PLX Technology, Inc. Reports Third Quarter 2012 Financial

PLX Technology, Inc. Reports Third Quarter 2012 Financial Results  SUNNYVALE, CA -- (Marketwire) -- 10/29/12 --  PLX Technology, Inc. (PLX) (NASDAQ: PLXT)      --  Net Revenues from Continuing Operations Increased Six Percent to     $26.9M --  Consecutive Record Quarters in PCI Express Revenue --  Gross Margins Improved to 59.8 Percent --  Expanded PCIe Gen3 Portfolio with Three New Products --  Closed Divestiture of Satellite TV and Ethernet Business --  Board Named David Raun Interim President, CEO     PLX Technology, Inc. (PLX) (NASDAQ: PLXT), a leading global supplier of high-speed connectivity solutions enabling emerging data center architectures, today announced third quarter revenues of $26.9 million and a GAAP net loss from continuing operations of $3.3 million, or $0.07 per share (diluted).  "The team did an excellent job of driving up PCI Express, as well as overall revenues, while increasing margins and building our design win portfolio," said David Raun, PLX(R) interim president and CEO. "The divesture of the satellite and 10 Gigabit Ethernet business increased cash by $7.6 million and drove credit line debt down by $3.5 million during the quarter, and will reduce annual operating spending by approximately $20 million."                                                                                                                                                                Non-GAAP Financial                                                            Comparison                                                                  (in millions, except per                                                      share amounts)                                                                                                                                                                              Quarterly Results         Year to Date                                  Q3 2012   Q2 2012   Q3 2011   2012      2011                                --------  --------  -------- --------  -------- Net revenues                 $   26.9  $   25.4  $   29.8 $   76.8  $   86.3 Operating expense            $   14.6  $   12.9  $   13.3 $   42.2  $   41.8 Operating income from                                                         continuing operations       $    1.5  $    2.2  $    3.9 $    3.0  $    7.4 Net income from continuing                                                    operations                  $    0.5  $    2.6  $    2.7 $    2.4  $    5.4 Income per share (diluted)                                                    from continuing operations  $   0.01  $   0.06  $   0.06 $   0.05  $   0.12    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         Year to Date                                  Q3 2012   Q2 2012   Q3 2011   2012      2011                                --------  --------  -------- --------  -------- Net revenues                 $   26.9  $   25.4  $   29.8 $   76.8  $   86.3 Operating expense            $   18.4  $   16.0  $   14.2 $   49.5  $   45.4 Operating income (loss) from                                                  continuing operations       $   (2.3) $   (0.9) $    3.0 $   (4.4) $    3.9 Net income (loss) from                                                        continuing operations       $   (3.3) $   (0.5) $    1.9 $   (5.0) $    1.9 Income (loss) per share                                                       (diluted) from continuing                                                    operations                  $  (0.07) $  (0.01) $   0.04 $  (0.11) $   0.04    Product Highlights  PLX announced a new trio of ultra-high lane count PCI Express (PCIe) Gen3 switches developed for cutting-edge markets like storage systems, high-end graphics, and communications platforms. The high-performance ExpressLane(TM) PCIe Gen3 switches include the PEX8796 (96 lanes, 24 ports), PEX8780 (80 lanes, 20 ports) and PEX8764 (64 lanes, 16 ports), which expand the PLX portfolio to 18 PCIe Gen3 devices. Designers choosing the PEX8796 switch -- touting bandwidth of 8 Gigatransfers per second, per lane, in full duplex mode -- are rewarded with amazing throughput of 1.5 terabits per second (192 gigabytes/s), delivering performance that challenges all other interconnect technologies.  "PLX continues to drive PCI Express Gen3 switch products including the ExpressFabric(R) solution as an alternative to integrated CPUs as well as other competitive high-speed system connectivity solutions like InfiniBand, SAS, and Ethernet," said Raun. "Our offering of 18 different Gen3 switch devices provides our customers with more options as they select their interconnect solutions."  New PCI Express Markets  By leveraging low-latency PCIe Gen3 performance, new market opportunities are developing to help manage the massive flow of data driven mostly by today's Internet applications. Designers are creating sophisticated solid state disk (SSD) PCIe-based architectures dedicated to storing and retrieving movies, music, photos, and other files.  Individual racks making up the core of data centers now have a new choice when considering fabrics for external box-to-box rack connectivity. By implementing a PCIe-based ExpressFabric, architects can take advantage of native PCIe-based systems to increase performance and lower overall cost and power.  Other markets experiencing growth via PCIe include oil and gas exploration, Wall Street trade routing, test and measurement, communications, and general-purpose computation on graphics processing units (GPGPU) used to accelerate a wide range of applications like embedded systems, mobile appliances, computers, and gaming graphics.  Merger and Acquisition Update  On July 11, 2012, PLX entered into an asset purchase transaction with Entropic Communications, pursuant to which PLX transferred certain specific direct broadcast satellite intellectual property and corresponding technologies to Entropic. The purchased assets relate to the design and development of a digital channel stacking switch (dCSS) semiconductor product for up to $8 million, $3 million of which was received at closing. In addition to the asset purchase, Entropic paid a one-time $4 million licensing fee for intellectual property.   On Sept. 14, 2012, PLX Technology, Inc. entered into an asset purchase transaction with Aquantia Corp. pursuant to which PLX agreed to sell the physical layer 10GBase-T integrated circuit family of products and certain assets exclusive ly related to the products to the purchaser, subject to the satisfaction of certain customary closing conditions. On Sept. 20, 2012, PLX completed the transaction and received the proceeds of $2 million in cash.  The above divestitures resulted in the Satellite TV and Ethernet business, as well as proceeds from the sale, being accounted for as discontinued operations during the quarter and for all comparative periods presented.  On Oct. 3, 2012, Integrated Device Technology, Inc. (IDT) announced that it is extending the expiration date of its exchange offer for all outstanding shares of common stock of PLX Technology, Inc., pursuant to the previously announced merger agreement with PLX, dated April 30, 2012, which contemplates the exchange offer for all outstanding shares of PLX common stock, followed by a second step merger. The exchange offer was previously scheduled to expire at the end of the day on Oct. 4, 2012, at 12:00 midnight, New York City time. The exchange offer is being extended as the applicable waiting period pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act") has not yet expired or been terminated. While previous extensions of the expiration date of the exchange offer have been limited to 20 business days pursuant to the terms of the Agreement and Plan of Merger relating to the exchange offer, the parties have agreed to a one-time waiver of this limitation, which permits IDT to extend the offer period for 26 business days until the end of the day on Nov. 9, 2012, at 12:00 midnight, New York City time. This additional time period will allow the parties to coordinate the timing of any subsequent extensions of the exchange offer with financial reporting requirements of IDT and PLX that the parties anticipate will be applicable to the registration statement relating to the exchange offer on or after Nov. 9, 2012. IDT and PLX both continue to provide information to the Federal Trade Commission in connection with the antitrust review of the transaction. Receipt of antitrust clearance under the HSR Act is a condition to the closing of the merger. PLX recently extended the merger agreement under its terms until January 31, 2013.  Conference Call  PLX management plans to conduct a conference call and webcast today at 2:30 p.m. (PT) to discuss its third quarter financial results. The company will not be announcing a fourth 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) 203-2528, using access code 36834013. International callers may dial +1 (617) 213-8847.  A recorded replay of this webcast will be available on the PLX Website beginning 4:30 p.m. (PT) on October 29, 2012, through 11:59 p.m. (PT) on November 5, 2012. To listen to the replay via telephone, call (888) 286-8010 and use access code 85432552. 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.  ExpressLane, ExpressFabric, PLX and the PLX logo 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.  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 from continuing operations 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 anticipated reductions in operating spending due to the divestitures and regarding new PCIe markets. 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; 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 and the risk that PLX's business will have been adversely impacted during the pendency of the transaction. 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 Forms 10-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 o f 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 TECHNOLOGY, INC.                                           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                                (Unaudited)                                                    (in thousands, except per share amounts)                                                                                                                            Three Months Ended            Nine Months Ended                     September 30   June 30  September 30     September 30                                                              ------------------                         2012        2012        2011        2012      2011                       ------------  --------  ------------  --------  --------                                                                               Net revenues       $     26,866  $ 25,437  $     29,763  $ 76,834  $ 86,256  Cost of revenues         10,808    10,370        12,580    31,732    37,038                     ------------  --------  ------------  --------  --------  Gross margin             16,058    15,067        17,183    45,102    49,218                     ------------  --------  ------------  --------  --------  Operating                                                                     expenses:                                                                     Research and                                                                  development            8,823     5,993         7,007    21,362    22,929    Selling, general                                                              and                                                                          administrative         6,654     7,588         6,745    22,764    20,402    Acquisition and                                                               restructuring                                                                related costs          2,830     2,350          (166)    5,179        52    Amortization of                                                               purchased                                                                    intangible                                                                   assets                    64        78           382       223     1,145    Impairment of                                                                 assets                     -         -           208         -       838                     ------------  --------  ------------  --------  --------  Total operating                                                               expenses                18,371    16,009        14,176    49,528    45,366                     ------------  --------  ------------  --------  --------  Income (loss) from                                                            operations              (2,313)     (942)        3,007    (4,426)    3,852  Interest income                                                               (expense) and                                                                other, net                 (60)      (55)          (42)     (119)     (209)                    ------------  --------  ------------  --------  --------  Income (loss) from                                                            continuing                                                                   operations before                                                            provision for                                                                income taxes            (2,373)     (997)        2,965    (4,545)    3,643  Provision                                                                     (benefit) for                                                                income taxes               931      (513)        1,083       466     1,767                     ------------  --------  ------------  --------  --------  Income (loss) from                                                            continuing                                                                   operations, net                                                              of tax                  (3,304)     (484)        1,882    (5,011)    1,876  Loss from                                                                     discontinued                                                                 operations                                                                   (including gain                                                              on disposal of                                                               $2,097), net of                                                              tax                     (3,013)  (17,734)       (6,108)  (26,965)  (21,246)                    ------------  --------  ------------  --------  --------  Net loss           $     (6,317) $(18,218) $     (4,226) $(31,976) $(19,370)                    ============  ========  ============  ========  ========                                                                               Basic net income                                                              (loss) per share:                                                             Income (loss)                                                                 from continuing                                                              operations      $      (0.07) $  (0.01) $       0.04  $  (0.11) $   0.04                     ============  ========  ============  ========  ========    Loss  from                                                                     discontinued                                                                 operations      $      (0.07) $  (0.40) $      (0.14) $  (0.60) $  (0.48)                    ============  ========  ============  ========  ========    Net loss         $      (0.14) $  (0.41) $      (0.10) $  (0.71) $  (0.44)                    ============  ========  ============  ========  ========                                                                               Diluted net loss                                                              per share:                                                                    Income (loss)                                                                 from continuing                                                              operations      $      (0.07) $  (0.01) $       0.04  $  (0.11) $   0.04                     ============  ========  ============  ========  ========    Loss from                                                                     discontinued                                                                 operations      $      (0.07) $  (0.40) $      (0.14) $  (0.60) $  (0.47)                    ============  ========  ============  ========  ========    Net loss         $      (0.14) $  (0.41) $      (0.10) $  (0.71) $  (0.43)                    ============  ========  ============  ========  ========                                                                               Shares used to                                                                compute per share                                                            amounts:                                                                      Basic                  44,946    44,797        44,537    44,824    44,525                     ============  ========  ============  ========  ========    Diluted                44,946    44,797        45,003    44,824    45,032                     ============  ========  ============  ========  ========                                                                                                                                                                                                                                                                                                                                                  PLX TECHNOLOGY, INC.                                                CONDENSED CONSOLIDATED BALANCE SHEETS                                                     (Unaudited)                                                                 (in thousands)                                                                                                                                                              September 30   December 31                                                       2012          2011                                                       ------------  ------------  ASSETS                                                                                                                                                      Cash and investments                           $     17,873  $     19,752    Accounts receivable, net                             14,133        11,074    Inventories                                          10,240         8,896    Property and equipment, net                          11,274        12,291    Goodwill                                             20,461        21,338    Other intangible assets                                  22        20,845    Other assets                                          3,941         2,622                                                   ------------  ------------  Total assets                                     $     77,944  $     96,818                                                   ============  ============                                                                               LIABILITIES                                                                                                                                                 Accounts payable                               $     15,548  $      7,134    Accrued compensation and benefits                     5,775         3,586    Accrued commissions                                     804           632    Other accrued expenses                                4,268         3,132    Short term note payable & capital lease                                       obligations                                            105         5,115    Short term borrowings against line of credit          5,000             -    Long term borrowings against line of credit               -         2,000                                                   ------------  ------------  Total liabilities                                      31,500        21,599                                                                               STOCKHOLDERS' EQUITY                                                                                                                                        Common stock, par value                                  45            45    Additional paid-in capital                          188,623       185,323    Accumulated other comprehensive loss                   (246)         (147)   Accumulated deficit                                (141,978)     (110,002)                                                  ------------  ------------  Total stockholders' equity                             46,444        75,219                                                   ------------  ------------  Total liabilities and stockholders' equity       $     77,944  $     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)                                                                                                                                                               Nine Months                                   Three Months Ended                Ended                             September 30  June 30  September 30    September 30                                                               ----------------                            2012        2012       2011        2012     2011                         ------------  -------  ------------  -------  -------  Income (Loss) From                                                            Continuing                                                                   Operations                                                                   Reconciliation                                                                GAAP Income (Loss)  $     (3,304) $  (484) $      1,882  $(5,011) $ 1,876    Acquisition and                                                               restructuring                                                                related costs             2,830    2,350          (166)   5,179       52    Share-based                                                                   compensation                914      694           443    2,006    1,517    Amortization of                                                               purchased                                                                    intangible assets            64       78           382      223    1,145    Impairment of                                                                 assets                        -        -           208        -      838                        ------------  -------  ------------  -------  -------    Non-GAAP Income                                                               (Loss)             $        504  $ 2,638  $      2,749  $ 2,397  $ 5,428                        ============  =======  ============  =======  =======                                                                               Loss Per Share From                                                           Continuing                                                                   Operations                                                                   Reconciliation                                                                GAAP Diluted Income                                                           (Loss) Per Share   $      (0.07) $ (0.01) $       0.04  $ (0.11) $  0.04    Effect of                                                                     acquisition and                                                               restructuring                                                                related costs              0.06     0.05             -     0.12        -    Effect of share-                                                              based compensation         0.02     0.02          0.01     0.04     0.03    Effect of                                                                     amortization of                                                              purchased                                                                    intangible assets             -        -          0.01        -     0.03    Effect of asset                                                               impairment                    -        -             -        -     0.02                        ------------  -------  ------------  -------  -------    Non-GAAP Diluted                                                              Income (Loss) Per                                                            Share              $       0.01  $  0.06  $       0.06  $  0.05  $  0.12                        ============  =======  ============  =======  =======                                                                               Operating Loss From                                                           Continuing                                                                   Operations                                                                   Reconciliation                                                                GAAP Operating                                                                Income (Loss)      $     (2,313) $  (942) $      3,007  $(4,426) $ 3,852    Share-based                                                                   compensation -                                                               COGS                         49       37            11       98       34    Share-based                                                                   compensation - R&D          349      228           193      719      588    Share-based                                                                   compensation -                                                               SG&A                        516      429           239    1,189      895    Acquisition and                                                               restructuring                                                                related costs             2,830    2,350          (166)   5,179       52    Amortization of                                                               purchased                                                                    intangible assets            64       78           382      223    1,145    Impairment of                                                                 assets                        -        -           208        -      838                        ------------  -------  ------------  -------  -------    Non-GAAP Operating                                                            Income (Loss)      $      1,495  $ 2,180  $      3,874  $ 2,982  $ 7,404                        ============  =======  ============  =======  =======                                                                               Operating Expense                                                             From Continuing                                                              Operations                                                                   Reconciliation                                                                GAAP Operating                                                                Expenses           $     18,371  $16,009  $     14,176  $49,528  $45,366    Share-based                                                                   compensation - R&D         (349)    (228)         (193)    (719)    (588)   Share-based                                                                   compensation -                                                               SG&A                       (516)    (429)         (239)  (1,189)    (895)   Acquisition and                                                               restructuring                                                                related costs            (2,830)  (2,350)          166   (5,179)     (52)   Amortization of                                                               purchased                                                                    intangible assets           (64)     (78)         (382)    (223)  (1,145)   Impairment of                                                                 assets                        -        -          (208)       -     (838)                       ------------  -------  ------------  -------  -------    Non-GAAP Operating                                                            Expenses           $     14,612  $12,924  $     13,320  $42,218  $41,848                        ============  =======  ============  =======  =======                                                                               (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          Nine Months Ended                        September 30  June 30  September 30    September 30                                                              -----------------                            2012       2012        2011       2012     2011                         ------------- -------- ------------- -------- --------  Net Revenues by                                                               Geography                                                                   Americas                        18%      16%           17%      16%      17% Asia Pacific                    72%      73%           73%      71%      70% Europe                          10%      11%           10%      13%      13%                                                                                                                                                                                         Three Months Ended          Nine Months Ended                        September 30  June 30  September 30    September 30                                                              -----------------                            2012       2012        2011       2012     2011                         ------------- -------- ------------- -------- --------  Net Revenues by Type                                                         PCI Express Revenue             65%      67%           55%      66%      55% Connectivity Revenue            35%      33%           45%      34%      45%     Investor Relations contact: Leslie Green Green Communications Consulting, LLC (for PLX) Tel: (650) 312-9060 leslie@greencommunicationsllc.com  Company contact: Arthur Whipple CFO PLX Technology, Inc. Tel: (408) 774-9060 investor-relations@plxtech.com     
Press spacebar to pause and continue. Press esc to stop.