Exhibit 99.1
PLX Technology, Inc. Reports Solid Third-Quarter and
Nine-Month 2004 Financial Results
SUNNYVALE, Calif.--(BUSINESS WIRE)--Oct. 19, 2004--PLX Technology,
Inc. (Nasdaq:PLXT) today announced financial results for the third
quarter ended September 30, 2004. Financial results include the
acquired operations of NetChip Technology, Inc. beginning on May 24,
2004.
For the third quarter, PLX reported net revenues of $15.5 million,
a 50 percent increase from the $10.3 million reported for the third
quarter of 2003 and a ten percent increase from the $14.0 million
reported for the second quarter of 2004. Net revenues for the first
nine months of 2004 were $41.1 million, a 50 percent increase from the
$27.4 million reported for the first nine months of 2003.
Net income under U.S. generally accepted accounting principles
(GAAP), which included the effect of acquisition-related costs, was
$0.3 million, or $0.01 per share (diluted), for the third quarter of
2004. This compared with net income under GAAP of $0.1 million, or
$0.01 per share (diluted), for the third quarter of 2003 and net loss
under GAAP of $0.5 million, or a loss of $0.02 per share (diluted),
for the prior quarter. Net income for the first nine months of 2004
was $0.1 million, or $0.00 per share (diluted), compared to net losses
of $2.6 million, or a loss of $0.12 per share (diluted), for the first
nine months of 2003.
Pro forma net income for the third quarter of 2004, which excluded
the effect of acquisition-related costs, was $0.8 million, or $0.03
per share (diluted). This compared with pro forma net income of $0.6
million, or $0.02 per share (diluted), for the same quarter a year
ago, and with pro forma net income of $1.1 million, or $0.04 per share
(diluted), for the prior quarter. Pro forma net income for the first
nine months of 2004 was $2.5 million, or $0.10 per share (diluted),
compared to pro forma net losses of $0.1 million, or a loss of $0.01
per share (diluted), for the first nine months of 2003. The
reconciliation between net income (loss) under GAAP and pro forma net
income (loss) is provided in a table immediately below the Pro Forma
Consolidated Statements of Operations.
"Despite a more cautious customer purchasing environment, I am
pleased that we met our revenue and exceeded our earnings expectations
for the quarter," said Mike Salameh, president and chief executive
officer of PLX. "We also achieved important milestones in our
long-term growth programs, including PCI Express(TM) technology."
The Company's gross margin for the third quarter of 2004 was 64
percent, compared with 65 percent for the prior quarter. The
sequential decrease in gross margin was due primarily to an expected
change in the Company's product and customer mix associated with the
acquisition of NetChip, partially offset by a net benefit of
approximately one and one-half margin points, primarily due to the
sale of previously written down NetChip inventory.
Operating expenses on a GAAP basis for the third quarter of 2004
were $9.4 million, as compared with $9.7 million for the prior
quarter. On a pro forma basis, which excludes acquisition-related
costs of approximately $0.5 million, operating expenses for the third
quarter of 2004 were $8.9 million, as compared with $8.1 million for
the prior quarter.
The Company's balance sheet remained strong. At September 30,
2004, cash, cash equivalents and total investments increased to $31.8
million, from $31.3 million at June 30, 2004, and there was no debt.
The Company also noted that the emerging PCI Express standard, a
new interconnect architecture for servers, storage, communications,
embedded systems, and other microprocessor-based systems, is a major
focus for PLX. In the third quarter, the Company produced the first
silicon for the largest and most complex chip in its PCI Express
family, the 32-lane switch. In September, the Company demonstrated
this switch at the Intel Developer Forum and also provided samples to
customers. Based on strong customer interest, the Company believes
that the PCI Express market provides PLX a significant long-term
growth opportunity.
Although third-quarter revenues met the Company's expectations,
the Company believes that customers have accumulated excess inventory
of PLX(R) products. Therefore, fourth-quarter revenues are expected to
decline relative to the third quarter. However, the Company believes
that its progress with new products and new designs will translate to
renewed revenue growth in 2005.
Business Outlook
The following statements are based on current expectations. The
Company does not intend to update, confirm or change this guidance
until its fourth-quarter earnings conference call, although it may
provide additional detail regarding its guidance on today's scheduled
call.
-- Revenue for the fourth quarter of 2004 is expected to be
between $13.5 million and $14.5 million.
-- Gross margins are expected to be in the range of 61 percent to
65 percent.
-- Operating expenses on a GAAP basis are expected to be between
$9.4 million and $9.8 million. On a pro forma basis, which
excludes acquisition-related costs of approximately $0.5
million, expenses are expected to be between $8.9 million and
$9.3 million. Engineering expenses related to 0.13-micron chip
development, Sarbanes-Oxley compliance and year-end audit
comprise a significant portion of total anticipated
fourth-quarter expenses. The timing of the development
expenses will depend on when the actual mask and prototype
fabrication work is performed.
PLX management plans to conduct a conference call today at 2:00
p.m. PDT to discuss its third-quarter financial results, as well as
its fourth-quarter outlook. There will also be a live Webcast and a
replay of the conference call available through the Investors section
of the PLX Web site at www.plxtech.com until October 26, 2004.
For the live Webcast, listeners should go to the Web site at least
15 minutes before the event starts to download and install any
necessary audio software. The archived Webcast is typically available
one to two hours after the end of the live conference call.
USE OF PRO FORMA FINANCIAL INFORMATION: In addition to reporting
financial results in accordance with generally accepted accounting
principles, or GAAP, PLX reports pro forma financial results. Pro
forma net income (loss) and earnings (loss) per share exclude
acquisition-related charges, such as amortization of purchased
intangible assets and deferred compensation. PLX's management believes
these pro forma measures are useful to investors because they provide
supplemental information that facilitates comparisons with prior
periods. Management uses these pro forma measures to evaluate its
financial results, develop budgets and manage expenditures. The method
PLX uses to produce pro forma results is not computed according to
GAAP, is likely to differ from the methods used by other companies and
should not be regarded as a replacement for corresponding GAAP
measures. Investors are encouraged to review the reconciliation of
these pro forma financial measures to the comparable GAAP results,
which are provided in a table immediately below the Pro Forma
Consolidated Statements of Operations.
About PLX
PLX Technology, Inc. (www.plxtech.com), based in Sunnyvale,
Calif., USA, is the leading supplier of standard I/O interconnect
silicon to the communications, server, storage, embedded-control and
consumer industries. The PLX solution provides a competitive edge to
customers through an integrated combination of high-performance
silicon, hardware and software design tools. These innovative
solutions enable customers to develop products with industry-leading
performance and functionality. Furthermore, the combination of PLX
product features, supporting development tools and partnerships allows
customers to bring their designs to market faster. PLX PCI and USB
interconnect chips are designed into a wide variety of communications,
server, storage, embedded-control and consumer products.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
This release includes statements that qualify as forward-looking
statements under the Private Securities Litigation Reform Act of 1995.
These include statements about the Company's estimated revenues,
estimated expenses, and estimated gross margins for the fourth quarter
of 2004, which are set forth under the caption "Business Outlook," and
statements regarding the PCI Express market, customer inventory
levels, progress with new products and new design, revenue growth
prospects for 2005, and timing of development expenses. Such
statements involve risks and uncertainties which may cause actual
results to differ materially from those set forth in the statements.
Factors that could cause actual results to differ materially include
risks and uncertainties, such as reduced demand for products of
electronic equipment manufacturers which include the Company's
products, adverse economic conditions in general or those specifically
affecting the Company's markets, technical difficulties and delays in
the development process, errors in the products, reduced backlog for
the Company's customers and unexpected expenses. Please refer to the
documents filed by the Company with the SEC from time to time,
including, but not limited to, the Annual Report on Form 10-K for the
year ended December 31, 2003 and the Company's quarterly report on
Form 10-Q for the quarter ended June 30, 2004, which identify
important risk factors that could cause actual results to differ from
those contained in the forward-looking statements. All forward-looking
statements are made as of today, and the Company assumes no obligation
to update such statements.
PLX TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended
September 30 September 30 June 30
2004 2003 2004
------------ ------------ --------
Net revenues $15,457 $10,283 $14,016
Cost of revenues 5,639 2,846 4,925
------- ------- -------
Gross margin 9,818 7,437 9,091
Operating expenses:
Research and development 4,765 3,816 4,394
Selling, general and
administrative 4,209 3,301 3,768
In-process research and
development - - 1,123
Amortization of purchased
intangible assets 467 297 442
------- ------- -------
Total operating expenses 9,441 7,414 9,727
Income (loss) from operations 377 23 (636)
Interest income and other, net 134 138 99
------- ------- -------
Income (loss) before provision for
income taxes 511 161 (537)
Provision for income taxes 184 32 -
------- ------- -------
Net income (loss) $ 327 $ 129 $ (537)
======= ======= =======
Basic net income (loss) per share $ 0.01 $ 0.01 $ (0.02)
======= ======= =======
Shares used to compute basic per
share amounts 26,342 23,797 24,850
======= ======= =======
Diluted net income (loss) per share $ 0.01 $ 0.01 $ (0.02)
======= ======= =======
Shares used to compute diluted per
share amounts 27,129 24,442 24,850
======= ======= =======
Nine Months Ended
September 30
--------- --------
2004 2003
------- -------
Net revenues $41,115 $27,446
Cost of revenues 13,793 7,879
------- -------
Gross margin 27,322 19,567
Operating expenses:
Research and development 13,216 11,422
Selling, general and administrative 11,655 9,552
In-process research and development 1,123 875
Amortization of purchased intangible assets 1,206 634
------- -------
Total operating expenses 27,200 22,483
Income (loss) from operations 122 (2,916)
Interest income and other, net 301 348
------- -------
Income (loss) before provision for
income taxes 423 (2,568)
Provision for income taxes 356 16
------- -------
Net income (loss) $ 67 $(2,584)
======= =======
Basic net income (loss) per share $ 0.00 $ (0.12)
======= =======
Shares used to compute basic per
share amounts 25,028 22,392
======= =======
Diluted net income (loss) per share $ 0.00 $ (0.12)
======= =======
Shares used to compute diluted per
share amounts 26,144 22,392
======= =======
PLX TECHNOLOGY, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(Excluding Acquisition-Related Costs
and Amortization of Intangible Assets)
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended
September 30 September 30 June 30
2004 2003 2004
------------- ------------ -------
Net revenues $15,457 $10,283 $14,016
Cost of revenues 5,639 2,846 4,925
------- ------- -------
Gross margin 9,818 7,437 9,091
Operating expenses:
Research and development 4,745 3,713 4,379
Selling, general and administrative 4,175 3,287 3,755
------- ------- -------
Total operating expenses 8,920 7,000 8,134
Income (loss) from operations 898 437 957
Interest income and other, net 134 138 99
------- ------- -------
Income (loss) before provision for
income taxes 1,032 575 1,056
Provision for income taxes 184 4 -
------- ------- -------
Net income (loss) $ 848 $ 571 $ 1,056
======= ======= =======
Basic net income (loss) per share $ 0.03 $ 0.02 $ 0.04
======= ======= =======
Shares used to compute basic per
share amounts 26,342 23,797 24,850
======= ======= =======
Diluted net income (loss) per share $ 0.03 $ 0.02 $ 0.04
======= ======= =======
Shares used to compute diluted per
share amounts 27,129 24,442 26,678
======= ======= =======
A reconciliation between net income (loss) on a GAAP basis and pro
forma net income (loss) is as follows:
GAAP net income (loss) $ 327 $ 129 $ (537)
In-process research and development - - 1,123
Amortization of deferred stock-based
compensation 54 117 28
Amortization of purchased intangible
assets 467 297 442
Income tax effect - 28 -
------- ------- -------
Pro forma net income (loss) $ 848 $ 571 $ 1,056
======= ======= =======
Nine Months Ended
September 30
---------- --------
2004 2003
------- -------
Net revenues $41,115 $27,446
Cost of revenues 13,793 7,879
------- -------
Gross margin 27,322 19,567
Operating expenses:
Research and development 13,172 10,503
Selling, general and administrative 11,599 9,529
------- -------
Total operating expenses 24,771 20,032
Income (loss) from operations 2,551 (465)
Interest income and other, net 301 348
------- -------
Income (loss) before provision for
income taxes 2,852 (117)
Provision for income taxes 356 16
------- -------
Net income (loss) $ 2,496 $ (133)
======= =======
Basic net income (loss) per share $ 0.10 $ (0.01)
======= =======
Shares used to compute basic per
share amounts 25,028 22,392
======= =======
Diluted net income (loss) per share $ 0.10 $ (0.01)
======= =======
Shares used to compute diluted per
share amounts 26,144 22,392
======= =======
A reconciliation between net income (loss) on a
GAAP basis and pro forma net income (loss) is as
follows:
GAAP net income (loss) $ 67 $(2,584)
In-process research and development 1,123 875
Amortization of deferred stock-based
compensation 100 942
Amortization of purchased intangible
assets 1,206 634
Income tax effect - -
------- -------
Pro forma net income (loss) $ 2,496 $ (133)
======= =======
PLX TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2004 2003 (1)
-------- --------
(unaudited)
ASSETS
Cash and investments $ 31,760 $ 23,056
Accounts receivable, net 6,165 4,998
Inventories 4,351 1,893
Property and equipment, net 30,978 31,068
Goodwill 30,970 15,998
Other intangible assets 7,503 2,730
Other assets 1,341 2,060
-------- --------
Total assets $113,068 $ 81,803
======== ========
LIABILITIES
Accounts payable $ 4,558 $ 1,768
Accrued compensation and benefits 1,998 1,427
Deferred revenues 1,678 991
Accrued commissions 332 368
Other accrued expenses 2,264 1,228
-------- --------
Total liabilities 10,830 5,782
-------- --------
STOCKHOLDERS' EQUITY
Common stock, par value 26 24
Additional paid-in capital 111,477 84,508
Deferred compensation (818) (44)
Notes receivable for employee stock
purchases - (70)
Accumulated other comprehensive income (166) (49)
Accumulated deficit (8,281) (8,348)
-------- --------
Total stockholders' equity 102,238 76,021
-------- --------
Total liabilities and stockholders' equity $113,068 $ 81,803
======== ========
(1) Derived from audited financial statements
CONTACT: PLX Technology, Inc.
Rafael Torres, 408-774-9060
rtorres@plxtech.com
or
CommonGround Communications (for PLX)
Jerry Steach, 415-222-9996
jsteach@plxtech.com