Financial Highlights - GAAP: First quarter 2006 compared with first quarter 2005 (including $9.6 million non-cash revenues).
- Revenues for the quarter were $15.8 million, compared to $22.2 million in the previous year.
- Gross profit for the quarter was $12.1 million, compared to $19.6 million in the previous year.
- Operating income for the quarter was $7.7 million, compared to $14.9 million in the previous year.
- Net income for the quarter was $10.0 million, or $0.34 per basic and $0.31 per diluted share, compared to net income in the previous year of $11.8 million.
- Net income for the quarter included $0.6 million of stock-based compensation (including $0.4 million of income due to a cumulative effect of a change in accounting principle relating to the adoption of SFAS 123R) compared to $1.4 million in the previous year.
Saifun reports its results of operation in accordance with GAAP and additionally on a non-GAAP basis, referred to as Non-GAAP. Non-GAAP information, where applicable, excludes the effect of $9.6 million non-cash revenues resulting from the termination of our former joint venture with Infineon Technologies AG recognized in the first quarter of 2005, excludes the loss from discontinued product operations, and excludes stock based compensation expenses and income.
Financial Highlights - Non-GAAP[1]: First quarter 2006 compared with first quarter 2005.
- Revenues for the quarter were $15.8 million, compared to $12.6 million, an increase of 25% compared to the previous year.
- Licensing revenues for the quarter were $10.5 million compared to $9.3 million, an increase of 13%.
- Service revenues for the quarter were $5.3 million, compared to $3.3 million in the previous year, an increase of 59%.
- Gross profit for the quarter was $12.5 million, compared to $10.2 million.
- Operating income for the quarter was $8.7 million or 55% of revenues, compared to $6.6 million or 52% of revenues in the previous year.
- Net income for the quarter was $10.7 million, or $0.36 per basic and $0.33 per diluted share, compared to net income in the previous year of $6.8 million.
[1] These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP. A reconciliation of GAAP statements of operations to Non-GAAP statements of operations is included in the financial statements portion of this release as well as on our website in the Investors section at www.saifun.com.
Saifun's management believes the Non-GAAP information is useful because it can enhance the understanding of the Company's ongoing economic performance and Saifun therefore uses internally the Non-GAAP information to evaluate and manage the Company's operations. Saifun has chosen to provide this information to investors to enable them to perform comparisons of operating results in a manner similar to how the Company analyzes its operating results.
Commenting on the results, Kobi Rozengarten, President of Saifun Semiconductors said, "We met or exceeded many of our goals for the quarter, which included achieving an operating profit margin of over 50% excluding stock-based compensation expense. We believe this illustrates the success and profitability of our business model which positions Saifun as an emerging leader in the NVM market.
"We continued to focus on helping our licensees accelerate product launches and deliver more products incorporating NROM to the market. This is reflected in the increase in service revenues as a percentage of total sales.
"Finally, our results this quarter were underscored by our ongoing commitment to take NROM technology to a new level. During the quarter, we taped out Quad NROM designs to two licensees who are working with us on data flash applications. This is another milestone in our initiative to foster broad adoption of NROM technology. We have multiple data flash projects underway with our partners and expect to see data flash products incorporating Quad NROM on the market by the end of 2006. The data flash market represents a sizeable opportunity for Saifun and our NROM technology. With a number of NROM-based data flash products currently in development by our licensees, we believe we are well positioned to capture a significant share of this market."
Lock-Up Agreements
The Company wishes to advise all shareholders that signed a lock-up agreement in connection with the Company's initial public offering that the lock-up agreement will be extended until May 15, 2006 and will not terminate on May 8, 2006 as was previously disclosed. This is because this earnings release has been issued within the 17-day period leading up to the expiration of the 180-day lock-up period as described in that agreement.
Conference Call
Saifun will host a conference call to discuss its financial results and other matters discussed in this press release at 8:30 a.m. EDT today, April 26, 2006. The call will be available live on the Internet at http://ir.saifun.com/phoenix.zhtml?c=183096&p=irol-irhome.
About Saifun Semiconductors Ltd.
Saifun is a provider of intellectual property (IP) solutions for the non-volatile memory (NVM) market. The company's innovative Saifun NROM(R) technology allows semiconductor manufacturers to deliver high performance, reliable products at a lower cost per megabit, with greater storage capacity, using a single process for all NVM applications. Saifun licenses its IP to semiconductor manufacturers who use this technology to develop and manufacture a variety of stand-alone and embedded NVM products. These include Flash memory for the telecommunications, consumer electronic, networking and automotive markets. The companies currently licensing Saifun NROM technology are Infineon Technologies, Macronix International, Matsushita, SMIC, Sony Corporation, Spansion and Tower Semiconductors.
Safe Harbor Statement
Information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to the company's plans, objectives and expectations for future operations and are based upon management's current estimates and projections of future results or trends. Actual future results may differ materially from those projected as a result of certain risks and uncertainties. For a discussion of such risks and uncertainties, see "Risk Factors" as described in the Company's final prospectus filed on November 10, 2005 with the U.S. Securities and Exchange Commission in connection with the company's initial public offering. These forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
The above reconciled Non-GAAP statements are based upon our unaudited and audited consolidated statements of operations for the periods shown, giving effect to the adjustments above. This presentation is not in accordance with, or an alternative for, U.S. generally accepted accounting principles (GAAP). The reconciled Non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. However, Saifun believes that the Non-GAAP information, giving effect to the adjustments shown above, provides meaningful information and therefore uses it to supplement its GAAP reporting and internally in evaluating operations, managing and benchmarking performance. Saifun has chosen to provide this Non -GAAP supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of operating results.
SAIFUN SEMICONDUCTORS LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
All data in thousands of U.S. dollars, except share and per share data
Three months ended Year ended
March 27, March 31, December 31,
2005 2006 2005
Unaudited
Revenues:
Licenses $ 18,881 $ 10,502 $ 65,790
Services 3,333 5,290 12,811
22,214 15,792 78,601
Cost of revenues:
Services (1) 2,634 3,678 12,048
Gross Profit 19,580 12,114 66,553
Operating expenses:
Research and development (1) 1,520 2,317 7,427
Marketing and selling (1) 1,430 883 4,889
General and administrative (1) 1,737 1,225 6,216
Total operating expenses 4,687 4,425 18,532
Operating income 14,893 7,689 48,021
Financial income, net 155 1,977 1,749
Income from continuing operations 15,048 9,666 49,770
Loss from discontinued
operations (1) (3,224) - (5,263)
Income before cumulative effect
of change in accounting principle 11,824 9,666 44,507
Cumulative effect of a change in
accounting principle (2) - 378 -
Net Income $ 11,824 $ 10,044 $ 44,507
Net earnings per share from
continuing operations
Basic $ - $ 0.33 $ 0.46
No. of shares - basic 17,640 29,601 19,581
Diluted $ - $ 0.30 $ 0.36
No. of shares - diluted 17,640 32,329 26,447
Net earnings per share
Basic $ - $ 0.34 $ 0.17
No. of shares - basic 17,640 29,601 29,453
Diluted $ - $ 0.31 $ 0.16
No. of shares - diluted 17,640 32,329 31,947
(1) Expenses include stock-based compensation related to options granted
to employees and others as follows:
Three months ended Year ended
March 27, March 31, December 31,
2005 2006 2005
Unaudited
Cost of revenues $ 154 $ 367 $ 834
Research and development 31 191 330
Marketing and selling 162 165 667
General and administrative 974 292 2,410
Loss from discontinued operations 35 - 54
$ 1,356 $ 1,015 $ 4,295
(2) On January 1, 2006, the Company adopted FASB 123 (R), " Share- Based Payment". Accordingly, the Company recorded a cumulative effect of change in accounting principle relating to estimated forfeitures for the compensation cost that was recognized in the financial statements under the provisions of FASB 123 for the years ended December 26, 2004 and December 31, 2005.
SAIFUN SEMICONDUCTORS LTD.
Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations
All data in thousands of U.S. dollars, except share and per share data
Three months ended
March 27, 2005
Non-GAAP
Reported entries Non-GAAP
Unaudited
Revenues:
Licenses $ 18,881 $ (9,616) (1) $ 9,265
Services 3,333 - 3,333
22,214 (9,616) 12,598
Cost of revenues:
Services 2,634 (154) (2) 2,480
Gross Profit 19,580 (9,462) 10,118
Operating expenses:
Research and development 1,520 (31) (2) 1,489
Marketing and selling 1,430 (162) (2) 1,268
General and administrative 1,737 (974) (2) 763
Total operating expenses 4,687 (1,167) 3,520
Operating income 14,893 (8,295) 6,598
Financial income, net 155 - 155
Income from continuing operations 15,048 (8,295) 6,753
Loss from discontinued operations (3,224) 3,224 (4)
Income before cumulative effect
of change in accounting principle 11,824 (5,071) 6,753
Cumulative effect of a change
in accounting principle - - -
Net Income $ 11,824 $ (5,071) $ 6,753
Three months ended
March 27, 2005
Non-GAAP
Reported entries Non-GAAP
Unaudited
Net earnings per share from
continuing operations
Basic $ - $ -
No. of shares - basic 17,640 17,640
Diluted $ - $ -
No. of shares - diluted 17,640 17,640
Net earnings per share
Basic $ - $ -
No. of shares - basic 17,640 17,640
Diluted $ - $ -
No. of shares - diluted 17,640 17,640
Three months ended
March 31, 2006
Non-GAAP
Reported entries Non-GAAP
Unaudited
Revenues:
Licenses $ 10,502 $ - $ 10,502
Services 5,290 - 5,290
15,792 - 15,792
Cost of revenues:
Services 3,678 (367) (2) 3,311
Gross Profit 12,114 367 12,481
Operating expenses:
Research and development 2,317 (191) (2) 2,126
Marketing and selling 883 (165) (2) 718
General and administrative 1,225 (292) (2) 933
Total operating expenses 4,425 (648) 3,777
Operating income 7,689 1,015 8,704
Financial income, net 1,977 - 1,977
Income from continuing operations 9,666 1,015 10,681
Loss from discontinued operations - - -
Income before cumulative effect
of change in accounting principle 9,666 1,015 10,681
Cumulative effect of a change in
accounting principle 378 (378) (3) -
Net Income $ 10,044 $ 637 $ 10,681
Three months ended
March 31, 2006
Non-GAAP
Reported entries Non-GAAP
Unaudited
Net earnings per share from
continuing operations
Basic $ 0.33 $ 0.36
No. of shares - basic 29,601 29,601
Diluted $ 0.30 $ 0.33
No. of shares - diluted 32,329 32,329
Net earnings per share
Basic $ 0.34 $ 0.36
No. of shares - basic 29,601 29,601
Diluted $ 0.31 $ 0.33
No. of shares - diluted 32,329 32,329
Three months ended
December 31, 2005
Non-GAAP
Reported entries Non-GAAP
Unaudited
Revenues:
Licenses $ 65,790 (19,182) (1) $ 46,608
Services 12,811 - 12,811
78,601 (19,182) 59,419
Cost of revenues:
Services 12,048 (834) (2) 11,214
Gross Profit 66,553 (18,348) 48,205
Operating expenses:
Research and development 7,427 (330) (2) 7,097
Marketing and selling 4,889 (667) (2) 4,222
General and administrative 6,216 (2,410) (2) 3,806
Total operating expenses 18,532 (3,407) 15,125
Operating income 48,021 (14,941) 33,080
Financial income, net 1,749 - 1,749
Income from continuing operations 49,770 (14,941) 34,829
Loss from discontinued operations (5,263) 5,263 (4)
Income before cumulative effect
of change in accounting principle 44,507 (9,678) 34,829
Cumulative effect of a change in
accounting principle - - -
Net Income $ 44,507 $ ( 9,678) $ 34,829
Three months ended
December 31, 2005
Non-GAAP
Reported entries Non-GAAP
Unaudited
Net earnings per share from
continuing operations
Basic $ 0.46 $ 0.49
No. of shares - basic 19,581 19,581
Diluted $ 0.36 $ 0.39
No. of shares - diluted 26,447 26,447
Net earnings per share
Basic $ 0.17 $ 0.20
No. of shares - basic 29,453 29,453
Diluted $ 0.16 $ 0.18
No. of shares - diluted 31,947 31,947
Notes:
(1) Non-cash revenues resulting from the termination of our former joint venture with Infineon Technologies.
(2) Stock-based compensation related to options granted to employees and others.
(3) Cumulative effect of change in accounting principle relating to estimated forfeitures for the compensation cost that was recognized in the financial statements under the provisions of FASB 123 for the years ended December 26, 2004 and December 31, 2005.
SAIFUN SEMICONDUCTORS LTD.
CONSOLIDATED BALANCE SHEETS
All data in thousands of U.S. dollars
March 31, December 31,
2006 2005
Unaudited
Cash and cash equivalents $ 47,418 $ 100,327
Short-term investments - -
Held-to-maturity marketable securities 93,195 75,501
Trade receivables 5,539 2,663
Inventories - -
Loans to employees 612 613
Other accounts receivable and prepaid expenses 3,458 2,181
Total assets attributed to discontinued operations - 212
Total current assets 150,222 181,497
Held-to-maturity marketable securities 46,420 5,995
Property and equipment, net 2,918 2,668
Loans to employees 1,061 1,097
Severance pay fund 2,277 2,122
Lease deposits 296 289
Other assets 241 70
Total long term assets 53,213 12,241
Total assets $ 203,435 $ 193,738
Current liabilities
Trade payables $ 1,153 $ 1,165
Accrued expenses and other liabilities 7,596 9,913
Deferred revenues 1,729 3,786
Total liabilities attributed to discontinued
operations - 146
Total current liabilities 10,478 15,010
Deferred revenues - -
Accrued severance pay 2,804 2,655
Obligation to finance equity method investees - -
Total liabilities 13,282 17,665
Share capital 121 120
Additional paid-in capital 215,767 211,706
Subscription receivable - -
Accumulated other comprehensive income 12 38
Accumulated deficit (25,747) (35,791)
Treasury shares at cost - -
Total shareholders' equity 190,153 176,073
Total liabilities and shareholders' equity $ 203,435 $ 193,738
Saifun Semiconductors Contact:
Marsha Shalvi
Investor Relations Director
+972-9-892-8450
Email Contact
Investor Relations Contact:
Todd Fromer/Lee Roth
KCSA Worldwide
+1-212-896-1215/+1-212-896-1209
Email Contact
CONTACT: Saifun Semiconductors Contact: Marsha Shalvi, Investor Relations
Director, +972-9-892-8450,
Email Contact. Investor Relations Contact:
Todd Fromer/Lee Roth, KCSA Worldwide, +1-212-896-1215/+1-212-896-1209,
Email Contact