Lexar Media, Inc. (Nasdaq:LEXR), a world leader in advanced digital
media technologies, today reported financial results for the first
quarter ended March 31, 2006. Lexar's GAAP results for the first
quarter of 2006 reflect the adoption of SFAS 123(R) regarding the
expensing of non-cash share-based compensation. In light of Lexar's
pending merger agreement with Micron Technology, Inc. (NYSE:MU),
Lexar will not be holding a conference call to discuss these
results. Lexar recorded total first quarter revenues of $124.7
million as compared to $232.4 million in the same period last year
and $239.1 million in the previous quarter. License and royalty
revenues increased to $4.0 million for the first quarter as
compared to $0.8 million in the same period last year and $9.7
million in the previous quarter. Net loss for the first quarter was
$36.8 million, or $0.45 per diluted share, as compared to a net
loss of $9.6 million, or $0.12 per diluted share, in the same
period last year and a net loss of $23.8 million, or $0.29 per
diluted share, in the previous quarter. Included in the net loss
for the three months ended March 31, 2006 is $1.9 million in stock
based compensation expense. Corporate Highlights Lexar recently: --
Announced the expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
in connection with Micron's proposed acquisition of Lexar. The
transaction is subject to the satisfaction of customary closing
conditions, including approval by Lexar stockholders. -- Filed a
formal complaint with the International Trade Commission (ITC)
against Toshiba Corporation, Toshiba America, Inc., and Toshiba
America Electronic Components, Inc. seeking to halt the
infringement of Lexar's intellectual property rights. -- Announced
a partnership with SecureWave, a worldwide leader in endpoint
security software to develop and market an enterprise-class privacy
solution for controlling personal storage devices. About Lexar
Media, Inc. Lexar is a leading marketer and manufacturer of NAND
flash memory products including memory cards, USB flash drives,
card readers and ATA controller technology for the digital
photography, consumer electronics, industrial and communications
markets. The company holds over 97 issued or allowed controller and
system patents, and licenses its technology to companies including
Olympus Corporation, Samsung Electronics Co., Ltd., SanDisk
Corporation and Sony Corporation. Lexar sells its memory cards
worldwide and through an exclusive agreement, also sells memory
cards under the Kodak(R) brand. Headquartered in Fremont,
California, Lexar has operations in countries around the world.
More information is available at www.lexar.com Cautionary Note
Regarding Forward-Looking Statements This news release contains
forward-looking information within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 and is subject to the safe harbor created by
those sections. These forward-looking statements include statements
related to projections about our business and financial outlook,
including statements regarding our proposed acquisition by Micron,
our ITC litigation against Toshiba and a partnership to develop a
new product. These forward-looking statements involve a number of
risks and uncertainties that could cause actual results to differ
materially from those anticipated by these forward-looking
statements. These risks include: competitive pricing pressures, our
operating results and gross margins are difficult to predict and
may fluctuate significantly; our planned acquisition by Micron may
not close or the closing may be delayed; our customers or suppliers
may not react positively to Micron's acquisition of us; the ITC
litigation against Toshiba may not be successful; there is no
assurance the partnership to develop a new product will result in a
successful product; the cost of flash memory is a significant part
of our products' cost structure, and if we are unable to obtain
sufficient quantities of flash memory in a timely manner and at
competitive prices, we may not be able to manufacture and deliver
products to satisfy our customers' requirements, compete
effectively in the market or maintain our targeted gross margins or
market share; future average selling prices may continue to erode
due to excess industry capacity and extreme price competition which
may impact our margins and our ability to maintain our position at
our retail accounts; many of our retail customers and distributors
have price protection which could require us to make large payments
if we reduce prices; if we are unable to manage our inventory
levels, our operating results will be negatively impacted; if we
are unable to anticipate demand and pricing of our products or
effectively manage distributor channels and relationships and
changes in market conditions, our operating results will be harmed;
our licensing revenues may fluctuate significantly as the payments
from our recent agreement with Samsung will be made over a short
period of time and we may be unable to secure new license or
royalty revenue; increased competition in the digital media market
may lead to a decrease in our revenues and market share; if we are
unable to achieve or maintain our technology leadership position or
to obtain rights to develop and manufacture new form factors on
acceptable terms, our gross margins and revenues would likely
decline significantly; and we are involved in litigation, and may
become involved in additional litigation, the outlook of which is
highly uncertain, that could divert management's time and
attention, be time-consuming and expensive to defend and limit our
access to important technology. Readers should also refer to the
risk factors described in our filings with the Securities and
Exchange Commission, including our Annual Report on Form 10-K for
our fiscal year ended December 31, 2005, filed with the Securities
and Exchange Commission on March 16, 2006. We assume no obligation
to update the forward-looking information contained in this news
release. In addition, please refer to the documents that Micron and
Lexar file with the Securities and Exchange Commission on Forms
S-4, 10-K, 10-Q and 8-K. The filings by each of Micron and Lexar
identify and address other important factors that could cause
actual results to differ materially from those contained in the
forward-looking statements set forth in this press release.
Additional Information About the Merger and Where to Find It Micron
has filed a registration statement on Form S-4 (Registration No.
333-132757) containing a preliminary prospectus/proxy statement and
other relevant materials in connection with the proposed
acquisition of Lexar by Micron. Investors and security holders are
urged to read the registration statement on Form S-4 and the
related preliminary proxy statement/prospectus, as well as the
definitive proxy statement/prospectus when it becomes available,
because they contain, and will contain, important information about
Micron, Lexar and the proposed merger. The definitive proxy
statement/prospectus will be mailed to Lexar stockholders that hold
shares of Lexar common stock as of the record date for the Lexar
special meeting related to the proposed merger. The preliminary
prospectus/proxy statement, the definitive proxy statement when
available, and any other documents filed by Micron or Lexar with
the SEC, may be obtained free of charge at the SEC's web site at
www.sec.gov. In addition, investors and security holders may obtain
free copies of the documents filed with the SEC by Micron by
contacting Micron Investor Relations, Kipp Bedard, (208) 368-4465.
Investors and security holders may obtain free copies of the
documents filed with the SEC by Lexar by contacting Lexar Chief
Financial Officer, Michael Scarpelli, (510) 580-8730. Micron,
Steven Appleton, Micron's Chairman, Chief Executive Officer and
President, and certain of Micron's other executive officers may be
deemed to be participants in the solicitation of proxies of Lexar
stockholders in connection with the proposed merger. Investors and
security holders may obtain more detailed information regarding the
names, affiliations and interests of Mr. Appleton and certain of
Micron's other executive officers in the solicitation by reading
the preliminary prospectus/proxy statement. Lexar, Eric Stang,
Lexar's Chairman, Chief Executive Officer and President, and
Lexar's other directors and executive officers may be deemed to be
participants in the solicitation of proxies of Lexar stockholders
in connection with the proposed merger. Such individuals may have
interests in the proposed merger, including as a result of holding
options or shares of Lexar common stock. Investors and security
holders may obtain more detailed information regarding the names,
affiliations and interests of Mr. Stang and Lexar's other directors
and executive officers in the solicitation by reading the
preliminary prospectus/proxy statement. Lexar and the Lexar logo
are trademarks of Lexar Media, Inc. All other brand or product
names are trademarks or registered trademarks of their respective
holders. -0- *T LEXAR MEDIA, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) ASSETS March
31, December 31, 2006 2005 ---------- ------------ Current assets:
Cash, cash equivalents and short-term investments $ 114,328 $
171,318 Restricted cash 5,000 5,000 Accounts receivable, net 51,379
103,396 Inventories 70,788 117,055 Prepaid expenses and other
current assets 10,312 9,197 ---------- ------------ Total current
assets 251,807 405,966 Property and equipment, net 10,815 10,823
Intangibles and other assets, net 9,631 2,928 ----------
------------ Total assets $ 272,253 $ 419,717 ==========
============ LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 38,435 $ 109,604 Accrued
liabilities 77,128 73,328 Deferred license revenue and product
margin 14,680 25,236 Short-term bank borrowings - 54,723 ----------
------------ Total current liabilities 130,243 262,891 Deferred
license revenue, net of current portion 19,000 4,000 Senior
convertible notes payable 70,000 70,000 ---------- ------------
Total liabilities 219,243 336,891 Total stockholders' equity 53,010
82,826 ---------- ------------ Total liabilities and stockholders'
equity $ 272,253 $ 419,717 ========== ============ LEXAR MEDIA,
INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share amounts) (unaudited)
Three Months Ended ---------------------------------- March 31,
December 31, April 1, 2006 2005 2005 ---------- ------------
---------- Net revenues: Product revenues $ 120,633 $ 229,316 $
231,633 License and royalty revenues 4,041 9,744 809 ----------
------------ ---------- Total net revenues 124,674 239,060 232,442
---------- ------------ ---------- Cost of product revenues 125,296
225,362 203,060 ---------- ------------ ---------- Gross margin
(622) 13,698 29,382 ---------- ------------ ---------- Operating
expenses: Research and development 3,744 3,533 3,393 Sales and
marketing 15,032 17,543 19,934 General and administrative 13,678
11,705 15,163 ---------- ------------ ---------- Total operating
expenses 32,454 32,781 38,490 ---------- ------------ ----------
Loss from operations (33,076) (19,083) (9,108) ----------
------------ ---------- Other income (expense): Interest and other
expense (1,448) (1,454) (484) Interest and other income 997 876 126
Foreign exchange loss, net (282) (265) (102) ----------
------------ ---------- Total other expense (733) (843) (460)
---------- ------------ ---------- Loss before income taxes
(33,809) (19,926) (9,568) Income taxes $ 3,008 $ 3,841 $ 18
---------- ------------ ---------- Net loss $ (36,817) $ (23,767) $
(9,586) ========== ============ ========== Net loss per common
share: Basic $ (0.45) $ (0.29) $ (0.12) Diluted $ (0.45) $ (0.29) $
(0.12) Shares used in computing net loss per common share
calculation: Basic 81,530 80,804 79,519 Diluted 81,530 80,804
79,519 *T
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