SUNNYVALE, CA -- (MARKET WIRE) -- Oct 23, 2008 -- Leadis Technology, Inc. (NASDAQ: LDIS), an analog and mixed-signal semiconductor developer of color display drivers, LED drivers, power management, audio and touch ICs for mobile consumer electronics devices, today announced results for the third quarter of 2008, ended September 30, 2008. The company also announced anticipated restructuring activities, including the divestiture of its Audio business and other expense reductions.
Q3 2008 Highlights
-- Leadis achieved ten new product design wins in the quarter, including
four new display driver designs and six new LED/Power designs. Two of the
display driver wins utilize RGBW, and one design win utilizes Leadis'
proprietary Epic™ technology for AM-OLED displays.
-- Leadis announced sample availability of the LDS535, a 480 channel, one
billion color AM-OLED source driver IC, the first of many products the
company is developing for the mid-size AM-OLED display market.
-- Leadis shipped over 50 Touch evaluation kits, with customer interest
extending beyond consumer portable devices into a variety of other markets.
The company expects its first Touch design wins in the fourth quarter and
revenue in the first quarter of 2009, with promising customer evaluations
occurring throughout the world.
-- Leadis is currently testing first silicon utilizing its Epic™
technology for AM-OLED displays.
-- Leadis shipped engineering samples of its first display driver design
utilizing RGBW technology for high resolution amorphous TFT displays.
Financial Results
Third quarter revenue was $4.7 million, below the company's guidance of $5.9 million. Third quarter gross margin was 6%, with 7% gross margin on product sales offset by negative gross margin on NRE activity during the quarter. Under generally accepted accounting principles (GAAP), third quarter net loss was $7.7 million, or $0.26 per basic share, as compared with the $19.5 million, or $0.67 per basic share, net loss reported in the previous quarter and the $8.4 million, or $0.29 per basic share, net loss reported in the third quarter of 2007. The loss in the third quarter of 2008 included a $0.5 million tax benefit for reversal of a tax reserve. The loss in the second quarter of 2008 included a $9.4 million non-cash impairment charge for goodwill and other intangible assets originally recorded in connection with previous business acquisitions.
In addition to reporting GAAP results, the company reports non-GAAP results, which exclude share-based compensation expense per FAS 123(R) and acquisition-related expenses, and goodwill and intangible impairment charges. Non-GAAP net loss for the third quarter of 2008 was $6.9 million, or $0.23 per basic share, as compared to a net loss of $8.2 million, or $0.28 per basic share, in the second quarter of 2008 and a net loss of $5.9 million, or $0.20 per basic share, in the third quarter of 2007. A reconciliation of GAAP measures to non-GAAP measures is included in the financial statements portion of this press release.
The company reported cash, restricted cash and long-term investments of $43 million as of September 30, 2008, which was $11.3 million lower than its balance as of June 30, 2008, due to the third quarter net loss as well as a $1.8 million gross inventory build and $1.2 million increase in receivables.
Business Summary
"Third quarter revenue fell short of our guidance as a result of a decline in one of our key display driver programs," said Mr. Tony Alvarez, President and CEO. "We expect product revenue to improve in the fourth quarter. We managed expenses closely during this difficult quarter, with non-GAAP operating expenses reduced $0.4 million from the previous quarter."
The company continues to focus on achieving design wins across its business areas, as well as expanding its line of analog and mixed-signal products. Design win progress and product introductions for the quarter included:
-- Leadis gained four new display driver design wins, including its third
design win utilizing its Epic™ technology designed to dramatically
improve AM-OLED manufacturing yields and picture quality. The company won
two additional designs utilizing RGBW technology and one AM-OLED design.
The company has thirteen display driver design wins through the first three
quarters of the year, surpassing its goal of ten to twelve for the full
year.
-- The company achieved four LED/Power design wins utilizing the LDS8845
and LDS8846, a family of no noise, highly efficient 4-channel white LED
drivers. The company added two additional design wins utilizing Power
management products. The first utilizes the LDS102, a low voltage
reference chip optimized for low noise, and the second utilizes the
LDS431L, a 1.24v shunt voltage regulator with greater bandwidth than
current industry standard products.
-- The company shipped samples of its LDS9505/9504 headphone amplifiers
with Gmax™ technology to over 30 customers during the quarter, primarily
for evaluation in mobile phone and MP3/PMP applications.
-- Leadis signed two additional NRE contracts during the third quarter,
and has contracts signed year to date in excess of $2 million. Four
additional NRE contracts are committed and currently under negotiation. In
aggregate, NRE contracts signed and committed in 2008 are expected to
contribute over $4 million upon completion of the related projects.
Q4 2008 Outlook
"We expect revenue to increase by approximately 10% in the fourth quarter of 2008 as compared with the third quarter," said Mr. Alvarez. "Our current display driver programs are expected to show modest growth. We also expect continued traction in our analog businesses. While the analog revenue level remains modest, we now see an increasing number of design opportunities converting to design wins and revenue."
"Based on our current outlook, we must significantly reduce expenses to preserve cash and extend the horizon for our most promising lines of business," continued Mr. Alvarez. "To achieve this, we hired financial advisors during the quarter to assist us in the divestment of our Audio business. We are currently entertaining bids from parties that have expressed interest in this business. Through this divestment and other spending reductions, we are targeting the reduction of our non-GAAP quarterly operating expenses to below $6 million in the first quarter of 2009."
Based on information currently available to the company, expectations for the fourth quarter of 2008 are as follows:
-- Revenue is expected to increase approximately 10% in the fourth
quarter of 2008.
-- Gross margin on product sales, which varies with product mix, selling
price and unit costs, is expected to be approximately flat in the fourth
quarter.
-- Non-GAAP operating expenses will be reduced as described above, with
the goal to be below $6 million in operating expenses in the first quarter
of 2009.
Conference Call Today
Leadis will broadcast its conference call today, Thursday, October 23, 2008 at 2 p.m. Pacific Time (5 p.m. Eastern Time) to discuss its third quarter 2008 earnings and provide additional guidance.
To listen to the call, dial 1-877-545-1409 approximately ten minutes before the start of the call. A taped replay will be made available approximately two hours after the conclusion of the call and will remain available for one week. To access the replay, dial 1-888-203-1112. The confirmation code for the replay is 4649358.
A live webcast of the call will be available on the investor relations section of the company's web site, http://ir.leadis.com. An archived webcast of the call will remain available until the company's next earnings call.
About Leadis Technology, Inc.
Leadis Technology, Inc., headquartered in Sunnyvale, California, designs, develops and markets analog and mixed-signal semiconductors that enable and enhance the features and capabilities of portable and consumer electronics devices. Leadis' product offerings include color display drivers, which are critical components of displays used in portable consumer electronic devices; LED drivers, which provide controlled levels of current required to drive light emitting diodes in diverse applications including backlight units; power management ICs including LDOs, LDO controllers, shunt references, thermal switches, current regulators, and battery charger controllers; audio CODEC and FM transmitter ICs, which are integral components in portable media players and their associated aftermarket accessories; and touch controller ICs, which enable highly reliable touch-based input controls and attractive industrial design options for both mobile and non-mobile applications.
Non-GAAP Financial Measures
Leadis reports financial information in accordance with generally accepted accounting principles (GAAP), but believes that non-GAAP financial measures are helpful in evaluating its ongoing operating results and comparing its performance to comparable companies. Leadis management uses financial statements that exclude share-based compensation expense and the impact of purchase accounting expenses, including in-process research and development expenses, amortization of purchased intangible assets, impairment charges for goodwill and other intangible assets, and retention expenses connected with acquisitions, to plan and evaluate its financial performance. Consequently, Leadis has excluded these expenses and charges in deriving calculations of net income (loss), net income (loss) per share, gross profit or margin and certain operating expenses (including cost of sales, research and development, selling, general and administrative, and provision for income taxes). Leadis believes the inclusion of these non-GAAP measures enhances the comparability of current results against the results of prior periods. These non-GAAP measures will enable investors to evaluate the company's operating results and business outlook in a manner similar to how the company internally analyzes its operating results and makes strategic decisions. Investors should note, however, that the non-GAAP financial measures used by the company may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as that of other companies. The company does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures alone or as a substitute for financial information prepared in accordance with GAAP. A reconciliation of GAAP financial measures to non-GAAP financial measures is included in the financial statements portion of this press release. Investors are encouraged to review the related GAAP financial measures and the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measure. For additional information on the non-GAAP financial measures, please see the Form 8-K regarding this press release furnished today with the Securities and Exchange Commission.
Cautionary Language
This press release contains forward-looking statements regarding the company's business and financial outlook for the fourth quarter of 2008 and beyond, based on the company's current expectations. The words "expect," "will," "should," "would," "anticipate," "project," "outlook," "believe," "intend," "confident," "optimistic," "targeted," and similar phrases as they relate to future events are intended to identify such forward-looking statements. These forward-looking statements reflect the company's current views and assumptions but are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are the following: risks that the company may not be able to maintain its current level of revenue or its gross margin levels; risks that one or more of the company's concentrated group of customers may reduce demand or price for the company's products or a particular product; risks that design wins will not result in meaningful revenue; the company's dependence on a limited number of products; risks that the company's new products may not be completed in a timely fashion or gain market acceptance; risks associated with the company's efforts to expand its business beyond display drivers, including efforts to develop and market LED drivers, power management ICs, audio CODEC's and FM transmitters, and touch sensor technology products; risks related to the semiconductor and portable electronic industries; the company's ability to keep up with technological change; risks associated with any strategic transaction undertaken by the company; risks with managing international activities; and other factors. For a discussion of these and other factors that could impact the company's financial results and cause actual results to differ materially from those in the forward-looking statements, please refer to the company's Annual Report on Form 10-K for the year ended December 31, 2007 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, in the sections titled Risk Factors and Forward-Looking Statements, which are available at www.leadis.com. The projections in this press release are based on information currently available to the company. Although such projections, as well as the factors influencing them, may change in the future, the company undertakes no responsibility to update the information contained in this press release. (LDISG)
LEADIS TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
Sep. 30, June 30, Dec. 30,
2008 2008 2007
-------- -------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 27,154 $ 37,710 $ 33,945
Restricted cash 2,467 2,461 2,508
Short-term investments 11,146 11,851 31,286
Accounts receivable, net 4,943 3,772 5,787
Inventory 5,716 4,659 2,210
Prepaid expenses and other current assets 2,387 2,483 4,270
-------- -------- --------
Total current assets 53,813 62,936 80,006
Property and equipment, net 3,042 3,513 4,534
Goodwill and purchased intangible assets, net 80 107 11,233
Long term investments 2,307 2,307 3,000
Other assets 1,558 1,630 806
-------- -------- --------
Total assets $ 60,800 $ 70,493 $ 99,579
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,574 $ 7,479 $ 4,538
Taxes payable 89 80 353
Deferred margin 543 386 6
Other accrued liabilities 4,721 4,463 6,691
-------- -------- --------
Total current liabilities 11,927 12,408 11,588
Long-term tax liabilities 1,994 2,684 3,439
Other noncurrent liabilities 767 901 1,075
-------- -------- --------
Total liabilities 14,688 15,993 16,102
Stockholders' equity:
Common stock and additional paid-in capital 109,118 109,814 109,171
Accumulated deficit (63,006) (55,314) (25,694)
-------- -------- --------
Total stockholders' equity 46,112 54,500 83,477
-------- -------- --------
Total liabilities and stockholders'
equity $ 60,800 $ 70,493 $ 99,579
======== ======== ========
LEADIS TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
------------------------------- --------------------
Sep. 30, June 30, Sep. 30, Sep. 30, Sep. 30,
2008 2008 2007 2008 2007
--------- --------- --------- --------- ---------
Product revenue $ 4,645 $ 5,606 $ 9,943 $ 15,802 $ 33,349
NRE revenue 74 307 - 437 -
--------- --------- --------- --------- ---------
Total revenue 4,719 5,913 9,943 16,239 33,349
Product cost of
sales 4,307 5,483 8,857 15,367 29,834
NRE cost of sales 144 453 - 629 -
--------- --------- --------- --------- ---------
Total cost of sales 4,451 5,936 8,857 15,996 29,834
Gross profit 268 (23) 1,086 243 3,515
Research and
development
expenses 5,434 5,485 5,391 16,252 13,230
Selling, general and
administrative
expenses 3,744 4,306 4,318 12,749 11,150
Amortization of
purchased
intangible assets 27 848 627 1,723 1,463
Impairment of
goodwill and
intangible assets - 9,445 - 9,445 -
In process research
and development - - 500 - 1,820
--------- --------- --------- --------- ---------
Total operating
expenses 9,205 20,084 10,836 40,169 27,663
--------- --------- --------- --------- ---------
Operating loss (8,937) (20,107) (9,750) (39,926) (24,148)
Interest and other
income, net 581 340 997 1,718 3,319
--------- --------- --------- --------- ---------
Loss before benefit
from income taxes (8,356) (19,767) (8,753) (38,208) (20,829)
Benefit from income
taxes (665) (221) (394) (896) (946)
--------- --------- --------- --------- ---------
Net loss $ (7,691) $ (19,546) $ (8,359) $ (37,312) $ (19,883)
========= ========= ========= ========= =========
Basic and diluted
net loss per share $ (0.26) $ (0.67) $ (0.29) $ (1.28) $ (0.68)
========= ========= ========= ========= =========
Shares used in
computing basic and
diluted per share
amounts 29,379 29,221 28,973 29,205 29,225
========= ========= ========= ========= =========
LEADIS TECHNOLOGY, INC.
SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
------------------------------- --------------------
Sep. 30, June 30, Sep. 30, Sep. 30, Sep. 30,
2008 2008 2007 2008 2007
--------- --------- --------- --------- ---------
A. GAAP net loss $ (7,691) $ (19,546) $ (8,359) $ (37,312) $ (19,883)
Adjustment for
stock-based
compensation
within:
Cost of sales 44 53 47 116 109
Research and
development
expenses 250 329 291 712 742
Selling,
general and
administrative
expenses 99 229 634 900 1,551
Provision for
income taxes - - (213) (218) (439)
Adjustment for
acquisition of
business within:
Research and
development
expenses 154 164 408 516 938
Selling,
general and
administrative
expenses 242 242 217 738 520
Amortization
of purchased
intangible
assets 27 848 627 1,723 1,463
In-process
research and
development - - 500 - 1,820
Provision for
income taxes - - (25) - (61)
Adjustment for
impairment of
goodwill and
intangible
assets - 9,445 - 9,445 -
--------- --------- --------- --------- ---------
Non-GAAP net loss $ (6,875) $ (8,236) $ (5,873) $ (23,380) $ (13,240)
B. GAAP basic and
diluted net loss
per share $ (0.26) $ (0.67) $ (0.29) $ (1.28) $ (0.68)
Adjustment for
stock-based
compensation 0.01 0.02 0.03 0.05 0.07
Adjustment for
acquisition of
business 0.02 0.04 0.06 0.10 0.16
Adjustment for
impairment of
goodwill and
intangible
assets - 0.33 - 0.32 -
--------- --------- --------- --------- ---------
Non-GAAP basic and
diluted net loss
per share $ (0.23) $ (0.28) $ (0.20) $ (0.81) $ (0.45)
C. GAAP Gross Margin 5.7% -0.4% 10.9% 1.5% 10.5%
Adjustment for
stock-based
compensation 0.9% 0.9% 0.5% 0.7% 0.3%
--------- --------- --------- --------- ---------
Non-GAAP Gross
Margin 6.6% 0.5% 11.4% 2.2% 10.9%
D. GAAP operating
expenses $ 9,205 $ 20,084 $ 10,836 $ 40,169 $ 27,663
Adjustment for
stock-based
compensation
within:
Research and
development
expenses (250) (329) (291) (711) (742)
Selling,
general and
administrative
expenses (99) (229) (634) (900) (1,551)
Adjustment for
acquisition of
business within:
Research and
development
expenses (154) (164) (408) (516) (938)
Selling,
general and
administrative
expenses (242) (242) (217) (738) (520)
Amortization
of purchased
intangible
assets (27) (848) (627) (1,723) (1,463)
In-process
research and
development - - (500) - (1,820)
Adjustment for
impairment of
goodwill and
intangible
assets - (9,445) - (9,445) -
--------- --------- --------- --------- ---------
Non-GAAP Operating
expenses $ 8,433 $ 8,827 $ 8,159 $ 26,136 $ 20,629
IR Contacts: John Allen Chief Financial Officer Eric Itakura Director Business Development & Investor Relations (408) 331-8616