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Artisan Components, Inc. Reports Record Total Revenue Of $18.9 Million For The Third Quarter Of Fiscal 2003

17 July 2003

SUNNYVALE, Calif.--(BUSINESS WIRE)--July 17, 2003--Artisan Components, Inc., (Nasdaq:ARTI), a leading provider of physical intellectual property ("IP"), today reported its third quarter results for the three month period ended June 30, 2003. For the third quarter of fiscal 2003, Artisan reported total revenue of $18.9 million, an 89% increase over total revenue of $10.0 million in the third quarter of fiscal 2002.

On a generally accepted accounting principles ("GAAP") basis, net income for the third quarter of fiscal 2003 was $1.4 million or $0.06 per diluted share, which included amortization of purchased intangible assets of $1.5 million and deferred stock-based compensation of $150,000 from acquisitions. For the third quarter of fiscal 2002, GAAP net income was $1.1 million or $0.06 per diluted share, which included amortization of purchased intangible assets from acquisitions of $492,000.

Pro forma net income for the third quarter of fiscal 2003 was $2.0 million or $0.09 per diluted share, a 100% increase over pro forma net income of $1.0 million or $0.06 per diluted share in the third quarter of fiscal 2002. 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, in-process research and development and one-time or extraordinary charges, such as the one-time charge for the lease on our former facility. A detailed reconciliation of GAAP net income to pro forma net income is included with this press release.

During the third quarter of fiscal 2003, Artisan completed a public offering of 4.1 million shares of its common stock, of which 1.1 million shares were sold by selling stockholders. Artisan raised net proceeds of approximately $54.9 million, before expenses. The impact of the 3 million shares issued by Artisan in the offering is reflected in the weighted-average shares used to calculate basic and diluted earnings per share for the three and nine month periods ended June 30, 2003.

"Artisan continues to provide thousands of IC design teams with leading IP products as well as access to a broad range of manufacturers. In addition, we continue to invest in new products, infrastructure and scalability, all of which will be critical for our future growth," commented Mark Templeton, Artisan's president and chief executive officer. "I am especially excited about our high-speed interface products including PCI-Express, SERDES and GDDR as well as our new 90-nanometer standard cell and memory products. We have also just completed a successful roll-out of our new website and associated CRM system, enabling us to provide Artisan users with easier access to our growing product family."

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, in-process research and development and one-time or extraordinary charges, such as the one-time charge for the lease on our former facility. 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 value delivered by Artisan's products and business model to manufacturers and design teams. These statements are subject to various risk factors including, without limitation, the continued demand for semiconductors including Artisan's products and the production of those semiconductors in volume; delays in the design process or delays in a customer's project that use Artisan's products; the rapid pace of technological development; Artisan's ability to negotiate, structure, monitor and enforce agreements for the determination and payment of royalties; and the continuation of the worldwide slowdown in economic activity, as well as continued weakness in businesses' capital expenditures on technology. 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, mixed-signal and communications 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 1,000 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, Artisan and Process-Perfect 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)

                                                  Jun. 30,  Sept. 30,
                                                    2003       2002
                                                  --------    -------
ASSETS                                           (unaudited)
Current assets:
 Cash and cash equivalents                       $ 98,508 $29,159
 Marketable securities                             14,817     23,085
 Accounts receivable, net                          13,345      7,232
 Prepaid expenses and other current assets          2,739      2,345
                                                  --------    -------
  Total current assets                            129,409     61,821

Property and equipment, net                         6,858      3,499
Goodwill, net                                      35,316     13,741
Purchased intangible assets, net                    9,851      2,271
Other assets                                        1,017      1,116
                                                  --------    -------
  Total assets                                   $182,451 $82,448
                                                  ========    =======

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                                $    565 $   861
 Accrued liabilities                                8,127      4,081
 Deferred revenue, current portion                  8,595      5,924
                                                  --------    -------
  Total current liabilities                        17,287     10,866

Deferred revenue                                      850        812
Other liabilities                                   1,191      1,610
Deferred tax liability                              4,196          -
                                                  --------    -------
  Total liabilities                                23,524     13,288
                                                  --------    -------

Stockholders' equity:
 Common stock                                          22         17
 Additional paid in capital                       164,013     77,170
 Deferred stock-based compensation                   (487)         -
 Treasury stock                                    (1,399)         -
 Accumulated deficit                               (3,222)    (8,027)
                                                  --------    -------
  Total stockholders' equity                      158,927     69,160
                                                  --------    -------
  Total liabilities and stockholders' equity     $182,451 $82,448
                                                  ========    =======



                      Artisan Components, Inc.
           Condensed Consolidated Statements of Operations
                (In thousands, except per share data)
                             (Unaudited)

                                Three Months Ended  Nine Months Ended
                                    June 30,            June 30,
                                -----------------   -----------------
                                   2003     2002       2003     2002
                                 -------  -------    -------  -------

Gross revenue:
 License                        $15,606 $ 7,418 $41,520 $18,509
 Royalty                          4,500    3,578     10,214   10,039
                                 -------  -------    -------  -------
  Gross revenue                  20,106   10,996     51,734   28,548
                                 -------  -------    -------  -------

Net revenue:
 License                         15,606    7,418     41,520   18,509
 Net royalty                      3,313    2,545      7,505    7,026
                                 -------  -------    -------  -------
  Total revenue                  18,919    9,963     49,025   25,535
                                 -------  -------    -------  -------

 Cost of revenue (a)              4,941    2,086     12,428    5,207
 Product development (a)          5,695    2,923     13,386    9,041
 Sales and marketing (a)          4,092    2,268     10,422    6,339
 General and administrative (a)   1,586    1,172      4,819    2,374
 Provision for unused
  facility lease                      -        -          -    1,197
 In-process research
  and development                     -        -        520        -
 Amortization of
  purchased intangibles           1,511      492      2,910    1,476
                                 -------  -------    -------  -------
   Total cost and expenses       17,825    8,941     44,485   25,634
                                 -------  -------    -------  -------
Operating income (loss)           1,094    1,022      4,540      (99)
Other income, net                   614      195        992      597
                                 -------  -------    -------  -------
Income before provision for
 income taxes                     1,708    1,217      5,532      498
Provision for income taxes          274       75        727      192
                                 -------  -------    -------  -------
Net income                      $ 1,434 $ 1,142 $ 4,805 $   306
                                 =======  =======    =======  =======
Net income per share - basic    $  0.07 $  0.07 $  0.26 $  0.02
                                 =======  =======    =======  =======
Net income per share - diluted  $  0.06 $  0.06 $  0.23 $  0.02
                                 =======  =======    =======  =======

Shares used in per share
 calculation - basic             20,359   16,780     18,447   16,669
                                 =======  =======    =======  =======
Shares used in per share
 calculation - diluted           22,873   18,222     20,634   18,157
                                 =======  =======    =======  =======

(a) Includes stock-based
    compensation expense of:        150        -        209        -



                       Artisan Components, Inc.
            Reconciliation of GAAP to Pro Forma Net Income
                 (In thousands, except per share data)
                              (Unaudited)

                                Three Months Ended  Nine Months Ended
                                    June 30,            June 30,
                                -----------------   -----------------
                                   2003     2002       2003     2002
                                 -------  -------    -------  -------

Net income                      $ 1,434 $ 1,142 $ 4,805 $   306
                                 =======  =======    =======  =======

Adjustments to reported net
 income to arrive at
 pro forma results:
Add: non-recurring effect of
     acquisitions                     -        -        520        -
Add: amortization of purchased
     intangible assets from
     acquisitions                 1,511      492      2,910    1,476
Add: deferred stock-based
     compensation                   150        -        209        -
Add: effect of loss accrual on
     former lease                     -        -          -    1,197
Pro forma tax adjustment         (1,074)    (609)    (2,941)  (1,076)
                                 -------  -------    -------  -------
Pro forma net income            $ 2,021 $ 1,025 $ 5,503 $ 1,903
                                 =======  =======    =======  =======
Pro forma net income
 per share - basic              $  0.10 $  0.06 $  0.30 $  0.11
                                 =======  =======    =======  =======
Pro forma net income
 per share - diluted            $  0.09 $  0.06 $  0.27 $  0.10
                                 =======  =======    =======  =======

Shares used in per share
 calculation - basic             20,359   16,780     18,447   16,669
                                 =======  =======    =======  =======
Shares used in per share
 calculation - diluted           22,873   18,222     20,634   18,157
                                 =======  =======    =======  =======

SOURCE: Artisan Components, Inc.