Catalyst Semiconductor Reports 1st Quarter Results.SANTA CLARA Santa Clara, city, Cuba Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. , Calif. -- Catalyst Semiconductor, Inc. (Nasdaq:CATS), a developer and marketer of programmable and analog/mixed signal products used in telecommunications, networking systems, computation, automotive, industrial and consumer markets, today reported financial results for its first fiscal quarter ended July 31, 2006. For the first fiscal quarter ended July 31, 2006, Catalyst had a net loss of $228,000, or ($0.01) per share, on net revenue of $15.2 million. This compares with net income of $495,000, or $0.03 per diluted share, on net revenue of $14.7 million in the first quarter ended July 31, 2005. For the fourth quarter ended April 30, 2006, Catalyst reported net income of $270,000, or $0.02 per diluted share, on net revenue of $14.2 million. The first quarter net loss results from lower gross margins and the impact of stock option compensation expense. Total stock option related compensation expense was $478,000, and is a new cost in the Company's statement of operations See Income statement. in fiscal 2007, which is a result of the adoption of FAS123R effective at the beginning of this fiscal year. Net revenue from analog/mixed signal products increased to $1.4 million, or 9.4% of net revenue, in the quarter ended July 31, 2006, compared to $1.1 million, or 7.3% of net revenue, in the quarter ended July 31, 2005 and $1.2 million, or 8.2% of net revenue, in the quarter ended April 30, 2006. Gross margin for the quarter ended July 31, 2006 was 32.2%, compared with 39.0% for the quarter ended July 31, 2005 and 34.9% for the quarter ended April 30, 2006. The gross margin decrease from the previous quarter is primarily attributable to a decline in average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. due to product mix and sales of more expensive inventory acquired in previous quarters. Research & Development expense was $1.8 million for the quarter ended July 31, 2006, unchanged from $1.8 million for the quarters ended July 31, 2005 and April 30, 2006. Sales, General and Administrative expense was $3.9 million for the quarter ended July 31, 2006, compared to $3.4 million for the quarters ended July 31, 2005 and April 30, 2006. The increase from the previous quarters is principally attributable to compensation expense associated with outstanding stock option grants to sales, marketing and administrative personnel and the annual program grant to directors. Catalyst recorded a tax benefit of $240,000, or 51.2% of loss before taxes during the quarter ended July 31, 2006. This compares to a tax provision of $247,000 in the quarter ended July 31, 2005 and a tax benefit of $216,000 in the quarter ended April 30, 2006. As of July 31, 2006, Catalyst had cash, cash equivalents and short-term investments of $26.3 million, compared to $29.1 million as of April 30, 2006. The decrease of $2.8 million was primarily due to the purchase of $1.5 million of additional inventory and the acquisition of $1.0 million in fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → including $560,000 for refurbishment re·fur·bish tr.v. re·fur·bished, re·fur·bish·ing, re·fur·bish·es To make clean, bright, or fresh again; renovate. re·fur of the company's new owned headquarters facility located in Santa Clara, California Santa Clara, California (IPA: /ˌsæntəˈklærə/) , founded in 1777 and incorporated in 1852, is a city in Santa Clara County, in the U.S. state of California. , to which Catalyst relocated in August. Management Comments & Outlook "We continue to see competitive pressure on our product margins, particularly in the memory product lines. We believe that our ongoing transition to .35 micron products and other cost cutting measures will have a positive effect on our margins when more fully implemented. It is noteworthy that the stock option expenses of $478,000 adversely impacted our operating results," said Gelu Voicu, president and chief executive officer. "Another sign of progress is that analog product sales reached $1,425,000, or 9.4% of our net revenue in this quarter. We are encouraged that net revenue for our EEPROM (Electrically Erasable Programmable ROM) A rewritable memory chip that holds its content without power. Although EEPROMs spawned flash memory, EEPROMs are byte addressable at the write level, whereas flash chips must erase a block of bytes before rewriting. memory products is also increasing and hope to see this trend continue," he added. Additional Events Catalyst recently formed a new wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Catalyst Semiconductor Thailand, Ltd. to serve as its operating center for the management of its inventory and other key activities. Additionally, the Board of Directors of Catalyst announced that Dr. Roland Duchatelet, a member of the board since 1999, has joined the Company's audit committee as its fourth member. Investor Conference Call Catalyst will conduct a conference call regarding the first fiscal quarter results beginning at 2:00 p.m. (Pacific Time) today. The call will be available to all investors and media via the company's website at www.catsemi.com, at www.companyboardroom.com, or by dialing (800) 811-0667 (domestic). International callers may dial (913) 981-4901. A replay of the call will be aired from approximately 5:00 p.m. today until midnight (Pacific Time) on September 12, 2006 at the company's Web site or by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international), entering reservation number 3345350 and following operator instructions. About Catalyst Semiconductor Founded in 1985, Catalyst Semiconductor, Inc. is headquartered in Santa Clara, California. The Company is a leading supplier of high performance analog/mixed-signal solutions and nonvolatile memory See non-volatile memory. products used in automotive, aircraft, telecommunications, computation, industrial and consumer markets. The Company designs and markets a broad range of analog/mixed-signal products such as LED Drivers, DC-DC DC-DC Direct Current to Direct Current (power conversion) Converters, GPI/O Expanders, Digitally Programmable Potentiometers (DPP DPP - Dining Philosophers Problem (TM)), Microcontroller A single chip that contains the processor (the CPU), non-volatile memory for the program (ROM or flash), volatile memory for input and output (RAM), a clock and an I/O control unit. Supervisory circuits Supervisory circuits are semiconductor devices that detect and monitor voltage levels in power supplies, microprocessors, and other systems. They are protection circuits that monitor one or more system parameters. and other analog/mixed-signal products. Programmable products include Serial and Parallel EEPROMs with I2C I2C Inter-Integrated Circuit I2C Intelligent Interface Controller I2C Intelligent Controller , SPI (1) (Stateful Packet Inspection) See stateful inspection. (2) (Service Provider Interface) The programming interface for developing Windows drivers under WOSA. and Microwire interfaces, as well as NVRAM (Non-Volatile RAM) May refer to dynamic RAM (DRAM) and static RAM (SRAM) chips that are backed up by a battery or to non-volatile chips such as flash memory. See non-volatile memory, dynamic RAM, static RAM and solid state disk. and low density Flash Memories. Typical applications include LCD displays, digital cameras, cell phones, automotive instrumentation, modems, wireless LANs A local area network that transmits over the air typically in the 2.4 GHz or 5 GHz unlicensed frequency band. It does not require line of sight between sender and receiver. Wireless base stations (access points) are wired to an Ethernet network and transmit a radio frequency over an area , network cards, DIMM (Dual In-Line Memory Module) A printed circuit board that holds memory chips and plugs into a DIMM socket on the motherboard. See memory module. DIMM - Dual In-Line Memory Module modules, digital satellite box receivers, set-top boxes The cable TV box that sits on "top" of the TV "set," although it is often located several feet away in an equipment rack. The set-top box descrambles the premium channels and provides a tuner for the higher cable numbers that very old TVs did not support. and Internet routers (1) A router in the Internet that forwards IP packets between local, regional and national providers. Same as "IP router." (2) (InterNet Router) Macintosh software from Apple that internetworks different access methods (LocalTalk, EtherTalk, TokenTalk, etc. . Catalyst's Quality Management System is ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. 9001:2000 certified. For additional information about Catalyst Semiconductor, visit our web site at www.catsemi.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This earnings release contains forward-looking statements, including statements regarding the expected reduction of manufacturing costs, pressure on product margins, Catalyst's transition to .35 micron products, cost cutting measures and net revenue. These risks and uncertainties, which could cause Catalyst's results to differ materially from the forward-looking statements and include, without limitation: increased competition in the markets for Catalyst's products leading to decreased average selling prices; declining growth of the markets for Catalyst's products; declining market acceptance and demand for Catalyst's products; potential errors, latent defects latent defect n. a hidden flaw, weakness or imperfection in an article which a seller knows about, but the buyer cannot discover by reasonable inspection. It includes a hidden defect in the title to land, such as an incorrect property description. , design flaws or other problems with any of Catalyst's products; volatility in supply and demand for Catalyst's products, which would adversely affect revenues and market prices; price and availability of foundry services, assembly and test subcontract sub·con·tract n. A contract that assigns some of the obligations of a prior contract to another party. intr. & tr.v. sub·con·tract·ed, sub·con·tract·ing, sub·con·tracts capacity, which are required to meet Catalyst's financial targets and/or meet backlog requirements; timing, future development, cost and market acceptance of Catalyst's new products; increased regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. and costs of compliance; difficulties in implementation of a supply chain management system or failures in, or problems resulting from, Catalyst's newly-implemented enterprise resource management system; and the other risks detailed from time to time in Catalyst's Securities and Exchange Commission filings and reports, including, but not limited to, Catalyst's Annual Report filed on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and Quarterly Reports filed on Form 10-Q Form 10-Q See 10-Q. . Catalyst disclaims any obligation to update information contained in any forward looking statement.
CATALYST SEMICONDUCTOR, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 31, 2006 April 30, 2006
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $12,503 $ 7,730
Short-term investments 13,797 21,409
Accounts receivable, net 10,148 9,502
Inventories 15,075 14,262
Other assets 3,424 3,255
-------------- --------------
Total current assets 54,947 56,158
Property and equipment, net 9,942 9,408
Deferred tax assets 4,759 4,759
Other assets 95 95
-------------- --------------
Total assets $69,743 $70,420
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,207 $ 7,596
Accrued expenses 2,572 3,002
Deferred gross profit on
shipments to distributors 2,166 2,292
-------------- --------------
Total current liabilities 11,945 12,890
Total stockholders' equity 57,798 57,530
-------------- --------------
Total liabilities and
stockholders' equity $69,743 $70,420
============== ==============
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended
-------------------------------
July 31, April 30, July 31,
2006 2006 2005
-------------------------------
Net revenue $15,225 $14,187 $14,676
Cost of revenues 10,318 9,241 8,958
--------- ---------- ---------
Gross profit 4,907 4,946 5,718
Research and development 1,834 1,883 1,822
Selling, general and administration 3,860 3,446 3,364
--------- ---------- ---------
Operating income (loss) (787) (283) 532
Net interest income 319 337 210
--------- ---------- ---------
Income (loss) before income taxes (468) 54 742
Income tax provision (benefit) (240) (216) 247
--------- ---------- ---------
Net income (loss) $ (228) $ 270 $ 495
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Net income (loss) per share:
Basic $ (0.01) $ 0.02 $ 0.03
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Diluted $ (0.01) $ 0.02 $ 0.03
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Weighted average common shares:
outstanding:
Basic 16,350 16,432 16,650
Diluted 16,350 17,880 18,152
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