Exhibit 99.1
Catalyst Semiconductor Reports 2nd Quarter Results
SUNNYVALE, Calif.--(BUSINESS WIRE)--Dec. 2, 2004--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 fiscal second quarter ended October 31, 2004.
For the fiscal second quarter ended October 31, 2004, Catalyst had
net income of $1.0 million, or $0.05 per diluted share, on revenues of
$15.6 million. This compares with net income of $426,000, or $0.02 per
diluted share, on revenues of $16.0 million in the quarter ended
October 31, 2003. In the quarter ended July 31, 2004, Catalyst
reported net income of $2.2 million, or $0.12 per diluted share, on
revenues of $16.7 million. The basic share count in the quarter just
ended was nearly 11 percent higher than last year because of a
secondary offering completed in July.
Revenues from analog/mixed signal products were $545,000, or 3.5%
of revenues, in the quarter ended October 31, 2004, compared with
$239,000, or 1.5% of revenues, in the quarter ended October 31, 2003
and $766,000, or 4.6% of revenues, in the quarter ended July 31, 2004.
Gross margin for the quarter ended October 31, 2004 was 40.8%,
compared to 31.2% for the quarter ended October 31, 2003 and 51.9% for
the quarter ended July 31, 2004. Second quarter margins were impacted
by an increasingly competitive pricing environment and the depletion
of the less expensive inventory purchased in previous quarters.
Catalyst recorded an income tax provision of $216,000, or 18% of
income before income taxes during the quarter ended October 31, 2004.
This compares to an income tax provision of $75,000 in the quarter
ended October 31, 2003 and a tax provision of $1.3 million, or 37% on
income before taxes in the quarter ended July 31, 2004. The tax
provision recorded for the current quarter adjusts year to date tax
rate to 32% based upon certain changes in the tax laws and other
factors.
Research & Development increased $282,000, or 17%, from the
quarter ended October 31, 2003 and decreased $211,000, or 10%, from
the quarter ended July 31, 2004. The decrease from the prior quarter
is due to a reduction in charges for developmental masks. Sales,
General & Administrative expenses increased $468,000, or 16%, from the
quarter ended October 31, 2003 and increased $234,000, or 7%, from the
quarter ended July 31, 2004. The increase is principally attributable
to an increase of $244,000 in consulting and outside accountant
expenses due to our efforts to document our internal control systems
to bring us into full compliance with the Sarbanes-Oxley Act of 2002.
Current estimates anticipate such compliance- related expenses to
continue at a similar level for the remainder of this fiscal year.
As of October 31, 2004, Catalyst had cash, cash equivalents and
short-term investments of $42.9 million, a decrease of $2.9 million
compared to the previous quarter, of which $2.8 million was spent on
capital purchases, principally $2.1 million associated with the
purchase of the new building for the company's subsidiary in
Bucharest, Romania.
Management Comments & Outlook
"While we were pleased to record our 12th consecutive profitable
quarter, this was a challenging quarter for us because of the weaker
demand for our memory products and the resulting price pressure. The
combination of the market conditions with the shipment of higher
priced inventories purchased this calendar year when fab capacities
were tightening and wafer costs increased, pushed our gross margin to
40.8%, down from our near record gross margin of 51.9% in the previous
fiscal quarter. We expect that these challenging market conditions
could continue through the current quarter.
"We are encouraged by the traction we have achieved and the
continuing demand for our new analog/mixed signal products. During the
most recent quarter, new product revenues were reduced by one
customer's request to exchange some analog/mixed signal product for a
more recent design. In addition, due to increased lead times from our
fabs, production has not ramped fast enough for our new products to
match the demand from our customers," said Gelu Voicu, president and
chief executive officer.
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.catalyst-semiconductor.com, at
www.fulldisclosure.com, or by dialing (800) 865-4425 (domestic only).
International callers can dial (973) 935-2100. A replay of the call
will be aired from approximately 4:00 p.m. today until midnight
(Pacific) on December 10, 2004 at the company's Web site or by dialing
(877) 519-4471 (domestic) or (973) 341-3080 (international), entering
reservation number 5423558 and following operator instructions.
About Catalyst Semiconductor
Founded in 1985, Catalyst Semiconductor, Inc. is headquartered in
Sunnyvale, California. The Company designs and markets a broad range
of programmable products including Serial and Parallel EEPROMs with
I2C, SPI and Microwire interfaces, Flash Memories, NVRAM, Digitally
Programmable Potentiometers, Microcontroller Supervisory circuits and
other programmable Analog/Mixed Signal products. Catalyst products are
used in telecommunications, networking systems, computation,
automotive, industrial and consumer markets. Typical applications
include optical networks, modems, wireless LANs, network cards, PC
BIOS, DIMM modules, cellular telephones, digital satellite box
receivers, set-top boxes and Internet routers. Catalyst's Quality
Management System is ISO 9001 certified. For additional information
about Catalyst Semiconductor, visit our web site at
www.catalyst-semiconductor.com
Forward-Looking Statements
Certain statements in this press release, including statements
regarding future market conditions, demand for our products,
increasing inventories to satisfy customer demand, and continuing
expenses, are forward looking statements that are subject to risks and
uncertainties. These risks and uncertainties, which could cause
Catalyst's results to differ materially from the forward-looking
statements and include, without limitation: declining market
acceptance and demand for Catalyst's new products; increased costs of
regulatory compliance; increased competition in the markets for
Catalyst's products leading to decreased average selling prices; the
continued growth of the markets 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 and the other
risks detailed from time to time in Catalyst's Securities and Exchange
Commission filings and reports, including, but not limited to,
Catalyst's annual report filed on form 10-K and quarterly reports
filed on form 10-Q. Catalyst disclaims any obligation to update
information contained in any forward looking statement.
CATALYST SEMICONDUCTOR, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
October 31, April 30,
2004 2004
------------- ----------
ASSETS
Current assets:
Cash and cash equivalents $7,094 $17,245
Short term investments 35,844 16,564
Accounts receivable, net 9,561 12,547
Inventories 10,311 6,960
Deferred tax assets 5,024 5,024
Other current assets 870 875
------------- ----------
Total current assets 68,704 59,215
Property and equipment, net 5,590 3,334
Deferred tax assets 4,098 4,098
Other assets 159 218
------------- ----------
Total assets $78,551 $66,865
============= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $4,915 $5,016
Accrued expenses 4,641 3,782
Deferred gross profit on shipments to
distributors 2,967 4,079
------------- ----------
Total current liabilities 12,523 12,877
Total stockholders' equity 66,028 53,988
------------- ----------
Total liabilities and stockholders'
equity $78,551 $66,865
============= ==========
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Six Months
Ended Ended
----------------- -----------------
Oct. 31, Oct. 31, Oct. 31, Oct. 31,
2004 2003 2004 2003
----------------- -----------------
Net revenues $15,604 $15,978 $32,315 $29,825
Cost of revenues 9,244 10,987 17,280 19,687
-------- -------- -------- --------
Gross profit 6,360 4,991 15,035 10,138
Operating expenses:
Research and development 1,932 1,650 4,075 3,198
Selling, general and
administration 3,392 2,924 6,550 5,531
-------- -------- -------- --------
Income from operations 1,036 417 4,410 1,409
Interest income, net 184 84 293 174
-------- -------- -------- --------
Income before income taxes 1,220 501 4,703 1,583
Income tax provision 216 75 1,505 237
-------- -------- -------- --------
Net income $1,004 $426 $3,198 $1,346
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Net income per share:
Basic $0.06 $0.03 $0.18 $0.08
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Diluted $0.05 $0.02 $0.16 $0.07
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Weighted average common shares:
Basic 18,221 16,483 17,490 16,421
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Diluted 19,978 19,407 19,494 19,081
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CONTACT: Catalyst Semiconductor, Inc.
Joan Vargas, 408-542-1051 (Investor Relations)
joan.vargas@catsemi.com