Year-over-year revenue growth of 44-percent driven by new and expanded product lines
Fremont, CA - November 4, 2002, News Release Highlights:
- Record Q4 revenues of $13.1 million, up 44 percent over Q4 of fiscal 2001 and 7 percent sequentially - Record Q4 pro forma operating income(1) of $2.0 million, up 79 percent over Q4 of fiscal 2001 and 5 percent sequentially - Record Q4 pro forma net income(1) of $1.5 million, or $0.07 per diluted share - Q4 GAAP (reported) net income of $5.4 million, or $0.25 per diluted share, including $5.2 million for a one-time recovery of an impairment charge
Virage Logic Corp. (Nasdaq:VIRL), a global leader in application-optimized semiconductor IP platforms, today reported record revenues for the fourth quarter and fiscal year 2002.
Fourth-quarter revenues were $13.1 million, up 44 percent from $9.1 million a year ago, and up 7 percent from $12.2 million for the third quarter. Total license revenue for the fourth quarter was $12.6 million, up from $8.9 million for the fourth quarter of fiscal 2001, and up sequentially from $11.8 million. Royalties for the fourth quarter were $475,000, compared with royalties of $176,000 for the same quarter a year ago and $435,000 for the previous quarter.
As reported under generally accepted accounting principles (GAAP) in the U.S., net income for the fourth quarter of fiscal 2002 was $5.4 million, or $0.25 per diluted share. This included non-cash amortization expenses for deferred stock compensation of $1.5 million and $97,000 for amortization of purchased technology related to the company's acquisition of In-Chip Systems, Inc. This also included other income of $5.5 million consisting of net interest income of $312,000, and a recovery of an impairment charge from the third quarter of fiscal 2002 in the amount of $5.2 million resulting from a payment from Monolithic System Technology ("MoSys") as part of MoSys' acquisition of ATMOS Corporation, in which Virage Logic had made an investment. Actual net income under GAAP for the same period a year ago, including non-cash amortization expenses for deferred stock compensation and warrants of $1.2 million, as well as net interest income of $624,000, was $234,000, or $0.01 per diluted share.
Pro forma net income for the fourth quarter of fiscal 2002 was $1.5 million, or $0.07 per diluted share, compared with $1.1 million, or $0.05 per diluted share for the same period of fiscal 2001. Pro forma net income for the fourth quarter included pro forma operating income of $2.0 million, which was up 79 percent from $1.1 million in the same period a year ago and up five percent sequentially from $1.9 million, and net interest income of $312,000, less a tax provision of $830,000.
For fiscal year 2002, revenues grew to $45.6 million, up 44 percent from revenues of $31.8 million for fiscal 2001. As reported under GAAP, net income for fiscal 2002 was $225,000, or $0.01 per diluted share. This included non-cash amortization expenses for deferred stock compensation and warrants of $4.2 million, a one-time non-cash charge of $1.1 million for in-process research and development related to In-Chip, $129,000 for amortization of purchased technology related to In-Chip, an impairment charge (net of recovery) of $124,000 related to the investment in ATMOS, and net interest income of $1.3 million. This compared with a reported net loss of $2.1 million, or $0.11 per diluted share, including non-cash amortization expenses for deferred stock compensation and warrants of $6.3 million, and net interest income of $3.1 million for fiscal 2001.
Pro forma net income for fiscal 2002, including net interest income of $1.3 million, was $5.2 million, or $0.25 per diluted share. This compared with pro forma net income of $4.0 million, including net interest income of $3.1 million, or $0.20 per diluted share, for fiscal 2001.
"During fiscal 2002, we continued to expand our competitive lead by introducing advanced embedded memory and logic products, which continued to drive our revenue growth as we took advantage of semiconductor industry outsourcing trends," said Adam Kablanian, president and chief executive officer. "As we move into fiscal 2003, we continue to believe that our growing product portfolio, coupled with our customers' use of our semiconductor intellectual property, will continue to enable customers to cost-effectively meet their current and future design needs."
Additional Recent Business Highlights
During the fourth quarter and more recently, Virage Logic:
- Announced a multi-year, multi-generation license agreement with STMicroelectronics (NYSE:STM) enabling it to source Virage Logic's entire portfolio of embedded memory technology and software tools for STMicroelectronic's 90-nanometer (nm) and 65-nm technologies, as well as its current 0.13-micron technology process
- Announced an agreement with ARM (LSE:ARM; Nasdaq:ARMHY) to integrate Virage Logic's ASAP embedded SRAM into ARM's memory cores based on Taiwan Semiconductor Manufacturing Company's (TSMC) and United Microelectronics Corporation's (UMC) 90-nm, 0.13-micron and 0.18-micron process technologies, in order to meet customers' stringent area, speed and power requirements for semiconductor devices,
- Signed a multi-year license agreement with QuickLogic (Nasdaq:QUIK) for Virage Logic's Area, Speed and Power (ASAP™) High-Speed (HS) embedded SRAM memory on Tower Semiconductor's 0.18-micron process, enabling QuickLogic to offer higher-performance and more cost effective embedded standard products.
- Released its Ultra Low Power (ULP) embedded memory family of ASAP and STAR Memory System versions utilizing architecture that consumes four to 26 times less active power in wireless and portable electronic devices than competing memory products
- Introduced its new family of ASAP Logic(TM) products based on In-Chip's technology, marking the company's first foray into logic components with the ASAP Metal Programmable Cell Library and ASAP High-Density (HD) Standard Cell Library, and utilizing advanced technology to dramatically reduce the price and power consumption of the overall chip while improving performance.
- Signed six new direct royalty agreements for the STAR™ Memory System, bringing the total number of STAR licensees to more than 35; completed five new direct royalty agreements for NOVeA™, bringing the total number to seven.
- Shipped products under licensing agreements to 44 customers - 32 existing and 12 new, including Cypress Semiconductor, LSI Logic and NEC.
Virage Logic also reported today its current outlook for the first quarter and full-year fiscal 2003. Forward-looking statements for these periods are based on current expectations. Actual results may vary materially. Although this earnings 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.
Virage Logic's expectations for first-quarter 2003 results are as follows:
- Revenues of approximately $13.5 million to $13.9 million - Gross margin of about 80 percent - Pro forma operating expenses of approximately $8.5 million to $8.8 million. - Net interest income of about $250,000 - Effective tax rate of 36 percent. Virage Logic's expectations for full year fiscal 2003 results are as follows: - Revenues of approximately $56 million to $60 million - Gross margin of about 80 percent - Pro forma operating expenses of approximately $35 million to $38 million - Net interest income of about $1.0 million - Effective tax rate of 36 percent.
An archived webcast of management's conference call regarding fourth-quarter results will be available to all investors from October 30 until November 13, 2002 on the Virage Logic Website. In addition, a telephonic replay will be available through this date at 706-645-9291, access code 5986572.
(1) Pro forma operating income and net income represent the companys operating results, excluding non-cash items resulting from the revaluation of stock options and warrants in connection with the companys 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.
(2) For complete financial tables go to Virage Logic Investor Relations
About Virage Logic
Virage Logic (Nasdaq:VIRL) is a global leader in application-optimized semiconductor IP platforms based on memory, logic and design 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 graphics markets. For more information, please contact Virage Logic at www.viragelogic.com or telephone (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 continue to develop new products, 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, business and economic conditions generally and in the semiconductor industry in particular, competition in the market for embedded memories, and other risks including those described in the company's Annual Report on Form 10-K for the period ended September 30, 2001, filed with the Securities and Exchange Commission (SEC) on December 19, 2001, and in Virage Logic's other periodic reports filed with the SEC, all of which are available from Virage Logic 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.