PDF Solutions Reports Record First Quarter 2005 Revenue; Results Repre

    Business Editors/High-Tech Writers

    SAN JOSE, Calif.--(BUSINESS WIRE)--April 21, 2005--PDF Solutions(R), Inc. (Nasdaq:PDFS) the leading provider of process-design integration technologies to enhance IC manufacturability, today announced financial results for its first fiscal quarter ended March 31, 2005.
    Revenue for the first fiscal quarter of 2005 totaled a record $18.1 million, an increase of 43%, compared with revenue of $12.7 million for the first fiscal quarter of 2004. On a GAAP basis, net income for the first fiscal quarter of 2005 totaled approximately $1.4 million, or $0.05 per diluted share, compared with a net loss of approximately $1.8 million, or $0.07 per diluted share, for the first fiscal quarter of 2004.
    In addition to using GAAP results in evaluating PDF Solutions' business, management also believes it useful to measure results using a non-GAAP measure of net income or loss, which excludes amortization of stock-based compensation and acquired intangible assets. Using this non-GAAP measure, net income for the first fiscal quarter of 2005 totaled $2.7 million, or $0.10 per diluted share, compared with non-GAAP net loss of approximately $373,000, or $0.01 per diluted share, for the first fiscal quarter of 2004.
    As previously announced, PDF will hold a live conference call beginning at 3:00 p.m. Pacific Time/6:00 p.m. Eastern Time today to discuss these quarterly results. A live webcast of this conference call will be available on PDF Solutions' website at http://ir.pdf.com/medialist.cfm. A replay of the call will be available at the same website address beginning approximately two hours after completion of the live call. Further, a copy of this press release, including the disclosure and reconciliation of certain non-GAAP financial measures to the most directly comparable GAAP measure, which non-GAAP measures may be used periodically by PDF Solutions' management when discussing financial results with investors and analysts, will be available on PDF Solutions' website at http://www.pdf.com/news_archive.phtml following the date of this release.

    About PDF Solutions

    PDF Solutions, Inc. (Nasdaq:PDFS) is the leading provider of process-design integration technologies for manufacturing integrated circuits (ICs). PDF Solutions' software, methodologies and services enable semiconductor companies to create IC designs that can be more easily manufactured using manufacturing processes that are more capable. By simulating deep sub-micron product and process interactions, the PDF solution offers clients reduced time to market, increased IC yield and performance, and enhanced product reliability and profitability. Headquartered in San Jose, Calif., PDF Solutions operates worldwide with additional offices in Europe and Japan. For more information, visit www.pdf.com.

    PDF Solutions(R) is a registered trademark of PDF Solutions, Inc.

PDF SOLUTIONS, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands)

March 31, December 31, ------------ ------------ 2005 2004 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $48,388 $45,660 Accounts receivable, net of allowances 18,370 15,978 Prepaid expenses and other current assets 2,867 2,685 Deferred tax assets 1,550 1,586 ------------ ------------ Total current assets 71,175 65,909 Property and equipment, net 3,236 3,321 Goodwill 39,886 39,886 Intangible assets, net 14,290 15,791 Other assets 348 500 ------------ ------------ Total assets $128,935 $125,407 ============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities: Accounts payable $1,434 $1,023 Accrued compensation and related benefits 2,613 3,209 Other accrued liabilities 1,696 2,593 Taxes payable 3,533 3,286 Deferred revenues 3,704 2,905 Billings in excess of recognized revenue 2,211 1,581 ------------ ------------ Total current liabilities 15,191 14,597 Long-term liabilities 302 311 Deferred tax liabilities 1,583 1,701 ------------ ------------ Total liabilities 17,076 16,609 ------------ ------------

Stockholders' equity: Common stock 4 4 Additional paid-in-capital 135,856 134,191 Treasury stock (4,806) (4,806) Deferred stock-based compensation (106) (148) Notes receivable from stockholders (550) (550) Accumulated deficit (18,581) (19,975) Accumulated other comprehensive income 42 82 ------------ ------------ Total stockholders' equity 111,859 108,798 ------------ ------------ Total liabilities and stockholders' equity $128,935 $125,407 ============ ============

PDF SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except per share amounts)

Three Months Ended ------------------------- March 31, March 31, 2005 2004 ------------ ------------

Revenue: Design-to-silicon-yield solutions: Integrated solutions $12,557 $9,506 Software licenses 3,449 2,189 Gain share 2,087 981 ------------ ------------ Total revenue 18,093 12,676 ------------ ------------

Cost and expenses: Cost of design-to-silicon-yield solutions: Direct costs of design-to-silicon-yield solutions: Integrated solutions 5,750 4,352 Software licenses 157 2 Amortization of acquired core technology 1,266 1,350 Research and development 5,336 5,218 Selling, general and administrative 3,914 3,797 Stock-based compensation amortization(1) 42 255 Amortization of other acquired intangible assets 235 410 ------------ ------------ Total costs and expenses 16,700 15,384 ------------ ------------

Income (loss) from operations 1,393 (2,708) Interest and other income 272 153 ------------ ------------ Income (loss) before taxes 1,665 (2,555)

Tax provision (benefit) 271 (713) ------------ ------------ Net income (loss) $1,394 $(1,842) ============ ============

Net income (loss) per share: Basic $0.05 $(0.07) ============ ============ Diluted $0.05 $(0.07) ============ ============

Weighted average common shares: Basic 25,696 25,301 ============ ============ Diluted 27,129 25,301 ============ ============

(1) Stock-based compensation amortization: Cost of design-to-silicon-yield solutions $- $28 Research and development 42 202 Selling, general and administrative - 25 ------------ ------------ $42 $255 ============ ============

PDF SOLUTIONS, INC. RECONCILIATION OF REPORTED GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS) (UNAUDITED) (In thousands, except per share amounts)

Three Months Ended ------------------------- March 31, March 31, 2005 2004 ------------ ------------

GAAP net income (loss) $1,394 $(1,842)

Stock-based compensation amortization 42 255

Amortization of intangible assets, net of taxes 1,263 1,214

------------ ------------ Non-GAAP net income (loss) $2,699 $(373) ============ ============

Non-GAAP net income (loss) per share - diluted $0.10 $(0.01) ============ ============

Weighted average common shares - diluted 27,129 25,301 ============ ============

    Use of Non-GAAP Information

    In addition to providing results that are determined in accordance with Generally Accepted Accounting Principles (GAAP), PDF Solutions also provides certain Non-GAAP financial measures that exclude certain charges as additional information relating to its operating results. PDF Solutions' management believes that the presentation of these measures provides useful information to investors regarding certain additional financial and business trends relating to its financial condition and results of operations. PDF Solutions has also chosen to provide this information to investors to enable them to perform meaningful comparisons of PDF Solutions' past, present and future operating results. These measures are not in accordance with, or an alternative to, GAAP and may be different from non-GAAP measures used by other companies. The calculations of non-GAAP financial measures have been adjusted to exclude the effects of amortization of stock-based compensation and acquired intangible assets.

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CONTACT: PDF Solutions, Inc. Sonia Segovia, 408-938-6491 (Investor Relations) sonia.segovia@pdf.com or Armstrong Kendall, Inc. Abbie Kendall, 503-672-4681 (Corporate Communications) abbie@akipr.com

KEYWORD: CALIFORNIA INDUSTRY KEYWORD: HARDWARE COMPUTERS/ELECTRONICS TELECOMMUNICATIONS SOFTWARE EARNINGS CONFERENCE CALLS EDA SOURCE: PDF Solutions, Inc.

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