LATTICE SEMICONDUCTOR CORP

Note1 - Basis of Presentation and Significant Accounting Policies

Basis of Presentation and Use of Estimates

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

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments affecting the amounts reported in our consolidated financial statements and the accompanying notes. We base our estimates and judgments on historical experience, knowledge of current conditions, and our beliefs of what could occur in the future considering available information. While we believe that our estimates, assumptions, and judgments are reasonable, they are based on information available when made, and because of the uncertainty inherent in these matters, the actual results that we experience* may*differ materially from these estimates under different assumptions or conditions. We evaluate our estimates and judgments on an ongoing basis.

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

Fiscal Reporting Periods

We report based on a52 or53-week fiscal year ending on the Saturday closest to* December 31.Our fiscal2025* was a53-week year that ended on* January 3, 2026.Our fiscal2024* and2023 were both52-week years that ended on* December 28, 2024and December 30, 2023,respectively. Our fiscal2026* will be a52-week year and will end on* January 2, 2027.*All references to quarterly or annual financial results are references to the results for the relevant fiscal period.

Concentrations of Risk

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

Sales to distributors have historically accounted for a significant portion of our total revenue. Certain of our largest distributors each account for more than10% 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:

Certain of our distributors accounted for more than10% of net accounts receivable at the dates presented. At* January 3, 2026and December 28, 2024*, Distributor A accounted for approximately 28% and 36%, respectively, and Distributor B accounted for approximately 62% and 45%, respectively.

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

We limit our risk exposure related to cash and cash equivalents by placing our cash with high credit quality financial institutions. At times, such deposits* mayexceed Federal Deposit Insurance Corporation insurance limits. We havenot* experienced any losses on our deposits of cash and cash equivalents.

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

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Cash and Cash Equivalents

We consider all investments that are readily convertible into cash and that have original maturities ofthree months or less to be cash equivalents. Cash equivalents consist primarily of highly liquid investments in time deposits or money market accounts and are carried at cost, which approximates fair value.

Foreign Exchange and Translation of Foreign Currencies

While our revenues and the majority of our expenses are denominated in U.S. dollars, we also have international subsidiaries and branch operations that conduct some transactions in currencies that differ from the functional currency of that entity. Gains or losses from foreign exchange rate fluctuations on balances denominated in currencies that differ from the functional currencies are reflected in Other income (expense), net.

We translate accounts denominated in foreign currencies in accordance with ASC830, “Foreign Currency Matters,” using the current rate method under which asset and liability accounts are translated at the current rate, while stockholders' equity accounts are translated at the appropriate historical rates, and revenue and expense accounts are translated at average monthly exchange rates. Translation adjustments related to the consolidation of foreign subsidiary financial statements are reflected in Accumulated other comprehensive loss in Stockholders' equity (See our Consolidated Statements of Stockholders' Equity).

Revenue Recognition

Under the terms of ASC606, "Revenue from Contracts with Customers", we recognize revenue when we satisfy performance obligations as evidenced by the transfer of control of our products or services to customers. For sales to distributors, we have concluded that our contracts are with the distributor, rather than with the distributor’s end customer, as we hold a contract bearing enforceable rights and obligations only with the distributor. Our revenue is derived primarily from sales of silicon-based products, with additional revenue from sales of silicon-enabling products. We consider customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. For each contract, we consider our promise to transfer each distinct product to be the identified performance obligations. Revenue for product sales is recognized at the time of product shipment, as determined by the agreed upon contract shipping terms.

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

We measure revenue based on the amount of consideration we expect to be entitled to in exchange for products or services. Variable consideration is estimated and reflected as an adjustment to the transaction price. We determine variable consideration, which consists primarily of various sales price concessions, by estimating the most likely amount of consideration we expect to receive from the customer based on an analysis of historical rebate claims over a period of time considered adequate to account for current pricing and business trends. Sales rebates earned by customers are offset against their receivable balances. Rebates earned by customers when they donot have outstanding receivable balances are recorded within Accrued liabilities. Revenue related to licensing and services, which includes HDMI and MHL standards revenue, as well as certain IP licenses, includes variable consideration in the form of usage-based royalties.

We generally provide an assurance warranty that our products will substantially conform to the published specifications fortwelve months from the date of shipment. In some cases, the warranty period* maybe longer thantwelve* months. We donot separately price or sell the assurance warranty. Our liability is limited to either a credit equal to the purchase price or replacement of the defective part. Under the practical expedient provided by ASC340, we generally expense sales commissions when incurred because the amortization period would be less thanone year. We record these costs within Selling, general, and administrative expenses. Substantially all of our performance obligations are satisfied withintwelve months.

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Inventories and Cost of Revenue

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

Property and Equipment

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

Business Combinations

Business combinations are accounted for using the acquisition method of accounting, under which we allocate the purchase price paid for a company to identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Goodwill is measured as the excess of purchase price over the fair value of identifiable assets acquired and liabilities assumed. Determining the fair value of identifiable tangible and intangible assets acquired and liabilities assumed requires management to make assumptions, estimates, and judgments that are based on all available information, including comparable market data and information obtained from our management and the management of the acquired companies. The estimation of the fair values of the intangible assets requires significant judgment and the use of valuation techniques including primarily the income approach. Consideration is given to all relevant factors that might affect the fair value such as estimates of future revenues and costs, present value factors, and the estimated useful lives of intangible assets. We expense acquisition-related costs in the period incurred.

Impairment of Long-Lived Assets

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

Valuation of Goodwill

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that arenot individually identified and separately recognized. Goodwill isnot amortized, but is instead tested for impairment annually during thefourth 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 thannot that the reporting unit's fair value is less than the carrying amount. If the qualitative assessment determines that it is more likely thannot that the fair value is less than the carrying amount, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, then goodwill impairment exists for the reporting unit. The impairment loss, if any, is recognized for the amount by which the carrying value exceeds the fair value. If the fair value of the reporting unit exceeds its carrying value,no further impairment analysis is needed. For purposes of testing goodwill for impairment, we currently operate as a single reporting unit.

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Leases

We account for leases under the terms of ASC842, "Leases," which requires lessees to record assets and liabilities on the balance sheet for all leases with terms longer than12 months. Under this guidance, we apply the practical expedient tonot separate lease and non-lease components for all asset classes.

Right-of-use ("ROU") assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized on the commencement date of the lease based on the present value of lease payments over the lease term. As most of our leases donot provide an implicit rate, we determine the present value of lease payments using an incremental borrowing rate based on information from our commercial bank for an equivalent borrowing and term in the respective region as of the lease commencement date. At inception, we determine if an arrangement is a lease, if it includes options to extend or terminate the lease, and if it is reasonably certain that we will exercise the options. Lease cost, representing lease payments over the term of the lease and any capitalizable direct costs less any incentives received, is recognized on a straight-line basis over the lease term as lease expense. We have operating leases for corporate offices, sales offices, research and development facilities, storage facilities, and a data center.

The exercise of lease renewal options is at our sole discretion. When deemed reasonably certain of exercise, the renewal options are included in the determination of the lease term and lease payment obligation, respectively. For our leases that contain variable lease payments, residual value guarantees, or restrictive covenants, we have concluded that these inputs arenot significant to the determination of the ROU asset and lease liability.

Research and Development

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

Restructuring

Expenses associated with exit or disposal activities are recognized when incurred under ASC420, “Exit or Disposal Cost Obligations,” for everything except severance expenses and vacated leased facilities. Because we have a history of paying severance benefits, the cost of severance benefits associated with a restructuring plan is recorded when such costs are probable and the amount can be reasonably estimated in accordance with ASC712, “Compensation - Nonretirement Postemployment Benefits.” When leased facilities are vacated, the amount of any ROU asset impairment is calculated in accordance with ASC360, "Property, Plant, and Equipment" and recorded as a part of Restructuring. Expenses from other exit or disposal activities, including the cancellation of software contracts and engineering tools or the abandonment of long-lived assets, are recorded as a part of Restructuring.

Accounting for Income Taxes

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

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

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Our income tax calculations are based on application of the respective U.S. federal, state or foreign tax law**.**Our tax filings, however, are subject to audit by the relevant tax authorities. Accordingly, we recognize tax liabilities based upon our estimate of whether, and the extent to which, additional taxes will be due when such estimates are more-likely-than-not to be sustained. An uncertain income tax position willnot be recognized if it has less than a50% likelihood of being sustained. To the extent the final tax liabilities are different than the amounts originally accrued, the increases or decreases as well as any interest or penalties are recorded as income tax expense or benefit in the Consolidated Statements of Operations. We recognize the tax impact of including certain foreign earnings in U.S. taxable income as a period cost.

Stock-Based Compensation

We estimate the fair value of stock-based awards consistent with the provisions of ASC718, “Compensation - Stock Compensation” and recognize stock-based compensation expense on a straight-line basis over the requisite service period, with forfeitures accounted for as they occur. We value restricted stock units ("RSUs") restricted stock awards ("RSAs") using the closing market price on the date of grant, and we value our employee stock purchase plan ("ESPP") using the Black-Scholes option pricing model. We have also granted RSUs with a market condition or a performance condition to certain executives. The terms of these grants, including achievement criteria and vesting schedules, are detailed under the heading "Market-Based and Performance-Based Awards — Grants" in Note10 - Stock-Based Compensation Plans. Our current practice is to issue new shares to satisfy ESPP purchases. For RSUs, we issue new shares when awards vest andwithhold a portion of these shares on behalf of employees to satisfy the minimum statutory tax withholding requirements.

New Accounting Pronouncements

In* November 2024,the FASB issued ASU2024*-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic220*-40): Disaggregation of Income Statement Expenses*. This new guidance requires public entities to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of income statement. The ASU* maybe applied prospectively or retrospectively and is effective for fiscal years beginning after December 15, 2026and for interim periods beginning after December 15, 2027.*Early adoption is permitted. We are currently evaluating the impact of adoption of this new guidance on our consolidated financial statements disclosures.

In* September 2025,the FASB issued ASU2025*-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic350*-40): Targeted Improvements to the Accounting for Internal-Use Software*. This ASU is intended to simplify the recognition and disclosure guidance related to capitalized internal-use software costs by removing all references to software development project stages and introducing a more judgment-based framework. ASU2025-06 is effective for fiscal years beginning after* December 15, 2027,and for interim periods within those fiscal years, with early adoption permitted as of the beginning of a fiscal year. This standard may*be applied prospectively, retrospectively, or via a modified prospective transition method. We are currently evaluating the impact of adoption of this new guidance on our consolidated financial statements and disclosures.

Note2 - Net Income Per Share

We compute basic earnings per share based on the weighted average number of shares of common stock outstanding during the period. We compute diluted earnings per share based on the weighted average number of shares of common stock outstanding plus potentially dilutive shares of common stock outstanding during the period, if applicable. Potentially dilutive shares of common stock from employee equity incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options, the assumed vesting of outstanding RSUs and RSAs, and the assumed issuance of common stock under the stock purchase plan.

Our calculation of potentially dilutive shares includes the number of shares from our equity awards with market conditions or performance conditions that would be issuable under the terms of such awards at the end of the reporting period. For equity awards with a market condition, the number of shares included in the diluted share count as of the end of each period presented is determined by measuring the achievement of the market condition as of the end of the respective reporting periods. For equity awards with a performance condition, the number of shares that qualified for vesting as of the end of each period presented are included in the diluted share count when the condition for their issuance was satisfied by the end of the respective reporting periods. See "Note10 - Stock-Based Compensation Plans" to our consolidated financial statements for further discussion of our equity awards with market conditions or performance conditions.

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

The computation of diluted Net income per share excludes the effects of employee equity incentive plans that are antidilutive, aggregating to approximately 0.7 million,1.0 million, and 0.4 million, respectively, in fiscal2025,2024, and2023.

Note3 - Revenue from Contracts with Customers

Disaggregation of Revenue

The following tables provide information about revenue from contracts with customers disaggregated by channel and by geographical market. Revenue is attributed to geographic regions based on the ship-to location of the customer. The Greater China geography includes revenue associated with shipments to both Hong Kong and mainland China. Products shipped to Hong Kong* maysubsequently be transferred to mainland China or other destinations, and products shipped to mainland China may*similarly move through intermediary locations

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Contract Balances

Our contract assets relate primarily to our rights to consideration for licenses and royalties due to us as a member of the HDMI Founders consortium. The balance results primarily from the amount of estimated revenue related to HDMI that we have recognized to date, but which hasnot yet been distributed to us by the HDMI licensing agent. Contract assets are recorded in Prepaid expenses and other current assets in our Consolidated Balance Sheets.

The following table summarizes activity during the periods presented:

Contract liabilities are included in Accrued liabilities on our Consolidated Balance Sheets. The following table summarizes activity during the periods presented:

Note4 - Balance Sheet Components

Accounts Receivable

Accounts receivable donot bear interest and are shown net of an allowance for expected lifetime credit losses, which reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine this allowance through an assessment of known troubled accounts, analysis of our accounts receivable aging, historical experience, expectations for future economic conditions, management judgment, and other available evidence.

We hadno material bad debt expense in fiscal2025, 2024, or2023.

Inventories

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Accrued Liabilities

Included in Accrued liabilities in the Consolidated Balance Sheets are the following balances:

Other Long-Term Liabilities

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

Note5 - Property and Equipment

For fiscal years2025,2024, and2023 depreciation and amortization expense for property and equipment was $19.9 million, $19.3 million, and $17.3 million, respectively.

Property and Equipment – Geographic Information

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

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Note6 - Intangible Assets and Goodwill

In connection with our previous acquisitions, we have recorded identifiable intangible assets related to existing technology, customer relationships, and trade name / trademarks. We amortize the intangible assets using the straight-line method over their estimated useful lives. Additionally, we have entered into license agreements forthird-party technology and recorded them as intangible assets. These licenses are being amortized to Research and development expense over their estimated useful lives. No impairment charges relating to acquired intangible assets were recorded for fiscal2025 or2023. In fiscal2024, we recorded an impairment charge of $13.9 million relating to acquired intangible assets.

The following tables summarize the details of our Intangible assets, net as of* January 3, 2026and December 28, 2024*:

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

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

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Goodwill

Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and intangible assets. The goodwill balance at* January 3, 2026is comprised of approximately $315.4 million from prior acquisitions. No impairment charges relating to goodwill were recorded for fiscal2025*,2024, or2023.

Note7 - Long-Term Debt

On* September 1, 2022,we entered into an Amended and Restated Credit Agreement (the“2022* Credit Agreement”), which provides for afive-year secured revolving loan facility with an aggregate principal amount of up to $350 million. We have azero drawn balance on this facility and, effective* December 10, 2025,*we deliberately reduced the aggregate available principal amount from up to $350 million to up to $200 million. This reduction lowered our carrying costs. We intend to use the revolving loan facility for working capital and general corporate purposes as appropriate.

At our option, the revolving loans accrue interest at a per annum rate based on ranges determined by our consolidated total leverage ratio of either (i) the base rate (as defined in the2022 Credit Agreement) plus a margin ranging from 0.25% to 1.00%, or (ii) the adjusted Term Secured Overnight Financing Rate ("SOFR") for interest periods of1, 3 or6 months plus a margin ranging from 1.25% to 2.00%. Interest is due and payable in arrears quarterly for loans bearing interest at the base rate and at the end of an interest period (or at eachthree-month interval in the case of loans with interest periods greater thanthree months) in the case of loans bearing interest at the adjusted Term SOFR. In addition, we pay a quarterly commitment fee of 0.20% on the unused portion of the revolving facility.

The revolving loans under the2022 Credit Agreement* maybe repaid and reborrowed at our discretion, with any remaining outstanding principal amount due and payable on the maturity date of the revolving loan on September 1, 2027.At January 3, 2026and December 28, 2024,we hadno borrowings outstanding under the2022* Credit Agreement.

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

Note8 - Restructuring

In thethird quarter of2024, our management commenced an internal restructuring plan ("the** Q3 2024 Plan"), which includes a global workforce reduction. Under this plan, we incurred restructuring costs of approximately $3.4 million and $7.6 million, respectively, in fiscal2025 and2024. Under this plan, approximately $11.0 million of total costs have been incurred through* January 3, 2026.TheQ3* 2024 Plan is expected to be largely complete by the end of thefirst quarter of fiscal year2026.

In thethird quarter of2023, our management approved and executed an internal restructuring plan (the*“Q3* 2023 Plan”), which included a targeted workforce reduction intended to reorganize critical roles and focus skillsets in key growth markets.

We incurredno restructuring costs during fiscal2025, and incurred restructuring costs of approximately $5.3 million and $2.0 million, respectively, in fiscal2024 and2023. Under this plan, approximately $7.3 million of total costs have been incurred through* January 3, 2026.All actions planned under theQ3* 2023 plan have been implemented.

Other restructuring activity in the periods presented consisted of expense adjustments on previous plans. Costs and adjustments on restructuring plans are recorded to Restructuring and other on our Consolidated Statements of Operations. The restructuring accrual balance is presented in Accrued liabilities and in Other long-term liabilities on our Consolidated Balance Sheets.

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The following table displays the activity related to our restructuring plans:

Note9 - Leases

We have operating leases for corporate offices, sales offices, research and development facilities, storage facilities, and a data center, all of which are leased under operating leases that expire at various times through2035. Our leases have remaining lease terms of less than 1 year to 10 years, some of which include options to extend for up to 5 years, and some of which include options to terminate within 1 year. The weighted-average remaining lease term was 6.4 years and the weighted-average discount rate was 4.9% as of* January 3, 2026.We recorded fixed operating lease expense of $8.1 million, $8.5 million, and $7.8 million, respectively, for fiscal2025*,2024, and2023.

The following table presents the lease balance classifications within the Consolidated Balance Sheets and summarizes their activity during fiscal2025:

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Maturities of operating lease liabilities as of* January 3, 2026*are as follows:

Note10 - Stock-Based Compensation Plans

Employee and Director Restricted Stock and ESPP Plans

As of* January 3, 2026,we havethree* active equity incentive plans, including the*"2023* Equity Incentive Plan"and the*"2011* Non-Employee Director Equity Incentive Plan", under which shares remain available for grants to employees and non-employee directors, respectively. We also have the*“2025* Inducement Equity Plan”, under which shares will be available for grants to new hire employees. Restricted stock unit ("RSU"), and restricted stock award ("RSA") grants are part of our equity compensation practices for employees who receive equity grants. RSUs and RSAs generally vest quarterly over afour-year period beginning on the grant date.

We also maintain the2012 Employee Stock Purchase Plan ("2012 ESPP"), pursuant to which eligible employees* maycontribute through payroll deductions up to 10% of base compensation, subject to certain income limits, to purchase shares of our common stock. The purchase price of the shares is the lower of 85% of the fair market value of the stock at the beginning of eachsix*-month offering period or 85% of the fair market value at the end of such period. We have treated the2012 ESPP as a compensatory plan. At* January 3, 2026*, a total of 0.7 million shares of our common stock were available for future purchases under the2012 ESPP.

At* January 3, 2026,a total of 4.9 million shares of our common stock were available for future grants under the2023* Equity Incentive Plan and the2011 Non‑Employee Director Equity Incentive Plan. At the same date,1.3 million shares were available for issuance under the2025 Inducement Equity Plan, which is a standalone, non‑shareholder‑approved plan that* maybe used only for inducement awards to new hires. The2023* Equity Incentive Plan,2011 Non‑Employee Director Equity Incentive Plan, and the2025 Inducement Equity Plan donot have any fungible share‑counting provisions. Shares subject to performance‑based restricted stock units that arenot delivered due to failure to meet the maximum payout threshold generally become available for re‑issuance under the applicable equity incentive plans.

Stock-Based Compensation Expense

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

The income tax benefit related to total stock-based compensation expense was $8.5 million, $6.3 million, and $7.6 million, respectively, for fiscal2025, 2024, and2023, which is reflected in Income tax expense (benefit) in the Consolidated Statements of Operations. There wasno income tax benefit related to awards vested during2025 due to shortfalls(actual tax deductions were lower than the U.S. GAAP compensation cost). The income tax benefit related to awards vested or exercised during fiscal2024 and2023, respectively, was $1.7 million and $10.4 million. These amounts donot include the indirect effects of stock-based compensation, which primarily relate to the R&D tax credit.

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Employee Stock Purchase Plan

The fair values of the shares expected to be issued under the employee stock purchase plan were estimated using the Black-Scholes valuation model and the assumptions noted in the following table. The expected volatility of ESPP shares is based on the daily historical volatility of our stock price, measured over the ESPP purchase period. The risk-free interest rate is based on the implied yield on a U.S. Treasuryzero-coupon issue with a remaining term closest to the expected term of the offering period. Dividend yield hasno valuation impact, as we havenot paid any cash dividends since inception and donot intend to pay any cash dividends in the foreseeable future.

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

The weighted average fair values for the ESPP, calculated using the Black-Scholes option pricing model with the noted assumptions for the ESPP, were $18.30, $15.50, and $24.38 for fiscal years2025,2024, and2023, respectively.

Compensation expense for the ESPP is recognized using the straight-line method. We recorded stock-based compensation expense related to the ESPPof approximately$2.3 million, $1.8 million, and $2.2 million in fiscal2025,2024, and2023, respectively.

Time-Based Restricted Stock Unit Awards and Restricted Stock Awards

The following table summarizes the activity for our time-based RSUs and RSAs for the year ended* January 3, 2026:*

At* January 3, 2026,there was$162.9 million of unrecognized compensation expense related to unvested time-based RSUs and RSAs. Compensation expense for RSUs and RSAs is recognized using the straight-line method over the related vesting period. In fiscal2025*,2024, and2023, we recorded stock-based compensation expense related to time-based RSUs and RSAsof approximately $70.2 million,$51.8 million, and $41.5 million, respectively.

Market-Based and Performance-Based Awards

In2023 through2025, we granted awards of RSUs with either a market condition or a performance condition to certain executives.

Market-Based and Performance-Based Awards — Grants

In fiscal2025, 2024, and2023, we granted awards of RSUs with a market condition to certain executives. Under the terms of these grants, the RSUs with a market condition vest over 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.

In fiscal2025, we also granted awards of RSUs with a performance condition to certain executives. Under the terms of these grants, the RSUs with a performance condition will vest if the Company achieves year-over-year revenue growth in excess of the Gartner Non-Memory Semiconductor Revenue Growth benchmark, and the number of shares that vest will scale based on achievement of year-over-year revenue growth compared to certain targets, with maximum vesting up to 250%.

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During fiscal2025, the Compensation Committee of the Board of Directors approved a modification to the performance condition periods and vesting criteria associated with these revenue growth performance awards and similar awards that were granted to certain executives in fiscal2024 to align the awards with the Company's growth strategy. The modification extended the beginning and end dates of each measurement period byone year, such that the performance condition will be measured annually after each fiscal year-end forone-fourth of the grants with thefirst measurement period beginning in fiscal2026 and the last measurement period ending at the end of fiscal2029. Additionally, the awards were modified such that the measurement and vesting for each tranche will occur on the later of the filing date of the Company’s Annual Report on Form10-K for the applicable measurement period, or the date the Gartner Non-Memory Semiconductor Revenue Growth benchmark is published. Vesting of these awards occurs approximately4 months after the end of each measurement period. All other terms of the modified awards including the size of the awards and performance criteria remain the same. This modification hadno material impact on stock-based compensation expense upon adoption.

Also during fiscal2025, we granted additional awards of RSUs with a performance condition to the majority of our employee population. Under the terms of these grants, the RSUs with a performance condition will vest if the Company achieves year-over-year revenue growth targets, and the number of shares vested will scale for achievement of year-over-year revenue growth compared to certain targets, with maximum vesting up to 200% depending on the employee's level. The performance condition will be measured annually after each fiscal year-end forone-half of the grants with thefirst measurement period beginning in fiscal2026 and the last measurement period ending at the end of fiscal2027. Vesting of these awards occurs approximately4 months after the end of each measurement period.

In 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 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.

Market-Based and Performance-Based Awards — Vesting

During fiscal2025, the market condition for awards granted to certain executives in previous years exceeded the 55th percentile of their TSR condition, and these awards vested at 134%. Also during2025, thethird tranche of awards granted in fiscal2021 and2022 with a year-over-year revenue growth performance condition vested at the 116.3% level of achievement, based on the Company's year-over-year revenue growth performance as of* December 30, 2023.For thefourth* tranche of these awards, the Company didnot meet the year-over-year revenue growth performance criteria as of* December 28, 2024.*

During fiscal2024, the market condition for the majority of awards granted to certain executives in previous years exceeded the 75th percentile of their TSR condition, and these awards vested at 250% or 200%, as applicable for the respective executive. One award achieved the 54th percentile of its TSR condition and vested at approximately 97%, whileone award didnot meet its minimum TSR threshold for vesting. Also during2024, thesecond tranche of awards granted in fiscal2021 and2022 with a year-over-year revenue growth performance condition vested at the 200% level of achievement, as the Company met the maximum year-over-year revenue growth performance criteria as of* December 31, 2022,and the 13-month vesting period had been met. For 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.*

During fiscal2023, the market condition for awards granted to certain executives in previous years exceeded the 75th percentile of their TSR condition, and applicable tranches of these awards vested at 250% or 200% for the respective executives. Also during2023, thefirst tranche of awards granted in fiscal2021 with a year-over-year revenue growth performance condition vested at the 200% level of achievement, as the Company met the maximum year-over-year revenue growth performance criteria as of* January 1, 2022,*and the 13-month vesting period had been met.

Market-Based and Performance-Based Awards — Compensation Expense

Forour awards with a market condition or a performance condition, we incurred stock compensation expense in fiscal2025 of approximately $43.1 million. In fiscal2024, we recorded benefits from forfeitures of approximately $29.0 million due to executive departures, partially offset by stock compensation expense of approximately $28.4 million. In fiscal2023, we incurred stock-based compensation expense of approximately $26.4 million. These amounts are recorded as components of total stock-based compensation. At* January 3, 2026,*there was $66.2 million of unrecognized compensation expense related to unvested RSUs with a market condition or a performance condition. Awards with a market condition were valued using Monte Carlo simulation models.

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

The valuation of RSUs with a performance condition is based on the closing market price on the date of grant.

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

Note11 - Common Stock Repurchase Program

On* December 9, 2024,we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to $100 million of outstanding common stock could be repurchased from time to time (the"2025* Repurchase Program"). The duration of the2025 Repurchase Program was through* December 31, 2025.During thefourth* quarter of fiscal2025, we repurchased 217,506 shares for $14.1 million, or an average price paid per share of $65.03. All repurchases were open market transactions funded from available working capital. All shares repurchased pursuant to the2025 Repurchase Program were retired upon settlement. We repurchased a total of 1,763,053 shares for $100.0 million, or an average price paid per share of $56.72, during fiscal year2025.

On* December 5, 2025,we announced that our Board of Directors had approved a stock repurchase program pursuant to which up to an additional$250* million of outstanding common stock could be repurchased from time to time (the*"2026* Repurchase Program"). The2026 Repurchase Program hasno termination date and* maybe suspended or discontinued at any time. No shares were repurchased under the2026* Repurchase Program during thefourth quarter of fiscal2025.

Note12 - 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:

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

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740*) Improvements to Income Tax Disclosures*, which require greater disaggregation of income tax disclosures around the effective rate reconciliation. The guidance in this update is effective for fiscal years beginning after* December 15, 2024,and the Company adopted it prospectively for the year ended January 3, 2026.Income tax expense (benefit) for the year ended January 3, 2026*differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax income as a result of the following differences:

State taxes in Oregon made up the majority (greater than50* percent) of the tax effect in this category.

The increase in provision for income taxes in fiscal year2025 compared to fiscal year2024 was primarily due to nondeductible stock compensation and the recognition of uncertain tax benefits in the previous year.

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As previously disclosed for the years ended* December 28, 2024and December 30, 2023,prior to the adoption of ASU2023*-09, income tax expense (benefit) differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax income as a result of the following differences:

The decrease in benefit for income taxes in fiscal year2024 compared to fiscal year2023 was primarily due to the release of the US federal valuation allowance in fiscal year2023 and the recognition of uncertain tax benefits in fiscal year2024.

On* July 4, 2025,the United States enacted tax legislation (the “Tax Act”). The Tax Act includes significant provisions, such as the permanent extension of certain expiring provisions of The2017* Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates with certain provisions effective in2025. The impacts of provisions effective in2025 have been incorporated into the income tax provision in fiscal2025 and didnot have a material impact on our effective tax rate.

We updated our evaluation of the valuation allowance position in the United States through* January 3, 2026and concluded that we should continue to maintain a full valuation allowance against our state deferred tax assets due to insufficient income sources. We will continue to evaluate both positive and negative evidence in future periods to determine if we will realize the deferred tax assets. The amount of the deferred tax asset considered realizable could be adjusted if sufficient positive evidence exists. We don't have a valuation allowance on a significant portion of our U.S. Federal deferred tax assets or in any foreign jurisdictions as we have concluded that it is more likely thannot* that we will realize the net deferred tax assets in the future periods.

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

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

As of* January 3,*2026, we had U.S. federal net operating loss ("NOL") carryforwards (pretax) of approximately $5.7 million which will expire between2027 and2031. We had state NOL carryforwards (pretax) of approximately $125.5 million that substantially all expire at various dates from2026 through2044. We also had federal credit carryforwards of $47.4 million that expire at various dates from2036 through2045, and $88.2 million state credit carryforwards of which substantially all donot expire.

Future utilization of federal and state net operating losses and tax credit carryforwards* maybe limited if cumulative changes to ownership exceed50%* within anythree-year period, which hasnot occurred through fiscal2025. However, if there is a significant change in ownership, future tax attribute utilization* may*be limited and NOL carryforwards and/or R&D credits will be reduced to reflect the limitation.

At* January 3, 2026and December 28, 2024,our unrecognized tax benefits associated with uncertain tax positions were $30.1 million, and $29.3 million, respectively, of which $27.0 million and $26.3 million, respectively, if recognized, would affect the effective tax rate, subject to valuation allowance. As of January 3, 2026and December 28, 2024,interest and penalties associated with unrecognized tax benefits were $0.3 million and $0.4 million, respectively, which arenot* reflected in the table below. We accrue interest and penalties related to uncertain tax positions in Income tax expense.

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

Our liability for uncertain tax positions (including penalties and interest) was $2.1 million and $2.5 million at* January 3, 2026* and* December 28, 2024*, respectively, and is recorded as a component of Other long-term liabilities on our Consolidated Balance Sheets.

The years that remain subject to examination are2022 for federal income taxes,2021 for state income taxes, and2020 for foreign income taxes, including years ending thereafter. However, to the extent allowed by law, the tax authorities* may*have the right to examine prior periods where net operating losses or tax credits were generated and carried forward, and make adjustments up to the amount of the net operating losses or credit carryforward amount.

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Cash Taxes Paid

The Company adopted ASU2023-09, Income Taxes (Topic740) prospectively for the year ended* January 3, 2026*and included the following table as a result of our adoption, which presents Income taxes paid, net of refunds, as follows:

Note13 - Employee Benefit Plans

Qualified Investment Plan

In1990, we adopted a401(k) tax-deferred savings plan, which provides all employees in the United States who meet certain eligibility requirements with an opportunity to accumulate funds for retirement. Participants* maycontribute up to the amount allowable as a deduction for federal income tax purposes. The plan doesnot* allow investments in the Company's common stock. The plan allows for the Company to make discretionary matching contributions in cash. We recorded matching contributions of approximately $2.7 million, $2.8 million, and $3.1 million in fiscal years2025,2024, and2023, respectively.

Corporate Incentive Plan

For fiscal2025,2024, and2023, the Board of Directors of the Company, upon the recommendation of the Compensation Committee, approved the Corporate Incentive Plan (the “CIP”) for the respective fiscal year. The chief executive officer, other executive officers, and other members of senior management, including vice presidents and director-level employees, together with all other employees of the Companynot on the Company's sales incentive plan are eligible to participate in the CIP. Under the CIP, individual cash or equity incentive payments for the eligible employees will be based both on Company financial performance, as measured by achievement of operating income (before incentive plan accruals) and revenue goals within specified ranges established by the Compensation Committee, and Company performance, as measured by the achievement of personal management objectives. The Compensation Committee determines the performance of the chief executive officer, the chief financial officer and other participants based on the achievement of the management objectives established by the Compensation Committee during thefirst quarter of the respective fiscal year. We recorded approximately $16.6 million, $1.6 million, and $15.0 million of expense under the CIP in fiscal2025,2024, and2023, respectively.

Under our Corporate Incentive Plan, incentive payments* maybe made in cash or in shares of our Common Stock, or a combination of both, as determined at the discretion of the Compensation Committee of our Board of Directors. To the extent incentive payments are settled in equity under the2023* Equity Incentive Plan, the number of RSUs to be issued is determined by dividing the eligible employee’s incentive payment value by the30-calendar day average closing price of our Common Stock during the period ending the day before the date of settlement. Under this methodology, the value of RSUs issued on the settlement date could differ from the incentive payment value accrued.

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Note14 - Contingencies

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.

Note15 - Segment Reporting

ASC280, Segment Reporting, establishes standards for the manner in which companies report financial information about operating segments, products, services, geographic areas and major customers. Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer.

As of* January 3, 2026,*we have determined that the Company operates in asingle operating and reportable segment: the core Lattice business, which includes silicon-based and silicon-enabling products, evaluation boards, development hardware, and related intellectual property licensing, services, and sales. Our CODM reviews operating results and financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

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

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