Exhibit 99.1
Virage Logic Reports Second-Quarter Fiscal 2005 Results
FREMONT, Calif.--(BUSINESS WIRE)--April 21, 2005--Virage Logic
Corporation (Nasdaq:VIRL)
Quarterly News Release Highlights:
-- Q2 revenues of $12.8 million, compared with $13.0 million for
Q2 fiscal 2004 and $15.9 million for Q1 fiscal 2005
-- Q2 GAAP net loss of $988,000, or $0.04 per share, compared
with GAAP net income of $189,000, or $0.01 per share, for Q2
fiscal 2004, and with GAAP net income of $1.7 million, or
$0.08 per share, for Q1 fiscal 2005
Virage Logic Corporation, a leading provider of semiconductor
intellectual property (IP) platforms and pioneer in Silicon Aware
IP(TM), today reported its financial results for the second fiscal
quarter ended March 31, 2005.
Revenues for the second quarter of fiscal 2005 were $12.8 million,
compared with $13.0 million for the second quarter of fiscal 2004, and
with $15.9 million for the first quarter of fiscal 2005. License
revenue for the second quarter of fiscal 2005 was $10.1 million,
compared with $11.2 million for the same quarter a year ago and with
$13.1 million for the prior quarter. Royalties for the second quarter
of fiscal 2005 were $2.7 million, compared with $1.8 million for the
second quarter of fiscal 2004 and with $2.8 million the prior quarter.
As reported under U.S. generally accepted accounting principles
(GAAP) net loss was $988,000, or $0.04 per share for the second
quarter of fiscal 2005. This compared with net income of $189,000, or
$0.01 per share, for the second quarter of fiscal 2004 and with net
income of $1.7 million, or $0.08 per share, for the first quarter of
fiscal 2005.
"While we believe the fundamentals of our business are solid, we
are disappointed with our results for the second quarter which were
primarily impacted by delayed customer purchasing decisions due to
what we believe to be a temporary slow down in the business," said
Adam Kablanian, Virage Logic's president and chief executive officer.
"Beyond the impact of these business conditions, we also experienced
some operational issues that negatively impacted our ability to
fulfill existing orders. We are addressing these issues and are
confident that these measures together with our leading technology
offering and solid business model will enable us to bring the
company's financial performance back to profitability."
Continued Kablanian, "During the quarter, we launched our Silicon
Aware IP initiative, which calls for Virage Logic's entire product
portfolio of Physical IP -- including memories, logic and I/Os -- to
be designed and tightly integrated with embedded Infrastructure IP for
test, diagnostics, repair, and yield enhancements. The benefits that
Silicon Aware IP delivers, including optimized yield, improved
reliability and rapid time-to-volume, are particularly significant at
the advanced process nodes. We believe that this initiative is the
right strategic direction for the company to further extend its
competitive leadership position at advanced process nodes and we are
encouraged by the increasing customer adoption of our Self-Test and
Repair (STAR) Memory System(TM), which represents the company's first
Silicon Aware IP offering."
For the first six months of fiscal 2005, revenues were $28.6
million, up 20 percent from $23.8 million for the first six months of
fiscal 2004. Net income for the first six months of fiscal 2005 was
$751,000, or $0.03 per share, compared with a net loss of $170,000, or
$0.01 per share, for the first six months of fiscal 2004.
Recent Business Highlights
During the second quarter and more recently, Virage Logic:
-- Signed another 65-nanometer agreement, marking the third
65-nanometer agreement signed to date for Virage Logic's
semiconductor IP
-- Signed a total of five new direct royalty-bearing agreements
for the STAR Memory System, the company's first Silicon Aware
IP product, bringing the total number of STAR Memory System
agreements signed to date to 114
-- Booked a total of five new 90-nanometer agreements, including
one with a new customer
-- Signed seven new ASAP Logic(TM) and IPrima(TM) Foundation
semiconductor IP platform agreements
-- Qualified its Non-Volatile Electrically Alterable (NOVeA(R))
embedded memories for production on UMC's 0.18-micron CMOS
logic process, enabling customers to source cost-effective
non-volatile memories for applications requiring security,
encryption, unique device identification, analog trimming, and
silicon repair with no additional mask or process steps
required
-- Recorded revenue under licensing agreements from 44 customers
-- 41 existing and three new.
Business Outlook
Virage Logic also announced today its business outlook for the
third quarter of fiscal 2005. The company currently anticipates total
revenues in the range of approximately $14.5 million to $15.0 million.
Expected total revenues for the quarter are anticipated to include
royalties of approximately $2.9 million. The company expects to report
GAAP net income of approximately $0.02 to $0.03 per diluted share.
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.
Webcast and Taped Replay
Virage Logic's management plans to hold a teleconference on
second-quarter 2005 results at 1:30 p.m. PT / 4:30 p.m. ET today. A
live webcast of management's teleconference regarding second-quarter
results will be available to all investors and an archived webcast
will be available from April 21, 2005 until April 21, 2006 on the
investor relations page of Virage Logic's website at
http://www.viragelogic.com. In addition, a telephonic replay will be
available through April 28, 2005 at (719) 457-0820, access code
9094245.
About Virage Logic
Founded in 1996, Virage Logic Corporation (Nasdaq:VIRL) rapidly
established itself as a technology and market leader in providing
advanced embedded memory intellectual property (IP) for the design of
complex integrated circuits. Today the company is a global leader in
semiconductor IP platforms comprising embedded memories, standard
cells, and I/Os and is pioneering the development of a new class of IP
called Silicon Aware IP. Silicon Aware IP tightly integrates Physical
IP (memory, logic and I/Os) with the embedded test, diagnostic, and
repair capabilities of Infrastructure IP to help ensure
manufacturability and optimized yield at the advanced process nodes.
Virage Logic's highly differentiated product portfolio provides higher
performance, lower power, higher density and optimal yield to
foundries, integrated device manufacturers (IDMs) and fabless
customers who develop products for the consumer, communications and
networking, hand-held and portable, and computer and graphics markets.
The company's comprehensive quality efforts are validated in its
FirstPass-Silicon Characterization Lab, which helps ensure high
quality, reliable IP across a wide range of foundries and process
technologies. Headquartered in Fremont, California, Virage Logic has
R&D, sales and support offices worldwide. For more information, visit
www.viragelogic.com.
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 operational issues, 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 improve its
operations; its ability to forecast its business, including its
revenue, income and order flow 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 or fluctuations
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, 2004, 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
Unaudited Consolidated Statements of Operations
(In thousands, except per-share amounts)
Three Months Ended Six Months Ended
------------------- -------------------
Mar. 31, Mar. 31, Mar. 31, Mar. 31,
2005 2004 2005 2004
--------- --------- --------- ---------
Revenues:
License $10,109 $11,212 $23,171 $20,686
Royalties 2,675 1,765 5,472 3,151
--------- --------- --------- ---------
Total revenues 12,784 12,977 28,643 23,837
Cost and expenses:
Cost of revenues 3,102 2,867 6,139 5,303
Research and development 5,089 4,639 9,862 9,052
Sales and marketing 4,170 3,714 7,983 6,962
General and administrative 2,109 1,636 4,043 3,081
Stock-based compensation 339 49 339 99
--------- --------- --------- ---------
Total cost and expenses 14,809 12,905 28,366 24,497
--------- --------- --------- ---------
Operating income (loss) (2,025) 72 277 (660)
Interest income and other, net 444 136 738 304
--------- --------- --------- ---------
Income (loss) before taxes (1,581) 208 1,015 (356)
Income tax provision (benefit) (593) 19 264 (186)
--------- --------- --------- ---------
Net income (loss) $(988) $189 $751 $(170)
========= ========= ========= =========
Earnings per share:
Basic $(0.04) $0.01 $0.03 $(0.01)
Diluted $(0.04) $0.01 $0.03 $(0.01)
Shares used in computing per
share amounts:
Basic 22,140 21,373 21,959 21,277
Diluted 22,140 22,168 22,896 21,277
Virage Logic Corporation
Unaudited Consolidated Balance Sheets
(In thousands)
Mar. 31, 2005 Sept. 30, 2004
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $31,877 $28,746
Short-term investments 22,454 27,144
Accounts receivable, net 15,051 17,756
Costs in excess of billings on
uncompleted contracts 1,069 670
Prepaid expenses and other assets 4,949 4,079
Taxes receivable 315 1,302
-------------- --------------
Total current assets 75,715 79,697
Property, equipment and leasehold
improvements, net 5,655 4,090
Goodwill 9,782 9,782
Other intangible assets, net 2,568 2,762
Deferred tax assets 5,225 5,225
Long-term investments 13,367 7,222
Other long-term assets 1,240 410
-------------- --------------
Total assets $113,552 $109,188
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,176 $506
Accrued expenses 4,575 5,019
Deferred revenue 6,547 7,548
Income taxes payable 2,350 3,569
-------------- --------------
Total current liabilities 14,648 16,642
Deferred tax liability 1,035 1,035
-------------- --------------
Total liabilities 15,683 17,677
Stockholders' equity:
Common stock 22 22
Additional paid-in capital 117,613 112,457
Accumulated other comprehensive income
(loss) 423 (28)
Accumulated deficit (20,189) (20,940)
-------------- --------------
Total stockholders' equity 97,869 91,511
-------------- --------------
Total liabilities and
stockholders' equity $113,552 $109,188
============== ==============
Virage Logic Corporation
Unaudited Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended
March 31,
-------------------
2005 2004
--------- ---------
OPERATING ACTIVITIES:
Net income (loss) $(988) $189
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Provision for doubtful accounts (41) (43)
Depreciation 570 817
Amortization of intangible assets 97 96
Expense related to stock-based compensation 339 49
Changes in operating assets and liabilities:
Accounts receivable 1,964 (767)
Costs in excess of billings on uncompleted
contracts (244) 130
Prepaid expenses and other assets (307) 137
Taxes receivable 989 (259)
Accounts payable 301 (325)
Accrued expenses (956) (141)
Deferred revenue 841 (825)
Income tax payable (1,294) -
--------- ---------
Net cash provided by (used in) operating
activities 1,271 (942)
INVESTING ACTIVITIES:
Purchase of property and equipment (1,781) (315)
Purchase of investments (4,203) (130)
Proceeds from maturities of investments 5,941 7,177
Payment of merger-related obligation (500) (500)
--------- ---------
Net cash provided by (used in) investing
activities (543) 6,232
--------- ---------
FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 2,304 1,013
--------- ---------
Net cash provided by financing activities 2,304 1,013
--------- ---------
Effect of exchange rates on cash (18) -
--------- ---------
Net increase in cash and cash equivalents 3,014 6,303
--------- ---------
Cash and cash equivalents at beginning of period 28,863 49,043
--------- ---------
Cash and cash equivalents at end of the period $31,877 $55,346
========= =========
CONTACT: Virage Logic Corporation
Mike Seifert, 510-360-8025
michael.seifert@viragelogic.com