SMTK Simtek Corp (MM)

Simtek Corporation (NASDAQ: SMTK), the inventor, pioneer, and world�s premier supplier of nonvolatile static random access memory (nvSRAM) integrated circuits, today announced its financial results for the period ended December 31, 2007. Revenues were at the high end of expectations for the quarter marking solidification of the Company�s core business. Design wins for products in Simtek�s core business continue the record pace established in 2006. Fourth Quarter and 2007 Highlights Product Revenue - $8.4 Million For Q42007, $33.0 Million For 2007, Up 16% Y/Y Gross Product Margin - 48% For 2007 Vs. 37% For 2006 Ex-Item Profit - $1.1 Million For 2007 Vs. $640,000 For 2006 Invested More Than $1 Million In New High Density nvRAM Initiative Significant Increase In R&D For New Products To Serve Larger Markets Design Wins From Diverse Applications And All Geographic Areas More Than 160 New Customer Designs In 2007 vs. Just Over 100 In 2006 4Megabit Beta Samples Resulting In Committed Customer Programs Record 15 Patent Applications Submitted In 2007 Financial Results Revenue for the fourth quarter of 2007 was $8.4 million, consisting entirely of product revenue, compared to $9.1 million in the same quarter of 2006. The decreased revenues are related to lower shipments into the military and smart metering segments. Gross margins were 46% for the quarter compared to 45% a year ago, reflecting lower volume of shipments of military parts that typically carry a gross margin in excess of 80% and the write-off of certain unsalable materials. The Company reported ex-item net loss for the fourth quarter of $284,000, or $0.02 per share, compared to an ex-item profit of $1.2 million, or $0.07 per share in Q406. For the quarter, ex-item income excludes the effects of stock options and amortization of acquisition related costs. On a GAAP basis, the Company reported a net loss for the quarter of $(1.3) million or $(0.08) per share down from a profit of $598,000 or $0.04 per share for the comparable 2006 period. The 2006 period included $552,000 of royalty revenue from Cypress Semiconductor. For the year ended December 31, 2007, revenue increased to $33.0 million, consisting entirely of product revenue, which represented a 16% increase over product revenue of $28.6 million, reported in the prior year. Gross margins were 48% for 2007 compared to 37%, for 2006. The Company reported ex-item net income for the year ended December 31, 2007 of $1.1 million or $0.07 per share, up from the ex-item net income of $640,000, or $0.04 per share a year ago. For the twelve months, ex-item income excludes the effects of stock options, amortization of acquisition related costs, and contractual milestone payments to Cypress Semiconductor to be paid from the restricted cash account. On a GAAP basis, the Company reported a net loss for 2007 of $(2.8) million or $(0.17) per share compared the loss of $(2.0) million or $(0.13) per share for 2006. The 2006 results include the royalty revenue from Cypress Semiconductor of $2.1 million, which had no associated costs. �The financial landscape at Simtek has changed dramatically over the 11 quarters that I have reported on,� stated Brian Alleman, Simtek�s chief financial officer. �The Company�s profitability and liquidity are stronger than at any time in Simtek�s recent history.� �Fourth quarter revenues were on the high end of our expectations and were driven by strong orders in the third quarter,� stated Harold A. Blomquist, Simtek president and chief executive officer. �We experienced solid demand from RAID server and storage customers for both 256K and 1Megabit products. Increased costs were incurred as a result of higher than expected demand for beta samples of our 4 megabit product which needed to be purchased with no offsetting revenue. Overall, we are pleased with the conclusion of 2007. We made progress on many fronts increasing revenues and design wins in our core 1 megabit and smaller products, increasing our R&D efforts to expand addressable markets, committed customer programs for our new 4 megabit product, and filing patents to protect our intellectual property position.� Blomquist concluded, �Demand appears to be picking up from SAS-based RAID customers. We already have customer programs committed to high volume production starting near the end of this year on our 4 megabit nvSRAM with Tier 1 customers in our traditional RAID/server and Industrial/Factory Automation markets. We also see very strong interest in the 4 megabit density from customers in the multifunction printer and copier market. Even though we have committed customer programs for the 4 meg, I�d like to point out that the total number of design wins reported for 2007 is for 1 megabit and smaller products. We will begin adding 4 megs to the count this year.� Ex-Item Earnings Simtek reports net income or loss in accordance with GAAP and additionally uses ex-item financial measures which are adjusted from the most directly comparable GAAP financial measures to exclude charges related to non-cash, unusual or non-recurring expenses the Company may incur from time to time, in order to provide additional comparative information between periods. Management believes that these ex-item measures are important to investor understanding of the Company�s disclosures regarding past, current and future operating results. Following is reconciliation* of the Ex-item financial measures to the most comparable GAAP financial measures, in thousands of dollars, except per share amounts: � Three Months Ended � Year Ended December 31, December 31, � 2007 � � � 2006 � 2007 � � � 2006 � � GAAP Net Income (Loss) $ (1,273 ) $ 598 $ (2,768 ) $ (2,007 ) � Ex-item Adjustments Amortization of non-compete agreement 445 445 1,781 1,784 Costs associated with stock options 544 125 1,386 542 Cypress milestone payments � - � � - � 735 � � 321 � � Ex-item income (loss) $ (284 ) $ 1,168 $ 1,134 � $ 640 � � Per Share Data: Net loss as reported $ (0.08 ) $ 0.04 $ (0.17 ) $ (0.13 ) � Ex-item Adjustments Amortization of non-compete agreement $ 0.03 $ 0.02 $ 0.11 $ 0.12 Costs associated with stock options $ 0.03 $ 0.01 $ 0.08 $ 0.03 Cypress milestone payments $ - � $ - $ 0.05 � $ 0.02 � � Ex-item income (loss) $ (0.02 ) $ 0.07 $ 0.07 � $ 0.04 � � � � weighted average common shares outstanding: Basic and diluted � 16,515,245 � � 16,123,904 � 16,405,580 � � 15,125,847 � (a) pursuant to the requirements of Regulation G. Conference Call Simtek management will host a conference call at 5:00 p.m. ET (2:00 p.m. PT) today to discuss these results. The call can be accessed by dialing 800-240-4186 and giving the company name, "Simtek." Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. A replay of the conference call will be available two hours after the call for the following five business days by dialing 800-405-2236 and entering the following pass code: 11106973#. Also, the conference call together with supplemental financial information will be available over the Internet at http://www.simtek.com in the Investor Info area of the site or by going to http://www.mkr-group.com. About Simtek Corporation Simtek Corporation designs and markets high-speed nonvolatile semiconductor memory products, for use in a variety of systems including RAID servers, storage arrays, GPS navigational systems, industrial controllers, robotics, copiers, avionics, metering, consumer, UPS, and networking and broadcast equipment. Information on Simtek products can be obtained from its web site: www.simtek.com; email: information@simtek.com. The company is headquartered in Colorado Springs, Colorado. Forward-Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements predicting Simtek's future growth. These forward-looking statements are inherently difficult to predict and involve risks and uncertainties that could cause actual results to differ materially, including, but not limited to, guidance and projections of future performance including predictions of future revenue, profitability, and expectations of the business environment in which Simtek operates. For a detailed discussion of these and other risk factors, please refer to Simtek's filings with the Securities and Exchange Commission (SEC), including its Annual Report on Form 10-K and subsequent Form 10-Q and Form 8-K filings. SIMTEK CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(Amounts in thousands, except par value and share amounts) � � ASSETS � � December 31, December 31, CURRENT ASSETS: � 2007 � 2006 Cash and cash equivalents $ 4,387 $ 4,522 Restricted investments 991 1,775 Accounts receivable - trade, net 5,222 5,537 Inventory, net 5,698 6,596 Prepaid expenses and other current assets 910 312 Deposits - - Total current assets 17,208 18,742 EQUIPMENT AND FURNITURE, net 1,987 1,239 DEFERRED FINANCING COSTS 15 54 GOODWILL 992 992 NON-COMPETITION AGREEMENT 5,344 7,126 OTHER ASSETS � 240 � � 89 TOTAL ASSETS $ 25,786 � $ 28,242 � � � LIABILITIES AND SHAREHOLDERS' EQUITY � CURRENT LIABILITIES: Accounts payable $ 2,827 $ 3,771 Accrued expenses 943 939 Accrued vacation payable 357 229 Accrued wages 179 814 Obligation under capital leases 21 - Line of credit 543 681 Debentures, current 480 480 Total current liabilities 5,350 6,914 DEBENTURES, NET OF CURRENT 1,620 2,220 Total liabilities 6,970 9,134 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred stock, $1.00 par value; 200,000 shares authorized, none issued - - Common stock, $.0001 par value; 30,000,000 shares authorized, 16,516,419 and 16,515,419 shares issued and outstanding at December 31, 2007 and 16,146,679 and 16,145,679 shares issued and outstanding at December 31, 2006 � � 2 2 Additional paid-in capital 69,453 67,173 Treasury stock, at cost; 1,000 shares (1) (1) Accumulated deficit (50,967) (48,199) Accumulated other comprehensive income: Cumulative translation adjustment 329 133 Total shareholders' equity 18,816 19,108 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 25,786 $ 28,242 SIMTEK CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(Amounts in thousands, except share and per share amounts) � � � Three Months Ended Year Ended December 31, December 31, 2007 � 2006 2007 � 2006 REVENUE: Product sales, net $ 8,362 $ 9,124 $ 33,007 $ 28,560 Royalty revenue - � � � 552 � � - � � � 2,070 � Total revenue 8,362 9,676 33,007 30,630 Cost of sales � 4,539 � � � 5,008 � � � 17,268 � � � 18,024 � GROSS MARGIN 3,823 4,668 15,739 12,606 OPERATING EXPENSES: Research and development costs 2,655 1,277 8,758 5,855 Sales and marketing 1,417 1,446 5,026 4,679 General and administrative � 1,137 � � � 1,266 � � � 4,689 � � � 3,861 � Total operating expenses � 5,209 � � � 3,989 � � � 18,473 � � � 14,395 � INCOME (LOSS) FROM OPERATIONS (1,386 ) 679 (2,734 ) (1,789 ) INCOME (LOSS) FROM OPERATIONS OTHER INCOME (EXPENSE): Interest income 45 50 193 162 Interest expense (85 ) (123 ) (381 ) (370 ) Exchange rate variance 97 1 130 (3 ) Other income � 159 � � � 24 � � � 165 � � � 26 � Total other income (expense) � 216 � � � (48 ) � � 107 � � � (185 ) INCOME (LOSS) FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES (1,170 ) 631 (2,627 ) (1,974 ) Provision for income taxes � (103 ) � � (33 ) � � (141 ) � � (33 ) NET INCOME (LOSS) $ (1,273 ) � $ 598 � � $ (2,768 ) � $ (2,007 ) NET INCOME (LOSS) PER COMMON SHARE: Basic and diluted Income (loss) from operations $ (.08 ) � $ .04 � � $ (.17 ) � $ (.13 ) � WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic and diluted � 16,515,245 � � � 16,123,904 � � � 16,405,580 � � � 15,125,847 �