MoSys, Inc. Reports Third Quarter 2007 Financial Results

SUNNYVALE, Calif.—(BUSINESS WIRE)—October 30, 2007— MoSys, Inc. (MoSys), (Nasdaq: MOSY), a leading provider of high-density system-on-chip (SoC) memory and analog/mixed-signal intellectual property (IP), today reported financial results for its third quarter ended September 30, 2007.

Third Quarter Highlights

Total revenue for the third quarter of 2007 was $4.0 million, compared to $4.3 million in the second quarter of 2007 and $4.0 million in third quarter of 2006.

Third quarter total revenue included $1.5 million of license revenue compared to $2.1 million in the previous quarter and $3.3 million in the third quarter of 2006. Royalty revenue increased approximately 12 percent to $2.4 million compared to $2.2 million in the previous quarter. Royalty revenue was $705,000 in the third quarter of 2006 and has grown on the strong demand for the Nintendo Wii game console.

Business Summary

"The Technology Licenses that we have signed over the past year on 1T-SRAM are now starting to generate royalties. Based on information provided to us by our licensees, we believe that there are several design wins that are now entering the production phase. We expect quarter over quarter royalty growth to continue throughout 2008 as additional design wins ramp into volume production," stated Chet Silvestri, Chief Executive Officer of MoSys.

"In addition, we expect to see incremental licensing revenue from our 1T-FLASH and Mixed Signal technologies in 2008. Our licensing strategy for these newer technologies is also to focus on signing Technology Licenses at the advanced 65nm process nodes and beyond, similar to the approach we have taken with our 1T-SRAM," concluded Mr. Silvestri.

Financial Results

The third quarter gross margin percentage determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP) was 83 percent compared to 84 percent in the second quarter of 2007 and 96 percent in the third quarter of 2006.

Total operating expenses were $7.3 million compared to $4.9 million in the second quarter of 2007. Operating expenses included a one-time charge of in-process research and development and intangible asset amortization of $1.2 million related to the recent acquisition of intellectual property from Atmel Corporation, as well as, additional operating expenses for the engineering personnel and operating costs that we agreed to incur as part of that acquisition.

On a GAAP basis, net loss for the quarter was $2.8 million, or ($0.09) per share, including stock-based compensation charges of $894,000 and the in-process research and development and intangible asset amortization charge of $1.2 million. This compares to a net loss of $146,000, or ($0.00) per share, in the previous quarter and a net loss of $2.9 million, or ($0.09) per share, in the third quarter of 2006. Net loss per share for the quarter on a GAAP basis was computed using 32,274,000 shares.

Non-GAAP net loss for the third quarter of 2007, which excludes stock-based compensation charges of $894,000 and $1.2 million in the in-process research and development and amortization charges, was $766,000, or ($0.02) per share. Net loss per share for the quarter on a non-GAAP basis was computed using 32,274,000 shares. 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 long and short-term investments totaled approximately $85.6 million as of September 30, 2007. Cash expenditures during the quarter included $1.4 million for the acquisition of certain analog mixed/signal designs and intellectual property from Atmel Corporation and the repurchase of common stock under the Company's repurchase program at a cost of approximately $641,000.

Business Outlook

The Company expects royalty revenue to continue to grow sequentially in the fourth quarter while total revenue is projected to remain flat. Additional financial details regarding the Company's business outlook will be provided during their conference call at 1:30 p.m. Pacific Time (PT) on Tuesday, October 30, 2007.

Third Quarter 2007 Financial Results Webcast/ Conference Call

MoSys management will host a conference call and webcast with investors today, October 30, 2007, at 1:30 p.m. PT (4:30 p.m. ET) to discuss the third quarter 2007 financial results and the business outlook. Investors and other interested parties may access the call by dialing 1-866-277-1184 in the U.S. (1-617-597-5360 outside of the U.S.), and entering the passcode 76456881 at least 10 minutes prior to the start of the call. In addition, an audio webcast will be available through the MoSys website at www.mosys.com A telephonic 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 of 85202789.

Use of Non-GAAP Financial Measures

To supplement MoSys' consolidated financial statements presented in accordance with GAAP, MoSys uses non-GAAP financial measures that exclude from the statement of operations the effects of stock-based compensation and a one-time charge of in-process research and development and amortization of intangibles in connection with the acquisition. MoSys management uses the above non-GAAP financial measures internally to understand, manage and evaluate our business. MoSys believes it is useful for itself and investors to review, as applicable, both GAAP information and the non-GAAP measures, which exclude the effects of stock-based compensation and in-process research and development and amortization charges of intangibles in connection with the acquisition, in order to assess the performance of our continuing operations and for planning and forecasting in future periods. The presentation of these non-GAAP measures is intended to provide investors with an understanding of our operational results and trends that enables them to analyze our base financial and operating performance and facilitate period-to-period comparisons and analysis of operational trends. MoSys believes the presentation of these non-GAAP financial measures is useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making.

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 October 30, 2007 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 and 1T-FLASH, and analog/mixed signal technologies.

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, 1T-FLASH or analog/mixed signal technologies, 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, 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 (Nasdaq: MOSY), develops, licenses and markets innovative memory and analog/mixed-signal 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 four or 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, making them ideal for embedding large memories in System on Chip (SoC) designs. MoSys' licensees have shipped more than 135 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)

                                                  Three  Months  Ended              Nine  Months  Ended
                                                        September  30,                      September  30,
                                                    2007                2006                2007                2006
                                              -----------  -----------  -----------  -----------
                                              (unaudited)  (unaudited)  (unaudited)  (unaudited)
Net  Revenue:
    Licensing                                  1,548              3,333              4,865              7,302
    Royalty                                      2,421                  705              6,570              2,598
                                              -----------  -----------  -----------  -----------
          Total  net  revenue            3,969              4,038            11,435              9,900

Cost  of  Net  Revenue:
    Licensing                                      670                  172              1,912                  906
                                              -----------  -----------  -----------  -----------
          Total  cost  of  net
            revenue                                  670                  172              1,912                  906

Gross  Profit                                3,299              3,866              9,523              8,994

Operating  Expenses:
    Research  and
      development                            3,241              2,018              7,420              6,099
    Selling,  general  and
      administrative                      2,945              3,350              8,350              8,785
    In-process  research
      and  development                        966                      -                  966                      -
    Amortization  of
      acquired  intangible
      assets                                          197                      -                  197                      -
    Litigation  settlement                  -              2,400                      -              2,400
                                              -----------  -----------  -----------  -----------
          Total  operating
            expenses                            7,349              7,768            16,933            17,284

    Loss  from  operations          (4,050)          (3,902)          (7,410)          (8,290)

    Other  income/expenses          1,209              1,043              3,505              2,421
                                              -----------  -----------  -----------  -----------
          Loss  before  income
            taxes                                (2,841)          (2,859)          (3,905)          (5,869)

    Benefit  (provision)
      for  income  taxes                        18                    (8)                (33)                (36)
                                              -----------  -----------  -----------  -----------

Net  loss                              $      (2,823)  $      (2,867)  $      (3,938)  $      (5,905)
                                              ===========  ===========  ===========  ===========

Net  loss  per  share
    Basic                                        ($0.09)          ($0.09)          ($0.12)          ($0.19)
    Diluted                                    ($0.09)          ($0.09)          ($0.12)          ($0.19)

Shares  used  in
  computing  net  loss  per
  share
    Basic                                        32,274            31,386            31,950            31,233
    Diluted                                    32,274            31,386            31,950            31,233



                                                          MOSYS,  INC.
    Reconciliation  of  GAAP  to  Non-GAAP  Net  Loss  and  Net  Loss  Per  Share
                              (In  thousands,  except  per  share  amounts)
                                                          (unaudited)

                                                                        Three  Months        Nine  Months  Ended
                                                                                Ended
                                                                        September  30,          September  30,
                                                                        2007          2006          2007          2006
                                                                    --------  --------  --------  ---------

  GAAP  net  loss                                        $(2,823)  $(2,867)  $(3,938)  $  (5,905)
      Stock  compensation  expense
          -Cost  of  revenue                                    95              23            317              127
          -Research  and  development                270            279            799              741
            Selling,  general  and
          -  administrative                                  529            401        1,458          1,062
                                                                    --------  --------  --------  ---------
            Total  stock  compensation
              expense                                                894            703        2,574          1,930

      In-process  research  and
        development                                              966                -            966                  -
      Amortization  of  acquired
        intangible  assets                                  197                -            197                  -

  Non-GAAP  net  loss                                $    (766)  $(2,164)  $    (201)  $  (3,975)
                                                                    ========  ========  ========  =========

  GAAP  net  loss  per  share                      ($0.09)    ($0.09)    ($0.12)      ($0.19)
      Reconciling  item:
          -Stock  compensation  expense          0.03          0.02          0.07            0.06
            In-process  research  and
          -  development                                      0.03                            0.03
            Amortization  of  acquired
          -  intangible  assets                          0.01                -          0.01                  -

                                                                    --------  --------  --------  ---------
  Non-GAAP  net  loss  per  share:
    Basic  and  Diluted                                ($0.02)    ($0.07)    ($0.01)      ($0.13)
                                                                    ========  ========  ========  =========

  Shares  used  in  computing  non-GAAP  net
    loss  per  share
      Basic                                                      32,274      31,386      31,950        31,233
      Diluted                                                  32,274      31,386      31,950        31,233



                                                          MOSYS,  INC.
                                CONDENSED  CONSOLIDATED  BALANCE  SHEETS
                                                        (in  thousands)

                                                                                          September          December
                                                                                                  30,                    31,
                                                                                                2007                  2006
                                                                                          -----------      ---------
                                                                                          (unaudited)      (audited)
Assets:
    Current  assets:
          Cash,  cash  equivalents  and  short-term
            investments                                                        $      71,447        $  81,807
          Accounts  receivable  -  net                                            829              2,491
          Unbilled  contract  receivable                                  1,218                  360
          Prepaid  expenses  and  other  assets                        2,156              2,831
                                                                                          -----------      ---------
                Total  current  assets                                          75,650            87,489

    Long-term  investments                                                    14,189              2,492
    Property  and  equipment  -  net                                        1,516                  855
    Goodwill                                                                              12,326            12,326
    Intangible  assets,  net                                                    2,362                      -
    Other  assets                                                                            464                  598
                                                                                          -----------      ---------
                Total  assets                                                  $    106,507        $103,760
                                                                                          ===========      =========


Liabilities  and  Stockholders'  Equity:
    Current  liabilities:
          Accounts  payable                                                $            518        $        307
          Accrued  expenses  and  other  liabilities              1,896              1,865
          Deferred  revenue                                                              194                  619
                                                                                          -----------      ---------
                Total  current  liabilities                                  2,608              2,791

      Long-term  portion  of  restructuring
        liability                                                                                  -                    54

    Stockholders'  equity:
          Common  stock,  additional  paid-in  capital
            and  others                                                                114,009          107,087
          Accumulated  deficit                                                (10,110)          (6,172)
                                                                                          -----------      ---------
                Total  stockholders'  equity                            103,899          100,915

                                                                                          -----------      ---------
                Total  liabilities  and  stockholders'
                  equity                                                            $    106,507        $103,760
                                                                                          ===========      =========
 



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