Revenues for the second quarter of fiscal 2006 were $15.2 million, compared with $12.8 million for the second quarter of fiscal 2005 and $13.7 million for the first quarter of fiscal 2006. License revenue for the second quarter of fiscal 2006 was $10.4 million, compared with $10.1 million for the second quarter of fiscal 2005 and $10.4 million for the previous quarter. Royalties for the second quarter of fiscal 2006 were $4.8 million, up 81 percent from $2.7 million for the second quarter of fiscal 2005 and up 46 percent from $3.3 million for the first quarter of fiscal 2006.
As reported under U.S. generally accepted accounting principles (GAAP), net income for the second quarter of fiscal 2006 was $176,000, or $0.01 per share, compared with a net loss of $(988,000), or $(0.04) per share for the same period a year ago and with a net loss of $(242,000) or $(0.01) per share for the first quarter of fiscal 2006.
Net income for the second quarter of fiscal 2006 included $1.9 million of stock-based compensation expense per the adoption of FAS123R. Excluding the effects of FAS123R, the company would have reported net income of $1.3 million, or $0.06 per share. The exclusion of FAS123R from our net income represents a non-GAAP measure provided by the company to allow comparability to prior fiscal periods.
"Our historical emphasis on developing semiconductor intellectual property for advanced process nodes allowed us to post strong, profitable royalty growth, moving us to the next level in royalty revenues as designs based on these nodes continued to ramp in volume," said Adam Kablanian, CEO and President. "Our future success demands the efficient development of performance optimized semiconductor IP at the advanced process nodes. During the quarter, we have taken first steps toward the expansion of our engineering development capacity and the build out of scalable infrastructure around our business processes to further improve our ability to drive leadership at the advanced process nodes of 90-nanometer and below."
Virage Logic also announced today its business outlook for the third quarter of fiscal 2006 ending June 30, 2006. The company currently anticipates total revenues of approximately $15.2 million to $15.7 million, including royalties of approximately $4.3 million to $4.6 million. The company expects to report GAAP net income of approximately $0.00 to $0.01 per share. The company also expects $1.8 million of stock-based compensation expense per FAS123R. Without the impact of stock-based compensation expense, the company would expect earnings per diluted share of $0.06 to $0.07 for the third fiscal quarter. 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 second-quarter 2006 results at 1:30 p.m. PT / 4:30 p.m. ET today. A live webcast of management's teleconference regarding second-quarter results will be available to all investors, and an archived webcast will be available from May 3, 2006 until May 3, 2007 on the Investor Relations page of Virage Logic's website at http://www.viragelogic.com. In addition, a telephonic replay will be available through May 10, 2006 at (719) 457-0820, access code 2005940.
About Virage Logic
Founded in 1996, Virage Logic Corporation (Nasdaq: VIRL) rapidly established itself as a technology and market leader in providing advanced embedded memory intellectual property (IP) for the design of complex integrated circuits. Now, as the company celebrates its 10th anniversary, it 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 www.viragelogic.com.
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 ( www.viragelogic.com) 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.
All trademarks are the property of their respective owners and are protected herein.
Virage Logic Corporation
Unaudited Consolidated Statements of Operations
(In thousands, except per-share amounts)
Three Months Ended Six Months Ended
------------------ -----------------
March 31, March 31,
2006 2005 2006 2005
------- ------- ------- -------
Revenues:
License $10,358 $10,109 $20,768 $23,171
Royalties 4,838 2,675 8,153 5,472
------- ------- ------- -------
Total revenues 15,196 12,784 28,921 28,643
Cost and expenses:
Cost of revenues 3,500 3,102 7,215 6,139
Research and development 5,328 5,089 10,956 9,862
Sales and marketing 4,299 4,170 8,559 7,983
General and administrative 2,709 2,109 5,465 4,043
Stock-based compensation - 339 - 339
------- ------- -------- -------
Total cost and expenses 15,836 14,809 32,195 28,366
------- ------- ------- -------
Operating income (loss) (640) (2,025) (3,274) 277
Interest income and other, net 665 444 1,284 738
------- ------- ------- -------
Income (loss) before taxes 25 (1,581) (1,990) 1,015
Income tax provision (benefit) (151) (593) (1,924) 264
------- ------- ------- -------
Net income (loss) $ 176 $ (988) $ (66) $ 751
======= ======= ======= =======
Earnings (loss) per share:
Basic $0.01 $(0.04) $(0.00) $0.03
Diluted $0.01 $(0.04) $(0.00) $0.03
Shares used in computing per share amounts:
Basic 22,302 22,140 22,314 21,959
Diluted 23,011 22,140 22,314 23,252
Virage Logic Corporation
Unaudited Consolidated Balance Sheets
(In thousands)
March 31, September 30,
2006 2005
------------ -------------
ASSETS:
Current assets:
Cash and cash equivalents $ 28,225 $ 26,841
Short-term investments 38,747 34,410
Accounts receivable, net 16,814 14,201
Costs in excess of related billings on
uncompleted contracts 760 896
Prepaid expenses and other current assets 3,943 4,517
Taxes receivable 430 493
----------- ------------
Total current assets 88,919 81,358
Property, equipment and leasehold
improvements, net 4,366 5,093
Goodwill 9,782 9,782
Other intangible assets, net 2,183 2,375
Deferred tax assets 10,788 8,604
Long-term investments 4,681 6,587
Other long term assets 254 695
----------- ------------
Total assets $ 120,973 $ 114,494
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 1,111 $ 770
Accrued expenses 4,402 3,623
Deferred revenue 8,422 8,440
Income taxes payable 1,373 1,441
----------- ------------
Total current liabilities 15,308 14,274
Deferred tax liabilities 852 852
----------- ------------
Total liabilities 16,160 15,126
Stockholders' equity:
Common stock 23 23
Additional paid-in capital 126,053 120,548
Accumulated other comprehensive income
(loss) 58 52
Accumulated deficit (21,321) (21,255)
----------- ------------
Total stockholders' equity 104,813 99,368
----------- ------------
Total liabilities and stockholders'
equity $ 120,973 $ 114,494
=========== ============
Contact:
Virage Logic Corporation Jens Meyerhoff, 510-360-8025 Email Contact