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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
FORM 10-Q/A
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended November 1, 1998 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from __________
to __________________.
COMMISSION FILE NUMBER: 0-21488
CATALYST SEMICONDUCTOR, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 77-0083129
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1250 BORREGAS AVENUE,
SUNNYVALE, CALIFORNIA 94089
(Address, including zip code, of
Registrant's principal executive offices)
(408) 542-1000
(Registrant's telephone number,
including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
The number of shares outstanding of the Registrant's Common Stock as of December
18, 1998 was 13,948,061
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CATALYST SEMICONDUCTOR, INC.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Unaudited Condensed Consolidated Balance Sheets
at October 31, 1998 and April 30, 1998................................... Page 3
Unaudited Condensed Consolidated Statements of Operations for the three and
six month periods ended October 31, 1998 and 1997........................ Page 4
Unaudited Condensed Consolidated Statements of Cash Flows for the six month
periods ended October 31, 1998 and 1997.................................. Page 5
Notes to Unaudited Condensed Consolidated Financial Statements............. Pages 6-8
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................................... Page 9
SIGNATURES......................................................................... Page 10
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Item 1 of Part I to Registrant's Form 10-Q for the fiscal quarter ended
November 1, 1998 is amended in its entirety to read as follows:
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CATALYST SEMICONDUCTOR, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Oct. 31, April 30,
1998 1998
-------- --------
ASSETS
Current assets:
Cash .............................................. $ 2,733 $ 534
Restricted cash ................................... 0 5,750
Accounts receivable, net .......................... 4,805 4,726
Inventories ....................................... 2,861 4,194
Other assets ...................................... 994 815
-------- --------
Total current assets .......................... 11,393 16,019
Property and equipment, net ....................... 2,181 2,834
-------- --------
$ 13,574 $ 18,853
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit .................................... $ 3,175 $ 3,225
Accounts payable .................................. 6,387 13,400
Accrued expenses .................................. 3,530 3,650
Deferred gross profit on shipments to
distributors..................................... 1,104 475
Current portion of long-term debt and capital lease
obligations...................................... 1,439 1,471
-------- --------
Total current liabilities ..................... 15,635 22,221
Long-term debt and capital lease obligations .......... 435 501
-------- --------
Total liabilities ............................. 16,070 22,722
Total stockholders' equity (deficit) .................. (2,496) (3,869)
-------- --------
$ 13,574 $ 18,853
======== ========
See accompanying notes to the unaudited condensed
consolidated financial statements.
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CATALYST SEMICONDUCTOR, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Six Months Ended
----------------------------- -----------------------------
Oct. 31, 1998 Oct. 31, 1997 Oct. 31, 1998 Oct. 31, 1997
------------- ------------- ------------- -------------
Net revenues ......................... $ 8,126 $ 10,175 $ 15,431 $ 19,723
Cost of revenues ..................... 5,776 9,021 10,841 16,194
-------- -------- -------- --------
Gross profit ......................... 2,350 1,154 4,590 3,529
Research and development ............. 583 1,048 1,150 2,228
Selling, general and administrative... 1,921 1,851 4,017 3,643
-------- -------- -------- --------
Loss from operations ................. (154) (1,745) (577) (2,342)
Interest income (expense), net ....... (266) (203) (488) (388)
-------- -------- -------- --------
Loss before income taxes ............. (420) (1,948) (1,065) (2,730)
Income tax provision .............. -- -- -- --
-------- -------- -------- --------
Net loss .......................... $ (420) $ (1,948) $ (1,065) $ (2,730)
======== ======== ======== ========
Net loss per share:
Basic ......................... $ (0.04) $ (0.24) $ (0.10) $ (0.34)
======== ======== ======== ========
Diluted ....................... $ (0.04) $ (0.24) $ (0.10) $ (0.34)
======== ======== ======== ========
Weighted average common shares:
Basic ......................... 11,726 8,204 10,582 8,106
======== ======== ======== ========
Diluted ....................... 11,726 8,204 10,582 8,106
======== ======== ======== ========
See accompanying notes to the unaudited condensed
consolidated financial statements.
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CATALYST SEMICONDUCTOR, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended
-------------------------------
Oct. 31, 1998 Oct. 31, 1997
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .................................... $(1,065) $(2,730)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization .................... 668 968
Changes in assets and liabilities:
Restricted cash ............................... 5,750 --
Accounts receivable ........................... (79) (698)
Inventories ................................... 1,333 1,832
Other assets .................................. (179) (314)
Accounts payable .............................. (7,013) (387)
Accrued expenses .............................. (120) (110)
Deferred gross profit on shipments to
distributors.................................. 629 14
------- -------
Net cash used in operating activities .................... (76) (1,425)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used for the acquisition of equipment ........... (15) (1,211)
------- -------
Cash used in investing activities ............... (15) (1,211)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock transactions, net ....................... 2,438 902
Net proceeds from (payment of) line of credit ........ (50) 690
Payment of long-term debt and capital lease
obligations.......................................... (98) (266)
------- -------
Cash provided by (used in) financing activities... 2,290 1,326
------- -------
Net increase (decrease) in cash and cash equivalents ..... 2,199 (1,310)
Cash and cash equivalents at beginning of the period ..... 534 2,695
------- -------
Cash at end of the period ................................ $ 2,733 $ 1,385
======= =======
See accompanying notes to the unaudited condensed
consolidated financial statements.
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CATALYST SEMICONDUCTOR, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
In the opinion of management, the unaudited condensed consolidated
interim financial statements included herein have been prepared on the same
basis as the April 30, 1998 audited consolidated financial statements and
include all adjustments, consisting of only normal recurring adjustments,
necessary to fairly state the information set forth herein. The statements have
been prepared in accordance with the regulations of the Securities and Exchange
Commission, but omit certain information and footnote disclosures necessary to
present the statements in accordance with generally accepted accounting
principles. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended April 30, 1998. The results of operations for the six
month period ended October 31, 1998 are not necessarily indicative of the
results to be expected for the entire year.
The Company's business is highly cyclical and has been subject to
significant downturns at various times which have been characterized by reduced
product demand, production overcapacity, and significant erosion of average
selling prices. Throughout fiscal 1998 and thus far in fiscal 1999, the market
for certain FLASH and EEPROM devices, which comprise the majority of Catalyst's
business, experienced an excess market supply relative to demand which resulted
in a significant downward trend in prices. The Company could continue to
experience a downward trend in product pricing which could further adversely
affect the Company's operating results.
The Company's operating results in the past year have consumed
substantial amounts of cash. The reduction in cash has also placed restrictions
on wafer purchases which, during the fourth quarter of 1998, resulted in the
cancellation of some customer sales orders. In May 1998, the Company received
net proceeds of $1.5 million from the sale of 1,500,000 shares of its Common
Stock in a private placement. In September 1998, the Company completed the sale
of 4,000,000 additional shares of its Common Stock to the same investor for $1.0
million. Management believes, however, that it will require additional cash from
similar or related private placements or other sources of liquidity to meet the
Company's projected working capital and other cash requirements for fiscal 1999,
and is currently pursuing other sources of liquidity.
As a result of these circumstances, the Company's independent
accountants' opinion on the Company's April 30, 1998 consolidated financial
statements includes an explanatory paragraph indicating that these matters raise
substantial doubt about the Company's ability to continue as a going concern.
The Company's fiscal year and its first, second and third fiscal
quarters end the Sunday closest to April 30, July 31, October 31 and January 31,
respectively. For purposes of financial statement presentation, the year end
date is expressed as April 30 and the quarter end dates are expressed as July
31, October 31 or January 31.
NOTE 2 - INCOME (LOSS) PER SHARE
During the quarter ended January 31, 1998, the Company adopted SFAS No.
128, "Earnings Per Share". SFAS No. 128 requires presentation of both basic and
diluted net income per share on the face of the income statement. All prior
period net income per share data presented has been restated in accordance with
SFAS No. 128. Basic net income per share is computed by dividing net income
available to common shareholders (numerator) by the weighted average number of
common shares outstanding (denominator) during the period and excludes the
dilutive effect of stock options. Diluted net income per share gives effect to
all dilutive potential common shares outstanding during a period. In computing
diluted net income per share, the average stock price for the period is used in
determining the number of shares assumed to be purchased from exercise of stock
options.
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Three Months Ended Six Months Ended
------------------------------- -------------------------------
Oct. 31, 1998 Oct. 31, 1999 Oct. 31, 1998 Oct. 31, 1997
------------- ------------- ------------- -------------
(in thousands) (in thousands)
Net loss ............................... $ (420) $ (1,948) $ (1,065) $ (2,730)
Shares calculation:
Average shares outstanding-basic ... 11,726 8,204 10,582 8,106
Effect of Dilutive securities:
Stock options ...................... -- -- -- --
-------- -------- -------- --------
Average shares outstanding-diluted ..... 11,726 8,204 10,582 8,106
======== ======== ======== ========
Options to purchase 2,889,000 shares of common stock at prices ranging
from $0.13 to $6.30 per share outstanding during the quarter ended October 31,
1998 and options to purchase 2,675,000 shares of common stock at prices from
$1.08 to $7.25 per share outstanding during the quarter ended October 31, 1997
were not included in the computation of diluted EPS because the inclusion of
such options would have been antidilutive.
NOTE 3 - BALANCE SHEET COMPONENTS (IN THOUSANDS):
Oct. 31, 1998 April 30, 1998
------------- --------------
Accounts receivable:
Accounts receivable ............................... $ 5,034 $ 5,052
Less: Allowance for doubtful accounts ............ (308) (326)
-------- --------
$ 4,726 $ 4,726
======== ========
Inventories:
Work-in-process ................................... $ 2,454 $ 2,410
Finished goods .................................... 407 1,784
-------- --------
$ 2,861 $ 4,194
======== ========
Property and equipment:
Engineering and test equipment .................... $ 7,691 $ 7,691
Computer hardware and software .................... 3,485 3,470
Furniture and office equipment .................... 1,275 1,275
-------- --------
12,451 12,436
Less: accumulated depreciation and amortization ... (10,270) (9,602)
-------- --------
$ 2,181 $ 2,834
======== ========
NOTE 4 - DEBT:
Under the terms of a bank revolving line of credit, the Company can
borrow the lesser of $13.5 million or an amount determined by a formula applied
to eligible accounts receivable, local inventory and backlog from certain
foreign customers, at a variable interest rate of prime plus 5.25% (13.5% at
October 31, 1998). The revolving line of credit is subject to compliance with
loan covenants. At July 31, 1998, the Company was not in compliance with certain
of the loan covenants and the bank has agreed in a letter of forbearance not to
enforce certain of its rights to which it is entitled under such condition. Such
forbearance is granted until March 31, 1999 for each condition of non-compliance
on July 31, 1998. As a result of such non-compliance with the terms of the loan,
the Company cannot currently borrow any additional funds under the line without
the permission of the bank. During the six months ended October 31, 1998, the
bank has continued to loan amounts in accordance with the loan agreement.
On February 15, 1997, a vendor loaned $1.2 million to the Company in
settlement of billings for assembly and test services totaling the same. The
loan which bears interest at 18%, was originally due and payable on May
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15, 1998. A subsequent agreement has been negotiated, allowing the Company to
satisfy the obligation by making monthly payments of $0.1 million principle and
interest beginning on November 15, 1998 until paid in full.
NOTE 5 - SALE OF COMMON STOCK:
In May 1998, a private investor purchased 1,500,000 shares of the
Company's common stock in a private placement for $1.00 per share. The offer and
sale of the securities was exempt from registration under the Securities Act of
1933, as amended, pursuant to Section 4(2) of such Act. In connection with such
issuance, the investor agreed to various standstill and voting provisions
including not acquiring additional shares of Company Stock or taking actions to
control the Company. The Company also has repurchase rights with respect to the
shares sold over the twelve months from the date of issuance.
In September 1998, the same shareholder purchased an additional
4,000,000 shares of the Company's common stock for $.25 per share. The terms and
conditions applicable to this additional purchase are the same as the shares
purchased in May 1998. In addition, for a period of twelve months following the
closing of the foregoing sale of shares, the Company has the right to require
the shareholder to purchase up to 4,000,000 additional shares of common stock at
a purchase price of $.25 per share.
NOTE 6 - STOCK OPTION PLAN REPRICING:
In September 1998, the Board of Directors repriced all outstanding
options held by employees and consultants to the then current fair market value
of the Common Stock. As a consequence, all such outstanding options were
cancelled and an equivalent number of new options with an exercise price of
$.125 were issued in replacement thereof. The terms and conditions applicable to
the new options, including the vesting provisions, were the same as the old
options except that the price was lowered and the expiration date of the options
was extended to a date ten years from the date of the repricing.
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CATALYST SEMICONDUCTOR, INC.
Item 6 of Part II to Registrant's Form 10-Q for the fiscal quarter ended
November 1, 1998 is amended to revise Exhibits 3.4 and 27.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
3.4 Bylaws of Registrant
10.66* Amendment No. 2 to Preferred Shares Rights Agreement dated as
of September 14, 1998 between Registrant and BancBoston, N.A.,
as rights agent
27 Financial Data Schedule
* Previously filed with Registrant's Form 10-Q for the fiscal quarter
ended November 1, 1998.
(b) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the quarter ended October
31, 1998.
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CATALYST SEMICONDUCTOR, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of Sunnyvale and State of
California.
Date: April 12, 1999 By: /s/ Radu M. Vanco
--------------------- -----------------
Radu M. Vanco
President and Chief Executive Officer
Date: April 12, 1999 By: /s/ Thomas E. Gay III
--------------------- ---------------------
Thomas E. Gay III
Vice President of Finance and Administration
and Chief Financial Officer
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EXHIBIT INDEX
Exhibit
No. Document
---- --------
3.4 Bylaws of Registrant
10.66* Amendment No. 2 to Preferred Shares Rights Agreement dated
as of September 14, 1998 between Registrant and BancBoston,
N.A., as rights agent
27 Financial Data Schedule
* Previously filed with Registrant's Form 10-Q for the fiscal quarter
ended November 1, 1998.