PDF Solutions (PDFS) 8-K PDF Solutions® Reports Fourth Quarter 2006 Results

Exhibit 99.1

News Release

Investor Relations Contact:	Investor Relations Contact:
Steven Melman, V.P. of Investor Relations	Sonia Segovia, IR Coordinator
PDF Solutions, Inc.	PDF Solutions, Inc.
Tel: (408) 938-6445	Tel: (408) 938-6491
Email: steve.melman@pdf.com	Email: sonia.segovia@pdf.com

PDF Solutions^® Reports Fourth Quarter
2006 Results

Record Gain Share for Fiscal 2006 Highlights Record Total Year Revenue

     SAN JOSE, Calif.—February 6, 2007—PDF Solutions, Inc. (NASDAQ: PDFS) the leading provider of process-design integration technologies to enhance IC manufacturability, today announced financial results for its fourth fiscal quarter ended December 31, 2006.

     Revenue for the fourth fiscal quarter of 2006 totaled $19.0 million, compared with revenue of $19.0 million for the fourth fiscal quarter of 2005. Gain share revenue for the fourth fiscal quarter of 2006 totaled $4.9 million, an increase of 28%, compared to the fourth fiscal quarter of 2005. Revenue for the full fiscal year ended December 31, 2006 totaled a record $76.2 million with gain share revenue contributing a record $20.0 million. On a GAAP basis, net loss for the fourth fiscal quarter of 2006 totaled approximately $559,000, or $0.02 per basic share, compared with net income of $2.3 million, or $0.09 per basic share, for the fourth fiscal quarter of 2005. The adoption of SFAS 123(R) during fiscal year 2006 and the previously announced acquisition of Si Automation S.A. in October 2006, resulted in $1.9 million in stock-based compensation expense and an $800,000 write-off of in-process research and development during the fourth fiscal quarter or approximately $0.10 per basic 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, amortization of acquired intangible assets and the write-off of in-process research and development. Using this non-GAAP measure, net income for the fourth fiscal quarter of 2006 totaled approximately $2.3 million, or $0.08 per diluted

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share, compared with non-GAAP net income of approximately $3.9 million, or $0.14 per diluted share, for the fourth fiscal quarter of 2005.

     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, amortization of acquired intangible assets, the write-off of in-process research and development 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, amortization of acquired intangible assets, the write-off of in-process research and development 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 a 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

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more easily manufactured using manufacturing processes that are more capable. By simulating 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. PDF Solutions also offers the industry leading Yield Management System (YMS) software,dataPOWER^®, and Fault Detection and Classification (FDC) software, Maestria™, to enhance yield improvement and production control activities at leading fabrication facilities around the world. Headquartered in San Jose, Calif., PDF Solutions operates worldwide with additional offices in Europe, Japan and China. For more information, visit www.pdf.com.

dataPOWER and PDF Solutions are registered trademarks, and Maestria is a trademark, of PDF Solutions, Inc.

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PDF SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)

	December 31,			December 31,
	2006			2005
ASSETS
Current assets:
Cash and cash equivalents	$	36,451		$	60,506
Short-term investments		16,402			—
Accounts receivable, net of allowances		27,575			22,082
Prepaid expenses and other current assets		2,796			1,992
Deferred tax assets		2,581			908
Total current assets		85,805			85,488
Property and equipment, net		3,916			3,328
Goodwill		60,034			39,886
Intangible assets, net		13,605			9,787
Deferred tax assets		4,912			877
Other assets		503			526
Total assets	$	168,775		$	139,892
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,182		$	1,728
Accrued compensation and related benefits		3,325			4,922
Other accrued liabilities		3,843			1,469
Taxes payable		4,767			4,950
Deferred revenues		3,705			2,281
Billings in excess of recognized revenue		95			1,604
Current portion of long-term debt		302			—
Total current liabilities		19,219			16,954
Long-term debt		1,198			—
Other liabilities		221			257
Total liabilities		20,638			17,211
Stockholders’ equity:
Common stock		4			4
Additional paid-in-capital		167,370			141,720
Treasury stock, at cost		(5,549	)		(5,549	)
Deferred stock-based compensation		—			(27	)
Accumulated deficit		(14,019	)		(13,451	)
Accumulated other comprehensive (loss) gain.		331			(16	)
Total stockholders’ equity		148,137			122,681
Total liabilities and stockholders’ equity	$	168,775		$	139,892

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PDF SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)

	Three Months Ended						Twelve Months Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Revenue:
Design-to-silicon-yield solutions:
Integrated solutions	$	11,523		$	14,061		$	45,382		$	52,719
Software licenses		2,557			1,140			10,774			9,319
Gain share		4,873			3,821			20,028			11,890
Total revenue		18,953			19,022			76,184			73,928
Cost and expenses:
Cost of design-to-silicon-yield solutions:
Direct costs of design-to-silicon-yield solutions:
Integrated solutions.		7,561			6,421			27,369			24,319
Software licenses		111			20			209			293
Amortization of acquired core technology		1,472			1,266			5,270			5,064
Research and development		8,051			5,654			27,594			22,204
Selling, general and administrative		5,079			3,964			19,929			16,146
Amortization of other acquired intangible assets		754			235			1,459			940
Write-off of in-process research and development		800			—			800			—
Total costs and expenses		23,828			17,560			82,630			68,966
Income (loss) from operations		(4,875	)		1,462			(6,446	)		4,962
Interest and other income, net		488			573			2,826			1,658
Income (loss) before taxes		(4,387	)		2,035			(3,620	)		6,620
Tax provision (benefit)		(3,828	)		(217	)		(3,052	)		96
Net income (loss)	$	(559	)	$	2,252		$	(568	)	$	6,524
Net income (loss) per share:
Basic	$	(0.02	)	$	0.09		$	(0.02	)	$	0.25
Diluted	$	(0.02	)	$	0.08		$	(0.02	)	$	0.24
Weighted average common shares:
Basic		27,459			26,272			26,885			25,983
Diluted		27,459			28,013			26,885			27,473

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PDF SOLUTIONS, INC.
IMPACT OF NON-GAAP ADJUSTMENTS ON REPORTED NET INCOME (UNAUDITED)
(In thousands, except per share amounts)

	Three Months Ended											Three Months Ended
	December 31, 2006											December 31, 2005
	As reported			Adjustments					Non-GAAP			As reported			Adjustments					Non-GAAP
Revenue:
Design to-silicon-yield solutions:
Integrated solutions	$	11,523		$	—				$	11,523		$	14,061		$	—				$	14,061
Software licenses		2,557			—					2,557			1,140			—					1,140
Gain share		4,873			—					4,873			3,821			—					3,821
Total revenue		18,953			—					18,953			19,022			—					19,022
Cost and expenses:
Cost of design-to-silicon-yield solutions:
Direct cost of design-to-silicon-yield solutions:
Integrated solutions		7,561			(547	)	(a	)		7,014			6,421			—					6,421
Software licenses		111			—					111			20			—					20
Amortization of acquired core technology		1,472			(1,472	)	(b	)		—			1,266			(1,266	)	(b	)		—
Research and development		8,051			(580	)	(a	)		7,471			5,654			—					5,654
Selling, general and administrative		5,079			(810	)	(a	)		4,269			3,964			(13	)	(a	)		3,951
Amortization of other acquired intangible assets		754			(754	)	(b	)		—			235			(235	)	(b	)		—
In-process research and development		800			(800	)	(d	)		—			—			—					—
Total costs and expenses		23,828			(4,963	)				18,865			17,560			(1,514	)				16,046
Income (loss) from operations		(4,875	)		4,963					88			1,462			1,514					2,976
Interest and other income, net		488			—					488			573			—					573
Income (loss) before taxes		(4,387	)		4,963					576			2,035			1,514					3,549
Tax provision (benefit)		(3,828	)		2,150		(a,b	)		(1,678	)		(217	)		(159	)	(a,b	)		(376	)
Net income (loss)	$	(559	)	$	2,813				$	2,254		$	2,252		$	1,673				$	3,925
Net income (loss) per share — diluted	$	(0.02	)	$	0.10				$	0.08		$	0.08		$	0.06				$	0.14
Weighted average common shares — diluted (c)		27,459			28,484					28,484			28,013			28,013					28,013

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 December 31, 2006 and 2005 include the dilutive impact of common stock options.
(d)	The non-GAAP adjustment represent the reversal of in-process research and development expense.

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