QuickLogic Corporation

Feb 3, 2009

QuickLogic Announces Fourth Quarter and Fiscal 2008 Results - Fourth Quarter New Product Revenue Up Sequentially

SUNNYVALE, Calif., Feb 03, 2009 (BUSINESS WIRE) -- QuickLogic Corporation (NASDAQ:QUIK), the lowest power programmable solutions leader, today announced the financial results for its fourth quarter and fiscal year ended December 28, 2008.

Total revenue for the fourth quarter of 2008 was $5.9 million, down 5 percent from the third quarter of 2008 and down 45 percent from the fourth quarter of 2007. The sequential decline in revenue was primarily due to anticipated declines in our legacy product revenue. New products - ArcticLink(R), PolarPro(R) II, PolarPro , Eclipse(TM) II and QuickPCI(R) II - grew to contribute 26 percent of revenue in the fourth quarter of 2008 compared to 23 percent in the third quarter of 2008 and was 33 percent of revenue in the fourth quarter of 2007.

Under generally accepted accounting principles (GAAP), the net loss for the fourth quarter of 2008 was $2.6 million, or $0.09 per share, compared with a net loss of $615,000, or $0.02 per share, in the third quarter of 2008 and a net loss of $1.7 million, or $0.06 per share, in the fourth quarter of 2007. Non-GAAP net loss for the fourth quarter of 2008 was $1.2 million, or $0.04 per share, compared with a non-GAAP net loss of $196,000, or $0.01 per share, in the third quarter of 2008 and a non-GAAP net loss of $1.1 million, or $0.04 per share, in the fourth quarter of 2007.

Revenue for 2008 was $31.9 million, compared with revenue of $34.4 million in 2007. Under GAAP, the net loss for 2008 was $9.4 million, or $0.32 per share, compared with a net loss of $11.1 million, or $0.38 per share, in 2007. Non-GAAP net loss for 2008 improved to $3.0 million, or $0.10 per share, compared with a non-GAAP net loss of $9.3 million, or $0.32 per share, in 2007.

"New product revenue in our fiscal year 2008 was $8.1 million, a $1.8 million increase over new product revenue in fiscal year 2007. The sale of Customer Specific Standard Products, or CSSPs, into the portable navigation device market was the primary driver of the increase in new product sales," said E. Thomas Hart, chairman, president and CEO. "Our low power CSSPs allow mobile device manufacturers to bring their new products to market more quickly and cost effectively with lower risk. The CSSP message - 'Your idea, our platform, customized for you' - resonates well in our target markets, as we continue to engage with more top tier mobile device manufacturers."

Conference Call

QuickLogic will hold a conference call at 2:30 p.m. Pacific Time today, February 3, 2009, to discuss the fourth quarter and fiscal year financial results. The conference call is being webcast and can be accessed via QuickLogic's website at www.quicklogic.com/investors. To participate, please call (877) 591-4958 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: 7884431. The call recording will be archived until February 6, 2008 and the webcast will be available for 12 months.

About QuickLogic

QuickLogic Corporation (NASDAQ:QUIK) is the pioneer of innovative, customizable semiconductor solutions for mobile and portable electronics original equipment manufacturers (OEMs) and original design manufacturers (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. Code:QUIK-G

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. 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 in the financial statements portion 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 made by our CEO relating to the interest of the market in our new products and the revenue generating potential of such new products, 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.

ArcticLink, pASIC, PolarPro, QuickLogic, QuickPCI, and QuickRAM are registered trademarks and Eclipse and the QuickLogic logo are 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   Years Ended
December 28,

2008

  December 30,

2007

  September 28,

2008

December 28,

2008

  December 30,

2007

Revenue $ 5,914 $ 10,745

$

6,230

$ 31,910 $ 34,417
Cost of revenue, excluding inventory write-down and related charges 2,656 5,312 2,575 13,343 15,469
Inventory write-down and related charges 267 408 203 1,598 3,941
Long-lived asset impairment   --     --     --     1,545     --  
Gross profit 2,991 5,025 3,452 15,424 15,007
Operating expenses:
Research and development 1,400 2,549 1,354 8,185 9,517
Selling, general and administrative 3,093 4,230 2,666 14,049 17,163
Long-lived asset impairment -- -- -- 468 --
Restructuring costs   50     --     --     502     --  
Total operating expenses   4,543     6,779     4,020     23,204     26,680  
Loss from operations (1,552 ) (1,754 ) (568 ) (7,780 ) (11,673 )

Write-down of investment in Tower Semiconductor Ltd

(981 ) -- -- (1,398 ) --
Interest expense (23 ) (54 ) (59 ) (225 ) (280 )
Interest income and other, net   (94)   142     (46)   (6)   894  
Loss before income taxes (2,650 ) (1,666 ) (673 ) (9,409 ) (11,059 )
Provision for (benefit from) income taxes   (30)   4     (58)   (54)   75  
Net loss $(2,620 ) $(1,670 )

$

(615

) $(9,355 ) $(11,134 )
 
Net loss per share:
Basic $(0.09 ) $(0.06 )

$

(0.02

) $(0.32 ) $(0.38 )
Diluted $(0.09 ) $(0.06 )

$

(0.02

) $(0.32 ) $(0.38 )
Weighted average shares:
Basic   29,844     29,267     29,772     29,653     29,041  
Diluted   29,844     29,267     29,772     29,653     29,041  
 
QUICKLOGIC CORPORATION
SUPPLEMENTAL RECONCILIATIONS OF GAAP AND NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
(Unaudited)
 
  Three Months Ended   Years Ended

December 28,
2008

 

December 30,
2007

 

September 28,
2008

December 28,
2008

 

December 30,
2007

GAAP loss from operations $ (1,552 ) $ (1,754 )

$

(568

) $ (7,780 ) $ (11,673 )
Adjustment for the write-off of equipment within:
Cost of revenue

12

161 30

42

166
Selling, general and administrative -- -- -- 15 2
Adjustment for long-lived asset impairment within:

Cost of revenue

-- -- -- 1,545 --
Selling, general and administrative -- -- -- 468 --
Adjustment for stock-based compensation within:

Cost of revenue

47 53 49 267 229
Research and development 74 103 89 517 376
Selling, general and administrative 249 287 251 1,557 1,099
Adjustment for restructuring costs   50     --     --     502     --  
Non-GAAP loss from operations $(1,120 ) $(1,150 )

$

(149

) $(2,867 ) $(9,801 )
 
GAAP net loss $ (2,620 ) $ (1,670 )

$

(615

) $ (9,355 ) $ (11,134 )
Adjustment for the write-off of equipment within:
Cost of revenue

12

161 30

42

166
Selling, general and administrative -- -- -- 15 2
Adjustment for long-lived asset impairment within:

Cost of revenue

-- -- -- 1,545 --
Selling, general and administrative -- -- -- 468 --
Adjustment for stock-based compensation within:

Cost of revenue

47 53 49 267 229
Research and development 74 103 89 517 376
Selling, general and administrative 249 287 251 1,557 1,099
Adjustment for restructuring costs 50 -- -- 502 --
Adjustment for write-down of investment in Tower Semiconductor Ltd.   981     --     --     1,398     --  
Non-GAAP net loss $(1,207 ) $(1,066 )

$

(196

) $(3,044)$ (9,262 )
 
GAAP net loss per share $ (0.09 ) $ (0.06 )

$

(0.02

) $ (0.32 ) $ (0.38 )
Adjustment for stock-based compensation 0.01 0.02 0.01 0.08 0.06
Adjustment for long-lived asset impairment -- -- -- 0.07 --
Adjustment for write-off of equipment

*

*

*

*

*

Adjustment for restructuring costs

*

-- -- 0.02 --
Adjustment for write-down of investment in Tower Semiconductor Ltd.   0.04     --     --     0.05     --  
Non-GAAP net loss per share $(0.04 ) $(0.04 )

$

(0.01

) $(0.10 ) $(0.32 )
 
GAAP gross margin percentage 50.6 % 46.8 % 55.4 % 48.3 % 43.6 %
Adjustment for stock-based compensation 0.8 %

0.5

% 0.8 % 0.8 %

0.7

%
Adjustment for long-lived asset impairment 0.0 % 0.0 % 0.0 % 4.8 % 0.0 %
Adjustment for write-off of equipment  

0.2

%  

1.5

%   0.5 %  

0.2

%  

0.5

%
Non-GAAP gross margin percentage  

51.6

%   48.8 %   56.7 %  

54.1

%   44.8 %
 

* Figures were not considered in the reconciliation of Non-GAAP net loss per share due to the insignificant amount

QUICKLOGIC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
  December 28,

2008

  December 30,

2007(1)

ASSETS
 
Current assets:
Cash and cash equivalents $ 19,376 $ 20,868
Short-term investment in Tower Semiconductor Ltd. 116 1,279
Accounts receivable, net 1,746 2,634
Inventory 1,900 5,770
Other current assets   833     1,607  
Total current assets 23,971 32,158
Property and equipment, net 3,493 5,877
Investment in Tower Semiconductor Ltd. 59 644
Other assets   903     2,745  
 
TOTAL ASSETS $28,426   $41,424  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
Revolving line of credit 2,000 --
Trade payables 1,992 4,207
Accrued liabilities 1,537 2,228
Deferred income on shipments to distributors 282 516
Deferred royalty revenue -- 431
Current portion of debt and capital lease obligations   753     2,497  
Total current liabilities   6,564     9,879  
 
Long-term liabilities:
Debt and capital lease obligations, less current portion   --     2,527  
Total liabilities   6,564     12,406  
 
Stockholders' equity:
Common stock, at par value 30 29
Additional paid-in capital 169,846 167,298
Accumulated other comprehensive income -- 350
Accumulated deficit   (148,014 )   (138,659 )
Total stockholders' equity   21,862     29,018  
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $28,426   $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 RevenueChange in Revenue
Q4
2008
      Q3
2008
      Fiscal
2008
      Fiscal
2007
Q3 2008 to
Q4 2008
      2007 to
2008
COMPOSITION OF REVENUE
 
Revenue by product (1):
New products 26 % 23 % 25 % 19 % 7 % 28 %
Mature products 60 % 74 % 54 % 48 % (22 %) 3 %
End-of-life products 14 % 3 % 21 % 33 % 327 % (42 %)
 
Revenue by geography:
North America 46 % 33 % 41 % 53 % 34 % (28 %)
Europe 13 % 14 % 15 % 18 % (9 %) (23 %)
Asia Pacific 34 % 42 % 36 % 20 % (24 %) 66 %
Japan 7 % 11 % 8 % 9 % (44 %) (19 %)
 
 
Revenue by end-customer segment:
Instrumentation and test 30 % 53 % 52 % 43 % (46 %) 10 %
Military and aerospace systems 38 % 12 % 15 % 14 % 208 % (4 %)
Datacom and telecom 7 % 8 % 13 % 19 % (14 %) (37 %)
Graphics and imaging 12 % 24 % 16 % 19 % (53 %) (19 %)
Computing 13 % 3 % 4 % 5 % 273 % (12 %)
 

_________________________

(1) New products include ArcticLink, PolarPro II, PolarPro, Eclipse II and QuickPCI II products. Mature products include QuickRAM, 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.

SOURCE: QuickLogic Corporation

QuickLogic Corporation
Ralph S. Marimon, 408-990-4000
Chief Financial Officer
rsmarimon@quicklogic.com
Andrea Vedanayagam, 408-990-4000
Director, Corporate Communications
andrea@quicklogic.com

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