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MoSys, Inc. Reports Second Quarter 2013 Financial Results



  MoSys, Inc. Reports Second Quarter 2013 Financial Results

Business Wire

SANTA CLARA, Calif. -- July 19, 2013

MoSys, Inc., (NASDAQ: MOSY), a leader in semiconductor solutions that enable
fast, intelligent data access for network and communications systems, today
reported financial results for the second quarter ended June 30, 2013.

Second Quarter and Recent Highlights

  * Secured multiple new design wins for Bandwidth Engine® and LineSpeed™
    integrated circuits (ICs);
  * Shipped prototype quantities of Bandwidth Engine 2 and initial samples of
    LineSpeed Gearbox ICs;
  * Announced second product in the LineSpeed family, the 100G Quad Retimer;
  * Obtained net proceeds of $27.7 million from underwritten public offering
    of common stock; and
  * Ended the quarter with total cash and investments of $58.9 million.

Management Commentary

“During the quarter, we continued to build sales and design win momentum,
securing multiple new design wins for our Bandwidth Engine products,”
commented Len Perham, MoSys’ President and Chief Executive Officer. “I was
pleased with our win rate during the quarter, especially with new customers.
After further testing and characterization, Bandwidth Engine 2 continues to
meet or exceed specifications, and we made initial shipments to our customers.

“The addition of the LineSpeed family of single-chip PHY ICs to our product
offerings complements our Bandwidth Engine products for next generation
networking and communications systems and provides MoSys with a significantly
expanded market opportunity. We recently achieved our first design engagements
for Gearbox ICs in two high-performance line card applications. Although the
majority of activity has been for our 100G Multi-Mode Gearbox, our recently
released 100G Quad Retimer has also been well-received. The LineSpeed devices
represent a growing percentage of our sales activity, which is a strong
testament to the considerable importance of these functions to future system
design requirements, the quality and capabilities of our technology, and the
tireless efforts of our sales and marketing teams.

“In summary, I am pleased with the level of activity, both internally and
externally, as we continue to make notable progress toward becoming a viable
fabless semiconductor company. We have grown our sales pipeline for both the
Bandwidth Engine and LineSpeed products and have multiple prospective
customers advancing in the decision process. With the recent infusion of
capital from our public offering, we are well positioned to expedite new
product development and further our sales activities in order to drive
additional design wins and future revenue.”

Second Quarter Results

Total net revenue for the second quarter of 2013 was $1.1 million, compared
with $1.3 million reported in the first quarter of 2013 and $1.7 million in
the second quarter of 2012.

Second quarter 2013 total revenue included licensing and other revenue of $0.1
million, consistent with the previous quarter and compared with $0.6 million
in the second quarter of 2012. Revenue attributable to shipments of integrated
circuits is included in licensing and other revenue. Second quarter 2013
royalty revenue was $1.0 million, compared with $1.1 million in both the
previous quarter and the second quarter of 2012.

Gross margin for the second quarter of 2013 was 93 percent, compared with 99
percent in the first quarter of 2013 and 90 percent for the second quarter of
2012.

Total operating expenses on a GAAP basis for the second quarter of 2013 were
$7.4 million, compared with $6.3 million in the previous quarter and $8.1
million for the second quarter of 2012. Second quarter 2013 operating expenses
included $0.3 million of amortization of intangible assets and $1.0 million in
stock-based compensation expense.

GAAP net loss for the second quarter of 2013 was $6.4 million, or ($0.15) per
share, compared with a net loss of $5.0 million, or ($0.12) per share, in the
previous quarter and a net loss of $6.6 million, or ($0.17) per share, for the
second quarter of 2012. The non-GAAP net loss for the second quarter of 2013
was $5.2 million, or ($0.12) per share, which excludes amortization of
intangible assets and stock-based compensation expense. Earnings per share for
the second quarter of 2013 were computed using approximately 43.9 million
weighted shares on a GAAP and non-GAAP basis. A reconciliation of GAAP results
to non-GAAP results is provided in the financial statement tables following
the text of this press release.

As of June 30, 2013, cash and investments totaled $58.9 million, which
included approximately $27.7 million in net cash proceeds received from the
Company’s May 2013 public offering of common stock.

The Company also announced, in accordance with NASDAQ Listing Rule 5635(c)(4),
as a material inducement to the hiring of five new employees, it has granted
or offered to grant stock options for a total of 136,000 shares of common
stock. Inducement option grants have an exercise price equal to the closing
price of the Company’s common stock on the NASDAQ market on the grant date,
and vest over four years and expire in ten years, assuming continued service.

Financial Results Webcast / Conference Call

MoSys will host a conference call and webcast with investors today at 5:30
a.m. Pacific Time (8:30 a.m. Eastern Time) to discuss the second quarter 2013
financial results. Investors and other interested parties may access the call
by dialing 1-866-515-2907 in the U.S. (1-617-399-5121 outside of the U.S.),
and entering the pass code 11984387 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 two
business days following the call at 1-888-286-8010 in the U.S. (1-617-801-6888
outside of the U.S.), pass code of 79466204.

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
amortization of recorded intangible assets. 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
that MoSys’ management uses for planning and forecasting future performance.
MoSys’ management believes that the presentation of non-GAAP financial
measures that exclude these items is useful to investors because MoSys’
management does not consider these charges part of the day-to-day business or
reflective of the core operational activities of the Company that are within
the control of management or that would be used to evaluate management’s
operating performance.

Investors are encouraged to review the reconciliation of these non-GAAP
financial measures to the comparable GAAP results, which is provided in a
table below the Condensed Consolidated Statements of Operations. The non-GAAP
financial measures disclosed by the Company should not be considered a
substitute for, or superior to, financial measures calculated in accordance
with GAAP, and the financial results calculated in accordance with GAAP and
reconciliations to those financial statements should be carefully evaluated.
The non-GAAP financial measures used by the Company may be calculated
differently from, and therefore may not be comparable to, similarly titled
measures used by other companies. 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 July 19, 2013, that
the Company filed with the Securities and Exchange Commission.

Forward-Looking Statements

This press release may contain forward-looking statements about the Company,
including, without limitation, anticipated benefits and performance expected
from our IC products and the Company’s future markets and future business
prospects.

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 the following:

  * achieving additional design wins for Bandwidth Engine ICs;
  * commencing volume shipments of Bandwidth Engine ICs;
  * our ability to enhance our existing proprietary technologies and develop
    new technologies;
  * achieving necessary acceptance of our IC architecture and interface
    protocols by potential customers and their suppliers;
  * difficulties and delays in the development, production, testing and
    marketing of our ICs;
  * reliance on our manufacturing partners to assist successfully with the
    fabrication of our ICs;
  * availability of quantities of ICs supplied by our manufacturing partners
    at a competitive cost;
  * our lack of recent experience as a fabless semiconductor company making
    and selling proprietary ICs;
  * 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;
  * vigor and growth of markets served by our customers and our operations;
    and

other risks identified in the Company’s most recent 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.

MoSys, Inc. (NASDAQ: MOSY) is a fabless semiconductor company enabling leading
equipment manufacturers in the networking and communications systems markets
to address the continual increase in Internet users, data and services. The
company’s solutions deliver data path connectivity, speed and intelligence
while eliminating data access bottlenecks on line cards and systems scaling
from 100G to multi-terabits per second. Engineered and built for
high-reliability carrier and enterprise applications, MoSys’s Bandwidth
Engine® and LineSpeed™ IC product families are based on the company’s patented
high-performance, high-density intelligent access and high-speed serial
interface technology, and utilize the company’s highly efficient GigaChip™
Interface. MoSys is headquartered in Santa Clara, California. More information
is available at http://www.mosys.com.

MoSys, 1T-SRAM and Bandwidth Engine are registered trademarks of MoSys, Inc.
in the US and/or other countries. Breaking Bandwidth Barriers, GigaChip,
LineSpeed and the MoSys logo are trademarks of MoSys, Inc. All other marks
mentioned herein are the property of their respective owners.

                         (Financial Tables to Follow)

                                                                  
MOSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts; unaudited)
                                                                    
                         Three Months Ended          Six Months Ended
                         June 30,                    June 30,
                         2013         2012           2013          2012
                                                                    
Net Revenue
Licensing and other      $ 160        $ 644          $ 409         $ 865
Royalty                    960          1,092          2,046         2,295    
Total net revenue          1,120        1,736          2,455         3,160
                                                                    
Cost of Net Revenue
Licensing and other        77           179            96            236      
Total cost of net          77           179            96            236
revenue
                                                                    
Gross Profit               1,043        1,557          2,359         2,924
                                                                    
Operating Expenses
Research and               5,983        6,688          11,303        14,194
development
Selling, general and       1,460        1,428          3,083         4,354
administrative
Gain on sale of assets     -            -              (630    )     (1,856  )
Total operating            7,443        8,116          13,756        16,692
expenses
                                                                    
Loss from operations       (6,400 )     (6,559 )       (11,397 )     (13,768 )
                                                                    
Other income, net          24           36             44            60       
Loss before income         (6,376 )     (6,523 )       (11,353 )     (13,708 )
taxes
                                                                    
Income tax provision       20           30             40            60       
                                                                    
Net loss                 $ (6,396 )   $ (6,553 )     $ (11,393 )   $ (13,768 )
                                                                    
Net loss per share
Basic and diluted          ($0.15 )     ($0.17 )       ($0.27  )     ($0.36  )
                                                                    
Shares used in
computing net loss per
share
Basic and diluted          43,892       38,880         42,078        38,723

 
 
MOSYS, INC.
Reconciliation of GAAP to Non-GAAP Net Loss and Net Loss Per Share
(In thousands, except per share amounts; unaudited)
                                                                  
                         Three Months Ended          Six Months Ended
                         June 30,                    June 30,
                         2013         2012           2013          2012
                                                                    
GAAP net loss            $ (6,396 )   $ (6,553 )     $ (11,393 )   $ (13,768 )
Stock-based
compensation expense
- Cost of net revenue      5            38             7             46
- Research and             720          730            1,310         1,496
development
- Selling, general and     236          252            532           521      
administrative
Total stock-based          961          1,020          1,849         2,063
compensation expense
                                                                    
Amortization of            250          563            500           1,246    
intangible assets
                                                                    
Non-GAAP net loss        $ (5,185 )   $ (4,970 )     $ (9,044  )   $ (10,459 )
                                                                    
GAAP net loss per        $ (0.15  )   $ (0.17  )     $ (0.27   )   $ (0.36   )
share
Reconciling items
- Stock-based              0.02         0.03           0.05          0.06
compensation expense
- Amortization of          0.01         0.01           0.01          0.03
intangible assets
                                                                    
Non-GAAP net loss per
share: basic and         $ (0.12  )   $ (0.13  )     $ (0.21   )   $ (0.27   )
diluted
                                                                    
Shares used in
computing non-GAAP net
loss per share
Basic and diluted          43,892       38,880         42,078        38,723

                                                       
                                                         
MOSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
                                                         
                                             June 30,   December 31,
                                             2013       2012
                                                         
Assets
Current assets:
Cash, cash equivalents and investments       $ 39,985   $   33,327
Accounts receivable, net                       81           287
Prepaid expenses and other assets              1,623        1,362
Total current assets                           41,689       34,976
                                                         
Long-term investments                          18,951       7,383
Property and equipment, net                    915          1,238
Goodwill                                       23,134       23,134
Intangible assets, net                         2,154        2,654
Other assets                                   139          149
Total assets                                 $ 86,982   $   69,534
                                                         
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable                             $ 445      $   393
Accrued expenses and other liabilities         2,105        3,947
Deferred revenue                               241          481
Total current liabilities                      2,791        4,821
                                                         
Long-term liabilities                          197          171
                                                         
Stockholders' equity                           83,994       64,542
                                                         
Total liabilities and stockholders’ equity   $ 86,982   $   69,534

Contact:

MoSys, Inc.
Jim Sullivan, CFO, +1-408-418-7500
jsullivan@mosys.com
or
Shelton Group, Investor Relations
Beverly Twing, +1-972-239-5119 ext. 126
Sr. Acct. Manager
btwing@sheltongroup.com
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