Virage Logic Reports Second-Quarter Fiscal 2005 Results

FREMONT, Calif.--(BUSINESS WIRE)--April 21, 2005--Virage Logic Corporation (Nasdaq:VIRL)

Quarterly News Release Highlights:

Q2 revenues of $12.8 million, compared with $13.0 million for Q2 fiscal 2004 and $15.9 million for Q1 fiscal 2005
Q2 GAAP net loss of $988,000, or $0.04 per share, compared with GAAP net income of $189,000, or $0.01 per share, for Q2 fiscal 2004, and with GAAP net income of $1.7 million, or $0.08 per share, for Q1 fiscal 2005

Virage Logic Corporation, a leading provider of semiconductor intellectual property (IP) platforms and pioneer in Silicon Aware IP(TM), today reported its financial results for the second fiscal quarter ended March 31, 2005.

Revenues for the second quarter of fiscal 2005 were $12.8 million, compared with $13.0 million for the second quarter of fiscal 2004, and with $15.9 million for the first quarter of fiscal 2005. License revenue for the second quarter of fiscal 2005 was $10.1 million, compared with $11.2 million for the same quarter a year ago and with $13.1 million for the prior quarter. Royalties for the second quarter of fiscal 2005 were $2.7 million, compared with $1.8 million for the second quarter of fiscal 2004 and with $2.8 million the prior quarter.

As reported under U.S. generally accepted accounting principles (GAAP) net loss was $988,000, or $0.04 per share for the second quarter of fiscal 2005. This compared with net income of $189,000, or $0.01 per share, for the second quarter of fiscal 2004 and with net income of $1.7 million, or $0.08 per share, for the first quarter of fiscal 2005.

"While we believe the fundamentals of our business are solid, we are disappointed with our results for the second quarter which were primarily impacted by delayed customer purchasing decisions due to what we believe to be a temporary slow down in the business," said Adam Kablanian, Virage Logic's president and chief executive officer. "Beyond the impact of these business conditions, we also experienced some operational issues that negatively impacted our ability to fulfill existing orders. We are addressing these issues and are confident that these measures together with our leading technology offering and solid business model will enable us to bring the company's financial performance back to profitability."

Continued Kablanian, "During the quarter, we launched our Silicon Aware IP initiative, which calls for Virage Logic's entire product portfolio of Physical IP -- including memories, logic and I/Os -- to be designed and tightly integrated with embedded Infrastructure IP for test, diagnostics, repair, and yield enhancements. The benefits that Silicon Aware IP delivers, including optimized yield, improved reliability and rapid time-to-volume, are particularly significant at the advanced process nodes. We believe that this initiative is the right strategic direction for the company to further extend its competitive leadership position at advanced process nodes and we are encouraged by the increasing customer adoption of our Self-Test and Repair (STAR) Memory System(TM), which represents the company's first Silicon Aware IP offering."

For the first six months of fiscal 2005, revenues were $28.6 million, up 20 percent from $23.8 million for the first six months of fiscal 2004. Net income for the first six months of fiscal 2005 was $751,000, or $0.03 per share, compared with a net loss of $170,000, or $0.01 per share, for the first six months of fiscal 2004.

Recent Business Highlights

During the second quarter and more recently, Virage Logic:

Signed another 65-nanometer agreement, marking the third 65-nanometer agreement signed to date for Virage Logic's semiconductor IP
Signed a total of five new direct royalty-bearing agreements for the STAR Memory System, the company's first Silicon Aware IP product, bringing the total number of STAR Memory System agreements signed to date to 114
Booked a total of five new 90-nanometer agreements, including one with a new customer
Signed seven new ASAP Logic(TM) and IPrima(TM) Foundation semiconductor IP platform agreements
Qualified its Non-Volatile Electrically Alterable (NOVeA(R)) embedded memories for production on UMC's 0.18-micron CMOS logic process, enabling customers to source cost-effective non-volatile memories for applications requiring security, encryption, unique device identification, analog trimming, and silicon repair with no additional mask or process steps required
Recorded revenue under licensing agreements from 44 customers -- 41 existing and three new.

Business Outlook

Virage Logic also announced today its business outlook for the third quarter of fiscal 2005. The company currently anticipates total revenues in the range of approximately $14.5 million to $15.0 million. Expected total revenues for the quarter are anticipated to include royalties of approximately $2.9 million. The company expects to report GAAP net income of approximately $0.02 to $0.03 per diluted share. 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.

Financial tables

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Webcast and Taped Replay

Virage Logic's management plans to hold a teleconference on second-quarter 2005 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 April 21, 2005 until April 21, 2006 on the investor relations page of Virage Logic's website at http://www.viragelogic.com. In addition, a telephonic replay will be available through April 28, 2005 at (719) 457-0820, access code 9094245.

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. Today the company is a global leader in semiconductor IP platforms comprising embedded memories, standard cells, 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's comprehensive quality efforts are validated in its FirstPass-Silicon Characterization Lab, which helps 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 operational issues, trends, business outlook, products, and customer relationships. 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, 2004, 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.

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SOURCE: Virage Logic Corporation