Exhibit 99.1
Catalyst Semiconductor Reports 2nd Quarter FY 2008 Financial Results
For the second quarter of FY2008, highlights included:
• Net revenues of $ 20.7 million, up 4% sequentially.
• Analog/Mixed Signal revenues of $3.8 million, up 42% from 1st Quarter.
• Total gross margin of 37.3%, up from 36.2% in the 1st Quarter.
• Net income of $1.0 million, up 41% from 1st Quarter.
SANTA CLARA, Calif. (November 29, 2007) — 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 second quarter of fiscal year 2008, which ended October 28, 2007.
For the quarter ended October 28, 2007, Catalyst had net revenues of $ 20.7 million, an increase of approximately $900,000, or 4%, from the first quarter ended July 29, 2007, and an increase of $4.4 million, or 27%, from the second quarter ended October 29, 2006. Net revenues from analog/mixed signal products were a record $3.8 million, or 18% of net revenues in the second quarter ended October 28, 2007, up 42% from $2.7 million, or 13% of net revenues in the first quarter ended July 29, 2007, and up 191% from $1.3 million, or 8% of net revenues in the second quarter ended October 29, 2006.
For the second quarter ended October 28, 2007, Catalyst reported net income of $1.0 million, or $0.06 per diluted share, compared with net income of $720,000, or $0.04 per diluted share, for the first quarter ended July 29, 2007, and net income of $176,000, or $0.01 per diluted share, for the second quarter ended October 29, 2006.
On a non-GAAP basis, net income in the second quarter ended October 28, 2007 was $1.3 million, or $0.07 per diluted share, an improvement of $264,000, or $0.01 per diluted share, from net income of $1.0 million, or $0.06 per diluted share, for the first quarter ended July 29, 2007, and an improvement of $691,000, or $0.03 per diluted share, from net income of $644,000, or $0.04 per diluted share, in the second quarter ended October 29, 2006. Non-GAAP net income reflects adjustments for non-cash stock compensation expense and the related tax impact, which are more fully detailed in the reconciliation between net income/loss on a GAAP basis and non-GAAP net income/loss provided in the statements that accompany this press release.
Gross margin for the second quarter ended October 28, 2007 was 37.3 %, compared with 36.2% in the first quarter ended July 29, 2007 and 35.5% in the second quarter ended October 29, 2006. The gross margin percentage increase over previous quarters
was primarily attributable to increased sales of higher margin analog/mixed signal products, greater manufacturing efficiencies in our back-end manufacturing and the sale of inventory that was previously written down.
As of October 28, 2007, cash and short term investments increased by $5.6 million to $35.5 million from the first quarter of fiscal 2008, with $1.3 million of the increase related to stock option exercises.
Management Comments & Outlook
“We had another outstanding quarter in terms of revenue and profit growth,” said Gelu Voicu, Catalyst’s President and Chief Executive Officer. Other highlights of the quarter included:
• As a result of our continuing migration to .35 micron technology, we shipped a record number of units again in the second quarter;
• Analog and mixed signal revenue grew in excess of 40% for the third consecutive quarter; and
• We introduced a total of five new products, which represented a broad spectrum of our analog and mixed signal products families: Supervisors, Digital Potentiometer, Bus Products, LDO regulator and LED Drivers.
“We are pleased to see the continued traction gained by our mixed signal business, which came on top of 41% growth in the first quarter of 2008 and 44% in the fourth quarter of 2007. All analog and mixed signal product groups grew, with the LED driver product family again achieving the highest rate of growth.
“Our memory business also performed well during the second quarter of 2008; coupled with our established position as a high quality, cost-effective producer has enabled us to increase profits,” he added.
“While we typically experience some seasonality in our business during our fiscal third quarter, we remain confident in our future,” he added.
Investor Conference Call
Catalyst will conduct a conference call regarding the second 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. A replay of the call will be aired from approximately 4:00 p.m. today until midnight (Eastern) on December 13, 2007 at the company’s Web site or by dialing (800) 642-1687 (domestic) or (706) 645-9291 (international), entering reservation number 23787300 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™), 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™ technology, to deliver Adaptive Analog™ 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 confidence in its future. 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.
TABLES TO FOLLOW
CATALYST SEMICONDUCTOR, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| | October 28, 2007 | | April 29, 2007 | |
ASSETS | | | | | |
Current assets: | | | | | |
Cash and short-term investments | | $ | 35,497 | | $ | 28,658 | |
Accounts receivable, net | | 13,881 | | 10,444 | |
Inventories | | 8,730 | | 11,137 | |
Other assets | | 4,231 | | 2,845 | |
Total current assets | | 62,339 | | 53,084 | |
| | | | | |
Property and equipment, net | | 11,320 | | 11,700 | |
Deferred tax and other assets | | 2,485 | | 4,428 | |
Total assets | | $ | 76,144 | | $ | 69,212 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 8,946 | | $ | 6,690 | |
Accrued expenses | | 2,661 | | 2,137 | |
Deferred gross profit on shipments to distributors | | 2,041 | | 2,130 | |
Total current liabilities | | 13,648 | | 10,957 | |
Other non-current liabilities | | 159 | | — | |
Total liabilities | | 13,807 | | 10,957 | |
| | | | | |
Total stockholders’ equity | | 62,337 | | 58,255 | |
Total liabilities and stockholders’ equity | | $ | 76,144 | | $ | 69,212 | |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| | Three Months Ended | | Six Months Ended | |
| | October 28, | | October 29, | | October 28, | | October 29, | |
| | 2007 | | 2006 | | 2007 | | 2006 | |
| | | | | | | | | |
Net revenues | | $ | 20,717 | | $ | 16,310 | | $ | 40,573 | | $ | 31,535 | |
| | | | | | | | | |
Cost of revenues | | 12,990 | | 10,523 | | 25,664 | | 20,844 | |
Gross profit | | 7,727 | | 5,787 | | 14,909 | | 10,691 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Research and development | | 2,133 | | 1,937 | | 4,236 | | 3,826 | |
Selling, general and administration | | 4,286 | | 3,828 | | 8,623 | | 7,760 | |
Income (loss) from operations | | 1,308 | | 22 | | 2,050 | | (895 | ) |
| | | | | | | | | |
Interest income, net | | 329 | | 325 | | 758 | | 644 | |
Income (loss) before income taxes | | 1,637 | | 347 | | 2,808 | | (251 | ) |
| | | | | | | | | |
Income tax provision (benefit) | | 624 | | 171 | | 1,075 | | (168 | ) |
| | | | | | | | | |
Net income (loss) | | $ | 1,013 | | $ | 176 | | $ | 1,733 | | $ | (83 | ) |
| | | | | | | | | |
Net income (loss) per share: | | | | | | | | | |
Basic | | $ | 0.06 | | $ | 0.01 | | $ | 0.10 | | $ | (0.01 | ) |
| | | | | | | | | |
Diluted | | $ | 0.06 | | $ | 0.01 | | $ | 0.10 | | $ | (0.01 | ) |
| | | | | | | | | |
Weighted average common shares: | | | | | | | | | |
Basic | | 16,657 | | 16,284 | | 16,495 | | 16,317 | |
| | | | | | | | | |
Diluted | | 18,150 | | 17,118 | | 17,770 | | 16,317 | |
| | | | | | | | | | | | | | |
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME AND
NET LOSS PER SHARE
(UNAUDITED)
(In thousands, except per share data)
| | Three Months Ended | | Six Months Ended | |
| | October 28, | | October 29, | | October 28, | | October 29, | |
| | 2007 | | 2006 | | 2007 | | 2006 | |
GAAP Net Income (Loss) | | $ | 1,013 | | $ | 176 | | $ | 1,733 | | $ | (83 | ) |
Equity based compensation expense under SFAS No. 123(R) | | 416 | | 528 | | 867 | | 1,136 | |
Tax effect of equity based compensation expense | | (94 | ) | (60 | ) | (194 | ) | (141 | ) |
Non-GAAP Net Income | | $ | 1,335 | | $ | 644 | | $ | 2,406 | | $ | 912 | |
| | | | | | | | | |
Non-GAAP Net Income Per Share | | | | | | | | | |
Basic | | 0.08 | | 0.04 | | 0.15 | | 0.06 | |
Diluted | | 0.07 | | 0.04 | | 0.13 | | 0.05 | |
| | | | | | | | | |
Shares Used in Net Income Per Share | | | | | | | | | |
Basic | | 16,657 | | 16,284 | | 16,495 | | 16,317 | |
Diluted | | 18,987 | | 17,160 | | 18,359 | | 17,323 | |
These adjustments reconcile the Company’s GAAP results of operations to the reported non-GAAP results of operations. The Company believes that presentation of net income (loss) and net income (loss) per share excluding non-cash equity based compensation and the tax effect of equity based compensation provides meaningful supplemental information to investors, as well as management, which is indicative of the Company’s core operating results and facilitates comparison of operating results across multiple reporting periods. The Company 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. This non-GAAP measure should not be viewed as a substitute for the Company’s GAAP results, and may be different than non-GAAP measures used by other companies.
For the three months ended October 28, 2007, non-cash equity based compensation was $416,000, allocated as follows:$13,000 to Cost of Revenues, $132,000 to Research and Development and $271,000 to Sales, General and Administrative expense.
For the three months ended October 29, 2006, non-cash equity based compensation was $528,000, allocated as follows:$13,000 to Cost of Revenues, $176,000 to Research and Development and $339,000 to Sales, General and Administrative expense.
For the six months ended October 28, 2007, non-cash equity based compensation was $867,000, allocated as follows: $26,000 to Cost of Revenues, $252,000 to Research and Development and $589,000 to Sales, General and Administrative expense.
For the six months ended October 29, 2006, non-cash equity based compensation was $1,136,000, allocated as follows: $25,000 to Cost of Revenues, $359,000 to Research and Development and $752,000 to Sales, General and Administrative expense.
