LogicVision Reports Fourth Quarter and Fiscal Year 2005 Financial Results

Results Ahead of Guidance

SAN JOSE, Calif., Jan. 31 /PRNewswire-FirstCall/ -- LogicVision, Inc. (NASDAQ: LGVN), a leading provider of yield learning capabilities that enable its customers to quickly and effectively improve product yields, today announced financial results for the fourth quarter and fiscal year ended Dec. 31, 2005.

Fourth Quarter 2005 Results

Revenues in the fourth quarter of 2005 were $2.5 million, compared with $2.2 million in the third quarter of 2005.

Net loss in the fourth quarter of 2005 was $2.5 million, or a net loss of $0.13 per share, compared with a net loss of $2.9 million, or a net loss of $0.15 per share, reported in the third quarter of 2005.

Gross margins in the fourth quarter were 67 percent, compared with 66 percent in the third quarter.

Operating expenses, including restructuring charges, were $4.3 million in the fourth quarter, compared with $4.4 million in the third quarter of 2005. During Q4 the Company announced and executed a restructuring plan, incurring restructuring charges of $0.7 million. Reductions in personnel, primarily in administration, engineering and marketing, and the closing of a facility in Canada, together with the downsizing of its facility in India, accounted for these charges. The decrease in operating expenses resulted from lower payroll costs, as headcount was trimmed from 106 to 78 employees and a portion of accrued bonus expense was reversed as operating results were below planned thresholds.

At Dec. 31, 2005, LogicVision had $10.7 million in cash, cash equivalents and investments, and no bank debt.

New orders received during the fourth quarter totaled $3.3 million. The company exited the fourth quarter with a backlog of $20.3 million, including $6.7 million of deferred revenues, compared with a backlog of $19.8 million, including $5.7 million of deferred revenues, at the end of the third quarter. Approximately $7.2 million of the total backlog is expected to become recognized as revenue during 2006.

Fiscal Year 2005 Results

For the fiscal year ended Dec. 31, 2005, LogicVision reported revenues of $10.9 million, an 8 percent increase from revenues of $10.1 million in 2004. The net loss for 2005 was $10.0 million, or a net loss of $0.53 per share, compared with the 2004 net loss of $8.4 million or a net loss of $0.51 per share. Gross margins in 2005 were 71 percent, compared with 68 percent in the prior year.

"We are pleased that we are on a growth path again. We had annual bookings of $13.5 million in 2005. This is a 37% increase over 2004 and positions us well for 2006," said James T. Healy, president and CEO of LogicVision.

"Last quarter we introduced ATPG Compression, an additional LV2005 capability, allowing our customers to use our embedded test with ATPG compression in a single flow. We expect this capability will extend the usage of LV2005 to less complex designs, thus expanding our market coverage. Last quarter we also had our first sale of our SiVision yield learning solution to one of our top embedded test customers," Healy said.

    Guidance for the First Quarter of 2006

    * Revenues in Q1 are expected to be in the range of $2.2 million to
      $2.3 million

    * Net loss in Q1 is expected to be in the range of $2.0 million to
      $2.2 million, or a net loss in the range of $0.11 to $0.12 per share.

    * Cash, cash equivalents and investments are expected to be no less than
      $9 million at the end of Q1.

    Conference Call

LogicVision will broadcast its conference call discussion of fourth quarter and 2005 financial results today, Jan. 31, 2006 at 2 p.m. Pacific time. To listen to the call, please dial (800) 619-7886, pass code: "LogicVision." A taped replay will be made available approximately one hour after the conclusion of the call and will remain available for one week. To access the replay, dial (203) 369-3735. The LogicVision financial results conference call will be available via a live web cast on the investor relations section of the company's web site at http://www.logicvision.com. An archived web cast of the call will be available at http://www.logicvision.com for one year.

About LogicVision, Inc.

LogicVision, Inc. provides unique yield learning capabilities in the design for manufacturing space. These capabilities enable its customers, leading semiconductor companies, to more quickly and efficiently learn to improve product yields. The company's advanced Design for Test (DFT) product line, ETCreate, works together with ETAccess and SiVision yield learning applications to enable increased profit by reducing device field returns, reducing test costs, and accelerating both time to market and time to yield. LogicVision solutions are used in the development of semiconductor ICs for products ranging from digital consumer goods to wireless communications devices and satellite systems. LogicVision was founded in 1992 and is headquartered in San Jose, Calif. For more information visit http://www.logicvision.com.


Except for the historical information contained herein, the matters set forth in this press release, including statements as to the Company's outlook, expected bookings, the features, benefits and enhancements of the Company's products, market opportunities, and the Company's expected financial results, including revenues and net loss, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, including, but not limited to, the possibility that orders could be modified, cancelled or not renewed, the ability of the Company to negotiate and sign customer agreements and obtain purchase orders, trends in capital spending in the semiconductor industry, the timing and nature of customer orders, whether customers accept the Company's new products, the impact of competitive products and alternative technological advances, the Company's ability to realize anticipated savings from the restructuring, and other risks detailed in LogicVision's Form 10-K for the year ended December 31, 2004, Form 10-Q for the quarter ended Sept. 30, 2005 and from time to time in LogicVision's SEC reports. These forward-looking statements speak only as of the date hereof. LogicVision disclaims any obligation to update these forward-looking statements.

LogicVision, Embedded Test and LogicVision logos are trademarks or registered trademarks of LogicVision, Inc. in the United States and other countries. All other trademarks and service marks are the property of their respective owners.

                      - Summary financial data follows -

                               LOGICVISION, INC
                   (in thousands, except per share amount)

                                                                Twelve Months
                                            Three Months Ended      Ended
                                                                                  December  31,            December  31,
                                                                                            2005          2004          2005          2004
            License                                                              $1,295      $1,575      $6,735      $5,686
            Service                                                                1,147        1,118        3,951        4,095
            Product                                                                      28              35            196            313
                    Total  revenues                                          2,470        2,728      10,882      10,094

        Cost  of  revenues:
            License                                                                    266            187            916            323
            Service                                                                    548            639        2,116        2,616
            Product                                                                      13              33              88            299
                    Total  cost  of  revenues                              827            859        3,120        3,238
        Gross  profit                                                          1,643        1,869        7,762        6,856

        Operating  expenses:
              Research  and  development                            1,387        1,452        5,848        5,111
              Sales  and  marketing                                      1,824        1,707        7,517        6,075
              General  and  administrative                        1,103        1,020        4,725        4,386
                    Total  operating  expenses                      4,314        4,179      18,090      15,572

        Loss  from  operations                                        (2,671)    (2,310)  (10,328)    (8,716)
        Interest  and  other  income,  net                            75              71            286            395

        Loss  before  provision  for  income  taxes    (2,596)    (2,239)  (10,042)    (8,321)
        Provision  for  income  taxes                                (108)            31            (69)            67

        Net  loss                                                              $(2,488)  $(2,270)  $(9,973)  $(8,388)

        Net  loss  per  common  share,  basic  and
          diluted                                                                $(0.13)    $(0.13)    $(0.53)    $(0.51)
        Weighted  average  number  of  shares
          outstanding,  basic  and  diluted                  18,841      17,394      18,677      16,338

                                                              LOGICVISION,  INC
                                        CONDENSED  CONSOLIDATED  BALANCE  SHEETS
                                                                (in  thousands)

                                                                                                      December  31,      December  31,
                                                                                                            2005                          2004

        Current  Assets:
              Cash  and  cash  equivalents                                        $3,620                        $5,790
              Short-term  investments                                                7,076                        15,552
              Accounts  receivable,  net  of  allowance
                for  doubtful  accounts  of  $25  and  $12                  2,512                          1,125
              Prepaid  expenses  and  other  current  assets          1,544                          1,459
                    Total  current  assets                                            14,752                        23,926
        Property  and  equipment,  net                                            1,097                              907
        Long-term  investments                                                                -                          4,960
        Intangible  assets,  net                                                          464                              767
        Goodwill                                                                                  6,846                          6,846
        Other  long-term  assets                                                      1,182                          1,837
                    Total  assets                                                          $24,341                      $39,243

        Current  Liabilities:
              Short-term  debt                                                                $    -                        $3,500
              Accounts  payable                                                                484                              481
              Accrued  liabilities                                                      1,702                          2,385
              Deferred  revenue,  current  portion                          3,137                          4,885
                    Total  current  liabilities                                    5,323                        11,251
        Deferred  revenue                                                                  3,580                          3,184
                    Total  liabilities                                                    8,903                        14,435

        Commitments  and  contingencies

        Stockholders'  Equity:
              Preferred  stock,  $0.0001  par  value:
                    Authorized:  5,000  shares;
                    Issued  and  outstanding:  no
                      shares  issued  and  outstanding                                  -                                  -
              Common  stock,  $0.0001  par  value:
                    Authorized:  125,000  shares;
                    Issued  and  outstanding:  18,892
                      shares  at  December  31,  2005
                      and  18,170  shares  at  December  31,  2004                2                                  2
        Additional  paid-in  capital                                          104,417                      103,734
        Deferred  stock-based  compensation                                        -                                (1)
        Accumulated  other  comprehensive  income  (loss)              (7)                              74
        Accumulated  deficit                                                        (88,974)                    (79,001)
                    Total  stockholders'  equity                                15,438                        24,808
                    Total  liabilities  and
                      stockholders'  equity                                        $24,341                      $39,243


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