Virage Logic Reports First-Quarter Fiscal 2006 Results; Revenue of $13.7 Million Increases by 7% over Q4 Fiscal 2005

FREMONT, Calif.—(BUSINESS WIRE)—Jan. 25, 2006— Virage Logic Corporation (Nasdaq: VIRL) today reported its financial results for the first fiscal quarter ended December 31, 2005.

Revenues for the first quarter of fiscal 2006 were $13.7 million, compared with $15.9 million for the first quarter of fiscal 2005 and $12.8 million for the fourth quarter of fiscal 2005. License revenue for the first quarter of fiscal 2006 was $10.4 million, compared with $13.1 million for the same period a year ago and $10.0 million for the prior quarter. Royalties for the first quarter of fiscal 2006 were $3.3 million, compared with $2.8 million for the first quarter of fiscal 2005 and $2.8 million for the fourth quarter of fiscal 2005.

As reported under U.S. generally accepted accounting principles (GAAP), net loss for the first quarter of fiscal 2006 was $242,000, or $0.01 per share, compared with net income of $1.7 million, or $0.08 per share for the first quarter of fiscal 2005 and net income of $232,000 or $0.01 per share for the fourth quarter of fiscal 2005.

Net loss for the first quarter of fiscal 2006 included $1.9 million of stock-based compensation expense. Without the adoption of FAS123R, the company would have reported a net loss of $95,000 or $0.00 per share.

"We believe that our strategy of capturing both 90- and 65-nanometer designs during this current upturn in the semiconductor industry is beginning to pay off as royalty revenues begin to ramp," said Adam Kablanian, Virage Logic's president and chief executive officer. "At these advanced process nodes, our products hold a commanding technological lead over our competitors and offer customers key yield improvements and time-to-market advantages in implementing designs that utilize Virage Logic's semiconductor intellectual property."

Virage Logic also announced today its business outlook for the second quarter of fiscal 2006. The company currently anticipates total revenues of approximately $14.5 million to $15.0 million. Expected total revenues for the quarter are anticipated to include royalties of approximately $4.0 million to $4.5 million. The company expects to report a GAAP net loss of approximately $0.00 to $0.01 per share for the three months ending March 31, 2006. The company expects $1.8 million of stock-based compensation expense for the second quarter ending March 31, 2006. Without the adoption of FAS123R, the company would expect earnings per diluted share of $0.02 to $0.04. 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.

Virage Logic's management plans to hold a teleconference on first-quarter 2006 results at 1:30 p.m. PT / 4:30 p.m. ET today. A live webcast of management's teleconference regarding first-quarter results will be available to all investors, and an archived webcast will be available from January 25, 2006 until January 25, 2007 on the Investor Relations page of Virage Logic's website at In addition, a telephonic replay will be available through February 1, 2006 at (719) 457-0820, access code 5866433.

About Virage Logic

Founded in 1996, Virage Logic Corporation 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, logic, 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 uses its FirstPass-Silicon(TM) Characterization Lab for certain products to help 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

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 industry and company trends, business outlook and products. 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, 2005, and in Virage Logic's other periodic reports filed with the SEC, all of which are available from Virage Logic's website ( or from the SEC's website (, 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.

-- financial statements attached -

                       Virage Logic Corporation
            Unaudited Consolidated Statements of Operations
               (In thousands, except per-share amounts)

                                                       Three Months
                                                       December 31,
                                                        2005     2004
                                                     -------- --------
 License                                             $10,410  $13,062
 Royalties                                             3,315    2,797
                                                                                                    --------  --------
Total  revenues                                                                                13,725      15,859
Cost  and  expenses:
  Cost  of  revenues                                                                            3,179        3,037
  Research  and  development                                                            6,164        4,773
  Sales  and  marketing                                                                      4,260        3,813
  General  and  administrative                                                        2,756        1,934
                                                                                                          --------  --------
      Total  cost  and  expenses                                                        16,359      13,557
                                                                                                          --------  --------
      Operating  income  (loss)                                                        (2,634)      2,302
Interest  income  and  other,  net                                                      619            294
                                                                                                          --------  --------
      Income  (loss)  before  taxes                                                  (2,015)      2,596
Income  tax  provision  (benefit)                                                (1,773)          857
                                                                                                          --------  --------

      Net  income  (loss)                                                                      $(242)    $1,739
                                                                                                          ========  ========

Earnings  per  share:
  Basic                                                                                                $(0.01)      $0.08
                                                                                                          ========  ========
  Diluted                                                                                            $(0.01)      $0.08
                                                                                                          ========  ========

Shares  used  in  computing  per-share  amounts:
  Basic                                                                                                22,257      21,781
                                                                                                          ========  ========
  Diluted                                                                                            22,257      22,697
                                                                                                          ========  ========

                                              Virage  Logic  Corporation
                                  Unaudited  Consolidated  Balance  Sheets
                                                        (In  thousands)

                                                                                                    December      September
                                                                                                          31,                30,
                                                                                                        2005              2005
                                                                                                    ----------  ---------
Current  assets:
  Cash  and  cash  equivalents                                                $    32,121    $  26,841
  Short-term  investments                                                            35,118        34,410
  Accounts  receivable,  net                                                        13,858        14,201
  Costs  in  excess  of  related  billings  on
    uncompleted  contracts                                                                  408              896
  Prepaid  expenses  and  other  current  assets                        3,981          4,517
  Taxes  receivable                                                                              806              493
                                                                                                      ---------    --------
          Total  current  assets                                                        86,292        81,358

Property,  equipment  and  leasehold  improvements,
  net                                                                                                    4,678          5,093
Goodwill                                                                                            9,782          9,782
Other  intangible  assets,  net                                                    2,279          2,375
Deferred  tax  assets                                                                    10,536          8,604
Long-term  investments                                                                  3,791          6,587
Other  long-term  assets                                                                    157              695
                                                                                                      ---------    --------

          Total  assets                                                                  $  117,515    $114,494
                                                                                                      =========    ========

Current  liabilities:
  Accounts  payable                                                                  $          453    $        770
  Accrued  expenses                                                                          4,492          3,623
  Deferred  revenue                                                                          8,904          8,440
  Income  taxes  payable                                                                  1,455          1,441
                                                                                                      ---------    --------
          Total  current  liabilities                                              15,304        14,274
Deferred  tax  liabilities                                                                852              852
                                                                                                      ---------    --------
          Total  liabilities                                                              16,156        15,126

Stockholders'  equity:
  Common  stock                                                                                        23                23
  Additional  paid-in  capital                                                  122,821      120,548
  Accumulated  other  comprehensive  income  (loss)                      12                52
  Accumulated  deficit                                                                (21,497)    (21,255)
                                                                                                      ---------    --------
          Total  stockholders'  equity                                          101,359        99,368
                                                                                                      ---------    --------

          Total  liabilities  and  stockholders'  equity      $  117,515    $114,494
                                                                                                      =========    ========

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