PDF Solutions® Reports Third Fiscal Quarter Results

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

	Three months ended							Nine months ended
	September 30,		June 30,		September 30,		September 30,				September 30,
	2015		2015		2014		2015				2014
GAAP net income	$	1,494	$	2,149	$	1,761	$		9,610		$	12,711
Adjustments to reconcile GAAP net income to non-GAAP net income:
Stock-based compensation expense		2,564		2,355		2,226			7,118			6,259
Impairment of deferred costs		-		-		1,892			-			1,892
Previously impaired costs (1)		-		-		-			(1,892	)		-
Amortization of acquired technology		80		-		-			80			-
Amortization of other acquired intangible assets		89		-		-			89			31
Restructuring charges		-		-		-			-			57
Acquisition costs (2)		290		482		-			772			-
Acquisition related contingent earn-out (2)		475		-		-			475			-
Acquisition related deferred revenue adjustment (2)		501		-		-			501			-
Non-cash portion of income tax expense		270		882		428			3,115			3,797
Non-GAAP net income	$	5,763	$	5,868	$	6,307	$		19,868		$	24,747

GAAP net income per diluted share	$	0.05	$	0.07	$	0.05	$		0.30		$	0.40
Non-GAAP net income per diluted share	$	0.18	$	0.18	$	0.20	$		0.62		$	0.77

Shares used in diluted shares calculation		32,106		32,400		32,079			32,266			31,975


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

		Three months ended						Nine months ended
	September 30,		June 30,		September 30,		September 30,				September 30,
	2015		2015		2014		2015				2014

GAAP net income	$	1,494	$	2,149	$	1,761	$		9,610		$	12,711
Adjustments to reconcile GAAP net income to EBITDAR:
Stock-based compensation expense		2,564		2,355		2,226			7,118			6,259
Impairment of deferred costs		-		-		1,892			-			1,892
Previously impaired costs (1)		-		-		-			(1,892	)		-
Amortization of acquired technology		80		-		-			80			-
Amortization of other acquired intangible assets		89		-		-			89			31
Restructuring charges		-		-		-			-			57
Acquisition costs (2)		290		482		-			772			-
Acquisition related contingent earn-out (2)		475		-		-			475			-
Acquisition related deferred revenue adjustment (2)		501		-		-			501			-
Depreciation expense		682		632		519			1,919			1,459
Income tax provision		1,269		1,572		1,217			6,395			7,287
EBITDAR	$	7,444	$	7,190	$	7,615	$		25,067		$	29,696

EBITDAR per diluted share	$	0.23	$	0.22	$	0.24	$		0.78		$	0.93

Shares used in diluted shares calculation		32,106		32,400		32,079			32,266			31,975


(1) 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.
(2) 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.

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