Exhibit 99.1
Virage Logic Reports First-Quarter Fiscal 2004 Results;
Revenues Up 10% Sequentially While Royalties Set New Record
FREMONT, Calif.--(BUSINESS WIRE)--Jan. 20, 2004--Virage Logic
Corporation (Nasdaq:VIRL)
Quarterly News Release Highlights:
-- Q1 revenues of $10.9 million, compared with $9.9 million for
Q4
-- Q1 GAAP net loss of $359,000, or $0.02 per share, compared
with a net loss of $687,000, or $0.03 per share, for Q4
-- Q1 pro forma* net loss of $276,000, or $0.01 per share,
compared with a pro forma net loss of $621,000, or $0.03 per
share, for Q4.
Virage Logic Corporation (Nasdaq:VIRL), a leading provider of
best-in-class semiconductor IP platforms, today reported its financial
results for the first quarter of fiscal 2004 ended December 31, 2003.
Revenues for the first quarter of fiscal 2004 were $10.9 million,
up 10 percent sequentially over $9.9 million for the fourth quarter of
fiscal 2003, and compared with $11.6 million for the first quarter of
fiscal 2003. Total license revenue for the first quarter of fiscal
2004 was $9.5 million, compared with $8.6 million for the prior
quarter and $11.0 million for the same quarter a year ago. Royalties
for the first quarter of fiscal 2004 were $1.4 million, exceeding the
prior historical record of $1.3 million for the fourth quarter of
fiscal 2003, and up from $515,000 for the first quarter of fiscal
2003.
As reported under generally accepted accounting principles (GAAP)
in the U.S., net loss for the first quarter of fiscal 2004 was
$359,000, or $0.02 per share. By comparison, net loss for the fourth
quarter of fiscal 2003 was $687,000, or $0.03 per share, and the net
loss for the first quarter of fiscal 2003 was $385,000, or $0.02 per
share.
Pro forma net loss for the first quarter of fiscal 2004 was
$276,000, or $0.01 per share. This compared with a pro forma net loss
of $621,000, or $0.03 per share, for the fourth quarter of fiscal
2003, and with pro forma net income of $239,000, or $0.01 per share,
for the same quarter a year ago. Pro forma net loss for the first
quarter of fiscal 2004 included a pro forma operating loss of
$585,000, as well as net interest income of $168,000 and a tax benefit
of $141,000.
"The first quarter marked continued progress toward our goal of
returning to profitability," said Adam Kablanian, president and chief
executive officer. "Our results for the quarter were driven by further
market penetration of our semiconductor IP platform products among
emerging foundries, continued growth in our royalty base and an
increase in 90-nanometer design starts beyond what we saw in the
fourth quarter. In addition, we are seeing signs of improved business
activity in the semiconductor industry and better visibility in our
business."
Additional Recent Business Highlights
During the first quarter, Virage Logic:
-- Signed a wafer-based royalty-bearing agreement with an
important emerging Asia-based foundry to provide Virage
Logic's semiconductor IP platform for the foundry's
0.13-micron process, adding to Virage Logic's foundry coverage
beyond its strong existing foundry relationships with
Chartered Semiconductor Manufacturing, Semiconductor
Manufacturing International Corporation (SMIC), Silterra,
Tower Semiconductor, Taiwan Semiconductor Manufacturing
Company (TSMC), and United Microelectronics Corporation (UMC)
-- Licensed the company's ASAP Logic(TM) product with a
royalty-bearing agreement to a new foundry for use on the
90-nanometer process and signed six other new ASAP Logic
end-customer licensing agreements for 0.18-, 0.15- and
0.13-micron technologies
-- Booked a total of four new 90-nanometer agreements with key
foundry and integrated device manufacturer (IDM) customers,
including the ASAP Logic foundry agreement mentioned above, as
well as two agreements which included Virage Logic's ASAP
Memory(TM) and Self-Test and Repair (STAR) Memory System(TM)
and one agreement which included the ASAP Logic product
-- Signed eight new direct royalty-bearing agreements for the
STAR Memory System, bringing the total number of agreements to
over 60, and three new NOVeA(R) agreements bringing the total
to nine end-product design agreements across five foundries
and one IDM
-- Shipped products under licensing agreements to 46 customers -
39 existing and seven new.
Business Outlook
Virage Logic also reported today its outlook for the second
quarter of fiscal 2004. The company currently expects to be profitable
on a pro forma basis with total revenues in the range of $12.0 to
$12.4 million, an anticipated increase over the first quarter of 10
percent to 14 percent. Total expected revenues for the quarter are
anticipated to include royalties of approximately $1.5 million. In
addition, the company expects total pro forma operating expenses to
increase sequentially by approximately $600,000 to $1.0 million. Net
interest income and the company's effective tax rate are expected to
remain fairly consistent with the first 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 exclude 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 in connection with the company's
initial public offering and acquisition activity and the amortization
of purchased technology. The non-GAAP net loss measure also assumes a
34% effective tax rate for the first fiscal quarters ended December
31, 2003 and 2002, which differs 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 they
provide 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 in the tabular
information below.
Webcast and Taped Replay
Virage Logic's management plans to hold a teleconference on
first-quarter 2004 results at 1:30 p.m. PT/4:30 p.m. ET today. Both a
live webcast and an archived webcast of management's conference call
regarding first-quarter results will be available to all investors
from January 20, 2004 until January 20, 2005 on the Virage Logic
website at http://www.viragelogic.com/ir/. In addition, a telephonic
replay will be available through January 27, 2004 at (719) 457-0820,
access code 177336.
About Virage Logic
Virage Logic Corporation (Nasdaq:VIRL) is a leading provider of
best-in-class semiconductor IP platforms based on memory, logic and
I/Os 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
and income 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, 2003, 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.
* Pro forma results represent the company's operating results,
excluding non-cash items related to deferred stock compensation for
stock options in connection with the company's initial public offering
and acquisition activity, and the amortization of purchased
technology, and including net interest income and a tax benefit
calculated using a tax rate which differs from the rate used under
Generally Accepted Accounting Principles (GAAP).
Virage Logic Corporation
Consolidated Statements of Operations
(In thousands, except per-share amounts)
Three Months Ended
Dec. 31, Dec. 31,
2003 2002
-------- --------
Revenues:
License $ 9,474 $11,050
Royalties 1,386 515
Revenues 10,860 11,565
-------- -------
Cost and expenses:
Cost of revenues 2,436 2,651
Research and development 4,413 4,629
Sales and marketing 3,248 3,083
General and administrative 1,445 1,185
Stock-based compensation 50 575
-------- --------
Total cost and expenses 11,592 12,123
-------- --------
Operating loss (732) (558)
Interest income and other, net 168 249
-------- --------
Loss before taxes (564) (309)
Income tax provision (benefit) (205) 76
-------- --------
Net loss $ (359) $ (385)
======== ========
Earnings per share:
Basic and diluted $ (0.02) $ (0.02)
Shares used in computing per share amounts:
Basic and diluted 21,181 20,453
Virage Logic Corporation
Reconciliation of Pro Forma Net Income (Loss) to GAAP Results
(In thousands, except per-share amounts)
Three Months Ended
Dec. 31, Dec. 31,
2003 2002
--------- ---------
Pro forma net income (loss) $ (276) $ 239
Amortization of purchased technology 97 97
Stock-based compensation 50 575
Income tax provision (benefit) (64) (48)
--------- ---------
Total reconciling items 83 624
--------- ---------
Reported net loss $ (359) $ (385)
========= =========
Virage Logic Corporation
Pro Forma Consolidated Statements of Operations
(In thousands, except per-share amounts)
Three Months Ended
Dec. 31, Dec. 31,
2003 2002
-------- --------
Revenues:
License $ 9,474 $11,050
Royalties 1,386 515
-------- --------
Revenues 10,860 11,565
Cost and expenses:
Cost of revenues 2,436 2,651
Research and development 4,413 4,629
Sales and marketing 3,248 3,083
General and administrative 1,348 1,088
-------- --------
Total cost and expenses 11,445 11,451
-------- --------
Operating income (loss) (585) 114
Interest income and other, net 168 249
-------- --------
Income (loss) before taxes (417) 363
Income tax provision (benefit) (141) 124
-------- --------
Pro forma net income (loss) $ (276) $ 239
======== ========
Pro forma earnings per share:
Basic $ (0.01) $ 0.01
Diluted $ (0.01) $ 0.01
Shares used in computing per share amounts:
Basic 21,181 20,453
Diluted 21,181 21,282
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 issued, and the
amortization of purchased technology.
The tax provision (benefit) in the pro forma statement for the
periods presented for fiscal years 2004 and 2003 is computed using
a tax rate of 34%.
A reconciliation from pro forma net income (loss) to the GAAP
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)
Dec. 31, Sept. 30,
2003 2003
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 49,043 $ 38,930
Investments 9,087 16,085
Accounts receivable, net 13,324 10,499
Costs in excess of related billings on
uncompleted contracts 715 619
Prepaid expenses and other 3,697 3,820
Taxes receivable 120 -
--------- ---------
Total current assets 75,986 69,953
Property, equipment and leasehold improvements,
net 5,519 6,250
Intangible assets, net of amortization 12,833 12,930
Deferred tax assets 2,942 2,942
Long term investments 2,029 4,095
Other long term assets 395 392
--------- ---------
Total assets $ 99,704 $ 96,562
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 643 $ 807
Accrued payroll and related expenses 2,555 2,545
Accrued expenses 1,706 1,226
Deferred revenue 5,717 2,613
Income taxes payable - 309
--------- ---------
Total current liabilities 10,621 7,500
Deferred tax liability 1,189 1,189
Deferred acquisition costs 500 500
--------- ---------
Total liabilities 12,310 9,189
Stockholders' equity:
Common stock 21 21
Additional paid-in capital 110,664 110,330
Unrealized gains and losses (1) 2
Deferred stock-based compensation (81) (130)
Accumulated deficit (23,209) (22,850)
--------- ---------
Total stockholders' equity 87,394 87,373
--------- ---------
Total liabilities and stockholders'
equity $ 99,704 $ 96,562
========= =========
CONTACT: Virage Logic Corporation
Doug Blankenship, 510-360-8063
doug@viragelogic.com