SOURCE: Leadis Technology, Inc.

October 23, 2007 16:05 ET

Leadis Technology Reports Third Quarter 2007 Results

SUNNYVALE, CA--(Marketwire - October 23, 2007) - Leadis Technology, Inc. (NASDAQ: LDIS), an analog and mixed-signal semiconductor developer of color display drivers, LED drivers, and audio ICs for mobile consumer electronics devices, today announced results for the third quarter of 2007, ended September 30, 2007.

Q3 '07 Highlights

--  Leadis was awarded 4 new display driver program design wins, bringing
    its year-to-date total to 11.
    
--  Leadis released two new LED driver products into sampling, achieved
    its first two design wins on LED drivers and generated first revenue from
    sales of LED driver products.
    
--  Leadis announced a strategic partnership and licensing agreement for
    RGBW technology for use in display drivers.
    
--  Leadis acquired technology that is expected to significantly improve
    manufacturing yields for AM-OLED displays and extend their lifetime by
    correcting image sticking.
    
--  Leadis announced the expansion of its distribution coverage in the
    Asia Pacific region.
    
--  Leadis started a new analog design center in Arizona.
    

Financial Results

Third quarter revenue was $9.9 million, meeting the company's guidance and slightly higher than the previous quarter. Third quarter gross margin was 11%, consistent with the prior quarter. Under generally accepted accounting principles (GAAP), third quarter net loss was $8.4 million or $0.29 per basic share, as compared with the $6.1 million, or $0.21 per basic share, net loss reported in the previous quarter and the $2.8 million, or $0.10 per basic share, net loss reported in the third quarter of 2006. The loss in the current quarter includes a $0.5 million charge for in-process research and development acquired during the quarter.

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 third quarter of 2007 was $5.9 million, or $0.20 per basic share, as compared to a net loss of $4.1 million, or $0.14 per basic share, in the second quarter of 2007 and a net loss of $1.7 million, or $0.06 per basic share, in the third quarter of 2006. 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 $81.0 million as of September 30, 2007, which was $5.8 million lower than its balance as of June 30, 2007, due primarily to the third quarter net loss and $2.1 million of share repurchases under the company's share buy-back program announced in the first quarter of this year.

Business Summary

The company continues to diversify its business beyond display drivers by leveraging its analog and mixed-signal capabilities to expand into synergistic markets, with the vision of becoming an analog mixed-signal IC supplier of "Sight, Sound, and Touch" solutions targeting a larger available market at higher gross margins. The company also continues to add advanced technology to its display driver business in order to offer customers differentiated higher value products. Highlights for the quarter included:

--  Leadis announced sampling of the LDS8842 and LDS8830, LED drivers
    featuring a highly efficient 1.33x-mode enabled charge pump.  The LDS8842
    supports up to four LEDs with a maximum current supply of 25mA per channel,
    while the LDS8830 supports up to three LEDs with a maximum current supply
    of 32mA per channel.  Both drivers are targeted at mobile backlighting
    applications.  The company now has five LED driver products available for
    sale.
    
--  Leadis announced a strategic partnership with VP Dynamics on RGBW
    technology for small and medium mobile displays.  Leadis will license VP
    Dynamics' VPW™ RGBW technology for use in LCD, AM-OLED and other display
    drivers, empowering products with lower power consumption, higher
    resolution, excellent brightness, and better contrast.
    
--  Leadis announced the acquisition of intellectual property from
    Nuelight Corporation designed to correct image sticking issues that can
    occur with the display of static content and significantly improve
    manufacturing yields in AM-OLED displays.  This technology has the
    potential to accelerate AM-OLED market share gains by making it more
    reliable and cost competitive with alternative display technologies that
    lack the visual experience and low-power advantages offered with AM-OLED
    displays.
    
--  Leadis won four new display driver program designs during the second
    quarter. Three of the four design wins were for Leadis' new family of a-TFT
    QVGA drivers, which was launched with the LDS285 PowerLite™ enabled
    driver.  The fourth design win was for a CSTN driver.
    
--  Leadis purchased approximately 600,000 shares of its common stock
    through the stock buyback program announced in January.  Shares purchased
    year to date total approximately 1,100,000.
    

"Third quarter financial results met expectations at the revenue and gross margin level, while operating expenses exceeded our guidance as a result of accelerated investment in research and development activities," said Mr. Tony Alvarez, President and CEO. "We have added exciting intellectual property to our traditional display driver business, generating a great deal of interest among our customers. Likewise, customer discussions on our new businesses are very encouraging. We are pleased to achieve initial sales of LED driver devices during the quarter, and customer feedback on our Audio products has been very positive. We remain focused on building revenue in each of our businesses."

Q4 2007 Outlook

"We expect revenue to decline in the fourth quarter of 2007," said Mr. Paul Novell, Executive Vice President of Sales and Marketing. "Initial revenue from our 2007 display driver design wins has pushed into early 2008, while our legacy product revenue will decrease during the quarter. Our longer term view remains optimistic based on the large number of 2007 design wins and strong customer interest resulting from the advanced technology we have added this year. Our recently announced expansion of distributors in the Asia Pacific region will enable us to gain access to a broader base of customers and begin to build sales momentum heading into 2008, especially for our new product lines."

Based on information currently available to the company, expectations for the fourth quarter of 2007 are as follows:

--  Revenues are expected to decline to $6 - $7 million in the fourth
    quarter.
    
--  Gross margin, which varies with product mix, selling price and unit
    costs, is expected to decline slightly compared to the third quarter.
    
--  Operating expenses are expected to increase by approximately $0.3
    million, with headcount additions and engineering mask costs driving much
    of this increase.
    

"Our primary goals entering 2007 were to create greater value in our display driver business through product innovation and to diversify our business beyond display driver ICs," said Mr. Alvarez. "We believe we have built a foundation for future success on these two goals. Our challenge is now to turn the innovation into profitable revenue."

Conference Call Today

Leadis will broadcast its conference call today, Tuesday, October 23, 2007 at 2 p.m. Pacific Time (5 p.m. Eastern Time) to discuss its third quarter 2007 earnings and provide additional guidance.

To listen to the call, dial 1-888-218-8032 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 2254160.

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 fourth quarter of 2007 and 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 LCD and OLED display drivers, including efforts to develop and market LED drivers, audio CODECs 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 June 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. (LDISG)

                          LEADIS TECHNOLOGY, INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                                (Unaudited)
                              (In thousands)

                                  September 30,    June 30,    December 31,
                                      2007          2007          2006
                                  ============  ============  =============
ASSETS
Current assets:
  Cash and cash equivalents       $     34,471  $     44,020  $      62,697
  Restricted cash                        2,559         2,530              -
  Short-term investments                44,016        40,287         43,845
  Accounts receivable, net               9,043         8,127         17,399
  Inventory                              4,169         5,635          7,024
  Prepaid expenses and other
   current assets                        3,730         3,874          4,498
                                  ------------  ------------  -------------
    Total current assets                97,988       104,473        135,463
Property and equipment, net              4,497         4,725          4,160
Goodwill                                 2,867         2,867            281
Purchased intangible assets, net         3,841         4,468              -
Other assets                               845           833            825
                                  ------------  ------------  -------------
    Total assets                  $    110,038  $    117,366  $     140,729
                                  ============  ============  =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                $      7,085  $      5,807  $      19,623
  Taxes payable                             70           254          2,342
  Deferred margin                          139           281            383
  Other accrued liabilities              5,564         4,328          3,805
                                  ------------  ------------  -------------
    Total current liabilities           12,858        10,670         26,153
Long-term tax liabilities                2,419         2,689              -
Other noncurrent liabilities             1,141         1,159            539
                                  ------------  ------------  -------------
    Total liabilities                   16,418        14,518         26,692

Stockholders' equity:
  Common stock and additional
   paid-in capital                     108,265       109,134        109,110
  Retained earnings (Accumulated
   deficit)                            (14,645)       (6,286)         4,927
                                  ------------  ------------  -------------
    Total stockholders’ equity          93,620       102,848        114,037
                                  ------------  ------------  -------------
    Total liabilities and
     stockholders’ equity         $    110,038  $    117,366  $     140,729
                                  ============  ============  =============



                          LEADIS TECHNOLOGY, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Unaudited)
                 (In thousands, except per share amounts)


                           Three Months Ended           Nine Months Ended
                     ===============================  ====================
                     September     June    September  September  September
                         30,        30,        30,        30,        30,
                        2007       2007       2006       2007       2006
                     =========  =========  =========  =========  =========
Revenue              $   9,943  $   9,735  $  22,312  $  33,349  $  77,306

Cost of sales (1)        8,857      8,678     19,443     29,834     67,686
                     ---------  ---------  ---------  ---------  ---------
  Gross profit           1,086      1,057      2,869      3,515      9,620

Research and
 development
 expenses (1)            5,391      4,479      3,797     13,230     10,824
Selling, general and
 administrative
 expenses (1)            4,318      3,608      3,316     11,150     10,841
Amortization of
 purchased
 intangible assets         627        627          -      1,463          -
In-process research
 and development           500          -          -      1,820          -
                     ---------  ---------  ---------  ---------  ---------
  Total operating
   expenses             10,836      8,714      7,113     27,663     21,665
                     ---------  ---------  ---------  ---------  ---------
Operating loss          (9,750)    (7,657)    (4,244)   (24,148)   (12,045)
Interest and other
 income, net               997      1,085      1,126      3,319      3,041
                     ---------  ---------  ---------  ---------  ---------
Loss before provision
 (benefit) for
 income taxes           (8,753)    (6,572)    (3,118)   (20,829)    (9,004)
Provision (benefit)
 for income taxes         (394)      (506)      (296)      (946)       (25)
                     ---------  ---------  ---------  ---------  ---------
  Net loss before
   cumulative change
   in accounting
   principle            (8,359)    (6,066)    (2,822)   (19,883)    (8,979)
Cumulative effect of
 change in accounting
 principle                   -          -          -          -        142
                     ---------  ---------  ---------  ---------  ---------
  Net Income (loss)  $  (8,359) $  (6,066) $  (2,822) $ (19,883) $  (8,837)
                     =========  =========  =========  =========  =========

Basic and diluted
 net loss per share  $   (0.29) $   (0.21) $   (0.10) $   (0.68) $   (0.31)
                     =========  =========  =========  =========  =========

Shares used in
 computing basic and
 diluted per share
 amounts                28,973     29,376     28,935     29,225     28,716
                     =========  =========  =========  =========  =========

Note:
(1) Includes stock-based compensation, as follows:


                           Three Months Ended           Nine Months Ended
                     ===============================  ====================
                     September     June    September  September  September
                         30,        30,        30,        30,        30,
                        2007       2007       2006       2007       2006
                     =========  =========  =========  =========  =========
Cost of sales       $       47 $       44 $      116 $       71 $      368
Research and
 development
 expenses                  291        255        258        742        799
Selling, general and
 administrative
 expenses                  634        480        864      1,587      2,431



                          LEADIS TECHNOLOGY, INC.
         SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS
                                (Unaudited)
                 (In thousands, except per share amounts)


                                               Three Months Ended
                                     =====================================
                                     September 30,  June 30,  September 30,
                                         2007        2007          2006
                                     ============  =========  ============

A. GAAP net loss                     $     (8,359) $  (6,066) $     (2,822)
     Adjustment for stock-based
      compensation within:
       Cost of sales                           47         44           116
       Research and development
        expenses                              291        255           258
       Selling, general and
        administrative expenses               634        480           864
       Benefit for income taxes              (213)       (83)         (156)
     Adjustment for acquisition of
      business within:
       Research and development
        expenses                              408        394             -
       Selling, general and
        administrative expenses               217        231             -
       Amortization of purchased
        intangible assets                     627        627             -
       In-process research and
        development                           500          -             -
       Benefit for income taxes               (25)       (20)            -
                                     ------------  ---------  ------------
   Non-GAAP net loss                 $     (5,873) $  (4,138) $     (1,740)

B. GAAP basic and diluted net loss
    per share                        $      (0.29) $   (0.21) $      (0.10)
     Adjustment for stock-based
      compensation                           0.03       0.02          0.04
     Adjustment for acquisition of
      business                               0.06       0.05             -
                                     ------------  ---------  ------------
   Non-GAAP basic and diluted net
    loss per share                   $      (0.20) $   (0.14) $      (0.06)

C. GAAP Gross Margin                         10.9%      10.9%         12.9%
     Adjustment for stock-based
      compensation                            0.5%       0.4%          0.5%
                                     ------------  ---------  ------------
   Non-GAAP Gross Margin                     11.4%      11.3%         13.4%

D. GAAP operating expenses           $     10,836  $   8,714  $      7,113
     Adjustment for stock-based
      compensation within:
       Research and development
        expenses                             (291)      (255)         (258)
       Selling, general and
        administrative expenses              (634)      (480)         (864)
     Adjustment for acquisition
      of business within:
        Research and development
         expenses                            (408)      (394)            -
       Selling, general and
        administrative expenses              (217)      (231)            -
       Amortization of purchased
        intangible assets                    (627)      (627)            -
       In-process research and
        development                          (500)         -             -
                                     ------------  ---------  ------------
   Non-GAAP Operating expenses       $      8,159  $   6,727  $      5,991

Contact Information

  • IR Contacts
    John Allen
    Chief Financial Officer

    Eric Itakura
    Director Business Development & Investor Relations
    (408) 331-8616