Catalyst Semiconductor Reports 3rd Quarter Results
SUNNYVALE, Calif.--Feb. 2, 20054, 2005--Catalyst Semiconductor, Inc. , 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 third quarter ended January 31, 2005. The company also announced that its Board of Directors increased its share repurchase authorization by 500,000 shares to 3.5 million shares, of which 2.6 million shares have been acquired since the program began in 2001.For the fiscal third quarter ended January 31, 2005, Catalyst had net income of $107,000, or $0.01 per diluted share, on revenues of $13.7 million. This compares with net income of $2.4 million, or $0.12 per diluted share, on revenues of $16.9 million in the quarter ended January 31, 2004. In the quarter ended October 31, 2004, Catalyst reported net income of $1.0 million, or $0.05 per diluted share, on revenues of $15.6 million.
Net revenues for the quarter ended January 31, 2005 were $13.7 million, which represented a 19% decrease from net revenues in the quarter ended January 31, 2004 and a 12% decrease from net revenues of $15.6 million in the quarter ended October 31, 2004. The decrease in revenues was primarily attributable to a decrease in unit volumes and average selling prices for the company's EEPROM products and a decrease in unit volumes for the company's Flash products. Similar reduced demand and resultant pricing pressure has been reported by many companies in the semiconductor market recently. Revenues from the company's new family of analog/mixed signal products were $727,000, or 5.3% of revenues, in the quarter ended January 31, 2005, compared with $305,000, or 1.8% of revenues, in the quarter ended January 31, 2004 and $545,000, or 3.5% of revenues, in the quarter ended October 31, 2004.
Gross margin for the quarter ended January 31, 2005 was 38.4%, compared to 46.0% for the quarter ended January 31, 2004 and 40.8% for the quarter ended October 31, 2004. The decrease was primarily caused by a combination of competitive market conditions and higher cost inventories purchased in 2004 when foundry capacity was tighter.
Research & Development expenses were flat at $1.9 million compared to the quarters ended January 31, 2004 and October 31, 2004. Sales, General & Administrative expenses increased $379,000, or 13%, from the quarter ended January 31, 2004 and decreased $29,000, or 1%, from the quarter ended October 31, 2004. The increase from the previous year was principally attributable to an increase of $426,000 in consulting and outside accountant expenses due to our efforts to document our internal control systems in anticipation of the application of Section 404 of the Sarbanes-Oxley Act of 2002. The Company anticipates that such compliance-related expenses will continue at a similar level for the remainder of this fiscal year.
Catalyst recorded an income tax provision of $50,000, or 32% of income before income taxes during the quarter ended January 31, 2005. This compares to an income tax provision of $534,000, or 18% in the quarter ended January 31, 2004 and an income tax provision of $216,000, or 18% on income before taxes in the quarter ended October 31, 2004. The tax provision recorded for the current quarter reflects an estimated year to date tax rate of 32%.
Board Increases Share Repurchase Authorization
As of January 31, 2005, Catalyst had cash, cash equivalents and short-term investments of $38.5 million, a decrease of $4.5 million compared to the previous quarter. The decrease was primarily due to the company's repurchase of 921,200 shares of the company's stock for an average purchase price of $5.24 per share, or $4.8 million in the aggregate. As of February 22, 2005, the company's cumulative stock repurchases under its open market repurchase program initially authorized in September 2001 had reached a total of 2.6 million shares at an average price of $3.61, or 9.4 million in the aggregate. On February 23, 2005, the Board of Directors increased the share repurchase authorization by 500,000 to 3.5 million shares.
Management Comments & Outlook
"Like the previous quarter, this was a challenging quarter for us because of the weaker demand for our memory products and the resulting price pressure," said Gelu Voicu, president and chief executive officer. "The combination of these market conditions with the shipment of higher priced inventories purchased earlier when fab capacities were tightening and wafer costs increasing, pushed our gross margin to 38.4%, down from the gross margins of the previous four fiscal quarters. We do not expect significant changes in these market conditions in the current quarter.
"Nevertheless, we are very encouraged to see our analog/mixed signal product line resuming its growth momentum. We are seeing a broader range of design-in activities for our analog/mixed-signal products into video game consoles, digital cameras, cell phones and other portable devices. In fact, we expect revenue growth of our analog/mixed signal products to continue through the current quarter," said Voicu.
Investor Conference Call
Catalyst will conduct a conference call regarding the third 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 877-754-9851 (domestic only). International callers can dial 706-643-1107. A replay of the call will be aired from approximately 4:00 p.m. today until midnight (Pacific) on March 4, 2005 at the company's Web site or by dialing 800-642-1687 (domestic) or 706-645-9291 (international), entering reservation number 3992752 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 analog/mixed-signal products, increasing wafer costs, decreasing average selling prices, repurchases of Catalyst's common stock, and continuing expenses relating to regulatory compliance, 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 demand for Catalyst's new products; increased competition in the markets for Catalyst's new products; potential errors, latent defects, design flaws or other problems with Catalyst's new 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 demand for Catalysts' new products; timing, future development, and cost of Catalyst's new products; unpredictability and volatility of the price of Catalyst's common stock and the securities of other companies in the Catalyst's industry; the performance of and conditions in the United States and world financial markets; increased costs of regulatory compliance; difficulties in implementing an enterprise resource planning system in connection with our efforts to comply with the requirements of the Sarbanes-Oxley Act; 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)
January 31, April 30,
2005 2004
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ASSETS
Current assets:
Cash and cash equivalents $ 9,723 $17,245
Short term investments 28,747 16,564
Accounts receivable, net 8,269 12,547
Inventories 11,902 6,960
Deferred tax assets 5,024 5,024
Other assets 847 875
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Total current assets 64,512 59,215
Property and equipment, net 5,683 3,334
Deferred tax assets 4,098 4,098
Other assets 127 218
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Total assets $74,420 $66,865
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,943 $ 5,016
Accrued expenses 4,485 3,782
Deferred gross profit on shipments to
distributors 2,469 4,079
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Total current liabilities 12,897 12,877
Total stockholders' equity 61,523 53,988
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Total liabilities and stockholders'
equity $74,420 $66,865
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Nine Months
Ended Ended
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Jan. 31, Jan. 31, Jan. 31, Jan. 31,
2005 2004 2005 2004
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Net revenue $13,680 $16,875 $45,995 $46,700
Cost of revenues 8,432 9,108 25,712 28,795
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Gross profit 5,248 7,767 20,283 17,905
Research and development 1,940 1,936 6,015 5,134
Selling, general and administration 3,363 2,984 9,913 8,515
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Operating income (55) 2,847 4,355 4,256
Net interest income 212 108 505 282
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Income before income taxes 157 2,955 4,860 4,538
Income tax provision 50 534 1,555 771
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Net income $ 107 $ 2,421 $ 3,305 $ 3,767
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Net income (loss) per share:
Basic $ 0.01 $ 0.15 $ 0.19 $ 0.23
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Diluted $ 0.01 $ 0.12 $ 0.17 $ 0.19
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Weighted average common shares:
Basic 17,946 16,620 17,642 16,487
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Diluted 19,761 19,890 19,662 19,351
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