UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 13, 2017
PDF SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
000-31311
(Commission File Number)
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Delaware |
25-1701361 |
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(State or Other Jurisdiction of Incorporation) |
(I.R.S. Employer Identification No.) |
333 West San Carlos Street, Suite 1000
San Jose, CA 95110
(Address of principal executive offices, with zip code)
(408) 280-7900
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
TABLE OF CONTENTS
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Item 2.02. Results of Operations and Financial Condition |
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Item 9.01. Financial Statements and Exhibits |
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SIGNATURES |
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EXHIBIT INDEX |
Item 2.02. Results of Operations and Financial Condition.
On February 13, 2017 PDF Solutions (the “Company”) issued a press release regarding its financial results and certain other information related to the fourth fiscal quarter and year ended December 31, 2016. The Company also posted on the Investor Relations section of its website (www.pdf.com) a management report with regard to the quarter and fiscal year ended December 31, 2016. Copies of the press release and management report are attached to this report as Exhibit 99.1 and 99.2, respectively. Information on the website is not, and will not be deemed, a part of this report or incorporated into any other filings the Company makes with the Securities and Exchange Commission.
The information in this Item 2.02, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section, and shall not be deemed incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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Exhibit No. |
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Description |
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99.1 |
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Press Release dated February 13, 2017, regarding financial results and certain other information related to the fourth fiscal quarter and year ended December 31, 2016. |
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99.2 |
Management Report by PDF Solutions, Inc. as of February 13, 2017 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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PDF SOLUTIONS, INC. (Registrant) |
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By: |
/s/Gregory C. Walker |
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Gregory C. Walker VP, Finance, and Chief Financial Officer (principal financial and accounting officer) |
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Dated: February 13, 2017
EXHIBIT INDEX
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Exhibit No. |
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Description |
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99.1 |
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Press Release dated February 13, 2017, regarding financial results and certain other information related to the fourth fiscal quarter and year ended December 31, 2016. |
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99.2 |
Management Report by PDF Solutions, Inc. as of February 13, 2017 |
Exhibit 99.1
News Release
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Company Contacts: |
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Gregory Walker, |
Sonia Segovia, |
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VP, Finance and CFO |
IR Coordinator |
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Tel: (408) 938-6457 |
Tel: (408) 938-6491 |
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Email:gregory.walker@pdf.com |
Email: sonia.segovia@pdf.com |
PDF Solutions® Reports Fourth Fiscal Quarter and Fiscal Year 2016 Results
SAN JOSE, Calif.—February 13, 2017—PDF Solutions, Inc. (“PDF Solutions” or the “Company”) (NASDAQ: PDFS), the leading provider of process-design integration technologies to enhance integrated circuit (IC) manufacturability, today announced financial results for its fourth fiscal quarter and fiscal year ended December 31, 2016.
Total revenues for the fourth fiscal quarter of 2016 totaled $28.4 million, up 4% from $27.3 million for the third fiscal quarter of 2016 and up 18% when compared to total revenues of $24.1 million for the fourth fiscal quarter of 2015. Design-to-silicon-yield solutions revenue for the fourth fiscal quarter of 2016 totaled $19.5 million, up 5% from $18.6 million for the third fiscal quarter of 2016 and up 36% when compared to Design-to-silicon-yield solutions revenue of $14.3 million for the fourth fiscal quarter of 2015. Gainshare performance incentives revenue for the fourth fiscal quarter of 2016 totaled $9.0 million, up 3% from $8.7 million for the third fiscal quarter of 2016 and down 8% from $9.8 million for the fourth fiscal quarter of 2015.
Total revenues for the fiscal year ended December 31, 2016, totaled $107.5 million, up 10% when compared with total revenues of $98.0 million for the fiscal year ended December 31, 2015. Design-to-silicon-yield solutions revenues for the fiscal year ended December 31, 2016, totaled $77.2 million, up 21% when compared with Design-to-silicon-yield solutions revenues of $63.8 million for the fiscal year ended December 31, 2015. Gainshare performance incentives revenues for the fiscal year ended December 31, 2016, totaled $30.3 million, down 11% when compared with Gainshare performance incentives revenues of $34.1 million for the fiscal year ended December 31, 2015.
On a GAAP basis, net income for the fourth fiscal quarter of 2016 was $2.9 million, or $0.09 per basic and diluted share, compared to $2.0 million, or $0.06 per basic and diluted share, for the third fiscal quarter of 2016, and compared to $2.8 million, or $0.09 per basic and diluted share, for the fourth fiscal quarter of 2015. Net income for the fiscal year ended December 31, 2016, was $9.1 million, or $0.29 per basic and $0.28 per diluted share, compared to net income of $12.4 million, or $0.39 per basic and diluted share, for the fiscal year ended December 31, 2015.
Cash and cash equivalents were $116.8 million at December 31, 2016, compared to $126.2 million at December 31, 2015.
Non-GAAP net income for the fourth fiscal quarter of 2016 was $5.6 million, or $0.17 per diluted share, compared to $5.4 million, or $0.17 per diluted share, for the third fiscal quarter of 2016, and compared to $5.7 million, or $0.18 per diluted share, for the fourth fiscal quarter of 2015. Non-GAAP net income for the fiscal year ended December 31, 2016, was $21.6 million, or $0.67 per diluted share, compared to non-GAAP net income of $25.6 million, or $0.80 per diluted share, for the fiscal year ended December 31, 2015. EBITDAR for the fourth quarter of 2016 was $7.4 million, compared to $7.2 million for the third fiscal quarter of 2016, and compared to $7.5 million for the fourth fiscal quarter of 2015. EBITDAR for the fiscal year ended December 31, 2016, was $28.5 million, compared to $32.5 million for the fiscal year ended December 31, 2015.
As previously announced, PDF Solutions will discuss these results on a live conference call beginning at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time today. The call will be simultaneously web cast on PDF Solutions’ website at http://www.pdf.com/events. A replay of the web cast will be available at the same website address beginning approximately two hours after completion of the live call. A copy of this press release, including the disclosure and reconciliation of certain non-GAAP financial measures to the comparable GAAP measures, which non-GAAP measures may be used periodically by PDF Solutions’ management when discussing financial results with investors and analysts, will also be available on PDF Solutions’ website at http://www.pdf.com/press-releases following the date of this release.
Fourth Quarter and Fiscal Year 2016 Financial Commentary Available Online
A Management Report reviewing the Company’s fourth quarter and fiscal year 2016 financial results, as well as providing first quarter 2017 financial outlook will be furnished to the SEC on Form 8-K and published on the Company’s website at http://ir.pdf.com/sec.cfm. Analysts and investors are encouraged to review this commentary prior to participating in the conference call webcast.
Information Regarding Use of Non-GAAP Financial Measures
In addition to providing results that are determined in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), PDF Solutions also provides certain non-GAAP financial measures. Non-GAAP net income excludes the effects of non-recurring items, stock-based compensation expenses, amortization of acquired technology and other acquired intangible assets, and their related income tax effects, as applicable, as well as adjusts for the non-cash portion of income taxes. EBITDAR is calculated by taking GAAP net income, adding back the effects of non-recurring items, stock-based compensation expenses, amortization of acquired technology and other acquired intangibles, depreciation expense and income tax provision (benefit). These non-GAAP financial measures are used by management internally to measure the Company’s profitability and performance. PDF Solutions’ management believes that these non-GAAP measures provide useful supplemental measures to investors regarding the Company’s ongoing operations in light of the fact that none of these categories of expense has a current effect on the future uses of cash (with the exception of certain non-recurring items) nor do they impact the generation of current or future revenues. These non-GAAP results should not be considered an alternative to, or a substitute for, GAAP financial information, and may be different from similarly titled non-GAAP measures used by other companies. In particular, these non-GAAP financial measures are not a substitute for GAAP measures of income or loss as a measure of performance, or to cash flows from operating, investing and financing activities as a measure of liquidity. Since management uses these non-GAAP financial measures internally to measure profitability and performance, PDF Solutions has included these non-GAAP measures to give investors an opportunity to see the Company’s financial results as viewed by management. A reconciliation of the comparable GAAP financial measures to the non-GAAP financial measures is provided at the end of the Company’s financial statements presented below. For a more detailed reconciliation of the adjustments made to comparable GAAP measures, please refer the “GAAP to Non-GAAP and EBITDAR Reconciliation” provided in the Investor Relations section of our website at http://ir.pdf.com/sec.cfm.
Forward-Looking Statements
The statements made on the planned conference call regarding the Company's future expected business performance and financial results are forward looking and are subject to events and circumstances of the future. Actual results could differ materially from those expressed in these forward-looking statements. Risks and uncertainties that could cause results to differ materially include risks associated with: customers' production volumes at Gainshare-covered facilities; continued adoption of the Company's solutions by new and existing customers; project milestones or delays and performance criteria achieved; the provision of technology and services prior to the execution of a final contract; and other risks set forth in PDF Solutions' periodic public filings with the Securities and Exchange Commission, including, without limitation, its Annual Reports on Form 10-K, most recently filed for the year ended December 31, 2015, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K and amendments to such reports. The forward-looking statements made in the conference call are made as of the date hereof, and PDF Solutions does not assume any obligation to update such statements nor the reasons why actual results could differ materially from those projected in such statements.
About PDF Solutions
PDF Solutions enables customers to reduce the time to market of integrated circuits (“ICs”), lower the cost of IC design and manufacturing and improve profitability. The Company has developed proprietary products and provides services that target the entire Process Life Cycle, which is a term used to mean the time from technology development and the design of an IC to volume manufacturing of that IC to product assembly and test.
PDF Solutions’ products and services consist of proprietary test structures and electrical test systems, physical intellectual property, enterprise platform software and professional services. The Company’s Characterization Vehicle® (CV®) electrical test chip infrastructure provides core modeling capabilities, and is used by more leading manufacturers than any other test chips in the industry. The Design-for-Inspection™ (DFI™) solution extends the Company’s electrical characterization technologies into the e-beam measurement of extremely dense test structures, or DFI cells, across an entire fabrication process. Proprietary Template™ layout patterns for standard cell libraries optimize area, performance, and manufacturability for designing IC products. The Exensio® platform for big data unlocks relevant, actionable information buried in wafer fabrication, process control and test data through four, key components: Exensio-Yield, Exensio-Control, Exensio-Test, and Exensio-Char. The Exensio platform is available either on-premise or via software as a service (SaaS).
Headquartered in San Jose, Calif., PDF Solutions operates worldwide with additional offices in Canada, China, France, Germany, Italy, Japan, Korea, and Taiwan. PDF Solutions is listed on The NASDAQ National Market under the ticker symbol PDFS. For the Company’s latest news and information, visit http://www.pdf.com/.
Characterization Vehicle, CV, Exensio, PDF Solutions, and the PDF Solutions logo are registered trademarks of PDF Solutions, Inc. or its subsidiaries. Design-for-Inspection, DFI, and Template are trademarks of PDF Solutions, Inc. or its subsidiaries.
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PDF SOLUTIONS, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) |
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(In thousands) |
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December 31, |
December 31, |
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2016 |
2015 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 116,787 | $ | 126,158 | ||||
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Accounts receivable, net |
48,157 | 33,438 | ||||||
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Prepaid expenses and other current assets |
5,335 | 3,655 | ||||||
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Total current assets |
170,279 | 163,251 | ||||||
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Property and equipment, net |
19,341 | 11,325 | ||||||
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Deferred tax assets |
15,640 | 10,299 | ||||||
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Goodwill |
215 | 215 | ||||||
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Intangible assets, net |
4,223 | 5,028 | ||||||
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Other non-current assets |
12,631 | 1,651 | ||||||
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Total assets |
$ | 222,329 | $ | 191,769 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
$ | 2,206 | $ | 1,293 | ||||
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Accrued compensation and related benefits |
5,959 | 4,812 | ||||||
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Accrued and other current liabilities |
2,080 | 2,382 | ||||||
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Deferred revenues - current portion |
8,189 | 4,702 | ||||||
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Billings in excess of recognized revenue |
88 | 1,267 | ||||||
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Total current liabilities |
18,522 | 14,456 | ||||||
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Long-term income tax payable |
3,354 | 2,540 | ||||||
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Other non-current liabilities |
1,650 | 466 | ||||||
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Total liabilities |
23,526 | 17,462 | ||||||
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Stockholders’ equity: |
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Common stock and additional paid-in-capital |
281,428 | 266,013 | ||||||
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Treasury stock at cost |
(54,882 | ) | (50,383 | ) | ||||
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Accumulated deficit |
(25,752 | ) | (39,780 | ) | ||||
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Accumulated other comprehensive loss |
(1,991 | ) | (1,543 | ) | ||||
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Total stockholders’ equity |
198,803 | 174,307 | ||||||
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Total liabilities and stockholders’ equity |
$ | 222,329 | $ | 191,769 | ||||
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PDF SOLUTIONS, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) |
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(In thousands, except per share amounts) |
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Three months ended |
Twelve months ended |
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December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
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2016 |
2016 (1) |
2015 |
2016 |
2015 |
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Revenues: |
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Design-to-silicon-yield solutions |
$ | 19,458 | 18,552 | $ | 14,282 | $ | 77,162 | $ | 63,839 | |||||||||||
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Gainshare performance incentives |
8,975 | 8,707 | 9,790 | 30,299 | 34,138 | |||||||||||||||
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Total revenues |
28,433 | 27,259 | 24,072 | 107,461 | 97,977 | |||||||||||||||
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Costs of Design-to-silicon-yield solutions: |
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Direct costs of Design-to-silicon-yield solutions |
12,040 | 11,366 | 9,984 | 44,074 | 38,847 | |||||||||||||||
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Amortization of acquired technology |
96 | 86 | 96 | 374 | 176 | |||||||||||||||
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Total costs of Design-to-silicon-yield solutions |
12,136 | 11,452 | 10,080 | 44,448 | 39,023 | |||||||||||||||
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Gross profit |
16,297 | 15,807 | 13,992 | 63,013 | 58,954 | |||||||||||||||
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Operating expenses: |
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Research and development |
7,171 | 7,017 | 5,398 | 27,559 | 19,096 | |||||||||||||||
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Selling, general and administrative |
6,290 | 5,548 | 5,085 | 22,056 | 20,421 | |||||||||||||||
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Amortization of other acquired intangible assets |
92 | 106 | 107 | 432 | 196 | |||||||||||||||
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Total operating expenses |
13,553 | 12,671 | 10,590 | 50,047 | 39,713 | |||||||||||||||
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Income from operations |
2,744 | 3,136 | 3,402 | 12,966 | 19,241 | |||||||||||||||
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Interest and other income (expense), net |
378 | (101 | ) | 15 | -10 | 181 | ||||||||||||||
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Income before income taxes |
3,122 | 3,035 | 3,417 | 12,956 | 19,422 | |||||||||||||||
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Income tax provision |
197 | 1,051 | 620 | 3,853 | 7,015 | |||||||||||||||
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Net income |
$ | 2,925 | 1,984 | $ | 2,797 | $ | 9,103 | $ | 12,407 | |||||||||||
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Net income per share: |
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Basic |
$ | 0.09 | 0.06 | $ | 0.09 | $ | 0.29 | $ | 0.39 | |||||||||||
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Diluted |
$ | 0.09 | 0.06 | $ | 0.09 | $ | 0.28 | $ | 0.39 | |||||||||||
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Weighted average common shares: |
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Basic |
31,636 | 31,413 | 31,323 | 31,373 | 31,424 | |||||||||||||||
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Diluted |
33,293 | 32,578 | 31,858 | 32,431 | 32,164 | |||||||||||||||
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(1) The results for the period ended September 30, 2016 have been updated to reflect the Company’s adoption of the Accounting Standards Update (ASU) 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The Company elected to early adopt this new standard in the fourth quarter of 2016, which required that any adjustments be reflected as of January 1, 2016, the beginning of the fiscal year that includes the interim period of adoption. |
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PDF SOLUTIONS, INC. |
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RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (UNAUDITED) |
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(In thousands, except per share amounts) |
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Three months ended |
Twelve months ended |
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December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
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2016 |
2016 (1) |
2015 |
2016 |
2015 |
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GAAP net income |
$ | 2,925 | 1,984 | $ | 2,797 | $ | 9,103 | $ | 12,407 | |||||||||||
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Adjustments to reconcile GAAP net income to non-GAAP net income: |
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Stock-based compensation expense |
3,067 | 2,977 | 2,639 | 11,002 | 9,756 | |||||||||||||||
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Previously impaired deferred costs (2) |
- | - | - | - | (1,892 | ) | ||||||||||||||
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Amortization of acquired technology |
96 | 86 | 96 | 374 | 176 | |||||||||||||||
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Amortization of other acquired intangible assets |
92 | 106 | 107 | 432 | 196 | |||||||||||||||
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Acquisition costs (3) |
- | - | 62 | - | 835 | |||||||||||||||
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Acquisition related contingent earn-out (3) |
- | - | 25 | - | 500 | |||||||||||||||
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Acquisition related deferred revenue adjustment (3) |
1 | 3 | 400 | 169 | 901 | |||||||||||||||
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Non-cash portion of income tax expense |
(587 | ) | 236 | (390 | ) | 558 | 2,725 | |||||||||||||
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Non-GAAP net income |
$ | 5,594 | 5,392 | $ | 5,736 | $ | 21,638 | $ | 25,604 | |||||||||||
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GAAP net income per diluted share |
$ | 0.09 | 0.06 | $ | 0.09 | $ | 0.28 | $ | 0.39 | |||||||||||
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Non-GAAP net income per diluted share |
$ | 0.17 | 0.17 | $ | 0.18 | $ | 0.67 | $ | 0.80 | |||||||||||
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Shares used in diluted shares calculation |
33,293 | 32,578 | 31,858 | 32,431 | 32,164 | |||||||||||||||
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PDF SOLUTIONS, INC. |
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RECONCILIATION OF GAAP NET INCOME TO EBITDAR (UNAUDITED) |
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(In thousands, except per share amounts) |
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Three months ended |
Twelve months ended |
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December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
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2016 |
2016 (1) |
2015 |
2016 |
2015 |
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GAAP net income |
$ | 2,925 | 1,984 | $ | 2,797 | $ | 9,103 | $ | 12,407 | |||||||||||
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Adjustments to reconcile GAAP net income to EBITDAR: |
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Stock-based compensation expense |
3,067 | 2,977 | 2,639 | 11,002 | 9,756 | |||||||||||||||
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Previously impaired deferred costs (2) |
- | - | - | - | (1,892 | ) | ||||||||||||||
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Amortization of acquired technology |
96 | 86 | 96 | 374 | 176 | |||||||||||||||
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Amortization of other acquired intangible assets |
92 | 106 | 107 | 432 | 196 | |||||||||||||||
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Acquisition costs (3) |
- | - | 62 | - | 835 | |||||||||||||||
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Acquisition related contingent earn-out (3) |
- | - | 25 | - | 500 | |||||||||||||||
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Acquisition related deferred revenue adjustment (3) |
1 | 3 | 400 | 169 | 901 | |||||||||||||||
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Depreciation expense |
1,000 | 960 | 727 | 3,584 | 2,646 | |||||||||||||||
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Income tax provision |
197 | 1,051 | 620 | 3,853 | 7,015 | |||||||||||||||
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EBITDAR |
$ | 7,378 | 7,167 | $ | 7,473 | $ | 28,517 | $ | 32,540 | |||||||||||
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(1) The results for the period ended September 30, 2016 have been updated to reflect the Company’s adoption of the Accounting Standards Update (ASU) 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The Company elected to early adopt this new standard in the fourth quarter of 2016, which required that any adjustments be reflected as of January 1, 2016, the beginning of the fiscal year that includes the interim period of adoption. |
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(2) As announced on September 29, 2014, we were unable to close two Design-to-silicon-yield solutions contracts, which restricted our ability to book revenue relating to work on these projects and required us to impair previously deferred costs of $1.9 million in the three months ended September 30, 2014. As reported on January 7, 2015, in the three months ended March 31, 2015, we executed those two contacts, which increased our Design-to-Silicon-Yield Solutions revenue in the quarter by approximately $6.0 million. Reinstatement of previously impaired costs is not allowed under US GAAP. Accordingly, in order to match the revenue and the cost associated with these two contracts, management has included these costs in the current period as a non-GAAP reconciling item. |
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(3) As announced on July 20, 2015, the Company completed the acquisition of Syntricity, Inc., the industry leading hosted solution for characterization and yield management. In relation to this acquisition, the company incurred direct acquisition costs, acquisition related contingent earn-out and recorded an adjustment to reduce revenue recognized from deferred revenue arising from the acquisition. Accordingly, for non-GAAP purposes, the Company is excluding these expenses and the reduction to revenue in order to provide better comparability between periods. |
Exhibit 99.2
