Catalyst Semiconductor Reports 4th Quarter, Year-End Results; Annual Revenue Up 31% With 6th Consecutive Year of Profitability.Business Editors/High-Tech Writers SUNNYVALE, Calif.--(BUSINESS WIRE)--May 27, 2004 Catalyst Semiconductor, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CATS), a developer and marketer of programmable products used in telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , networking systems, computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. , automotive, industrial and consumer markets, today reported financial results for its fiscal fourth quarter ended April 30, 2004. For the fiscal fourth quarter ended April 30, 2004, Catalyst had net income of $5.6 million, or $0.29 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share -- including a tax benefit of $2.2 million, or $0.14 per share -- on revenues of $16.8 million. This compares with net income of $4.0 million, or $0.22 per diluted share -- including a tax benefit of $2.7 million, or $0.16 per share -- on revenues of $12.5 million in the year-ago quarter ended April 30, 2003. In the preceding quarter ended January 31, 2004, the Company reported net income of $2.4 million, or $0.12 per diluted share, on revenues of $16.9 million. During the fourth quarter, the deferred gross margin on shipments increased $1.5 million as inventories increased sharply at distributors. As of April 30, 2004, Catalyst had cash, cash equivalents and short-term investments of $33.8 million, a decrease of $1.1 million compared to the previous quarter as $4.1 million of cash was used to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. common stock. Gross margin for the quarter ended April 30, 2004 was 49.0%, compared to 46.0% for the previous quarter and 42.3% one year ago. Fourth quarter sales reflected a better mix of new products and stronger overall ASPs compared to the third quarter, and included increased sales of reserved inventory and decreased royalty expense related to the settlement of a dispute with Philips announced in the third quarter. The company reversed its valuation allowance against its deferred tax assets during the fourth quarter of fiscal 2004. This resulted in a fourth quarter income tax benefit of $2.2 million and a $5.1 million increase in shareholders equity for the benefit related to employee stock options. Research and development expense increased 3% from the previous quarter, while overall operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. were flat compared to the previous quarter. Other highlights of the quarter included: -- Fourth-quarter shipments from analog/mixed signal products grew to $705,000 or 4.2% of total revenues, compared with $432,000 or 2.6% of revenues in the prior quarter; -- Shipping more than 1 million microprocessor microprocessor, integrated circuit containing the arithmetic, logic, and control circuitry required to interpret and execute instructions from a computer program. supervisors per quarter, up from nearly zero two quarters ago; -- Ramping up production in a new, more advanced process, for 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 -- Repurchasing of 600,000 shares of Company common stock from Elex, N.V. at $6.77 per share. Management Comments & Outlook "Here we are at the end of a very rewarding fiscal year; we managed to grow our revenue from $48.2 million in FY 2003 to more than $63.5 million in fiscal 2004, and added the sixth consecutive profitable year to our growing list of achievements. For the last three quarters, we shipped at a rate of more than 100 million units per quarter and we are prepared to increase this number if market conditions require. We are excited by the progress being made in both growing the revenue from our analog/mixed signal products and in our increasing involvement with customers on the design of customized, next-generation versions of such products. This revenue growth helps us increase profit margins and grow overall revenues, and also strengthens our position as supplier of a wide base of products to our customers," said Gelu Voicu, president and chief executive officer. 12-Month Results For the 12 months ended April 30, 2004, Catalyst had net income of $9.4 million, or $0.48 per diluted share on revenues of $63.5 million. This compares with net income of $6.3 million, or $0.34 per share, on revenues of $48.2 million for fiscal year 2003. Gross margin for fiscal year 2004 was 41.2% compared to 41.1% for fiscal year 2003. Gross margin for fiscal 2004 reflects higher sales volume at lower ASPs. In 2004, the Company recognized $1.4 million of royalty expense related to the settlement with Philips and a $1.1 million benefit, compared to $495,000 in 2003, related to the sales of previously reserved inventory. Investor Conference Call The Company will conduct a conference call on the fourth 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 Web site www.catalyst-semiconductor.com, at www.companyboardroom.com, or by dialing (800) 865-4425 (domestic only). A replay of the call will be aired from approximately 4:00 p.m. today until midnight (Pacific) on June 4, 2004 at the company's Web site or by dialing (877) 519-4471 (domestic) or (973) 341-3080 (international), entering reservation number 4774022 and following operator instructions. About Catalyst Semiconductor Founded in 1985, Catalyst Semiconductor, Inc. is headquartered in Sunnyvale, California Sunnyvale ([sʌniveil]) is a city in Santa Clara County, California, United States. It is one of the major cities that make up the Silicon Valley. As of the 2000 census, the city population was 131,760. . The Company designs and markets a broad range of programmable products including 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, Flash Memories, 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. , Digitally Programmable Potentiometers, 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 programmable Analog/Mixed Signal products. Catalyst products are used in telecommunications, networking systems, computation, automotive, industrial and consumer markets. Typical applications include optical networks, 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, PC BIOS See BIOS. , 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, cellular telephones, 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 certified See certification. . For additional information about Catalyst Semiconductor, visit our web site at www.catalyst-semiconductor.com Certain statements in this press release, including statements regarding increasing future revenues and profit margins, introducing new products, increasing revenues, shipments and market share, and adding new customers, and reducing manufacturing costs, are forward looking statements that are subject to risks and uncertainties. These risks and uncertainties, which could cause the forward looking statements and Catalyst's results to differ materially, include, without limitation: increased competition in the markets for Catalyst's products leading to decreased average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. ; the continued growth of the markets for Catalyst's products; market acceptance and demand for Catalyst's new 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 A semiconductor manufacturer that makes chips for third parties. It may be a large chip maker that sells its excess manufacturing capacity or one that makes chips exclusively for other companies. 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 our new products 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)
April April
30, 30,
2004 2003
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $17,245 $7,828
Short-term investments 16,564 20,078
Accounts receivable, net 12,547 7,863
Inventories 6,960 8,423
Deferred tax assets 5,024 1,914
Other assets 875 1,146
-------- --------
Total current assets 59,215 47,252
Property and equipment, net 3,334 3,091
Deferred tax assets 4,098 0
Other assets 218 245
-------- --------
Total assets $66,865 $50,588
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,016 $3,692
Accrued expenses 3,782 3,126
Deferred gross profit on shipments to distributors 4,079 1,417
-------- --------
Total current liabilities 12,877 8,235
Total stockholders' equity 53,988 42,353
-------- --------
Total liabilities and stockholders' equity $66,865 $50,588
======== ========
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Twelve Months
Ended Ended
----------------- -----------------
April April April April
30, 30, 30, 30,
2004 2003 2004 2003
----------------- -----------------
Net revenue $16,838 $12,510 $63,538 $48,221
Cost of revenues 8,580 7,214 37,375 28,396
-------- -------- -------- --------
Gross profit 8,258 5,296 26,163 19,825
Research and development 1,996 1,470 7,130 5,223
Selling, general and administration 2,938 2,687 11,453 10,020
-------- -------- -------- --------
Operating income 3,324 1,139 7,580 4,582
Net interest income 97 145 379 382
-------- -------- -------- --------
Income before taxes 3,421 1,284 7,959 4,964
Income tax benefit 2,179 2,717 1,408 1,354
-------- -------- -------- --------
Net income $5,600 $4,001 $9,367 $6,318
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Net income per share:
Basic $0.33 $0.24 $0.57 $0.38
======== ======== ======== ========
Diluted $0.29 $0.22 $0.48 $0.34
======== ======== ======== ========
Weighted average common shares
Basic 16,806 16,721 16,567 16,721
======== ======== ======== ========
Diluted 19,593 18,339 19,411 18,339
======== ======== ======== ========
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