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PDF Solutions® Reports Fourth Quarter 2008 Results

Feb 5, 2009 - SAN JOSE, Calif. (PDF Solutions, Inc.)

PDF Solutions, Inc. (NASDAQ: PDFS) the leading provider of yield improvement technologies and services for the integrated circuit (IC) manufacturing process life cycle, today announced financial results for its fourth fiscal quarter ended December 31, 2008.

Total revenue for the fourth fiscal quarter of 2008 totaled $13.8 million, down 26% from $18.8 million in the third fiscal quarter of 2008 and down 44% when compared with total revenue of $24.6 million for the fourth fiscal quarter of 2007. Gain share revenue totaled $2.5 million, down 53% from $5.4 million in the third fiscal quarter of 2008 and down 61% when compared to gain share revenue of $6.5 million for the fourth fiscal quarter of 2007.

Net loss for the fourth fiscal quarter was $79.1 million, or $2.92 per basic and diluted share, compared to a net loss of $12.2 million, or $0.44 per basic and diluted share in the third fiscal quarter of 2008 and net income for the fourth fiscal quarter of 2007 of $1.1 million, or $0.04 per basic and diluted share.

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 (loss), which excludes stock-based compensation expense, amortization of acquired technology and intangible assets, restructuring charges, impairment charges on goodwill and certain intangible assets, and their related income tax effects, as applicable. Using this non-GAAP measure, the non-GAAP net loss for the fourth fiscal quarter of 2008 totaled $3.8 million or $0.14 per basic and diluted share, compared with non-GAAP net income of $5.9 million, or $0.21 per basic and diluted share, for the fourth fiscal quarter of 2007.

During the fourth quarter ended December 31, 2008, PDF Solutions utilized a portion of the $10 million share repurchase plan previously authorized by its Board of Directors to repurchase 1.7 million of its shares on the open market at a weighted average cost of $2.26 per share, for a total repurchase value of $3.8 million. Early in the fourth quarter ended December 31, 2008, PDF Solutions completed its acquisition of the fault detection and classification business of Triant Holdings, Inc., a British Columbia corporation utilizing an additional $1.6 million. Additional information regarding this acquisition is described in the filings by the Company with the Securities and Exchange Commission on September 2, 2008 and October 14, 2008 on Form 8-K.

As previously announced, PDF Solutions 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/events.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. A copy of this press release, including the disclosure and reconciliation of certain non-GAAP financial measures to the comparable GAAP measures, which non-GAAP measures may be used periodically by PDF Solutions' management when discussing financial results with investors and analysts, will also 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 technology and intangible assets, restructuring charges, impairment charges on goodwill and certain intangible assets, and their related income tax effects, as applicable. PDF Solutions' management believes that the presentation of these measures provides useful supplemental information to investors regarding PDF Solutions' operating results. These non-GAAP financial measures are used by management internally to measure the company's profitability and performance. PDF Solutions' management believes that excluding the effects of stock-based compensation expense, amortization of acquired technology and intangible assets, restructuring charges, impairment charges on goodwill and certain intangible assets, and their related income tax effects, as applicable, provides a useful supplemental measure of the company's ongoing operations in light of the fact that none of these categories of expense has a current effect on the future uses of cash (with the exception of restructuring charges) 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 Solutions 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 life cycle. 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. 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, mstria®, 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, Korea, Singapore and Taiwan. For the company's latest news and information, visit http://www.pdf.com/.

Characterization Vehicle, CV, dataPOWER, mstria, PDF Solutions, and the PDF Solutions logo are registered trademarks of PDF Solutions, Inc.


PDF SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)

   
December 31,
December 31,
 
2008
2007
ASSETS          
Current assets:          
Cash and cash equivalents   $ 31,686   $ 35,315  
Short-term investments   9,051   9,949  
Accounts receivable (net)   24,989   38,526  
Prepaid expenses, deferred tax assets, and other current assets   5,147   5,030  
Total current assets   70,873   88,820  
Property and equipment, net   2,675   3,621  
Non-current investments   718   ---  
Goodwill   ---   65,170  
Intangible assets, net   4,730   12,818  
Deferred tax assets and other non-current assets   631   8,922  
Total assets   $ 79,627   $ 179,351  
           
LIABILITIES AND STOCKHOLDERS 0045QUITY          
           
Current liabilities:          
Current portion of long-term debt   $ 370   $ 421  
Accounts payable   1,384   3,469  
Accrued compensation and related benefits   7,169   5,950  
Taxes payable and other accrued liabilities 3,079   2,812  
Deferred revenue   1,792   3,159  
Billings in excess of recognized revenue   748   553  
Total current liabilities   14,542   16,364  
Long-term debt   512   907  
Long-term taxes payable   3,356   5,581  
Long-term other liabilities   1,447   29  
Total liabilities   19,857   22,881  
           
Stockholders 0020 equity:          
Common stock   4   4  
Additional paid-in-capital   189,132   181,566  
Treasury stock, at cost   (18,402)   (11,524)  
Accumulated deficit   (112,620)   (16,892)  
Accumulated other comprehensive income   1,656   3,316  
Total stockholders 0065quity   59,770   156,470  
Total liabilities and stockholders 0065quity   $ 79,627   $ 179,351  



PDF SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)

    Three Months Ended   Year Ended  
    December 31, 2008   December 31, 2007   December 31, 2008   December 31, 2007  
                   
Revenue:                  
Design-to-silicon-yield solutions   $ 11,289   $ 18,058   $ 55,113   $ 70,376  
Gainshare performance incentives   2,522   6,497   18,924   24,087  
Total revenue   13,811   24,855   74,037   94,463  
                   
Cost of design-to-silicon-yield solutions:                  
Direct costs of design-to-silicon-yield solutions:   6,926   9,494   29,111   32,470  
Amortization of acquired technology   699   632   2,592   5,148  
Total cost of design-to-silicon-yield solutions   7,625   10,126   31,703   37,618  
Gross margin   6,186   14,429   42,334   56,845  
                   
Operating Expenses:                  
Research and development   7,949   9,899   33,994   36,074  
Selling, general and administrative   4,432   6,613   21,778   24,891  
Amortization of other acquired intangible assets   310   393   893   3,422  
Restructuring charges   1,929   ---   3,400   ---  
Impairment on goodwill and itangible assets   70,251   ---   70,251   ---  
Total operating expenses   84,871   16,905   130,316   64,387  
                   
Loss from operations   (78,685)   (2,476)   (87,982)   (7,542)  
Interest and other income (expense), net   (44)   544   353   1,891  
Loss before taxes   (78,729)   (1,932)   (87,629)   (5,651)  
Income tax provision (benefit)   322   (3,000)   8,099   (2,724)  
Net income (loss)   $ (79,051)   $ 1,068   $ (95,728)   $ (2,927)  
                   
Net income (loss) per share:                  
Basic   $ (2.92)   $ 0.04   $ (3.48)   $ (0.10)  
Diluted   $ (2.92)   $ 0.04   $ (3.48)   $ (0.10)  
                   
Weighted average common shares:                  
Basic   27,065   27,964   27,514   28,066  
Diluted   27,065   28,246   27,514   28,066  



PDF SOLUTIONS, INC.
NON-GAAP RESULTS
(In thousands, except per share amounts)

  Three Months Ended
  December 31, 2008 December 31, 2007  
         
GAAP net income (loss) $ (79,051)   $ 1,068  
Stock-based compensation expense - cost of design-to-silicon yield solutions 496   765  
Stock-based compensation expense - research and development 552   888  
Stock-based compensation expense - selling, general and aministrative 730   1,124  
Amortization of aquired core technology 699   632  
Aortization of other acquired intangible assets 310   393  
Restructuring charges 1,929   ---  
Impairment on goodwill and intangible assets 70,251   ---  
Tax impact 322   976  
Non-GAAP net income (loss) $ (3,762)   $ 5,846  
         
Net income (loss) per basic and diluted share $ (2.92)   $ 0.04  
Non-GAAP net income (loss) per diluted share $ (0.14)   $ 0.21  
Shares used in computing diluted non-GAAP measure of net income (loss) per share 27,065   28,246  

 

© 2008 PDF Solutions, Inc.