LATTICE SEMICONDUCTOR CORP

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

Market-Based and Performance-Based Stock Compensation

In thefirst andthird quarters of fiscal2024, we granted awards of RSUs with a market condition to certain executives. Under the terms of these grants, the RSUs with a market condition vest after athree-year period based on the Company’s total shareholder return ("TSR") relative to the Russell3000 index, which condition is measured for the grants on either thethird anniversary of the grant date, or equally on the first, second, andthird anniversary of the grant date, depending on the executive. The awards* may*vest at 250% or 200%, depending on the executive, if the 75th percentile of the market condition is achieved, with 100% of the units vesting at the 55th percentile, zero vesting if relative TSR is below the 25th percentile, and vesting scaling for achievement between the 25th and 75th percentile.

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In thesecond andthird quarters of fiscal2024, we also granted awards of RSUs with a performance condition to certain executives. Under the terms of these grants, the RSUs with a performance condition will vest if the Company achieves year-over-year revenue growth in excess of an industry benchmark, and the number of shares vested will scale for achievement of year-over-year revenue growth compared to certain targets, with maximum vesting up to 250%. The performance condition will be measured annually after each fiscal year-end forone-fourth of the grants beginning in fiscal2025 through the end of fiscal2028. Vesting of these awards occurs 13 months after the end of each measurement period and the entire award cannot be fully earned untilfive and a half years from grant date.

In thethird quarter of fiscal2024, we also granted awards of RSUs with a market condition to our new chief executive officer with vesting tied to the Company's stock price appreciation. The number of shares that become eligible to vest can range from 25% to 250% of the target number of shares, based on the Company's stock price growth over the 6-year service period, which ranges from 25% to 200% stock price growth calculated based on the simple average of the closing Company share price for the trailing60 trading days up to and including the measurement date.No vesting occurs for stock price growth below 25%. Vesting will occur annually after 3 years for a portion of the vesting eligible RSUs.

In thefirst nine months of fiscal2024, certain awards with a market condition or performance condition granted in prior fiscal years vested. During thefirst quarter of fiscal2024, the market condition for awards granted to certain executives in thefirst quarter of fiscal2021 exceeded the 75th percentile of their TSR condition, and these awards vested at 250% or 200%, as applicable for the respective executive. Also during thefirst quarter of fiscal2024, thesecond tranche of awards granted in fiscal2021 and2022 with a performance condition vested. Under the terms of these grants, the RSUs with a performance condition will vest based on the Company generating specified levels of year-over-year revenue growth, which are measured annually forone-fourth of the grants after each fiscal year-end through the end of fiscal2024, with vesting of each tranche occurring13 months after the performance condition is met. Vesting of these awards scales for achievement of year-over-year revenue growth compared to certain targets, with maximum vesting up to 200%. Thesecond tranche of these awards vested at the 200% level of achievement, as the Company met the maximum year-over-year revenue growth performance criteria as of* December 31, 2022.For thethird* tranche of these awards, the Company met the year-over-year revenue growth performance criteria at the 116.3% level of achievement as of* December 30, 2023.*

For our awards with a market condition or performance condition, we incurred stock compensation expense of approximately $4.5 million, partially offset by benefits from forfeitures of approximately $2.9 million due to executive departures, in thethird quarter of fiscal2024. In thefirst nine months of fiscal2024, we recorded benefits from forfeitures of approximately $18.0 million due to executive departures, which was partially offset by stock compensation expense of approximately $16.5 million. We incurred stock compensation expense of approximately $5.1 million and $21.0 million in thethird quarter andfirst nine months of fiscal2023, respectively. These amounts are recorded as components of total stock-based compensation.

The following table summarizes the activity for our awards with a market condition or performance condition:

Note10 - Common Stock Repurchase Program

On* November 30, 2023,we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to $250 million of outstanding common stock could be repurchased from time to time (the"2024* Repurchase Program"). The duration of the2024 Repurchase Program is through* December 28, 2024.*

During thethird quarter of fiscal2024, we repurchased 370,309 shares for $17.0 million, or an average price paid per share of $45.91, under the2024 Repurchase Program. During thefirst nine months of fiscal2024, we have repurchased a total of 778,591 shares for $47.0 million, or an average price paid per share of $60.36. All repurchases were open market transactions funded from available working capital. All shares repurchased pursuant to the2024 Repurchase Program were retired by the end of thethird quarter of fiscal2024. As of* September 28, 2024*, the remaining portion of the amount authorized for the2024 Repurchase Program is approximately $203.0 million.

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Note11 - Income Taxes

We are subject to federal and state income tax as well as income tax in the foreign jurisdictions in which we operate. For thethird quarter of fiscal2024 and2023, we recorded income tax expense of approximately $1.0 million and $4.1 million, respectively. For thefirst nine months of fiscal2024 and2023, we recorded income tax expense of approximately $5.2 million and $9.1 million, respectively. Income taxes for thethree andnine-month periods ended* September 28, 2024and September 30, 2023* represent tax at the federal, state, and foreign statutory tax rates in addition to federal tax credits, withholding taxes, excess benefits from stock compensation, as well as other non-deductible items in federal, state, and foreign jurisdictions. The difference between the U.S. federal statutory tax rate of 21% and our effective tax rates for thethree andnine months ended* September 28, 2024* resulted primarily from non-deductible items in federal, state, and foreign jurisdictions, foreign rate differentials, federal tax credits, and the discrete impacts of excess tax benefits from stock compensation and for thethree andnine months ended* September 30, 2023* resulted primarily from U.S. valuation allowance, foreign withholding taxes, foreign rate differentials, and the discrete impacts of excess tax benefits from stock compensation.

The portion of our uncertain tax positions (including penalties and interest) recorded as a liability was $22.6 million and $21.9 million at* September 28, 2024* and* December 30, 2023*, respectively, and is included as a component of Other long-term liabilities on our Consolidated Balance Sheets. The resolution of audits or expiration of statute of limitations could reduce our uncertain tax positions. The estimated potential reduction in our uncertain tax positions in the next12 months is up to $36.0 million.

Note12 - Contingencies

Legal Proceedings

On or about* December 19, 2018,Steven De Jaray, Perienne De Jaray and Darrell Oswald (collectively, the “Plaintiffs”) commenced an action against the Company in the Multnomah County Circuit Court of the State of Oregon, in connection with the sale of certain products by the Company to the Plaintiffs in or around2008.* The Plaintiffs alleged the Company violated the Lanham Act, engaged in negligence, fraud, and breach of contract by failing to disclose to the Plaintiffs the export-controlled status of the subject parts. In* January 2019,we removed the action to the United States District Court for the District of Oregon (the “Court”). On May 24, 2023,the Plaintiffs filed asecond* amended complaint, which added Apex-Micro Manufacturing Corporation (“Apex-Micro”) as a plaintiff and removed the violation of the Lanham Act claim. The Plaintiffs sought damages of $180 million, punitive damages, and other remedies. On* January 18, 2024,the court dismissed the claims against the Company by Ms. De Jaray and Mr. Oswald. The trial for the remaining claims was held from January 30, 2024to February 15, 2024.On February 13, 2024,the Court granted the Company’s Rule50* motion in part and entered judgment in the Company’s favor as to all of Mr. De Jaray’s claims and Apex-Micro’s negligence claims. On* February 15, 2024,the jury found that the Company wasnot* liable for all outstanding claims and judgment was entered in favor of the Company. On* March 15, 2024,Mr. De Jaray and Apex-Micro filed a Notice of Appeal to the United States Court of Appeals for the Ninth Circuit. On March 18, 2024,Ms. De Jaray filed a separate Notice of Appeal. Ms. De Jaray’s appeal was dismissed for failure to prosecute on August 1, 2024.In response to Mr. De Jaray and Apex Micro's request for an extension, their appeal opening brief was due October 7, 2024.Mr. De Jaray and Apex Micro failed to file their appeal opening brief on October 7th. Mr. De Jaray's and Apex Micro's appeal was dismissed for failure to prosecute on October 30, 2024.*

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

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