Exhibit 99.1
PLX Technology, Inc. Reports First Quarter 2006 Financial Results
SUNNYVALE, Calif.--(BUSINESS WIRE)--April 18, 2006--PLX
Technology, Inc. (Nasdaq:PLXT):
-- Continued Strong Sequential Revenue, Profitability Growth
-- Continued Progress in PCI Express, USB Design Wins
-- More than 300 PCI Express Customers Sampled to Date
PLX Technology, Inc. (Nasdaq:PLXT) today announced financial
results for the first quarter of 2006 which ended March 31, 2006.
For the first quarter ended March 31, 2006, PLX reported net
revenues of $20.0 million, a 51 percent increase from the $13.2
million reported in the quarter ended March 31, 2005 and a 30 percent
increase from the $15.3 million reported in the quarter ended December
31, 2005.
In the first quarter, the Company completed an evaluation and
concluded that it is more appropriate to recognize revenues at the
time of shipment to a distributor, also referred to as the sell-in
basis of recognizing revenue. Prior to the first quarter the Company
recognized revenues on sales to distributors when the distributor
resold the product to its end customer, also referred to as the
sell-through basis of recognizing revenue. Because of this change the
Company recognized a one-time pick-up of $2,766,076 and $1,875,066 to
revenues and gross margin, respectively. This pick-up corresponds to
the amount of inventory held by the distributors as of March 31, 2006.
Statement of Financial Accounting Standards No. 48, "Revenue
Recognition When Right of Return Exists," sets forth conditions that
must be met to recognize revenue at the time of shipment. Among those
conditions is that a company that provides a right of return to a
buyer be able to reasonably estimate the amount of future returns. In
the past, the Company had concluded that it did not meet this
condition, and therefore had deferred revenue on sales to distributors
in the manner described above. The Company now believes that it is
able to estimate returns and pricing concessions.
Excluding the pick-up, net revenues for the first quarter ended
March 31, 2006 were $17.2 million, a 30 percent increase from the
$13.2 million reported in the quarter ended March 31, 2005, and a 12
percent increase from the $15.3 million reported in the quarter ended
December 31, 2005.
Net income for the first quarter ended March 31, 2006, under U.S.
generally accepted accounting principles (GAAP), was $1.5 million or
$0.06 per share (diluted), which included the effect of
acquisition-related costs and stock option expense as prescribed by
Statement of Financial Accounting Standard No. 123R (FAS 123R). This
compared to a net loss under GAAP of $0.5 million, or a loss of $0.02
per share (diluted), in the quarter ended March 31, 2005. This also
compares to net income under GAAP of $35,000 in the fourth quarter
ended December 31, 2005, or $0.00 per share (diluted).
Pro forma net income for the first quarter ended March 31, 2006
was $3.1 million, or $0.11 per share (diluted) and excludes
approximately $1.0 million in stock option expense as prescribed by
FAS 123R and $0.5 million of acquisition-related costs. This compares
with pro forma net income of $70,000, or $0.00 per share (diluted), in
the quarter ended March 31, 2005 and pro forma net income of $0.8
million, or $0.03 per share (diluted), in the quarter ended December
31, 2005. A reconciliation between net income (loss) under GAAP and
pro forma net income is provided in a table immediately below the Pro
Forma Consolidated Statements of Operations.
Gross margin in the first quarter ended March 31, 2006 was 63
percent, compared with 64 percent for the fourth quarter ended
December 31, 2005. Included in gross margin for the first quarter is
the pick-up of $2,766,076 and $891,009, respectively, of net revenues
and cost of revenues resulting from the change in the accounting for
revenues to distributors. Excluding the pick-up, gross margin for the
first quarter was 62 percent, compared with 64 percent for the prior
quarter. The decrease in gross margin was primarily the result of
higher sales of USB and PCI Express(TM) devices, which yield lower
margins relative to the PCI I/O devices.
Operating expenses under GAAP for the first quarter ended March
31, 2006 of $11.3 million include $1.0 million in stock option expense
as prescribed by FAS 123R and $0.5 million of acquisition-related
costs. This compares with operating expenses under GAAP of $9.9
million in the prior quarter, which includes $0.7 million of
acquisition-related costs. Pro forma operating expenses for the first
quarter ended March 31, 2006 were $9.7 million and excludes the items
noted above. This compares to pro forma operating expenses of $9.2
million for the prior quarter. The sequential increase in pro forma
operating expenses was due to higher compensation and benefit
expenses, increases in sales commissions to manufacturers'
representatives and professional fees associated with the year-end
audit and Sarbanes-Oxley compliance.
In summary, excluding the pick-up to net revenues and gross margin
resulting from the change in accounting for revenues to distributors,
acquisition-related costs, and share-based compensation, the Company
recorded $17,200,000 in net revenues, 62 percent in gross margin,
$9,700,000 million in operating expenses, $943,000 in income from
operations, $1,285,000 in income before provision for income taxes and
$1,242,000 in net income.
The Company's balance sheet remained strong. At March 31, 2006,
cash and investments were $35.4 million, compared to $35.0 million at
December 31, 2005. Additionally, there continued to be no debt.
"In the first quarter, rapid growth in our PCI Express and USB
product lines drove substantial sequential revenue growth and
increased profitability," said Mike Salameh, PLX Technology's chief
executive officer. "In addition to growing PCI Express revenues
rapidly, we continued to enhance our market leadership position by
sampling our seventh PCI Express chip. To date, we have shipped
samples or development systems to more than 300 customers, up from the
approximately 250 in the fourth quarter of 2005.
"Recent design-win success in consumer electronics and PC
peripherals drove the rapid growth in our USB product line. Thanks to
the strength in our PCI Express and USB product lines, we are looking
forward to continued growth in total company revenues and profits in
2006."
Business Outlook
The following statements are based on current expectations. The
Company does not intend to update, confirm or change this guidance
until its second-quarter earnings conference call, although it may
provide additional detail regarding its guidance on today's scheduled
call.
-- Revenue for the second quarter ended June 30, 2006 is expected
to be between $18.0 million and $19.0 million, with
approximately 19 percent to 23 percent of total revenues
attributable to USB products and approximately 21 percent to
25 percent of total revenues attributable to PCI Express
products.
-- Gross margins are expected to be in the range of 60 percent to
62 percent.
-- Operating expenses under GAAP are expected to be between $11.0
million and $11.4 million. Pro forma operating expenses are
expected to be between $9.5 million and $9.7 million. Pro
forma operating expenses exclude the effect of share-based
compensation, which is expected to be between $1.0 million and
$1.2 million and acquisition-related costs of approximately
$0.5 million.
PLX management plans to conduct a conference call today at 2:00
p.m. PDT to discuss its first-quarter financial results, as well as
its second-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 April
25, 2006. 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 the effect of stock-based compensation expense as
prescribed by FAS 123R and acquisition-related charges, such as
amortization of deferred compensation, amortization and write-down of
purchased intangible assets and in-process research and development
charges. PLX's management believes that the presentation of pro forma
financial results are useful to investors and other interested persons
because, by excluding certain expenses PLX believes are not indicative
of the Company's core operating results, the users of the financial
statements are provided with valuable insight into PLX's operating
results. Further, these non-GAAP results are one of the primary
indicators PLX's management uses for planning and forecasting future
performance. In addition, PLX has consistently provided these pro
forma measurements in previous earnings releases and believes that it
is important to provide investors and other interested persons with a
consistent basis for comparison between quarters. 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 second quarter of 2006,
which are set forth under the caption "Business Outlook," statements
regarding the PCI Express and USB product line and statements about
the Company's 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, 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
March 31 March 31 December 31
2006 2005 2005
-------- --------- -----------
Net revenues $20,005 $13,222 $15,339
Cost of revenues 7,497 4,857 5,462
-------- --------- -----------
Gross margin 12,508 8,365 9,877
Operating expenses:
Research and development 5,079 4,112 4,843
Selling, general and administrative 5,675 4,426 4,339
Amortization and write-off of
purchased intangible assets 512 512 726
-------- --------- -----------
Total operating expenses 11,266 9,050 9,908
Income (loss) from operations 1,242 (685) (31)
Interest income and other, net 342 155 261
-------- --------- -----------
Income (loss) before provision
for income taxes 1,584 (530) 230
Provision for income taxes 43 11 195
-------- --------- -----------
Net income (loss) $1,541 $(541) $35
======== ========= ===========
Basic net income (loss) per share $0.06 $(0.02) $0.00
======== ========= ===========
Shares used to compute basic per share
amounts 27,884 26,786 27,592
======== ========= ===========
Diluted net income (loss) per share $0.05 $(0.02) $0.00
======== ========= ===========
Shares used to compute diluted per
share amounts 28,794 26,786 28,237
======== ========= ===========
PLX TECHNOLOGY, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(Excluding Acquisition-Related Costs, Amortization of Intangible
Assets and Share-Based Compensation Costs)
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended
March 31 March 31 December 31
2006 (1) 2005 2005
--------- -------- -----------
Net revenues $20,005 $13,222 $15,339
Cost of revenues 7,488 4,857 5,462
--------- -------- -----------
Gross margin 12,517 8,365 9,877
Operating expenses:
Research and development 4,602 4,034 4,829
Selling, general and administrative 5,097 4,405 4,337
--------- -------- -----------
Total operating expenses 9,699 8,439 9,166
Income (loss) from operations 2,818 (74) 711
Interest income and other, net 342 155 261
--------- -------- -----------
Income before provision for income
taxes 3,160 81 972
Provision for income taxes 43 11 195
--------- -------- -----------
Net income $3,117 $70 $777
========= ======== ===========
Basic net income per share $0.11 $0.00 $0.03
========= ======== ===========
Shares used to compute basic per share
amounts 27,884 26,786 27,592
========= ======== ===========
Diluted net income per share $0.11 $0.00 $0.03
========= ======== ===========
Shares used to compute diluted per
share amounts 28,794 27,592 28,237
========= ======== ===========
A reconciliation between net income (loss) on a GAAP basis and pro
forma net income is as follows:
GAAP net income (loss) $1,541 $(541) $35
Amortization of deferred stock-based
compensation 16 99 16
Amortization and write-off of purchased
intangible assets 512 512 726
Share-based compensation expense
- Cost of revenues 10 - -
- Research and development 463 - -
- Selling, general and administrative 575 - -
--------- -------- -----------
Pro forma net income $3,117 $70 $777
========= ======== ===========
(1) The above pro forma amounts for the three months ended March 31,
2006 include a pick-up in net revenues and cost of revenues of
$2,766,076 and $891,009, respectively, as a result of the
Company's change from the sell-through method of accounting for
revenues to the sell-in method whereby revenues are now recognized
at the time of shipment to a distributor.
PLX TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31 December 31
2006 2005 (1)
----------- ------------
(unaudited)
ASSETS
Cash and investments $35,362 $35,043
Accounts receivable, net 7,531 6,203
Inventories 7,988 4,328
Property and equipment, net 29,386 29,535
Goodwill 35,818 35,818
Other intangible assets 4,218 4,729
Other assets 1,737 2,255
----------- ------------
Total assets $122,040 $117,911
=========== ============
LIABILITIES
Accounts payable $6,605 $4,530
Accrued compensation and benefits 1,887 1,754
Deferred revenues - 1,963
Accrued commissions 471 298
Other accrued expenses 1,445 1,877
----------- ------------
Total liabilities 10,408 10,422
STOCKHOLDERS' EQUITY
Common stock, par value 28 28
Additional paid-in capital 121,000 118,441
Deferred compensation (111) (128)
Accumulated other comprehensive loss (88) (114)
Accumulated deficit (9,197) (10,738)
----------- ------------
Total stockholders' equity 111,632 107,489
----------- ------------
Total liabilities and stockholders' equity $122,040 $117,911
=========== ============
(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