EX-99.1 2 f35044exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1
News Release
     
Investor Relations Contact:
  Investor Relations Contact:
Steven Melman, VP, 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 Third Quarter
2007 Results
Quarterly Gain Share A Strong Contributor to Overall Revenue Growth
     SAN JOSE, Calif.—October 31, 2007—PDF Solutions, Inc. (NASDAQ: PDFS) the leading provider of yield improvement technologies and services for the integrated circuit (IC) manufacturing process lifecycle, today announced financial results for its third fiscal quarter ended September 30, 2007.
     Revenue for the third fiscal quarter of 2007 totaled $24.1 million, an increase of 24%, compared with revenue of $19.4 million for the third fiscal quarter of 2006. Gain share revenue for the third fiscal quarter of 2007 totaled $6.8 million, an increase of 55%, compared to $4.4 million for the third fiscal quarter of 2006. On a GAAP basis, net loss for the third fiscal quarter of 2007 totaled approximately $939,000, or $0.03 per basic share, compared with net income of approximately $570,000, or $0.02 per basic and diluted share, for the third fiscal quarter of 2006.
     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 their related income tax effects. Using this non-GAAP measure, net income for the third fiscal quarter of 2007 totaled approximately $5.3 million, or $0.19 per diluted share, compared with non-GAAP net income of approximately $3.6 million, or $0.13 per diluted share, for the third fiscal quarter of 2006.
     Additionally, during the third quarter ended September 30, 2007, PDF Solutions utilized the remaining balance available under the $10 million share repurchase plan previously
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authorized by its Board of Directors. During the quarter, PDF Solutions repurchased 437,287 of its shares on the open market at a weighted average cost of $10.18, for a total repurchase value of approximately $4.5 million. On October 29, 2007, PDF Solutions’ Board of Directors authorized an additional $10.0 million share repurchase, to be utilized over the upcoming three years.
     As previously announced, PDF will discuss these results on a live conference call beginning at 3:00 p.m. Pacific Time/6:00 p.m. Eastern Time today. The call will be simultaneously web cast on PDF Solutions’ website at http://ir.pdf.com/medialist.cfm. A replay of the web cast 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, 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, 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 the leading provider of yield improvement technologies and services for the IC manufacturing process lifecycle.  PDF Solutions offers solutions that are designed to enable clients to lower costs of IC design and manufacture, enhance time to market, and improve profitability by addressing design and manufacturing interactions from product design to initial process ramps to mature manufacturing operations. 
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PDF Solutions’ Characterization Vehicle® (CV®) test chips provide the core modeling capabilities, and are used by -more- leading manufacturers than any other test chips in the industry.  PDF Solutions’ industry leading yield management system software, dataPOWER®, and fault detection and classification software, maestria®, enhance yield improvement and production control activities at leading fabs around the world. Headquartered in San Jose, Calif., PDF Solutions operates worldwide with additional offices in China, Europe, Japan and Korea. For the company’s latest news and information, visit http://www.pdf.com/.
Characterization Vehicle, CV, dataPOWER, Maestria, PDF Solutions, and the PDF Solutions logo are registered trademarks of PDF Solutions, Inc.
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PDF SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
                 
    September 30,     December 31,  
    2007     2006  
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 38,461     $ 36,451  
Short-term investments
     11,500       16,402  
Accounts receivable
     32,609       27,575  
Prepaid expenses and other current assets
     2,825       2,796  
Deferred tax assets
     2,644       2,581  
 
            
Total current assets
     88,039       85,805  
Property and equipment, net
     3,761       3,916  
Goodwill
     64,593       60,034  
Intangible assets, net
     13,855       13,605  
Deferred tax assets
     6,265       4,994  
Other assets
     472       503  
 
            
Total assets
   $ 176,985     $ 168,857  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities:
                
Current portion of long-term debt
   $ 403     $ 302  
Accounts payable
     2,424       3,182  
Accrued compensation and related benefits
     5,430       3,325  
Other accrued liabilities
     2,541       3,843  
Taxes payable
     2,919       4,767  
Deferred revenue
     4,221       3,705  
Billings in excess of recognized revenue
     301       95  
 
            
Total current liabilities
     18,239       19,219  
Long-term debt
     946       1,198  
Long-term taxes payable
     5,355       —  
Other liabilities
     78       221  
 
            
Total liabilities
     24,618       20,638  
 
            
Stockholders’ equity:
                
Common stock
     4       4  
Additional paid-in-capital
     177,992       167,323  
Treasury stock at cost
     (10,001 )     (5,549 )
Accumulated deficit
     (18,423 )     (13,890 )
Accumulated other comprehensive income
     2,795       331  
 
            
Total stockholders’ equity
     152,367       148,219  
 
            
Total liabilities and stockholders’ equity
   $ 176,985     $ 168,857  
 
            
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PDF SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,     September 30,     September 30,  
    2007     2006     2007     2006  
Revenue:
                                
Design-to-silicon-yield solutions
                                
Integrated solutions
   $ 16,294     $ 11,153     $ 46,090     $ 33,859  
Software licenses
     967       3,811       6,228       8,217  
Gain share
     6,807       4,400       17,590       15,155  
 
                        
Total revenue
     24,068       19,364       69,908       57,231  
 
                        
 
                                
Cost of design-to-silicon-yield solutions:
                                
Direct costs of design-to-silicon-yield solutions
                                
Integrated solutions
     8,052       6,734       22,842       19,808  
Software licenses
     48       58       134       98  
Amortization of acquired core technology
     1,331       1,266       4,516       3,798  
 
                        
Total cost of design-to silicon-yield solutions
     9,431       8,058       27,492       23,704  
 
                        
Gross margin
     14,637       11,306       42,416       33,527  
 
                                
Operating expenses:
                                
Research and development
     9,008       6,416       26,175       19,543  
Selling, general and administrative
     5,789       5,028       18,278       14,850  
Amortization of other acquired intangible assets
     985       235       3,029       705  
 
                        
Total operating expenses
     15,782       11,679       47,482       35,098  
 
                        
 
                                
Loss from operations
     (1,145 )     (373 )     (5,066 )     (1,571 )
Interest and other income, net
     322       892       1,347       2,338  
 
                        
Income (loss) before taxes
     (823 )     519       (3,719 )     767  
 
                                
Tax provision (benefit)
     116       (51 )     276       776  
 
                        
Net income (loss)
   $ (939 )   $ 570     $ (3,995 )   $ (9 )
 
                        
 
                                
Net income (loss) per share:
                                
Basic
   $ (0.03 )   $ 0.02     $ (0.14 )   $ (0.00 )
 
                        
Diluted
   $ (0.03 )   $ 0.02     $ (0.14 )   $ (0.00 )
 
                        
 
                                
Weighted average common shares:
                                
Basic
     28,223       26,860       28,127       26,694  
 
                        
Diluted
     28,223       27,621       28,127       26,694  
 
                        
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PDF SOLUTIONS, INC.
IMPACT OF NON-GAAP ADJUSTMENTS ON REPORTED NET INCOME (LOSS) (UNAUDITED)
(In thousands, except per share amounts)
                                                 
    Three Months Ended     Three Months Ended  
    September 30, 2007     September 30, 2006  
    As reported     Adjustment     Non-GAAP     As reported     Adjustment     Non-GAAP  
Revenue:
                                                
Design-to-silicon-yield solutions
                                                
Integrated solutions
   $ 16,294     $ —     $ 16,294     $ 11,153     $ —     $ 11,153  
Software licenses
     967       —       967       3,811       —       3,811  
Gain share
     6,807       —       6,807       4,400       —       4,400  
 
                                    
Total revenue
     24,068       —       24,068       19,364       —       19,364  
 
                                                
Cost of design-to-silicon-yield solutions:
                                                
Direct costs of design-to-silicon-yield solutions
                                                
Integrated solutions
     8,052       (435) (a)     7,617       6,734       (443) (a)     6,291  
Software licenses
     48       —       48       58       —       58  
Amortization of acquired core technology
     1,331       (1,331) (b)     —       1,266       (1,266) (b)     —  
 
                                    
Total cost of design-to-silicon-yield solutions
     9,431       (1,766 )     7,665       8,058       (1,709 )     6,349  
 
                                    
Gross margin
     14,637       1,766       16,403       11,306       1,709       13,015  
 
                                                
Operating expenses:
                                                
Research and development
     9,008       (553) (a)     8,455       6,416       (443) (a)     5,973  
Selling, general and administrative
     5,789       (682) (a)     5,107       5,028       (621) (a)     4,407  
Amortization of other acquired intangible assets
     985       (985) (b)     —       235       (235) (b)     —  
 
                                    
Total operating expenses
     15,782       (2,220 )     13,562       11,679       (1,299 )     10,380  
 
                                    
 
                                                
Income (loss) from operations
     (1,145 )     3,986       2,841       (373 )     3,008       2,635  
Interest and other income, net
     322       —       322       892       —       892  
 
                                    
Income (loss) before taxes
     (823 )     3,986       3,163       519       3,008       3,527  
 
                                                
Tax provision (benefit)
     116       (2,280) (c)     (2,164 )     (51 )     (51) (c)     (102 )
 
                                    
Net income (loss)
   $ (939 )   $ 6,266     $ 5,327     $ 570     $ 3,059     $ 3,629  
 
                                    
 
                                                
Net income (loss) per share – diluted
   $ (0.03 )   $ 0.22     $ 0.19     $ 0.02     $ 0.11     $ 0.13  
 
                                    
 
                                                
Weighted average common shares – diluted
     28,223       28,713 (d)     28,713       27,621       27,621 (d)     27,621  
 
                                    
 
Notes:
(a)   The non-GAAP adjustments represent the reversal of stock-based compensation.
 
(b)   The non-GAAP adjustments represent the reversal of amortization of intangible assets.
 
(c)   The non-GAAP adjustments represent the tax impact from the reversal of stock-based compensation and amortization of intangible assets.
 
(d)   The shares used in computing non-GAAP net income for the three months ended September 30, 2007 and 2006 include the dilutive impact of common stock options.
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