Exhibit 99.1
Virage Logic Reports Fourth-Quarter Fiscal 2003 Results; Posts Record
Royalty Revenues
FREMONT, Calif.--(BUSINESS WIRE)--Oct. 30, 2003--Virage Logic
Corporation (Nasdaq:VIRL)
Quarterly News Release Highlights:
-- Q4 revenues of $9.9 million, compared with $9.6 million for Q3
and $13.1 million for Q4 of fiscal 2002
-- Q4 GAAP net loss of $687,000, or $0.03 per share, compared
with a net loss of $1.2 million, or $0.06 per share, the prior
quarter, and net income of $5.4 million (including other
income of $5.5 million), or $0.25 per diluted share, a year
ago
-- Q4 pro forma* net loss of $621,000, or $0.03 per share,
compared with a pro forma net loss of $1.0 million, or $0.05
per share, the prior quarter, and pro forma net income of $1.5
million, or $0.07 per diluted share, a year ago.
Virage Logic Corporation (Nasdaq:VIRL), a leading provider of
best-in-class semiconductor IP platforms, today reported its financial
results for the fourth quarter and fiscal year ended September 30,
2003.
Revenues for the fourth quarter were $9.9 million, compared with
$9.6 million for the third quarter and $13.1 million for the fourth
quarter of fiscal 2002. Total license revenue for the fourth quarter
was $8.6 million, compared with $8.5 million for the prior quarter and
$12.6 million for the same quarter a year ago. Royalties for the
fourth quarter reached a record level at $1.3 million, compared with
royalties of $1.1 million for the previous quarter and $475,000 for
the fourth quarter of fiscal 2002.
As reported under generally accepted accounting principles (GAAP)
in the U.S., net loss for the fourth quarter of fiscal 2003 was
$687,000, or $0.03 per share, including non-cash amortization expenses
of $51,000 for deferred stock compensation and $97,000 for purchased
technology. By comparison, net loss for the third quarter was $1.2
million, or $0.06 per share, including non-cash amortization expenses
of $137,000 for deferred stock compensation and $97,000 for purchased
technology. Net income under GAAP for the fourth quarter of fiscal
2002 was $5.4 million, or $0.25 per diluted share. This included
non-cash amortization expenses of $1.5 million for deferred stock
compensation and $97,000 for purchased technology related to the
company's acquisition of In-Chip Systems, Inc. It also included other
income of $5.5 million consisting of net interest income of $312,000
and $5.2 million related to recovery of an investment impairment
charge for the third quarter of fiscal 2002.
Pro forma net loss for the fourth quarter of fiscal 2003 was
$621,000, or $0.03 per share. This compared with a pro forma net loss
of $1.0 million, or $0.05 per share for the third quarter, and with
pro forma net income of $1.5 million, or $0.07 per diluted share, for
the fourth quarter of fiscal 2002. Pro forma net loss for the fourth
quarter of fiscal 2003 included a pro forma operating loss of $1.1
million, as well as net interest income of $206,000 and a tax benefit
of $319,000.
Fiscal year 2003 revenues were $40.7 million, compared with $45.6
million for the prior fiscal year. The GAAP net loss for fiscal year
2003 was $3.9 million, or $0.19 per share, including non-cash
amortization expenses of $1.2 million for deferred stock compensation
and $388,000 for purchased technology. For fiscal 2002, the company
posted GAAP net income of $225,000, or $0.01 per diluted share,
including non-cash amortization expenses of $4.3 million for deferred
stock compensation and warrants, a one-time non-cash charge of $1.1
million for in-process research and development, and $129,000 of
purchased technology related to the company's acquisition of In-Chip
Systems, Inc. Fiscal year 2002 GAAP net income also included an
impairment charge in the third quarter net of recovery in the fourth
quarter of $124,000 related to the company's investment in a private
company, and net interest income of $1.1 million.
"We are encouraged by our fourth-quarter results and by the
strategic relationships we are building with emerging foundries for
our 0.18- and 0.13-micron process technologies," said Adam Kablanian,
president and chief executive officer. "In addition, we are seeing
companies initiate 90-nanometer design starts, where we believe we
have a leading product portfolio, including the Self-Test and Repair
(STAR) Memory System(TM), which helps customers improve yields and
device reliability though its self-test and repair features. Based on
these trends and our current discussions with customers, we believe
that we should see sequential top-line improvement for the first
quarter as they source our best-in-class semiconductor IP to pursue
new designs cost-effectively."
Additional Recent Business Highlights
During the fourth quarter, Virage Logic:
-- Joined Chartered Semiconductor Manufacturing's NanoAccess
Alliance for the pre-qualification of Virage Logic's
90-nanometer solutions to ensure lower production risk as
customers move to leading-edge integrated circuit and
system-on-chip (SoC) designs
-- As announced earlier today, completed a follow-on
royalty-bearing licensing agreement with Semiconductor
Manufacturing International Corporation (SMIC), which named
Virage Logic as its preferred provider for the 0.13-micron
process, following a prior agreement that provided SMIC with
Virage Logic's Technology-Optimized semiconductor IP platform
on the 0.18-micron process
-- Partnered with NEC Electronics to successfully execute the
first customer tape out of a high-volume consumer application
integrating Virage Logic's silicon-qualified NOVeA technology,
which enables designers to reduce overall system costs and
size, enhance security and meet time-to-market requirements
-- Appointed to its board of directors Dan McCranie, a 30-year
veteran of the semiconductor and communications industries, as
chairman; and Robert Smith, an experienced financial
executive, as director
-- Signed six new direct royalty-bearing agreements for the STAR
Memory System, bringing the total number of agreements to over
55 and signed two new NOVeA agreements
-- Shipped products under licensing agreements to 38 customers --
29 existing and 9 new.
Business Outlook
Virage Logic also reported today its outlook for the first quarter
of fiscal 2004. The company currently expects total revenues in the
range of $10.6 to $11.0 million, a sequential increase over the fourth
quarter of fiscal 2003 of 7 percent to 11 percent. Total expected
revenues are anticipated to include royalties for the quarter of
approximately $1.4 million. In addition, the company expects total pro
forma operating expenses to increase sequentially by approximately
$300,000 to $500,000. Net interest income and the company's effective
tax rate are expected to remain fairly consistent with the fourth
quarter. 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 financial measures for operating and
net income and loss that excludes certain non-cash charges and that
have not been calculated in accordance with generally accepted
accounting principles (GAAP). These measures differ from GAAP in that
they exclude non-cash items related to deferred stock-based
compensation for stock options and warrants in connection with the
company's initial public offering and acquisition activity, impairment
of investment and related recovery, the amortization of purchased
technology and a one-time non-cash charge for in-process research and
development. In addition, the non-GAAP operating loss excludes net
interest income and a tax benefit. The non-GAAP net loss measure also
assumes a 34% effective tax rate for the fourth fiscal quarter and
full fiscal year ended September 30, 2003, and a 36% effective tax
rate for the fourth fiscal quarter and full fiscal year ended
September 30, 2002, which may differ from the company's GAAP effective
tax rate. Virage Logic has previously provided these measurements as a
supplement to GAAP information 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. These
measures 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 income and
loss for the recently completed quarter is set forth below in the
tabular information below.
Webcast and Taped Replay
An archived webcast of management's conference call regarding
fourth-quarter results will be available to all investors from October
30, 2003 until October 30, 2004 on the Virage Logic website at
http://www.viragelogic.com/ir/. In addition, a telephonic replay will
be available through November 6, 2003 at (719) 457-0820, access code
350351.
About Virage Logic
Virage Logic Corporation (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.
*Pro forma results represent the company's operating results,
excluding non-cash items related to deferred stock compensation for
stock options and warrants in connection with the company's initial
public offering and acquisition activity, one-time impairment of
investment and related recovery, the amortization of purchased
technology, and a one-time charge for in-process research and
development, and includes net interest income and a tax benefit
calculated using a tax rate which may differ from the rate used under
Generally Accepted Accounting Principles (GAAP).
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; the company's ability
to complete a search for a new chief financial officer in a timely
manner; 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, and in Virage
Logic's other periodic reports filed with the SEC, all of which are
available from Virage Logic's website (www.viragelogic.com) 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.
Virage Logic Corporation
Consolidated Statements of Operations
(In thousands, except per-share amounts)
Three Months Ended Year Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2003 2002 2003 2002
Revenues:
License $ 8,574 $12,611 $37,137 $43,942
Royalties 1,329 475 3,520 1,671
--------- --------- --------- ---------
Revenues 9,903 13,086 40,657 45,613
Cost and expenses:
Cost of revenues 2,142 2,497 9,256 9,059
Research and development 4,350 3,692 18,678 13,135
Sales and marketing 3,424 3,145 12,781 11,485
General and administrative 1,230 1,855 4,859 5,191
Stock-based compensation 51 1,489 1,204 4,248
In-process R&D - - - 1,100
--------- --------- --------- ---------
Total cost and expenses 11,197 12,678 46,778 44,218
--------- --------- --------- ---------
Operating income (loss) (1,294) 408 (6,121) 1,395
Interest income and other,
net 206 5,472 739 1,136
--------- --------- --------- ---------
Income (loss) before taxes (1,088) 5,880 (5,382) 2,531
Income tax provision
(benefit) (401) 495 (1,532) 2,306
--------- --------- --------- ---------
Net income (loss) $ (687) $ 5,385 $(3,850) $ 225
========= ========= ========= =========
Earnings per share:
Basic $ (0.03) $ 0.26 $ (0.19) $ 0.01
Diluted $ (0.03) $ 0.25 $ (0.19) $ 0.01
Shares used in computing
per share amounts:
Basic 21,026 20,597 20,750 19,902
Diluted 21,026 21,225 20,750 21,157
Virage Logic Corporation
Reconciliation of Pro Forma Net Income to Reported Results
(In thousands, except per-share amounts)
Three Months Ended Year Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2003 2002 2003 2002
--------- --------- --------- ---------
Pro forma net income
(loss) $ (621) $ 1,476 $(2,500) $ 5,243
Revaluation of warrants - - - 60
Amortization of purchased
technology 97 97 388 129
Stock-based compensation 51 1,489 1,204 4,248
In-process R&D - - - 1,100
Impairment (recovery) of
investment - (5,160) - 124
Income tax provision
(benefit) (82) (335) (242) (643)
--------- --------- --------- ---------
Total reconciling
items 66 (3,909) 1,350 5,018
Reported net income
(loss) $ (687) $ 5,385 $(3,850) $ 225
========= ========= ========= =========
Virage Logic Corporation
Pro Forma Consolidated Statements of Operations
(In thousands, except per-share amounts)
Three Months Ended Year Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2003 2002 2003 2002
--------- --------- --------- ---------
Revenues:
License $ 8,574 $12,611 $37,137 $43,942
Royalties 1,329 475 3,520 1,671
--------- --------- --------- ---------
Revenues 9,903 13,086 40,657 45,613
Cost and expenses:
Cost of revenues 2,142 2,497 9,256 9,059
Research and development 4,350 3,692 18,678 13,135
Sales and marketing 3,424 3,145 12,781 11,485
General and administrative 1,133 1,758 4,471 5,002
--------- --------- --------- ---------
Total cost and
expenses 11,049 11,092 45,186 38,681
--------- --------- --------- ---------
Operating income (loss) (1,146) 1,994 (4,529) 6,932
Interest income and other,
net 206 312 739 1,260
--------- --------- --------- ---------
Income (loss) before taxes (940) 2,306 (3,790) 8,192
Income tax provision
(benefit) (319) 830 (1,290) 2,949
--------- --------- --------- ---------
Pro forma net income
(loss) $ (621) $ 1,476 $(2,500) $ 5,243
========= ========= ========= =========
Pro forma earnings
per share:
Basic $ (0.03) $ 0.07 $ (0.12) $ 0.26
Diluted $ (0.03) $ 0.07 $ (0.12) $ 0.25
Shares used in computing
per share amounts:
Basic 21,026 20,597 20,750 19,902
Diluted 21,026 21,225 20,750 21,157
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,
one-time impairment of investment and related recovery, the
amortization of purchased technology, and a one-time charge for
in-process research and development, and includes net interest income
and a tax benefit calculated using a tax rate which may differ from
the rate used under GAAP.
The tax provision (benefit) in the pro forma statement for the fourth
fiscal quarter and full fiscal year 2003 periods is computed using a
tax rate of 34%, as compared with 36% for the fourth fiscal quarter
and full 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 GAAP.
Virage Logic Corporation
Consolidated Balance Sheets
(In thousands)
Sept. 30, Sept. 30,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $ 38,930 $ 35,422
Investments 16,085 5,008
Accounts receivable, net 10,499 15,688
Costs in excess of related billings on
uncompleted contracts 619 820
Prepaid expenses and other 3,820 2,512
--------- ---------
Total current assets 69,953 59,450
Property, equipment and leasehold
improvements, net 6,250 5,708
Intangible assets, net of amortization 12,930 13,315
Deferred tax assets 2,942 2,442
Long term investments 4,095 19,029
Other long term assets 392 410
--------- ---------
Total assets $ 96,562 $100,354
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 807 $ 438
Accrued payroll and related expenses 2,545 2,952
Accrued expenses 1,226 1,288
Capital lease obligation - 96
Deferred revenue 2,613 2,936
Income taxes payable 309 2,049
--------- ---------
Total current liabilities 7,500 9,759
Deferred tax liability 1,189 1,343
Deferred acquisition costs 500 1,000
--------- ---------
Total liabilities 9,189 12,102
Stockholders' equity:
Common stock 21 20
Additional paid-in capital 110,330 110,530
Unrealized gains and losses 2 28
Deferred stock-based compensation (130) (3,326)
Accumulated deficit (22,850) (19,000)
--------- ---------
Total stockholders' equity 87,373 88,252
--------- ---------
Total liabilities and stockholders'
equity $ 96,562 $100,354
========= =========
CONTACT: Virage Logic
Jim Pekarsky, 510-360-8025 (CFO)
jrp@viragelogic.com