Third quarter and YTD FY 2008 highlights included:
-- Third quarter net revenues of $17.8 million, down 14%
sequentially and up 9% over the year ago quarter.
-- YTD net revenues, up $10.5 million, or 22% year-over-year.
-- YTD Analog/Mixed Signal revenues, up $4.7 million, or 116%
year- over-year.
-- Third quarter total gross margin of 38.5 %, up from 37.3% in
Q2.
-- Third quarter GAAP net income of $0.4 million - $0.02 EPS.
-- Third quarter non-GAAP net income of $1.1 million - $0.06 EPS.
SANTA CLARA, Calif.--February 28, 2008--Catalyst Semiconductor,
Inc. (NASDAQ:CATS), a developer and marketer of
programmable and analog/mixed signal products used in
telecommunications, networking systems, computers, automotive,
industrial and consumer markets, today reported financial results for
its third quarter of fiscal year 2008, which ended January 27, 2008.
Net revenues for the third quarter ended January 27, 2008 were
$17.8 million, down 14% from net revenues of $20.7 million for the
preceding quarter ended October 28, 2007, and up 9% from net revenues
of $16.4 million for the third quarter ended January 28, 2007.
Catalyst previously announced on February 5, 2008 that it expected net
revenues and net income for the third quarter ended January 27, 2008
to be between $17.4 to $17.6 million and $0.1 million and $0.3
million, respectively.
Net revenues from analog/mixed signal products were $2.2 million,
or 13% of net revenues in the third quarter ended January 27, 2008,
down 40% from $3.8 million, or 18% of net revenues for the quarter
ended October 28, 2007, and up 72% from $1.3 million, or 8% of net
revenues for the third quarter ended January 28, 2007.
Net income for the third quarter ended January 27, 2008, was $0.4
million, or $0.02 per diluted share, compared with net income of $1.0
million, or $0.06 per diluted share for the preceding quarter ended
October 28, 2007, and net income of $0.1 million, or $0.01 per diluted
share in the third quarter ended January 28, 2007. Net income for the
third quarter ended January 27, 2008 includes the impact of $634,000
of expenses incurred for professional services associated with
strategic transaction activities that were under discussion during the
quarter. In January 2008, the board of directors terminated these
discussions due to changes in market conditions.
On a non-GAAP basis, net income for the third quarter was $1.1
million, or $0.06 per diluted share, compared with non-GAAP net income
of $1.3 million, or $0.07 per diluted share, for the preceding quarter
ended October 28, 2007, and $0.6 million, or $0.03 per diluted share,
in the third quarter ended January 28, 2007. Non-GAAP net income
reflects adjustments for non-cash stock compensation expenses and
professional fees incurred in association with strategic transaction
activities, which are more fully detailed in the reconciliation
between net income on a GAAP basis and net income on a non-GAAP basis
provided in the statements that accompany this press release.
The gross margin percentage for the third quarter ended January
27, 2008 was 38.5%, compared with 37.3% in the preceding quarter ended
October 28, 2007 and 35.6% in the third quarter ended January 28,
2007. The gross margin percentage improvement over the previous
quarter was attributable to greater manufacturing efficiencies in our
back-end manufacturing operations.
Operating activities during the third quarter generated a positive
cash flow of $1.6 million and $7.5 million year-to-date with cash and
short term investments increasing by $1.0 million to $36.5 million at
the end of the third quarter ended January 27, 2008.
In February 2008, Catalyst announced that its board of directors
approved increasing the number of authorized shares under the stock
repurchase program to four million shares. Prior to the increase,
Catalyst had approximately 763,000 shares remaining under the current
stock repurchase program.
Management Comments & Outlook
"Total revenues for the third quarter were lower than our results
for the first and second quarters due in large part to seasonality in
our business. However, we are pleased that year-to-date revenues
through the fiscal third quarter are up 22% over the same period last
year with our analog/mixed signal net revenues up by 116%
year-over-year," said Gelu Voicu, Catalyst's President and Chief
Executive Officer. "While we saw a slow start in our fiscal fourth
quarter, due to the Chinese New Year holiday at the beginning of
February, we are encouraged to see that our bookings and shipments
after four weeks are at a similar level to what we attained at this
point during the third quarter."
Other highlights of the quarter included:
-- Catalyst introduced four new products: one bus product for I/O
expansion and three LED drivers. The LED drivers exemplify
Catalyst's strategy to be a "one-stop" vendor for a broad
range of LED drivers which address all the major segments of
the lucrative LED market - from cell phone backlighting to
mid-size portable panels, to large-panel video and LED
signage.
-- Catalyst further enhanced its ability to compete in the
consumer market with the introduction of the first in a new
line of optimized, low pin-count EEPROMs.
-- Catalyst was granted a key patent, adding another piece of
significant intellectual property to its analog portfolio.
This patent covers a unique step-down switching regulator
circuit architecture and is embedded in the CAT4201
inductor-based, step-down LED driver, introduced in the first
quarter of fiscal year 2008.
-- Catalyst's CAT4201 LED driver was named to the prestigious EDN
"Hot 100 Products of 2007." This same device was also named
the "Smartest Commercial Move in Switching Regulators" by the
highly regarded EN-Genius Network website.
Investor Conference Call
Catalyst will conduct a conference call regarding the third 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, or by dialing (877) 754-9851 (domestic only).
International callers can dial (706) 643-1107. Participants will be
required to provide the conference call ID # 34333362.
A replay of the call will be aired from approximately 4:00 p.m.
today until midnight (Eastern) on March 13, 2008 at the company's Web
site or by dialing (800) 642-1687 (domestic) or (706) 645-9291
(international), entering reservation number 34333362 and following
operator instructions.
About Catalyst Semiconductor
Headquartered in Santa Clara, California, Catalyst Semiconductor designs and markets analog, mixed-signal and non-volatile memory products, including Digitally Programmable Potentiometers (DPP(TM)), white and color LED drivers, DC/DC converters, LDO regulators, voltage supervisors, bus expanders, serial and parallel EEPROMs, Flash and NVRAM. Many of Catalyst's products incorporate the Company's Quantum Charge Programmable(TM) technology, to deliver Adaptive Analog(TM) products, which offer a new level of customer flexibility, lower power and smaller die size. Catalyst products are used in telecommunications, computer, automotive, industrial and consumer markets. Typical applications include LCD displays, automotive lighting, optical networks, printers, modems, wireless LANs, network cards, DIMM modules, cellular telephones, navigation systems, set-top boxes and Internet routers. www.catsemi.com
Forward-Looking Statements
This earnings release contains forward-looking statements, including statements regarding Catalyst's bookings and shipments in the fourth quarter. 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, 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 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 and costs of compliance; 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 and Quarterly Reports filed on Form 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)
January 27, 2008 April 29, 2007
---------------- ----------------
ASSETS
Current assets:
Cash and short-term investments $ 36,484 $ 28,658
Accounts receivable, net 12,346 10,444
Inventories 10,345 11,137
Other assets 3,038 2,845
---------------- ----------------
Total current assets 62,213 53,084
Property and equipment, net 11,496 11,700
Deferred tax and other assets 3,320 4,428
---------------- ----------------
Total assets $ 77,029 $ 69,212
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,956 $ 6,690
Accrued expenses 2,647 2,137
Deferred gross profit on shipments
to distributors 2,178 2,130
---------------- ----------------
Total current liabilities 13,781 10,957
Other non-current liabilities 157 -
---------------- ----------------
Total liabilities 13,938 10,957
Total stockholders' equity 63,091 58,255
---------------- ----------------
Total liabilities and stockholders'
equity $ 77,029 $ 69,212
================ ================
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
----------------------- -----------------------
Three Months Ended Nine Months Ended
----------------------- -----------------------
January 27, January 28, January 27, January 28,
2008 2007 2008 2007
----------- ----------- ----------- -----------
Net revenues $ 17,837 $ 16,417 $ 58,410 $ 47,952
Cost of revenues 10,968 10,576 36,632 31,420
----------- ----------- ----------- -----------
Gross profit 6,869 5,841 21,778 16,532
Operating expenses:
Research and
development 2,196 1,915 6,432 5,741
Selling, general and
administrative 4,609 3,987 13,232 11,747
----------- ----------- ----------- -----------
Income (loss) from
operations 64 (61) 2,114 (956)
Interest income, net 384 333 1,142 977
----------- ----------- ----------- -----------
Income before income
taxes 448 272 3,256 21
Income tax provision
(benefit) 93 161 1,168 (7)
----------- ----------- ----------- -----------
Net income $ 355 $ 111 $ 2,088 $ 28
=========== =========== =========== ===========
Net income per share:
Basic $ 0.02 $ 0.01 $ 0.13 $ 0.00
=========== =========== =========== ===========
Diluted $ 0.02 $ 0.01 $ 0.12 $ 0.00
=========== =========== =========== ===========
Weighted average common
shares:
Basic 16,872 16,359 16,621 16,331
=========== =========== =========== ===========
Diluted 17,914 17,200 17,818 17,246
=========== =========== =========== ===========
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
AND NET INCOME PER SHARE
(UNAUDITED)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
----------------------- -----------------------
January 27, January 28, January 27, January 28,
2008 2007 2008 2007
----------- ----------- ----------- -----------
GAAP Net Income $ 355 $ 111 $ 2,088 $ 28
Equity based
compensation expense
under SFAS No.
123(R), net of tax
(Note 1) 337 452 1,010 1,448
Strategic transaction
activities, net of
tax (Note 2) 407 - 556 -
----------- ----------- ----------- -----------
Non-GAAP Net Income $ 1,099 $ 563 $ 3,654 $ 1,476
=========== =========== =========== ===========
Non-GAAP Net Income
Per Share
Basic $ 0.07 $ 0.03 $ 0.22 $ 0.09
Diluted $ 0.06 $ 0.03 $ 0.20 $ 0.09
Shares Used in Net
Income Per Share
Basic 16,872 16,359 16,621 16,331
Diluted 18,282 17,212 18,197 17,289
These adjustments reconcile Catalyst's GAAP results of operations
to the reported non-GAAP results of operations. Catalyst believes that
presentation of net income and net income per share excluding non-cash
equity-based compensation and non-recurring professional service
expense as more fully described in Notes (1) and (2) below, provides
meaningful supplemental information to investors, as well as
management, which is indicative of Catalyst's core operating results
and facilitates comparison of operating results across multiple
reporting periods. Catalyst uses these non-GAAP measures when
evaluating its financial results as well as for internal planning and
budgeting purposes. Equity-based compensation is excluded from
non-GAAP financial results since it is a non-cash based charge.
Professional service fees in connection with the strategic alternative
activities are excluded from non-GAAP financial results since these
are infrequent and non-recurring and therefore may not be considered
directly related to our on-going business operations.
This non-GAAP measure should not be viewed as a substitute for
Catalyst's GAAP results, and may be different than non-GAAP measures
used by other companies.
Note (1):
For the three months ended January 27, 2008, non-cash equity based
compensation was $440,000, allocated as follows: $13,000 to Cost of
Revenues, $143,000 to Research and Development and $284,000 to
Selling, General and Administrative expense.
For the three months ended January 28, 2007, non-cash equity based
compensation was $557,000, allocated as follows: $16,000 to Cost of
Revenues, $215,000 to Research and Development and $326,000 to
Selling, General and Administrative expense.
For the nine months ended January 27, 2008, non-cash equity based
compensation was $1.3 million, allocated as follows: $39,000 to Cost
of Revenues, $395,000 to Research and Development and $873,000 to
Selling, General and Administrative expense.
For the nine months ended January 28, 2007, non-cash equity based
compensation was $1.7 million, allocated as follows: $42,000 to Cost
of Revenues, $574,000 to Research and Development and $1.1 million to
Selling, General and Administrative expense.
Note (2):
In July 2007, the Board of Directors of Catalyst Semiconductor,
Inc. formed a Strategy Committee and shortly thereafter engaged the
services of an investment banker to assist the Board in evaluating
various strategic alternatives. In January 2008, the Board terminated
further activities related to the discussions that occurred during the
third quarter of fiscal year 2008 due to changes in market conditions.
For the three months ended January 27, 2008, approximately
$634,000 ($407,000, net of tax), of non-recurring professional fees
for investment banking and legal services are included in Selling,
General and Administrative expense related to these activities and
$867,000 ($556,000, net of tax), year-to-date.
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