SmartKem (NASDAQ:SMTK)
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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