MEMSCAP Announces Results of First Half 2002

Transitional Period Highlighted by Commencement of Fab Operations

GRENOBLE, France & SAN JOSE, Calif.--(BUSINESS WIRE)--Aug. 1, 2002--MEMSCAP (Euronext:MEMS), the leading provider of innovative solutions based on MEMS (micro-electromechanical systems), today announced results for the half year ending June 30, 2002.

Revenues for the half year rose to 2.5 million Euros, with second quarter revenues of 1.4 million euros.

As MEMSCAP has emphasized since January, the first half of 2002 was expected to be a transitional period as the new fabrication facility began operations. The fab, in operation for several weeks, has already enabled the production and sale of fully qualified optical components to a number of select customers. The ramp-up in production capability will be a key element in achieving the revenue goals set forth for the second half of the year.

During the first half of the year, operational expenses rose to 9.5 million Euros, of which 5.0 million Euros went to research and development.

Given this focus on heavy investment, MEMSCAP saw an operating loss of 10 million Euros and a net loss of 10.3 million Euros. The net loss figure does not include a research tax credit, estimated at 1.7 million euros for the first half of the year, to be taken at the end of the year.

As of June 30, 2002, MEMSCAP had 83.2 million Euros of shareholder's equity and a cash position of 11.4 million Euros, prior to the refinancing of the Bernin fabrication facility underwritten by two banking syndicates for equipment and facilities investment (18.1 million and 19.5 million Euros, respectively, not including tax). As of July 25, 2002, taking into account the first payment from the equipment lease, MEMSCAP's cash position rose to 20.5 million Euros. Based on the cash position of June 30, and taking into consideration the total funds issued for the lease-back (37.5 million Euros), cash levels were at nearly 50 million Euros.

"MEMSCAP's growth is based on long term goals and rapid execution. In less than one year, since the company went public, we have built the most modern MEMS foundry in the world, which is already operational. However, production ramp-up and the sales cycle have inherent delays that affect the entire company despite the excellent performance of our teams and technology," said Jean-Michel Karam, president and chief executive officer, MEMSCAP.

As announced earlier, it is expected that business activity will intensify during the entire second half of the year, although fab start-up costs and market conditions will most likely prevent profitability this year.

First Half 2002 Milestones:

  • Closing of lease-back contracts worth 37.5 million Euros with two bank syndicates
  • Start-up of fab operations and ramp-up of wafer production (front-end) with high yields, and start-up of assembly and packaging operations (back-end) with full production slated for end of year.
  • Delivery of the first optical components (2x2 and 1x2 switches and variable optical attenuators) produced entirely in the new fab, as well as qualification of MEMSCAP solutions by 4 new customers.
  • Start-up of wireless component production at Walsin Lihwa's fab, based on patented technology transferred by MEMSCAP (above-IC). Signing of the Walsin Lihwa marketing and manufacturing agreement driving royalty based revenue for the coming 5 years.
  • Signing of the Jazz Semiconductors agreement accelerating the deployment and adoption of MEMSCAP wireless technology in the marketplace.
  • Signing of several agreements in the medical and aerospace industries, the first indications of a successful integration of Capto AS (now MEMSCAP AS).
  • Delivery of the first prototype of the Skin Station in May 2002 after only six months from signing of the contract. Several agreements are in discussion that are expected to be conclude during the second half of the year.
  • Significant progress in patent portfolio activity, increasing from 73 patents grouped in 25 categories in December 2001, to more than 100 patents in 45 categories by June 30, 2002.

-0-

                            MEMSCAP, S.A.

                      CONSOLIDATED BALANCE SHEET
                        (in thousands of euros)

                                                              Proforma
                                     June 30,     Dec. 31,    Dec. 31,
                                      2002         2001         2001
                                    --------     --------     --------
                                       EUR          EUR          EUR

                   Assets
Fixed Assets

Goodwill............................  5,520            -        5,810
Intangible fixed assets.............  1,024          476          593
Property, plant and equipment....... 57,837       36,047       37,843
                                    --------     --------     --------
                                     64,381       36,523       44,246
                                    --------     --------     --------
Current Assets

Inventories.........................  2,074          356        1,493
Customer and associates accounts ...  7,578        7,569        9,751
Other accounts receivable and
 associates accounts................  8,483       11,948       12,904
Cash equivalents....................  8,556       43,070       43,070
Cash                                  2,811        7,814          138
                                                           --------          --------          --------
                                                                          29,502              70,757              67,356
                                                                        --------          --------          --------
Total  Assets                                                  93,883            107,280            111,602
                                                                        ========          ========          ========


    Liabilities  and  Shareholders'  Equity

Shareholders'  Equity

Capital  ............................    2,726                2,691                2,691
Additional  paid-in  capital..........  93,824              93,674              93,674
Reserves  and  consolidated
  statements  ........................(13,275)            (2,953)            (2,953)
Cumulative  translation  adjustment...        (92)                (383)                (383)
                                                                        --------          --------          --------
                                                                          83,183              93,029              93,029
                                                                        --------          --------          --------
Liabilities

Borrowings  and  financial
  liabilities........................        910                    213                    442
Accounts  payable....................    7,483              12,667              14,420
Other  liabilities  and
  associates  accounts  ...............    2,307                1,371                3,711
                                                                        --------          --------          --------
                                                                          10,700              14,251              18,573
                                                                        --------          --------          --------
Total  Liabilities  and
  Shareholders'  Equity                                93,883            107,280            111,602
                                                                        ========          ========          ========



                                                          MEMSCAP,  S.A.

                                  CONSOLIDATED  STATEMENTS  OF  OPERATIONS
                                                (in  thousands  of  euros)

                                                                                Half  period  ending
                                                                                        June  30                            Year
                                                              ----------------------------          ending
                                                                                                      Proforma        Dec.  31
                                                                2002              2001              2001              2001
                                                              ------          ------          ------          ------
                                                                  EUR                                    EUR                EUR

Revenues................              2,473            6,061            8,346            9,834
Sales  cost..............            (2,305)            (154)        (1,688)            (839)
                                                              ------          ------          ------          ------
        Profit  Margin.......                  168            5,907            6,658            8,995
                                                              ------          ------          ------          ------

Operating  expenses:
Research  and  development
  expenses...............            (4,957)        (2,466)        (2,466)        (5,576)
Selling  and  marketing
  expenses                                          (2,358)        (3,107)        (3,417)        (3,994)
General  and
  administrative
  expenses                                          (2,277)        (1,369)        (1,543)        (2,424)
                                                              ------          ------          ------          ------
        Total  operating
          expenses                                  (9,592)        (6,942)        (7,426)      (11,994)
                                                              ------          ------          ------          ------
              Operational  result          (9,424)        (1,035)            (768)        (2,999)
                                                              ------          ------          ------          ------
Interest  expenses.......                (415)            (114)            (147)              (39)
Interest  income.........                  363            1,366            1,028            2,441
Foreign  exchange
  gain  (loss)............                (519)              140                137                384
                                                              ------          ------          ------          ------
        Net  income  (loss)
          before  tax  benefit.            (9,995)              357                250              (213)
                                                              ------          ------          ------          ------

Corporation  tax.........                      -                    -                (67)                  -

        Net  income  (loss)  before
          acquisition  goodwill
          amortization.......            (9,995)              357                183              (213)
                                                              ------          ------          ------          ------
Acquisition  goodwill
  amortization  ..........                (290)                  -              (290)                  -

        Net  income  (loss)...          (10,285)              357              (107)            (213)
                                                              ======          ======          ======          ======
Net  earning  (loss)
  per  share..............              (0.19)      (0.0072)      (0.0021)          (0.01)

Number  of  shares........    53,989,764  49,838,508  49,838,508  51,803,443

Net  diluted  earning
  (loss)  per  share.......              (0.19)      (0.0066)      (0.0020)          (0.01)

Number  of  shares  fully
  diluted................    53,989,764  54,220,519  54,220,519  51,803,443



                                                          MEMSCAP,  S.A.

                                                CONSOLIDATED  CASH  FLOWS
                                                (in  thousands  of  euros)

                        (In  thousands)                                              Half  period        Year
                                                                                                        ending          ending
                                                                                                      June  30          Dec.  31
                                                                                                            2002              2001
                                                                                                    ---------    ---------
                                                                                                              EUR                EUR

Cash  flows  from  operating  activities:
Net  income  (loss)  ...............................    (10,285)            (213)
    Suppression  of  non  monetary  elements:
    Amortization  and  depreciation..................            692                960
    Cash  increase  (decrease)  on:
        Accounts  receivable..........................        2,349          (6,819)
        Inventories..................................          (496)            (351)
        Other  accounts  receivable,  prepayments
          and  accrued  income..........................        4,259        (11,316)
        Accounts  payable.............................      (6,983)        12,473
        Accrued  expenses  and  other  debts.............      (1,560)              (93)
                                                                                                    ---------    ---------
            Cash  flows  from  operating  activities.......    (12,024)        (5,359)
                                                                                                    ---------    ---------
Cash  flows  from  investments  activities:
Property,  plant  and  equipment  acquisition........    (20,094)      (35,627)
Intangible  fixed  assets  acquisition..............          (654)            (731)
Incidence  des  variations  de  perimetre............      (7,676)                  -
                                                                                                    ---------    ---------
            Cash  flows  from  investments  activities.....    (28,424)      (36,358)
                                                                                                    ---------    ---------
Cash  flows  from  financing  activities:
New  loans........................................            281                    -
Capital  increase  (exercised  stock  options).......            146                    -
Additional  paid-in  capital.......................                -          83,276
                                                                                                    ---------    ---------
            Cash  flows  from  financing  activities.......            427          83,276
                                                                                                    ---------    ---------
Effect  of  exchange  rate  on  C&C  equivalent........            292              (330)
                                                                                                    ---------    ---------
Variation  of  C&C  equivalent......................    (39,729)        41,229
                                                                                                    =========    =========
C&C  equival.  Beginning  of  period.................      50,884            9,655
                                                                                                    ---------    ---------
C&C  equival.  End  of  period.......................      11,155          50,884
                                                                                                    =========    =========

 


Contact:
           MEMSCAP
          Vincent  Tempelaere,  +33  (0)4  76  92  85  00  (IR  and  M&A)
          vincent.tempelaere@memscap.com
          Aurore  Foulon,  +33  (0)4  76  92  85  00  (Corp.  Comm)
          aurore.foulon@memscap.com
          Tom  Breunig,  +1  408  392-7570  (Corp.  Comm)
          tom.breunig@memscap.com
                  or
          EURO  RSCG  OMNIUM
          Laure  Chabert,  +  33  (0)1  41  34  48  55
          Laure.chabert@eurorscg.fr 



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