SOURCE: Leadis Technology, Inc.

January 29, 2008 16:13 ET

Leadis Technology Reports Fourth Quarter 2007 Results

SUNNYVALE, CA--(Marketwire - January 29, 2008) - 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 fourth quarter of 2007, ended December 31, 2007.

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

Contact Information

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