QuickLogic Corporation

Oct 23, 2008

QuickLogic Announces Third Quarter Fiscal 2008 Results -- Operational Realignment Improves Financial Results

SUNNYVALE, Calif., Oct 23, 2008 (BUSINESS WIRE) -- QuickLogic Corporation (NASDAQ:QUIK), the lowest power programmable solutions leader, today announced the financial results for its fiscal third quarter ended September 28, 2008.

Total revenue for the third quarter of 2008 of $6.2 million was at the high end of the Company's revenue guidance, while being down 29 percent from the second quarter of 2008 and down 31 percent from the third quarter of 2007. The sequential decline in revenue was primarily due to anticipated declines in end-of-life product revenue. New product revenue also decreased in the third quarter, as anticipated, due to the product line of a large consumer OEM nearing the end of its expected product life. The year-on-year decrease in revenue was primarily due to a decline in end-of-life product revenue.

Under generally accepted accounting principles (GAAP), the net loss for the third quarter of 2008 improved to $615,000, or $0.02 per share, compared with a net loss of $4.7 million, or $0.16 per share, in the second quarter of 2008 and a net loss of $1.5 million, or $0.05 per share, in the third quarter of 2007. Gross margin increased to 55.4% for the third quarter of 2008 compared with 36.8% for the second quarter of 2008 and 52.2% for the third quarter of 2007.

On a non-GAAP basis, the net loss for the third quarter of 2008 improved to $196,000, or $0.01 per share, compared with a net loss of $929,000, or $0.03 per share, in the second quarter of 2008 and a net loss of $1.0 million, or $0.04 per share, in the third quarter of 2007. Gross margin, on a non-GAAP basis, increased to 56.7% for the third quarter of 2008 compared with 55.7% for the second quarter of 2008 and 53.0% for the third quarter of 2007.

"Our third quarter results demonstrated the benefits of our recently completed operational realignment," said E. Thomas Hart, chairman, president and CEO. "We had a 36% reduction in our non-GAAP operating expenses compared with the second quarter and our ending cash was essentially unchanged from the prior quarter. We are encouraged by the continued growth of customer design activity for our CSSP solutions and that the operational realignment gives us the agility to drive future revenue growth."

Conference Call

QuickLogic will hold a conference call at 2:30 p.m. Pacific Time today, October 23, 2008, to discuss the third 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) 397-0297 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 or (888) 203-1112 and reference the pass code: 4545787. The call recording will be archived until October 30, 2008 and the webcast will be available for 12 months.

About QuickLogic

QuickLogic Corporation is the pioneer of innovative, customizable semiconductor solutions for mobile and portable electronics original equipment manufacturers (OEM) and original design manufacturers (ODM). 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 financial performance, ability to respond to specific customer opportunities and new product design activity, operating expense containment, and revenue generating potential. 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.

The QuickLogic name and logo are registered trademarks of QuickLogic Corporation. All other brands or trademarks are the property of their respective holders and should be treated as such.

QUICKLOGIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
                                                                 Three Months Ended                                        Nine Months Ended
                                                                 September 28,       September 30,         June 29,        September 28,          September 30,
                                                                 2008                2007                  2008            2008                   2007
Revenue                                                          $6,230              $9,025                $8,743          $25,996                $23,672
Cost of revenue, excluding inventory write-down and related      2,575               4,005                 3,810           10,687                 10,157
charges and long-lived asset impairment
Inventory write-down and related charges                         203                 309                   172             1,331                  3,533
Long-lived asset impairment                                      --                  --                    1,545           1,545                  --
Gross profit                                                     3,452               4,711                 3,216           12,433                 9,982
Operating expenses:
Research and development                                         1,354               2,342                 2,610           6,785                  6,968
Selling, general and administrative                              2,666               3,953                 3,970           10,956                 12,933
Long-lived asset impairment                                      --                  --                    468             468                    --
Restructuring costs                                              --                  --                    452             452                    --
Total operating expenses                                         4,020               6,295                 7,500           18,661                 19,901
Loss from operations                                             (568)               (1,584)               (4,284)         (6,228)                (9,919)
Write-down of investment in Tower Semiconductor Ltd.             --                  --                    (417)           (417)                  --
Interest expense                                                 (59)                (69)                  (72)            (202)                  (226)
Interest income and other, net                                   (46)                189                   30              88                     752
Loss before income taxes                                         (673)               (1,464)               (4,743)         (6,759)                (9,393)
Provision for income taxes                                       (58)                29                    --              (24)                   71
Net loss                                                         $(615)              $(1,493)              $(4,743)        $(6,735)               $(9,464)
Net loss per share:
Basic                                                            $(0.02)             $(0.05)               $(0.16)         $(0.23)                $(0.33)
Diluted                                                          $(0.02)             $(0.05)               $(0.16)         $(0.23)                $(0.33)
Weighted average shares:
Basic                                                            29,772              29,116                29,589          29,589                 28,966
Diluted                                                          29,772              29,116                29,589          29,589                 28,966
QUICKLOGIC CORPORATION
SUPPLEMENTAL RECONCILIATIONS OF GAAP AND NON-GAAP FINANCIAL
MEASURES
(In thousands, except per share amounts)
(Unaudited)
                                                                          Three Months Ended                                         Nine Months Ended
                                                                          September 28,        September 30,        June 29,         September 28,         September 30,
                                                                          2008                 2007                 2008             2008                  2007
GAAP loss from operations                                                 $(568)               $(1,584)             $(4,284)         $(6,228)              $(9,919)
Adjustment for stock-based compensation within:
Cost of revenue                                                           49                   67                   106              220                   176
Research and development                                                  89                   94                   196              443                   273
Selling, general and administrative                                       251                  291                  615              1,308                 812
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:
Cost of revenue                                                           30                   5                    --               30                    5
Selling, general and administrative                                       --                   2                    15               15                    2
Adjustment for restructuring costs                                        --                   --                   452              452                   --
Non-GAAP loss from operations                                             $(149)               $(1,125)             $(887)           $(1,747)              $(8,651)
GAAP net loss                                                             $(615)               $(1,493)             $(4,743)         $(6,735)              $(9,464)
Adjustment for stock-based compensation within:
Cost of revenue                                                           49                   67                   106              220                   176
Research and development                                                  89                   94                   196              443                   273
Selling, general and administrative                                       251                  291                  615              1,308                 812
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:
Cost of revenue                                                           30                   5                    --               30                    5
Selling, general and administrative                                       --                   2                    15               15                    2
Adjustment for restructuring costs                                        --                   --                   452              452                   --
Adjustment for write-down of investment in Tower Semiconductor Ltd.       --                   --                   417              417                   --
Non-GAAP net loss                                                         $(196)               $(1,034)             $(929)           $(1,837)              $(8,196)
GAAP net loss per share                                                   $(0.02)              $(0.05)              $(0.16)          $(0.23)               $(0.33)
Adjustment for stock-based compensation                                   0.01                 0.01                 0.03             0.07                  0.05
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                                               $(0.01)              $(0.04)              $(0.03)          $(0.06)               $(0.28)
QUICKLOGIC CORPORATION
SUPPLEMENTAL RECONCILIATIONS OF GAAP AND NON-GAAP FINANCIAL
MEASURES
(Continued)
(In thousands, except per share amounts)
(Unaudited)
                                                                          Three Months Ended                                         Nine Months Ended
                                                                          September 28,        September 30,        June 29,         September 28,         September 30,
                                                                          2008                 2007                 2008             2008                  2007
GAAP weighted average shares                                              29,772               29,116               29,589           29,589                28,966
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                                          29,772               29,116               29,589           29,589                28,966
GAAP gross margin percentage                                              55.4%                52.2%                36.8%            47.8%                 42.2%
Adjustment for stock-based compensation                                   0.8%                 0.8%                 1.2%             0.8%                  0.7%
Adjustment for long-lived asset impairment                                --                   --                   17.7%            5.9%                  --
Adjustment for write-off of equipment                                     0.5%                 --                   --               0.2%                  --
Non-GAAP gross margin percentage                                          56.7%                53.0%                55.7%            54.7%                 42.9%
QUICKLOGIC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                                  September 28,                     December 30,
                                                                  2008                              2007(1)
ASSETS
Current assets:
Cash and cash equivalents                                         $       18,833                    $       20,868
Short-term investment in Tower Semiconductor Ltd.                         519                               1,279
Accounts receivable, net                                                  2,279                             2,634
Inventories                                                               2,457                             5,770
Other current assets                                                      919                               1,607
Total current assets                                                      25,007                            32,158
Property and equipment, net                                               4,013                             5,877
Investment in Tower Semiconductor Ltd.                                    261                               644
Other assets                                                              1,027                             2,745
TOTAL ASSETS                                                      $       30,308                    $       41,424
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving line of credit                                          $       2,000                     $       --
Trade payables                                                            1,453                             4,207
Accrued liabilities                                                       2,009                             2,228
Deferred revenue less cost of revenue                                     239                               516
Deferred royalty revenue                                                  --                                431
Current portion of debt and capital lease obligations                     764                               2,497
Total current liabilities                                                 6,465                             9,879
Long-term liabilities:
Debt and capital lease obligations, less current portion                  186                               2,527
Total liabilities                                                         6,651                             12,406
Stockholders' equity:
Common stock, at par value                                                30                                29
Additional paid-in capital                                                169,397                           167,298
Accumulated other comprehensive income (loss)                             (376      )                       350
Accumulated deficit                                                       (145,394  )                       (138,659  )
Total stockholders' equity                                                23,657                            29,018
TOTAL LIABILITIES AND STOCKHOLDERS'                               $       30,308                    $       41,424
EQUITY
(1) Derived from the December30, 2007 audited balance sheet
included in the 2007 Annual Report on Form10-K of QuickLogic
Corporation.
QUICKLOGIC CORPORATION
SUPPLEMENTAL DATA
(Unaudited)
                                         Percentage of Revenue                     Change in Revenue
                                         Q3            Q3            Q2            Q3 2007 to         Q2 2008 to
                                         2008          2007          2008          Q3 2008            Q3 2008
COMPOSITION OF REVENUE
Revenue by product (1):
New products                             23%           18%           29%           (12%)              (45%)
Mature products                          74%           50%           53%           2%                 1%
End-of-life products                     3%            32%           18%           (93%)              (88%)
Revenue by geography:
North America                            33%           50%           38%           (55%)              (39%)
Europe                                   14%           22%           15%           (55%)              (36%)
Asia Pacific                             42%           19%           39%           49%                (22%)
Japan                                    11%           9%            8%            (11%)              3%
Revenue by end-customer segment:
Instrumentation and test                 53%           47%           65%           (22%)              (42%)
Military and aerospace systems           12%           15%           9%            (47%)              (13%)
Datacom and telecom                      8%            14%           8%            (62%)              (28%)
Graphics and imaging                     24%           19%           17%           (12%)              4%
Computing                                3%            5%            1%            (50%)              65%
(1) The Company changed the definition of its product families in
the third quarter of 2007 and adjusted prior periods to conform to
the new definitions. New products include ArcticLink(TM),
PolarPro?, Eclipse(TM)
II and QuickPCI? II products. Mature
products include QuickRAM?, pASIC?
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.

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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