SOURCE: Leadis Technology, Inc.

April 22, 2008 16:08 ET

Leadis Technology Reports First Quarter 2008 Results

SUNNYVALE, CA--(Marketwire - April 22, 2008) - Leadis Technology, Inc. (NASDAQ: LDIS), an analog and mixed-signal semiconductor developer of color display drivers, LED drivers, power management and audio ICs for mobile consumer electronics devices, today announced results for the first quarter of 2008, ended March 31, 2008.

Q1 2008 Highlights

--  Leadis announced significant progress on new product design wins in
    the quarter. Leadis was awarded five new display driver program design
    wins, three new Audio design wins and two new LED/Power design wins.
    
--  Leadis announced sample availability of four new 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, as well as a
    new family of highly efficient 4-channel white LED drivers.
    
--  Leadis announced sample availability of the world's first stand-alone
    Class G Headphone amplifiers featuring the company's proprietary Gmax™
    and ARA™ technologies. The devices are optimized for ultra-low power
    dissipation, which allows for increased battery run-time on portable audio
    devices.
    
--  Leadis announced production availability and commencement of volume
    shipments of the LDS285, a TFT LCD driver enabled with the company's
    proprietary PowerLite™ dynamic backlight control (DBC) technology. Since
    the beginning of March, Leadis has shipped over one million units of this
    device to a tier-one cell phone customer.
    

Financial Results

First quarter revenue was $5.6 million, meeting the low end of the company's guidance. First quarter gross margin was 0%, with charges for excess and obsolete inventory of $0.5 million reducing the gross margin by approximately 9%. Under generally accepted accounting principles (GAAP), first quarter net loss was $10.1 million or $0.35 per basic share, as compared with the $11.0 million, or $0.38 per basic share, net loss reported in the previous quarter and the $5.5 million, or $0.19 per basic share, net loss reported in the first quarter of 2007. The loss in the fourth quarter of 2007 included a $0.7 million charge for in-process research and development acquired during the quarter, and an acceleration of $0.8 million in the Mondowave retention bonus. The loss in the first quarter of 2007 included a $1.3 million charge for in-process research and development in connection with the Mondowave acquisition.

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 first quarter of 2008 was $8.3 million, or $0.28 per basic share, as compared to a net loss of $7.2 million, or $0.25 per basic share, in the fourth quarter of 2007 and a net loss of $3.2 million, or $0.11 per basic share, in the first 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 investments of $60 million as of March 31, 2008, which was $10.8 million lower than its balance as of December 31, 2007, due primarily to the first quarter net loss.

Business Summary

The company remains focused on expanding its line of analog and mixed-signal products and is driving toward design wins in the new business areas to meet the objective of revenue expansion beyond the core display driver business. In addition, the company is concentrating its display driver efforts on designs using advanced technology that offer more attractive features to its customers as well as greater opportunity for profitability. Design win progress and other highlights for the quarter included:

--  Leadis achieved its first Audio design wins and achieved first product
    shipments, with three design wins.
    
--  Display driver design wins included Leadis' first design utilizing
    RGBW technology licensed from VP Dynamics, and its first design utilizing
    the Epic™ technology designed to dramatically improve AM-OLED
    manufacturing yields and picture quality, as well as three other AM-OLED
    designs. Each of these design wins, targeted to ramp in Q1 2009 and reach
    volume production in Q2 2009, offers the opportunity for higher margin
    sales.
    
--  The two LED/Power design wins were for two cell phone customers in
    Asia. One design win was for the six channel charge pump LED driver LDS8861
    and the other for the four channel charge pump LDS8845.
    
--  Leadis announced sampling of six new LED drivers during the quarter:
    LDS8869, LDS8868 and LDS8867, a new family of charge-pump based LED drivers
    with a new 1-wire interface; LDS8860, a new charge-pump based 6-channel LED
    driver with I2C serial interface; and LDS8845 and LDS8846, a new family of
    no-noise, highly efficient 4-channel white LED drivers.
    
--  Leadis announced sampling of the world's first stand-alone Class G
    headphone amplifiers. The LDS9505 and LDS9504 are optimized for ultra-low
    power dissipation, dramatically increasing battery run-time of portable
    audio devices. Following in the foot-steps of earlier Leadis products, the
    LDS9505 and LDS9504 incorporate Gmax™ technology, a proprietary and
    highly effective implementation of Class-G.
    
--  Leadis expanded its Board of Directors with the addition of Dr. I-Wei
    Wu, a flat panel industry veteran. Dr. Wu provides valuable experience from
    his past work with Taiwan-based partners and suppliers, as well as bringing
    new technologies to the marketplace.
    

Q2 2008 Outlook

"We will return to quarter over quarter revenue growth in the second quarter and expect this trend to continue for the remainder of the year," said Mr. Paul Novell, Executive Vice President of Marketing. "We expect revenue to increase 25% in the second quarter of 2008 as compared with the first quarter, with volume production commencing on two of our 2007 display driver design wins as well as continued growth in the LDS285 program that ramped in March. While revenue from our analog products remains modest, we are pleased by our first quarter design wins and current pipeline of customer opportunities."

Based on information currently available to the company, expectations for the second quarter of 2008 are as follows:

--  Revenue is expected to increase to $7.0 million dollars, plus or minus
    10%, in the second quarter of 2008 as compared with Q1 2008.
    
--  Gross margin on product sales, which varies with product mix, selling
    price and unit costs, is expected to be approximately 9% in the second
    quarter.
    
--  Operating expenses are expected to be approximately $9.0 million.
    

"First quarter financial results were at the low end of our guidance for revenue, and gross margins were lower due to inventory reserve charges," said Mr. Tony Alvarez, President and CEO. "Operating expenses were below our guidance and are targeted to remain roughly flat. We remain focused on revenue growth for 2008, in particular growth from our analog products which we expect will pick up in the second half of the year driven by first half design wins. We see strong customer interest across all of our product groups. Our initial Audio design wins and two cell phone design wins in LED/Power are evidence of our progress, and we anticipate greater design win activity in these product lines during the second quarter."

Conference Call Today

Leadis will broadcast its conference call today, Tuesday, April 22, 2008 at 2 p.m. Pacific Time (5 p.m. Eastern Time) to discuss its first quarter 2008 earnings and provide additional guidance.

To listen to the call, dial 1-877-591-4959 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 7113740.

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; and audio CODEC and FM transmitter ICs, which are integral components in portable 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, LED drivers supporting backlighting applications, and audio ICs supporting portable media players and aftermarket audio.

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 second 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," "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 CODECs 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, in the sections titled Risk Factors and Forward-Looking Statements, which is 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)


                                           March 31, December 31, March 31,
                                             2008       2007       2007
                                           ---------  ---------  ---------
ASSETS
Current assets:
   Cash and cash equivalents               $  39,450  $  33,945  $  53,849
   Restricted cash                             2,418      2,508      2,500
   Short-term investments                     15,442     31,286     37,319
   Accounts receivable, net                    5,340      5,787     11,343
   Inventory                                   1,706      2,210      8,326
   Prepaid expenses and other current
    assets                                     5,070      4,270      3,788
                                           ---------  ---------  ---------
      Total current assets                    69,426     80,006    117,125
Property and equipment, net                    4,021      4,534      3,992
Goodwill and purchased intangible assets,
 net                                          10,466     11,233      7,962
Long term investments, net                     2,607      3,000          -
Other assets                                   1,513        806        814
                                           ---------  ---------  ---------
      Total assets                         $  88,033  $  99,579  $ 129,893
                                           =========  =========  =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                        $   5,331  $   4,538  $  12,164
   Taxes payable                               1,109        353        288
   Deferred margin                               303          6        336
   Other accrued liabilities                   3,811      6,691      3,683
                                           ---------  ---------  ---------
      Total current liabilities               10,554     11,588     16,471
Long-term tax liabilities                      2,957      3,439      3,222
Other noncurrent liabilities                     937      1,075        513
                                           ---------  ---------  ---------
      Total liabilities                       14,448     16,102     20,206

Stockholders' equity:
   Common stock and additional paid-in
    capital                                  109,354    109,171    109,907
   Accumulated deficit                       (35,769)   (25,694)      (220)
                                           ---------  ---------  ---------
      Total stockholders' equity              73,585     83,477    109,687
                                           ---------  ---------  ---------
      Total liabilities and stockholders'
       equity                              $  88,033  $  99,579  $ 129,893
                                           =========  =========  =========






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


                                                 Three Months Ended
                                           -------------------------------
                                           March 31, December 31, March 31,
                                             2008       2007       2007
                                           ---------  ---------  ---------
Revenue                                    $   5,607  $   6,233  $  13,670

Cost of sales                                  5,609      6,510     12,298
                                           ---------  ---------  ---------
   Gross profit                                   (2)      (277)     1,372

Research and development expenses              5,333      5,370      3,361
Selling, general and administrative
 expenses                                      4,699      5,233      3,224
Amortization of purchased intangible
 assets                                          848        627        209
In-process research and development                -        650      1,320
                                           ---------  ---------  ---------
   Total operating expenses                   10,880     11,880      8,114
                                           ---------  ---------  ---------

Operating loss                               (10,882)   (12,157)    (6,742)
Interest and other income, net                   797      1,074      1,238
                                           ---------  ---------  ---------
Loss before benefit from income taxes        (10,085)   (11,083)    (5,504)
Benefit from income taxes                        (10)       (34)       (46)
                                           ---------  ---------  ---------
   Net loss                                $ (10,075) $ (11,049) $  (5,458)
                                           =========  =========  =========

Basic and diluted net loss per share       $   (0.35) $   (0.38) $   (0.19)
                                           =========  =========  =========

Shares used in computing basic and diluted
 per share amounts                            29,016     28,813     29,329
                                           =========  =========  =========







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


                                                 Three Months Ended
                                           -------------------------------
                                           March 31, December 31, March 31,
                                              2008       2007       2007
                                           ---------  ---------  ---------

A. GAAP net loss                           $ (10,075) $ (11,049) $  (5,458)
     Adjustment for stock-based
      compensation within:
        Cost of sales                             19         50         18
        Research and development expenses        133        304        196
        Selling, general and administrative
         expenses                                572        637        437
        Benefit from (provision for) income
         taxes                                  (218)       184       (143)
     Adjustment for acquisition of business
      within:
        Research and development expenses        198        308        136
        Selling, general and administrative
         expenses                                254      1,126         72
        Amortization of purchased
         intangible assets                       848        627        209
        In-process research and development        -        650      1,320
        Provision for income taxes                 -        (13)       (16)
                                           ---------  ---------  ---------
  Non-GAAP net loss                        $  (8,269) $  (7,176) $  (3,229)

B. GAAP basic and diluted net loss per
    share                                  $   (0.35) $   (0.38) $   (0.19)
     Adjustment for stock-based
      compensation                              0.02       0.04       0.02
     Adjustment for acquisition of business     0.05       0.09       0.06
                                           ---------  ---------  ---------
  Non-GAAP basic and diluted net loss per
   share                                   $   (0.28) $   (0.25) $   (0.11)

C. GAAP Gross Margin                             0.0%      -4.4%      10.0%
     Adjustment for stock-based
      compensation                               0.3%       0.8%       0.1%
                                           ---------  ---------  ---------
  Non-GAAP Gross Margin                          0.3%      -3.6%      10.1%

D. GAAP operating expenses                 $  10,880  $  11,880  $   8,114
     Adjustment for stock-based
      compensation within:
        Research and development expenses       (133)      (304)      (196)
        Selling, general and administrative
         expenses                               (572)      (637)      (437)
     Adjustment for acquisition of business
      within:
        Research and development expenses       (198)      (308)      (136)
        Selling, general and administrative
         expenses                               (254)    (1,126)       (72)
        Amortization of purchased
         intangible assets                      (848)      (627)      (209)
        In-process research and development        -       (650)    (1,320)
                                           ---------  ---------  ---------
  Non-GAAP Operating expenses              $   8,875  $   8,228  $   5,744

Contact Information

  • IR Contacts:
    John Allen
    Chief Financial Officer
    Eric Itakura
    Director Business Development & Investor Relations
    (408) 331-8616