Monolithic System Technology, Inc. Announces Second Quarter 2004 Results

SUNNYVALE, Calif.--(BUSINESS WIRE)--Aug. 4, 2004 -- Monolithic System Technology, Inc. (MoSys), (Nasdaq:MOSY) today reported financial results for its second quarter ended June 30, 2004.

Financial Results

Total net revenue in the quarter was $3.4 million, as compared to $4.5 million in the first quarter of 2004 and $4.5 million in the second quarter 2003.

During the quarter, the company agreed to include the design and delivery of additional components as part of a contract, which led to a delay in the recognition of $600,000 of revenue that otherwise would have been recognized in the second quarter. This amount, along with the remaining value of the contract, will be realized upon completion, which is anticipated in the first half of 2005.

License revenue in the quarter totaled $1.3 million, down from $3.0 million in the previous quarter and the $2.2 million in the second quarter of 2003.

The company reported $1.4 million of royalty revenue in the quarter, the same amount as reported in the first quarter, and a decrease from the $1.8 million reported in the second quarter of 2003.

Product revenue in the second quarter totaled $681,000. This compares to $162,000 recognized in the previous quarter and $515,000 reported in the second quarter of 2003.

"Although the second quarter provided some unique challenges for MoSys, we continued to execute on our strategy to provide innovative SOC solutions for high-density memory applications to our customers," commented Dr. Fu-Chieh Hsu, President and CEO of MoSys. "During the quarter, we remained committed to growing our business even as we worked diligently to resolve our acquisition agreement challenge in a manner that was in the best interest of our shareholders."

Net loss for the quarter under generally accepted accounting principles (GAAP) was $4.1 million or ($0.13) loss per share. GAAP net loss includes $3.4 million ($3.2 million on a net tax basis) of expenses associated with the proposed Synopsys acquisition and subsequent litigation activities. The results for the quarter compare to GAAP net income of $500,000, or $0.02 per fully diluted share, in the same period last year. Excluding expenses associated with the proposed acquisition and subsequent litigation, pro forma net loss for the second quarter of 2004 was $871,000 or ($0.03) loss per share. A reconciliation of GAAP results to pro forma results has been provided in the financial statement tables following the text of this press release.

Dr. Hsu further commented, "As we move forward, we remain confident that our technology provides valuable, cost-effective solutions for embedding large, high-performance, low-power memories into SOC designs. With our strong cash position and exceptional engineering talent, we are focused on executing our business plan and the strategies that we believe position MoSys to take advantage of the growth in the SOC market."

Business Outlook

MoSys' President and Chief Executive Officer, Dr. Fu-Chieh Hsu and Chief Financial Officer, Mark Voll will update their business outlook for the third quarter of 2004 during their earnings conference call at 2:15 P.M. PT on August 4, 2004.

Financial Tables

Click here to read financial tables

Second Quarter Financial Results Web cast/Conference Call

The MoSys management team will host a live web cast and conference call to discuss second quarter 2004 financial results beginning at 2:15 P.M. (PT) on Wednesday, August 4, 2004. Investors and other interested parties may listen to the live web cast by visiting the investor relations' section of the MoSys Web site at http://www.mosys.com. A replay of the conference call will be available for 24 hours beginning at 5 P.M. PT. The replay number is 888-286-8010 with a pass code of 84828210. A web cast replay will also be available on the Company's Web site.

About MoSys

Founded in 1991, MoSys (Nasdaq:MOSY), develops, licenses and markets innovative memory 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, contributing to making them ideal for embedding large memories in System on Chip (SoC) designs. MoSys' licensees have shipped more than 65 million chips incorporating 1T-SRAM embedded memory technologies, demonstrating excellent manufacturability in a wide range of silicon processes and applications. MoSys is headquartered at 1020 Stewart Drive, Sunnyvale, California 94085. More information is available on MoSys' Web site at http://www.mosys.com.

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 technology, proving our technology in high-volume production of licensees' integrated circuits, the level of commercial success of licensees' products such as the Nintendo GAMECUBE and cell phone hand sets, ease of integration of our 1T-SRAM with other semiconductor functions, 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 vigor and growth of markets served by our licensees and customers, and the impact of our acquisition of ATMOS Corporation , the termination of our merger agreement with Synopsys, Inc. and pending litigation on future operating results 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.

1T-SRAM(R) is a MoSys trademark registered in the U.S. Patent and Trademark Office. All other trade, product, or service names referenced in this release may be trademarks or registered trademarks of their respective holders.

Non-GAAP Financial Measurements

In addition to the GAAP results provided by this document, the Company has provided non-GAAP financial measurements that present net income (loss) and net income (loss) per share on a basis excluding non-recurring expenses associated with the Synopsys acquisition and subsequent litigation. Details of these excluded items are presented in the table below, which reconciles the GAAP results to non-GAAP financial measurements described in this press release. Also, this press release and the reconciliation from GAAP results to these and other additional non-GAAP financial measurements that may be discussed in the Q2 2004 earnings conference call can be found on the Company's Web site at http://www.mosys.com.

SOURCE: Monolithic System Technology, Inc.