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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended July 30, 2000 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
September 1, 2000 was 16,467,177
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CATALYST SEMICONDUCTOR, INC.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Unaudited Condensed Consolidated Balance Sheets
at July 31, 2000 and April 30, 2000....................................................... Page 3
Unaudited Condensed Consolidated Statements of Income for the three month periods
ended July 31, 2000 and 1999.............................................................. Page 4
Unaudited Condensed Consolidated Statements of Cash Flows for the three month periods
ended July 31, 2000 and 1999.............................................................. Page 5
Notes to Unaudited Condensed Consolidated Financial Statements............................ Pages 6-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION.................................................... Pages 9-17
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION..................................................................... Page 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................................................... Page 19
SIGNATURES..................................................................................... Page 20
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CATALYST SEMICONDUCTOR, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
July 31, April 30,
2000 2000
-------- -------
ASSETS
Current assets:
Cash ............................................................ $15,729 $ 6,205
Accounts receivable, net ........................................ 13,541 10,727
Inventories ..................................................... 4,359 3,531
Other assets .................................................... 584 624
------- -------
Total current assets ........................................ 34,213 21,087
Property and equipment, net ..................................... 2,520 1,856
------- -------
Total assets ................................................ $36,733 $22,943
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit .................................................. $ 2,025 $ 2,028
Accounts payable ................................................ 8,595 5,721
Accounts payable - related parties .............................. 1,513 1,024
Accrued expenses ................................................ 3,292 2,522
Deferred gross profit on shipments to distributors .............. 2,002 880
Current portion of long-term debt and capital lease obligations.. 215 203
------- -------
Total current liabilities ................................... 17,642 12,378
Long-term debt and capital lease obligations ......................... 4 64
------- -------
Total liabilities ........................................... 17,646 12,442
Total stockholders' equity ........................................... 19,087 10,501
------- -------
Total liabilities and stockholders equity ................... $36,733 $22,943
======= =======
See accompanying notes to the
unaudited condensed consolidated financial statements.
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CATALYST SEMICONDUCTOR, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended
--------------------------------
July 31, 2000 July 31, 1999
------------- -------------
Net revenues .......................... $ 25,441 $ 9,196
Cost of revenues ...................... 12,386 5,376
-------- --------
Gross profit .......................... 13,055 3,820
Research and development .............. 1,154 607
Selling, general and administrative ... 3,288 2,212
-------- --------
Income from operations ................ 8,613 1,001
Interest income (expense), net ........ 30 (148)
-------- --------
Income before income taxes ............ 8,643 853
Income tax provision .................. 450 --
-------- --------
Net income ............................ $ 8,193 $ 853
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Net income per share:
Basic ............................ $ 0.51 $ 0.06
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Diluted .......................... $ 0.40 $ 0.05
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Weighted average common shares:
Basic ............................ 16,166 13,969
======== ========
Diluted .......................... 20,537 17,859
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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)
Three Months Ended
--------------------------------
July 31, 2000 July 31, 1999
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................ $ 8,193 $ 853
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ......................... 233 265
Changes in working capital:
Accounts receivable .............................. (2,814) (497)
Inventories ...................................... (828) (45)
Other assets ..................................... 40 72
Accounts payable ................................. 3,363 (1,037)
Accrued expenses ................................. 770 452
Deferred gross profit on shipments to distributors 1,122 250
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Net cash provided by operating activities ...................... 10,079 313
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CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used for the acquisition of equipment ................ (897) (266)
-------- --------
Cash used in investing activities .................. (897) (266)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock ...................................... 393 4
Net payments on line of credit ............................ (3) (154)
Payment of long-term debt and capital lease obligations ... (48) (341)
-------- --------
Cash provided by (used in) financing activities ....... 342 (491)
-------- --------
Net increase (decrease) in cash and cash equivalents ........... 9,524 (444)
Cash at beginning of the period ................................ 6,205 1,852
-------- --------
Cash at end of the period ...................................... $ 15,729 $ 1,408
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SUPPLEMENTAL CASH FLOW DISCLOSURES:
Net interest paid .................................. $ 99 $ 148
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Income taxes ....................................... $ 375 $ --
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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, 2000 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/A for the
year ended April 30, 2000. The results of operations for the three month period
ended July 31, 2000 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. During fiscal 2000, the semiconductor market rebounded from a
cyclical decline which has had a favorable impact on the Company's revenues and
gross margins. Throughout fiscal 1998 and 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 experience another such downward
trend in product pricing in the future which could further adversely affect the
Company's operating results.
During fiscal 2000, the Company's operations improved significantly,
primarily due to an improvement in market conditions. As stated above, the
semiconductor market's rebound has had a favorable impact on the Company's
revenues and gross margins. Further, reductions in product costs and operating
expenses, which were realized due to a cost reductions program by management,
have had a favorable impact on profitability.
The Company's fiscal year and its first, second and third fiscal quarters
end on 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.
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NOTE 2 - INCOME PER SHARE
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.
A reconciliation of the numerators and denominators of the basic
diluted income per share is presented below:
Three Months Ended
--------------------------------
July 31, 2000 July 31, 1999
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Net income ................................... $ 8,193 $ 853
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Shares calculation:
Weighted average shares outstanding-basic 16,166 13,969
Effect of dilutive securities:
Stock options ........................... 4,371 3,890
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Weighted average shares outstanding-diluted .. 20,537 17,859
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Net income (loss) per share:
Basic ................................... $ 0.51 $ 0.06
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Diluted ................................. $ 0.40 $ 0.05
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Options to purchase 100,000 shares of common stock at prices ranging from
$8.22 to $9.50 per share outstanding during the quarter ended July 31, 2000 and
options to purchase 981,000 shares of common stock at prices from $0.91 to $6.30
per share outstanding during the quarter ended July 31, 1999 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):
July 31, April 30,
2000 2000
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Accounts receivable:
Accounts receivable .............................. $ 13,827 $ 11,013
Less: Allowance for doubtful accounts ........... (286) (286)
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$ 13,541 $ 10,727
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Inventories:
Work-in-process .................................. $ 2,932 $ 2,516
Finished goods ................................... 1,427 1,015
-------- --------
$ 4,359 $ 3,531
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Property and equipment:
Engineering and test equipment ................... $ 8,883 $ 8,012
Computer hardware and software ................... 3,532 3,517
Furniture and office equipment ................... 1,297 1,286
-------- --------
13,712 12,815
Less: accumulated depreciation and amortization... (11,192) (10,959)
-------- --------
$ 2,520 $ 1,856
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NOTE 4 - DEBT
Under the terms of a bank revolving line of credit, the Company can borrow
the lesser of $5.0 million or an amount determined by a formula applied to
eligible accounts receivable at a variable interest rate of prime (9.5% at July
31, 2000) plus 2.5%. Amounts borrowed on the line of credit are secured by
accounts receivable and are subject to compliance with loan covenants. As of
July 31, 2000, $2.0 million was outstanding under the line.
NOTE 5 - 1998 SPECIAL EQUITY INCENTIVE PLAN
In December 1998, the Company adopted an additional stock option plan
entitled the Special Equity Incentive Plan ("Special Option Plan") for incentive
stock options and non-statutory stock options for certain directors, officers
and consultants of the Company. A total of 3.5 million shares of Common Stock
have been reserved for issuance under the Special Option Plan. Options granted
under the Special Option Plan are for periods not to exceed ten years. Options
generally vest over four year periods. During 1999, options totaling 3.0 million
shares were granted under the plan at a price of $0.125 per share when the
market was at $0.26 per share. As a result, an aggregate of $533,000 of
compensation expense will be recognized over the four year vesting period of the
options, $35,000 of which was recognized during the three-month period ended
July 31, 2000. An aggregate of $220,000 of such expense has been recognized
through July 31, 2000 and $313,000 remains to be recognized in future periods.
NOTE 6 - RELATED PARTY TRANSACTIONS
During the fourth quarter of fiscal 2000, the Company began taking delivery
of wafers fabricated at X-fab Texas, Inc. (Xfab), a wholly owned subsidiary of
Elex NV, a Belgian holding company that owns 33.4% of the outstanding shares of
the Company. The wafers provided by Xfab supplement the same designs fabricated
at Oki Semiconductor in Japan, the Company's principal wafer fab since 1985. The
Company believes that the cost of such wafers is no greater than comparable
materials available from alternative foundry services. During the fiscal quarter
ended July 31, 2000, the Company purchases from Xfab totaled $1,372,000. As of
July 31, 2000, the total amount owed Xfab was $1,164,000. Mr. Duchatelet is the
Chairman and CEO of Elex N. V. and serves as a member of the Company's Board of
Directors.
The Company has had an arrangement since 1995 to obtain engineering
services from Lxi Corporation, a California corporation (Lxi), a provider of
engineering services through Essex com SRL (Essex), its wholly owned subsidiary
in Romania. As of April 30, 2000, Essex employed the equivalent of approximately
13 engineers to perform the services on behalf of Catalyst. The services relate
to key development projects of the Company including development, design, layout
and test program development services. Officers of the Company own approximately
95% of Lxi. The fees for such engineering services are on terms believed by the
Company to be fair to the Company and no less favorable to the Company than arms
length commercial terms. During the fiscal quarter ended July 31, 2000 the
Company recorded $183,000 of engineering fees from Lxi for engineering design
services. As of July 31, 2000 the total amount owed to Lxi was $349,000.
NOTE 7 - COMMITMENTS
In July 2000, the Company entered into an arrangement with Oki to increase
the supply of wafers from September 1, 2000 through August 30, 2001. In return
for this increase in capacity the Company has agreed to make significant
payments in September 2000 and March 2001.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following discussion should be read in conjunction with the
accompanying condensed consolidated financial statements and notes thereto
included in this report. In addition, the Company desires to take advantage of
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Specifically, the Company wishes to alert readers that the factors set
forth in "Certain Factors that May Affect the Company's Future Results" as set
forth below in this Item 2, as well as other factors, in the past have affected
and in the future could affect the Company's actual results, and could cause the
Company's results for future quarters to differ materially from those expressed
in any forward looking statements made by or on behalf of the Company.
OVERVIEW
Catalyst Semiconductor, Inc., incorporated October 8, 1985, designs,
develops and markets nonvolatile memory semiconductor products including Serial
and Parallel EEPROMs and Flash memory. Revenues are derived from sales of
semiconductor products designed by the Company and manufactured by other
companies.
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. During fiscal 2000, the semiconductor market rebounded from a
cyclical decline which has had a favorable impact on the Company's revenues and
gross margins. Throughout fiscal 1998 and 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 experience another such downward
trend in product pricing in the future which could further adversely affect the
Company's operating results.
During fiscal 2000, the Company's operations improved significantly,
primarily due to an improvement in market conditions. The semiconductor market
has rebounded from a cyclical decline which has had a favorable impact on the
Company's revenues and gross margins. Further, reductions in product costs and
operating expenses, which were realized due to a cost reductions program by
management, have had a favorable impact on profitability.
RESULTS OF OPERATIONS
Revenues. Total revenues consist primarily of net product sales. A
substantial portion of net product sales has been made through independent
distributors. Revenue from product sales to original equipment manufacturers and
from sales to distributors who have no, or limited, product return rights and no
price protection rights, is recognized upon shipment net of allowances for
estimated returns. When distributors have rights to return products or price
protection rights, the Company defers revenue recognition until the distributor
sells the product to the end customer. Total revenues increased 176% to $25.4
million for the quarter ended July 31, 2000 from $9.2 million for the quarter
ended July 31, 1999. The increase was primarily attributable to an increase in
sales of the Company's EEPROM products. Total revenues of $25.4 million for the
quarter ended July 31, 2000 increased by 49% from $17.1 million for the quarter
ended April 30, 2000. The increase is primarily attributable to an increase in
units shipped. For the three months ended July 31, 2000, approximately 63% of
the Company's revenues were derived from shipments to international customers
compared with 56% of net product sales during both the three months ended July
31, 1999 and during fiscal 2000. The increase in the percentage of international
revenues is attributable to an improvement in the Company's ability to compete
effectively at the low prices prevalent in certain markets in the Far East and
increased shipments to the Company's distributors in Japan. All sales of the
Company's products are in US dollars, minimizing the effects of currency
fluctuations.
Gross Profit. Gross profit for the quarter ended July 31, 2000 was $13.1
million, or 52% of revenues, compared to a gross profit of $3.8 million, or 41%
of revenues, for the quarter ended July 31, 1999. The increase in gross profit
percentage is primarily due to increased prices in the market for its products
and decreased unit assembly and testing costs. In the quarter ended July 31,
1999, the Company received the benefit of approximately $0.5 million credit from
the sale of inventory which was previously reserved. It is the policy of the
Company to fully reserve all inventory that is not expected to be sold within a
reasonable period of time following the balance sheet date, generally within the
ensuing six months. The Company pays certain foreign manufacturing expenses in
local currency, primarily Baht in Thailand and Yen in Japan. Such expenses are
not material to the Company and the majority are paid within 45 days, minimizing
the effects of currency fluctuations.
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Research and Development. Research and development (R&D) expenses consist
principally of salaries for engineering, technical and support personnel,
depreciation of equipment, and the cost of wafers used to evaluate new products
and new versions of current products. R&D expenses increased by 100% to $1.2
million, or 5% of revenues, for the quarter ended July 31, 2000, from $0.6
million, or 7% of revenues for the quarter ended July 31, 1999. The increase in
R&D spending is primarily attributable to increased expenses for research and
development personnel.
Selling, General and Administrative. Selling, general and administrative
(SG&A) expenses consist principally of salaries for sales, marketing and
administrative personnel, commissions and promotional activities. SG&A expenses
increased by 50% to $3.3 million, or 13% of revenues, for the quarter ended July
31, 1999, from $2.2 million, or 24% of revenues, for the quarter ended July 31,
1999. The increase is primarily attributable to increased expenses for sales and
administrative personnel and increased commission expenses to outside
representatives.
Net Interest Income/expense. Net interest income was $30,000 for the
quarter ended July 31, 2000, compared to net interest expense of $148,000 for
the quarter ended July 31, 1999. The decrease is primarily related to the
decreased average outstanding borrowings and interest earned on the Company's
increased cash.
Income Tax Provision. The Company recorded a provision for income taxes of
$0.5 million or 6% of net income before taxes for the quarter ended July 31,
2000, compared to a provision of zero for the quarter ended July 31, 1999. The
provision for income tax primarily represents federal alternative minimum tax.
As of April 30, 2000, the Company had available net operating loss
carryforwards of approximately $22.8 million for federal tax purposes, which
begin to expire in fiscal 2004. If the net income before taxes of the Company
for the quarter ended July 31, 2000 remains at that level for the balance of
fiscal 2001, the remaining net operating loss carryforwards will be minimal.
Furthermore, the availability of the net operating loss and general business
credit carryforwards may potentially be reduced in the event of substantial
changes in equity ownership.
LIQUIDITY AND CAPITAL RESOURCES
Cash increased $9.5 million to $15.7 million as of July 31, 2000 from $6.2
million as of April 30, 2000. The increase was primarily attributable to the net
profits generated by the Company's operations.
Under the terms of a bank revolving line of credit, the Company can borrow
the lesser of $5.0 million or an amount determined by a formula applied to
eligible accounts receivable at a variable interest rate of prime (9.5% at July
31, 2000) plus 2.5%. As of July 31, 2000, the Company had approximately $2.0
million of secured loans owed to its bank. As of July 31, 2000, under the terms
of its borrowing agreement, the Company was eligible to borrow approximately
$3.0 million additional cash and had cash on hand of $15.7 million. The Company
is also indebted to other creditors in the amount of approximately $10.1
million. This amount is comprised of approximately $8.6 million for wafers and
inventory processing and approximately $1.5 million for other goods and
services.
Although management believes the Company has sufficient working capital
resources to continue its operations, the Company may seek additional equity or
debt financing to address its working capital needs and to provide funding for
capital expenditures. There can be no assurances, however, that financing will
be available on terms acceptable to the Company, if at all.
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CERTAIN FACTORS THAT MAY AFFECT THE COMPANY'S FUTURE RESULTS
THE COMPANY DESIRES TO TAKE ADVANTAGE OF CERTAIN PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995, ENACTED IN DECEMBER 1995 (THE "REFORM
ACT") THAT PROVIDES A "SAFE HARBOR" FOR FORWARD-LOOKING STATEMENTS MADE BY OR ON
BEHALF OF THE COMPANY. THE COMPANY HEREBY CAUTIONS STOCKHOLDERS, PROSPECTIVE
INVESTORS IN THE COMPANY AND OTHER READERS THAT THE FOLLOWING IMPORTANT FACTORS,
AMONG OTHERS, IN SOME CASES HAVE AFFECTED, AND IN THE FUTURE COULD AFFECT, THE
COMPANY'S STOCK PRICE OR CAUSE THE COMPANY'S ACTUAL RESULTS FOR THE FISCAL YEAR
ENDING APRIL 30, 2001, FOR THE FISCAL QUARTER ENDING OCTOBER 31, 2000, AND
FUTURE FISCAL YEARS AND QUARTERS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN
ANY FORWARD-LOOKING STATEMENTS, ORAL OR WRITTEN, MADE BY OR ON BEHALF OF THE
COMPANY.
The Company's business and future operating results are subject to
potential fluctuations due to a number of factors including the following:
Variability of Operating Results; Possibility of Future Losses. Due to
favorable conditions, the Company's operating results for the year ended April
30, 2000 would have resulted in a profit of $8.8 million instead of a profit of
$10.0 million if they had not included a credit of $0.8 million from a vendor as
a result of various negotiations and $0.4 million profit from the sale of
inventory previously reserved for. Additionally, the Company's operating results
for fiscal 1999 would have resulted in a loss of $1.5 million instead of a
profit of $0.2 million if they had not included $1.7 million of credits received
from vendors as a result of various negotiations. Additionally, the Company's
operating results in fiscal 1998 and 1997 resulted in losses of $18.9 million
and $4.0 million respectively. The Company did not benefit from any such credits
during the quarter ended July 31, 2000. During the fiscal years 1998 through
most of 1999 and before, the Company experienced significant negative cash flow
from operations. There can be no assurance that the Company can continue to
generate revenue growth, or that any revenue growth that is achieved can be
sustained. To the extent that increases in operating expenses precede and are
not subsequently followed by increased revenues, the Company's business, results
of operations and financial condition would be materially adversely affected.
Although the Company has reported profits for the seven most recent consecutive
quarters, there can be no assurance that the Company will be able to sustain
such profitability in the future.
Semiconductor Industry. The semiconductor industry is highly cyclical and
has been subject to significant economic downturns at various times,
characterized by diminished product demand, accelerated erosion of average
selling prices and gross margins, and production overcapacity. Accordingly, the
Company may experience substantial period to period fluctuations in future
operating results due to general semiconductor industry conditions, overall
economic conditions or other factors. For example, the Company experienced
accelerated erosion of average selling prices caused by adverse industry-wide
conditions in fiscal years 1997, 1998 and 1999 and incurred substantial losses
during that period. While average selling prices have increased recently, there
can be no assurances of how long, if at all, these increases will continue and
when decreases will occur.
Fluctuations in Operating Results. The Company's operating results have
historically been and in future quarters may be adversely affected or otherwise
fluctuate due to factors such as timing of new product introductions and
announcements by the Company and its competitors, fluctuations in customer
demand for the Company's products, volatility in supply and demand affecting
market prices generally (such as the increases in supply of competitive products
and significant declines in average selling prices experienced by the Company in
the fiscal years ended April 30, 1999, 1998 and 1997), increased expenses
associated with new product introductions or process changes, increased
expenditures related to expanding the Company's sales channels, gains or losses
of significant customers, timing of significant orders of the Company's
products, fluctuations in manufacturing yields, changes in product mix, wafer
price increases due to increased market demand, prices charged by the Company's
suppliers and foreign currency fluctuations and general economic conditions. The
Company anticipates that a significant portion of its revenue will be derived
from a limited number of large orders, and the timing of receipt and fulfillment
of any such orders is expected to cause material fluctuations in the Company's
operating results, particularly on a quarterly basis.
Due to the foregoing factors, quarterly revenue and operating results are
difficult to forecast. The Company's expense levels are based, in significant
part, on the Company's expectations as to future revenue and are therefore
relatively fixed in the short term. If revenue levels fall below expectations,
as has occurred during the years ended April 30, 1999, 1998 and 1997, net income
is likely to be disproportionately adversely affected because a proportionately
smaller amount of the Company's expenses varies with its revenue. There can be
no assurance that the Company will be able to achieve or maintain profitability
on a quarterly or annual basis in the future. Due
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to the foregoing factors, the Company's operating results may fall below the
expectations of investors, which could have a material adverse effect on the
market price of the Company's Common Stock. Reductions in revenue expectations
can also require the Company to take additional reserves against inventory
valuations based upon the reduced likelihood that the Company will be able to
liquidate its inventories at profitable prices.
Dependence on One Manufacturer. The Company does not manufacture the
semiconductor wafers used for its products. Oki has supplied wafers to the
Company since 1987 and was the Company's sole foundry source until the fourth
quarter of fiscal 2000. At this time, the additional foundry, Xfab, provides a
limited number of products to the Company and the volumes are considerably less
than Oki currently provides. The Company does not have a wafer supply agreement
with Xfab at this time and instead purchases wafers on a purchase order and
acceptance basis. The Company's almost exclusive reliance on these independent
foundries involves a number of risks including the risk of inadequate wafer
supplies to meet the Company's production needs, increased prices charged by
those independent foundries, the unavailability of or interruption in access to
required or more cost effective process technologies, reduced control over
delivery schedules, manufacturing yields and costs, and the risks associated
with international operations more fully described below. In view of the recent
increase in demand for semiconductor products, the Company has not been able to
obtain sufficient increased quantities of wafers from Oki to fulfill some of the
recent increased customer demand, a circumstance that is expected to continue in
at least the near future. Although the Company has a wafer purchase agreement
with UMC for certain Flash products which runs through February 2006, due to
declining Flash bookings and other circumstances, the Company has not ordered
any wafers from UMC since December 1997. On September 6, 2000, the Company
announced an agreement with Oki that will result in a significant increase in
foundry capacity commencing in September 2000. To address the Company's wafer
supply concerns, the Company plans to continue working on expanding its primary
foundry capability at Oki and its secondary foundry capability with Xfab at that
foundry's facility in Lubbock, Texas. Xfab is owned by Elex NV which is a 33.4%
shareholder of the Company. The addition of Xfab as a second foundry source
could enable the Company to reduce the risks associated with the sourcing and
quantity of its wafer supply and thereby improve control over an important
component of its business; however, there can be no assurance that sufficient
capacity will be available from Xfab. Additionally, there can be no assurance
that increased capacity will continue to be available from Oki or that capacity
will be available from another manufacturer at prices acceptable to the Company.
Even if such capacity is available, the qualification process and time required
to make the foundry fully operational for the Company could take many months, or
longer, and be subject to the other factors described under "Semiconductor
Manufacturing Risks" below. The loss of Oki as a supplier, the inability of the
Company to obtain additional capacity at Oki or to qualify Xfab for additional
products or other wafer manufacturers for desired foundry capacity, or any other
circumstances causing a significant interruption in the supply of semiconductor
wafers to the Company would have a material adverse effect on the Company's
business, financial condition and results of operations.
Semiconductor Manufacturing Risks. The manufacture of semiconductor wafers
is highly complex and sensitive to a wide variety of factors and, as is typical
in the semiconductor industry, the Company's outside wafer foundry from time to
time has experienced lower than anticipated production yields. The amount of
time to develop an alternative foundry source can be lengthy and the expense
considerable. Furthermore, the yield of satisfactory product is often
substandard during the initial developmental stages when the process is being
initiated. There can be no assurance that the Company will continue to receive
sufficient quantities of wafers at favorable prices on a timely basis, if at
all, or that the Company will be able to attain higher levels of wafer supply as
demand requires. Material disruptions in the supply of wafers as a result of
manufacturing yield or other manufacturing problems are not uncommon in the
semiconductor industry. The Company may also be subject to production transition
delays. There can be no assurance that the Company will not experience such
problems in the future. Such delays and reductions can result in cancellations
of customer orders thereby adversely affecting the Company's ability to generate
future revenues. The loss of Oki as a supplier, the failure to further develop
Xfab as a reliable foundry in an expeditious and cost-effective manner, any
prolonged inability to obtain adequate yields or deliveries from Oki or Xfab, or
any other circumstance that would require the Company to seek and qualify
alternative sources of supply of such products, could delay shipments, result in
the loss of customers and have a material adverse effect on the Company's
business and operating results. Moreover, the inability to procure wafer
supplies from Oki on commercially reasonable terms as a result of foreign
currency exchange rate fluctuations may have a material adverse effect on the
Company's operating results. Although the Company is exploring and seeking to
develop alternative wafer supply sources such as Xfab, there can be no assurance
that it will be able to obtain such alternative sources or that the Company will
have adequate facilities available. Failure to have such supplies available
would have a material adverse effect on the Company's business, financial
condition and results of operations.
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Inventory. The cyclical nature of the semiconductor industry periodically
results in oversupply or shortages of wafer fabrication capacity such as the
Company has experienced from time to time. Since the Company must order products
and build inventory substantially in advance of product shipments, there is a
risk that the Company will forecast incorrectly and produce excess or
insufficient inventories of particular products because demand for the Company's
products is volatile and customers place orders with short lead times. The
ability of the Company's customers to reschedule or cancel orders without
significant penalty could adversely affect the Company's liquidity, as the
Company may be unable to adjust its purchases from its wafer suppliers to match
such customer changes and cancellations. There can be no assurance that the
Company's inventory will be reduced by the fulfillment of customer orders or
that in the future the Company will not produce excess quantities of its
products. To the extent the Company produces excess inventories of particular
products, the Company's operating results could be adversely affected by charges
that the Company could recognize due to significant reductions in demand for its
products, rapid declines in the market value of inventory resulting in inventory
writedowns or other related factors. For example, during the last half of fiscal
1998, the Company recorded charges of approximately $7.5 million due to the
rapid decrease in demand for and the selling prices for the Company's products.
Such adjustments amounted to less than $0.5 million in fiscal 1999 and were not
material in fiscal 2000 or in the first three months of fiscal 2001. In
addition, in fiscal 1998, the Company's ability to forecast future demand and
selling prices diminished. It is the policy of the Company to fully reserve all
inventory that is not expected to be sold in a reasonable period of time from
the balance sheet date, generally within the ensuing six months. As a result of
a reduction in estimated demand for the Company's products, the Company provided
additional reserves for excess quantities and obsolescence for certain products,
primarily the Company's Flash and EEPROM products. The rapid erosion of selling
prices also left the Company with significant amounts of inventory with a
carrying value that exceeded its current selling price resulting in adjustments
to the carrying value of the inventory to the lower of cost or market value.
There can be no assurance that the Company will not suffer similar reductions in
values of its inventories in the future or that the Company will be able to
liquidate its inventory at acceptable prices.
Dependence upon Key Personnel. The Company's ability to operate
successfully will depend, to a large extent, upon the continued service of
certain key employees, and the continued ability to attract and retain
additional highly qualified personnel. Competition for such personnel,
particularly for highly skilled design, process and test engineers, is intense
and there can be no assurance that the Company can retain such personnel or that
it can attract other highly qualified personnel. The loss of or failure to
attract and retain any such highly qualified personnel could have a material
adverse affect on the Company's business, financial condition and results of
operations.
International Operations. For the three month period ended July 31, 2000,
international sales comprised 63% of the Company's product sales. Additionally,
for fiscal years 2000, 1999 and 1998, international sales accounted for
approximately 56%, 41% and 64%, respectively, of the Company's product sales.
The decrease in international sales in 1999 was primarily attributable to the
transition in Japan from Marubun, who resigned in fiscal 1998, to various
smaller alternative distributors that serve similar markets and the inability of
the Company to compete with the low selling prices in certain Far East markets.
In fiscal 2000, the Company was able to reenter certain Far East markets,
contributing to the increased international sales. The Company expects that
international sales will continue to represent a significant portion of its
product sales in the future. The Company's international operations may be
adversely affected by fluctuations in exchange rates, imposition of government
controls, political and financial instability, trade restrictions, changes in
regulatory requirements, difficulties in staffing international operations and
longer payment cycles. All sales are invoiced and paid in dollars, reducing the
Company's direct exposure to currency fluctuations. Except for Yoshikawa
Semiconductor in Japan, a provider of wafer sorting services, and certain
contract personnel costs and incidental manufacturing supply purchases in
Thailand, over 98% of the Company's purchases are in US dollars, minimizing any
direct currency fluctuation risk. In addition, the Company's business is subject
to other risks generally associated with doing business with foreign
subcontractors including, but not limited to, foreign government regulations,
political and financial unrest which may cause disruptions or delays in
shipments to the Company's customers or access to the Company's inventories.
There can be no assurance that these or other factors related to international
operations will not have a material adverse affect on the Company's business,
financial condition and results of operations.
Competition. The semiconductor industry is intensely competitive and has
been characterized by rapid price erosion, declining gross margins, rapid
technological change, product obsolescence and heightened international
competition in many markets. Average selling prices in the semiconductor
industry generally, and for the Company's products in particular, have decreased
significantly and rapidly over the life of each product. The Company expects
that average selling prices for its existing products will decline rapidly in
the future and that average selling prices for each new product will decline
significantly over the life of the product. Declines in average selling prices
for the Company's products, if not offset by reductions in the cost of producing
those
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products or by sales of new products with higher gross margins, would decrease
the Company's overall gross margins, could cause a negative adjustment to the
valuation of the Company's inventories and could materially and adversely affect
the Company's operating results.
The Company competes with major domestic and international semiconductor
companies, many of which have substantially greater financial, technical, sales,
marketing, production, distribution and other resources. There can be no
assurance that the Company will be able to compete successfully in the future.
The Company's more mature products, such as Serial and Parallel EEPROM devices,
compete on the basis of product performance, price and customer service. The
Company believes it competes successfully with respect to each of these
competitive factors; however price competition is significant and expected to
continue. Principal competitors with respect to the Company's EEPROM products
currently include STMicroelectronics, Fairchild Semiconductor, Atmel and Xicor,
all of which have substantially greater resources than the Company.
The market for Flash memory products has been characterized by long
production cycles, irregular yields, competing technologies and, particularly
since the first quarter of fiscal 1997, intense price competition resulting in
major reductions in average selling prices and corresponding reductions in
margins. The Company's Flash memory products compete on the basis of product
performance, price and customer service. However, given the development of
higher density/lower cost products and the intense price competition prevalent
for these products, there can be no assurance that the Company will be able to
compete successfully in the future against its competitors on the bases of these
or other competitive factors.
Flash Memory Market. A significant amount of the Company's net revenues
during 2000, 1999 and 1998 were derived from sales of Flash memory products. The
market for Flash memory products has been characterized by intense price
competition, long production cycles, inconsistent yields, competing
technologies, rapidly declining average selling prices, declines in gross
margins and intense overall competition. The Company's fiscal 1999, 1998 and
1997 operating results were adversely affected by intense price competition
caused by increased supplies of products and other adverse industry-wide
conditions. Intel and other competitors (which include Advanced Micro Devices,
Atmel, Fujitsu, Hitachi, Micron, Mitsubishi, STMicroelectronics, Sharp, Texas
Instruments and Toshiba) are expected to further increase Flash memory
production. Most of these competitors are manufacturing and selling devices with
larger memories which are utilized in more recently developed products such as
digital cameras. Due to the intense competition, limited development resources
and other factors, the Company has decided not to develop any of the higher
density Flash memory devices at this time. There can be no assurance that the
Company will be able to sustain the market acceptance for its Flash memory
products. The Company anticipates continued price and other competitive
pressures, which adversely affected fiscal 1999, 1998 and 1997 operating
results, to adversely affect the Company's future operating results.
Expected Need for Additional Capital. The Company has incurred significant
losses or experienced significant negative cash flow from operations during
several recent years. Such negative cash flow during fiscal 1999, 1998 and 1997
significantly reduced the Company's available capital. During fiscal 1999, the
Company was successful in having its lenders agree to waive or forbear taking
actions on defaults under existing loans or to renegotiate the terms of such
loans to enable the Company to be in conformance with the terms and conditions
negotiated. Even though the Company had cash on hand of $15.7 million and the
ability to draw up to $3.0 million additional cash from its bank as of July 31,
2000, there can be no assurance that the Company will continue to generate
sufficient revenue and profits to fund its operations. The Company has pursued
and continues to pursue measures designed to reduce expenses and conserve cash
such as constraints in hiring additional personnel, deferrals of planned
expenditures, other expense reductions and other measures. Such activities can
have a material, adverse effect on the Company's business, financial condition
and operating results. Furthermore, to the extent the Company suffers any
adverse effects to its revenues or margins because of delays in new product
introductions, price competition or other competitive factors, the Company's
cash position and its business, operating results and financial condition will
be adversely affected.
The Company may seek additional equity or debt financing to address its
working capital needs and to provide funding for capital expenditures. There can
be no assurance that additional funding will be available at acceptable terms,
if at all. If the Company is successful in raising additional funds through the
issuance of equity securities, existing stockholders of the Company could
experience significant dilution or the securities may have rights, preferences
or privileges senior to those of the Company's Common Stock. If adequate funds
are not available or are not available on acceptable terms, further reductions
in the Company's operating expenses and capital expenditures may be required to
continue operations, either of which could have a material adverse effect on the
Company's business, operating results and financial condition.
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15
Volatility of Stock Price. The Company's stock price has been and may
continue to be subject to significant volatility. Any shortfall in revenues or
earnings from levels expected or projected by investors or others could have an
immediate and significant adverse effect on the trading price of the Company's
Common Stock in any given period. In addition, the stock market in general has
experienced extreme price and volume fluctuations particularly affecting the
market prices for many high technology companies and small capitalization
companies, and these fluctuations have often been unrelated to the operating
performance of the specific companies. These broad fluctuations may adversely
affect the market price for the Company's Common Stock.
Delinquencies to Customers. Due to the constraints in the Company's wafer
supply, it has been unable to fulfill all its customers' orders according to the
schedule originally requested. Although the Company is striving to increase its
supply of wafers and communicate to its customers the scheduled delivery dates
that it believes that it can reasonably expect to meet, there can be no
assurance that the customers will accept the alternative delivery date or not
seek cancellation of its outstanding orders. The Company's operating results
have historically been and in future quarters may be adversely affected or
otherwise fluctuate due to factors such as timing of new product introductions
and announcements by the Company and its competitors, fluctuations in customer
demand for the Company's products, volatility in supply and demand affecting
market prices generally (such as the increases in supply of competitive products
and significant declines in average selling prices experienced by the Company in
recent fiscal years).
New Product Development and Technological Change. The markets for the
Company's products are characterized by rapidly changing technology and product
obsolescence. The timely introduction of new products at competitive
price/performance levels is a key factor to the success of the Company's
business. In particular, the Company's future success will depend on its ability
to develop and implement new design and process technologies which enable the
Company to achieve higher product densities and thereby reduce product costs.
For example, most of the Company's products are currently designed and
manufactured using a 0.8 micron CMOS EEPROM process or a 0.6 micron Flash memory
process. There can be no assurance that the Company will be able to select and
develop new products and technologies and introduce them to the market in a
timely manner and with acceptable fabrication yields and production costs.
Furthermore, there can be no assurance that the Company's products will achieve
market acceptance. The failure of the Company to complete and introduce new
products at competitive price/performance levels could materially and adversely
affect the Company's business, financial condition and operating results. Delays
in developing new products, achieving volume production of new products,
successfully completing technology transitions with acceptable yields and
reliability or the lack of commercial acceptance of new products introduced by
the Company, could have a material adverse effect on the Company's business,
financial condition and results of operations.
Dependence on Proprietary Technology; Risk of Intellectual Property
Litigation. In the semiconductor industry, companies place extensive reliance
upon their intellectual property and proprietary technology and it is typical
for companies to receive notices from time to time that allege infringement of
patents or other intellectual property rights of others. There can be no
assurance that the Company will not receive any such notification or that
proceedings alleging infringement of intellectual property rights will not be
commenced against the Company in the future. In such event, there can be no
assurances that the Company could obtain any required licenses of third party
intellectual property rights or could obtain such licenses on commercially
reasonable terms. Failure to obtain such a license in any event could require
the Company to cease production of its products until the Company develops a
non-infringing design or process. Moreover, the cost of litigation of any such
claim or damages resulting therefore could be substantial and could materially
and adversely affect the Company's business, financial condition and results of
operations.
Limited Market for the Company's Securities. The Company's common stock was
traded on the NASDAQ National Market from May 1993 until it was delisted in
August 1998 for sustained trading below the minimum level of $1.00 per share
required by the NASDAQ stock exchange for continued listing. The Company's stock
was traded on the Over-The-Counter Bulletin Board market until September 6, 2000
when the Company was relisted on the NASDAQ SmallCap market. The over the
counter market was generally less visible to investors and therefore the Company
was unable to meet the liquidity requirements of some major commercial,
institutional and private investors thus limiting the market for the Company's
securities. As a result of recent operating results and other conditions,
management believes that the Company's common stock now meets the qualifications
for being listed on the NASDAQ National Market as well. Therefore, the Company
plans to submit a request that its securities be listed on the National Market,
but is unable to ascertain the amount of time NASDAQ will take to consider such
application, if NASDAQ will reply favorably to such application or, if
additional information is requested, how
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16
much time and effort will be required on the part of the Company's management
and legal representatives to adequately demonstrate and verify the Company's
qualifications.
Customer Concentration. A relatively small number of customers have
accounted for a significant portion of the Company's net revenue in the past.
For the quarter ended July 31, 2000, shipments to Future Electronics, Inc., a
distributor principally in North America and Memec (Asia Pacific) Ltd., a
distributor in Asia each represented more than ten percent of the Company's
revenues (13% and 11%, respectively). For the year ended April 30, 2000,
shipments to Memec (Asia Pacific) Ltd., Future Electronics, Inc. and Yosun
Industrial Corp., a reseller located in Taiwan each represented more than ten
percent of the Company's revenues (13%, 12% and 11% respectively). During fiscal
years 1999 and 1998, the only customer which represented more than ten percent
of Catalyst's product revenue was Marubun Corporation, a Japanese distributor
(0% and 21%, respectively). Marubun resigned as a distributor effective in or
about March 1998. The Company has been working to develop alternative
distributors in Japan to replace Marubun. Such efforts take substantial time and
may never completely replace the sales volumes achieved through Marubun. Loss of
one or more of the Company's current customers could materially and adversely
affect the Company's business, operating results and financial condition. In
addition, the Company has experienced and may continue to experience lower
margins on sales to significant customers as a result of volume pricing
arrangements.
Dependence on Manufacturer Representatives and Distributors. The Company
markets and distributes its products primarily through manufacturers'
representatives and independent distributors. The Company's distributors
typically offer competing products. The distribution channels have been
characterized by rapid change, including consolidations and financial
difficulties. The loss of one or more manufacturers' representatives or
distributors, or the decision by one or more distributors to reduce the number
of the Company's products offered by such distributors or to carry the product
lines of the Company's competitors, could have a material, adverse effect on the
Company's operating results.
Takeover Resistive Measures. The Company's Stockholder Rights Plan, which
provides stockholders with certain rights to acquire shares of Common Stock in
the event a third party acquires more than 15% of the Company's stock, the
Board's ability to issue "blank check" Preferred Stock without stockholder
approval and the Company's staggered terms for its directors, could have the
effect of delaying or preventing a change in control of the Company.
Recently Issued Accounting Standards. In June 1998, the Financial
Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. It further
provides criteria for derivative instruments to be designated as fair value,
cash flow and foreign currency hedges, and establishes respective accounting
standards for reporting changes in the fair value of the instruments. The
statement is effective for all fiscal quarters of fiscal years beginning after
June 15, 2000. Upon adoption of SFAS No. 133, the Company will be required to
adjust hedging instruments to fair value in the balance sheet, and recognize the
offsetting gain or loss as transition adjustments to be reported in net income
or other comprehensive income, as appropriate, and presented in a manner similar
to the cumulative effect of a change in accounting principle. The Company
believes the adoption of this statement will not have a significant effect on
the results of operations.
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition", which provides
guidance on the recognition, presentation and disclosure of revenue in financial
statements filed with the SEC. SAB 101 outlines the basic criteria that must be
met in order to recognize revenue and provides guidance for disclosures related
to revenue recognition policies. In June 2000, the SEC issued SAB 101B, "Second
Amendment: Revenue Recognition in Financial Statements" which extends the
effective date of SAB 101 to the fourth fiscal quarter of fiscal years
commencing after December 15, 1999. At this time, management is still assessing
the impact of SAB 101 on the Company's financial position and results of
operations.
In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation - an interpretation of APB Opinion No. 25" (FIN 44). This
Interpretation clarifies the definition of employee for the purposes of applying
Accounting Practice Board Opinion No. 25, Accounting for Stock Issued to
Employees (APB 25), the criteria for determining whether a plan qualifies as a
noncompensatory plan, the accounting consequences of various modifications to
the terms of a previously fixed stock option or award and the accounting for an
exchange of stock compensation awards in a business combination.
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This Interpretation is effective July 1, 2000, but certain conclusions in this
Interpretation cover specific events that occur after either December 15, 1998,
or January 12, 2000. The Company believes that FIN 44 will not have a material
effect on the financial position or results of operations of the Company.
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CATALYST SEMICONDUCTOR, INC.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On June 14, 2000, the Company's Board of Directors increased the number of
authorized directors from five to six and on July 9, 2000 further increased the
number of authorized directors from six to eight. As a result of these actions,
the board is currently comprised of three Class I Directors, three Class II
Directors and two Class III Directors. On June 14, 2000, Ms. Cynthia Butitta was
appointed to the Company's Board of Directors as a Class II Director. Mr. Glen
Possley was appointed as a Class II Director on July 9, 2000. The Class II
directors will stand for re-election at the Annual Shareholders meeting to be
held September 22, 2000. The third Class II Director, Mr. Patrick Verderico has
stated his intention not to stand for reelection, which will effectively reduce
the number of directors from eight to seven on that date. Mr. Henry C.
Montgomery was appointed to serve as a Class I director on July 9, 2000. Mr.
Montgomery's term will expire, along with that of the other Class I Directors,
on April 30, 2002, or at such time as his successor has been duly elected and
qualified.
Cynthia M. Butitta has served as the CFO for Telik, Inc. since August 1998
and is also a director of Telik, Inc. Ms. Butitta co-founded Altair Capital
Associates, LLC, a provider of financial advisory services in November 1998 and
continues to serve as a principal and she founded Butitta Consulting Services
LLC in September 1997. From December 1995 to September 1997, she served as the
CFO and Vice President of Finance and Administration for Connetics Corporation,
a provider of services. From June 1994 to December 1995, Ms. Butitta served as
the CFO and Vice President of Finance and Administration at InSite Vision, Inc.
She holds a BS in Business & Accounting from Edgewood College in Madison,
Wisconsin and a MBA from the University of Wisconsin, Madison.
Dr. Glen G. Possley is currently a managing general partner at Glen-Ore
Associates. From January 1998 through January 2000, Dr. Possley was a partner at
International Technology Ventures and N-Able Group. From June 1994 to December
1997, Dr. Possley was President of SubMicron Technology, Inc., a semiconductor
company. From April 1992 to May 1994 he was Senior Vice President of
Manufacturing at Ramtron International, a semiconductor company. Dr. Possley has
also held senior management positions at Texas Instruments, Motorola,
Philips/Signetics, and United Technologies Mostek Corporations. Dr. Possley is
currently a director of Novellus Systems, Inc., and TecHarmonic, Inc. He
received a BS in Mathematics from Western Illinois University in 1963 and a
Ph.D. in Physical Chemistry from the University of Kentucky in 1969.
Henry C. Montgomery previously served as a member of our Board of Directors
from 1990 to 1995. Since 1980, Mr. Montgomery has been and continues to serve as
the Chairman of the Board of Montgomery Financial Services Corporation, a
management consulting and financial services firm. Mr. Montgomery specializes in
services for companies in transition or that are financially troubled. The
following describes some of those engagements. Since January 2000 Mr. Montgomery
has served as Executive Vice President, Finance and Administration, and Chief
Financial Officer of Indus International, Inc., a public company engaged in
enterprise asset management systems. For eight months in 1999, he served as
Executive Vice President of Finance and Administration of Spectrian Corporation,
a public company engaged in making cellular base station power amplifiers and
power transistors. Mr. Montgomery served as Executive Vice President of SyQuest
Technology, Inc., a public company engaged in the development, manufacture and
sale of computer hard drives from November 1996 through July 1997. On November
17, 1998, SyQuest filed a petition under Chapter 11 of the U.S. Bankruptcy Code.
Mr. Montgomery served as President and Chief Executive Officer of New Media
Corporation, a privately held company engaged in developing, manufacturing and
selling PCMCIA cards for the computer industry, from March 1995 until
mid-November 1996. On October 14, 1998, New Media Corporation filed a petition
under Chapter 11 of the U.S. Bankruptcy Code.
On September 6, 2000, the Company announced that it had been approved for
listing on the Nasdaq SmallCap Market. Trading on the Nasdaq SmallCap Market
commenced on Wednesday, September 6, 2000 under the trading symbol CATS. The
Company believes that its performance since filing the application for listing
on the Nasdaq SmallCap Market has enabled it to also meet the requirements for
listing on the Nasdaq National Market and therefore plans to file an application
in the near future.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the quarter ended July 31,
2000.
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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: September 14, 2000 By: /s/ RADU M. VANCO
------------------ ----------------------------------
Radu M. Vanco
President and Chief Executive Officer
Date: September 14, 2000 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
Number Description
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27 Financial Data Schedule