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PDF Solutions(R) Reports Third Fiscal Quarter 2014 Results

SAN JOSE, Calif., Oct. 23, 2014 (GLOBE NEWSWIRE) -- PDF Solutions, Inc. ("PDF Solutions" or the "Company") (Nasdaq:PDFS), the leading provider of yield improvement technologies and services for the integrated circuit (IC) manufacturing process life cycle, today announced financial results for its third fiscal quarter ended September 30, 2014.

Total revenues for the third fiscal quarter of 2014 totaled $22.4 million, down 9% from $24.6 million for the second fiscal quarter of 2014 and down 12% when compared to total revenues of $25.5 million for the third fiscal quarter of 2013. Design-to-silicon-yield solutions revenue for the third fiscal quarter of 2014 totaled $10.9 million, down 17% from $13.1 million for the second fiscal quarter of 2014 and down 36% when compared to design-to-silicon-yield solutions revenue of $17.0 million for the third fiscal quarter of 2013. Gainshare performance incentives revenue for the third fiscal quarter of 2014 totaled $11.5 million, the same as the second fiscal quarter of 2014 and up 36% when compared to gainshare performance incentives revenue of $8.5 million for the third fiscal quarter of 2013.

On a GAAP basis, net income for the third fiscal quarter of 2014 was $1.8 million, or $0.06 per basic and $0.05 per diluted share, compared to $4.7 million, or $0.15 per basic and diluted share, for the second fiscal quarter of 2014, and compared to $4.8 million, or $0.16 per basic and $0.15 per diluted share, for the third fiscal quarter of 2013.

Cash and cash equivalents were $116.1 million at September 30, 2014, compared to $89.4 million at December 31, 2013.

Non-GAAP net income for the third fiscal quarter of 2014 was $6.3 million, or $0.20 per diluted share, compared to $9.0 million, or $0.28 per diluted share, for the second fiscal quarter of 2014, and compared to $8.6 million, or $0.27 per diluted share, for the third fiscal quarter of 2013. EBITDAR for the third fiscal quarter of 2014 was $7.6 million, or $0.24 per diluted share, compared to $10.6 million, or $0.33 per diluted share, for the second fiscal quarter of 2014, and compared to $9.8 million, or $0.31 per diluted share, for the third fiscal quarter of 2013.

As previously announced, PDF Solutions will discuss these results on a live conference call beginning at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time today. The call will be simultaneously web cast on PDF Solutions' website at http://www.pdf.com/events. A replay of the web cast will be available at the same website address beginning approximately two hours after completion of the live call. A copy of this press release, including the disclosure and reconciliation of certain non-GAAP financial measures to the comparable GAAP measures, which non-GAAP measures may be used periodically by PDF Solutions' management when discussing financial results with investors and analysts, will also be available on PDF Solutions' website at http://www.pdf.com/press-releases following the date of this release.

Information Regarding Use of Non-GAAP Financial Measures

In addition to providing results that are determined in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), PDF Solutions also provides certain non-GAAP financial measures. Non-GAAP net income excludes the effects of non-recurring items, stock-based compensation expenses, amortization of acquired technology and other acquired intangible assets, and their related income tax effects, as applicable, as well as adjusts for the non-cash portion of income taxes. EBITDAR is calculated by taking GAAP net income, adding back the effects of non-recurring items, stock-based compensation expenses, amortization of acquired technology and other acquired intangibles, depreciation expense and income tax provision (benefit). These non-GAAP financial measures are used by management internally to measure the Company's profitability and performance. PDF Solutions' management believes that these non-GAAP measures provide useful supplemental measures to investors regarding the Company's ongoing operations in light of the fact that none of these categories of expense has a current effect on the future uses of cash (with the exception of certain non-recurring items) nor do they impact the generation of current or future revenues. These non-GAAP results should not be considered an alternative to, or a substitute for, GAAP financial information, and may be different from similarly titled non-GAAP measures used by other companies. In particular, these non-GAAP financial measures are not a substitute for GAAP measures of income or loss as a measure of performance, or to cash flows from operating, investing and financing activities as a measure of liquidity. Since management uses these non-GAAP financial measures internally to measure profitability and performance, PDF Solutions has included these non-GAAP measures to give investors an opportunity to see the Company's financial results as viewed by management. A reconciliation of the comparable GAAP financial measures to the non-GAAP financial measures is provided at the end of the Company's financial statements presented below.

Forward-Looking Statements

The statements made on the conference call to regarding PDF Solutions' financial results for its third fiscal quarter ended September 30, 2014, including the Company's future expected financial results, are forward looking and are subject to events and circumstances of the future. Actual results could differ materially from those expressed in these forward-looking statements. Risks and uncertainties that could cause results to differ materially include risks associated with: customers' production volumes at Gainshare-covered facilities; continued adoption of the Company's solutions by new and existing customers; project milestones or delays and performance criteria achieved; the provision of technology and services prior to the execution of a final contract; and other risks set forth in PDF Solutions' periodic public filings with the Securities and Exchange Commission, including, without limitation, its Annual Reports on Form 10-K, most recently filed for the year ended December 31, 2013, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K and amendments to such reports. The forward-looking statements made in the conference call are made as of the date hereof, and PDF Solutions does not assume any obligation to update such statements nor the reasons why actual results could differ materially from those projected in such statements.

About PDF Solutions

PDF Solutions, Inc. (Nasdaq:PDFS) is the leading provider of yield improvement technologies and services for the IC manufacturing process life cycle. PDF Solutions offers solutions that are designed to enable clients to lower costs of IC design and manufacture, enhance time to market, and improve profitability by addressing design and manufacturing interactions from product design to initial process ramps to mature manufacturing operations. PDF Solutions' Characterization Vehicle® (CV®) electrical test chip infrastructure provides the core modeling capabilities, and is used by more leading manufacturers than any other test chips in the industry. Proprietary Template™ layout patterns provide optimum area, performance, and manufacturability for designing IC products. The proprietary Exensio™ solution for YieldAware™ FDC enables world-class variability control in manufacturing, in part by leveraging PDF Solutions' industry-leading dataPOWER® yield management system (YMS) and mæstria® fault detection and classification (FDC) software. Headquartered in San Jose, Calif., PDF Solutions operates worldwide with additional offices in Canada, China, France, Germany, Italy, Japan, Korea, Singapore, and Taiwan. For the Company's latest news and information, visit http://www.pdf.com/.

Characterization Vehicle, CV, dataPOWER®, mæstria®, PDF Solutions®, and the PDF Solutions logo are registered trademarks of PDF Solutions, Inc. or its subsidiaries. Exensio, Template and YieldAware are trademarks of PDF Solutions, Inc. or its subsidiaries.

PDF SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
September 30,
2014
December 31,
2013
ASSETS
Current assets:
Cash and cash equivalents $ 116,121 $ 89,371
Accounts receivable, net 27,064 34,860
Deferred tax assets - current portion 4,046 5,920
Prepaid expenses and other current assets 3,169 3,632
Total current assets 150,400 133,783
Property and equipment, net 8,679 7,064
Deferred tax assets - long-term portion 7,590 8,599
Other non-current assets 1,292 1,718
Total assets 167,961 151,164
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 992 $ 1,129
Accrued compensation and related benefits 5,181 7,707
Accrued and other current liabilities 1,564 1,593
Deferred revenues 2,637 2,096
Billings in excess of recognized revenues -- 343
Total current liabilities 10,374 12,868
Non-current liabilities 3,274 3,584
Total liabilities 13,648 16,452
Stockholders' equity:
Common stock and additional paid-in-capital 245,812 233,818
Treasury stock at cost (33,326) (28,905)
Accumulated deficit (57,937) (70,649)
Accumulated other comprehensive income (236) 448
Total stockholders' equity 154,313 134,712
Total liabilities and stockholders' equity $ 167,961 $ 151,164
PDF SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)
Three months ended Nine months ended
September 30,
2014
June 30,
2014
September 30,
2013
September 30,
2014
September 30,
2013
Revenues:
Design-to-silicon-yield solutions $ 10,860 $ 13,091 $ 17,015 $ 38,871 $ 46,813
Gainshare performance incentives 11,546 11,519 8,474 35,231 27,562
Total revenues 22,406 24,610 25,489 74,102 74,375
Costs of design-to-silicon-yield solutions:
Direct costs of design-to-silicon-yield solutions 9,722 8,847 10,507 28,273 29,905
Impairment of deferred costs 1,892 -- -- 1,892 --
Total costs of design-to silicon-yield solutions 11,614 8,847 10,507 30,165 29,905
Gross profit 10,792 15,763 14,982 43,937 44,470
Operating expenses:
Research and development 3,349 3,337 3,396 10,282 9,944
Selling, general and administrative 4,498 4,661 3,812 13,487 13,010
Amortization of other acquired intangible assets -- 12 19 31 56
Restructuring charges (credits) -- -- 8 57 (35)
Total operating expenses 7,847 8,010 7,235 23,857 22,975
Income from operations 2,945 7,753 7,747 20,080 21,495
Interest and other income (expense), net 33 (27) (283) (82) (109)
Income before income taxes 2,978 7,726 7,464 19,998 21,386
Income tax provision 1,217 3,030 2,640 7,287 7,279
Net income $ 1,761 $ 4,696 $ 4,824 $ 12,711 $ 14,107
Net income per share:
Basic $ 0.06 $ 0.15 $ 0.16 $ 0.41 $ 0.48
Diluted $ 0.05 $ 0.15 $ 0.15 $ 0.40 $ 0.45
Weighted average common shares:
Basic 30,876 30,590 30,000 30,648 29,668
Diluted 32,079 31,882 31,623 31,975 31,198
PDF SOLUTIONS, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (UNAUDITED)
(In thousands, except per share amounts)
Three months ended Nine months ended
September 30,
2014
June 30,
2014
September 30,
2013
September 30,
2014
September 30,
2013
GAAP net income $ 1,761 $ 4,696 $ 4,824 $ 12,711 $ 14,107
Adjustments to reconcile GAAP net income to non-GAAP net income:
Stock-based compensation expense 2,226 2,375 1,924 6,259 4,942
Impairment of deferred costs 1,892 -- -- 1,892 --
Amortization of other acquired intangible assets -- 12 19 31 56
Restructuring charges (credits) -- -- 8 57 (35)
Non-cash portion of income tax expense 428 1,869 1,832 3,797 3,977
Non-GAAP net income $ 6,307 $ 8,952 $ 8,607 $ 24,747 $ 23,047
GAAP net income per diluted share $ 0.05 $ 0.15 $ 0.15 $ 0.40 $ 0.45
Non-GAAP net income per diluted share $ 0.20 $ 0.28 $ 0.27 $ 0.77 $ 0.74
Shares used in diluted shares calculation 32,079 31,882 31,623 31,975 31,198
PDF SOLUTIONS, INC.
RECONCILIATION OF GAAP NET INCOME TO EBITDAR (UNAUDITED)
(In thousands, except per share amounts)
Three months ended Nine months ended
September 30,
2014
June 30,
2014
September 30,
2013
September 30,
2014
September 30,
2013
GAAP net income $ 1,761 $ 4,696 $ 4,824 $ 12,711 $ 14,107
Adjustments to reconcile GAAP net income to EBITDAR:
Stock-based compensation expense 2,226 2,375 1,924 6,259 4,942
Impairment of deferred costs 1,892 -- -- 1,892 --
Amortization of other acquired intangible assets -- 12 19 31 56
Restructuring charges (credits) -- -- 8 57 (35)
Depreciation expense 519 482 386 1,459 961
Income tax provision 1,217 3,030 2,640 7,287 7,279
EBITDAR $ 7,615 $ 10,595 $ 9,801 $ 29,696 $ 27,310
EBITDAR per diluted share $ 0.24 $ 0.33 $ 0.31 $ 0.93 $ 0.88
Shares used in diluted shares calculation 32,079 31,882 31,623 31,975 31,198

CONTACT: Company Contacts: Gregory Walker, VP, Finance and CFO Tel: (408) 938-6457 Email:gregory.walker@pdf.com Sonia Segovia, IR Coordinator Tel: (408) 938-6491 Email: sonia.segovia@pdf.com

Source:PDF Solutions, Inc.