Catalyst Semiconductor Reports 4th Quarter and Fiscal Year Results.SUNNYVALE, Calif. -- 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 and analog/mixed signal 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 announced financial results for its fiscal fourth quarter and year ended April 30, 2006. For the quarter ended April 30, 2006, Catalyst reported net income of $270,000, or $0.02 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, on net revenue of $14.2 million. This compares with net income of $516,000, or $0.03 per diluted share, on net revenue of $16.3 million in the quarter ended April 30, 2005. In the quarter ended January 31, 2006, Catalyst reported net income of $864,000, or $0.05 per diluted share, on net revenue of $14.4 million. For the year ended April 30, 2006, Catalyst reported net income of $2.6 million, or $0.14 per diluted share, on revenue of $60.2 million. This compares to net income of $3.8 million, or $0.20 per diluted share, in the previous year on revenue of $62.3 million. Net revenue from analog/mixed signal products totaled $1,164,000, or 8.2% of revenue, in the quarter ended April 30, 2006, compared with $901,000, or 5.5% of revenue, in the quarter ended April 30, 2005 and $1,123,000, or 7.8% of net revenue, in the quarter ended January 31, 2006. Gross margin for the quarter ended April 30, 2006 was 34.9%, compared to 37.9% for the quarter ended April 30, 2005 and 43.1% for the quarter ended January 31, 2006. Several factors impacted the fourth quarter margin compared to the previous quarter including a net increase in reserve for excess inventory of $89,000, increased overhead expenses of $146,000, as well as increased costs to manufacture certain parts. In the quarter ended January 31, 2006, Catalyst recorded a benefit from the sale of previously reserved inventory of $280,000. Gross margin for the year ended April 30, 2006 was 38.7% compared to 42.5% in the year ended April 30, 2005. The decrease was due primarily to the challenging pricing environment, particularly in the serial memory line which represented approximately 58% of fiscal 2006 revenue. Catalyst continues to pursue product cost reduction programs including transition to .35 micron micron: see micrometer. One micrometer, which is one millionth of a meter or approximately 1/25,000 of an inch. The tiny elements that make up a transistor on a chip are measured in micrometers and nanometers. See process technology. products. Research & Development expenses decreased $112,000, or 5.9%, to $1.8 million for the quarter ended April 30, 2006 from $1.9 million for the quarter ended April 30, 2005 and $108,000, or 5.7%, from $1.9 million for the quarter ended January 31, 2006. The decrease from the prior year was due primarily to a decrease in costs for professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. of $51,000 and a decrease of $45,000 in spending for engineering equipment. The decrease from the previous quarter was due primarily to a $114,000 reduction in employee compensation related expenses. Sales, General & Administrative expenses decreased $337,000, or 8.9%, to $3.4 million in the quarter ended April 30, 2006 from $3.8 million in the quarter ended April 30, 2005 and increased $163,000, or 5.0%, from $3.3 million in the quarter ended January 31, 2006. These periodic fluctuations resulted partially from the level and timing of costs attributable to Sarbanes-Oxley related expenses. Catalyst recorded an income tax benefit of $216,000 during the quarter ended April 30, 2006 compared to income tax provisions of $218,000, or a tax rate of 29.7%, in the quarter ended April 30, 2005 and $539,000, or 38.4%, in the quarter ended January 31, 2006. The tax benefit recorded for the quarter ended April 30, 2006 was attributable to expiry of the statute of GLOUCESTER, STATUTE OF. An English statute, passed 6 Edw. I., A. D., 1278; so called, because it was passed at Gloucester. There were other statutes made at Gloucester, which do not bear this name. See stat. 2 Rich. II. MARLEBRIDGE, STATUTE OF. limitation and resulted in an effective tax rate of 28.5% for fiscal 2006. The tax rate in the quarter ended April 30, 2006 benefited by $284,000 from a reduction in state tax liability. As of April 30, 2006, Catalyst had cash, cash equivalents and short-term investments of $29.1 million, a decrease of $3.8 million compared to January 31, 2006. The decrease in cash was primarily attributable to the purchase of a building for $3.7 million to serve as Catalyst's future headquarters facility and stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. of 388,184 shares at a cost of $1,920,000, or an average cost of $4.95 per share. During fiscal 2006, Catalyst repurchased 912,943 shares at a total cost of $4,503,000, or $4.93 per share. The company had previously provided a preliminary estimate of fourth quarter revenues but reporting of final results had been delayed by complications encountered in the recent implementation of a more sophisticated inventory tracking and cost accounting system. The system significantly improved our ability to track and monitor inventory quantities, but its implementation resulted in unanticipated delays in closing our books and completing our assessment of the effectiveness of the company's internal control over financial reporting as required by the Sarbanes-Oxley Act See SOX. under Section 404. Management Comments & Outlook "While we are pleased to record our 8th consecutive fiscal year of profitability, we are nevertheless concerned about the continuing pricing pressure on our serial 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. product line. We continue to focus our attention on cost reduction programs for this particular product line and the volume from our new process platform is picking up. "Despite fluctuations on a quarter to quarter basis, we are encouraged by the revenue increase achieved for our line of analog/mixed signal products, which totaled $4.6 million in revenues for fiscal 2006 compared to $2.9 million for fiscal 2005. We are increasing the pace of new product introductions, coupled with increasing marketing efforts and design wins, to accelerate our rate of success in the coming quarters," said Gelu Voicu, president and chief executive officer. Investor Conference Call Catalyst will conduct a conference call regarding 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.catsemi.com, at www.fulldisclosure.com, or by dialing (877) 754-9851 (domestic only). International callers can dial (706) 643-1107. A replay of the call will be aired from approximately 4:00 p.m. today until midnight (Eastern) on July 28, 2006 at the company's Web site or by dialing (800) 642-1687 (domestic) or (706) 645-9291 (international), entering reservation number 9700472 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. . Catalyst 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 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. Certain statements in this press release, including statements regarding future market conditions, new product offerings, demand for products, and increasing revenues, particularly from analog/mixed signal products, are forward looking statements that are subject to risks and uncertainties. These risks and uncertainties, which could cause Catalyst's results to differ materially from the forward-looking statements and include, without limitation: declining market acceptance and demand for Catalyst's products; 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. ; a decline in the growth of the markets 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 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 Catalyst's 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 30, April 30,
2006 2005
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 7,730 $10,978
Short term investments 21,409 22,815
Accounts receivable, net 9,502 9,966
Inventories 14,262 11,455
Other current assets 3,255 5,063
-------- --------
Total current assets 56,158 60,277
Property and equipment, net 9,408 5,582
Deferred tax assets 4,759 4,128
Other assets 95 74
-------- --------
Total assets $70,420 $70,061
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,596 $ 6,069
Accrued expenses 3,002 4,245
Deferred gross profit on shipments to
distributors 2,292 1,879
-------- --------
Total current liabilities 12,890 12,193
Total stockholders' equity 57,530 57,868
-------- --------
Total liabilities and stockholders' equity $70,420 $70,061
======== ========
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Twelve Months
Ended Ended
----------------- -----------------
April April April April
30, 30, 30, 30,
2006 2005 2006 2005
-------- -------- -------- --------
Net revenues $14,187 $16,325 $60,217 $62,320
Cost of revenues 9,241 10,140 36,900 35,852
-------- -------- -------- --------
Gross profit 4,946 6,185 23,317 26,468
Operating expenses:
Research and development 1,783 1,895 7,472 7,910
Selling, general and
administration 3,446 3,783 13,445 13,696
-------- -------- -------- --------
Income (loss) from operations (283) 507 2,400 4,862
Interest income, net 337 227 1,175 732
-------- -------- -------- --------
Income before income taxes 54 734 3,575 5,594
Income tax provision (benefit) (216) 218 1,019 1,773
-------- -------- -------- --------
Net income $ 270 $ 516 $ 2,556 $ 3,821
======== ======== ======== ========
Net income per share:
Basic $ 0.02 $ 0.03 $ 0.15 $ 0.22
======== ======== ======== ========
Diluted $ 0.02 $ 0.03 $ 0.14 $ 0.20
======== ======== ======== ========
Weighted average common shares:
outstanding:
Basic 16,432 17,104 16,685 17,507
======== ======== ======== ========
Diluted 17,880 18,767 18,220 19,485
======== ======== ======== ========
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