Table of Contents

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): April 25, 2007
PDF SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
000-31311
(Commission File Number)
 	 	 	
Delaware
(State or Other Jurisdiction of
Incorporation)	 	25-1701361
(I.R.S. Employer Identification No.)	
333 West San Carlos Street, Suite 700
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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

TABLE OF CONTENTS
 	 	 	 	 	 	 	 	 	
 	Item 2.02 Results of Operations and Financial Condition.	
 	Item 7.01 Regulation FD Disclosure.	
 	Item 9.01. Financial Statements and Exhibits.	
SIGNATURES	
EXHIBIT INDEX	
EXHIBIT 99.1	
EXHIBIT 99.2	

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Item 2.02 Results of Operations and Financial Condition.
     On April 25, 2007, the Registrant issued a press release regarding its financial results and certain other information related to the first fiscal quarter of 2007 ended March 31, 2007. A copy of the press release is attached hereto as Exhibit 99.1. The information in this Item 2.02, including Exhibit 99.1, is furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended.
Item 7.01 Regulation FD Disclosure.
     On April 25, 2007, the Registrant issued a press release regarding the financial outlook for the second fiscal quarter ending June 30, 2007 and the total fiscal year ending December 31, 2007. A copy of the press release is attached hereto as Exhibit 99.2. The information in this Item 7.01, including Exhibit 99.2, is furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
 	 	 	
Exhibit No.	 	Description	
99.1	 	Press Release dated April 25, 2007 regarding financial results and certain other information related to the first fiscal quarter of 2007 ended March 31, 2007.	
 	 	 	
99.2	 	Press Release dated April 25, 2007 regarding the financial outlook for the second fiscal quarter ending June 30, 2007 and the total fiscal year ending December 31, 2007.	

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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.
 	 	 	 	 	
 	PDF SOLUTIONS, INC.
(Registrant)
 	 	
 	By:  	/s/ Keith A. Jones  	 	
 	 	Keith A. Jones	 	
 	 	Chief Financial Officer and
Vice President, Finance  	 	
 	
Dated: April 25, 2007

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EXHIBIT INDEX
 	 	 	
Exhibit No.	 	Description	
99.1	 	Press Release dated April 25, 2007 regarding financial results and certain other information related to the first fiscal quarter of 2007 ended March 31, 2007.	
 	 	 	
99.2	 	Press Release dated April 25, 2007 regarding the financial outlook for the second fiscal quarter ]ending June 30, 2007 and the total fiscal year ending December 31, 2007.	

 
Exhibit 99.1
News Release
 	 	 	
Investor Relations Contact:	 	Investor Relations Contact:	
Steven Melman, V.P. of Investor Relations	 	Sonia Segovia, IR Coordinator	
PDF Solutions, Inc.	 	PDF Solutions, Inc.	
Tel: (408) 938-6445	 	Tel: (408) 938-6491	
Email: steve.melman@pdf.com	 	Email: sonia.segovia@pdf.com	
PDF Solutions® Reports First Quarter
2007 Results
Total Quarterly Revenue Exceeds $20 Million
     SAN JOSE, Calif.—April 25, 2007—PDF Solutions, 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, 2007.
     Revenue for the first fiscal quarter of 2007 totaled $22.1 million, an increase of 12%, compared with revenue of $19.9 million for the first fiscal quarter of 2006. Gain share revenue for the first fiscal quarter of 2007 totaled $4.9 million, compared to $5.0 million for the first fiscal quarter of 2006. On a GAAP basis, net loss for the first fiscal quarter of 2007 totaled approximately $2.4 million, or $0.08 per basic share, compared with net income of $268,000, or $0.01 per diluted share, for the first fiscal quarter of 2006.
     In addition to using GAAP results in evaluating PDF Solutions’ business, management also believes it is useful to measure results using a non-GAAP measure of net income, which excludes stock-based compensation expense, amortization of acquired intangible assets and their related income tax effects. Using this non-GAAP measure, net income for the first fiscal quarter of 2007 totaled approximately $3.9 million, or $0.14 per diluted share, compared with non-GAAP net income of approximately $3.3 million, or $0.12 per diluted share, for the first fiscal quarter of 2006.
     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 results. A live web cast of this conference call will be available on PDF Solutions’ website at http://ir.pdf.com/medialist.cfm. A
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web cast replay 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 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.
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 that exclude the effects of stock-based compensation expense, amortization of acquired intangible assets, and their related income tax effects. PDF Solutions’ management believes that the presentation of these measures provides useful supplemental information to investors regarding PDF’s operating results. These non-GAAP financial measures are used by management internally to measure the company’s profitability and performance. PDF’s management believes that excluding the effects of stock-based compensation expense, amortization of acquired intangible assets, and their related income tax effects, provides a useful supplemental measure of the company’s ongoing operations in light of the fact that neither category of expense has a current effect on the future uses of cash nor do they have use with regards to 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 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 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 non-GAAP financial measures to the comparable GAAP financial measure is provided at the end of the company’s financial statements presented below.
About PDF Solutions
PDF Solutions, Inc. (NASDAQ: PDFS) is a 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. PDF Solutions also offers the industry leading Yield Management System (YMS) software,  data POWER ® , and Fault Detection and Classification (FDC) software, Maestria ® , to enhance yield improvement and production control activities at leading fabrication facilities around the world. Headquartered in San Jose, Calif., PDF Solutions operates worldwide with additional offices in Europe, Japan and China. For more information, visit www.pdf.com.
DataPOWER, Maestria and PDF Solutions are registered trademarks of PDF Solutions, Inc.
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PDF SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
 	 	 	 	 	 	 	 	 	
 	 	March 31,	 	 	December 31,	 	
 	 	2007	 	 	2006	 	
ASSETS	 	 	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	32,083	 	 	$	36,451	 	
Short-term investments	 	 	18,419	 	 	 	16,402	 	
Accounts receivable, net of allowances	 	 	35,099	 	 	 	27,575	 	
Prepaid expenses and other current assets	 	 	2,720	 	 	 	2,796	 	
Deferred tax assets	 	 	3,087	 	 	 	2,581	 	
 	 	 	 	 	 	 	
Total current assets	 	 	91,408	 	 	 	85,805	 	
Property and equipment, net	 	 	3,742	 	 	 	3,916	 	
Goodwill	 	 	60,997	 	 	 	60,034	 	
Intangible assets, net	 	 	11,004	 	 	 	13,605	 	
Deferred tax assets	 	 	6,603	 	 	 	4,994	 	
Other assets	 	 	533	 	 	 	503	 	
 	 	 	 	 	 	 	
Total assets	 	$	174,287	 	 	$	168,857	 	

LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	 	
Current portion of long-term debt	 	$	289	 	 	$	302	 	
Accounts payable	 	 	2,554	 	 	 	3,182	 	
Accrued compensation and related benefits	 	 	5,364	 	 	 	3,325	 	
Other accrued liabilities	 	 	2,283	 	 	 	3,843	 	
Taxes payable	 	 	1,533	 	 	 	4,767	 	
Deferred revenues	 	 	6,572	 	 	 	3,705	 	
Billings in excess of recognized revenue	 	 	888	 	 	 	95	 	
 	 	 	 	 	 	 	
Total current liabilities	 	 	19,483	 	 	 	19,219	 	
Long-term debt	 	 	1,173	 	 	 	1,198	 	
Long-term taxes payable	 	 	4,757	 	 	 	—	 	
Other liabilities	 	 	177	 	 	 	221	 	
 	 	 	 	 	 	 	
Total liabilities	 	 	25,590	 	 	 	20,638	 	

Stockholders’ equity:	 	 	 	 	 	 	 	 	
Common stock	 	 	4	 	 	 	4	 	
Additional paid-in-capital	 	 	169,580	 	 	 	167,323	 	
Treasury stock, at cost	 	 	(5,549	)	 	 	(5,549	)	
Accumulated deficit	 	 	(16,774	)	 	 	(13,890	)	
Accumulated other comprehensive income	 	 	1,436	 	 	 	331	 	

Total stockholders’ equity	 	 	148,697	 	 	 	148,219	 	

Total liabilities and stockholders’ equity	 	$	174,287	 	 	$	168,857	 	
 	 	 	 	 	 	 	
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PDF SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended	 	
 	 	March 31,	 	 	March 31,	 	
 	 	2007	 	 	2006	 	
Revenue:	 	 	 	 	 	 	 	 	
Design-to-silicon-yield solutions:	 	 	 	 	 	 	 	 	
Integrated solutions	 	$	13,764	 	 	$	12,229	 	
Software licenses	 	 	3,485	 	 	 	2,612	 	
Gain share	 	 	4,893	 	 	 	5,016	 	
 	 	 	 	 	 	 	
Total revenue	 	 	22,142	 	 	 	19,857	 	

Cost and expenses:	 	 	 	 	 	 	 	 	
Cost of design-to-silicon-yield solutions:	 	 	 	 	 	 	 	 	
Direct costs of design-to-silicon-yield solutions:	 	 	 	 	 	 	 	 	
Integrated solutions	 	 	7,708	 	 	 	6,429	 	
Software licenses	 	 	59	 	 	 	11	 	
Amortization of acquired core technology	 	 	1,575	 	 	 	1,266	 	
Research and development	 	 	8,370	 	 	 	6,256	 	
Selling, general and administrative	 	 	5,844	 	 	 	4,956	 	
Amortization of other acquired intangible assets	 	 	1,013	 	 	 	235	 	
 	 	 	 	 	 	 	
Total costs and expenses	 	 	24,569	 	 	 	19,153	 	

Income (loss) from operations	 	 	(2,427	)	 	 	704	 	
Interest and other income, net	 	 	496	 	 	 	635	 	
 	 	 	 	 	 	 	
Income (loss) before taxes	 	 	(1,931	)	 	 	1,339	 	
 	 	 	 	 	 	 	 	 	
Tax provision	 	 	424	 	 	 	1,071	 	
 	 	 	 	 	 	 	
Net income (loss)	 	$	(2,355	)	 	$	268	 	

Net income (loss) per share:	 	 	 	 	 	 	 	 	
Basic	 	$	( 0.08	)	 	$	0.01	 	
 	 	 	 	 	 	 	
Diluted	 	$	( 0.08	)	 	$	0.01	 	

Weighted average common shares:	 	 	 	 	 	 	 	 	
Basic	 	 	27,980	 	 	 	26,542	 	
 	 	 	 	 	 	 	
Diluted	 	 	27,980	 	 	 	28,223	 	
 	 	 	 	 	 	 	
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PDF SOLUTIONS, INC.
IMPACT of NON-GAAP ADJUSTMENTS ON REPORTED NET INCOME (LOSS) (UNAUDITED)
(In thousands, except per share amounts)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended	 	 	Three Months Ended	 	
 	 	March 31, 2007	 	 	March 31, 2006	 	
 	 	As reported	 	 	Adjustments	 	 	Non-GAAP	 	 	As reported	 	 	Adjustments	 	 	Non-GAAP	 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Design to-silicon-yield solutions:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Integrated solutions	 	$	13,764	 	 	 	 	 	 	$	13,764	 	 	$	12,229	 	 	 	 	 	 	$	12,229	 	
Software licenses	 	 	3,485	 	 	 	 	 	 	 	3,485	 	 	 	2,612	 	 	 	 	 	 	 	2,612	 	
Gain share	 	 	4,893	 	 	 	 	 	 	 	4,893	 	 	 	5,016	 	 	 	 	 	 	 	5,016	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	 	 	22,142	 	 	 	—	 	 	 	22,142	 	 	 	19,857	 	 	 	—	 	 	 	19,857	 	

Cost and expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of design-to-silicon-yield solutions:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Direct cost of design-to-silicon-yield solutions:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Integrated solutions	 	 	7,708	 	 	 	(493	)(a)	 	 	7,215	 	 	 	6,429	 	 	 	(621	)(a)	 	 	5,808	 	
Software licenses	 	 	59	 	 	 	 	 	 	 	59	 	 	 	11	 	 	 	 	 	 	 	11	 	
Amortization of acquired core technology	 	 	1,575	 	 	 	(1,575	)(b)	 	 	—	 	 	 	1,266	 	 	 	(1,266	)(b)	 	 	—	 	
Research and development	 	 	8,370	 	 	 	(562	)(a)	 	 	7,808	 	 	 	6,256	 	 	 	(618	)(a)	 	 	5,638	 	
Selling, general and administrative	 	 	5,844	 	 	 	(782	)(a)	 	 	5,062	 	 	 	4,956	 	 	 	(929	)(a)	 	 	4,027	 	
Amortization of other acquired intangible assets	 	 	1,013	 	 	 	(1,013	)(b)	 	 	—	 	 	 	235	 	 	 	(235	)(b)	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total costs and expenses	 	 	24,569	 	 	 	(4,425	)	 	 	20,144	 	 	 	19,153	 	 	 	(3,669	)	 	 	15,484	 	

Income (loss) from operations	 	 	(2,427	)	 	 	4,425	 	 	 	1,998	 	 	 	704	 	 	 	3,669	 	 	 	4,373	 	
Interest and other income	 	 	496	 	 	 	 	 	 	 	496	 	 	 	635	 	 	 	 	 	 	 	635	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before taxes	 	 	(1,931	)	 	 	4,425	 	 	 	2,494	 	 	 	1,339	 	 	 	3,669	 	 	 	5,008	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tax provision (benefit)	 	 	424	 	 	 	(1,810	)(a,b)	 	 	(1,386	)	 	 	1,071	 	 	 	673	 (a,b)	 	 	1,744	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	 	$	(2,355	)	 	$	6,235	 	 	$	3,880	 	 	$	268	 	 	$	2,996	 	 	$	3,264	 	

Net income (loss) per share — diluted	 	$	(0.08	)	 	$	0.22	 	 	$	0.14	 	 	$	0.01	 	 	$	0.11	 	 	$	0.12	 	

Weighted average common shares — diluted	 	 	27,980	 	 	 	28,590	 	 	 	28,590	 (c)	 	 	28,223	 	 	 	28,223	 	 	 	28,223	 	

Notes:	 	 	
(a)	 	The non-GAAP adjustments represent the reversal of stock-based compensation, net of taxes.	
(b)	 	The non-GAAP adjustments represent the reversal of amortization of intangible assets, net of taxes.	
(c)	 	The shares used in computing non-GAAP net income for the three months ended March 31, 2007 and 2006 include the dilutive impact of common stock options.	
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Exhibit 99.2
News Release
 	 	 	
Investor Relations Contact:	 	Investor Relations Contact:	
Steven Melman, V.P. of Investor Relations	 	Sonia Segovia, IR Coordinator	
PDF Solutions, Inc.	 	PDF Solutions, Inc.	
Tel: (408) 938-6445	 	Tel: (408) 938-6491	
Email: steve.melman@pdf.com	 	Email: sonia.segovia@pdf.com	
PDF Solutions® Provides Financial Outlook For
The Second Quarter and Total Year Fiscal 2007
     SAN JOSE, Calif.—April 25, 2007—PDF Solutions, Inc. (NASDAQ: PDFS), the leading provider of process-design integration technologies to enhance IC manufacturability, today provided its financial outlook for the second fiscal quarter ending June 30, 2007 and reiterated its outlook for the total fiscal year ending December 31, 2007.
     PDF Solutions expects total revenue in the range of $23.6 million to $25.1 million for the second fiscal quarter ending June 30, 2007. Gain share revenue for the second quarter is expected to be in the range of $5.6 million to $6.1 million. On a GAAP basis, net income (loss) for the second fiscal quarter of 2007 is projected in a range of ($120,000) to $480,000, or ($0.00) to $0.02 per basic share.
     For the total fiscal year ending December 31, 2007, PDF Solutions reiterates prior expectations of total revenue in the range of $105.0 million to $111.0 million and, on a GAAP basis, net income in a range of $4.3 million to $6.3 million, or $0.14 to $0.21 per diluted share.
     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, which excludes amortization of stock-based compensation and acquired intangible assets. Non-GAAP net income for the second fiscal quarter ending June 30, 2007 is projected in a range of $4.2 million to $4.8 million, or $0.15 to $0.17 per diluted share. PDF Solutions reiterates that its non-GAAP net income for the total fiscal year ending December 31, 2007 is projected in a range of $21.3 million to $23.3 million, or $0.72 to $0.78 per diluted share.
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     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 its first quarter 2007 results and financial outlook for the second fiscal quarter and fiscal year 2007. A live webcast of this conference call will be available on PDF Solutions’ website at http://ir.pdf.com/medialist.cfm. A web cast replay 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 the company’s website at http://www.pdf.com/news_archive.phtml following the date of this release.
Effectiveness of Guidance:
The outlook set forth above represents PDF Solutions’ expectations only as of the date of this release, and should not be viewed as a statement about PDF Solutions’ expectations after this date. Although this release will remain available on PDF Solutions’ website, its continued availability does not indicate that PDF Solutions is reaffirming or confirming its continued validity. PDF Solutions does not intend to report on its progress, or provide comments to analysts or investors on, or otherwise update, such guidance until it releases its quarterly results.
Information Regarding Use of Non-GAAP Financial Measures:
In addition to providing guidance that is determined in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), PDF Solutions also provides certain non-GAAP financial measures that exclude the effects of stock-based compensation expense and amortization of acquired intangible assets, and their related income tax effects. PDF Solutions’ management believes that the presentation of these measures provides useful supplemental information to investors regarding PDF’s operating results. These non-GAAP financial measures are used by management internally to measure the company’s profitability and performance. PDF’s management believes that excluding the effects of stock-based compensation expense and amortization of acquired intangible assets, and their income tax effects, provides a useful supplemental measure of the company’s ongoing operations in light of the fact that neither category of expense has a current effect on the future uses of cash nor do they have use with regards to the generation of current or future revenues. This non-GAAP guidance 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 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 has included these non-GAAP measures to give investors an opportunity to see the company as viewed by management. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measure is provided at the end of this press release.
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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. PDF Solutions also offers the industry leading Yield Management System (YMS) software,  data POWER ® , and Fault Detection and Classification (FDC) software, Maestria ® , to enhance yield improvement and production control activities at leading fabrication facilities around the world. Headquartered in San Jose, Calif., PDF Solutions operates worldwide with additional offices in Europe, Japan and China. For more information, visit www.pdf.com.
DataPOWER, Maestria and PDF SolutionsÒ are registered trademarks of PDF Solutions, Inc.
Forward-Looking Statements:
The statements in this press release regarding PDF Solutions’ outlook for its second fiscal quarter and fiscal year 2007, including expected revenue, net income, and net income per share, are forward looking. 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: any unforeseen industry changes; difficulties in modifying PDF’s solutions on a timely basis; and changes in the marketplace for such solutions, including the introduction of products or services competitive with PDF Solutions’ products and services. Readers should also refer to the risk disclosures set forth in PDF Solutions’ periodic public filings with the Securities and Exchange Commission, including, without limitation, its annual report on Form 10-K, most recently filed on March 16, 2007, and its quarterly reports on Form 10-Q, most recently filed on November 21, 2006. The forward-looking statements contained in this release 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.
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PDF SOLUTIONS, INC.
RECONCILIATION OF PROJECTED GAAP NET INCOME (LOSS) TO PROJECTED
NON-GAAP NET INCOME
(In thousands, except per share data)
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ending	 	
PROJECTED RESULTS	 	June 30, 2007	 	
GAAP net income (loss) per share — basic	 	$	(0.00	)	 	to	 	$	0.02	 	

GAAP net income (loss)	 	$	(120	)	 	to	 	$	480	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Amortization of stock-based compensation, net of taxes	 	 	1,840	 	 	 	 	 	 	 	1,840	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Amortization of acquired intangible assets, net of taxes	 	 	2,490	 	 	 	 	 	 	 	2,490	 	

Non-GAAP net income	 	$	4,210	 	 	to	 	$	4,810	 	

Non-GAAP net income per share — diluted	 	$	0.15	 	 	to	 	$	0.17	 	

Weighted average common shares — basic	 	 	28,400	 	 	 	 	 	 	 	28,400	 	
 	 	 	 	 	 	 	 	 	 	 	
Weighted average common shares — diluted	 	 	29,000	 	 	 	 	 	 	 	29,000	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Twelve Months Ending	 	
PROJECTED RESULTS	 	December 31, 2007	 	
GAAP net income per share — diluted	 	$	0.14	 	 	to	 	$	0.21	 	

GAAP net income	 	$	4,250	 	 	to	 	$	6,260	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Amortization of stock-based compensation, net of taxes	 	 	8,260	 	 	 	 	 	 	 	8,260	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Amortization of acquired intangible assets, net of taxes	 	 	8,790	 	 	 	 	 	 	 	8,790	 	

Non-GAAP net income	 	$	21,300	 	 	to	 	$	23,310	 	

Non-GAAP net income per share — diluted	 	$	0.72	 	 	to	 	$	0.78	 	

Weighted average common shares — diluted	 	 	29,750	 	 	 	 	 	 	 	29,750	 	
 	 	 	 	 	 	 	 	 	 	 	
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