Exhibit 99.1
MoSys, Inc. Reports Second Quarter 2006 Financial Results
SUNNYVALE, Calif.--(BUSINESS WIRE)--Aug. 2, 2006--MoSys, Inc.
(Nasdaq:MOSY), the industry's leading provider of high-density
System-on-Chip (SoC) embedded memory intellectual property (IP), today
reported financial results for its second quarter ended June 30, 2006.
-- Total revenue of $2.3 million
-- GAAP net loss of $2.1 million or ($0.07) per share
-- Non-GAAP net loss of $1.4 million or ($0.05) per share (See
table of reconciliation of GAAP to non-GAAP net loss and net
loss per share)
-- Announced that Nintendo is utilizing 1T-SRAM(R) within its
upcoming Wii(TM) video game console's graphics system
-- Signed a large 65mn license and royalty agreement with a major
integrated device manufacturer (IDM) for MoSys 1T-SRAM
technology on July 24, 2006
-- Began 65nm CLASSIC Macro designs with pure-play foundries
Second Quarter Results
Total net revenue for the second quarter of 2006 was $2.3 million
as compared to $3.5 million in the first quarter of 2006 and $3.1
million recorded in the second quarter of 2005. The second quarter
revenue guidance was recently revised by the Company as a result of a
license agreement with a major IDM that was delayed into the third
quarter. That license agreement was signed on July 24, 2006.
Second quarter total revenue included licensing revenue of $1.7
million as compared to $2.3 million in the first quarter of 2006 and
$1.9 million in the second quarter of 2005. Royalty revenue for the
second quarter was $639,000 compared to $1.3 million in the previous
quarter and $1.1 million in the same period a year ago. The Company
recorded licensing revenue from 13 different chip development projects
compared to 12 in the first quarter and royalty revenue from 18
different licensees compared to 19 in the previous quarter.
"We continue to make solid progress on the strategic initiatives
announced earlier this year. We signed multiple CLASSIC Macro
licensing deals during the quarter, initiated programs with
semiconductor manufacturers at the advanced 65 nanometer process
geometry, and further broadened our relationship with Nintendo and
NEC," commented Chet Silvestri, Chief Executive Officer of MoSys.
"Our CLASSIC Macro program continues to attract new customers as
well as generating repeat business with existing customers. CLASSIC
Macros enable our customers to move more rapidly from the development
stage to the production stage, thereby shortening time-to-market. This
advantage allows customers to reach volume production faster, which is
critical in the highly competitive consumer electronics market. As a
result, we have had several existing customers engage with us for
additional future projects."
Also during the quarter, MoSys completed the research and
development work for porting the 1T-SRAM technology to the 65nm
process node and initiated macro design work with pure-play foundries.
In addition, in July the Company signed a licensing and royalty
agreement with a major IDM who will utilize MoSys 1T-SRAM technology
in their 65nm process node.
Mr. Silvestri concluded, "We are pleased with the progress we have
made in our 65nm initiatives -- both for our CLASSIC Macros and our
technology licensing. We expect these initiatives to drive increased
licensing revenue in the latter part of 2006 and to drive our royalty
growth in 2007. Also during 2007 we anticipate strong royalty growth
from the success of Nintendo's Wii(TM) video game console."
In accordance with Generally Accepted Accounting Principles (GAAP)
the second quarter gross margin percentage was 84 percent, compared to
90 percent in the first quarter of 2006 and 80 percent in the second
quarter of 2005. The sequential decrease in gross margin was mainly
due to the decrease in royalty revenue relative to licensing revenue.
Total operating expenses for the second quarter were $4.9 million,
which included approximately $570,000 in legal expenses related to the
UniRAM litigation as the Company aggressively seeks to resolve this
litigation.
The GAAP net loss for the quarter was $2.1 million, or ($0.07) per
share, including stock-based compensation expense under Statement of
Financial Accounting Standard No. 123R (FAS 123R) of $624,000. This
compares to a net loss of $974,000, or ($0.03) per share, in the first
quarter of 2006 and a net loss of $579,000, or ($0.02) per share, in
the second quarter of 2005.
The non-GAAP net loss for the second quarter, which excludes the
total stock-based compensation charges of $624,000, was $1.4 million,
or ($0.05) per share. Per share amounts were computed using 31,293,000
shares outstanding for the quarter. A reconciliation of GAAP results
to non-GAAP results is provided in the financial statement tables
following the text of this press release.
Cash, cash equivalents and both long and short-term investments
totaled approximately $84.5 million as of June 30, 2006 compared to
approximately $85.4 million as of March 31, 2006.
Business Outlook
MoSys' Chief Executive Officer and Chief Financial Officer will
update the business outlook and give guidance during their earnings
conference call at 1:30 p.m. (PT) on Wednesday, August 2, 2006.
Second Quarter 2006 Financial Results Webcast/Conference Call
MoSys management will host a conference call and webcast with
investors today, August 2, at 1:30 p.m. Pacific time (4:30 p.m.
Eastern time) to discuss the second quarter financial results and the
business outlook going forward. Investors and other interested parties
may access the call by dialing 866-713-8566 in the U.S. (617-597-5325
outside of the U.S.), and entering the passcode 55260961 at least 10
minutes prior to the start of the call. In addition, an audio webcast
will be available through the MoSys Web site at http://www.mosys.com.
A replay will be available for 48 hours following the call at
888-286-8010 in the U.S. (617-801-6888 outside of the U.S.), passcode
63191049.
Use of Non-GAAP Financial Measures
To supplement MoSys' consolidated financial statements presented
in accordance with GAAP (Generally Accepted Accounting Principles),
MoSys uses non-GAAP financial measures that exclude from the income
statement the effects of stock-based compensation and the effects of
our adoption of SFAS 123R upon the number of diluted shares used in
calculating non-GAAP loss per share. MoSys' management believes that
the presentation of these non-GAAP financial measures is useful to
investors and other interested persons because they are one of the
primary indicators MoSys' management uses for planning and forecasting
future performance. In addition, MoSys believes that it is important
to provide investors and other interested persons with a consistent
basis for comparison between quarters, particularly in light of the
Company's adoption of the modified prospective transition method under
SFAS 123R, which requires application of the accounting standard as of
January 1, 2006 but not for prior periods. Investors are encouraged to
review the reconciliation of these non-GAAP financial measures to the
comparable GAAP results, which is provided in a table immediately
below the Condensed Consolidated Statements of Operations. For
additional information regarding these non-GAAP financial measures,
and management's explanation of why it considers such measures to be
useful, refer to the Form 8-K dated August 2, 2006 that we have
submitted to the Securities and Exchange Commission.
Forward-Looking Statements
This press release may contain forward-looking statements about
the Company including, without limitation, benefits and performance
expected from use of the Company's 1T-SRAM technology.
Forward-looking statements are based on certain assumptions and
expectations of future events that are subject to risks and
uncertainties. Actual results and trends may differ materially from
historical results or those projected in any such forward-looking
statements depending on a variety of factors. These factors include
but are not limited to, customer acceptance of our 1T-SRAM
technologies and embedded memory designs, the timing and nature of the
license agreements being signed with our customers and their requests
for our services under existing license agreements, the timing of
customer acceptance of our work under such agreements, the level of
commercial success of licensees' products such as cell phone hand
sets, ease of manufacturing and yields of devices incorporating our
1T-SRAM, our ability to enhance the 1T-SRAM technology or develop new
technologies, the level of intellectual property protection provided
by our patents, the expenses and other consequences of litigation,
including intellectual property infringement litigation, to which we
may be or may become a party from time to time, the vigor and growth
of markets served by our licensees and customers and operations of the
Company and other risks identified in the Company's most recent annual
report on Form 10-K filed with the Securities and Exchange Commission,
as well as other reports that MoSys files from time to time with the
Securities and Exchange Commission. MoSys undertakes no obligation to
update publicly any forward-looking statement for any reason, except
as required by law, even as new information becomes available or other
events occur in the future.
About MoSys, Inc.
Founded in 1991, MoSys, Inc. (Nasdaq:MOSY), develops, licenses and
markets innovative memory technologies for semiconductors. MoSys'
patented 1T-SRAM technologies offer a combination of high density, low
power consumption, high speed and low cost unmatched by other
available memory technologies. The single transistor bit cell used in
1T-SRAM memory results in the technology achieving much higher density
than traditional six transistor SRAMs while using the same standard
logic manufacturing processes. 1T-SRAM technologies also offer the
familiar, refresh-free interface and high performance for random
address access cycles associated with traditional SRAMs. In addition,
these technologies can reduce operating power consumption by a factor
of four compared with traditional SRAM technology, contributing to
making them ideal for embedding large memories in System-on-Chip (SoC)
designs. MoSys' licensees have shipped more than 100 million chips
incorporating 1T-SRAM embedded memory technologies, demonstrating
excellent manufacturability in a wide range of silicon processes and
applications. MoSys is headquartered at 755 N. Mathilda Avenue,
Sunnyvale, California 94085. More information is available on MoSys'
website at http://www.mosys.com.
MOSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
--------- -------- -------- --------
Net Revenue:
Product $-- $6 $-- $10
Licensing 1,701 1,940 3,969 3,153
Royalty 639 1,121 1,893 2,587
--------- -------- -------- --------
Total net revenue 2,340 3,067 5,862 5,750
Cost of Net Revenue:
Product -- -- -- --
Licensing 381 609 734 1,075
--------- -------- -------- --------
Total cost of net revenue 381 609 734 1,075
Gross Profit 1,959 2,458 5,128 4,675
Operating Expenses:
Research and development 2,129 1,320 4,081 2,923
Selling, general and
administrative 2,806 2,206 5,435 4,682
Restructuring expenses -- 114 -- 114
--------- -------- -------- --------
Total operating expenses 4,935 3,640 9,516 7,719
Loss from operations (2,976) (1,182) (4,388) (3,044)
Other income/expenses 926 605 1,378 1,118
--------- -------- -------- --------
Loss before income taxes (2,050) (577) (3,010) (1,926)
Provision for income taxes (14) (2) (28) (22)
--------- -------- -------- --------
Net loss $(2,064) $(579) $(3,038) $(1,948)
========= ======== ======== ========
Net loss per share
Basic ($0.07) ($0.02) ($0.10) ($0.06)
Diluted ($0.07) ($0.02) ($0.10) ($0.06)
Shares used in computing net loss
per share
Basic 31,293 30,465 31,157 30,453
Diluted 31,293 30,465 31,157 30,453
MOSYS, INC.
Reconciliation of GAAP to Non-GAAP Net Loss and Net Loss Per Share
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30,
2006 2005 2006 2005
--------- -------- -------- --------
GAAP net loss $(2,064) $(579) $(3,038) $(1,948)
Non-GAAP adjustments:
Stock compensation expense
- Cost of revenue 52 -- 104 --
- Research and development 235 -- 462 --
- Selling, general and
administrative 337 9 661 19
--------- -------- -------- --------
Total stock compensation
expense 624 9 1,227 19
Non-GAAP net loss $(1,440) $(570) $(1,811) $(1,929)
========= ======== ======== ========
GAAP net loss per share: Basic
and Diluted $(0.07) $(0.02) $(0.10) $(0.06)
Reconciling item:
- Stock compensation
expense $0.02 $0.00 $0.04 $0.00
--------- -------- -------- --------
Non-GAAP net loss per share:
Basic and Diluted $(0.05) $(0.02) $(0.06) $(0.06)
========= ======== ======== ========
Shares used in computing non-
GAAP net loss per share
Basic 31,293 30,465 31,157 30,453
Diluted 31,293 30,465 31,157 30,453
MOSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2006 2005 (a)
------------ ------------
(unaudited)
Assets:
Current assets:
Cash, cash equivalents and short-term
investments $78,871 $68,650
Accounts receivable -- net 2,834 638
Unbilled contract receivable 26 368
Prepaid expenses and other assets 2,534 2,632
------------ ------------
Total current assets 84,265 72,288
Long-term investments 5,670 17,339
Property and equipment -- net 926 1,121
Goodwill 12,326 12,326
Other assets 588 563
------------ ------------
Total assets $103,775 $103,637
============ ============
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable $152 $236
Accrued expenses and other
liabilities 3,111 2,564
Deferred revenue 328 1,309
------------ ------------
Total current liabilities 3,591 4,109
Long-term portion of restructuring
liability 130 196
Stockholders' equity:
Common stock, additional paid-in
capital and others 103,926 100,166
Accumulated deficit (3,872) (834)
------------ ------------
Total stockholders' equity 100,054 99,332
Total liabilities and
stockholders' equity $103,775 $103,637
============ ============
(a) Derived from Audited Financial Statements
CONTACT: MoSys
Jim Pekarsky, 408-731-1846
jimp@mosys.com
or
Shelton Investor Relations
Beverly Twing, 972-239-5119 x126
btwing@sheltongroup.com