LogicVision reports Q3 2003 financial results

SAN JOSE, Calif. – Oct. 28, 2003 – LogicVision, Inc. (NASDAQ: LGVN), a leading provider of embedded test IP for integrated circuits and systems, today announced financial results for the third quarter ended Sept. 30, 2003.

Revenues for the third quarter were $1.5 million, a six percent improvement over last quarter’s revenues. As the company has previously discussed, its total solutions sales approach has lengthened the sales cycle, and more of its revenues are being recognized ratably.

Net loss for the third quarter was $3.3 million, or a loss of $0.21 per share, compared with a net loss of $4.0 million, or a loss of $0.26 per share, in the second quarter of 2003.

Gross margins for the third quarter of 2003 were 59 percent, up from 45 percent in the second quarter. The increase in gross margins reflected a more favorable mix of business between the higher margin license revenues and the more labor-intensive, lower margin service revenues.

At Sept. 30, 2003, LogicVision had $30.9 million in cash and cash equivalents, short-term investments and marketable securities. The company also has a $1.0 million outstanding balance under its bank line of credit, for a combined net balance of $29.9 million, or $1.90 cash per share. This compares with a combined net balance of $33.1 million in the prior quarter.

New orders booked during the quarter totaled $1.2 million, and LogicVision exited the third quarter with a backlog of $10.9 million, including $5.3 million of deferred revenues.

“We are pleased that our total solutions sales approach to customers is gaining traction and generating new revenue opportunities. LogicVision is delivering key benefits to our customers in yield improvement, quality enhancements, lower cost of test and faster time to market,” said Dr. Vinod Agarwal, president and CEO of LogicVision.
“Looking ahead, we expect to sign contracts and/or receive purchase orders totaling more than $10 million in new business in the fourth quarter. We expect these contracts and orders to have terms of one to three years, and we will generally recognize revenue ratably over each contract’s specific term.

“In the third quarter, we further streamlined the integration of embedded test into nanometer-scale SOC designs with the announcement of our new generation test solution, LV2004™. With LV2004, designers can fully enable test automation at the design, debug and manufacturing test stages, as well as throughout the SOC life-cycle, increasing product quality and decreasing test costs,” said Dr. Agarwal.

Guidance for the Fourth Quarter of 2003

• Revenues for Q4 are expected to be at least $3 million.
• Net loss for Q4 is expected to be less than $2.5 million.
• Bookings and deferred revenues are expected to grow in Q4, leading to improved revenues and lower losses in FY 2004.
• Cash and cash equivalents, short-term investments and marketable securities are expected to be in the range of $29 million to $31 million at the end of Q4.

Conference Call
LogicVision will broadcast its conference call discussion of third quarter fiscal 2003 financial results on Tuesday, Oct. 28 at 2 p.m. Pacific Time. To listen to the call, please dial (210) 839-8500, 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 (402) 998-0718.

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 12 months.

About LogicVision Inc.
LogicVision (NASDAQ: LGVN) provides proprietary technologies for embedded test that enable the more efficient design and manufacture of complex semiconductors. LogicVision's embedded test solution allows integrated circuit designers to embed into a semiconductor design test functionality that can be used during semiconductor production and throughout the useful life of the chip. For more information on the company and its products, please visit the LogicVision website at www.logicvision.com.