SOURCE: PLX Technology

July 30, 2012 16:01 ET

PLX Technology, Inc. Reports Second Quarter 2012 Financial Results

Records in PCI Express Revenue, New Design Wins Reported

SUNNYVALE, CA--(Marketwire - Jul 30, 2012) - PLX Technology, Inc. (PLX) (NASDAQ: PLXT), a leading global supplier of high-speed connectivity solutions enabling emerging data center architectures, today announced second quarter revenues of $26.1 million and a GAAP net loss of $18.2 million, or $0.41 per share (diluted).

"Our PCI Express products continued to thrive during the second quarter by delivering record numbers in both revenue and new design win commitments. Besides our traditional applications, we remain optimistic in our PCI Express product penetration in traditional Ethernet and InfiniBand based applications," said Ralph Schmitt, PLX® president and CEO. "We also had very strong bookings in the quarter and expect to continue to see growth in the coming quarters due to the rapid adoption of our Gen3 products."

                         
Non-GAAP Financial Comparison  
(in millions, except per share amounts)  
    Quarterly Results  
    Q2 2012     Q1 2012     Q2 2011  
Net revenues   $ 26.1     $ 25.4     $ 30.7  
Operating expense   $ 17.8     $ 19.1     $ 19.5  
Operating loss   $ (2.8 )   $ (5.1 )   $ (2.2 )
Net loss   $ (2.9 )   $ (5.2 )   $ (2.3 )
Loss per share (diluted)   $ (0.07 )   $ (0.12 )   $ (0.06 )
                         

The above non-GAAP financial information (other than net revenues, which are presented on a GAAP basis) excludes share-based compensation, acquisition, restructuring and impairment charges, and amortization of acquired intangibles. See "Use of Non-GAAP Financial Information" below.

   
GAAP Financial Comparison  
(in millions, except per share amounts)  
    Quarterly Results  
    Q2 2012     Q1 2012     Q2 2011  
Net revenues   $ 26.1     $ 25.4     $ 30.7  
Operating expense   $ 33.1     $ 21.4     $ 23.2  
Operating loss   $ (18.1 )   $ (7.4 )   $ (5.9 )
Net loss   $ (18.2 )   $ (7.4 )   $ (6.0 )
Loss per share (diluted)   $ (0.41 )   $ (0.17 )   $ (0.14 )
                         

"The net loss reflects the impairment of certain intangible assets associated with PLX's Ethernet business," said Art Whipple, chief financial officer, PLX. "IDT's stated intention during the second quarter of divesting our Ethernet business and the resulting impact to the business environment during the quarter required an assessment of the carrying value of certain intangible assets. We have taken a non-cash charge of $10.3 million against these assets."

Product Highlights
PLX and One Stop Systems, Inc. (OSS) announced a collaboration to deliver the world's first industrial-grade high-performance computing systems and PCIe-over-cable products based on the PCIe Gen3 standard. The alliance pairs PLX PCIe Gen3 switches with OSS's premium design architectures, ideal for telecom, data centers and industrial markets. OSS is a pioneer in PCIe development since the standard's inception and again leads the industry with these new PLX-enabled Gen3 designs.

PLX's TeraPHY® 10GBase-T transceivers were recognized as "Best of Interop" finalists at the perennial favorite INTEROP Las Vegas event, the foremost industry trade show tailored for highlighting cutting-edge networking solutions. The committee selected the PLX PHY based on its significant technical impact and potential of advancing the business technology market.

Tehuti Networks, a fabless semiconductor company focused on mass adoption of 10 Gigabit Ethernet, and PLX announced a collaboration to deliver a superior network interface card (NIC) reference design platform utilizing 10GBase-T connectivity to enable bandwidth-intensive desktop workstation applications and low- to mid-range network appliances. This combination creates a new gateway to cost-conscious consumer applications, as well as to intensive data environments.

Merger and Acquisition Update
On May 7, 2012, in connection with the previously announced merger agreement between PLX Technology and Integrated Device Technology (IDT), dated April 30, 2012, IDT and PLX made premerger filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") with the Federal Trade Commission ("FTC") and the Antitrust Division of the U.S. Department of Justice. On July 6, 2012, IDT and PLX each received a request for additional information from the FTC (the "Second Request"). This Second Request extends the waiting period applicable to the exchange offer under the HSR Act, which was set to expire on July 6, 2012, at 11:59 p.m., New York City time. The waiting period is extended until 11:59 p.m., New York City time, on the thirtieth day (or the next business day) after both IDT and PLX substantially comply with the Second Request, as specified by the HSR Act and the implementing rules, subject to extension by agreement among the parties.

On July 11, 2012, PLX announced the sale of a specific direct broadcast satellite intellectual property and corresponding technologies to Entropic Communications, Inc. The sold assets relates to the design and development of a digital channel stacking switch (dCSS) semiconductor product for up to $8 million. In addition to the asset purchase agreement, Entropic paid a one-time $4 million licensing fee for intellectual property, which is related to the acquired assets.

Conference Call
PLX management plans to conduct a conference call and webcast today at 2:30 p.m. (PT) to discuss its second quarter financial results. The Company will not be announcing a third quarter 2012 outlook due to the pending acquisition transaction. A live webcast of the conference call will be available through the Investor Relations section of the PLX Website at www.plxtech.com/investors, which also can be heard live via telephone at (866) 362-4832, using access code 16107518. International callers may dial +1 (617) 597-5364.

A recorded replay of this webcast will be available on the PLX Website beginning 4:30 p.m. (PT) on July 30, 2012, through 11:59 p.m. (PT) on August 6, 2012. To listen to the replay via telephone, call (888) 286-8010 and use access code 54051543. International callers may dial +1 (617) 801-6888.

For the live webcast, listeners should go to the PLX Website at least 15 minutes before the event starts to download and install any necessary software.

About PLX
PLX Technology, Inc. (NASDAQ: PLXT), based in Sunnyvale, Calif., USA, is an industry-leading global provider of semiconductor-based connectivity solutions primarily targeting the enterprise and consumer markets. The company develops innovative software-enriched silicon that enables product differentiation, reliable interoperability and superior performance. Visit PLX on plxtech.com, Facebook, Twitter and YouTube.

Use of Non-GAAP Financial Information
To supplement PLX's financial statements presented on a GAAP basis, PLX has provided non-GAAP financial information, including non-GAAP net income (loss), non-GAAP earnings (loss) per share (diluted), non-GAAP operating income (loss) and non-GAAP operating expenses. These non-GAAP results exclude share-based compensation, including ESOP expenses, acquisition, restructuring and impairment related charges and amortization of acquired intangibles. A reconciliation of the adjustments to GAAP results is included in the tables below. Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to PLX investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by PLX may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not a substitute for, the results prepared in accordance with GAAP.

Safe Harbor Statement
This press release includes forward-looking statements. These include statements regarding: our expected future PCI Express market position, anticipated growth in the coming quarters relating to our Gen3 products, future status of our Ethernet business, and goals and prospects of the business collaborations we describe above. 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 the reduced demand for products of electronic equipment manufacturers that use PLX's products; adverse economic conditions in general or those specifically affecting PLX's markets; technical difficulties and delays in the development process; errors in the products; reduced backlog for PLX's customers and unexpected expenses; uncertainties as to the timing of the proposed transaction with IDT; the risk that the transaction will not close because of a failure to satisfy one or more of the offer closing conditions (including regulatory approvals); the risk that the announcement and pendency of the transaction may make it more difficult to establish or maintain relationships with employees, suppliers and other business partners; the risk that PLX's business will have been adversely impacted during the pendency of the transaction; the risk that the expected cost savings and other synergies from the transaction may not be fully realized, realized at all or take longer to realize than anticipated; and other economic, business and competitive factors affecting the businesses of IDT and PLX generally, including those set forth in the filings of IDT and PLX with the SEC from time to time,. Please also refer to the documents filed by PLX 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, 2011, and PLX's quarterly reports on Forms10-Q, 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.

Additional Information
This press release is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Any offer with respect to the acquisition of PLX will only be made through the prospectus, which is part of the registration statement on Form S-4, which contains an offer to purchase, form of letter of transmittal and other documents relating to the exchange offer, as well as the Tender Offer Statement on Schedule TO (collectively, and as amended and supplemented from time to time, the "Exchange Offer Materials"), each initially filed with the U.S. Securities and Exchange Commission (the "SEC") by Integrated Device Technology, Inc. ("IDT") on May 22, 2012. The registration statement has not yet become effective. In addition, PLX filed with the SEC on May 22, 2012, a solicitation/recommendation statement on Schedule 14D-9 (as amended and supplemented from time to time, the "Schedule 14D-9") with respect to the exchange offer. Investors and security holders are urged to carefully read these documents and the other documents relating to the transactions because these documents contain important information relating to the exchange offer and related transactions. Investors and security holders may obtain a free copy of these documents, as filed with the SEC, and other annual, quarterly and special reports and other information filed with the SEC by IDT or PLX, at the SEC's website at www.sec.gov. In addition, such materials will be available from IDT or PLX, or by calling Innisfree M&A Incorporated, the information agent for the exchange offer, toll-free at (877) 456-3463 (banks and brokers may call collect at (212) 750-5833).

PLX, the PLX logo, and TeraPHY are trademarks of PLX Technology, Inc., which may be registered in some jurisdictions.

   
   
PLX TECHNOLOGY, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited)  
(in thousands, except per share amounts)  
                   
                   
    Three Months Ended  
    June 30     March 31     June 30  
    2012     2012     2011  
                         
Net revenues   $ 26,063     $ 25,417     $ 30,745  
Cost of revenues     11,095       11,404       13,445  
Gross margin     14,968       14,013       17,300  
                         
Operating expenses:                        
  Research and development     10,999       11,063       13,574  
  Selling, general and administrative     7,683       8,625       6,678  
  Acquisition and restructuring related costs     2,350       -       485  
  Amortization of purchased intangible assets     1,728       1,731       2,444  
  Impairment of assets     10,343       -       -  
Total operating expenses     33,103       21,419       23,181  
                         
Loss from operations     (18,135 )     (7,406 )     (5,881 )
Interest income (expense) and other, net     (55 )     (5 )     (101 )
                         
Loss before provision for income taxes     (18,190 )     (7,411 )     (5,982 )
Provision for income taxes     29       29       30  
                         
Net loss   $ (18,219 )   $ (7,440 )   $ (6,012 )
                         
Basic net loss per share   $ (0.41 )   $ (0.17 )   $ (0.14 )
Shares used to compute basic per share amounts     44,797       44,729       44,526  
Diluted net loss per share   $ (0.41 )   $ (0.17 )   $ (0.14 )
Shares used to compute diluted per share amounts     44,797       44,729       44,526  
                         
                         
                         
PLX TECHNOLOGY, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Unaudited)  
(in thousands)  
             
             
    June 30     December 31  
    2012     2011  
ASSETS                
                 
  Cash and investments   $ 10,240     $ 19,752  
  Accounts receivable, net     15,572       11,074  
  Inventories     10,787       8,896  
  Property and equipment, net     12,090       12,291  
  Goodwill     21,338       21,338  
  Other intangible assets     7,607       20,845  
  Other assets     3,137       2,622  
Total assets   $ 80,771     $ 96,818  
                 
LIABILITIES                
                 
  Accounts payable   $ 12,071     $ 7,134  
  Accrued compensation and benefits     5,148       3,586  
  Accrued commissions     795       632  
  Other accrued expenses     2,573       3,132  
  Short term note payable & capital lease obligations     235       5,115  
  Long term borrowings against line of credit     8,500       2,000  
Total liabilities     29,322       21,599  
                 
STOCKHOLDERS' EQUITY                
                 
  Common stock, par value     45       45  
  Additional paid-in capital     187,286       185,323  
  Accumulated other comprehensive loss     (221 )     (147 )
  Accumulated deficit     (135,661 )     (110,002 )
Total stockholders' equity     51,449       75,219  
Total liabilities and stockholders' equity   $ 80,771     $ 96,818  
                 
                 
                 
PLX TECHNOLOGY, INC.  
RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION 1  
(unaudited, in thousands, except for per share data)  
(not prepared in accordance with GAAP)  
                   
                   
    Three Months Ended  
    June 30     March 31     June 30  
    2012     2012     2011  
Net Loss Reconciliation                        
  GAAP Net Loss   $ (18,219 )   $ (7,440 )   $ (6,012 )
  Acquisition and restructuring related costs     2,350       -       485  
  Share-based compensation     930       552       784  
  Amortization of purchased intangible assets     1,728       1,731       2,444  
  Impairment of assets     10,343       -       -  
  Non-GAAP Net Loss   $ (2,868 )   $ (5,157 )   $ (2,299 )
                         
Loss Per Share Reconciliation                        
  GAAP Diluted Loss Per Share   $ (0.41 )   $ (0.17 )   $ (0.14 )
  Effect of acquisition and restructuring related costs     0.05       -       0.01  
  Effect of share-based compensation     0.02       0.01       0.02  
  Effect of amortization of purchased intangible assets     0.04       0.04       0.05  
  Effect of asset impairment     0.23       -       -  
  Non-GAAP Diluted Loss Per Share   $ (0.07 )   $ (0.12 )   $ (0.06 )
                         
Operating Loss Reconciliation                        
  GAAP Operating Loss   $ (18,135 )   $ (7,406 )   $ (5,881 )
  Share-based compensation - COGS     36       13       12  
  Share-based compensation - R&D     450       279       381  
  Share-based compensation - SG&A     444       260       391  
  Acquisition and restructuring related costs     2,350       -       485  
  Amortization of purchased intangible assets     1,728       1,731       2,444  
  Impairment of assets     10,343       -       -  
  Non-GAAP Operating Loss   $ (2,784 )   $ (5,123 )   $ (2,168 )
                         
Operating Expense Reconciliation                        
  GAAP Operating Expenses   $ 33,103     $ 21,419     $ 23,181  
  Share-based compensation - R&D     (450 )     (279 )     (381 )
  Share-based compensation - SG&A     (444 )     (260 )     (391 )
  Acquisition and restructuring related costs     (2,350 )     -       (485 )
  Amortization of purchased intangible assets     (1,728 )     (1,731 )     (2,444 )
  Impairment of assets     (10,343 )     -       -  
  Non-GAAP Operating Expenses   $ 17,788     $ 19,149     $ 19,480  
                         
1 Refer to " Use of Non-GAAP Financial Information" in the press release for a discussion of management's use of non-GAAP financial measures.  
   
   
   

 

PLX TECHNOLOGY, INC.  
SUPPLEMENTAL DATA (Unaudited)  
                   
                   
    Three Months Ended  
    June 30     March 31     June 30  
    2012     2012     2011  
Net Revenues by Geography                  
Americas   16 %   15 %   17 %
Asia Pacific   73 %   69 %   70 %
Europe   11 %   16 %   13 %
                   
                   
                   
    Three Months Ended  
    June 30     March 31     June 30  
    2012     2012     2011  
Net Revenues by Type                  
PCI Express Revenue   66 %   63 %   55 %
Network PHY Revenue   2 %   3 %   2 %
Connectivity Revenue   32 %   34 %   43 %