SUNNYVALE, Calif.—(BUSINESS WIRE)—October 26, 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 third quarter
ended September 30, 2006.
-- Total revenue of $4.0 million
-- Overall gross margin of 96 percent
-- Resolved litigation related to UniRAM Technology, Inc.
(UniRAM)
-- GAAP net loss of $2.9 million or ($0.09) per share including
the UniRAM litigation settlement expense of $2.4 million or
($0.08) per share
-- Non-GAAP net loss of $2.2 million or ($0.07) per share
excluding the stock base compensation expense (See table of
reconciliation of GAAP to non-GAAP net income (loss) and net
income (loss) per share)
-- Announced a 65nm license and royalty agreement with Fujitsu
-- Signed first license agreement for 1T-Flash
Third Quarter Results
Total net revenue for the third quarter of 2006 was $4.0 million
compared to $2.3 million in the second quarter of 2006 and $4.1
million recorded in the third quarter of 2005. Third quarter revenue
represented a 73 percent sequential increase over the previous
quarter.
Third quarter total revenue included licensing revenue of $3.3
million compared to $1.7 million in the second quarter of 2006 and
$3.2 million in the third quarter of 2005. Royalty revenue for the
third quarter was $705,000 compared to $639,000 in the previous
quarter and $897,000 in the same period a year ago. The Company
recorded licensing revenue from 13 different chip development
projects, which is consistent with the second quarter, and royalty
revenue from 15 different licensees, compared to 18 in the previous
quarter.
During the quarter, MoSys announced a technology license agreement
with Fujitsu Limited, under which MoSys' 1T-SRAM technology is
licensed to Fujitsu on its advanced 65nm production process. The
implementation of MoSys' patented 1T-SRAM memory technology and 1T-Q
bit cell will allow Fujitsu to offer complex System-on-Chip (SoC)
solutions that have a fraction of the die area devoted to embedded
memory compared to other competing embedded memory technologies, while
maintaining very high performance with extremely low power
consumption. The cost and die area savings generated by using the
MoSys high density embedded memory solution can be allocated to other
uses, such as increasing logic functionality while maintaining the
same silicon cost.
"During the third quarter, we continued to make progress on our
65nm and embedded flash initiatives," commented Chet Silvestri, Chief
Executive Officer of MoSys. "The agreement with Fujitsu at 65
nanometers is a milestone for MoSys as it further validates the
scalability of our technology at the most advanced process nodes and
positions our technology for additional adoption into high volume
consumer devices. We also signed our first 1T-Flash flash license
during the quarter. In addition, we anticipate our royalties beginning
to significantly ramp in the fourth quarter and continuing into 2007
as the Nintendo Wii(TM) video game console, and other licensees'
products, are introduced into the market place."
Mr. Silvestri continued, "Today MoSys announced the settlement of
all outstanding litigation with UniRAM related to the trade secret
misappropriation and patent infringement suit filed in 2004 by UniRAM.
Under the settlement agreement, the companies agreed to dismiss all
outstanding claims and counterclaims with prejudice, MoSys will pay
UniRAM $2.4 million, and receive a complete release of all claims as
well as a future fully paid license for itself and all of its
licensees. The settlement amount was included in our third quarter
results and we are pleased to have resolved this matter," concluded
Mr. Silvestri.
In accordance with Generally Accepted Accounting Principles (GAAP)
the third quarter gross margin percentage was 96 percent, compared to
84 percent in the second quarter of 2006 and 84 percent in the third
quarter of 2005. The sequential increase in total gross margin for the
quarter was due to licensing revenue recognized from a high margin
contract.
Total operating expenses for the third quarter were $7.8 million,
which included approximately $816,000 in legal expenses related to the
UniRAM litigation and $2.4 million in the litigation settlement.
The GAAP net loss for the quarter was $2.9 million, or ($0.09) per
share, including stock-based compensation expense under Statement of
Financial Accounting Standard No. 123R (FAS 123R) of $703,000 and the
litigation settlement of $2.4 million. This compares to a net loss of
$2.1 million, or ($0.07) per share, in the second quarter of 2006 and
net income of $50,000, or $0.00 per share, in the third quarter of
2005. Per share amounts for the quarter on a GAAP basis were computed
using 31,386,000 shares.
The non-GAAP net loss for the third quarter, which excludes the
total stock-based compensation charges of $703,000, was $2.2 million,
or ($0.07) per share. Per share amounts for the quarter on a non-GAAP
basis were computed using 31,386,000 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 both long and short-term investments
totaled approximately $87.1 million as of September 30, 2006 compared
to approximately $84.5 million as of June 30, 2006.
Business Outlook
MoSys expects total revenue to be a range of $5.0 to $6.0 million
in the fourth quarter of 2006. The Company's Chief Executive Officer
and Chief Financial Officer will comment on the business highlights of
the third quarter and provide additional financial details during
their financial results conference call at 1:30 p.m. (PT) on Thursday,
October 26, 2006.
Third Quarter 2006 Financial Results Webcast/ Conference Call
MoSys management will host a conference call and webcast with
investors today, October 26, at 1:30 p.m. Pacific time (4:30 p.m.
Eastern time) to discuss the third quarter financial results and the
business outlook. Investors and other interested parties may access
the call by dialing 800-260-8140 in the U.S. (617-614-3672 outside of
the U.S.), and entering the passcode 29553152 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
telephone 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
83139737.
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
October 26, 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.