LogicVision Reports Third Quarter 2006 Financial Results

Revenue at High End of Guidance and Net Loss Better Than Forecast

SAN JOSE, Calif., Oct. 24 /PRNewswire-FirstCall/ -- LogicVision, Inc. (NASDAQ: LGVN), a leading provider of silicon test and yield learning solutions, today announced its financial results for the third quarter ended September 30, 2006.

Third Quarter 2006 Results

Revenues in the third quarter of 2006 were $2.7 million, compared with $2.8 million in the second quarter of 2006.

Net loss in the third quarter of 2006 was $1.7 million, or $0.09 per share, compared with a net loss of $1.7 million, or $0.09 per share, reported in the second quarter of 2006.

Gross margins in the third quarter were 72 percent, compared with 76 percent in the second quarter of 2006.

Operating expenses were $3.7 million in the third quarter, including $98,000 of stock-based employee compensation charges in accordance with SFAS 123(R). This compares with $3.9 million of operating expenses in the second quarter of 2006, including $124,000 of stock-based employee compensation charges in accordance with SFAS 123(R).

At September 30, 2006, LogicVision had $8.0 million in cash, cash equivalents and investments, compared with $9.6 million at June 30, 2006. The company has no bank debt.

New orders received during the third quarter totaled $3.8 million. The company exited the third quarter with a backlog of $21.4 million, including $6.6 million of deferred revenues, compared with a backlog of $19.8 million, including $6.4 million of deferred revenues, at the end of the second quarter. Approximately $9.4 million of the total backlog is expected to become recognized as revenue ratably over the next 12 months.

"In the third quarter, we achieved revenues at the high end of our guidance range and net loss better than forecasted on our last earnings conference call. We were able to lower our operating expenses again this quarter, making this the sixth consecutive quarter of reduced operating expenses. While new orders received during the quarter were good, they were not as high as we had anticipated which is why we used more cash than expected during the quarter. We expect our cash balances at the end of the fourth quarter to remain at approximately the current level," said James T. Healy, president and CEO of LogicVision.

"During the quarter, we focused on the key drivers of our long-term success -- developing and introducing innovative technologies, forging relationships with key partners and working with our customers to find ways to accelerate the sales cycle. We believe we are well positioned to capitalize on the Built-In-Self-Test market over the next year as more companies move to 90nm manufacturing processes and our customer evaluations are completed," Mr. Healy said.

    Guidance for the Fourth Quarter of 2006

    * Revenues are expected to be in the range of $2.7 million to $3.0

    * Net loss is expected to be in the range of $1.2 million to $1.5 million
      or a net loss in the range of $0.06 to $0.08 per share.

    * Cash, cash equivalents and investments are expected to be approximately
      $8.0 million at the end of the fourth quarter.

    Conference Call

LogicVision will broadcast its conference call discussion of third quarter 2006 financial results today, October 24, 2006 at 2 p.m. Pacific time. To listen to the call, please dial 800-857-5485, 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 866-514-4267. 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 test and 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 Yield Insight 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, net loss, and cash, cash equivalents and investments 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, and other risks detailed in LogicVision's Form 10-K for the year ended December 31, 2005, Form 10-Q for the quarter ended June 30, 2006 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.

                                LOGICVISION, INC.
                      (in thousands, except per share data)

                                         Three Months Ended  Nine Months Ended
                                             September 30,     September 30,
                                             2006     2005     2006     2005
      License                               $1,332   $1,250   $3,856   $5,440
      Service                                1,312      892    3,809    2,804
      Product                                                               10              58            110            168
                    Total  revenues                                          2,654        2,200        7,775        8,412

        Cost  of  revenues:
            License                                                                    259            261            746            650
            Service                                                                    486            468        1,339        1,568
            Product                                                                    -                  25            -                  75
                    Total  cost  of  revenues                              745            754        2,085        2,293
        Gross  profit                                                          1,909        1,446        5,690        6,119

        Operating  expenses:
              Research  and  development                            1,014        1,394        3,137        4,461
              Sales  and  marketing                                      1,745        1,943        5,404        5,693
              General  and  administrative                            956        1,054        2,957        3,622
                    Total  operating  expenses                      3,715        4,391      11,498      13,776

        Loss  from  operations                                        (1,806)    (2,945)    (5,808)    (7,657)
        Interest  and  other  income,  net                            81              81            243            211

        Loss  before  provision  for  income  taxes    (1,725)    (2,864)    (5,565)    (7,446)
        Provision  for  income  taxes                                    15                9              91              39

        Net  loss                                                              $(1,740)  $(2,873)  $(5,656)  $(7,485)

        Net  loss  per  common  share,  basic  and
          diluted                                                                $(0.09)    $(0.15)    $(0.29)    $(0.40)
        Weighted  average  number  of  shares
          outstanding,  basic  and  diluted                  20,058      18,836      19,326      18,621

                                                              LOGICVISION,  INC.
                                            (in  thousands,  except  per  share  data)

                                                                                              September  30,            December  31,
                                                                                                        2006                            2005

        Current  Assets:
              Cash  and  cash  equivalents                                        $5,247                        $3,620
              Short-term  investments                                                2,740                          7,076
            Accounts  receivable,  net  of
              allowance  for  doubtful
              accounts  of  $15  and  $25,
              respectively                                                                    1,449                          2,512
              Prepaid  expenses  and  other  current
                assets                                                                              1,149                          1,544
                    Total  current  assets                                            10,585                        14,752
        Property  and  equipment,  net                                                873                          1,097
        Intangible  assets,  net                                                          238                              464
        Goodwill                                                                                  6,846                          6,846
        Other  long-term  assets                                                          788                          1,182
                    Total  assets                                                          $19,330                      $24,341

        Current  Liabilities:
              Accounts  payable                                                              $572                            $484
              Accrued  liabilities                                                      1,962                          1,702
              Deferred  revenue,  current  portion                          4,849                          3,137
                    Total  current  liabilities                                    7,383                          5,323
        Deferred  revenue                                                                  1,714                          3,580
                    Total  liabilities                                                    9,097                          8,903

        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:  20,081
                      shares  at  September  30,  2006
                      and  18,892  shares  at
                      December  31,  2005                                                          2                                  2
        Additional  paid-in  capital                                          104,845                      104,417
        Accumulated  other  comprehensive
          income  (loss)                                                                            16                                (7)
        Accumulated  deficit                                                        (94,630)                    (88,974)
                    Total  stockholders'  equity                                10,233                        15,438
                    Total  liabilities  and
                      stockholders'  equity                                        $19,330                      $24,341

Web site: http://www.logicvision.com/

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