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Verisity announces record revenue and EPS for first quarter fiscal 2002
Net Income of $2.2 Million Grew 19% Sequentially MOUNTAIN VIEW, Calif., April 22, 2002--Verisity Ltd. (Nasdaq: VRST), a leading provider of functional verification automation software tools, today announced financial results for the first fiscal quarter ended March 31, 2002. Revenue for the quarter was $11.5 million, a 34% increase from revenue of $8.5 million for the first quarter ended March 31, 2001, and a 1.0% increase from revenue of $11.4 million for the fourth quarter ended December 30, 2001. The Company's net income under generally accepted accounting principles (GAAP) for the quarter ended March 31, 2002 was $2.2 million, or $0.11 per diluted share, compared to a net income of $530,000, or $0.03 per diluted share, for the quarter ended March 31, 2001 and net income of $1.9 million, or $0.09 per diluted share, for the quarter ended December 31, 2001. Excluding stock-based compensation expense, pro forma net income was $2.4 million, or $0.11 per diluted share, for the first quarter of 2002, compared to a pro forma net income of $696,000 for the first quarter 2001, or a pro forma net income of $0.04 per diluted share, and pro forma net income of $2.2 million for the fourth quarter 2001, or $0.10 per diluted share. "Despite the uncertain economic environment, we were able to report record revenues and earnings demonstrating, once again, the significant benefit that our verification tools provide to our customers. Net income for first quarter of 2002 rose 19% sequentially, and, on a pro-forma basis, by 11%, marking our seventh consecutive quarter of increased pro-forma profitability," said Moshe Gavrielov, Chief Executive Officer of Verisity. "The demand for functional verification tools continues as electronic devices become more complex. In order to stay ahead of the competition, our customers need to add new capabilities to their products to ensure that high quality products are released to the market on time," added Gavrielov. "As a result of using our solutions to detect design flaws, our customers are reducing the amount of time verifying their designs, where, by many estimates, they spend over 60% of the overall design cycle." Verisity's earnings call will be webcast today at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time, and may be accessed at http://www.verisity.com. Following the conclusion of the webcast, a replay will be available via Verisity's web site at http://www.verisity.com through May 3, 2002. The Company plans to include a business outlook in the conference call. About Verisity
Verisity is a leading provider of proprietary technologies and software products used to efficiently verify designs of electronic systems and complex integrated circuits that are essential to the communications and other high growth segments of the electronics industry. The Company's products automate the process of detecting flaws in these designs, enabling customers to deliver higher quality products, accelerate time-to-market and reduce overall product development costs. Verisity Design, Inc.'s principal executive offices are located in Mountain View, CA. The Company's principal research and development offices are located in Rosh Ha'ain, Israel. For more information, see Verisity's web site at www.verisity.com. Forward-Looking Statements
To the extent statements contained herein are not purely historical, they are forward-looking statements. Words such as "anticipate," "estimate," "expects," "projects," "intends," "plans," "believes" and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. All forward-looking statements represent only management's present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results or performance to differ materially from those described in the forward-looking statements. Verisity Ltd. is not under any obligation, and expressly disclaims any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. ### Verisity is a registered trademark of Verisity Design, Inc. All other trademarks are the property of their respective holders.
VERISITY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data) | | Three Months Ended March 31, | | | 2002
---------- | 2001
----------- | | | | (unaudited) | | Revenue: | | | | License | $ 6,685 | $ 5,839 | | Maintenance | 4,214 | 2,064 | | Other Services | 580 | 643 | Total revenue | -----------
11,479
----------- | -----------
8,546
----------- | Total cost of revenue | 768
----------- | 952
----------- | | Gross profit | 10,711 | 7,594 | | Operating expenses: | | | | Research and development | 2,288 | 2,125 | | Sales and marketing | 4,719 | 3,963 | | General and administrative | 1,219 | 1,036 | | Stock-based compensation | 149 | 166 | Total operating expenses | -----------
8,375
----------- | -----------
7,290
----------- | | Income from operations | 2,336 | 304 | | Other income, net | 208
----------- | 255
----------- | | Income before income taxes | 2,544 | 559 | | Provision for income taxes | 305 | 29 | Net income | ------------
$ 2,239
======= | ------------
$ 530
======= | | Basic earnings per share: | | | Basic net income per ordinary share | $ 0.12
======== | $ 0.06
======== | Shares used in per share calculation | 18,576
======== | 8,457
======== | | Diluted earnings per share: | | | Diluted net income per ordinary share | $ 0.11
======== | $ 0.03
======== | Shares used in per share calculation | 21,217
======== | 16,508
======== | | Pro forma earnings per share: (1) | | | Pro forma net income | $ 2,388
======== | $ 696
======== | Diluted pro forma net income per ordinary share | $ 0.11 | $ 0.04 | Shares used in pro forma per share calculation | =========
21,217
========= | =========
16,508
========= | (1) Pro forma net income excludes the impact of stock-based compensation charges.
VERISITY LTD.
CONSOLIDATED BALANCE SHEETS
(in thousands) | | March 31,
2002
------------ | December 31,
2001 (1)
------------ | | | (Unaudited) | | | Assets: | | | | Current assets: | | | Cash, cash equivalents | $ 61,237 | $ 58,488 | Accounts receivable | 7,874 | 8,498 | Other current assets | 2,656
--------- | 2,511
--------- | | Total current assets | 71,767 | 69,497 | | Property and equipment, net | 2,128 | 2,112 | | Other assets | 250 | 229 | | Total assets | ---------
$ 74,145
======= | ---------
$ 71,838
======= | | Liabilities and Shareholders' Equity: | | | | Current liabilities: | | | Accounts payable and accrued liabilities | $ 7,262 | $ 8,024 | Deferred revenue | 26,616 | 26,694 | Current portion of long-term debt | 9
--------- | 9
--------- | Total current liabilities | 33,887 | 34,727 | | Long-term liabilities | 207 | 197 | | Long-term portion of deferred revenue | 2,477 | 2,397 | | Shareholders' equity: | | | Share Capital | 52,647 | 51,829 | Accumulated deficit | (15,073) | (17,312) | Total shareholders' equity | -----------
37,574
----------- | -----------
34,517
----------- | | Total liabilities and shareholders' equity | $ 74,145
======= | $ 71,838
======= | (1) Derived from audited financial statements as at December 31, 2001..
| INVESTOR RELATIONS: Charles Alvarez
Verisity Ltd.
(650) 934-6800
investor_relations@verisity.com | MEDIA RELATIONS: Jennifer Bilsey
Verisity Ltd.
650/934-6800
jen@verisity.com |
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