Exhibit 99.1
PLX Technology, Inc. Reports Third-Quarter 2006 Financial Results
-- Net Revenue Growth of 64 Percent Year over Year, Eight Percent
Sequential
-- PCI Express Revenues Increase More than Sevenfold Year over
Year
-- Third Quarter 2006 Pro Forma EPS of $0.09 vs. Breakeven in
Third Quarter 2005
SUNNYVALE, Calif.--(BUSINESS WIRE)--Oct. 18, 2006--PLX Technology,
Inc. (NASDAQ:PLXT) today announced financial results for the third
quarter ended September 30, 2006.
"Our third-quarter results demonstrate our ability to successfully
execute our profitable growth strategy," said Mike Salameh, PLX
Technology's chief executive officer. "Compared to the third quarter
of 2005 we grew revenues 64 percent, improved GAAP net income from a
$510,000 loss to a $1.0 million profit, increased pro forma net income
from break-even to over $2.6 million and grew our cash and investments
on our balance sheet by more than $6.0 million. Sales of our focus
product line, PCI Express(R) interconnect chips, reached $4.6 million,
more than seven times higher than the third quarter of 2005.
"We continued to lay the groundwork for continued revenue growth
through our PCI Express product development and marketing programs. In
September, we announced the industry's highest-capacity PCI Express
switch, the ExpressLane(TM) PEX 8548, a 48-lane, nine-port device.
Including the new 48-lane switch, PLX now offers 10 PCI Express switch
and bridge products spanning the industry's widest price/performance
range. To date, we have shipped production units, samples or
development systems to more than 500 customers, including leading
manufacturers of server, storage, PC peripheral, communications and
embedded systems."
For the third quarter ended September 30, 2006, PLX reported net
revenues of $21.0 million, a 64 percent increase from the $12.9
million reported in the third quarter ended September 30, 2005, and an
eight percent increase compared to the $19.4 million reported in the
second quarter ended June 30, 2006.
Net revenues for the first nine months of 2006 were $60.5 million,
a 54 percent increase from the $39.3 million reported for the first
nine months of 2005. Net revenues for the first nine months of 2006
include a one-time pick-up in revenue of $2.8 million in the first
quarter ended March 31, 2006, 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 income for the third quarter ended September 30, 2006, under
U.S. generally accepted accounting principles (GAAP), which included
the effect of acquisition-related amortization and stock-option
expense, was $1.0 million, or $0.04 per share (diluted). This compared
with net losses under GAAP of $0.5 million, or a loss of $0.02 per
share (diluted), in the third quarter ended September 30, 2005, and
net income under GAAP of $0.3 million, or $0.01 per share (diluted),
in the second quarter ended June 30, 2006. Net income for the first
nine months of 2006 was $2.8 million, or $0.10 per share (diluted),
compared to net losses of $1.8 million, or a loss of $0.07 per share
(diluted), for the first nine months of 2005.
Pro forma net income for the third quarter ended September 30,
2006, which excluded the effect of acquisition-related amortization
and stock-option expense, was $2.6 million, or $0.09 per share
(diluted). This compared with pro forma net income of $22,000, or
$0.00 per share (diluted), in the third quarter ended September 30,
2005, and pro forma net income of $2.2 million, or $0.08 per share
(diluted), in the second quarter ended June 30, 2006. Pro forma net
income for the first nine months of 2006 was $7.9 million, or $0.28
per share (diluted), compared with pro forma net losses of $95,000, or
a loss of $0.00 per share (diluted), for the first nine months of
2005. 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 ended September
30, 2006, was 58 percent, as compared with 66 percent for the third
quarter ended September 30, 2005, and 58 percent for the second
quarter ended June 30, 2006. The decrease in the third quarter 2006
gross margin percentage, when compared to the third quarter of 2005,
was due primarily to a change in the Company's product mix.
Operating expenses under GAAP for the third quarter ended
September 30, 2006, of $11.4 million include $1.1 million in
stock-option expense and $0.5 million of acquisition-related
amortization. This compares with operating expenses under GAAP of
$11.3 million in the second quarter ended June 30, 2006, which include
$1.4 million of stock-option expense and $0.5 million of
acquisition-related amortization.
Pro forma operating expenses for the third quarter ended September
30, 2006, were $9.8 million, which exclude stock-option expense and
acquisition-related amortization. This compares to pro forma operating
expenses of $9.4 million for the prior quarter.
The Company's balance sheet remained strong. At September 30,
2006, cash and investments were $39.7 million, compared to $35.0
million at December 31, 2005. Additionally, there continues to be no
debt.
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 release, although it may provide
additional detail regarding its guidance on today's scheduled
conference call.
-- Revenue for the fourth quarter ended December 31, 2006, is
expected to be between $20.5 million and $21.5 million, with
approximately 13 percent to 15 percent of total revenues
attributable to USB products and approximately 27 percent to
30 percent of total revenues attributable to PCI Express
products.
-- Gross margins are expected to be in the range of 58 percent to
60 percent.
-- Operating expenses under GAAP basis are expected to be between
$11.7 million and $12.1 million. Pro forma operating expenses
are expected to be between $10.1 million and $10.3 million.
Pro forma operating expenses exclude the effect of stock-
option expense, which is expected to be between $1.1 million
and $1.3 million and acquisition-related amortization of
approximately $0.5 million.
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, 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 and 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 our customers through an integrated
combination of high-performance silicon, hardware and software design
tools, and partnerships. These innovative solutions enable our
customers to develop equipment with industry-leading performance,
scalability and reliability. Furthermore, the combination of PLX
product features and supporting infrastructure allow customers to
bring their designs to market faster. PLX PCI, PCI-X and PCI Express
devices are designed for a wide variety of applications across
multiple industries. In addition to its headquarters in the United
States, PLX has offices in China, Japan, Taiwan, and the United
Kingdom, while also supporting customers through distributors, sales
representatives and an on-demand customer-relationship-management
system.
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 2006,
which are set forth under the caption "Business Outlook," statements
regarding the PCI Express and USB product lines and statements about
achieving continued profitable growth. 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 June 30,
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, the PLX logo, and ExpressLane are trademarks 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
September 30 September 30 June 30 September 30
-----------------
2006 2005 2006 2006 2005
------------ ------------ -------- -------- --------
Net revenues $21,046 $12,869 $19,411 $60,462 $39,276
Cost of revenues 8,836 4,394 8,225 24,558 14,151
------------ ------------ -------- -------- --------
Gross margin 12,210 8,475 11,186 35,904 25,125
Operating
expenses:
Research and
development 5,396 4,849 4,835 15,310 13,626
Selling, general
and
administrative 5,609 3,791 5,982 17,266 12,238
Amortization of
purchased
intangible
assets 440 512 481 1,433 1,536
------------ ------------ -------- -------- --------
Total operating
expenses 11,445 9,152 11,298 34,009 27,400
Income (loss) from
operations 765 (677) (112) 1,895 (2,275)
Interest income
and other, net 484 222 421 1,247 562
------------ ------------ -------- -------- --------
Income (loss)
before provision
for income taxes 1,249 (455) 309 3,142 (1,713)
Provision for
income taxes 227 55 28 298 70
------------ ------------ -------- -------- --------
Net income (loss) $ 1,022 $ (510) $ 281 $ 2,844 $(1,783)
============ ============ ======== ======== ========
Basic net income
(loss) per share $ 0.04 $ (0.02) $ 0.01 $ 0.10 $ (0.07)
============ ============ ======== ======== ========
Shares used to
compute basic per
share amounts 28,241 27,482 28,081 28,070 27,067
============ ============ ======== ======== ========
Diluted net income
(loss) per share $ 0.04 $ (0.02) $ 0.01 $ 0.10 $ (0.07)
============ ============ ======== ======== ========
Shares used to
compute diluted
per share amounts 28,783 27,482 28,938 28,843 27,067
============ ============ ======== ======== ========
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 Nine Months Ended
September 30 September 30 June 30 September 30
-----------------
2006 2005 2006 2006(1) 2005
------------ ------------ -------- -------- --------
Net revenues $21,046 $12,869 $19,411 $60,462 $39,276
Cost of revenues 8,823 4,394 8,210 24,521 14,151
------------ ------------ -------- -------- --------
Gross margin 12,223 8,475 11,201 35,941 25,125
Operating
expenses:
Research and
development 4,911 4,835 4,279 13,792 13,518
Selling,
general and
administrative 4,935 3,785 5,117 15,149 12,194
------------ ------------ -------- -------- --------
Total operating
expenses 9,846 8,620 9,396 28,941 25,712
Income (loss)
from operations 2,377 (145) 1,805 7,000 (587)
Interest income
and other, net 484 222 421 1,247 562
------------ ------------ -------- -------- --------
Income (loss)
before provision
for income taxes 2,861 77 2,226 8,247 (25)
Provision for
income taxes 227 55 28 298 70
------------ ------------ -------- -------- --------
Net income (loss) $ 2,634 $ 22 $ 2,198 $ 7,949 $ (95)
============ ============ ======== ======== ========
Basic net income
(loss) per share $ 0.09 $ 0.00 $ 0.08 $ 0.28 $ (0.00)
============ ============ ======== ======== ========
Shares used to
compute basic
per share
amounts 28,241 27,482 28,081 28,070 27,067
============ ============ ======== ======== ========
Diluted net
income (loss)
per share $ 0.09 $ 0.00 $ 0.08 $ 0.28 $ (0.00)
============ ============ ======== ======== ========
Shares used to
compute diluted
per share
amounts 28,783 28,121 28,938 28,843 27,067
============ ============ ======== ======== ========
A reconciliation between net income (loss) on a GAAP basis and pro
forma net income (loss) is as follows:
GAAP net income
(loss) $ 1,022 $ (510) $ 281 $ 2,844 $(1,783)
Amortization of
deferred stock-
based
compensation 15 20 16 47 152
Amortization of
purchased
intangible
assets 440 512 481 1,433 1,536
Stock-based
compensation
expense
- Cost of
revenues 13 - 15 38 -
- Research and
development 471 - 542 1,476 -
- Selling,
general and
administrative 673 - 863 2,111 -
------------ ------------ -------- -------- --------
Pro forma net
income (loss) $ 2,634 $ 22 $ 2,198 $ 7,949 $ (95)
============ ============ ======== ======== ========
(1) The above pro forma amounts for the nine months ended September
30, 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)
September 30 December 31
2006 2005 (1)
------------ ------------
(unaudited)
ASSETS
Cash and investments $ 39,685 $ 35,043
Accounts receivable, net 6,810 6,203
Inventories 10,822 4,328
Property and equipment, net 29,059 29,535
Goodwill 35,818 35,818
Other intangible assets 3,296 4,729
Other assets 1,671 2,255
------------ ------------
Total assets $ 127,161 $ 117,911
============ ============
LIABILITIES
Accounts payable $ 5,709 $ 4,530
Accrued compensation and benefits 2,207 1,754
Deferred revenues - 1,963
Accrued commissions 529 298
Other accrued expenses 1,319 1,877
------------ ------------
Total liabilities 9,764 10,422
STOCKHOLDERS' EQUITY
Common stock, par value 28 28
Additional paid-in capital 125,343 118,313
Accumulated other comprehensive loss (80) (114)
Accumulated deficit (7,894) (10,738)
------------ ------------
Total stockholders' equity 117,397 107,489
------------ ------------
Total liabilities and stockholders' equity $ 127,161 $ 117,911
============ ============
(1) Derived from audited financial statements
CONTACT: PLX Technology, Inc.
Stephen Loh, Interim CFO, 408-774-9060 (Company)
sloh@plxtech.com
or
CommonGround Communications (for PLX)
Jerry Steach, 415-222-9996 (Editorial)
jsteach@plxtech.com