| | 22 July 2004 Artisan Components, Inc. Reports Record Total Revenue And Record Net Income For Its Third Quarter of Fiscal 2004SUNNYVALE, Calif.--(BUSINESS WIRE)--July 22, 2004--Artisan Components, Inc., (Nasdaq:ARTI), a leading provider of physical intellectual property (IP), today reported its results for the three-month period ended June 30, 2004. Total revenue for the third quarter of fiscal 2004 was comprised of license revenue and net royalty revenue of $14.2 million and $7.8 million, respectively, or $22.0 million, an increase of 16% from the same period in the prior year. Total revenue for the third quarter of fiscal 2003 was $18.9 million, comprised of license revenue and net royalty revenue of $15.6 million and $3.3 million, respectively. Net income for the third quarter of fiscal 2004, on a generally accepted accounting principles ("GAAP") basis, was $6.2 million or $0.25 per diluted share, an increase of 334% from the same period in the prior year. For the third quarter of fiscal 2003, GAAP net income was $1.4 million or $0.06 per diluted share. Pro forma net income for the third quarter of fiscal 2004 was $4.2 million or $0.17 per diluted share, an increase of 109% compared to pro forma net income of $2.0 million or $0.09 per diluted share for the third quarter of fiscal 2003. Pro forma net income is comprised of GAAP net income plus, to the extent incurred in any particular quarter, amortization of purchased intangible assets, deferred stock-based compensation expense, in-process research and development from acquisitions and the related income tax effect. A detailed reconciliation of GAAP net income to pro forma net income is included with this press release. Total revenue for the first nine months of fiscal 2004 was comprised of license revenue and net royalty revenue of $41.8 million and $21.6 million, respectively, or $63.4 million, an increase of 29% from the same period in the prior year. Total revenue for the first nine months of fiscal 2003 was $49.0 million, comprised of license revenue and net royalty revenue of $41.5 million and $7.5 million, respectively. Net income for the first nine months of fiscal 2004, on a GAAP basis, was $14.7 million or $0.59 per diluted share, an increase of 206%, compared with net income of $4.8 million or $0.23 per diluted share for the first nine months of fiscal 2003. Pro forma net income for the first nine months of fiscal 2004 was $11.3 million or $0.45 per diluted share, an increase of 105%, compared to pro forma net income of $5.5 million or $0.27 per diluted share for the first nine months of fiscal 2003. "Artisan's community, the leading pure-play foundries as well as more than 2,000 semiconductor companies that are Artisan licensees, is enjoying a robust market with strong production volume growth. Many of the companies that worked with us and prepared well during the downturn are reaping rewards with Artisan playing a key role in their success," said Mark Templeton, president and chief executive officer of Artisan Components. "The design activity in our user base continues to grow with the majority of our end-user licenses being for our memory products. During the quarter we licensed nearly 9,000 Artisan products to design teams at more than 500 companies. These large numbers demonstrate the appeal of our products as well as the benefits of our business model." Artisan is hosting a conference call beginning at 2:00 p.m. PT (5:00 p.m. ET) on Thursday, July 22, 2004 to discuss the results of the third quarter of fiscal 2004 and to review Artisan's progress and outlook. Interested parties may participate in the conference call available by telephone at 800-901-5213 and the passcode is 59647574. There will also be a live webcast available within the investor relations' section of Artisan's website at access.arm.com. A telephonic replay will be available through Thursday, August 5, 2004 at 888-286-8010. The passcode for the replay is 82334767. Use of Non-GAAP Financial Measures This earnings release includes financial information presented on both a pro forma and GAAP basis. Pro forma net income is comprised of GAAP net income plus, to the extent incurred in any particular quarter, amortization of purchased intangible assets and deferred stock-based compensation from acquisitions and in-process research and development. Pro forma net income and net income per share are reduced by the amount of additional tax that would be required to be accrued and expensed by us if pro forma results were used instead of GAAP results to calculate our tax liability. We provide pro forma financial information to enhance the reader's overall understanding of our current financial performance and our prospects for the future. We believe the pro forma results provide useful information to investors by excluding certain expenses that we believe are not indicative of our core operating results. The pro forma measures are included to provide investors and management with an alternative method for assessing our operating results in a manner that is focused on the performance of our ongoing operations and to provide a more consistent basis for comparison between quarters. Further, these pro forma results are one of the primary indicators management uses for planning and forecasting in future periods. In addition, since we have historically reported pro forma results to the investment community, we believe the inclusion of pro forma numbers provides consistency in our financial reporting. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Safe Harbor Statement This press release contains forward-looking statements, including statements regarding the growth in design activity by Artisan's end users, the growth in semiconductor production volume, and demand for Artisan's products. These statements are subject to various risk factors including, without limitation, market acceptance of Artisan's products and technologies and the continued demand for semiconductors incorporating Artisan's products and the production of those semiconductors in volume. We refer you also to the documents that Artisan files from time to time with the Securities and Exchange Commission, in particular the section entitled "Factors Affecting Future Operating Results" in Artisan's annual report on Form 10-K and its quarterly reports on Forms 10-Q. About Artisan Components Artisan Components, Inc. is a leading provider of physical intellectual property (IP) components for the design and manufacture of complex system-on-a-chip integrated circuits. Artisan's products include embedded memory, standard cell, input/output, analog and mixed-signal components, which are designed to achieve the best combination of performance, density, power and yield for a given manufacturing process. Artisan has licensed its IP components to over 2,000 companies involved in integrated circuit design. Artisan is headquartered in Sunnyvale, California. More information about Artisan Components, including free library access, can be found at access.arm.com. Artisan Components and Artisan are registered trademarks of Artisan Components, Inc. All other trademarks or registered trademarks are the property of their respective owners. Artisan Components, Inc.
Condensed Consolidated Balance Sheet
(In thousands)
(Unaudited)
June 30, Sept. 30,
2004 2003
------------------
ASSETS
Current assets:
Cash and cash equivalents $96,325 $98,841
Marketable securities 20,882 9,921
Accounts receivable, net 21,695 18,398
Deferred tax asset, current portion 2,092 -
Prepaid expenses and other current assets 4,490 2,197
------------------
Total current assets 145,484 129,357
Long-term marketable securities 23,242 5,504
Property and equipment, net 5,832 7,418
Purchased intangible assets, net 5,261 8,394
Goodwill, net 32,557 36,016
Deferred tax asset 19,747 -
Other assets 482 414
------------------
Total assets $232,605 $187,103
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,628 $1,486
Accrued liabilities 9,422 7,201
Deferred revenue, current portion 8,687 7,094
------------------
Total current liabilities 19,737 15,781
Deferred revenue 771 788
Other liabilities 856 1,146
Income tax payable 3,941 -
Deferred tax liability 2,182 3,257
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Total liabilities 27,487 20,972
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Stockholders' equity:
Common stock 23 22
Additional paid-in capital 191,439 167,043
Deferred stock-based compensation (143) (368)
Accumulated other comprehensive income (loss) (241) 118
Retained earnings/(Accumulated deficit) 14,040 (684)
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Total stockholders' equity 205,118 166,131
------------------
Total liabilities and stockholders' equity $232,605 $187,103
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Artisan Components, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Nine Months
Ended Ended
June 30, June 30,
----------------- -----------------
2004 2003 2004 2003
-------- -------- -------- --------
Gross revenue:
License $14,162 $15,606 $41,804 $41,520
Royalty 9,214 4,500 24,687 10,214
-------- -------- -------- --------
Gross revenue 23,376 20,106 66,491 51,734
-------- -------- -------- --------
Net revenue:
License 14,162 15,606 41,804 41,520
Net royalty 7,811 3,313 21,599 7,505
-------- -------- -------- --------
Total revenue 21,973 18,919 63,403 49,025
-------- -------- -------- --------
Costs and expenses:
Cost of revenue (1) 5,653 4,941 15,070 12,428
Product development (1) 4,019 5,695 13,898 13,386
Sales and marketing (1) 3,857 4,092 11,521 10,422
General and administrative (1) 1,894 1,586 5,443 4,819
In-process research and
development - - - 520
Amortization of purchased
intangible assets 896 1,511 3,133 2,910
-------- -------- -------- --------
Total cost and expenses 16,319 17,825 49,065 44,485
-------- -------- -------- --------
Operating income 5,654 1,094 14,338 4,540
Other income, net 445 614 1,127 992
-------- -------- -------- --------
Income before (benefit)/provision
for income taxes 6,099 1,708 15,465 5,532
(Benefit)/provision for income
taxes (130) 274 741 727
-------- -------- -------- --------
Net income $6,229 $1,434 $14,724 $4,805
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Net income per share - basic $0.27 $0.07 $0.65 $0.26
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Net income per share - diluted $0.25 $0.06 $0.59 $0.23
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Shares used in per share
calculation - basic 23,113 20,359 22,722 18,447
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Shares used in per share
calculation - diluted 25,387 22,873 24,866 20,634
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(1) Includes stock-based
compensation expense of: 52 150 225 209
Artisan Components, Inc.
Reconciliation of GAAP to Pro Forma Net Income
(In thousands, except per share information)
(Unaudited)
Three Months Nine Months
Ended Ended
June 30, June 30,
--------------- ----------------
2004 2003 2004 2003
------- ------- -------- -------
Net income $6,229 $1,434 $14,724 $4,805
Adjustments to reported net income
to arrive at pro forma results:
Add: amortization of purchased
intangible assets
from acquisitions 896 1,511 3,133 2,910
Add: deferred stock-based
compensation expense 52 150 225 209
Add: in-process research and
development - - - 520
Pro forma tax adjustment (2,948) (1,074) (6,788) (2,941)
------- ------- -------- -------
Pro forma net income $4,229 $2,021 $11,294 $5,503
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Pro forma net income per share -
basic $0.18 $0.10 $0.50 $0.30
======= ======= ======== =======
Pro forma net income per share -
diluted $0.17 $0.09 $0.45 $0.27
======= ======= ======== =======
Shares used in per share
calculation - basic 23,113 20,359 22,722 18,447
======= ======= ======== =======
Shares used in per share
calculation - diluted 25,387 22,873 24,866 20,634
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