Simtek Reports Second Quarter and First Half 2006 Financial Results
--------------------------------------------------------------------------------
BusinessWire
08:01 a.m. 07/27/2006
COLORADO SPRINGS, Colo., Jul 27, 2006 (BUSINESS WIRE) -- Simtek Corporation (SRAM) :
-- 36% Product Revenue Growth Q2 vs. Q1 2006, 115% Year to Date Product Revenue Growth vs. 2005
-- Revenue Guidance Increased to $25 to $30 million, from $23 to $27 million for Full Year 2006
-- Production Qualification Approved for 1 Megabit Device with Real Time Clock
-- Loss Per Share Reduced For Six Months 2006 to ($0.02) vs. ($0.06) 2005
Simtek Corporation (SRAM), the inventor, pioneer, and world's leading supplier of nonvolatile static random access memory (nvSRAM) integrated circuits, today announced its financial results for the second quarter and six months ended June 30, 2006.
Other highlights include:
-- Product Revenue $6.4 million for Q2 2006, $11.2 million for the first half 2006
-- Total Revenue $6.9 million for Q2 2006, $12.7 million for the first half 2006
-- Profitability Achieved for the Month of June
-- 4 Megabit nvSRAM Program with Cypress Well Underway
-- Record Design Wins Across Diverse Markets
In this and subsequent reports an accounting change has been, and will be, made in how the non-refundable advance royalty payments from Cypress Semiconductor are accounted for. The change, settled upon after consultation with the Company's independent accountants, results in adding approximately $1 million to Q1 2006 revenue and $0.5 million to Q2 2006 revenue, or $1.5 million in royalty revenue for the first six months of 2006. In this, and future reports, revenue will be reported for product sales, royalty revenue, and total revenue. Please refer to Simtek's related Form 8-K filed on July 26, 2006 for the effect on Q1 2006 financial statements.
Total revenue was $6.9 million for the second quarter of 2006, including royalty revenue of $0.5 million. Product sales for the second quarter were $6.4 million, an increase of 192% from $2.2 million in the second quarter of 2005, and an increase of 36% quarter-over-quarter compared to Q1 2006 product sales of $4.7 million. The Company reported a net loss for 2006's second quarter of $1.5 million or $0.01 per share, compared to a net loss of $2.9 million or $0.05 per share for the second quarter of 2005. Excluding the effects of stock options and amortization of acquisition related costs, the net loss was $0.9 million for the second quarter of 2006. There were no such charges in the 2005 period.
Total revenue for the first six months of 2006 was $12.7 million, including royalty revenue of $1.5 million. Product sales for the first six months of 2006 were $11.2 million, an increase of 115% from $5.2 million in the first six months of 2005. The Company reported a net loss for the six months ended June 30, 2006 of $2.4 million or $0.02 per share, compared to a net loss of $3.9 million or $0.06 per share for the same period in 2005. Excluding the effects of stock options and amortization of acquisition related costs, the net loss was $1.4 million for the 2006 period. There were no such charges in the 2005 period.
Simtek is guiding product revenue for the third quarter of 2006 to be in the range of $7.2 million to $7.5 million. The Company's order backlog, scheduled for delivery in the third quarter, stands at $5.5 million at June 30, 2006 and represents a larger percentage of guided revenue for the subsequent quarter than in prior quarters.
The Company is raising its guidance for total revenue for 2006 from $23 million to $27 million to $25 million to $30 million, including the impact of royalty revenue from the non-refundable payments received from Cypress Semiconductor.
Based on margin improvement and increasing revenue, the Company is guiding to be profitable on a pro-forma basis for the third and fourth quarters of 2006. There is no prepaid royalty installment expected in the third quarter.
Brian Alleman, CFO stated, "Achieving production qualification of the .25 micron 256 kilobit and real-time clock version of the 1 megabit devices, which the Company announced yesterday, is the culmination of several years of investment in process R&D and product development. We believe that the Company is now in a position to ramp current customer programs into production, and to aggressively cultivate new design wins. Product revenue for the first six months of 2006 exceeded total revenue for the full year 2005 by $800,000. For the month of June, Simtek achieved what we consider to be an even more significant goal, namely reaching profitability for the month. Focused ASP management, with a favorable shift in product mix and aggressive cost reduction efforts resulted in gross margins on product sales of just over 40% for the month."
Alleman continued, "The Company continues to work on reducing product costs, particularly on the .25 micron parts. We expect to be investing in the third quarter in continued cost reductions, yield enhancements, and back end test efficiencies. We have also successfully transferred offshore the final testing of our highest volume device family. The combination of these actions is projected to increase gross margins in Q3 2006 by as much as 500 basis points over Q2 2006."
Revenue is increasing from improved ASPs, a shift in mix toward higher ASP 1 megabit devices, and from significant increases in unit volumes shipped in several product families. In the European market, the unit volume of shipment of products from Simtek GmbH to customers in Europe increased by 66% quarter-over-quarter compared to Q1 2006. Unit volume shipped on a global basis increased by 36% quarter-over-quarter compared to Q1 2006. Compared to the first six months of 2005, total unit volume shipped to customers increased by 179%.
Simtek President and CEO, Harold Blomquist stated, "Growth is coming from customers around the world and from markets as diverse as storage/RAID (redundant arrays of independent disks) subsystems, automated meter reading systems, display subsystems in multiple application areas, and networking subsystems. Shipments of our 1 megabit family increased by 293% quarter-over-quarter and is showing steady increase in demand from recently awarded programs from Fortune 50 industry leaders in the RAID, and other market segments."
Blomquist went on to say, "We believe that design wins from new and existing customers, and from current and new market segments early in the year is unparalleled in our history and continues at a brisk pace. Market acceptance of our nvSRAM technology continues to broaden. Cypress Semiconductor Corp. reported in its earnings call last week that it has begun sampling high-speed nonvolatile SRAM devices obtained through its partnership with Simtek. Simtek is pleased with its collaboration with Cypress which is expected to provide first samples of a jointly developed 4 megabit device at the beginning of 2007, and which is opening doors to new customers with high-volume programs."
