Exhibit 99.1
PLX Technology, Inc. Reports Second-Quarter 2006 Financial Results
SUNNYVALE, Calif.--(BUSINESS WIRE)--July 18, 2006--PLX Technology, Inc.
(NASDAQ:PLXT):
-- Increases across All Product Lines Drive Revenue Growth and
Profitability
-- Cash and Investment Balances Increase by $2.9 Million from Prior
Quarter
-- Shipped PCI Express Production Units, Samples or Development Systems
to More than 400 Customers since Product Line Launch
PLX Technology, Inc. (NASDAQ:PLXT) today announced financial results for
the second quarter ended June 30, 2006.
For the second quarter ended June 30, 2006, PLX reported net revenues of
$19.4 million, a 47 percent increase from the $13.2 million reported in the
second quarter ended June 30, 2005, and a three percent decrease compared to the
$20.0 million reported in the first quarter ended March 31, 2006. Included in
the first quarter ended March 31, 2006 results is a one-time pick-up in net
revenues and gross margin of $2,766,076 and $1,875,066, 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 recognized at the time of
shipment to a distributor.
Net revenues for the first six months of 2006 were $39.4 million, a 49
percent increase from the $26.4 million reported for the first six months of
2005. As described above, net revenues for the first six months of 2006 include
the one-time pick-up in revenue in the first quarter ended March 31, 2006 as a
result of the change to the sell-in accounting method.
Net income for the second quarter ended June 30, 2006, under U.S. generally
accepted accounting principles (GAAP), which included the effect of
acquisition-related costs and stock option expense, was $0.3 million, or $0.01
per share (diluted). This compared with net losses under GAAP of $0.7 million,
or a loss of $0.03 per share (diluted), in the second quarter ended June 30,
2005 and net income under GAAP of $1.5 million, or $0.06 per share (diluted), in
the first quarter ended March 31, 2006. Net income for the first six months of
2006 was $1.8 million, or $0.06 per share (diluted), compared to net losses of
$1.3 million, or a loss of $0.05 per share (diluted), for the first six months
of 2005.
Pro forma net income for the second quarter ended June 30, 2006, which
excluded the effect of stock option expense and acquisition-related costs, was
$2.2 million, or $0.08 per share (diluted). This compared with pro forma net
losses of $0.2 million, or a loss of $0.01 per share (diluted), in the second
quarter ended June 30, 2005 and pro forma net income of $3.1 million, or $0.11
per share (diluted), in the first quarter ended March 31, 2006. Pro forma net
income for the first six months of 2006 was $5.3 million, or $0.18 per share
(diluted), compared with pro forma net losses of $0.1 million, or $0.00 per
share (diluted), for the first six months of 2005. Included in pro forma net
income for the first quarter and first six months of 2006 is the one-time
pick-up described above. 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 second quarter ended June 30, 2006 was
58 percent, as compared with 63 percent for the first quarter ended March 31,
2006 and 63 percent for the second quarter ended June 30, 2005. The one-time
pick-up in revenue and gross margin in the first quarter ended March 31, 2006 as
described above resulted in an increase of approximately one percent to the
first quarter ended March 31, 2006 gross margin. 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 second quarter ended June 30, 2006 of
$11.3 million include $1.4 million in stock option expense and $0.5 million of
acquisition-related costs. This compares with operating expenses under GAAP of
$11.3 million in the first quarter ended March 31, 2006, which include $1.0
million of stock option expense and $0.5 million of acquisition-related costs.
Pro forma operating expenses for the second quarter ended June 30, 2006
were $9.4 million, which exclude stock option expense and acquisition-related
costs. This compares to pro forma operating expenses of $9.7 million for the
prior quarter.
The Company's balance sheet remained strong. At June 30, 2006, cash and
investments were $38.3 million, compared to $35.0 million at December 31, 2005.
Additionally, there continues to be no debt.
"Our year-over-year and sequential results reflect solid execution of our
growth initiatives," said Mike Salameh, PLX Technology's chief executive
officer. "More specifically, we achieved 47 percent revenue growth
year-over-year, while growing quarterly pro forma results from a loss to a $2.2
million net profit and increasing cash and investments by nearly $6 million.
Successful execution of our PCI Express and USB product plans were the main
drivers of these results. In the second quarter, we started sampling two new PCI
Express switches, which brings our total PCI Express product family to nine
switches and bridges. This product family, by far the broadest in the industry,
addresses a wide range of applications in the server, storage, PC peripheral,
and embedded-system markets. Since we launched the product line in late 2004, we
have shipped PCI Express production units, samples or development systems to
more than 400 customers, compared to over 300 at the end of the first quarter.
"USB growth has been driven by increased demand from a variety of customers
in consumer and PC peripheral applications such as GPS systems, wireless LAN
adapters and docking stations. We are also winning new designs in applications
that have high data transfer rates or low power consumption requirements such as
PDA's and TV Tuners.
"Based on our market leadership in PCI Express and USB, we expect to
achieve sustained growth of revenues and earnings."
Business Outlook
The following statements are based on current expectations. The Company
does not intend to update, confirm or change this guidance until its
third-quarter earnings conference call, although it may provide additional
detail regarding its guidance on today's scheduled conference call.
-- Revenue for the third quarter ended September 30, 2006 is expected to
be between $19.5 million and $20.5 million, with approximately 18
percent to 20 percent of total revenues attributable to USB products
and approximately 22 percent to 24 percent of total revenues
attributable to PCI Express products.
-- Gross margins are expected to be in the range of 57 percent to 59
percent.
-- Operating expenses under GAAP are expected to be between $11.4 million
and $11.6 million. Pro forma expenses are expected to be between $9.6
million and $9.8 million. Pro forma operating expenses exclude the
effect of stock compensation, which is expected to be between $1.2
million and $1.4 million and acquisition-related costs of
approximately $0.5 million.
PLX(R) management plans to conduct a conference call today at 2:00 p.m. PST
to discuss its second-quarter financial results, as well as its third-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 July 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 SFAS 123R and
acquisition-related charges, such as amortization of deferred compensation, and
amortization of purchased intangible assets. 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 we believe are not
indicative of our 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, USB 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 third quarter of 2006, which are set forth under the caption
"Business Outlook," statements regarding the PCI Express and USB product lines
and statements about achieving sustained growth of revenues and earnings. 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, and our
quarterly report on Form 10-Q for the quarter ended March 31, 2006, 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 Six Months Ended
June 30
June 30 June 30 March 31 -----------------
2006 2005 2006 2006 2005
-------- -------- -------- -------- --------
Net revenues $19,411 $13,185 $20,005 $39,416 $26,407
Cost of revenues 8,225 4,900 7,497 15,722 9,757
-------- -------- -------- -------- --------
Gross margin 11,186 8,285 12,508 23,694 16,650
Operating expenses:
Research and
development 4,835 4,665 5,079 9,914 8,777
Selling, general and
administrative 5,982 4,021 5,675 11,657 8,447
Amortization of
purchased intangible
assets 481 512 512 993 1,024
-------- -------- -------- -------- --------
Total operating expenses 11,298 9,198 11,266 22,564 18,248
Income (loss) from
operations (112) (913) 1,242 1,130 (1,598)
Interest income and
other, net 421 185 342 763 340
-------- -------- -------- -------- --------
Income (loss) before
provision (benefit) for
income taxes 309 (728) 1,584 1,893 (1,258)
Provision for income
taxes 28 4 43 71 15
-------- -------- -------- -------- --------
Net income (loss) $ 281 $ (732) $ 1,541 $ 1,822 $(1,273)
======== ======== ======== ======== ========
Basic net income (loss)
per share $ 0.01 $ (0.03) $ 0.06 $ 0.07 $ (0.05)
======== ======== ======== ======== ========
Shares used to compute
basic per share amounts 28,081 26,932 27,884 27,983 26,857
======== ======== ======== ======== ========
Diluted net income (loss)
per share $ 0.01 $ (0.03) $ 0.05 $ 0.06 $ (0.05)
======== ======== ======== ======== ========
Shares used to compute
diluted per share
amounts 28,938 26,932 28,794 28,868 26,857
======== ======== ======== ======== ========
PLX TECHNOLOGY, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(Excluding Acquisition-Related Costs and
Stock-Based Compensation Expense)
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30
June 30 June 30 March 31 -----------------
2006 2005 2006 (1) 2006 2005
-------- -------- -------- -------- --------
Net revenues $19,411 $13,185 $20,005 $39,416 $26,407
Cost of revenues 8,210 4,900 7,488 15,698 9,757
-------- -------- -------- -------- --------
Gross margin 11,201 8,285 12,517 23,718 16,650
Operating expenses:
Research and
development 4,279 4,649 4,602 8,881 8,683
Selling, general and
administrative 5,117 4,004 5,097 10,214 8,409
-------- -------- -------- -------- --------
Total operating expenses 9,396 8,653 9,699 19,095 17,092
Income (loss) from
operations 1,805 (368) 2,818 4,623 (442)
Interest income and
other, net 421 185 342 763 340
-------- -------- -------- -------- --------
Income (loss) before
provision (benefit) for
income taxes 2,226 (183) 3,160 5,386 (102)
Provision for income
taxes 28 4 43 71 15
-------- -------- -------- -------- --------
Net income (loss) $ 2,198 $ (187) $ 3,117 $ 5,315 $ (117)
======== ======== ======== ======== ========
Basic net income (loss)
per share $ 0.08 $ (0.01) $ 0.11 $ 0.19 $ (0.00)
======== ======== ======== ======== ========
Shares used to compute
basic per share amounts 28,081 26,593 27,884 27,983 26,857
======== ======== ======== ======== ========
Diluted net income (loss)
per share $ 0.08 $ (0.01) $ 0.11 $ 0.18 $ (0.00)
======== ======== ======== ======== ========
Shares used to compute
diluted per share
amounts 28,938 26,593 28,794 28,868 26,857
======== ======== ======== ======== ========
A reconciliation between net income (loss) on a GAAP basis and pro forma net
income (loss) is as follows:
GAAP net income (loss) $ 281 $ (732) $ 1,541 $ 1,822 $(1,273)
Amortization of
deferred stock-based
compensation 16 33 16 32 132
Amortization of
purchased intangible
assets 481 512 512 993 1,024
Stock-based compensation
expense
-- Cost of revenues 15 - 10 25 -
-- Research and
development 542 - 463 1,005 -
-- Selling, general and
administrative 863 - 575 1,438 -
-------- -------- -------- -------- --------
Pro forma net income
(loss) $ 2,198 $ (187) $ 3,117 $ 5,315 $ (117)
======== ======== ======== ======== ========
(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 recognized at the time of shipment to a distributor.
PLX TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30 December 31
2006 2005 (1)
------------ ------------
(unaudited)
ASSETS
Cash and investments $ 38,265 $ 35,043
Accounts receivable, net 6,098 6,203
Inventories 10,112 4,328
Property and equipment, net 29,201 29,535
Goodwill 35,818 35,818
Other intangible assets 3,736 4,729
Other assets 1,913 2,255
------------ ------------
Total assets $ 125,143 $ 117,911
============ ============
LIABILITIES
Accounts payable $ 7,105 $ 4,530
Accrued compensation and benefits 2,153 1,754
Deferred revenues - 1,963
Accrued commissions 407 298
Other accrued expenses 1,146 1,877
------------ ------------
Total liabilities 10,811 10,422
STOCKHOLDERS' EQUITY
Common stock, par value 28 28
Additional paid-in capital 123,307 118,313
Accumulated other comprehensive loss (87) (114)
Accumulated deficit (8,916) (10,738)
------------ ------------
Total stockholders' equity 114,332 107,489
------------ ------------
Total liabilities and stockholders' equity $ 125,143 $ 117,911
============ ============
(1) Derived from audited financial statements
CONTACT: PLX Technology, Inc.
Michael J. Salameh, 408-774-9060 (CEO)
msalameh@plxtech.com
or
CommonGround Communications (for PLX)
Jerry Steach, 415-222-9996 (Editorial)
jsteach@plxtech.com