SANTA CLARA, Calif.–(BUSINESS WIRE)–Nov. 4, 2014–
MoSys
(NASDAQ: MOSY), a leader in semiconductor solutions that enable fast,
intelligent data access for network and communications systems, today
reported financial results for the third quarter ended September 30,
2014
.

Third Quarter and Recent Highlights

  • Secured new design wins for Bandwidth Engine® and LineSpeed™ ICs;
  • Launched new LineSpeed 100G Low Power Retimer for optical modules and
    line cards;
  • Demonstrated interoperability and performance capabilities of
    Bandwidth Engine ICs and LineSpeed extended-reach PHY products with
    leading industry players at ECOC 2014; and
  • Ended the quarter with total cash and investments of $33.7 million.

Management Commentary

“The third quarter saw a slowdown in sales activity, consistent with
what has been reported by various other suppliers to the
telecommunications and networking markets,” commented Len Perham, MoSys’
president and chief executive officer. “Although customer engagements
continued for us, it was slow going, and we did not close as many design
wins as we expected. More recently, our design win activity has
rebounded, and we anticipate that the fourth quarter will be
considerably more robust. We remain cautiously optimistic that we can
still get close to doubling design wins year over year.

“During the quarter, we introduced our new LineSpeed 100G low power,
full-duplex retimer IC, which has generated strong customer interest and
is being sampled to leading optical module and system companies. This
device features the industry’s lowest power dissipation and optimizes
performance and board space for 100G optical modules, as well as line
cards, in data center, enterprise and service provider applications.
More recently, we demonstrated interoperability at this year’s European
Conference on Optical Communications
(ECOC) and at the Optical
Internetworking Forum’s Interoperability 2014 event, including
interoperability demonstrations of our LineSpeed products with leading
optical device and module and passive cable and connector companies, as
well as showcasing our Bandwidth Engine 2 ICs with our FPGA partners,
Altera and Xilinx.”   

Mr. Perham concluded, “We remain focused on driving increased sales
activities, securing additional design wins, supporting customer
production ramps, expanding our product footprint and reducing
manufacturing costs. We expect to complete new product tape outs within
the next few months, and we already have potential customers waiting for
these products. While it remains difficult to predict the timing of our
revenue ramp, I believe we have measurably enhanced the foundation of
our IC business and remain well positioned for future growth.”

Third Quarter Results

Total net revenue for the third quarter of 2014 was $1.1 million,
compared with $1.8 million reported in the second quarter of 2014 and
$1.0 million in the third quarter of 2013. Net revenue through the first
nine months of 2014 was $4.2 million, compared with $3.4 million for the
same period in 2013.

Third quarter 2014 total revenue included product revenue of $0.4
million
, compared with $1.0 million in the second quarter of 2014 and
$0.1 million in the year ago period. Product revenue for the first nine
months of 2014 was $2.0 million, compared with $0.2 million for the same
period in 2013. Royalty and other revenue for the third quarter of 2014,
which includes licensing revenue, was $0.7 million as compared with $0.8
million
in the previous quarter and $0.9 million in the third quarter of
2013.

Gross margin for the third quarter of 2014 was 61 percent, compared with
42 percent in the second quarter of 2014 and 83 percent for the third
quarter of 2013. The sequential increase in gross margin reflects a
higher mix of royalty and other revenue, which carry higher gross
margins than the Company’s IC products.

Total operating expenses on a GAAP basis for the third quarter of 2014
were $9.2 million, compared with $7.9 million in the previous quarter
and $7.8 million for the third quarter of 2013. The sequential increase
in operating expenses was primarily due to higher development costs
related to the Company’s new products. Third quarter 2014 operating
expenses included $0.3 million of amortization of intangible assets and
$1.1 million in stock-based compensation expense.

GAAP net loss for the third quarter of 2014 was $8.5 million, or ($0.17)
per share, compared with a net loss of $7.2 million, or ($0.14) per
share, in the previous quarter and a net loss of $6.9 million, or
($0.14) per share, for the third quarter of 2013. Non-GAAP net loss for
the third quarter of 2014 was $7.2 million, or ($0.14) per share, which
excludes amortization of intangible assets and stock-based compensation
expense. Earnings per share for the third quarter of 2014 were computed
using approximately 49.6 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.

Financial Results Webcast / Conference Call

MoSys will host a conference call and webcast with investors today at
1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss the third
quarter 2014 financial results. Investors and other interested parties
may access the call by dialing 1-866-318-8619 in the U.S.
(1-617-399-5138 outside of the U.S.), and entering the pass code
41073267 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 21376802.

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 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 November 4,
2014
, 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 IC design wins;
  • commencing volume shipments of Bandwidth Engine ICs;
  • the timing of customer orders and product shipments;
  • our ability to enhance our existing proprietary technologies and
    develop new technologies;
  • achieving necessary acceptance and adoption 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’ 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 www.mosys.com.

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

 
MOSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts; unaudited)
                     
Three Months Ended Nine Months Ended
September 30, September 30,
2014     2013 2014     2013
 
Net Revenue
Product $ 437 $ 90 $ 1,993 $ 211
Royalty and other   716         867     2,241         3,201  
Total net revenue 1,153 957 4,234 3,412
 
Cost of Net Revenue
Product and other   447         158     2,046         254  
Total cost of net revenue 447 158 2,046 254
 
Gross Profit 706 799 2,188 3,158
 
Operating Expenses
Research and development 7,507 6,243 20,993 17,546
Selling, general and administrative 1,689 1,595 4,976 4,678
Gain on sale of assets                       (630 )
Total operating expenses 9,196 7,838 25,969 21,594
 
Loss from operations (8,490 ) (7,039 ) (23,781 ) (18,436 )
 
Other income, net   30         122     115         166  
Loss before income taxes (8,460 ) (6,917 ) (23,666 ) (18,270 )
 
Income tax provision   23         28     65         68  
 
Net loss $ (8,483 )     $ (6,945 ) $ (23,731 )     $ (18,338 )
 
Net loss per share
Basic and diluted ($0.17 ) ($0.14 ) ($0.48 ) ($0.42 )
 
Shares used in computing net loss per share
Basic and diluted 49,634 48,164 49,441 44,173
 
 
MOSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
         
September 30, December 31,
2014     2013
 
Assets
Current assets:
Cash, cash equivalents and investments $ 26,602 $ 36,556
Accounts receivable, net 175 148
Inventories 846 567
Prepaid expenses and other assets   1,009       1,104
Total current assets 28,632 38,375
 
Long-term investments 7,055 13,926
Property and equipment, net 961 706
Goodwill 23,134 23,134
Intangible assets, net 905 1,655
Other assets   200       193
Total assets $ 60,887     $ 77,989
 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 797 $ 276
Accrued expenses and other liabilities 2,320 1,909
Deferred revenue   76       170
Total current liabilities 3,193 2,355
 
Long-term liabilities 238 216
 
Stockholders’ equity 57,456 75,418
       
Total liabilities and stockholders’ equity $ 60,887     $ 77,989
 
 
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 Nine Months Ended
September 30, September 30,
2014     2013 2014     2013
 
GAAP net loss $ (8,483 ) $ (6,945 ) $ (23,731 ) $ (18,338 )
Stock-based compensation expense
Cost of net revenue 7
Research and development 786 614 2,653 1,924
Selling, general and administrative   288         337     943         869  
Total stock-based compensation expense 1,074 951 3,596 2,800
 
Amortization of intangible assets   250         250     750         750  
 
Non-GAAP net loss $ (7,159 )     $ (5,744 ) $ (19,385 )     $ (14,788 )
 
GAAP net loss per share $ (0.17 ) $ (0.14 ) $ (0.48 ) $ (0.42 )
Reconciling items
Stock-based compensation expense 0.02 0.01 0.07 0.07
Amortization of intangible assets 0.01 0.01 0.02 0.02
               
Non-GAAP net loss per share: basic and diluted $ (0.14 )     $ (0.12 ) $ (0.39 )     $ (0.33 )
 
Shares used in computing non-GAAP net loss per share
Basic and diluted 49,634 48,164 49,441 44,173

Source: MoSys

MoSys, Inc.
Jim Sullivan, CFO, +1 408-418-7500
jsullivan@mosys.com
or
Shelton
Group, Investor Relations
Beverly Twing, +1 214-272-0089
Sr.
Acct. Manager
btwing@sheltongroup.com