Exhibit 99.1
PLX Technology, Inc. Reports Third Quarter 2005 Financial Results;
Company Continues To Capitalize on Leadership Position
in Emerging PCI Express Market
SUNNYVALE, Calif.--(BUSINESS WIRE)--Oct. 18, 2005--PLX Technology,
Inc. (Nasdaq:PLXT) today announced financial results for the third
quarter ended September 30, 2005.
For the third quarter, PLX reported net revenues of $12.9 million,
a two percent decrease from the $13.2 million reported for the second
quarter of 2005, and a 17 percent decrease from the $15.5 million
reported for the third quarter of 2004. Net revenues for the first
nine months of 2005 were $39.3 million, a four percent decrease from
the $41.1 million reported for the first nine months of 2004.
Net losses for the third quarter of 2005, under U.S. generally
accepted accounting principles (GAAP), which included the effect of
acquisition-related costs, were $0.5 million, or a loss of $0.02 per
share (diluted). This compared with net losses under GAAP of $0.7
million, or a loss of $0.03 per share (diluted), for the second
quarter of 2005 and net income under GAAP of $0.3 million, or $0.01
per share (diluted), for the prior-year third quarter. Net losses for
the first nine months of 2005 were $1.8 million, or a loss of $0.07
per share (diluted), compared to net income of $67,000, or $0.00 per
share (diluted), for the first nine months of 2004.
Pro forma net income for the third quarter of 2005, which excluded
the effect of acquisition-related costs, was $22,000, or $0.00 per
share (diluted). This compared with pro forma net losses of $0.2
million, or a loss of $0.01 per share (diluted), for the second
quarter of 2005 and with pro forma net income of $0.8 million, or
$0.03 per share (diluted), for the prior-year third quarter. Pro forma
net losses for the first nine months of 2005 were $95,000, or a loss
of $0.00 per share (diluted), compared with pro forma net income of
$2.5 million, or $0.10 per share (diluted), for the first nine months
of 2004. A 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.
The company's gross margin for the third quarter of 2005 was 66
percent, compared with 63 percent for the prior quarter. The increase
in gross margin as a percentage of sales is the result of lower sales
of lower-margin HyperTransport(TM)-to-PCI-X bridge products and higher
sales of higher-margin PCI I/O devices.
Operating expenses on a GAAP basis for the third quarter of 2005
were $9.2 million, compared with $9.2 million for the prior quarter.
On a pro forma basis, which excludes acquisition-related costs of
approximately $0.5 million and $0.5 million for the quarters ended
September 30, 2005 and June 30, 2005, respectively, operating expenses
were $8.6 million for the third quarter of 2005, compared with $8.7
million for the prior quarter.
The company's balance sheet remained strong. On September 30,
2005, cash and total investments were $33.2 million, compared to $30.3
million at December 31, 2004. Additionally, there continues to be no
debt.
"In the third quarter we continued to make significant progress in
our PCI Express(TM) initiative," said Mike Salameh, PLX Technology
chief executive officer. "Third-quarter purchase orders were up
sharply because several customers are preparing to increase
production. Based on our current backlog we expect to ship $1.5
million to $2 million of PCI Express products in the fourth quarter.
"We also built on our leadership position in this market by
announcing two of our second-generation PCI Express chips, which
broaden our product line and offer customers more lane configurations,
lower cost and higher performance. Since we started sampling PCI
Express devices in late 2004, we have shipped samples or development
systems to more than 200 customers, up from 150-plus customers in the
second quarter of 2005. The growth in customer adoption of PCI Express
technology is an indication of broad market acceptance of both the
industry standard and our products.
"We believe we are well-positioned to substantially grow total
revenues and profitability in 2006. We now expect PCI Express designs
to transition from early production to higher volume in the fourth
quarter. At the same time, our PCI and USB product lines are
delivering stable revenues and margins. We believe we can grow
revenues over the next several quarters with only slight increases in
expenses over our current levels."
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 during today's
scheduled call.
-- Revenue for the fourth quarter of 2005 is expected to be
between $13.7 million and $14.7 million, with approximately 13
percent to 15 percent of total revenues attributable to USB
products and approximately 11 percent to 14 percent of total
revenues attributable to PCI Express products.
-- Gross margins are expected to be in the range of 64 percent to
68 percent.
-- Operating expenses on a GAAP basis are expected to be between
$9.6 million and $9.9 million. On a pro forma basis, which
excludes acquisition-related costs of approximately $0.5
million, expenses are expected to be between $9.1 million and
$9.4 million. Engineering expenses related to 0.13-micron chip
development comprise a significant portion of total
anticipated fourth-quarter expenses. The expected sequential
growth in expenses is due to mask charges, other variable
external engineering expenses related to PCI Express chips,
and expenses associated with our year-end Sarbanes-Oxley 404
and financial statement audit. Assuming that most of the added
external engineering expenses for these tape-outs occur in the
fourth quarter, we expect first-quarter 2006 tape-out-related
expenses to decline on a sequential basis bringing total pro
forma operating expenses for the first quarter of 2006 to
below $9.0 million. The actual timing of the expenses will
depend on the timing of actual mask and prototype fabrication.
PLX(R) 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 http://www.plxtech.com/investors until October
25, 2005. The Webcast can also be accessed through www.ccbn.com.
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 call.
USE OF PRO FORMA FINANCIAL INFORMATION: In addition to reporting
financial results in accordance with 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
deferred compensation and other intangibles and in-process research
and development charges. PLX's management believes these pro forma
measures are useful to investors because they provide supplemental
information that facilitates comparisons to 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 is 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 PCI Express and other standard
I/O interconnect silicon to the communications, server, storage,
embedded-control, and consumer industries. All PLX I/O interconnect
products are available in lead-free packaging. 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, PCI Express 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,
estimates of revenues attributable to certain products, estimated
expenses, and estimated gross margins for the fourth quarter of 2005,
which are set forth under the caption "Business Outlook," statements
regarding the PCI Express product line and the development of a second
generation of the product line and statements about our future gross
margins. 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, 2004, and our quarterly report on Form
10-Q for the quarter ended June 30, 2005, 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 is a trademark of PLX Technology, Inc., which may be
registered in some jurisdictions. All other product names that appear
in this material are for identification purposes only and are
acknowledged to be trademarks or registered trademarks of their
respective companies.
PLX TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
Sept. 30 Sept. 30 June 30 Sept. 30
-------------------
2005 2004 2005 2005 2004
-------- --------- -------- -------------------
Net revenues $12,869 $15,457 $13,185 $39,276 $41,115
Cost of revenues 4,394 5,639 4,900 14,151 13,793
-------- --------- -------- -------------------
Gross margin 8,475 9,818 8,285 25,125 27,322
Operating expenses:
Research and
development 4,849 4,765 4,665 13,626 13,216
Selling, general
and administrative 3,791 4,209 4,021 12,238 11,655
In-process
research and
development - - - - 1,123
Amortization of
purchased
intangible
assets 512 467 512 1,536 1,206
-------- --------- -------- -------------------
Total operating
expenses 9,152 9,441 9,198 27,400 27,200
Income (loss)
from operations (677) 377 (913) (2,275) 122
Interest income
and other, net 222 134 185 562 301
-------- --------- -------- -------------------
Income (loss)
before provision
for income taxes (455) 511 (728) (1,713) 423
Provision for
income taxes 55 184 4 70 356
-------- --------- -------- -------------------
Net income (loss) $(510) $327 $(732) $(1,783) $67
======== ========= ======== ===================
Basic net income
(loss) per share $(0.02) $0.01 $(0.03) $(0.07) $0.00
======== ========= ======== ===================
Shares used to
compute basic
per share
amounts 27,482 26,342 26,932 27,067 25,028
======== ========= ======== ===================
Diluted net
income (loss)
per share $(0.02) $0.01 $(0.03) $(0.07) $0.00
======== ========= ======== ===================
Shares used to
compute diluted
per share
amounts 27,482 27,129 26,932 27,067 26,144
======== ========= ======== ===================
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 Nine Months Ended
Sept. 30 Sept. 30 June 30 Sept. 30
-----------------
2005 2004 2005 2005 2004
--------- -------- -------- -------- --------
Net revenues $12,869 $15,457 $13,185 $39,276 $41,115
Cost of revenues 4,394 5,639 4,900 14,151 13,793
--------- -------- -------- -------- --------
Gross margin 8,475 9,818 8,285 25,125 27,322
Operating expenses:
Research and
development 4,835 4,745 4,649 13,518 13,172
Selling, general and
administrative 3,785 4,175 4,004 12,194 11,599
--------- -------- -------- -------- --------
Total operating
expenses 8,620 8,920 8,653 25,712 24,771
Income (loss) from
operations (145) 898 (368) (587) 2,551
Interest income and
other, net 222 134 185 562 301
--------- -------- -------- -------- --------
Income (loss) before
provision for income
taxes 77 1,032 (183) (25) 2,852
Provision for income
taxes 55 184 4 70 356
--------- -------- -------- -------- --------
Net income (loss) $22 $848 $(187) $(95) $2,496
========= ======== ======== ======== ========
Basic net income
(loss) per share $0.00 $0.03 $(0.01) $(0.00) $0.10
========= ======== ======== ======== ========
Shares used to compute
basic per share
amounts 27,482 26,342 26,932 27,067 25,028
========= ======== ======== ======== ========
Diluted net income
(loss) per share $0.00 $0.03 $(0.01) $(0.00) $0.10
========= ======== ======== ======== ========
Shares used to compute
diluted per share
amounts 28,121 27,129 26,932 27,067 26,144
========= ======== ======== ======== ========
A reconciliation between net income (loss) on a GAAP basis
and pro forma net income (loss) is as follows:
GAAP net income (loss) $(510) $327 $(732) $(1,783) $67
In-process research
and development - - - - 1,123
Amortization of
deferred stock-based
compensation 20 54 33 152 100
Amortization of
purchased intangible
assets 512 467 512 1,536 1,206
--------- -------- -------- -------- --------
Pro forma net income
(loss) $22 $848 $(187) $(95) $2,496
========= ======== ======== ======== ========
PLX TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30 December 31,
2005 2004 (1)
-------------- -------------
ASSETS
Cash and investments $ 33,192 $ 30,276
Accounts receivable, net 6,455 5,084
Inventories 3,278 4,159
Property and equipment, net 29,842 30,860
Goodwill 36,085 30,965
Other intangible assets 5,456 6,991
Other assets 1,397 2,138
-------------- -------------
Total assets $ 115,705 $ 110,473
============== =============
LIABILITIES
Accounts payable $ 3,851 $ 3,627
Accrued compensation and benefits 1,822 1,813
Deferred revenues 2,021 1,310
Accrued commissions 292 300
Other accrued expenses 1,158 1,264
-------------- -------------
Total liabilities 9,144 8,314
-------------- -------------
STOCKHOLDERS' EQUITY
Common stock, par value 28 27
Additional paid-in capital 117,617 111,739
Deferred compensation (144) (406)
Accumulated other comprehensive loss (167) (211)
Accumulated deficit (10,773) (8,990)
-------------- -------------
Total stockholders' equity 106,561 102,159
-------------- -------------
Total liabilities and stockholders'
equity $ 115,705 $ 110,473
============== =============
(1) Derived from audited financial statements
CONTACT: PLX Technology, Inc.
Rafael Torres, 408-774-9060 (CFO)
rtorres@plxtech.com
or
CommonGround Communications (for PLX)
Jerry Steach, 415-222-9996
jsteach@plxtech.com