Exhibit 99.1
News Release
Investor Relations Contact: | Corporate Communications Contact: | |
Steven Melman, V.P. of Investor Relations | Abbie Kendall, Principal | |
PDF Solutions, Inc. | Armstrong Kendall, Inc. | |
Tel: (408) 938-6445 | Tel: (503) 672-4681 | |
Email: steven.melman@pdf.com | Email: abbie@akipr.com |
PDF Solutions®Reports Third Quarter
2006 Results
2006 Results
SAN JOSE, Calif.—October 25, 2006—PDF Solutions, Inc. (Nasdaq: PDFS) the leading provider of process-design integration technologies to enhance IC manufacturability, today announced financial results for its third fiscal quarter ended September 30, 2006.
Revenue for the third fiscal quarter of 2006 totaled $19.4 million, an increase of 5%, compared with revenue of $18.5 million for the third fiscal quarter of 2005. Gain share revenue for the third fiscal quarter of 2006 totaled $4.4 million, an increase of 42%, compared to the third fiscal quarter of 2005. On a GAAP basis, net income for the third fiscal quarter of 2006 totaled approximately $570,000, or $0.02 per basic and diluted share, compared with net income of $1.5 million, or $0.06 per basic and diluted share, for the third fiscal quarter of 2005. The adoption of SFAS 123(R) during fiscal year 2006 resulted in $1.5 million in stock-based compensation expense during the third fiscal quarter or approximately $0.05 per diluted share.
In addition to using GAAP results in evaluating PDF Solutions’ business, management also believes it is useful to measure results using a non-GAAP measure of net income, which excludes stock-based compensation expense and amortization of acquired intangible assets. Using this non-GAAP measure, net income for the third fiscal quarter of 2006 totaled approximately $3.6 million, or $0.13 per diluted share, compared with non-GAAP net income of approximately $3.0 million, or $0.11 per diluted share, for the third fiscal quarter of 2005.
“While customer production wafer volumes were lower than expected and affected our gainshare revenue this quarter, the number of new integrated solutions engagements and
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dataPOWER® license revenues were strong, thereby demonstrating our customer’s continued confidence in our product and service offerings,” stated chief executive officer John Kibarian.
As previously announced, PDF will hold a live conference call beginning at 3:00 p.m. Pacific Time/6:00 p.m. Eastern Time today to discuss these results. A live webcast of this conference call will be available on PDF Solutions’ website at http://ir.pdf.com/medialist.cfm. A replay of the call will be available at the same website address beginning approximately two hours after completion of the live call. Further, a copy of this press release, including the disclosure and reconciliation of certain non-GAAP financial measures to the comparable GAAP measure, which non-GAAP measures may be used periodically by PDF Solutions’ management when discussing financial results with investors and analysts, will be available on PDF Solutions’ website at http://www.pdf.com/news_archive.phtml following the date of this release.
Information Regarding Use of Non-GAAP Financial Measures
In addition to providing results that are determined in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), PDF Solutions also provides certain non-GAAP financial measures that exclude the effects of stock-based compensation expense and amortization of acquired intangible assets, and their related income tax effects. PDF Solutions’ management believes that the presentation of these measures provides useful supplemental information to investors regarding PDF’s operating results. These non-GAAP financial measures are used by management internally to measure the company’s profitability and performance. PDF’s management believes that excluding the effects of stock-based compensation expense and amortization of acquired intangible assets, and their related income tax effects, provides a useful supplemental measure of the company’s ongoing operations in light of the fact that neither category of expense has a current effect on the future uses of cash nor do they have use with regards to the generation of current or future revenues. These non-GAAP results should not be considered an alternative to, or a substitute for, GAAP financial information, and may be different from similarly titled non-GAAP measures used by other companies. In particular, these non-GAAP financial measures are not a substitute for GAAP measures of income as a measure of performance, or to cash flows from operating, investing and financing activities as a measure of liquidity. Since management uses these non-GAAP financial measures internally to measure profitability and performance, PDF has included these non-GAAP measures to give investors an opportunity to see the company’s financial results as viewed by management. A reconciliation of the non-GAAP financial measures to the comparable GAAP financial measure is provided at the end of the company’s financial statements presented below.
About PDF Solutions
PDF Solutions, Inc. (Nasdaq: PDFS) is the leading provider of process-design integration technologies for manufacturing integrated circuits (ICs). PDF Solutions’ software, methodologies and services enable semiconductor companies to create IC designs that can be more easily manufactured using manufacturing processes that are more capable. By simulating
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deep sub-micron product and process interactions, the PDF solution offers clients reduced time to market, increased IC yield and performance, and enhanced product reliability and profitability. Headquartered in San Jose, Calif., PDF Solutions operates worldwide with additional offices in Europe, Japan and China. For more information, visit www.pdf.com.
PDF SolutionsÒis a registered trademark of PDF Solutions, Inc.
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PDF SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
September 30, | December 31, | |||||||
2006 | 2005 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 52,781 | $ | 60,506 | ||||
Short-term investments | 17,137 | — | ||||||
Accounts receivable, net of allowances | 23,420 | 22,082 | ||||||
Prepaid expenses and other current assets | 2,378 | 1,992 | ||||||
Deferred tax assets | 768 | 908 | ||||||
Total current assets | 96,484 | 85,488 | ||||||
Property and equipment, net | 3,533 | 3,328 | ||||||
Goodwill | 38,963 | 39,886 | ||||||
Intangible assets, net | 5,284 | 9,787 | ||||||
Deferred tax assets | 2,361 | 877 | ||||||
Other assets | 1,126 | 526 | ||||||
Total assets | $ | 147,751 | $ | 139,892 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,779 | $ | 1,728 | ||||
Accrued compensation and related benefits | 2,743 | 4,922 | ||||||
Other accrued liabilities | 1,729 | 1,469 | ||||||
Taxes payable | 4,262 | 4,950 | ||||||
Deferred revenues | 2,702 | 2,281 | ||||||
Billings in excess of recognized revenue | 139 | 1,604 | ||||||
Total current liabilities | 14,354 | 16,954 | ||||||
Long-term liabilities | 252 | 257 | ||||||
Total liabilities | 14,606 | 17,211 | ||||||
Stockholders’ equity: | ||||||||
Common stock | 4 | 4 | ||||||
Additional paid-in-capital | 152,136 | 141,720 | ||||||
Treasury stock, at cost | (5,549 | ) | (5,549 | ) | ||||
Deferred stock-based compensation | — | (27 | ) | |||||
Accumulated deficit | (13,460 | ) | (13,451 | ) | ||||
Accumulated other comprehensive income (loss) | 14 | (16 | ) | |||||
Total stockholders’ equity | 133,145 | 122,681 | ||||||
Total liabilities and stockholders’ equity. | $ | 147,751 | $ | 139,892 | ||||
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PDF SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenue: | ||||||||||||||||
Design-to-silicon-yield solutions: | ||||||||||||||||
Integrated solutions | $ | 11,153 | $ | 13,834 | $ | 33,859 | $ | 38,658 | ||||||||
Software licenses | 3,811 | 1,533 | 8,217 | 8,179 | ||||||||||||
Gain share | 4,400 | 3,090 | 15,155 | 8,069 | ||||||||||||
Total revenue | 19,364 | 18,457 | 57,231 | 54,906 | ||||||||||||
Cost and expenses: | ||||||||||||||||
Cost of design-to-silicon-yield solutions: | ||||||||||||||||
Direct costs of design-to-silicon-yield solutions: | ||||||||||||||||
Integrated solutions | 6,734 | 6,382 | 19,808 | 17,898 | ||||||||||||
Software licenses | 58 | 15 | 98 | 273 | ||||||||||||
Amortization of acquired core technology | 1,266 | 1,266 | 3,798 | 3,798 | ||||||||||||
Research and development | 6,416 | 5,485 | 19,543 | 16,550 | ||||||||||||
Selling, general and administrative | 5,028 | 3,979 | 14,850 | 12,182 | ||||||||||||
Amortization of other acquired intangible assets | 235 | 235 | 705 | 705 | ||||||||||||
Total costs and expenses | 19,737 | 17,362 | 58,802 | 51,406 | ||||||||||||
Income (loss) from operations | (373 | ) | 1,095 | (1,571 | ) | 3,500 | ||||||||||
Interest and other income, net | 892 | 463 | 2,338 | 1,085 | ||||||||||||
Income before taxes | 519 | 1,558 | 767 | 4,585 | ||||||||||||
Tax provision (benefit) | (51 | ) | 22 | 776 | 313 | |||||||||||
Net income (loss) | $ | 570 | $ | 1,536 | $ | (9 | ) | $ | 4,272 | |||||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | 0.02 | $ | 0.06 | $ | (0.00 | ) | $ | 0.17 | |||||||
Diluted | $ | 0.02 | $ | 0.06 | $ | (0.00 | ) | $ | 0.16 | |||||||
Weighted average common shares: | ||||||||||||||||
Basic | 26,860 | 26,101 | 26,694 | 25,887 | ||||||||||||
Diluted | 27,621 | 27,779 | 26,694 | 27,298 | ||||||||||||
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IMPACT OF NON-GAAP ADJUSTMENTS ON REPORTED NET INCOME (UNAUDITED)
(In thousands, except per share amounts)
(In thousands, except per share amounts)
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
September 30, 2006 | September 30, 2005 | |||||||||||||||||||||||
As reported | Adjustments | Non-GAAP | As reported | Adjustments | Non-GAAP | |||||||||||||||||||
Revenue: | ||||||||||||||||||||||||
Design to-silicon-yield solutions: | ||||||||||||||||||||||||
Integrated solutions | $ | 11,153 | $ | — | $ | 11,153 | $ | 13,834 | $ | — | $ | 13,834 | ||||||||||||
Software licenses | 3,811 | — | 3,811 | 1,533 | — | 1,533 | ||||||||||||||||||
Gain share | 4,400 | — | 4,400 | 3,090 | — | 3,090 | ||||||||||||||||||
Total revenue | 19,364 | — | 19,364 | 18,457 | — | 18,457 | ||||||||||||||||||
Cost and expenses: | ||||||||||||||||||||||||
Cost of design-to-silicon-yield solutions: | ||||||||||||||||||||||||
Direct cost of design-to-silicon-yield solutions: | ||||||||||||||||||||||||
Integrated solutions | 6,734 | (443 | )(a) | 6,291 | 6,382 | — | 6,382 | |||||||||||||||||
Software licenses | 58 | — | 58 | 15 | — | 15 | ||||||||||||||||||
Amortization of acquired core technology | 1,266 | (1,266 | )(b) | — | 1,266 | (1,266 | )(b) | — | ||||||||||||||||
Research and development | 6,416 | (443 | )(a) | 5,973 | 5,485 | (11 | )(a) | 5,474 | ||||||||||||||||
Selling, general and administrative | 5,028 | (621 | )(a) | 4,407 | 3,979 | (8 | )(a) | 3,971 | ||||||||||||||||
Amortization of other acquired intangible assets | 235 | (235 | )(b) | — | 235 | (235 | )(b) | — | ||||||||||||||||
Total costs and expenses | 19,737 | (3,008 | ) | 16,729 | 17,362 | (1,520 | ) | 15,842 | ||||||||||||||||
Income (loss) from operations | (373 | ) | 3,008 | 2,635 | 1,095 | 1,520 | 2,615 | |||||||||||||||||
Interest and other income | 892 | — | 892 | 463 | — | 463 | ||||||||||||||||||
Income before taxes | 519 | 3,008 | 3,527 | 1,558 | 1,520 | 3,078 | ||||||||||||||||||
Tax provision (benefit) | (51 | ) | (51) | (a,b) | (102 | ) | 22 | 21 | (b) | 43 | ||||||||||||||
Net income | $ | 570 | $ | 3,059 | $ | 3,629 | $ | 1,536 | $ | 1,499 | $ | 3,035 | ||||||||||||
Net income per share — diluted | $ | 0.02 | $ | 0.11 | $ | 0.13 | $ | 0.06 | $ | 0.05 | $ | 0.11 | ||||||||||||
Weighted average common shares — diluted(c) | 27,621 | 27,621 | 27,621 | 27,779 | 27,779 | 27,779 | ||||||||||||||||||
Notes: | ||
(a) | The non-GAAP adjustments represent the reversal of stock-based compensation, net of taxes. | |
(b) | The non-GAAP adjustments represent the reversal of amortization of intangible assets, net of taxes. | |
(c) | The shares used in computing non-GAAP net income for the three months ended September 30, 2006 and 2005 include the dilutive impact of common stock options. |
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