Exhibit 99.1
Virage Logic Reports Third-Quarter Fiscal 2003 Results
FREMONT, Calif.--(BUSINESS WIRE)--July 24, 2003--Virage Logic
Corp. (Nasdaq:VIRL)
News Release Highlights:
-- Q3 revenues of $9.6 million, compared with $9.6 million the
prior quarter and $12.2 million for Q3 of fiscal 2002
-- Q3 GAAP (reported) net loss of $1.6 million, or $0.08 per
share, compared with a net loss of $1.6 million, or $0.08 per
share, the prior quarter, and a net loss of $6.0 million, or
$0.30 per share, for Q3 of fiscal 2002
-- Q3 pro forma net loss(1) of $1.4 million, or $0.07 per share
(including a loan reserve of $550,000, or $0.02 per share),
compared with a pro forma net loss of $1.1 million, or $0.05
per share, the prior quarter, and pro forma net income of $1.4
million, or $0.07 per diluted share, for Q3 of fiscal 2002
Virage Logic Corp. (Nasdaq:VIRL), a leading provider of
best-in-class semiconductor IP platforms, today reported its financial
results for the third fiscal quarter ended June 30, 2003.
Revenues for the third quarter were $9.6 million, compared with
$9.6 million the prior quarter and $12.2 million a year ago. Total
license revenue for the third quarter was $8.5 million, compared with
$11.8 million for the same period a year ago and $9.0 million for the
prior quarter. Royalties for the third quarter were a record $1.1
million, compared with royalties of $435,000 for the same quarter a
year ago and $579,000 for the previous quarter.
As reported under generally accepted accounting principles (GAAP)
in the U.S., net loss for the third quarter of fiscal 2003 was $1.6
million, or $0.08 per share, including non-cash amortization expenses
for deferred stock compensation of $137,000, amortization of purchased
technology of $97,000 and net interest income of $145,000, as well as
a loan loss reserve of $550,000 for a secured loan to a private
company for which repayment is overdue. Net loss under GAAP for the
same period a year ago was $6.0 million, or $0.30 per share. This
included non-cash amortization expenses for deferred stock
compensation and warrants of $1.2 million, amortization of purchased
technology of $32,000 for the company's acquisition of In-Chip, and
one-time non-cash charges of $1.1 million for in-process research and
development related to In-Chip and $5.3 million related to the
company's impaired investment in ATMOS Corporation. The impairment was
subsequently substantially recovered in the fourth quarter of fiscal
2002.
Pro forma net loss for the third quarter of fiscal 2003 was $1.4
million, or $0.07 per share, compared with a pro forma net loss of
$1.1 million, or $0.05 per share the prior quarter, and with pro forma
net income of $1.4 million, or $0.07 per diluted share, for the third
quarter of fiscal 2002. Pro forma net loss for the third quarter of
fiscal 2003 included a pro forma operating loss of $1.7 million, net
interest income of $145,000, a tax benefit of $723,000, as well as the
aforementioned loan reserve of $550,000 (or $0.02 per share).
For the nine months of fiscal 2003, revenues were $30.8 million,
compared with $32.5 million for the same period of fiscal year 2002.
The GAAP net loss for the nine months of this fiscal year, including
non-cash amortization expenses of $1.2 million for deferred stock
compensation and amortization of purchased technology of $291,000, was
$3.5 million, or $0.17 per share. The GAAP net loss for the same
period of the prior fiscal year, including non-cash amortization
expenses for deferred stock compensation and warrants of $2.8 million
and aggregate one-time non-cash charges of $6.4 million related to the
In-Chip acquisition and the ATMOS investment impairment, was $5.2
million, or $0.27 per share.
"We are pleased to have signed strategic licensing and
royalty-bearing agreements during the third quarter with third-party
foundries and certain key integrated device manufacturers," said Adam
Kablanian, chairman, president and chief executive officer. "We
continue to execute on our strategy to become a single-source provider
of best-in-class semiconductor IP platforms."
Additional Recent Business Highlights
During the third quarter, Virage Logic:
-- Entered into wafer-based royalty-bearing agreements -
announced earlier today - with Semiconductor Manufacturing
International Corporation (SMIC), on the 0.18-micron process,
and Silterra, on both the 0.18- and 0.25-micron processes
-- Signed a new licensing agreement with Infineon Technologies
for Virage Logic's Area, Speed and Power (ASAP) Logic(TM)
product line on the 0.13-micron and 90-nanometer processes
-- Expanded its relationship with a Japanese integrated device
manufacturer (IDM) by entering into a multi-year licensing and
royalty-bearing agreement whereby the customer will adopt
Virage Logic's ASAP Logic products for the 0.15-micron,
0.13-micron and 90 nanometer processes, and ASAP Memory(TM)
for 90 nanometer
-- Signed a 90-nanometer licensing and royalty-bearing agreement
with a large U.S.-based IDM for Virage Logic's entire line of
memory products
-- Licensed the Ultra-Low Power (ULP) Self-Test and Repair (STAR)
Memory System(TM) to a large producer of mobile cellular
phones on the 90-nanometer process
-- Expanded its Technology-Optimized semiconductor IP offering to
Chartered Semiconductor Manufacturing's 0.13-micron process,
thereby furthering a successful relationship covering
technology nodes from 0.35 micron down to 0.13 micron
-- Signed seven new direct royalty-bearing agreements for the
STAR Memory System, bringing the total number of agreements to
over 50
-- Shipped products under licensing agreements to 35 customers -
29 existing and 6 new.
Business Outlook
Virage Logic also reported today its outlook for the fourth
quarter of fiscal 2003. The company currently expects total revenues
in the range of $9.7 to $10 million. The company currently anticipates
that royalties will approach approximately $1.0 million for the fourth
quarter. In addition, the company expects total pro forma operating
expenses to be reduced sequentially by approximately $200,000 from
those of the third quarter of fiscal 2003. Net interest income and the
company's effective tax rate are expected to remain fairly consistent
on a sequential basis. Although this news release will be available on
the company's website, the company disclaims any duty or intention to
update these or any other forward-looking statements.
Use of Non-GAAP Financial Measure
This press release includes a financial measure for loss per share
that excludes certain non-cash charges and that has not been
calculated in accordance with generally accepted accounting principles
(GAAP). This measure differs from GAAP in that it excludes deferred
stock-based compensation for stock options and warrants in connection
with the company's initial public offering and acquisition activity,
impairment of investment, the amortization of purchased technology as
well as a one-time charge for in-process research and development, and
assumes a 34% tax rate for the nine-month period ended June 30, 2003,
and a 36% tax rate for the nine-month period ended June 30, 2002,
which may differ from the company's GAAP tax rate. Virage Logic has
previously provided this measurement in addition to GAAP because the
company believes it provides a consistent basis for comparison between
quarters that is not influenced by certain non-cash and non-recurring
expenses or by changes in the company's effective tax rate, and
therefore is helpful to understanding the company's underlying
operational results. This measure should not be considered an
alternative to GAAP and may not be comparable to information provided
by other companies. The reconciliation of GAAP to non-GAAP
measurements for net loss per share for the recently completed quarter
is set forth below.
Webcast and Taped Replay
An archived webcast of management's conference call regarding
third-quarter results will be available to all investors from July 24,
2003 until July 24, 2004 on the Virage Logic website at
http://www.viragelogic.com/company/ir.html. In addition, a telephonic
replay will be available through July 31, 2003 at (719) 457-0820,
access code 437742.
About Virage Logic
Virage Logic Corp. (Nasdaq:VIRL) is a leading provider of
best-in-class semiconductor IP platforms based on memory, logic, I/Os,
and IP development tools that are silicon-proven and production-ready.
Virage Logic meets market demands for cost reduction, while improving
performance and reliability for fabless and integrated device
manufacturer (IDM) companies focused on the consumer, communications
and networking, handheld and portable, and computer and graphics
markets. Virage Logic is headquartered in Fremont, California and has
sales and support offices worldwide. For more information, visit
www.viragelogic.com or call (877) 360-6690 toll-free or (510)
360-8000.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995:
Statements made in this news release, other than statements of
historical fact, are forward-looking statements, including, for
example, statements relating to trends, business outlook, products,
and customer relationships. Forward-looking statements are subject to
a number of known and unknown risks and uncertainties, which might
cause actual results to differ materially from those expressed or
implied by such statements. These risks and uncertainties include
Virage Logic's ability to forecast its business, including its revenue
outlook; Virage Logic's ability to execute on its strategy to become a
provider of semiconductor IP platforms; Virage Logic's ability to
continue to develop new products and maintain and develop new
relationships with third-party foundries and integrated device
manufacturers; adoption of Virage Logic's technologies by
semiconductor companies and increases in the demand for their
products; the company's ability to overcome the challenges associated
with establishing licensing relationships with semiconductor
companies; the company's ability to obtain royalty revenues from
customers in addition to license fees, to receive accurate information
necessary for calculating royalty revenues and to collect royalty
revenues from customers; business and economic conditions generally
and in the semiconductor industry in particular; competition in the
market for semiconductor IP platforms; and other risks including those
described in the company's Annual Report on Form 10-K for the period
ended September 30, 2002, filed with the Securities and Exchange
Commission (SEC) on December 16, 2002, and in Virage Logic's other
periodic reports filed with the SEC, all of which are available from
Virage Logic or from the SEC's website (www.sec.gov), and in news
releases and other communications. Virage Logic disclaims any
intention or duty to update any forward-looking statements made in
this news release.
All trademarks are the property of their respective owners and are
protected herein.
(1) Pro forma results represents the company's operating results,
excluding non-cash items resulting from deferred stock
compensation for stock options and warrants in connection with the
company's initial public offering and acquisition activity,
impairment of investment, the amortization of purchased technology
as well as a one-time charge for in-process research and
development, plus net interest income and a tax benefit calculated
using a tax rate which may differ from the rate used under GAAP.
Virage Logic Corporation
Consolidated Statements of Operations
(In thousands, except per-share amounts)
Three Months Ended Nine Months Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
------- ------- ------- -------
Revenues:
License $ 8,467 $11,798 $ 28,563 $ 31,331
Royalties 1,097 435 2,191 1,196
------- ------- ------- -------
Revenues 9,564 12,233 30,754 32,527
Cost and expenses:
Cost of revenues 2,224 2,463 7,114 6,562
Research and development 4,678 3,575 14,328 9,443
Sales and marketing 3,344 3,115 9,357 8,340
General and administrative 1,135 1,206 3,629 3,336
Stock-based compensation 137 1,207 1,153 2,759
In-process R&D - 1,100 - 1,100
------- ------- ------- -------
Total cost and expenses 11,518 12,666 35,581 31,540
------- ------- ------- -------
Operating income (loss) (1,954) (433) (4,827) 987
Interest income and other, net (405) 250 (17) 948
Impairment of investment - (5,284) - (5,284)
------- ------- ------- -------
Loss before taxes (2,359) (5,467) (4,844) (3,349)
Income tax provision (benefit) (783) 537 (1,318) 1,811
------- ------- ------- -------
Net loss $ (1,576) $(6,004)$ (3,526)$ (5,160)
======= ======= ======= =======
Earnings per share:
Basic and diluted $ (0.08) $ (0.30)$ (0.17)$ (0.27)
Shares used in computing per
share amounts:
Basic and diluted 20,822 20,039 20,742 19,355
Virage Logic Corporation
Reconciliation of Pro Forma Net Income to Reported Results
(In thousands, except per-share amounts)
Three Months Ended Nine Months Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
------- ------- ------- -------
Pro forma net income (loss) $ (1,402) $ 1,417 $ (2,243) $ 3,767
Revaluation of warrants - - - 60
Stock-based compensation 137 1,207 1,153 2,759
Amortization of purchased
technology 97 32 291 32
In-process R&D - 1,100 - 1,100
Impairment of investment - 5,284 - 5,284
Income tax provision (benefit) (60) (202) (161) (308)
------- ------- ------- -------
Total reconciling items 174 7,421 1,283 8,927
Reported net loss $(1,576) $(6,004) $(3,526) $(5,160)
======= ======= ======= =======
Virage Logic Corporation
Pro Forma Consolidated Statements of Operations
(In thousands, except per-share amounts)
Three Months Ended Nine Months Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
-------- -------- -------- --------
Revenues:
License $ 8,467 $ 11,798 $28,563 $ 31,331
Royalties 1,097 435 2,191 1,196
-------- -------- -------- --------
Revenues 9,564 12,233 30,754 32,527
Cost and expenses:
Cost of revenues 2,224 2,463 7,114 6,562
Research and development 4,678 3,575 14,328 9,443
Sales and marketing 3,344 3,115 9,357 8,340
General and administrative 1,038 1,174 3,338 3,244
-------- -------- -------- --------
Total cost and expenses 11,284 10,327 34,137 27,589
-------- -------- -------- --------
Operating income (loss) (1,720) 1,906 (3,383) 4,938
Interest income and other, net (405) 250 (17) 948
-------- -------- -------- --------
Income (loss) before taxes (2,125) 2,156 (3,400) 5,886
Income tax provision (benefit) (723) 739 (1,157) 2,119
-------- -------- -------- --------
Pro forma net income (loss) $ (1,402)$ 1,417 $(2,243)$ 3,767
======== ======== ======== ========
Pro forma earnings per share:
Basic $ (0.07) $ 0.07 $ (0.11) $ 0.19
Diluted $ (0.07) $ 0.07 $ (0.11) $ 0.18
Shares used in computing
per share amounts:
Basic 20,822 20,039 20,742 19,355
Diluted 20,822 21,287 20,742 21,082
Pro forma statements of operations are intended to present the
company's operating results, excluding non-cash items resulting from
deferred stock compensation for stock options and warrants issued,
impairment of investment, the amortization of purchased technology as
well as a one-time charge for in-process research and development.
The tax provision (benefit) in the pro forma statement for the fiscal
year 2003 periods is computed using a tax rate of 34%, as compared
with 36% for the fiscal year 2002 periods.
A reconciliation from pro forma net income to the reported results is
presented on the prior page.
The format presented above is not in accordance with Generally
Accepted Accounting Principles.
Virage Logic Corporation
Consolidated Balance Sheets
(In thousands)
June 30, 2003 Sept. 30, 2002
------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 41,399 $ 35,422
Investments 15,092 5,008
Accounts receivable, net 12,381 15,688
Costs in excess of related
billings on uncompleted contracts 611 820
Prepaid expenses and other 2,604 2,512
Taxes receivable 1,112 -
-------- --------
Total current assets 73,199 59,450
Property, equipment and
leasehold improvements, net 6,420 5,708
Intangible assets, net 13,026 13,315
Deferred tax assets 2,442 2,442
Long-term investments - 19,029
Other assets 387 410
-------- --------
Total assets $ 95,474 $100,354
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 208 $ 438
Accrued expenses 4,149 4,240
Current portion of capital
lease obligations 15 96
Deferred revenue 2,550 2,936
Income taxes payable - 2,049
-------- --------
Total current liabilities 6,922 9,759
Deferred tax liability 1,343 1,343
Deferred acquisition costs 500 1,000
-------- --------
Total liabilities 8,765 12,102
Stockholders' equity:
Common stock 21 20
Additional paid-in capital 109,383 110,530
Unrealized gains and losses 12 28
Deferred stock-based compensation (181) (3,326)
Accumulated deficit (22,526) (19,000)
-------- --------
Total stockholders' equity 86,709 88,252
-------- --------
Total liabilities and
stockholders' equity $ 95,474 $100,354
======== ========
CONTACT: Virage Logic Corp.
Jim Pekarsky, CFO, 510-360-8025
jrp@viragelogic.com