Q4 2007 Highlights
-- Leadis acquired Acutechnology Semiconductor, Inc., a privately-held
analog semiconductor company specializing in power management technologies
for consumer and industrial markets, in late December 2007. The
acquisition added approximately 20 products, 5 patents and a small team of
experienced analog engineers.
-- Leadis was awarded 4 new display driver program design wins, reaching
its target of 15 design wins in 2007. Leadis was also awarded one new LED
driver design win.
-- Leadis announced sample availability of a family of charge-pump based
LED drivers that use the company's proprietary PowerLite™ current
regulator to deliver up to 95% power efficiency for longer battery life.
-- Leadis completed tape-out of its first Touch product, with engineering
samples expected to be available for evaluation in the first half of 2008.
Financial Results
Fourth quarter revenue was $6.2 million, meeting the company's guidance. Fourth quarter gross margin was (4%), with charges for excess and obsolete inventory of $0.8 million reducing the gross margin by approximately 13%. Under generally accepted accounting principles (GAAP), fourth quarter net loss was $10.9 million or $0.38 per basic share, as compared with the $8.4 million, or $0.29 per basic share, net loss reported in the previous quarter and the $3.1 million, or $0.11 per basic share, net loss reported in the fourth quarter of 2006. The loss in the current quarter includes a $0.6 million estimated charge for in-process research and development acquired during the quarter in connection with the Acutechnology acquisition, and an acceleration of $0.8 million in the Mondowave retention bonus. The company anticipates finalizing measurement of the charge for in-process research and development related to the Acutechnology transaction in the next several weeks and will report the final charge in its Annual Report on Form 10-K to be filed in March 2008.
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. Non-GAAP net loss for the fourth quarter of 2007 was $7.1 million, or $0.25 per basic share, as compared to a net loss of $5.9 million, or $0.20 per basic share, in the third quarter of 2007 and a net loss of $1.5 million, or $0.05 per basic share, in the fourth quarter of 2006. The increase in net loss from the prior quarter is primarily due to the inventory charged discussed previously. 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 short-term investments of $70.7 million as of December 31, 2007, which was $10.3 million lower than its balance as of September 30, 2007, due primarily to the fourth quarter net loss and the $5.0 million acquisition of Acutechnology.
Business Summary
The company remains focused on execution of its strategy of diversification beyond display drivers. The acquisition of Acutechnology enhances Leadis' analog product portfolio and provides the company greater potential for integration through the addition of power management functions to both its LED driver and audio product portfolios, as well as the potential to penetrate portions of the broad power management market. Other highlights for the quarter included:
-- Leadis announced sampling of the LDS8866, LDS8865 and LDS8864, a new
family of high-efficiency charge-pump based LED drivers that use the
company's proprietary PowerLite™ current regulator to deliver up to 95%
power efficiency, extending battery life by up to 20%. These products are
targeted at mobile backlighting applications and support up to six LEDs
with a maximum current of 32mA per channel.
-- Leadis achieved an important milestone with the completion of three
reference designs and two design-ins for its audio products. Reference
designs are turnkey solutions enabling customers to get to market quickly
and have the potential to proliferate into multiple OEMs.
Q1 2008 Outlook
"We expect revenue to be flat plus or minus 10% in the first quarter of 2008 as compared with the 2007 fourth quarter," said Mr. Paul Novell, Executive Vice President of Sales and Marketing. "We will realize initial revenue from our 2007 display driver design wins that will help offset declines in legacy product revenue. Our revenue outlook should improve in the succeeding quarters as our newer display driver designs ramp."
Based on information currently available to the company, expectations for the first quarter of 2008 are as follows:
-- Revenues are expected to be flat plus or minus 10% in the first
quarter of 2008 as compared with Q4 2007.
-- Gross margin on product sales, which varies with product mix, selling
price and unit costs, is expected to be approximately 8% in the first
quarter.
-- Operating expenses are expected to be approximately $9.0 million,
reflecting increases as a result of the Acutechnology acquisition as well
as engineering staffing and mask cost increases.
"Fourth quarter financial results met our revenue expectations, while gross margins were lower due to inventory reserve charges," said Mr. Tony Alvarez, President and CEO. "Operating expenses were below our guidance as a result of new wafer mask activity costs that will fall into the first quarter of 2008. Reflecting on 2007, we successfully diversified beyond our traditional display driver business and added intellectual property in each of our businesses. We believe this positions Leadis for higher margin revenue growth. We remain optimistic about our growth prospects based on customer interest in our newer products, however we have not yet generated appreciable revenue beyond our display driver business. That is our primary goal in 2008."
Conference Call Today
Leadis will broadcast its conference call today, Tuesday, January 29, 2008 at 2 p.m. Pacific Time (5 p.m. Eastern Time) to discuss its fourth quarter 2007 earnings and provide additional guidance.
To listen to the call, dial 1-877-548-7907 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 3426052.
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 mobile and consumer electronics devices. Leadis' product offerings include color display drivers, which are critical components of displays used in mobile consumer electronic devices; LED drivers, which provide controlled levels of current required to drive light emitting diodes in diverse applications including mobile backlight units; and audio CODEC and FM transmitter ICs, which are integral components in mobile media players and their associated aftermarket accessories. Leadis currently supplies display drivers supporting the major small panel display technologies, including a-Si and LTPS TFT LCDs, color STN LCDs, and color OLED displays, and LED drivers supporting mobile backlighting 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, and retention expenses connected with acquisitions, to plan and evaluate its financial performance. Consequently, Leadis has excluded these expenses 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 first quarter and remainder of the 2008 fiscal year based on the company's current expectations. The words "expect," "will," "should," "would," "anticipate," "project," "outlook," "believe," "intend," "confident," "optimistic," 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, audio CODEC's and FM transmitters, and touch sensor technology products; risks related to the semiconductor and mobile 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, 2006 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, 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.
LEADIS TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
December 31, September 30, December 31,
2007 2007 2006
=========== =========== ============
ASSETS
Current assets:
Cash and cash equivalents $ 33,945 $ 34,471 $ 62,697
Restricted cash 2,508 2,559 -
Short-term investments 34,286 44,016 43,845
Accounts receivable, net 5,803 9,043 17,399
Inventory 2,210 4,169 7,024
Prepaid expenses and other current
assets 4,119 3,730 4,498
----------- ----------- ------------
Total current assets 82,871 97,988 135,463
Property and equipment, net 4,582 4,497 4,160
Goodwill and purchased intangible
assets, net 10,278 6,708 281
Other assets 805 845 825
----------- ----------- ------------
Total assets $ 98,536 $ 110,038 $ 140,729
=========== =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,538 $ 7,085 $ 19,623
Taxes payable 353 70 2,342
Deferred margin 6 139 383
Other accrued liabilities 6,619 5,564 3,805
----------- ----------- ------------
Total current liabilities 11,516 12,858 26,153
Long-term income tax liabilities 2,276 2,419 -
Other noncurrent liabilities 1,107 1,141 539
----------- ----------- ------------
Total liabilities 14,899 16,418 26,692
Stockholders' equity:
Common stock and additional
paid-in capital 109,171 108,265 109,110
Retained earnings (Accumulated
deficit) (25,534) (14,645) 4,927
----------- ----------- ------------
Total stockholders' equity 83,637 93,620 114,037
----------- ----------- ------------
Total liabilities and
stockholders' equity $ 98,536 $ 110,038 $ 140,729
=========== =========== ============
LEADIS TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Year Ended
============================ ==================
December September December
31, 30, 31, Dec. 31, Dec. 31,
2007 2007 2006 2007 2006
======== ======== ======== ======== ========
Revenue $ 6,233 $ 9,943 $ 23,903 $ 39,581 $101,208
Cost of sales (1) 6,493 8,857 20,820 36,327 88,506
-------- -------- -------- -------- --------
Gross profit (loss) (260) 1,086 3,083 3,254 12,702
Research and development
expenses (1) 5,370 5,391 2,970 18,599 13,796
Selling, general and
administrative expenses(1) 5,146 4,318 3,946 16,296 14,785
Amortization of purchased
intangible assets 627 627 - 2,090 -
In-process research and
development (2) 600 500 - 2,420 -
-------- -------- -------- -------- --------
Total operating
expenses 11,743 10,836 6,916 39,405 28,581
-------- -------- -------- -------- --------
Operating loss (12,003) (9,750) (3,833) (36,151) (15,879)
Interest and other
income, net 1,071 997 1,308 4,390 4,349
-------- -------- -------- -------- --------
Loss before provision
(benefit) for income
taxes (10,932) (8,753) (2,525) (31,761) (11,530)
Provision (benefit) for
income taxes (43) (394) 548 (989) 523
-------- -------- -------- -------- --------
Net loss before
cumulative change in
accounting principle (10,889) (8,359) (3,073) (30,772) (12,053)
Cumulative effect of
change in accounting
principle - - - - 142
-------- -------- -------- -------- --------
Net loss $(10,889) $ (8,359) $ (3,073) $(30,772) $(11,911)
======== ======== ======== ======== ========
Basic and diluted net
loss per share:
Prior to cumulative
effect of change in
accounting principle $ (0.38) $ (0.29) $ (0.11) $ (1.06) $ (0.42)
Cumulative effect of
change in accounting
principle - - - - $ 0.01
======== ======== ======== ======== ========
Basic and diluted net
loss per share $ (0.38) $ (0.29) $ (0.11) $ (1.06) $ (0.41)
Shares used in computing
basic and diluted per
share amounts 28,813 28,973 29,187 29,119 28,802
======== ======== ======== ======== ========
Note:
(1) Includes stock-based compensation, as follows:
Three Months Ended Year Ended
============================ ==================
December September December
31, 30, 31, Dec. 31, Dec. 31,
2007 2007 2006 2007 2006
======== ======== ======== ======== ========
Cost of sales $ 50 $ 47 $ 48 $ 122 $ 417
Research and
development expenses 304 291 219 1,046 1,017
Selling, general and
administrative
expenses 637 634 801 2,223 3,232
(2) The Company has estimated the in-process R&D charges for the three
month period ending 12/31/2007. It is possible that this estimate could
change to a number between 400-800 thousand dollars. The Company
expects to finalize the in process R&D charge and report it in the
Annual Report on Form 10-K.
LEADIS TECHNOLOGY, INC.
SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Year Ended
========================== ==================
December September December
31, 30, 31, Dec. 31, Dec. 31,
2007 2007 2006 2007 2006
======== ======= ======= ======== ========
A. GAAP net loss $(10,889) $(8,359) $(3,073) $(30,772) $(11,911)
Adjustment for stock-
based compensation within:
Cost of sales 50 47 48 122 417
Research and
development expenses 304 291 219 1,046 1,017
Selling, general and
administrative
expenses 637 634 801 2,223 3,232
Benefit (provision)
for income taxes 185 (213) 505 (254) -
Adjustment for acquisition
of business within:
Research and
development expenses 308 408 - 1,246 -
Selling, general and
administrative
expenses 1,126 217 - 1,646 -
Amortization of
purchased intangible
assets 627 627 - 2,090 -
In-process research
and development 600 500 - 2,420 -
Provision for income
taxes (13) (25) - (74) -
Cumulative effect of
change in accounting
principle - - - - (142)
-------- ------- ------- -------- --------
Non-GAAP net loss $ (7,065) $(5,873) $(1,500) $(20,307) $ (7,387)
B. GAAP basic and diluted
net loss per share $ (0.38) $ (0.29) $ (0.11) $ (1.06) $ (0.41)
Adjustment for stock-
based compensation 0.04 0.03 0.06 0.11 0.15
Adjustment for
acquisition of
business 0.09 0.06 - 0.25 -
-------- ------- ------- -------- --------
Non-GAAP basic and
diluted net loss per
share $ (0.25) $ (0.20) $ (0.05) $ (0.70) $ (0.26)
C. GAAP Gross Margin (4.2%) 10.9% 12.9% 8.2% 12.6%
Adjustment for stock-
based compensation 0.8% 0.5% 0.2% 0.3% 0.4%
-------- ------- ------- -------- --------
Non-GAAP Gross Margin (3.4%) 11.4% 13.1% 8.5% 13.0%
D. GAAP operating expenses $ 11,743 $10,836 $ 6,916 $ 39,405 $ 28,581
Adjustment for stock-
based compensation within:
Research and
development expenses (304) (291) (219) (1,046) (1,017)
Selling, general and
administrative
expenses (637) (634) (801) (2,223) (3,232)
Adjustment for acquisition
of business within:
Research and
development expenses (308) (408) - (1,246) -
Selling, general and
administrative
expenses (1,126) (217) - (1,646) -
Amortization of
purchased intangible
assets (627) (627) - (2,090) -
In-process research
and development (600) (500) - (2,420) -
-------- ------- ------- -------- --------
Non-GAAP Operating
expenses $ 8,141 $ 8,159 $ 5,896 $ 28,734 $ 24,332
IR Contacts John Allen Chief Financial Officer Eric Itakura Director Business Development & Investor Relations (408) 331-8616