue by Geographical Market		Year Ended *
	(In thousands)		December 29, 2018			December 30, 2017			December 31, 2016
	Asia		298,119			277,638			305,093
	Europe		45,546			44,547			59,835
	Americas		55,134			63,776			62,126
	Total revenue		398,799			385,961			427,054
*	As noted above, amounts in periods prior to fiscal 2018 have not been adjusted under the modified retrospective method of adopting ASC 606 and, therefore, are presented under GAAP in effect during that period.

Note 3 - Net Loss Per Share

We compute basic Net loss per share by dividing Net loss by the weighted average number of common shares outstanding during the period. To determine diluted share count, we apply the treasury stock method to determine the dilutive effect of outstanding stock option shares, restricted stock units ("RSUs"), and Employee Stock Purchase Plan ("ESPP") shares. Our application of the treasury stock method includes, as assumed proceeds, the average unamortized stock-based compensation expense for the period. When weperiods presented:

(In thousands)
Contract assets as of December 28, 2019		$	5,569
Revenues recorded during the period			15,860
Transferred to Accounts receivable or collected			(15,818	)
Contract assets as of January 2, 2021		$	5,611
Revenues recorded during the period			15,587
Transferred to Accounts receivable or collected			(15,526	)
Contract assets as of January 1, 2022		$	5,672

Contract liabilities are included in a net loss position, we do not include dilutive securities as their inclusion would reduce the net loss per share.

A summary of basic and diluted Net loss per share is presented in the following table:

		Year Ended
(in thousands, except per share data)		December 29, 2018				December 30, 2017				December 31, 2016
Net loss		$	(26,322	)		$	(70,562	)		$	(54,099	)
Shares used in basic and diluted net loss per share		126,564				122,677				119,994
Basic and diluted net loss per share		$	(0.21	)		$	(0.58	)		$	(0.45	)

The computation of diluted Net loss per share excludes the effects of stock options, RSUs, and ESPP shares that are antidilutive, aggregating approximately the following number of shares:

		Year Ended
(in thousands)		December 29, 2018			December 30, 2017			December 31, 2016
Stock options, RSUs, and ESPP shares excluded as they are antidilutive		7,567			6,622			8,978

Stock options, RSUs, and ESPP shares are considered antidilutive when the aggregate of exercise price and unrecognized stock-based compensation expense are greater than the average market price forAccrued expenses on our common stock during the period or when we are in a net loss position, as the effects would reduce the loss per share. Stock options, RSUs, and ESPP shares that are antidilutive at December 29, 2018 could become dilutive in the future.

Note 4 - Marketable Securities

We classify our marketable securities as short-term based on their nature and availability for use in current operations. In the periods presented, our Short-term marketable securities consisted of government bonds with contractual maturities of up to two years.Consolidated Balance Sheets. The following table summarizes activity during the remaining maturitiesperiods presented:

(In thousands)
Contract liabilities as of December 28, 2019		$	2,313
Accruals for estimated future stock rotation and scrap returns			5,976
Less: Release of accruals for recognized stock rotation and scrap returns			(5,221	)
Contract liabilities as of January 2, 2021		$	3,068
Accruals for estimated future stock rotation and scrap returns			4,613
Less: Release of accruals for recognized stock rotation and scrap returns			(2,913	)
Contract liabilities as of January 1, 2022		$	4,768

Note 4 - Balance Sheet Components

Accounts Receivable

Accounts receivable do not bear interest and are shown net of an allowance for expected lifetime credit losses, which reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine this allowance through an assessment of known troubled accounts, analysis of our Short-term marketable securities at fair value:accounts receivable aging, historical experience, expectations for future economic conditions, management judgment, and other available evidence.

		January 1,				January 2,
(In thousands)		2022				2021
Accounts receivable		$	79,859			$	64,635
Less: Allowance for credit losses			0				(54	)
Accounts receivable, net of allowance for credit losses		$	79,859			$	64,581

We had no material bad debt expense in fiscal 2021,2020, or 2019.

Inventories

		January 1,				January 2,
(In thousands)		2022				2021
Work in progress		$	43,546			$	34,724
Finished goods			24,048				29,875
Total inventories, net		$	67,594			$	64,599

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(In thousands)	December 29, 2018				December 30, 2017
Short-term marketable securities:
Maturing within one year	$	7,454			$	4,982
Maturing between one and two years	2,170				—
Total marketable securities	$	9,624			$	4,982

Table of Contents

Note 5 - Fair Value of Financial Instruments

	Fair value measurements as of																Fair value measurements as of
	December 29, 2018																December 30, 2017
(In thousands)	Total				Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3
Short-term marketable securities	$	9,624			$	9,624			$	—			$	—			$	4,982			$	4,982			$	—			$	—
Foreign currency forward exchange contracts, net	53				—				53				—				77				—				77				—
Total fair value of financial instruments	$	9,677			$	9,624			$	53			$	—			$	5,059			$	4,982			$	77			$	—

We invest

Accrued Expenses

Included in various financial instruments that may include corporate and government bonds and notes, commercial paper, and certificates of deposit. In addition, we enter into foreign currency forward exchange contracts to mitigate our foreign currency exchange rate exposure. We carry these instruments at their fair value in accordance with ASC 820, "Fair Value Measurements." 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, as summarized in "Note 1 - Nature of Operations and Significant Accounting Policies." There were no transfers between any of the levels during fiscal 2018, 2017, and 2016.

In accordance with ASC 320, “Investments-Debt and Equity Securities,” we recorded an unrealized gain of less than $0.1 million during the fiscal year ended December 29, 2018, and an unrealized loss of approximately $0.1 million during the fiscal year ended December 30, 2017 on certain Short-term marketable securities (Level 1 instruments), which have been recorded in Accumulated other comprehensive loss. Future fluctuations in fair value related to these instruments that we deem to be temporary, including any recoveries of previous write-downs, would be recorded to Accumulated other comprehensive loss. If we were to determine in the future that any further decline in fair value is other-than-temporary, we would record an impairment charge, which could have a material adverse effect on our operating results. If we were to liquidate our position in these securities, it is likely that the amount of any future realized gain or loss would be different from the unrealized gain or loss reported in Accumulated other comprehensive loss.

Note 6 - Inventories

(In thousands)	December 29, 2018				December 30, 2017
Work in progress	$	47,224			$	49,642
Finished goods	19,872				30,261
Total inventories	$	67,096			$	79,903

In the second quarter of 2018, we made the strategic decision to discontinue our millimeter wave business, which included certain wireless technology inventory items. As such, specific inventory reserves of $8.0 million were taken during fiscal 2018 on product lines that were eliminated with the discontinuation of our millimeter wave business and were charged to Cost of product revenueAccrued expenses in the Consolidated Statements of Operations.Balance Sheets are the following balances:

		January 1,				January 2,
(In thousands)		2022				2021
Liability for non-cancelable contracts		$	9,930			$	8,492
Current portion of operating lease liabilities			5,696				4,149
Contract liability under ASC 606			4,768				3,068
Other accrued expenses			6,050				5,702
Total accrued expenses		$	26,444			$	21,411

Cloud Based Computing Implementation Costs

Under the guidance in ASU 2018-15,Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), we are capitalizing the implementation costs for cloud computing arrangements, mainly for our integrated distributor accounting management systems. These cloud-based computing implementation costs are recorded in Prepaid expenses and other current assets and Other long-term assets on our Consolidated Balance Sheets. The following table summarizes activity during the periods presented:

(In thousands)
Cloud based computing implementation costs as of December 28, 2019		$	2,543
Costs capitalized			983
Amortization			(695	)
Cloud based computing implementation costs as of January 2, 2021		$	2,831
Costs capitalized			324
Amortization			(775	)
Cloud based computing implementation costs as of January 1, 2022		$	2,380

Note 75 - Property and Equipment

(In thousands)	December 29, 2018				December 30, 2017
Production equipment and software	160,979				155,492
Leasehold improvements	12,648				13,277
Office furniture and equipment	2,623				2,914
	176,250				171,683
Accumulated depreciation and amortization	(141,367		)		(131,260		)
	$	34,883			$	40,423

		January 1,				January 2,
(In thousands)		2022				2021
Production equipment and software		$	133,039			$	135,774
Leasehold improvements			12,960				12,913
Office furniture and equipment			2,000				2,161
			147,999				150,848
Accumulated depreciation and amortization			(109,905	)			(111,182	)
		$	38,094			$	39,666

For fiscal year 2018,years 2021 and 2020, depreciation and amortization expense for property and equipment was $13.4$12.0 million including $0.6and $11.8 million, of restructuring expense.respectively. For fiscal years 2017 and 2016,year 2019, depreciation and amortization expense for property and equipment was $16.3$11.6 million, and $18.4 million, respectively.

In August 2017, we sold building space which we owned in Shanghai, China for gross proceeds of approximately $7.9 million. The building space was vacated in fiscal 2015, upon consolidation of facilities to a single site in Shanghai following our acquisition of Silicon Image. As of the sale date, the building had a historical cost of $3.6 million, accumulated depreciation of $1.4 million and we incurred $1.1including $0.4 million of direct selling costs, resulting in arestructuring expense.

Property and Equipment – Geographic Information

Our Property and equipment, net gain on saleby country at the end of $4.6 million, which is presentedeach period was as Gain on salefollows:

		January 1,				January 2,
(In thousands)		2022				2021
United States		$	26,509			$	29,440
Taiwan			6,555				5,171
Philippines			2,498				2,912
China			1,643				1,537
Other			889				606
Total foreign property and equipment, net			11,585				10,226
Total property and equipment, net		$	38,094			$	39,666

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Table of building in our Consolidated Statements of Operations.Contents

Note 86 - Discontinuation of Business Unit, Sales of Assets and Business Units,Combination and Goodwill

Discontinuation of Business Unit

In the second quarter of 2018,

On November 12, 2021, we made the strategic decision to discontinue our millimeter wave business, which included certain assets related to our Wireless products, and our Board of Directors approved a related internal restructuring plan. This action was designed to improve profitability, reduce our infrastructure costs, and re-focus on our core business activities. Approximately $24.1 million of total expense was recorded in our Consolidated Statements of Operations in fiscal 2018, including $11.9 million charged to Impairment of acquired intangible assets, $8.0 million charged to Cost of product revenue for inventory reserves, and $4.2 million charged to Restructuring charges for severance and other personnel costs, and for other asset restructuring. See "Note 6 - Inventories," "Note 10 - Impairment of Acquired Intangible Assets," and "Note 15 - Restructuring" for further details on the charges and costs related to the discontinuation of our millimeter wave business.

Sales of Assets and Business Units

On September 30, 2017, in conjunction with our June 2017 restructuring plan (see "Note 15 - Restructuring"), we sold 100% of the equityoutstanding shares of our Hyderabad, India subsidiaryMirametrix, Inc. ("Mirametrix"), an innovator in advanced AI software and transferredcomputer vision ("CV") applications. This acquisition combines Mirametrix technology and expertise with Lattice’s innovative hardware and software solution stacks to create an end-to-end AI and computer vision solution that spans from the hardware to the application layer. Total consideration to acquire Mirametrix was $68.5 million, paid 100% in cash to Mirametrix shareholders. There is 0 contingent consideration included in the determination of the purchase consideration.

Purchase consideration was allocated to the tangible and intangible assets and liabilities assumed on the basis of the respective estimated fair values on the acquisition date. The purchase price allocation has been substantially completed, but may be subject to revision as we perform and complete more detailed analysis of certain assets related to our Simplay Labs testing and certification business to Invecas, Inc.tax matters. The fair valuevalues of purchase price consideration was $5.3 million, which was comprised of $2.3 million of cashthe assets acquired and a $3.0 million note receivable. In the third quarter of fiscal 2017, we recorded a $1.8 million loss on the sale, including a $2.2 million disposal of a relative fair value share of our Goodwill, which is included in Other (expense) income, netliabilities assumed in the Consolidated Statementsacquisition of Operations.

In April 2016, we sold Qterics to an unrelated third party for net proceedsMirametrix, by major class, were recognized as follows:

(In thousands)		Estimated Fair Value
Assets acquired:
Cash and cash equivalents		$	437
Accounts receivable			3,265
Other current assets			262
Property and equipment			156
Intangible assets			24,800
Goodwill			47,844
Total assets acquired			76,764
Liabilities assumed
Accounts payable			21
Accrued expenses			5
Accrued payroll obligations			247
Long-term liabilities			7,955
Total liabilities assumed			8,228
Fair value of net assets acquired		$	68,536

The following table presents details of $2.0 million, netthe identified intangible assets acquired through the acquisition of cash sold, resulting in a gain of $2.6 million. The gain was included in Other (expense) income, net inMirametrix:

		Useful Life				Fair Value
		(In years)				(In thousands)
Existing technology			7			$	13,500
Customer relationships			7				9,800
Trade name / trademarks			10				1,500
Total identified intangible assets subject to amortization						$	24,800

We do not believe there is any significant residual value associated with these intangible assets. We are amortizing the Consolidated Statements of Operations inintangible assets using the period of sale. In the second quarter of fiscal 2017, we received a final escrow payment of $0.3 million related to the sale of Qterics, which was included as a gain in Other (expense) income, net in the Consolidated Statements of Operations for the period of receipt.

straight-line method over their estimated useful lives.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and intangible assets. The goodwill recognized in the acquisition of Mirametrix was derived from expected benefits from cost synergies and the knowledgeable and experienced workforce who joined the Company after the acquisition. Goodwill resulting from the acquisition is not amortized, but is instead tested for impairment annually or more frequently if certain indicators of impairment are present. We do not expect goodwill impairment to be tax deductible for Canada income tax purposes.

We determined that the strategic decision to discontinue our millimeter wave business in the second quarter of 2018 constituted a triggering event related to goodwill, and we evaluated our

The goodwill balance as of June 30, 2018. We concluded that goodwill was not impaired, and noapproximately $315.4 million at January 1, 2022 is comprised of approximately $267.5 million from prior acquisitions combined with the approximately $47.8 million from the acquisition of Mirametrix. NaN impairment charges relating to goodwill were recorded for fiscal 2018. No impairment charges relating to goodwill were recorded for either fiscal 20172021, 2020, or fiscal 2016 as no indicators2019.

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Table of impairment were present.Contents

Our asset sale to Invecas, Inc. in September 2017 included a $2.2 million disposal of a relative fair value share of our Goodwill, which is included in Other (expense) income, net in the Consolidated Statements of Operations.

Note 97 - Intangible Assets

In connection with our acquisitions of Mirametrix, Inc. in November 2021, Silicon Image, Inc. in March 2015, and SiliconBlue Technologies, Inc. in December 2011, we recorded identifiable intangible assets related to developed technology, customer relationships, licensed technology, patents, and in-process research and development based on guidance for determining fair value under the provisions of ASC 820, "Fair Value Measurements." Additionally, during fiscal years 2015, 2017, and 2018, we licensed additional third-party technology. We do not believe there is any significant residual value associated with these intangible assets. We are amortizing the intangible assets using the straight-line method over their estimated useful lives.

During the first quarter of fiscal 2017, Additionally, we sold a portfolio of patents that had beenhave entered into license agreements for third-party technology and recorded them as intangible assets. These licenses are being amortized to Research and development expense over their estimated useful lives. NaN impairment charges relating to acquired in our acquisition of Silicon Image for $18.0 million. This amount was received in two installments over the first and second quarters of fiscal 2017, and was recognized as Licensing and services revenue in our Consolidated Statements of Operations during the respective periods in which the installment payments were received. As a result of this transaction, Intangible assets, net was reduced by approximately $3.5 million on our Consolidated Balance Sheets.

We monitor the carrying value of our intangible assets were recorded for potential impairment and test the recoverability of such assets annually during the fourth quarter and whenever triggering eventsfiscal 2021, 2020, or changes in circumstances indicate that their carrying amounts may not be recoverable. The results of our assessments are summarized below and more fully detailed in "Note 10 - Impairment of Acquired Intangible Assets."

During the third quarter of fiscal 2018, we concluded that a certain product line had limited future revenue potential due to a decline in customer demand for that product, and we recorded an impairment charge of $0.6 million to the intangible asset associated with that product. In the second quarter of 2018, we made the strategic decision to discontinue our millimeter wave business, which included certain wireless technology intangible assets, and we recorded an impairment charge of $11.9 million to the intangible assets associated with this business. During the fourth quarter of fiscal 2017, we finalized our impairment assessment procedures related to certain of the developed technology intangible assets acquired in our acquisition of Silicon Image, resulting in a $3.8 million reduction to the preliminary impairment charge of $36.2 million recorded in the third quarter of fiscal 2017, for a net impairment charge of $32.4 million in fiscal 2017. During the third quarter of fiscal 2016, we recorded a $7.9 million impairment charge to the intangible assets associated with future HDMI adopter fees.

2019.

The following tables summarize the details of our Intangible assets, net as of December 29, 2018 January 1, 2022 and December 30, 2017:

		December 29, 2018
(In thousands)		Weighted Average Amortization Period (in years)		Gross				Impairment				Accumulated Amortization				Intangible assets, net
Developed technology		5.0		$	112,269			$	(12,486	)		$	(83,185	)		$	16,598
Customer relationships		5.8		22,934				—				(19,048		)		3,886
Licensed technology		5.0		1,195				—				(354		)		841
Total identified intangible assets				$	136,398			$	(12,486	)		$	(102,587	)		$	21,325

		December 30, 2017
(In thousands)		Weighted Average Amortization Period (in years)		Gross				Impairment				Accumulated Amortization				Intangible assets, net
Developed technology		4.7		$	158,700			$	(32,431	)		$	(81,847	)		$	44,422
Customer relationships		5.7		22,934				—				(16,696		)		6,238
Licensed technology		3.5		2,392				—				(1,744		)		648
Total identified intangible assets				$	184,026			$	(32,431	)		$	(100,287	)		$	51,308

January 2, 2021:

		January 1, 2022
(In thousands)		Weighted Average Amortization Period (in years)				Gross				Accumulated Amortization				Intangible assets, net
Existing technology			5.1			$	124,487			$	(111,090	)		$	13,397
Customer relationships			6.1				32,734				(22,947	)			9,787
Trade name / trademarks			10.0				1,500				(19	)			1,481
Licensed technology			6.3				6,551				(1,434	)			5,117
Total identified intangible assets						$	165,272			$	(135,490	)		$	29,782

		January 2, 2021
(In thousands)		Weighted Average Amortization Period (in years)				Gross				Accumulated Amortization				Intangible assets, net
Developed technology			5.0			$	110,987			$	(109,162	)		$	1,825
Customer relationships			5.8				22,934				(22,281	)			653
Licensed technology			6.6				4,376				(533	)			3,843
Total identified intangible assets						$	138,297			$	(131,976	)		$	6,321

We recorded amortization expense related to intangible assets on the Consolidated Statements of Operations as presented in the following table:

	Year Ended
(In thousands)	December 29, 2018				December 30, 2017				December 31, 2016
Research and development	$	277			$	569			$	745
Amortization of acquired intangible assets	17,690				31,340				33,575
	$	17,967			$	31,909			$	34,320

		Year Ended
		January 1,				January 2,				December 28,
(In thousands)		2022				2021				2019
Research and development		$	901			$	124			$	55
Amortization of acquired intangible assets			2,613				4,449				13,558
		$	3,514			$	4,573			$	13,613

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

Fiscal year		(in thousands)
2022		$	4,771
2023			4,492
2024			4,280
2025			4,233
2026			4,233
Thereafter			7,773
Total		$	29,782

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(In thousands)	Amount
2019	13,613
2020	4,499
2021	2,239
2022	238
Thereafter	736
Total	$	21,325

Table of Contents

Note 108 - ImpairmentLong-Term Debt

On May 17, 2019, we entered into a credit agreement (the “Current Credit Agreement”), which provides for a five-year secured term loan facility in an aggregate principal amount of Acquired Intangible Assets

In$175.0 million and a five-year secured revolving loan facility in an aggregate principal amount of up to $75.0 million, along with other components and options, such as a letter of credit, swing line, or expansion of the revolver, currently not in use, which are described in the Current Credit Agreement.

We used the $175.0 million term loan proceeds and an initial $31.5 million revolving loan draw at closing to (i) repay the $204.4 million obligation outstanding under our previous credit agreement (the “Previous Credit Agreement”), and (ii) pay fees and expenses totaling $2.1 million incurred in connection with the Current Credit Agreement. The revolving loan may be used for working capital and general corporate purposes. With the repayment of our acquisitionsobligations under the Previous Credit Agreement, we wrote off the remaining unamortized balance of Silicon Image in March 2015the related original issue discount and SiliconBlue in December 2011debt costs, which we recorded identifiable intangibleas a $2.2 million loss on refinancing in Other expense, net on our Consolidated Statements of Operations in fiscal 2019.

At our option, the term loan and the revolving loan (collectively, "long-term debt") accrue interest at a per annum rate based on either (i) the base rate plus a margin ranging from 0.25% to 1.00%, determined based on our total leverage ratio or (ii) the London Interbank Offered Rate ("LIBOR") for interest periods of 1,2,3 or 6 months plus a margin ranging from 1.25% to 2.00%, determined based on our total leverage ratio. The base rate is defined as the highest of (i) the federal funds rate, plus 0.50%, (ii) Wells Fargo Bank, National Association’s prime rate or (iii) the LIBOR rate for a 1-month interest period plus 1.00%. As of January 1, 2022, the effective interest rate on the term loan was 1.57%, and the effective interest rate on the revolving loan was 1.35%. We pay a commitment fee of 0.20% on the unused portion of the revolving loan.

The term loan is payable through a combination of (i) required quarterly installments of approximately $4.4 million, and (ii) any payments due upon certain issuances of additional indebtedness and certain asset dispositions, with any remaining outstanding principal amount due and payable on the maturity date of the term loan. The revolving loan is payable at our discretion, with any remaining outstanding principal amount due and payable on the maturity date of the revolving loan.

The Current Credit Agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Company to, among other things, incur debt, grant liens, undergo certain fundamental changes, make investments, make certain restricted payments, dispose of assets, relatedenter into transactions with affiliates, and enter into burdensome agreements, in each case, subject to developed technology, customer relationships, licensed technology, patents,limitations and in-process research.exceptions set forth in the Current Credit Agreement. We monitorare also required to maintain compliance with a total leverage ratio and an interest coverage ratio, in each case, determined in accordance with the terms of the Current Credit Agreement.

We account for the original issue discount and the debt issuance costs as a reduction to the carrying value of our acquired intangible assets for potential impairmentlong-term debt on our Consolidated Balance Sheets. We amortize the discount and testcosts to Interest expense in our Consolidated Statements of Operations over the recoverabilitycontractual term using the effective interest method. We determine the Current portion of such assets annually duringlong-term debt as the fourth quartersum of the required quarterly installments to be made over the next twelve months, reduced by the original issue discount and whenever events or changes in circumstances indicate that their carrying amounts may notthe debt issuance costs to be recoverable. Whenamortized over the next twelve months.

During fiscal 2021, we are required to determine themade principal payments totaling $13.1 million. The fair value of intangible assets other than goodwill, we useour long-term debt approximates the income approach. We start with a forecast of all expected net cash flows associated with the asset and then apply a discount rate to arrive at fair value.

During our review of our strategic long-range plan completed at the end of the third quarter of fiscal 2018, we concluded that a certain product line had limited future revenue potential due to a decline in customer demand for that product. We determined that this conclusion constituted an impairment indicator to the related specific developed technology intangible asset acquired in our acquisition of Silicon Image. Our assessment of the faircarrying value, of this intangible asset concluded that it had been fully impaired as of September 29, 2018, and we recorded an impairment charge of $0.6 million in the Consolidated Statements of Operations.

In the second quarter of 2018, we made the strategic decision to discontinue our millimeter wave business, which included certain wireless technology intangible assets. We determined that this action constituted an impairment indicator related to certain of the developed technology intangible assets acquired in our acquisition of Silicon Image. Our assessment of the fair value of these intangible assets concluded that they had been fully impaired as of June 30, 2018, and we recorded an impairment charge of $11.9 million in the Consolidated Statements of Operations.

In the third quarter of fiscal 2017, we updated our annual strategic long-range plan, which resulted in revised forecasts. We also sold 100% of the equity of our Hyderabad, India subsidiary and certain assets related to our Simplay Labs testing and certification business to an unrelated third party. We determined that these activities constituted impairment indicators related to certain of the developed technology intangible assets acquired in our acquisition of Silicon Image. Our assessment of the fair value of these intangible assets concluded that they had been impaired as of September 30, 2017, and we recorded a preliminary impairment charge of $36.2 million in the Consolidated Statements of Operations. During the fourth quarter of fiscal 2017, we completed our detailed analysis and evaluation of the information and assumptions used in the determination of the impairment charge, which included reviewing information, inputs, assumptions, and valuation methodologies used to estimate the fair value of these intangible assets, and finalization of review by an independent valuation expert. As a result, we recorded a $3.8 million reduction to the preliminary impairment charge recorded in the third quarter of fiscal 2017, for a net impairment charge of $32.4 million in fiscal 2017.

In September 2016, the Founders of the HDMI consortium, of which we are a member, amended the existing Founders Agreement as part of a regular amendment process resulting in changes to our role as agent for the HDMI consortium and to the model for sharing adopter fee revenues. Under the terms of the amended agreement, our role as the agent was terminated effective January 1, 2017 and a new independent entity was appointed to act as the new HDMI licensing agent with responsibility for licensing and the distribution of royalties among Founders. As a result of the amended model for sharing revenue, we were entitled to a reduced share of adopter fees paid by parties adopting the HDMI standard. We determined that this modification constituted an impairment indicator related to the intangible assets acquired in the Silicon Image acquisition associated with future HDMI adopter fees. Our assessment of the fair value of these intangible assets concluded that they had been impaired as of the end of the third quarter of fiscal 2016, and we recorded a $7.9 million impairment charge in the Consolidated Statements of Operations.

Note 11 - Cost Method Investment and Collaborative Arrangement

During fiscal 2015, we purchased a series of preferred stock ownership interests in a privately-held company that designs human-computer interaction technology for total consideration of $5.0 million. This gross investment constituted a 22.7% ownership interest. In the third quarter of fiscal 2016, we made an additional investment of $1.0 million via a convertible debt instrument, bringing our gross investment in the investee to $6.0 million at that time.

In each of the second and third quarters of fiscal 2017, we advanced the investee $1.0 million through a short-term instrument, bringing our total short-term advances to the investee to $2.0 million. As these advances were due and payable in the fourth quarter of fiscal 2017, they were included in Prepaid expenses and other current assetsis reflected in our Consolidated Balance Sheets while outstanding. The investee repaid the total advances in October 2017.

In 2017, we signed new development and licensing contracts with the investee, and the investee obtained preferredas follows:

		January 1,				January 2,
(In thousands)		2022				2021
Principal amount		$	158,750			$	171,875
Unamortized original issuance discount and debt costs			(817	)			(1,179	)
Less: Current portion of long-term debt			(17,173	)			(12,762	)
Long-term debt, net of current portion and unamortized debt issue costs		$	140,760			$	157,934

Interest expense related to our long-term debt that effectively subordinated our ownership position between their debt and common shareholders. After evaluating these events and our investment position, we concluded that we had a variable interest in the privately-held company. However, we were not the primary beneficiary of the investee, were not holding in-substance common stock, and did not have a significant amount of influence to direct the activities that most significantly impact the investee’s economic performance. Accordingly we accounted for our investment in this company under the cost method.

In the fourth quarter of fiscal 2018, we restructured our relationship such that we now own only preferred shares and the prior agreements were canceled, thereby eliminating the variable interest in the investee. See the “Collaborative Arrangement” section of this note for discussion of changes under the restructured relationship. We continue to account for our preferred shares investment in this company under the cost method.

We assess this investment for impairment on a quarterly basis by applying a fair value analysis using a revenue multiple approach. During fiscal 2018, we recognized an impairment adjustment, but our assessment as of December 29, 2018 concluded that no further impairment adjustment was necessary as of that date. The following table summarizes the impairment adjustments against this investment that we have recognized through Other (expense) income, net in the Consolidated Statements of Operations during the fiscal years presented:

		Year Ended
(In thousands)		December 29, 2018				December 30, 2017				December 31, 2016
Impairment of cost-basis investment		$	(266	)		$	(1,761	)		$	(1,459	)

Through December 29, 2018, we have reduced the value of our investment by approximately $4.0 million. The net balance of our investmentis included in Other long-term assets in the Consolidated Balance Sheets is detailed in the following table:

(In thousands)		Total
Balance at December 31, 2016		$	4,049
Impairment of cost-basis investment		(1,761		)
Balance at December 30, 2017		2,288
Impairment of cost-basis investment		(266		)
Balance at December 29, 2018		$	2,022

Collaborative Arrangement

During the fourth quarter of fiscal 2018, we restructured our relationship with the investee discussed above, including the cancellation of prior arrangements from the 2017 agreements that had provided for: (i) the assignment of certain Intellectual Property ("IP") from the investee to us, (ii) a license of certain IP from the investee to us, (iii) payment of royalties between the parties for future sales of co-developed products, (iv) the performance of certain services for each other at no additional charge. Under the 2017 agreements, we had agreed to make quarterly minimum payments to the investee, which were to be automatically credited against any future revenue share amount owed to the investee under the agreements, and which were accounted for as prepaid royalties under ASC 340. As of the fourth quarter 2018, and under the new contractual arrangement, we have returned the assignment of IP to the investee, we are no longer obligated to make quarterly royalty payments to the investee, and we have recorded Restructuring charges of $3.3 million in the Consolidated Statements of Operations for our abandonment of the accumulated balance of royalties prepaid under the 2017 agreements.

Note 12 - Accounts Payable and Accrued Expenses

Included in Accounts payable and accrued expenses in the Consolidated Balance Sheets are the following balances:

(In thousands)	December 29, 2018				December 30, 2017
Trade accounts payable	$	31,880			$	35,350
Liability for non-cancelable contracts	6,078				7,232
Restructuring	4,220				2,088
Other accrued expenses	9,585				9,735
Total accounts payable and accrued expenses	$	51,763			$	54,405

Note 13 - Lease Obligations

Certain of our facilities are leased under operating leases, which expire at various times through 2026. RentalInterest expense under operating leases was $8.3 million, $8.9 million and $9.5 million for fiscal years 2018, 2017 and 2016, respectively. Future minimum lease commitments at December 29, 2018 are as follows:

Fiscal year		Amount
(In thousands)
2019		$	7,090
2020		6,893
2021		5,452
2022		4,658
2023		4,229
Thereafter		9,930
		$	38,252

Note 14 - Income Taxes

The domestic and foreign components of loss before income taxes were as follows:

		Year Ended
(In thousands)		December 29, 2018				December 30, 2017				December 31, 2016
Domestic		$	(8,274	)		$	(17,341	)		$	(33,962	)
Foreign		(15,695		)		(52,372		)		(10,220		)
Loss before taxes		$	(23,969	)		$	(69,713	)		$	(44,182	)

The components of the income tax expense are as follows:

		Year Ended
(In thousands)		December 29, 2018				December 30, 2017				December 31, 2016
Current:
Federal		$	536			$	508			$	1,896
State		38				30				13
Foreign		1,869				304				7,918
		2,443				842				9,827
Deferred:
Federal		—				—				—
State		—				—				—
Foreign		(90		)		7				90
		(90		)		7				90
Income tax expense		$	2,353			$	849			$	9,917

Income tax expense differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax income as a result of the following differences:

		Year Ended
		December 29, 2018		December 30, 2017		December 31, 2016
		%		%		%
Statutory federal rate		(21)		(35)		(35)
Adjustments for tax effects of:
State taxes, net		(6)		(7)		7
Research and development credits		(5)		(1)		(2)
Stock compensation		8		3		3
Foreign rate differential		20		28		15
Foreign dividends		—		1		—
Foreign withholding taxes		5		—		9
Other permanent		2		—		3
Other deferred tax asset adjustment		13		—		—
Valuation allowance		(11)		(73)		17
Change in uncertain tax benefit accrual		2		1		5
Stock compensation (ASU 2016-09) adoption		—		(8)		—
Tax rate change		—		93		—
Other		3		(1)		1
Effective income tax rate		10		1		23

ASC 740, “Income Taxes”, provides for the recognition of deferred tax assets if realization of these assets is more-likely-than-not. We evaluate both positive and negative evidence to determine if some or all of our deferred tax assets should be recognized on a quarterly basis.

Through December 29, 2018, we continued to evaluate the valuation allowance position in the United States and concluded we should maintain a valuation allowance against the net federal and state deferred tax assets. In making this evaluation, we exercised significant judgment and considered estimates about our ability to generate revenue and gross profits sufficient enough to offset expenditures in future periods within the United States.

We will continue to evaluate both positive and negative evidence in future periods to determine if we should recognize more deferred tax assets. We don't have a valuation allowance in any foreign jurisdictions as we have concluded it is more likely than not that we will realize the net deferred tax assets in future periods. The net decrease in the total valuation allowance affecting the effective tax rate for the year ended December 29, 2018 was approximately $2.6 million, mainly attributable to the write down of intangible assets which had no tax basis.

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

(In thousands)		December 29, 2018				December 30, 2017
Deferred tax assets:
Accrued expenses and reserves		$	3,714			$	3,096
Inventory		2				2
Deferred Revenue		—				228
Stock-based and deferred compensation		2,660				4,018
Interest expense disallowance		1,283				—
Intangible assets		14,649				19,576
Fixed assets		281				216
Net operating loss carry forwards		88,333				86,410
Tax credit carry forwards		92,208				90,530
Capital loss carry forwards		5,007				3,926
Other		1,130				2,323
Total deferred tax assets		209,267				210,325
Less: valuation allowance		(207,108		)		(209,691		)
Net deferred tax assets		2,159				634
Deferred tax liabilities:
Fixed assets		1,536				559
Deferred revenue		525				—
Other		(57		)		16
Total deferred tax liabilities		2,004				575
Net deferred tax assets		$	155			$	59

At December 29, 2018, we had U.S. federal net operating loss ("NOL") carryforwards (pretax) of approximately $365.3 million that expire at various dates between 2019 and 2037. We had state NOL carryforwards (pretax) of approximately $147.6 million that expire at various dates from 2019 through 2037. We also had federal and state credit carryforwards of $51.5 million and $61.2 million, respectively. Of the $61.2 million state credit carryforwards, $60.2 million do not expire. The federal and remaining state credits expire at various dates from 2019 through 2038.

Future utilization of federal and state net operating losses and tax credit carry forwards may be limited if cumulative changes to ownership exceed 50% within any three-year period. This has not occurred through fiscal 2018. If there is a significant change in ownership, future tax attribute utilization may be restricted (§382 limitation) and NOL carryforwards and/or R&D credits will be reduced to reflect the limitation.

U.S. tax reform required a deemed repatriation of deferred foreign earnings as of December 30, 2017 and no future U.S. taxes should be due on these earnings because of enactment of a 100% dividends received deduction. We had no impact from this transition tax due to utilization of NOL carryforwards. Foreign earnings may be subject to withholding taxes in local jurisdictions if they are distributed and repatriated in the United States.

At December 29, 2018, our unrecognized tax benefits associated with uncertain tax positions were $44.0 million, of which $42.0 million, if recognized, would affect the effective tax rate, subject to valuation allowance. As of December 29, 2018, interest and penalties associated with unrecognized tax benefits were $8.6 million.

Our liability for uncertain tax positions (including penalties and interest) was $26.3 million and $26.9 million at December 29, 2018 and December 30, 2017, respectively, and is recorded as a component of Other long-term liabilities on our Consolidated Balance Sheets. The remainder of our uncertain tax position exposure of $24.9 million is netted against deferred tax assets.

The following table summarizes the changes to unrecognized tax benefits for fiscal years 2018, 2017 and 2016:

(In thousands)		Amount
Balance at January 2, 2016		$	48,207
Additions based on tax positions related to the current year		2,573
Additions based on tax positions of prior years		530
Reduction for tax positions of prior years		(1,824		)
Reduction as a result of lapse of applicable statute of limitations		(1,863		)
Balance at December 31, 2016		47,623
Additions based on tax positions related to the current year		471
Additions based on tax positions of prior years		11
Reductions for tax positions of prior years		(1,226		)
Reduction as a result of lapse of applicable statute of limitations		(2,047		)
Balance at December 30, 2017		44,832
Additions based on tax positions related to the current year		389
Additions based on tax positions of prior years		19
Reductions for tax positions of prior years		(5		)
Reduction as a result of lapse of applicable statute of limitations		(1,235		)
Balance at December 29, 2018		$	44,000

At December 29, 2018, it is reasonably possible that $1.8 million of unrecognized tax benefits and $0.1 million of associated interest and penalties could be recognized during the next twelve months.

We are subject to federal and state income tax as well as income tax in the various foreign jurisdictions in which we operate. Additionally, the years that remain subject to examination are 2015 for federal income taxes, 2014 for state income taxes, and 2012 for foreign income taxes, including years ending thereafter. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses or tax credits were generated and carried forward, and make adjustments up to the amount of the net operating losses or credit carryforward amount.

Our Philippines 2016 income tax return is currently under examination. We are not under examination in any other jurisdiction.

The Tax Cuts and Jobs Act (the "2017 Tax Act"), enacted December 22, 2017, contains provisions that affect us, but the impact will be absorbed by utilizing NOL carry forwards. Reduction of the corporate tax rate from 35% to 21% reduced the value of our domestic deferred tax assets and reduced our associated full valuation allowance on those assets, resulting in no net impact on our Consolidated Statements of Operation.

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 ("SAB 118"). The SEC issued SAB 118 on December 22, 2017 to address the situation where an SEC reporting company did not have all the necessary information available or analyzed to complete their accounting for the income tax effects of the 2017 Tax Act in the period of enactment. Due to the lack of authoritative guidance issued, complexity, and enactment timing of the 2017 Tax Act, we made a reasonable estimate of the income tax effect of the deemed repatriation of deferred foreign earnings as part of the fiscal 2017 year-end tax provision. Changes to the provisional amount recorded at December 30, 2017 have been finalized in the fourth quarter of fiscal 2018 with the filing of our 2017 tax return. There was no net impact on our Consolidated Statements of Operations as we adjustedfollows:

		Year Ended
		January 1,				January 2,				December 28,
(In thousands)		2022				2021				2019
Contractual interest		$	2,304			$	3,319			$	10,278
Amortization of original issuance discount and debt costs			362				400				1,659
Total interest expense related to long-term debt		$	2,666			$	3,719			$	11,937

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Expected future principal payments are based on the schedule of required quarterly installments. As of January 1, 2022, expected future principal payments on our NOL and valuation allowance.long-term debt were as follows:

Fiscal year		(in thousands)
2022			17,500
2023			17,500
2024			123,750
		$	158,750

We are not currently paying U.S. federal income taxes and do not expect to pay such taxes until we fully utilize our tax NOL and credit carryforwards. We expect to pay a nominal amount of state income tax. We are paying foreign income and withholding taxes, which are reflected in income tax expense in our Consolidated Statements of Operations and are primarily related to the cost of operating offshore activities and subsidiaries. We accrue interest and penalties related to uncertain tax positions in income tax expense.

Note 159 - Restructuring

In December 2018, March 2020, our management approved and executed an internal restructuring plan (the “December 2018“Q12020 Plan”), which included a global workforce reduction. This reduction in order to reduce our operating cost structure by leveraging our low-cost regions as well as enhancing efficiency. Under this plan, also included the abandonmentwe incurred restructuring expense of long lived assets related to the restructuring of our agreements with a privately-held investee (see "Note 11 - Cost Method Investmentapproximately $0.2 million and Collaborative Arrangement")$2.0 million, respectively, during fiscal 2021 and 2020. Approximately $4.8$2.2 million of restructuringtotal expense has been incurred through December 29, 2018 January 1, 2022 under the December 2018Q12020 Plan. Substantially all actions planned under the Q12020 Plan have been implemented.

In April 2019, our management approved and executed an internal restructuring plan (the “Q22019 Sales Plan”), which focused on a restructuring of the global sales organization through cancellation of certain contracts and a workforce reduction. Under this plan, 0 restructuring expense was incurred during fiscal 2021, and we believe this amount approximates theincurred restructuring expense of approximately $0.1 million and $2.0 million, respectively, during fiscal 2020 and 2019. Approximately $2.1 million of total costs expense has been incurred through January 1, 2022 under the plan and that this plan is substantially complete.

Q22019 Sales Plan. All actions planned under the Q22019 Sales Plan have been implemented.

In June 2018, 2017, our Board of Directors approved an internal restructuring plan (the "June 2018 Plan"), which included the discontinuation of our millimeter wave business and the use of certain assets related to our Wireless products, and a workforce reduction. The June 2018 Plan is designed to reduce our infrastructure costs and re-focus on our core business activities. Approximately $4.2 million of restructuring expense has been incurred through December 29, 2018 under the June 2018 Plan, and we believe this amount approximates the total costs under the plan and that this plan is substantially complete.

In "June 2017 our Board of Directors approved an internal restructuring plan (the "June 2017 Plan"), which included the sale of 100% of the equity of our Hyderabad, India subsidiary and the transfer of certain assets related to our Simplay Labs testing and certification business, a worldwide workforce reduction, and an initiative to reduce our infrastructure costs, including reconfiguringreconfiguring our use of certain leased properties. Under this initiative approved byplan, we incurred restructuring expense of approximately $0.7 million, $1.9 million, and $2.7 million, respectively, during fiscal 2021,2020, and 2019. We have incurred approximately $21.6 million of total expense through January 1, 2022 under the Board inJune 2017 wePlan, and all planned actions have been implemented. We expect the total cost of the June 2017 Plan to be approximately $22.0 million to $23.5 million as ROU asset amortization expenses related to our partially vacated approximately 50% or our facility in San Jose, California in the fourth quarter of fiscal 2018, and recorded approximately $6.9 million of Restructuring charges from ceasing use of this space. These actions are part of an overall plan to achieve financial targets and to enhance our financial and competitive position by better aligning our revenue and operating expenses. Under this plan, approximately $8.4 million and $8.0 million of expense was incurred during the years ended December 29, 2018 and December 30, 2017, respectively. Approximately $16.4 million of total expense has been incurred through December 29, 2018 under the June 2017 Plan, and we expect the total cost to be approximately $21.5 million to $23.0 million.

In September 2015, we implemented a reduction of our worldwide workforce (the "September 2015 Reduction") separate from the March 2015 Plan. The September 2015 Reduction was designed to resize the company in line with the market environment and to better balance our workforce with the long-term strategic needs of our business. The September 2015 Reduction is substantially complete subject to certain remaining expected costs, which we do not expect to be material but which will be expensed as incurred. Under this reduction, no expense, approximately $0.7 million of credit, and approximately $2.0 million of expense was incurred duringover the years ended December 29, 2018, December 30, 2017, and December 31, 2016, respectively. Approximately $7.2 million of total expense has been incurred through December 29, 2018 under the September 2015 Reduction, and we believe this amount approximates the total costs expected.

In March 2015, our Board of Directors approved an internal restructuring plan (the "March 2015 Plan"), in connection with our acquisition of Silicon Image. The March 2015 Plan was designed to realize synergies from the acquisition by eliminating redundancies created as a result of combining the two companies. This included reductions in our worldwide workforce, consolidation of facilities, and cancellation of software contracts and engineering tools. The March 2015 Plan is substantially complete subject to certain remaining expected costs that we do not expect to be material and any changes in sublease assumptions should they occur, which will be expensed as incurred. Under this plan, no expense, approximately $0.1 million of credit, and approximately $7.3 million of expense was incurred during the years ended December 29, 2018, December 30, 2017, and December 31, 2016, respectively. Approximately $20.5 million of total expense has been incurred through December 29, 2018 under the March 2015 Plan, and we believe this amount approximates the total costs expected.

lease term.

These expenses and credits were recorded to Restructuring charges on our Consolidated Statements of Operations. The restructuring accrual balance is presented in Accounts payable and accruedAccrued expenses (includes restructuring) and Other long-term liabilities on our Consolidated Balance Sheets.

The following table displays the activity related to the restructuring plans described above:

(In thousands)	Severance & Related (1)				Lease Termination				Software Contracts & Engineering Tools (2)				Other See note (3) for 2018				Total
Balance at January 2, 2016	$	3,696			$	1,005			$	377			$	—			$	5,078
Restructuring charges	2,883				2,993				1,903				1,488				9,267
Costs paid or otherwise settled	(5,778		)		(2,962		)		(2,255		)		(1,476		)		(12,471		)
Balance at December 31, 2016	$	801			$	1,036			$	25			$	12			$	1,874
Restructuring charges	2,484				811				3,066				835				7,196
Costs paid or otherwise settled	(2,093		)		(977		)		(2,731		)		(822		)		(6,623		)
Balance at December 30, 2017	$	1,192			$	870			$	360			$	25			$	2,447
Restructuring charges	5,696				7,379				913				3,361				17,349
Costs paid or otherwise settled	(5,074		)		381				(1,055		)		(3,368		)		(9,116		)
Balance at December 29, 2018	$	1,814			$	8,630			$	218			$	18			$	10,680

(In thousands)		Severance & Related (1)				Lease Termination & Fixed Assets				Software Contracts & Engineering Tools (2)				Other (3)				Total
Accrued Restructuring at December 29, 2018		$	1,814			$	8,630			$	218			$	18			$	10,680
Restructuring charges			625				2,716				0				1,323				4,664
Costs paid or otherwise settled			(2,279	)			(4,761	)			(218	)			(476	)			(7,734	)
Accrued Restructuring at December 28, 2019		$	160			$	6,585			$	0			$	865			$	7,610
Restructuring charges			1,669				1,896				0				372				3,937
Costs paid or otherwise settled			(1,583	)			(248	)			0				(573	)			(2,404	)
Accrued Restructuring at January 2, 2021		$	246			$	8,233			$	0			$	664			$	9,143
Restructuring charges			250				690				0				0				940
Costs paid or otherwise settled			(245	)			(1,793	)			0				(664	)			(2,702	)
Accrued Restructuring at January 1, 2022		$	251			$	7,130			$	0			$	0			$	7,381

(1) (1)	Includes employee relocation costs and outplacement costs, and accelerated stock compensation
(2)	(2)	Includes cancellation of contracts, asset impairments, and accelerated depreciation on certain enterprise resource planning and customer relationship management systems
(3)	In fiscal 2018, "Other" activity includes (3)	Includes termination fees on the abandonmentcancellation of long lived assets related tocertain contracts under the restructuringQ22019 Sales Plan

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Note 10 - Leases

We have operating leases for corporate offices, sales offices, research and development facilities, storage facilities, and a data center, all of our agreements with a privately-held investee

Note 16 - Long-Term Debt

On March 10, 2015, we entered into a secured credit agreement (the "Credit Agreement") with Jefferies Finance, LLC and certain other lenders for purposes of funding, in part, our acquisition of Silicon Image. The Credit Agreement provided for a $350 million term loan (the "Term Loan") maturing on March 10, 2021 (the "Term Loan Maturity Date"). We received $346.5 million net of an original issue discount of $3.5 million and we paid debt issuance costs of $8.3 million. The Term Loan bears variable interest equal to the one-month LIBOR, subject to a 1.00% floor, plus a spread of 4.25%. The current effective interest rate on the Term Loan is 7.30%.

The Term Loan is payable through a combination of (i) quarterly installments of approximately $0.9 million, (ii) annual excess cash flow payments as defined in the Credit Agreement, which are due 95 days after the last day of our fiscal year, and (iii) any payments due upon certain issuances of additional indebtedness and certain asset dispositions, with any remaining outstanding principal amount due and payable on the Term Loan Maturity Date. The percentage of excess cash flow we are required to pay ranges from 0% to 75%, depending on our leverage and other factors as defined in the Credit Agreement. As of December 29, 2018, the Credit Agreement required a75%excess cash flow payment.

leased under operating leases that expire at various times through 2028.In the first quarter of fiscal 2018,2021, we made a required quarterly installment paymentextended the leases for our Hillsboro, Oregon and Shanghai, China facilities, which resulted in approximately $7.2 million of $0.9 million. In the second quarterincrease in right-of-use assets and operating lease liabilities. Our leases have remaining lease terms of fiscal 2018, we made a required excess cash flow payment1 to 7 years, some of $0.2which include options to extend for up to 5 years, and some of which include options to terminate within 1 year. The weighted-average remaining lease term was 4.1 years and the weighted-average discount rate was 5.4% as of January 1, 2022. We recorded fixed operating lease expense of $7.9 million, a required quarterly installment payment of $0.9$7.6 million, and an additional $10.0$7.7 million, principal payment. Inrespectively, for fiscal 2021, 2020, and 2019.

The following table presents the third quarter oflease balance classifications within the Consolidated Balance Sheets and summarizes their activity during fiscal 2018, we made a required quarterly installment payment of $0.9 million, and an additional $15.0 million principal payment. In the fourth quarter of fiscal 2018, we made a required quarterly installment payment of $0.9 million, and an additional $15.0 million principal payment. As of December 29, 2018, we had approximately $263.0 million outstanding under the Credit Agreement.

While the Credit Agreement does not contain financial covenants, it does contain informational covenants and certain restrictive covenants, including limitations on liens, mergers and consolidations, sales of assets, payment of dividends, and indebtedness. We were in compliance with all such covenants in all material respects at December 29, 2018.

The original issue discount and the debt issuance costs have been accounted2021:

Operating lease right-of-use assets		(in thousands)
Balance as of January 2, 2021		$	22,178
Right-of-use assets obtained for new and modified lease contracts during the period			8,134
Amortization of right-of-use assets during the period			(6,587	)
Adjustments for present value and foreign currency effects			93
Balance as of January 1, 2022		$	23,818

Operating lease liabilities		(in thousands)
Balance as of January 2, 2021		$	23,055
Lease liabilities incurred for new lease contracts during the period			8,134
Accretion of lease liabilities			1,305
Operating cash used by payments on lease liabilities			(7,639	)
Adjustments for present value and foreign currency effects			89
Balance as of January 1, 2022			24,944
Less: Current portion of operating lease liabilities (included in Accrued expenses)			(5,696	)
Long-term operating lease liabilities, net of current portion		$	19,248

Lease obligations for as a reductionfacilities restructured prior to the carrying valueadoption of the Term LoanTopic 842 totaled approximately $7.1 million at January 1, 2022 and continued to be recorded in Other long-term liabilities on our Consolidated Balance Sheets and are being amortized to Interest expense in our Consolidated StatementsSheets.

Maturities of Operations over the contractual term, using the effective interest method.

The fair valueoperating lease liabilities as of the Term Loan approximates the carrying value, which is reflected in our Consolidated Balance SheetsJanuary 1, 2022 are as follows:

Fiscal year		(in thousands)
2022			6,917
2023			7,446
2024			5,408
2025			3,651
2026			2,532
Thereafter			2,082
Total lease payments			28,036
Less: amount representing interest			(3,092	)
Total lease liabilities		$	24,944

(in thousands)	December 29, 2018				December 30, 2017
Principal amount	$	263,033			$	306,791
Unamortized original issue discount and debt issuance costs	(3,386		)		(5,616		)
Less: Current portion of long-term debt	(8,290		)		(1,508		)
Long-term debt	$	251,357			$	299,667

Interest expense related to the Term Loan was included in Interest expense on the Consolidated Statements of Operations as follows:

					Year Ended
(in thousands)	December 29, 2018				December 30, 2017				December 31, 2016
Contractual interest	$	18,600			$	16,503			$	18,518
Amortization of debt issuance costs and discount	2,230				1,982				1,350
Total Interest expense related to the Term Loan	$	20,830			$	18,485			$	19,868

As of December 29, 2018, expected future principal payments on the Term Loan were as follows:

Fiscal year		(in thousands)
2019		10,031
2020		63,131
2021		189,871
		$	263,033

Note 1711 - Stock-Based Compensation Plans

Employee and Director Stock Options, Restricted Stock, and ESPP

Plans

We have fourtwo active equity incentive plans, (the "1996 Stock Incentive Plan," the "2001 Stock Plan," the "20132013 Incentive Plan and the "2011"2011 Non-Employee Director Equity Incentive Plan") and in connection with our acquisition of Silicon Image in 2015, we assumed outstanding awards, under the Silicon Image, Inc. 2008 Equity Incentive Plan and the Silicon Image, Inc. 1999 Equity Incentive Plan (together, the “Silicon Image Equity Incentive Plans”). Awards granted under the 1996 Stock Incentive Plan remain outstanding, but no awards granted under the 2001 Stock Plan remain outstanding, and nowhich shares are available for future awards under these plans. Shares remain available for grants to employees and non-employee directors, only under the 2013 Incentive Plan and the 2011 Non-Employee Director Equity Incentive Plan, respectively. In addition, we have made grants of inducement awards to certain of our newly hired executives and employees that are granted outside of, but governed by, the 2013 Incentive Plan. "Incentive stock options" under Section 422 of the U.S. Internal Revenue Code and restricted stock unit ("RSU") grants are part of our equity compensation practices for employees who receive equity grants. Options and RSUs generally vest quarterly over a four-yearfour-year period beginning on the grant date. The contractual terms of options granted do not exceed ten years.

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In May 2012, the Company's stockholders approved the 2012 Employee Stock Purchase Plan ("("2012 ESPP"), which authorizes the issuance of 3.0 million shares of common stock to eligible employees to purchase shares of common stock through payroll deductions, which cannot exceed 10% of an employee's compensation. The purchase price of the shares is the lower of 85% of the fair market value of the stock at the beginning of each six-monthsix-month offering period or 85% of the fair market value at the end of such period. We have treated the 2012 ESPP as a compensatory plan. We recorded $0.6 million related compensation expense in both fiscal 2018 and 2016. During fiscal 2017 only, the ESPP was suspended and we recorded no related compensation expense.

At December 29, 2018,January 1, 2022, a total of 6.11.1 million shares of our common stock were available for future purchases under the 2012 ESPP.

At January 1, 2022, a total of 7.5 million shares of our common stock were available for future grants under the 2013 Incentive Plan, and the 2011 Non-Employee Director Equity Incentive Plan. Following our 2018 Shareholder meeting, a share ratio of 2.2:1 was applied to the 2013 Incentive Plan. This ratio takes two and two tenths-tenths shares out of the 2013 Plan for every one full value share granted. During fiscal 2018,2021, a total of 2.52.3 million shares were adjusted out of the 2013 Plan. Shares subject to stock option grants that expire or are canceled, without delivery of such shares, generally become available for re-issuance under equity incentive plans. At December 29, 2018, a total of 1.7 million shares of our common stock were available for future purchases under the 2012 ESPP. On March 10, 2015, in conjunction with the acquisition of Silicon Image, we assumed certain outstanding stock option and RSU grants of the Silicon Image Equity Incentive Plans. We assumed all stock option grants that were unvested or vested and out-of-the-money and all outstanding unvested RSU grants. The exchange ratio for the conversion was 1.09816 for all grants. The conversion ratio was determined by the weighted average closing price of Lattice common stock for the ten days prior to the acquisition date divided by the offer price of $7.30. The converted outstanding option grants totaled 2,087,605 shares and converted RSU grants totaled 2,025,255 shares as of March 10, 2015. As of December 29, 2018, 76,449 options and 2,223 RSU shares arising from this conversion remained outstanding.

Stock-Based Compensation

Expense

Total stock-based compensation expense included in our Consolidated Statements of Operations is presented in the following table:

		Year Ended
(In thousands)		December 29, 2018				December 30, 2017				December 31, 2016
Cost of products sold		$	940			$	795			$	888
Research and development		4,357				5,245				7,928
Selling, general, and administrative		8,349				6,503				7,397
Total stock-based compensation		$	13,646			$	12,543			$	16,213

The stock-based compensation expense included in Selling, general,

		Year Ended
		January 1,				January 2,				December 28,
(In thousands)		2022				2021				2019
Cost of revenue		$	3,049			$	3,179			$	1,422
Research and development			14,563				10,124				5,640
Selling, general, and administrative			28,863				27,069				11,837
Total stock-based compensation		$	46,475			$	40,372			$	18,899

ESPP and administrative expense for fiscal 2018 includes approximately $1.4 million of additional one-time expense for acceleration of stock compensation under the CEO separation agreement executed with our former CEO during the first quarter of fiscal 2018.

ASC 718, “Compensation-Stock Compensation (“ASC 718”),” requires that we recognize compensation expense for only the portion of employee and director options and ESPP rights that are expected to vest.

Stock Options

The fair values of each option award on the date of grant and of the shares expected to be issued under the employee stock purchase plan areand of each option award on the date of grant were estimated using the Black-Scholes valuation model and the assumptions noted in the following table.No new stock options were granted during fiscal 2021,2020, or 2019. The expected volatility of both ESPP shares and stock options is based on the daily historical volatility of our stock price, measured over the ESPP purchase period or the expected term of the option. The risk-free interest rate is based on the implied yield on a U.S. Treasury zero-coupon issue with a remaining term closest to the expected term of the option. The expected term is based on historical vested option exercises and includes an estimate of the expected term for options that are fully vested and outstanding. The expected volatility of both stock options and ESPP shares is based on the daily historical volatility of our stock price, measured over the expected term of the option or the ESPP purchase period. The risk-free interest rate is based on the impliedDividend yield on a U.S. Treasury zero-coupon issue with a remaining term closest to the expected term of the option. The dividend yield reflects thathas no valuation impact, as we have not paid any cash dividends since inception and do not intend to pay any cash dividends in the foreseeable future.

The following table summarizes the assumptions used in the valuation of stockESPP compensation for the periods presented:

		Year Ended
		January 1,			January 2,			December 28,
		2022			2021			2019
Employee Stock Purchase Plan
Weighted average expected volatility		39.9%			48.2%			31.6%
Weighted average risk-free interest rate		0.07%			0.89%			2.51%
Expected term (in months)		6			6			6

The weighted average fair values for the ESPP, calculated using the Black-Scholes option pricing model with the noted assumptions for the ESPP, were $13.04, $6.62, and ESPP compensation:

	Year Ended
	December 29, 2018		December 30, 2017		December 31, 2016
Employee and Director Stock Options
Expected volatility	39.87% to 41.11%		40.96% to 48.01%		44.2% to 50.8%
Risk-free interest rate	2.29% to 2.78%		1.99% to 2.09%		.94% to 2.06%
Expected term (years)	4.08 to 4.25		4.08 to 4.25		4.06 to 4.78
Employee Stock Purchase Plan *
Weighted average expected volatility	36.4%		—%		57.9%
Weighted average risk-free interest rate	1.61%		—%		0.43%
Expected term	6 months		n/a		6 months
* ESPP suspended during fiscal 2017 only

$1.69 for fiscal years 2021, 2020, and 2019, respectively.

At December 29, 2018, January 1, 2022, there was $6.8 million of total0 unrecognized compensation cost related to unvested employee and director stock options, which is expected to be recognized over a weighted average period of 2.3 years. Our current practice is to issue new shares to satisfy option exercises.options. Compensation expense for all stock-based compensation awards is recognized using the straight-line method. In fiscal 2021, 2020, and 2019, we recorded stock compensation expense of approximately $1.2 million, $1.0 million, and $0.5 million, respectively, related to the ESPP, and approximately $1.0 million, $2.0 million, and $2.4 million, respectively, related to stock options.

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The following table summarizes our stock option activity and related information for the year ended December 29, 2018:

(Shares and aggregate intrinsic value in thousands)	Shares			Weighted average exercise price				Weighted average remaining contractual term (years)		Aggregate Intrinsic Value
Balance, December 30, 2017	12,939			$	5.76
Granted	843			7.61
Exercised	(4,882	)		5.79
Forfeited or expired	(2,284	)		5.87
Balance, December 29, 2018	6,616			$	5.94
Vested and expected to vest at December 29, 2018	6,616			$	5.94			4.26		$	6,788
Exercisable, December 29, 2018	3,122			$	5.70			2.82		$	3,668

January 1, 2022:

(Shares and aggregate intrinsic value in thousands)		Shares				Weighted average exercise price				Weighted average remaining contractual term (years)				Aggregate Intrinsic Value
Balance, January 2, 2021			2,200			$	6.40
Granted			0				0
Exercised			(822	)			6.02
Forfeited or expired			(11	)			5.73
Balance, January 1, 2022			1,367			$	6.62
Vested and expected to vest at January 1, 2022			1,367			$	6.62				2.92			$	96,315
Exercisable, January 1, 2022			1,367			$	6.62				2.92			$	96,315

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company's closing stock price on the last trading day of the fiscal year and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on that day. This amount changes based on the fair market value of the Company's stock. Total intrinsic value of options exercised for fiscal 2018, 2017,2021, 2020, and 20162019 was $6.5$44.7 million, $2.2$21.5 million, and $3.3$17.8 million, respectively. The total fair value of options and RSUs vested and expensed in fiscal 2018, 2017, and 2016 was $13.0 million, $12.5 million, and $15.6 million, respectively.

The resultant grant date weighted-average fair values for stock options granted, calculated using the Black-Scholes option pricing model with the noted assumptions for stock options, were $2.73, $2.02 and $2.14 for fiscal years 2018, 2017 and 2016, respectively. The weighted average fair values for the ESPP, calculated using the Black-Scholes option pricing model with the noted assumptions for the ESPP, were $1.50 and $1.82 for fiscal years 2018 and 2016, respectively.

Time-Based Restricted Stock Unit Awards

The following table summarizes the activity for our RSU activitytime-based RSUs for the year ended December 29, 2018:

(Shares in thousands)	Shares			Weighted average grant date fair value
Balance, December 30, 2017	2,766			$	5.85
Granted	3,498			8.02
Vested	(1,124	)		5.97
Forfeited or expired	(728	)		5.90
Balance, December 29, 2018	4,412			$	7.53

January 1, 2022:

(Shares in thousands)		Shares				Weighted average grant date fair value
Balance, January 2, 2021			2,998			$	16.76
Granted			1,176				56.29
Vested			(1,392	)			14.66
Forfeited or expired			(98	)			19.71
Balance, January 1, 2022			2,684			$	35.06

At December 29, 2018 January 1, 2022, there was $31.6$62.4 million of total unrecognized compensation costexpense related to unvested time-based RSUs. Our current practice is to issue new shares when RSUs vest. Compensation expense for RSUs is recognized using the straight-line method over the related vesting period.

In fiscal years 20162021, 2020, and 2019, we recorded stock compensation expense related to time-based RSUs of approximately $21.7 million, $16.6 million, and $10.3 million, respectively.

Market-Based and Performance-Based Awards

In 2019 through 2018,2021, we granted stock options andawards of RSUs with either a market condition or a performance condition to certain executives. The market condition is a comparison

Market-Based and Performance-Based Awards — Grants

In the first quarters of the Company's relative Total Shareholder Return ("TSR") when compared to the TSRfiscal 2021 and 2020, we granted awards of a component of companies of the PHLX Semiconductor Sector Index over a measurement period. TSR is a measure of stock price appreciation plus dividends paid, if any, in the performance period. We determined and fixed the fair value of the awardsRSUs with a market condition to certain executives. Under the terms of these grants, the RSUs with a market condition vest over a three-year period based on the Company’s total shareholder return ("TSR") relative to the Russell 2000 index, which condition is measured for the 2021 grants on the third anniversary of the grant date, and measured for one-half of the 2020 grants on the second and third anniversary of the grant usingdate. The awards may vest at 250% or 200%, depending upon the executive, if the 75th percentile of the market condition is achieved, with 100% of the units vesting at the 55th percentile, zero vesting if relative TSR is below the 25th percentile, and vesting scaling for achievement between the 25th and 75th percentile.

In the first quarter of fiscal 2021, we also granted awards of RSUs with a lattice-based option-pricing model. The valuationperformance condition to certain executives, to specifically drive additional executive attention and focus on the Company’s revenue growth priorities. Under the terms of these awards incorporated a Monte-Carlo simulation, and considered the likelihood that we would achieve the market condition. The performance condition is based upon the Company’s generating specified “adjusted” EBITDA levels on a trailing four-quarter basis in any two consecutive trailing four-quarter periods. We valuedgrants, the RSUs with a performance condition using the market price on the day of grant.

The options with a market condition granted in fiscal years 2016 and 2017 have a two year vesting period andwill vest between 0% and 200% of the target amount, based on the Company's relative TSR when compared to the TSRCompany generating specified levels of a component of companies of the PHLX Semiconductor Sector Index over a two year period. Under the termsyear-over-year revenue growth, which will be measured annually for one-fourth of the grants executives will receiveafter each fiscal year-end through the target amount ifend of fiscal 2024. Vesting of these awards scales for achievement of year-over-year revenue growth compared to certain targets, with maximum vesting up to 200%. Vesting of these awards occurs 13 months after the Company’s TSR relative to thatend of each measurement period and the Index achieves or exceeds the 50^th percentile. Executives may receive 200% if the Company’s TSR exceeds the 75^th percentile. No vesting occurs if the Company’s TSR does not exceed the 25^th percentile.entire award cannot be fully earned until five years from grant.

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In September 2018,fiscal 2019, we granted inducement awards outside of, but subject to the terms and conditions of the 2013 Incentive Plan to our incoming President and Chief Executive Officer.certain executives consisting of RSUs with a market condition. These awards included restricted stock units that vest and become payable upon satisfaction of certain market and performance conditions. The market and performance conditions include TSR and Adjusted EBITDA targets, respectively. The TSR-based awards vest and become payable over a three-yearthree-year period based on the Company’s TSR relative to the PHLX Semiconductor Sector Index, with either 250% or 200% of the units vesting at the 75th percentile, depending upon the executive, 100% of the units vesting at the 50th percentile and 250% of the units vesting at the 75th percentile achievement, zero vesting if relative TSR is below the 25th percentile, and vesting scaling linearly for achievement between the 25th and 75th percentile. The Adjusted EBITDA-based awards will vest and become payable based upon the Company’s generating specified “adjusted” EBITDA levels on a trailing four quarter basis in any two consecutive trailing four-quarter periods.

In September 2018,Prior to fiscal 2019, we granted inducement awards outside of, but subject to the terms and conditions of the 2013 Incentive Plan to our incoming Corporate Vice PresidentChief Executive Officer consisting of ResearchRSUs with a performance condition. These awards vest based upon the Company’s achievement of Adjusted EBITDA targets on a trailing four quarter basis in any two consecutive trailing four-quarter periods.

Market-Based and Development, and wePerformance-Based Awards — Vesting

During the first quarter of fiscal 2021, the market condition for awards granted awards from the 2013 Incentive Plan to certain executives including our incoming Corporate Vice Presidentin the first quarter of Marketingfiscal 2019 exceeded the 75th percentile of their TSR condition, and Strategythe second tranche of these awards vested at 200%. During the third and our Corporate Vice Presidentfourth quarters of fiscal 2021, the market condition for awards granted to certain executives in previous years exceeded the 75th percentile of their TSR condition, and General Counsel. Thesethe second and third tranches of these awards included restricted stock units that would vestvested at 250% or 200%, as applicable for the respective executive.

As of the end of the second and become payable upon achievementthird quarters of fiscal 2021, the second and third tranches, respectively, each 33.3% of the base number of the awards with an EBITDA performance condition vested, as the Company had met the adjusted EBITDA performance criteria on a target TSR. Thetrailing four-quarter basis for two consecutive trailing four-quarter periods as of the end of the respective previous quarters. As of January 1, 2022, the Company had met the next adjusted EBITDA performance criteria on a trailing four-quarter basis for two consecutive trailing four-quarter periods, and the fourth tranche of the awards vestwith an EBITDA performance condition qualified for vesting at 40% of the base number.

During the first quarter of fiscal 2020, the market condition for awards granted to certain executives in the first quarter of fiscal 2019 exceeded the 75th percentile of their TSR condition, and become payable overthe first tranche of these awards vested at 200%. As of the end of the first quarter of fiscal 2020, the first tranche of 33.3% of the base number of the awards with an EBITDA performance condition vested, as the Company had met the adjusted EBITDA performance criteria on a three-year period based ontrailing four-quarter basis for two consecutive trailing four-quarter periods as of the end of the previous quarter. During the third and fourth quarters of fiscal 2020, the market condition for awards granted in previous years exceeded the 75th percentile of the condition, and one-third of these awards vested at 250% or 200%, as applicable for the respective executive.

Market-Based and Performance-Based Awards — Compensation Expense

During the first quarter of fiscal 2020, the Board of Directors approved a modification to the market condition measurement periods associated with the unvested portions of certain of the Company’s TSR relativeawards with a market condition that were granted prior to fiscal 2020. The modification extended the duration of the measurement period by adjusting the beginning date of each measurement period to the PHLX Semiconductor Sector Index,original grant date, resulting in approximately $1.8 million additional stock compensation expense during the first quarter of fiscal 2020.

For our awards with 100%a market condition or a performance condition, we incurred stock compensation expense, including the effect of the units vestingmodification in the first quarter of fiscal 2020, of approximately $22.1 million, $20.8 million, and $5.7 million in fiscal years 2021, 2020, and 2019, respectively. At January 1, 2022, there was $25.3 million of unrecognized compensation expense related to unvested RSUs with a market condition or a performance condition. Awards with a TSR market condition were valued using a Monte Carlo simulation model.

The following table summarizes the assumptions used at the 50th percentile and 200%grant date in the valuation of the units vesting at the 75th percentile achievement, zero vesting if relative TSR is below the 25th percentile, and vesting scaling linearly for achievement between the 25th and 75th percentile.RSUs with a market or performance condition:

		Year Ended
		January 1,			January 2,			December 28,
		2022			2021			2019
Executive RSUs with a market condition or performance condition
Weighted average expected volatility		50.37% to 52.11%			42.38%			40.15% to 41.10%
Weighted average risk-free interest rate		0.22% to 0.77%			1.40%			1.66% to 2.55%
Expected term (years)		3.00 to 5.00			3.00			3.00

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The following table summarizes the activity for our stock options and RSUs with a market or performance condition:

(Shares in thousands)		Unvested			Vested			Total
Balance, December 30, 2017		707			83			790
Granted		788			—			788
Vested		(31	)		31			—
Exercised		—			(104	)		(104	)
Canceled		(555	)		(10	)		(565	)
Balance, December 29, 2018		909			—			909

We incurred stock compensation expense related to these stock option and RSU awards with a market condition or performance conditioncondition:

(Shares in thousands)		Shares				Weighted average grant date fair value
Balance, January 2, 2021			1,021			$	20.42
Granted			630				57.29
Effect of vesting multiplier			479				0
Vested			(884	)			13.87
Balance, January 1, 2022			1,246			$	41.23

Note 12 - Common Stock Repurchase Program

On February 19, 2021, our Board of Directors approved a stock repurchase program pursuant to which up to $60.0 million of outstanding common stock could be repurchased from time to time (the "2021 Repurchase Program"). The duration of the 2021 Repurchase Program is twelve months. Under the 2021 Repurchase Program during the fourth quarter of fiscal 2021, we repurchased approximately 60,800 shares for approximately $4.9 million, or an average price paid per share of $80.55. As of January 1, 2022, the amount authorized for the twelve-month 2021 Repurchase Program had been fully utilized. All repurchases were open market transactions funded from available working capital. All shares repurchased pursuant to the 2021 Repurchase Program were retired by the end of the 2021 fiscal year.

On November 8, 2021, we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to an additional $100.0 million of outstanding common stock could be repurchased from time to time (the "2022 Repurchase Program"). The duration of the 2022 Repurchase Program is through the end of December 2022. Under the 2022 Repurchase Program during the fourth quarter of fiscal 2021, we repurchased approximately 125,400 shares for $10.1 million, or an average price paid per share of $80.55. As of January 1, 2022, the remaining portion of the amount authorized for the 2022 Repurchase Program is approximately $89.9 million. All repurchases were open market transactions funded from available working capital. All shares repurchased pursuant to the 2022 Repurchase Program were retired by the end of the 2021 fiscal year.

Note 13 - Income Taxes

We are subject to federal and state income tax as well as income tax in the various foreign jurisdictions in which we operate.

The domestic and foreign components of Income before income taxes were as follows:

		Year Ended
		January 1,				January 2,				December 28,
(In thousands)		2022				2021				2019
Domestic		$	24,003			$	11,772			$	33,417
Foreign			73,623				36,684				11,648
Income before taxes		$	97,626			$	48,456			$	45,065

The components of Income tax expense are as follows:

		Year Ended
		January 1,				January 2,				December 28,
(In thousands)		2022				2021				2019
Current:
Federal		$	445			$	54			$	499
State			45				68				45
Foreign			1,538				1,025				1,345
			2,028				1,147				1,889
Deferred:
Federal			0				0				0
State			0				0				0
Foreign			(324	)			(83	)			(317	)
			(324	)			(83	)			(317	)
Income tax expense		$	1,704			$	1,064			$	1,572

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Income tax expense differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax income as a result of the following differences:

		Year Ended
		January 1,			January 2,			December 28,
		2022			2021			2019
		%			%			%
Statutory federal rate		21			21			21
Adjustments for tax effects of:
State taxes, net		(4)			(4)			3
Federal tax credits		(3)			(3)			3
Excess tax benefit for stock compensation		(8)			(10)			(6)
Foreign rate differential		(14)			(12)			(2)
U.S. tax on foreign operations		3			15			0 —
Foreign withholding taxes		1			3			3
Capital loss expiration		3			0 —			1
Other deferred tax asset adjustment		—			3			—
Valuation allowance		8			(13)			(19)
Change in uncertain tax benefit accrual		(5)			2			—
Effective income tax rate		2			2			4

We updated our evaluation of the valuation allowance position in the United States through January 1, 2022 and concluded that we should continue to maintain a full valuation allowance against the net federal and state deferred tax assets. In making this evaluation, we exercised significant judgment and considered estimates about our ability to generate revenue and taxable profits sufficient to offset expenditures in future periods within the United States. We will continue to evaluate both positive and negative evidence in future periods to determine if we will realize the net deferred tax assets. We don't have a valuation allowance in any foreign jurisdictions as we have concluded it is more likely than not that we will realize the net deferred tax assets in future periods.

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

(In thousands)		January 1, 2022				January 2, 2021
Deferred tax assets:
Intangible assets		$	8,236			$	10,082
Net operating loss carry forwards			88,254				87,443
Tax credit carry forwards			93,095				83,534
Accrued expenses and reserves			6,590				5,464
Stock-based and deferred compensation			4,477				3,851
Other			6,615				9,493
Total deferred tax assets			207,267				199,867
Less: valuation allowance			(200,438	)			(192,478	)
Net deferred tax assets			6,829				7,389
Deferred tax liabilities:
Fixed assets			2,379				2,809
Unremitted earnings			2,128				1,746
Other			9,969				4,003
Total deferred tax liabilities			14,476				8,558
Net deferred taxes		$	(7,647	)		$	(1,169	)
Reported as:
Deferred tax assets (included in Other long-term assets)		$	953			$	577
Deferred tax liabilities (included in Other long-term liabilities)			(8,600	)			(1,746	)
Net deferred taxes		$	(7,647	)		$	(1,169	)

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

Fiscal Years Ended		Balance at beginning				Charged (Credit) to costs and				Charged (credit) to other				Balance at end of
(in thousands)		of period				expenses				accounts				period
January 1, 2022		$	192,478			$	7,960			$	0			$	200,438
January 2, 2021		$	198,499			$	(6,021	)		$	0			$	192,478
December 28, 2019		$	207,108			$	(8,609	)		$	0			$	198,499

At January 1, 2022, we had U.S. federal net operating loss ("NOL") carryforwards (pretax) of approximately $0.9$361.5 million, $0.5of which $345.4 million expire at various dates between 2022 and 2037, and the remaining do not expire. We had state NOL carryforwards (pretax) of approximately $152.8 million that substantially all expire at various dates from 2022 through 2037. We also had federal credit carryforwards of $55.3 million that expire at various dates from 2022 through 2041, and $68.9 million state credit carryforwards, of which substantially all do not expire.

Future utilization of federal and state net operating losses and tax credit carry forwards may be limited if cumulative changes to ownership exceed 50% within any three-year period, which has not occurred through fiscal 2021. However, if there is a significant change in ownership, future tax attribute utilization may be limited and NOL carryforwards and/or R&D credits will be reduced to reflect the limitation.

Foreign earnings may be subject to withholding taxes in local jurisdictions if they are distributed. At January 1, 2022, U.S. income taxes and foreign withholding taxes were not provided for on a cumulative total of approximately $3.2 million of the undistributed earnings of our foreign subsidiaries. We intend to reinvest these earnings indefinitely.

At January 1, 2022 and January 2, 2021, our unrecognized tax benefits associated with uncertain tax positions were $56.2 million and $0.8$55.7 million, respectively, of which $54.0 million and $53.6 million, respectively, if recognized, would affect the effective tax rate, subject to valuation allowance. As of January 1, 2022 and January 2, 2021, interest and penalties associated with unrecognized tax benefits were $9.6 million and $9.1 million, respectively, which are not reflected in the table below. We accrue interest and penalties related to uncertain tax positions in Income tax expense.

The following table summarizes the changes to unrecognized tax benefits for the fiscal years 2018, 2017,presented:

		(in thousands)
Balance at December 29, 2018		$	58,285
Additions based on tax positions related to the current year			238
Additions based on tax positions of prior years			1,084
Reduction for tax positions of prior years			(213	)
Reduction as a result of lapse of applicable statute of limitations			(2,432	)
Balance at December 28, 2019			56,962
Additions based on tax positions related to the current year			548
Additions based on tax positions of prior years			628
Reductions for tax positions of prior years			0
Reduction as a result of lapse of applicable statute of limitations			(2,401	)
Balance at January 2, 2021			55,737
Additions based on tax positions related to the current year			1,156
Additions based on tax positions of prior years			1,130
Additions due to acquisition			977
Settlements			(51	)
Reduction as a result of lapse of applicable statute of limitations			(2,718	)
Balance at January 1, 2022		$	56,231

Our liability for uncertain tax positions (including penalties and 2016,interest) was $21.6 million and $22.3 million at January 1, 2022 and January 2, 2021, respectively, whichand is recorded as a component of total stock-based compensation expense.

Other long-term liabilities on our Consolidated Balance Sheets. The following table summarizesremainder of our uncertain tax position exposure of $44.2 million and $42.5 million at January 1, 2022 and January 2, 2021, respectively, is netted against deferred tax assets.

At January 1, 2022, it is reasonably possible that $0.8 million of unrecognized tax benefits and $0.1 million of associated interest and penalties could be recognized during the assumptions used innext twelve months.

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The years that remain subject to examination are 2017 for federal and state income taxes, and 2015 for foreign income taxes, including years ending thereafter. However, to the valuationextent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses or tax credits were generated and carried forward, and make adjustments up to the amount of stock optionsthe net operating losses or credit carryforward amount. Our Philippines 2019 and RSUs with a market or performance condition:2020 income tax returns are currently under examination.

	Year Ended
	December 29, 2018		December 30, 2017		December 31, 2016
Executive stock options with a market condition
Expected volatility	n/a		41%		46%
Risk-free interest rate	n/a		1.9%		1.1%
Expected term (years)	n/a		4.5		4.5
Executive RSUs with a market or performance condition
Expected volatility	41.06% to 41.74%		n/a		n/a
Risk-free interest rate	2.71% to 2.87%		n/a		n/a
Expected term (years)	3.00 to 3.16		n/a		n/a

Note 1814 - Employee Benefit Plans

Qualified Investment Plan

In 1990, we adopted a 401(k)401(k) tax-deferred savings plan, which provides participantsall employees in the United States who meet certain eligibility requirements with an opportunity to accumulate funds for retirement. Participants may contribute up to the amount allowable as a deduction for federal income tax purposes. The plan does not allow investments in the Company's common stock. The plan allows for the Company to make discretionary matching contributions in cash. We recorded matching contributions of approximately $0.6$2.6 million, $0.8$2.4 million, and $0.9$0.8 million in fiscal years 2018, 2017,2021, 2020, and 2016,2019, respectively.

2018

Cash Incentive Plan

On January 8, 2018,Plans

For 2021, 2020, and 2019, the Board of Directors of the Company, upon the recommendation of the Compensation Committee, the Board of Directors of the Company approved the 2018 Cash Incentive Plan (the “2018 Cash Plan”“Cash Plans”). for the respective fiscal year. The chief executive officer, other executive officers, and other members of senior management, including vice presidents and director-level employees, together with all other employees of the Company not on the Company's sales incentive plan are eligible to participate in the 2018 Cash Plan.Plans. Under the 2018 Cash Plan,Plans, individual cash incentive payments for the eligible employees will be based both on Company financial performance, as measured by achievement of operating income (before incentive plan accruals) and revenue goals within specified ranges established by the Compensation Committee, and Company performance, as measured by the achievement of personal management objectives. The Compensation Committee determines the performance of the chief executive officer, the chief financial officer and other participants based on the achievement of the management objectives established by the Compensation Committee during the first fiscal quarter of 2018. There was $5.9the respective fiscal year. We recorded approximately $18.0 million, $7.9 million, and $5.8 million of expense recorded under this planthe Cash Plans in fiscal 2018.

2017 Cash Incentive Plan

On December 20, 2016, upon the recommendation of the Compensation Committee, the Board of Directors of the Company approved the 2017 Cash Incentive Plan (the “2017 Cash Plan”). The chief executive officer, other executive officers,2021, 2020, and other members of senior management, including vice presidents and director-level employees, together with all other employees of the Company not on the Company's sales incentive plan are eligible to participate in the 2017 Cash Plan. Under the 2017 Cash Plan, individual cash incentive payments for the eligible employees will be based both on Company financial performance, as measured by achievement of operating income (before incentive plan accruals) and revenue goals within specified ranges established by the Compensation Committee, and Company performance, as measured by the achievement of personal management objectives. The Compensation Committee determines the performance of the chief executive officer, the chief financial officer and other participants based on the achievement of the management objectives established by the Compensation Committee during the first fiscal quarter of 2017. There was $7.2 million of expense recorded under this plan in fiscal 2017.2019, respectively.

2016 Cash Incentive Plan

On December 21, 2015, upon the recommendation of the Compensation Committee, the Board of Directors of the Company approved the 2016 Cash Incentive Plan (the “2016 Cash Plan”). The chief executive officer, other executive officers, and other members of senior management, including vice presidents and director-level employees, together with all other employees of the Company not on the Company's sales incentive plan are eligible to participate in the 2016 Cash Plan. Under the 2016 Cash Plan, individual cash incentive payments for the eligible employees will be based both on Company financial performance, as measured by achievement of operating income (before incentive plan accruals) and revenue goals within specified ranges established by the Compensation Committee, and Company performance, as measured by the achievement of personal management objectives. The Compensation Committee determines the performance of the chief executive officer, the chief financial officer and other participants based on the achievement of the management objectives established by the Compensation Committee during the first fiscal quarter of 2016. There was $4.7 million of expense recorded under this plan in fiscal 2016.

Note 1915 - Contingencies

Legal Matters

On or about December 19, 2018, Steven A.W. De Jaray, Perienne De Jaray and Darrell R. Oswald (collectively, the “Plaintiffs”) commenced an action against the Company and several unnamed defendants in the Multnomah County Circuit Court of the State of Oregon, in connection with the sale of certain products by the Company to defendantsthe Plaintiffs in or around 2008. The Plaintiffs allege that the Companywe violated theThe Lanham Act, engaged in negligence and fraud by failing to disclose to purchaserthe Plaintiffs the export-controlled status of the subject parts. The Plaintiffs seek damages of $138 million, treble damages, and other remedies. In January 2019, the Companywe removed the action to the United States District Court for the District of Oregon. At this stage of the proceedings, the Company does we do not have an estimate of the likelihood or the amount of any potential exposure to the Company; however, the Company believeswe believe that these claims are without merit and intendsintend to vigorously defend the action. See “Litigation and unfavorable results of legal proceedings could adversely affect our financial condition and operating results” in “Risk Factors” in Item 1A of Part I of this Annual Report on Form 10-K.

From time to time, we are exposed to certain additional asserted and unasserted potential claims. Periodically, weWe review the status of each significant matter and assess its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and a range of possible losses can be estimated, we then accrue a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based only on the best information available at the time. As additional information becomes available, we reassess the potential liability related to pending claims and litigation and may revise estimates.

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Note 20 - Valuation and Qualifying Accounts

The following table displays the activity related to changes in our valuation and qualifying accounts:

(In thousands)	Balance at beginning of period				Charged (Credit) to costs and expenses				Charged (credit) to other accounts				Settlements & write-offs net of recoveries				Balance at end of period
Fiscal year ended December 29, 2018
Valuation allowance for deferred tax assets	209,691				(2,583		)		—				—				207,108
Allowance for doubtful accounts	9,371				1				73				(9,248		)		197
Allowance for warranty expense	255				580				—				(482		)		353
	$	219,317			$	(2,002	)		$	73			$	(9,730	)		$	207,658
Fiscal year ended December 30, 2017
Valuation allowance for deferred tax assets	$	260,687			$	(50,960	)		$	(36	)		$	—			$	209,691
Allowance for doubtful accounts	9,299				3				38				31				9,371
Allowance for warranty expense	352				100				—				(197		)		255
	$	270,338			$	(50,857	)		$	2			$	(166	)		$	219,317
Fiscal year ended December 31, 2016
Valuation allowance for deferred tax assets	$	252,578			$	7,450			$	659			$	—			$	260,687
Allowance for doubtful accounts	621				7,362				2,284				(968		)		9,299
Allowance for warranty expense	370				216				—				(234		)		352
	$	253,569			$	15,028			$	2,943			$	(1,202	)		$	270,338

Note 21 - Segment and Geographic Information

Segment Information

As of December 29, 2018, we had one operating segment: the core Lattice business, which includes semiconductor devices, evaluation boards, development hardware, and related intellectual property licensing, services, and sales. Qterics, a discrete software-as-a-service business unit, was previously an immaterial operating segment in the Lattice legal entity structure prior to the sale of Qterics in April 2016.

Geographic Information

Our revenue by major geographic area, based on ship-to location of the end customer, where available, and ship-to location of distributor otherwise, is presented in the following table:

		Year Ended
(In thousands)		December 29, 2018						December 30, 2017						December 31, 2016
United States:		$	38,585			10%		$	48,315			13%		$	51,752			12%
China*		202,983				51		193,590				50		186,865				44
Europe		45,546				11		44,547				12		59,835				14
Japan		44,033				11		42,286				11		49,080				12
Taiwan		16,124				4		14,846				4		31,322				7
Other Asia*		34,979				9		26,916				7		37,826				9
Other Americas		16,549				4		15,461				4		10,374				3
Total foreign revenue		360,214				90		337,646				87		375,302				88
Total revenue		$	398,799			100%		$	385,961			100%		$	427,054			100%

* During 2017, we realigned our geographic categories to group Hong Kong with China rather than with Other Asia. Prior periods have been

reclassified to match current period presentation.

Our Property and equipment, net by country at the end of each period was as follows:

(In thousands)	December 29, 2018				December 30, 2017				December 31, 2016
United States	$	27,353			$	30,338			$	30,532
China	2,360				4,632				10,617
Philippines	3,319				3,883				4,928
Taiwan	949				958				2,310
Japan	324				313				637
Other	578				299				457
Total foreign property and equipment, net	7,530				10,085				18,949
Total property and equipment, net	$	34,883			$	40,423			$	49,481

Note 22 - Quarterly Financial Data (Unaudited)

A summary of the Company's consolidated quarterly results of operations is as follows:

		2018																2017 *
(In thousands, except per share data)		Q4				Q3				Q2				Q1				Q4				Q3				Q2				Q1
Revenue		$	95,977			$	101,484			$	102,715			$	98,623			$	95,266			$	91,971			$	94,137			$	104,587
Gross margin		54,306				58,364				50,248				56,521				51,216				53,322				51,209				60,832
Restructuring charges		11,854				90				4,376				1,029				2,483				3,071				1,576				66
Net (loss) income		$	(7,121	)		$	6,974			$	(20,223	)		$	(5,952	)		$	(7,213	)		$	(43,052	)		$	(13,022	)		$	(7,275	)
Net (loss) income per share - basic and diluted		$	(0.05	)		$	0.05			$	(0.16	)		$	(0.05	)		$	(0.06	)		$	(0.35	)		$	(0.11	)		$	(0.06	)

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

Report of Independent Registered Public Accounting Firm

The

To the Stockholders and the Board of Directors and Stockholders

of Lattice Semiconductor Corporation:

Corporation

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Lattice Semiconductor Corporation and subsidiaries (the Company) as of December 29, 2018January 1, 2022 and December 30, 2017,January 2, 2021, the related consolidated statements of operations, comprehensive loss,income, stockholders’ equity and cash flows for each of the two years in the three-year period ended December 29, 2018January 1, 2022, and the related notes (collectively referred to as the consolidated“consolidated financial statements)statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 29, 2018at January 1, 2022 and December 30, 2017,January 2, 2021, and the results of its operations and its cash flows for each of the two years in the three-year periodperiods ended December 29, 2018,January 1, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’sCompany's internal control over financial reporting as of December 29, 2018,January 1, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 26, 201923, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for revenue recognition in 2018, due to the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) and related amendments.

thereon.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidatedthe Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

		Inventory Valuation
Description of the Matter		The Company's net inventory totaled $67.6 million as of January 1, 2022. As explained in “Note 1 - Basis of Presentation and Significant Accounting Policies” within the consolidated financial statements, the Company records inventory at the lower of cost or net realizable value, and writes down inventories to net realizable value if it is obsolete or if quantities are in excess of projected customer demand.
		Auditing management’s estimates of excess and obsolete inventory was challenging because the estimate is judgmental and considers a number of factors that are affected by market and economic conditions that are outside of the Company’s control. In particular, excess and obsolete inventory calculations are sensitive to significant assumptions that relate to projected customer demand for the Company’s products.
How We Addressed the Matter in Our Audit		We evaluated and tested the design and operating effectiveness of the Company's internal controls over the calculation of excess and obsolete inventory, including the determination of projected customer demand and related application against on-hand inventory.
		Our audit procedures included, among others, evaluating the significant assumptions stated above and the underlying data used in management's excess and obsolete inventory assessment. We evaluated inventory levels compared to projected customer demand, historical sales, and specific product considerations. We also assessed the historical accuracy of management's estimates and performed sensitivity analyses to evaluate the changes in inventory valuation that would result from changes in significant assumptions.

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		Business Combinations
Description of the Matter		The Company acquired 100% of the outstanding shares of Mirametrix, Inc. for total consideration of $68.5 million. As explained in “Note 6 – Business Combination and Goodwill” within the consolidated financial statements, the transaction was accounted for as a business combination.
		Auditing management’s accounting for the Mirametrix acquisition was complex and required judgment due to the significant estimation applied by management to determine the fair value of the acquired intangible assets, which consist primarily of existing technology of $13.5 million and customer relationships of $9.8 million. The estimation of the fair values of the intangible assets required the use of valuation techniques including primarily the income approach. Significant assumptions used to estimate the fair value of these intangible assets included revenue growth rates, operating expenses, technology obsolescence, customer attrition, and discount rates. These assumptions are forward-looking and could be affected by future economic and market conditions.
How We Addressed the Matter in Our Audit		We evaluated and tested the design and operating effectiveness of the Company's internal controls over the Company's accounting for acquisitions. For example, we tested controls over management's review of the valuation of acquired intangible assets, including the review of the valuation models and significant assumptions used in the valuation models.
		To test the estimated fair value of these intangible assets, our audit procedures included, among others, evaluating the Company's valuation methodology, evaluating the significant assumptions used by the Company and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. For example, we compared the significant assumptions used to current industry, market, and economic trends, to the assumptions used to value similar assets in other acquisitions, and to the historical results of both the Company and the acquiree. We also involved our valuation specialists to assist with our evaluation of the methodology used by the company and significant assumptions included in the fair value estimates.

/s/ KPMGErnst & Young LLP

We have served as the Company's auditor since 2007.

Portland, Oregon

2020.

San Jose, California

February 26, 201923, 2022

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Report of Independent Registered Public Accounting Firm

The

To the Stockholders and the Board of Directors and Stockholders

of Lattice Semiconductor Corporation:

Corporation

Opinion on Internal Control Over Financial Reporting

We have audited Lattice Semiconductor Corporation and subsidiaries’ (the Company)Corporation’s internal control over financial reporting as of December 29, 2018,January 1, 2022, based on criteria established in Internal Control - Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.Commission (2013 framework) (the COSO criteria). In our opinion, the CompanyLattice Semiconductor Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 29, 2018,January 1, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheetssheet of the Company as of December 29, 2018January 1, 2022 and December 30, 2017,January 2, 2021, the related consolidated statements of operations, comprehensive loss,income, stockholders’ equity and cash flows for each of the two years in the three-year period ended December 29, 2018,January 1, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated February 26, 201923, 2022 expressed an unqualified opinion on those consolidated financial statements.

thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Overover Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also includedrisk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

San Jose, California

February 23, 2022

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Lattice Semiconductor Corporation:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows of Lattice Semiconductor Corporation and subsidiaries (the Company) for the year ended December 28, 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations of the Company and its cash flows for the year ended December 28, 2019, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ KPMG LLP

We served as the Company’s auditor from 2007 to 2020.

Portland, Oregon

February 24. 2020 except for Note 13, as to which the date is February 26, 20192021

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Item 9. Changes in and Disagreements with Accountants On Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

In connection with the filing of this Annual Report on Form 10-K, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 29, 2018.January 1, 2022. These disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that we accumulate and communicate correct information to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls are effective as of December 29, 2018.

January 1, 2022.

Management's Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) or 15d-15(f) under the Securities Exchange Act of 1934. The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding reliability of financial reporting and the preparation and fair presentation of published financial statements for external purposes in accordance with generally accepted accounting principles.

Our internal control over financial reporting includes those policies and procedures that:

(i)	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(ii)	(ii)	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

(iii)	(iii)	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations,

We do not expect that our disclosure controls and procedures or our internal control over financial reporting may notwill prevent or detect misstatements.all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met, and may not prevent or detect misstatements. Also, projectionsFurther, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any evaluationsystem of effectiveness tocontrols also is based in part upon certain assumptions about the likelihood of future periods are subject to the riskevents, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's internal control over financial reporting as of December 29, 2018.January 1, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013). Based on this assessment, management concluded that, as of December 29, 2018,January 1, 2022, the Company's internal control over financial reporting was effective.

KPMG

Ernst & Young LLP, our independent registered public accounting firm, has audited the Company's internal control over financial reporting and has issued its opinion on the effectiveness of the Company's internal control over financial reporting, which appears on page 8160 in this Annual Report on Form 10-K.

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RemediationTable of Previously Disclosed Material WeaknessContents

In Item 9A of Part II of our Annual report on Form 10-K for the year ended December 30, 2017, we disclosed a material weakness in internal control over financial reporting as a result of not conducting an effective risk assessment over significant unusual transactions and, as a result, not designing and implementing control activities over the accounting for those significant unusual transactions.

During fiscal 2018, we implemented new policies and procedures to enhance our risk assessment process to effectively design and implement control activities, including:

Timely reviews with the Controller and/or CFO regarding technical accounting conclusions to ensure an effective risk assessment is performed to identify and assess changes within the business and external environment that may impact financial reporting;

Routine Disclosure Committee meetings to highlight and identify unique or non-recurring transactions or events, the accounting for these matters and the associated relevant risk assessments;

Expansion of the Disclosure Committee membership to include representatives from the Executive Leadership Team; and

Continued risk assessment reviews, as warranted, with the Audit Committee.

Management has determined, through testing of our internal controls and procedures, that the remediation actions discussed above were effectively designed and demonstrated effective operation for a sufficient period of time to enable us to conclude that the material weaknesses has been remediated as of December 29, 2018.

Changes in Internal Control over Financial Reporting

Other than the remediation of the previously disclosed material weakness as described above, there

There were no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fourth quarter of fiscal 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We do not believe there has been any material impact to our internal controls over financial reporting notwithstanding that most of our employees are working remotely due to the COVID-19 pandemic. We continue to monitor and assess the COVID-19 situation on our internal controls to address any potential impact on their design and operating effectiveness.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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None.

PART III

---

Certain information required by Part III is incorporated by reference from our definitive proxy statement (the “Proxy Statement”) for the 20192021 Annual Meeting of Stockholders, pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, which we will file not later than 120 days after the end of the fiscal year covered by this report. With the exception of the information expressly incorporated by reference from the Proxy Statement, the Proxy Statement is not to be deemed filed as a part of this report.

Item 10. Directors, Executive Officers and Corporate Governance

Information regarding our directors that is required by this item is incorporated by reference from the information contained under the captions “Proposal 1: Election of Directors” and “Corporate Governance and Other Matters--Board Meetings and Committees” in the Proxy Statement. Information regarding our executive officers that is required by this item is incorporated by reference from the information contained under the caption "Executive Compensation--The Executive Officers of the Company” in the Proxy Statement.

Information regarding Section 16(a) reporting compliance that is required by this item is incorporated by reference from the information contained under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement.

We have adopted a Code of Conduct that applies to all of our employees, including our principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. The Code of Conduct is posted on our website at www.latticesemi.com. There were no changes towww.latticesemi.com. In fiscal 2021, we revised our Code of Conduct during fiscal 2018. by integrating certain standalone policies and providing clarifications on a variety of covered topics. Amendments to the Code of Conduct or any grant of a waiver from a provision of the Code of Conduct requiring disclosure under applicable SEC rules, if any, will be disclosed on our website at www.latticesemi.com.

www.latticesemi.com.

Information about our Corporate Governance Policies, our “Director Code of Ethics” and written committee charters for our Audit Committee, Compensation Committee, and Nominating and Governance Committee are available free of charge on the Company's website at www.latticesemi.com and are available in print to any shareholder upon request.

Information regarding our Audit Committee that is required by this Item is incorporated by reference from the information concerning our Audit Committee contained under the caption “Corporate Governance and Other Matters--Board Meetings and Committees” in the Proxy Statement.

Item 11. Executive Compensation

The information contained under the captions “Executive Compensation,” "Director Compensation," “Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report” in the Proxy Statement is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information contained under the captions “Security Ownership of Certain Beneficial Owners and Management” and "Equity Compensation Plan Information" in the Proxy Statement is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information contained under the captions entitled “Certain Relationships and Related Transactions” and “Corporate Governance and Other Matters--Director Independence” in the Proxy Statement is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

The information contained under the caption entitled “Proposal 5: Ratification of Appointment of Independent Registered Public Accounting Firm--Audit and Related Fees” in the Proxy Statement is incorporated herein by reference.

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PART IV

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Item 15. Exhibits

(a) List of Documents Filed as Part of this Report

(1) All financial statements

The following financial statements are filed as part of this report under Item 8.

Consolidated Financial Statements:	Page
Consolidated Balance Sheets	45
Consolidated Statements of Operations	4633
Consolidated Statements of Comprehensive LossIncome	4734
Consolidated Balance Sheets	35
Consolidated Statements of Cash Flows	36
Consolidated Statements of Stockholders' Equity	4837
Consolidated Statements of Cash Flows	49
Notes to Consolidated Financial Statements	5138

All other schedules have been omitted because the required information is included in the Consolidated Financial Statements or the notes thereto, or is not applicable or required.

(2) Exhibits

Exhibit Number		Description
Exhibit Number 3.1		Description
3.1		The Company’s Restated Certificate of Incorporation, filed, as amended on June 4, 2009 (Incorporated by reference to Exhibit 3.1 filed with the Company's Current Report on Form 8-K filed June 4, 2009).
3.2		The Company’s Bylaws, as amended as of November 3, 2016 (Incorporated by reference to Exhibit 3.2 filed with the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016).
10.1* 4.1		Lattice Semiconductor Corporation 1996 Stock Incentive Plan, as amended, and Related FormDescription of Option AgreementSecurities (Incorporated by reference to Exhibit 10.244.1 filed with the Company'sCompany’s Annual Report on Form 10-K for the fiscal year ended December 29, 2012)28, 2019).
10.2* 10.1*		2001 Stock Plan, as amended, and related Form of Option Agreement (Incorporated by reference to Exhibit 10.34 filed with the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2012).
10.3*		Form of Indemnification Agreement executed by each director and executive officer of the Company and certain other officers and employees of the Company and its subsidiaries (Incorporated by reference to Exhibit 10.41 filed with the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2004).
10.4* 10.2*		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).
10.5*		Form of Notice of Grant of Restricted Stock Units to Executive Officer (Incorporated by reference to Exhibit 99.1 filed with the Company’s Current Report on Form 8-K filed on February 8, 2007).
10.3*		Lattice Semiconductor Corporation 2012 Employee Stock Purchase Plan (incorporated by reference to Annex 1 to the Company's Definitive Proxy Statement on Schedule 14A for the 2012 Annual Meeting of Stockholders filed on April 12, 2012).
10.6*10.4*		Lattice Semiconductor Corporation 2011 Non-Employee Director Equity Incentive Plan. (Incorporated by reference to Exhibit 99.2 filed with the Company’s Registration Statement on Form S-8 filed June 25, 2019).
10.5*		Lattice Semiconductor Corporation 2013 Incentive Plan, as amended and restated (incorporated by reference to Annex A of the Company’s Definitive Proxy Statement filed with the Securities and Exchange Commission on March 23, 2020).
10.6		Credit Agreement by and among Lattice Semiconductor Corporation, as borrower, the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent. (Incorporated by reference to Exhibit 10.1 filed with the Company's Current Report on Form 8-K filed May 20, 2019).

*	Management contract or compensatory plan or arrangement required to be filed as an Exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) thereof.

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Exhibit Number			Description
10.7*			Lattice Semiconductor Corporation 2019 Cash Incentive Plan (incorporated by reference to Exhibit 10.14 filed with the Company’s Annual Report on Form 10-K filed on February 24, 2020).
10.8*			Lattice Semiconductor Corporation 2020 Cash Incentive Plan (incorporated by reference to Exhibit 10.9 filed with the Company’s Annual Report on Form 10-K filed on February 26, 2021).
10.9*			Lattice Semiconductor Corporation 2021 Cash Incentive Plan.
10.10*			Amended Employment Agreement, by and between Lattice Semiconductor Corporation and James R. Anderson, effective February 21, 2020. (Incorporated by reference to Exhibit 10.23 of the Company’s Annual Report on Form 10-K filed on February 24, 2020).
10.11*			Form of Amended Employment Agreement (Incorporated by reference to Exhibit 10.24 of the Company’s Annual Report on Form 10-K filed on February 24, 2020).
10.12*			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 for the fiscal year ended January 3, 2009).
10.7 10.13*			Employment Agreement, by and between Lattice Semiconductor Corporation and Stephen Douglass, effective September 4, 2018 (Incorporated by reference to Exhibit 10.2 filed with the Company’s Quarterly Report on Form 10-Q filed on October 29, 2018).
10.14*			Employment Agreement, by and between Lattice Semiconductor Corporation and Sherri Luther, effective January 2, 2019 (Incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on January 2, 2019).
10.15*			Employment Agreement, by and between Lattice Semiconductor Corporation and Esam Elashmawi, dated September 24, 2018 (Incorporated by reference to Exhibit 10.20 filed with the Company’s Annual Report on Form 10-K filed on February 26, 2019.).
10.16			Credit Agreement among Lattice Semiconductor Corporation, the Subsidiary Guarantors from time to time party thereto, the various Lenders from time to time party thereto, Jefferies Finance LLC as Administrative Agent, Jefferies Finance LLC and HSBC Securities (USA) Inc. as lead arrangers and book runners, Jefferies Finance LLC as syndication agent and HSBC Securities (USA) Inc. and ING Capital LLC as co-documentation agents (Incorporated by reference to Exhibit 10.1 filed with the Company's Current Report on Form 8-K filed March 11, 2015).
10.17

Exhibit Number		Description
10.8*		Lattice Semiconductor Corporation 2012 Employee Stock Purchase Plan (incorporated by reference to Annex 1 to the Company's Definitive Proxy Statement on Schedule 14A for the 2012 Annual Meeting of Stockholders filed on April 12, 2012).
10.9*		Lattice Semiconductor Corporation Amended 2011 Non-Employee Director Equity Incentive Plan, as amended (Incorporated by reference to Annex B to the Company's Definitive Proxy Statement on Schedule 14A filed on filed on April 10, 2018).
10.10*		Lattice Semiconductor Corporation 2013 Incentive Plan, as amended (Incorporated by reference to Annex A to the Company's Definitive Proxy Statement on Schedule 14A filed on April 10, 2018).
10.11		Office Lease, effective as of October 21, 2014, between 555 SW Oak, LLC and Lattice Semiconductor Corporation (Incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed October 27, 2014).
10.12* 16.1			Lattice Semiconductor Corporation 2017 Cash Incentive PlanLetter from KPMG LLP dated May 8, 2020 (Incorporated by reference to Exhibit 10.12 filed with the Company's Annual Report on Form 10-K filed on March 14, 2018).
10.13*		Lattice Semiconductor Corporation 2018 Cash Incentive Plan
10.14*		Separation Agreement, dated as16.1 of March 12, 2018, between Lattice Semiconductor Corporation and Darin G. Billerbeck (Incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on March 12, 2018)May 8, 2020).
10.15		Letter Agreement, dated as of March 7, 2018, among Lattice Semiconductor Corporation, Lion Point Capital, LP, Lion Point Master, LP, Lion Point Capital GP, LLC, Lion Point Holdings GP, LLC, Didric Cederholm and Jim Freeman (Incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on March 13, 2018).
10.16*		Employment Agreement, by and between Lattice Semiconductor Corporation and James R. Anderson, effective September 4, 2018 (Incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on August 27, 2018).
10.17*		Employment Agreement, by and between Lattice Semiconductor Corporation and Stephen Douglass, effective September 4, 2018 (Incorporated by reference to Exhibit 10.2 filed with the Company’s Quarterly Report on Form 10-Q filed on October 29, 2018).
10.18*		Employment Agreement, by and between Lattice Semiconductor Corporation and Sherri Luther, effective January 2, 2019 (Incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on January 2, 2019).
10.19*		CFO Notice and Supplemental Separation Benefit Letter, by and between Lattice Semiconductor Corporation and Max Downing, dated September 28, 2018 (Incorporated by reference to Exhibit 10.3 filed with the Company’s Quarterly Report on Form 10-Q filed on October 29, 2018).
10.20*		Employment Agreement, by and between Lattice Semiconductor Corporation and Esam Elashmawi, dated September 24, 2018.
21.1			Subsidiaries of the Registrant.
23.1			Consent of Independent Registered Public Accounting Firm.Firm (Ernst & Young LLP).
31.123.2			CertificationConsent of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.Independent Registered Public Accounting Firm (KPMG LLP)
31.224.1			CertificationPower of Chief Financial Officer pursuantAttorney (reference is made to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.signature page hereto).

*
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Labels Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Management contract or compensatory plan or arrangement required to be filed as an Exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) thereof.

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Exhibit Number			Description
31.1			Certification of Chief Executive Officer pursuant to the Securities Exchange Act of 1934 Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2			Certification of Chief Financial Officer pursuant to the Securities Exchange Act of 1934 Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1			Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2			Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS			Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH			Inline XBRL Taxonomy Extension Schema Document
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File - formatted in Inline XBRL and included in Exhibit 101

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LATTICE SEMICONDUCTOR CORPORATION
(Registrant)
By:	/s/ Sherri Luther
	Sherri Luther Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)
Date:	February 26, 201923, 2022

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints James Anderson and Sherri Luther, or either of them, his or her attorneys-in-fact, each with the power of substitution, for such person in any and all capacities, to sign any amendments to this report and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that either of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated and on the dates indicated:

Signature	Title
Signature	Title	Date
Principal Executive
Officer
/s/ James Anderson		February 26, 201923, 2022
James Anderson	President, Chief Executive Officer, and Director
Principal Financial and
Accounting Officer
/s/ Sherri Luther		February 23, 2022
Sherri Luther	Chief Financial Officer
Directors
Principal Financial and Accounting Officer /s/ Robin Abrams		February 23, 2022
Robin Abrams	Director
/s/ Sherri Luther		February 26, 2019
Sherri Luther	Chief Financial Officer
Directors /s/ Mark Jensen		February 23, 2022
Mark Jensen	Director
/a/ Anjali Joshi		February 23, 2022
Anjali Joshi	Director
/s/ Robin AbramsJames Lederer		February 26, 201923, 2022
Robin Abrams James Lederer	Director
/s/ Brian Beattie		February 26, 2019
Brian Beattie	Director
/s/ John BourgoinKrishna Rangasayee		February 23, 2022
Krishna Rangasayee	Director
	February 26, 2019
John Bourgoin	Director
/s/ Mark Jensen		February 26, 2019
Mark Jensen	Director
/s/ James Lederer		February 26, 2019
James Lederer	Director
/s/ John Major		February 26, 2019
John Major	Director
/s/ Krishna Rangasayee		February 26, 2019
Krishna Rangasayee	Director
/s/ Jeff Richardson		February 26, 201923, 2022
Jeff Richardson	Director

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