QuickLogic Corporation

Jul 23, 2008

QuickLogic Announces Second Quarter Fiscal 2008 Results - CSSP Customer Design Activity Gains Momentum

-- Strong Response to VEE(TM) Technology Launch in Asia Pacific

SUNNYVALE, Calif., Jul 23, 2008 (BUSINESS WIRE) -- QuickLogic Corporation (NASDAQ:QUIK), the lowest power programmable solutions leader, today announced the financial results for its fiscal second quarter ended June 29, 2008.

Total revenue for the second quarter of 2008 was $8.7 million, down 21 percent from the first quarter of 2008 and up four percent from the second quarter of 2007. The sequential decline in revenue was primarily due to lower end-of-life product revenue. The year-on-year increase in revenue was primarily due to a $2.0 million increase in new product revenue partially offset by a decline in end-of-life product revenue.

Under generally accepted accounting principles (GAAP), the net loss for the second quarter of 2008 was $4.7 million, or $0.16 per share. The second quarter net loss includes previously announced long-lived asset impairment charges of $2.0 million associated with reduced new product revenue visibility and lower utilization of licensed EDA software, restructuring costs of $452,000 associated with our operational realignment and $417,000 for the write-down of our equity investment in Tower Semiconductor Ltd. Collectively these charges totaled $2.9 million, or $0.10 per share, and lowered our gross margin by 17.7 percent of revenue. Our second quarter net loss of $4.7 million compares with a net loss of $1.4 million, or $0.05 per share, in the first quarter of 2008 and a net loss of $2.1 million, or $0.07 per share, in the second quarter of 2007.

On a non-GAAP basis, the net loss for the second quarter of 2008 was $929,000, or $0.03 per share, compared with a net loss of $712,000, or $0.02 per share, in the first quarter of 2008 and a net loss of $1.7 million, or $0.06 per share, in the second quarter of 2007. Gross margin, on a non-GAAP basis, was 55.7% for the second quarter of 2008 compared with 52.9% for the first quarter of 2008 and 53.3% for the second quarter of 2007.

"Our results were in line with or better than our guidance for the second quarter, and new product revenue was toward the high end of guidance for the quarter," said E. Thomas Hart, chairman, president and CEO. "We are encouraged by the continued growth of customer design activity for our CSSP solutions and the response in Asia Pacific to our Visual Enhancement Engine (VEE) technology launch. During the second quarter we realigned our Company based on expected declines in end-of-life product revenue and limited visibility of new product revenue. This alignment significantly lowers our break-even revenue level while providing us with the capability to use discretionary spending to respond to specific customer opportunities."

Conference Call

QuickLogic will hold a conference call at 2:30 p.m. Pacific Time today, July 23, 2008, to discuss the second quarter financial results. The conference call is being webcast and can be accessed via QuickLogic's website at www.quicklogic.com. To participate, please call (877) 675-4757 by 2:20 p.m. Pacific Time. A recording of the call will be available starting one hour after completion of the call. To access the recording, please call (719) 457-0820 and reference the pass code: 7654670. The call recording will be archived until July 30, 2008 and the webcast will be available for 12 months.

About QuickLogic

QuickLogic Corporation is the inventor and pioneer of innovative, customizable semiconductor solutions for mobile and portable electronics OEMs and ODMs. These silicon plus software solutions are called Customer Specific Standard Products (CSSPs). CSSPs enable our customers to bring their products to market more quickly and remain in the market longer, with the low power, cost and size demanded by the mobile and portable electronics market. For more information about QuickLogic and CSSPs, visit www.quicklogic.com.

Non-GAAP Financial Measures

QuickLogic reports financial information in accordance with GAAP, but believes that non-GAAP financial measures are helpful in evaluating its operating results and comparing its performance to comparable companies. Accordingly, the Company excludes charges related to stock-based compensation, restructuring, long-lived asset impairment, the write-down of the Company's investment in Tower Semiconductor Ltd. and the effect of the write-off of equipment in calculating non-GAAP (i) income (loss) from operations, (ii) net income (loss), (iii) net income (loss) per share, and (iv) gross margin percentage. For a full reconciliation of these GAAP measures to non-GAAP measures, please refer to the schedule on pages 5 and 6 of this press release. The Company provides this non-GAAP information to enable investors to evaluate its operating results in a manner similar to how the Company analyzes its operating results and to provide consistency and comparability with similar companies in the Company's industry.

Management uses the non-GAAP measures, which exclude gains, losses and other charges that are considered by management to be outside of the Company's core operating results, internally to evaluate its operating performance against results in prior periods and its operating plans and forecasts. In addition, the non-GAAP measures are used to plan for the Company's future periods, and serve as a basis for the allocation of Company resources, management of operations and the measurement of profit-dependent cash and equity compensation paid to employees and executive officers.

Investors should note, however, that the non-GAAP financial measures used by QuickLogic may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as that of other companies. QuickLogic 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 on pages 5 and 6 of this press release. Investors are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP financial measures with their most directly comparable GAAP financial measures.

Safe Harbor Statement Under The Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements relating to the Company's break-even revenue level, ability to respond to specific customer opportunities and new product design activity and revenue generating potential, which is dependent on the market acceptance of our products and the level of customer orders. Actual results could differ materially from the results described in these forward-looking statements. Factors that could cause actual results to differ materially include: delays in the market acceptance of the Company's new products; the ability to convert design opportunities into customer revenue; our ability to replace revenue from end-of-life products; the level and timing of customer design activity; the market acceptance of our customers' products; the risk that new orders may not result in future revenue; our ability to introduce and produce new products based on advanced wafer technology on a timely basis; our ability to adequately market the low power, competitive pricing and short time-to-market of our new products; intense competition, including the introduction of new products by competitors; our ability to hire and retain qualified personnel; changes in product demand or supply; capacity constraints; and general economic conditions. These factors and others are described in more detail in the Company's public reports filed with the Securities and Exchange Commission, including the risks discussed in the "Risk Factors" section in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and in the Company's prior press releases.

QuickLogic, pASIC, PolarPro, QuickPCI and QuickRAM are registered trademarks of and the QuickLogic logo, ArcticLink, Eclipse and VEE are trademarks of QuickLogic. All other brands or trademarks are the property of their respective holders and should be treated as such.

Note to Editors: Financial Tables Follow

                        QUICKLOGIC CORPORATION
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (In thousands, except per share amounts)
                             (Unaudited)

                           Three Months Ended        Six Months Ended
                      ----------------------------- ------------------
                      June 29,  July 1,   March 30, June 29,  July 1,
                        2008      2007       2008     2008      2007
                      -------- ---------- --------- --------- --------
Revenue               $ 8,743    $ 8,405  $ 11,023  $ 19,766  $14,647
Cost of revenue,
 excluding inventory
 write-down and
 related charges and
 long-lived asset
 impairment             3,810      3,216     4,302     8,112    6,152
Inventory write-down
 and related charges      172        759       956     1,128    3,224
Long-lived asset
 impairment             1,545         --        --     1,545       --
                      -------- ---------- --------- --------- --------
Gross profit            3,216      4,430     5,765     8,981    5,271
Operating expenses:
  Research and
   development          2,610      2,339     2,821     5,431    4,626
  Selling, general
   and administrative   3,970      4,387     4,320     8,290    8,980
  Long-lived asset
   impairment             468         --        --       468       --
  Restructuring costs     452         --        --       452       --
                      -------- ---------- --------- --------- --------
Total operating
 expenses               7,500      6,726     7,141    14,641   13,606
                      -------- ---------- --------- --------- --------
Loss from operations   (4,284)    (2,296)   (1,376)   (5,660)  (8,335)
Write-down of
 investment in Tower
 Semiconductor Ltd.      (417)        --        --      (417)
Interest expense          (72)       (72)      (71)     (143)    (157)
Interest income and
 other, net                30        317       104       134      563
                      -------- ---------- --------- --------- --------
Loss before income
 taxes                 (4,743)    (2,051)   (1,343)   (6,086)  (7,929)
Provision for income
 taxes                     --         27        34        34       42
                      -------- ---------- --------- --------- --------
Net loss              $(4,743)  $ (2,078) $ (1,377) $ (6,120) $(7,971)
                      ======== ========== ========= ========= ========

Net loss per share:
  Basic               $ (0.16)   $ (0.07) $  (0.05) $  (0.21) $ (0.28)
                      ======== ========== ========= ========= ========
  Diluted             $ (0.16)   $ (0.07) $  (0.05) $  (0.21) $ (0.28)
                      ======== ========== ========= ========= ========
Weighted average
 shares:
  Basic                29,589     28,966    29,406    29,498   28,890
                      ======== ========== ========= ========= ========
  Diluted              29,589     28,966    29,406    29,498   28,890
                      ======== ========== ========= ========= ========

                       QUICKLOGIC CORPORATION
SUPPLEMENTAL RECONCILIATIONS OF GAAP AND NON-GAAP FINANCIAL MEASURES
              (In thousands, except per share amounts)
                             (Unaudited)

                             Three Months Ended     Six Months Ended
                         -------------------------- -----------------
                                            March
                         June 29, July 1,     30,   June 29, July 1,
                           2008     2007     2008     2008     2007
                         -------- -------- -------- -------- --------
GAAP loss from
 operations              $(4,284) $(2,296) $(1,376) $(5,660) $(8,335)
 Adjustment for stock-
  based compensation
  within:
  Cost of revenue            106       54       65      171      109
  Research and
   development               196       94      158      354      179
  Selling, general and
   administrative            615      280      442    1,057      521
 Adjustment for long-
  lived asset impairment
  within:
  Cost of revenue          1,545       --       --    1,545       --
  Operating expenses         468       --       --      468       --
 Adjustment for write-
  off of equipment
  within:
  Selling, general and
   administrative             15       --       --       15       --
 Adjustment for
  restructuring costs        452       --       --      452       --
                         -------- -------- -------- -------- --------
Non-GAAP loss from
 operations              $  (887) $(1,868) $  (711) $(1,598) $(7,526)
                         ======== ======== ======== ======== ========

GAAP net loss            $(4,743) $(2,078) $(1,377) $(6,120) $(7,971)
 Adjustment for stock-
  based compensation
  within:
  Cost of revenue            106       54       65      171      109
  Research and
   development               196       94      158      354      179
  Selling, general and
   administrative            615      280      442    1,057      521
 Adjustment for long-
  lived asset impairment
  within:
  Cost of revenue          1,545       --       --    1,545       --
  Operating expenses         468       --       --      468       --
 Adjustment for write-
  off of equipment
  within:
  Selling, general and
   administrative             15       --       --       15       --
 Adjustment for
  restructuring costs        452       --       --      452       --
 Adjustment for write-
  down of investment in
  Tower Semiconductor
  Ltd.                       417       --       --      417       --
                         -------- -------- -------- -------- --------
Non-GAAP net loss        $  (929) $(1,650) $  (712) $(1,641) $(7,162)
                         ======== ======== ======== ======== ========

GAAP net loss per share  $ (0.16) $ (0.07) $ (0.05) $ (0.21) $ (0.28)
  Adjustment for stock-
   based compensation       0.03     0.01     0.03     0.05     0.03
  Adjustment for long-
   lived asset
   impairment               0.07       --       --     0.07       --
  Adjustment for write-
   off of equipment           --       --       --       --       --
  Adjustment for
   restructuring costs      0.02       --       --     0.02       --
  Adjustment for write-
   down of investment in
   Tower Semiconductor
   Ltd.                     0.01       --       --     0.01       --
                         -------- -------- -------- -------- --------
Non-GAAP net loss per
 share                   $ (0.03) $ (0.06) $ (0.02) $ (0.06) $ (0.25)
                         ======== ======== ======== ======== ========

                        QUICKLOGIC CORPORATION
SUPPLEMENTAL RECONCILIATIONS OF GAAP AND NON-GAAP FINANCIAL MEASURES
                             (Continued)
               (In thousands, except per share amounts)
                             (Unaudited)

                                                         Six Months
                                 Three Months Ended         Ended
                               ----------------------- ---------------
                                June           March    June
                                 29,   July 1,   30,     29,   July 1,
                                2008    2007    2008    2008    2007
                               ------- ------- ------- ------- -------

GAAP weighted average shares   29,589  28,966  29,406  29,498  28,890
  Adjustment for stock-based
   compensation                    --      --      --      --      --
  Adjustment for long-lived
   asset impairment                --      --      --      --      --
  Adjustment for write-off of
   equipment                       --      --      --      --      --
  Adjustment for restructuring
   costs                           --      --      --      --      --
  Adjustment for write-down of
   investment in Tower
   Semiconductor Ltd.              --      --      --      --      --
                               ------- ------- ------- ------- -------
Non-GAAP weighted average
 shares                        29,589  28,966  29,406  29,498  28,890
                               ======= ======= ======= ======= =======

GAAP gross margin percentage     36.8%   52.7%   52.3%   45.4%   36.0%
  Adjustment for stock-based
   compensation                   1.2%    0.6%    0.6%    0.9%    0.7%
  Adjustment for long-lived
   asset impairment              17.7%     --      --     7.8%     --
                               ------- ------- ------- ------- -------
Non-GAAP gross margin
 percentage                      55.7%   53.3%   52.9%   54.1%   36.7%
                               ======= ======= ======= ======= =======

                        QUICKLOGIC CORPORATION
                CONDENSED CONSOLIDATED BALANCE SHEETS
                            (In thousands)
                             (Unaudited)

                                                             December
                                                  June 29,      30,
                                                     2008     2007(1)
                                                  --------------------
                    ASSETS

Current assets:
  Cash and cash equivalents                       $  19,000 $  20,868
  Short-term investment in Tower Semiconductor
   Ltd.                                                 769     1,279
  Accounts receivable, net                            2,383     2,634
  Inventories                                         2,991     5,770
  Other current assets                                1,320     1,607
                                                  --------------------
Total current assets                                 26,463    32,158
Property and equipment, net                           4,400     5,877
Investment in Tower Semiconductor Ltd.                  387       644
Other assets                                          1,152     2,745
                                                  --------------------

TOTAL ASSETS                                      $  32,402 $  41,424
                                                  ====================

     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Trade payables                                  $   1,430 $   4,207
  Accrued liabilities                                 2,219     2,228
  Deferred income on shipments to distributors          516       516
  Deferred royalty revenue                              221       431
  Current portion of debt and capital lease
   obligations                                        2,284     2,497
                                                  --------------------
Total current liabilities                             6,670     9,879
                                                  --------------------

Long-term liabilities:
  Debt and capital lease obligations, less
   current portion                                    1,493     2,527
                                                  --------------------
Total liabilities                                     8,163    12,406
                                                  --------------------

Stockholders' equity:
  Common stock, at par value                             30        29
  Additional paid-in capital                        168,988   167,298
  Accumulated other comprehensive income                 --       350
  Accumulated deficit                              (144,779) (138,659)
                                                  --------------------
       Total stockholders' equity                    24,239    29,018
                                                  --------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $  32,402 $  41,424
                                                  ====================

----------------------------------------------
(1) Derived from the December 30, 2007 audited balance sheet included
 in the 2007 Annual Report on Form 10-K of QuickLogic Corporation.

                        QUICKLOGIC CORPORATION
                          SUPPLEMENTAL DATA
                             (Unaudited)

                                           Percentage of  Change in
                                               Revenue      Revenue
                                           -------------- -----------
                                                           Q2    Q1
                                                           2007  2008
                                                            to    to
                                            Q2   Q2   Q1   Q2    Q2
                                           2008 2007 2008  2008  2008
                                           ---- ---- ---- ----- -----
COMPOSITION OF REVENUE

Revenue by product (1):
  New products                              29%   7%  24% 320%   (1%)
  Mature products                           53%  52%  39%   5%    6%
  End-of-life products                      18%  41%  37% (54%) (61%)

Revenue by geography:
  North America                             38%  60%  45% (35%) (33%)
  Europe                                    15%  20%  16% (19%) (22%)
  Asia Pacific                              39%  11%  31% 284%   (3%)
  Japan                                      8%   9%   8%  (9%) (22%)


Revenue by end-customer segment:
  Instrumentation and test                  65%  32%  52% 113%   (1%)
  Military and aerospace systems             9%  19%   9% (49%) (19%)
  Datacom and telecom                        8%  26%  23% (69%) (72%)
  Graphics and imaging                      17%  20%  14% (13%)  (6%)
  Computing                                  1%   3%   2% (52%) (48%)

-------------------------------------------
(1) The Company changed the definition of its product families in the
 third quarter of 2007 and has adjusted prior periods to conform to
 the new definitions. New products include ArcticLink(TM),
 PolarPro(R), Eclipse(TM) II and QuickPCI(R) II products. Mature
 products include QuickRAM(R), pASIC(R) 3, Eclipse, QuickDSP and
 QuickFC products, as well as royalty revenue, programming hardware
 and software. End-of-life products include pASIC 1, pASIC 2, V3,
 QuickPCI and QuickMIPS products.

Code: QUIK-E

SOURCE: QuickLogic Corporation

QuickLogic Corporation
Carl M. Mills, 408-990-4000
Chief Financial Officer
cmills@quicklogic.com
Andrea Vedanayagam, 408-990-4000
Director, Corporate Communications
andrea@quicklogic.com

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