PLX Technology, Inc. Reports Second Quarter 2014 Financial

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News Desk 2018
PLX Technology, Inc. Reports Second Quarter 2014 Financial Results

SUNNYVALE, CA --(Marketwired - July 21, 2014) -   PLX Technology , Inc. ( NASDAQ : PLXT ), the global leader in PCI Express ® (PCIe ® ) silicon and software connectivity solutions enabling emerging data center architectures, today announced second quarter revenues of $28.5 million and GAAP net loss of $0.3 million, or $0.01 per share (diluted).

On June 23, 2014, PLX ® entered into a definitive agreement with Avago Technologies Limited (NASDAQ: AVGO) under which Avago will acquire PLX in an all-cash transaction valued at approximately $309 million, or $293 million net of cash and debt acquired.  Under the terms of the agreement, which was approved by the Boards of Directors of both companies, a subsidiary of Avago commenced a tender offer for all of the outstanding shares of PLX common stock for $6.50 per share in cash.  It is expected that the transaction will close in the fourth quarter of Avago's fiscal year ending November 3, 2014.  PLX will not issue financial guidance for the upcoming quarter or conduct a second quarter results conference call.

                       
                       
Non-GAAP Financial Comparison                      
(in millions, except per share amounts)                      
    Quarterly Results   Year to Date
    Q2 2014     Q1 2014   Q2 2013   2014   2013
Net revenues   $ 28.5     $ 24.8   $ 26.9   $ 53.4   $ 53.1
Gross Margin   $ 17.0     $ 15.0   $ 15.1   $ 32.0   $ 30.6
Operating expense   $ 14.7     $ 11.9   $ 11.8   $ 26.6   $ 23.4
Operating income from continuing operations   $ 2.2     $ 3.1   $ 3.3   $ 5.4   $ 7.2
Income from continuing operations, net of tax   $ 2.2     $ 3.0   $ 3.1   $ 5.3   $ 6.9
Income per share (diluted) from continuing operations, net of tax   $ 0.05     $ 0.07   $ 0.07   $ 0.11   $ 0.15
                                 
                                 

The above non-GAAP financial information (other than net revenues, which are presented on a GAAP basis) excludes share-based compensation, royalty accruals associated with the Internet Machines litigation, acquisition and restructuring costs, and discontinued operations.  See "Use of Non-GAAP Financial Information" below.

                                 
                                 
GAAP Financial Comparison                      
(in millions, except per share amounts)                      
    Quarterly Results   Year to Date
    Q2 2014     Q1 2014   Q2 2013   2014   2013
Net revenues   $ 28.5     $ 24.8   $ 26.9   $ 53.4   $ 53.1
Gross Margin   $ 16.7     $ 14.8   $ 15.1   $ 31.5   $ 30.6
Operating expense   $ 17.0     $ 12.5   $ 13.3   $ 29.5   $ 26.0
Operating income (loss) from continuing operations   $ (0.3 )   $ 2.3   $ 1.8   $ 2.0   $ 4.6
Income (loss) from continuing operations, net of tax   $ (0.3 )   $ 2.2   $ 1.7   $ 1.9   $ 4.4
Income (loss) per share (diluted) from continuing operations, net of tax   $ (0.01 )   $ 0.05   $ 0.04   $ 0.04   $ 0.09
                                 
                                 

About PLX :  PLX Technology, Inc. ( NASDAQ : PLXT ), based in Sunnyvale, Calif., USA, is the industry-leading global provider of semiconductor-based PCI Express connectivity solutions primarily targeting enterprise data center markets.  The company develops innovative software-enriched silicon that enables product differentiation, reliable interoperability and superior performance.  Visit PLX on  plxtech.com ,  LinkedIn  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 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, royalty accruals associated with the Internet Machines litigation, acquisition and restructuring costs, and discontinued operations.  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 statements that qualify as forward-looking statements under the Private Securities Litigation Reform Act of 1995.  These include statements about the company's expectation and timing of the closing of the transaction by which Avago will acquire PLX.  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, but are not limited to: the risk that the PLX/Avago transaction will not close because of a failure to satisfy one or more of the closing conditions (including regulatory approvals); litigation relating to the merger; unexpected costs, charges or expenses resulting from the merger; and adverse legislative, regulatory and economic developments. 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, 2013 and PLX's quarterly report on Form 10-Q, which identifies 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 will only be made through a Tender Offer Statement on Schedule TO (collectively, the "Offer Materials"), initially filed with the U.S. Securities and Exchange Commission (the "SEC") by Avago Technologies Limited ("Avago") on July 8, 2014.  In addition, PLX filed with the SEC on July 8, 2014, 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 contemplated by the Merger Agreement because these documents contain important information relating to the 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 Avago or PLX, at the SEC's website at www.sec.gov. In addition, such materials may be obtained from PLX or Avago by contacting PLX Investor Relations at (408) 774-9060 or  investor-relations@plxtech.com  or Avago Limited Investor Relations at (408)435-7400 or  investor.relations@avagotech.com .

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 organizations.

PLX TECHNOLOGY, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited)  
(in thousands, except per share amounts)  
                               
                               
                               
                               
                               
          Three Months Ended           Six Months Ended  
    June 30     March 31     June 30     June 30  
    2014     2014     2013     2014     2013  
                               
Net revenues   $ 28,511     $ 24,839     $ 26,850     $ 53,350     $ 53,068  
Cost of revenues     11,808       10,084       11,777       21,892       22,470  
Gross margin     16,703       14,755       15,073       31,458       30,598  
Operating expenses:                                        
Research and development     9,444       6,390       6,480       15,834       12,441  
Selling, general and administrative     5,844       6,097       6,804       11,941       13,223  
Acquisition and restructuring related costs     1,711       -       -       1,711       291  
Total operating expenses     16,999       12,487       13,284       29,486       25,955  
Income (loss) from operations     (296 )     2,268       1,789       1,972       4,643  
Interest income (expense) and other, net     (24 )     (29 )     (55 )     (53 )     (126 )
Income (loss) from continuing operations before provision for income taxes     (320 )     2,239       1,734       1,919       4,517  
Provision (benefit) for income taxes     (6 )     52       61       46       145  
Income (loss) from continuing operations, net of tax     (314 )     2,187       1,673       1,873       4,372  
Loss from discontinued operations, net of tax     -       -       -       -       (57 )
Net income (loss)   $ (314 )   $ 2,187     $ 1,673     $ 1,873     $ 4,315  
                                         
Basic net income (loss) per share:                                        
Income (loss) from continuing operations   $ (0.01 )   $ 0.05     $ 0.04     $ 0.04     $ 0.10  
Loss from discontinued operations   $ -     $ -     $ -     $ -     $ -  
Net income (loss)   $ (0.01 )   $ 0.05     $ 0.04     $ 0.04     $ 0.10  
                                         
Diluted net income (loss) per share:                                        
  Income (loss) from continuing operations   $ (0.01 )   $ 0.05     $ 0.04     $ 0.04     $ 0.09  
  Loss from discontinued operations   $ -     $ -     $ -     $ -     $ -  
  Net income (loss)   $ (0.01 )   $ 0.05     $ 0.04     $ 0.04     $ 0.09  
                                         
Shares used to compute per share amounts:                                        
  Basic     45,922       45,841       45,611       45,882       45,487  
  Diluted     45,922       47,149       46,299       47,154       46,195  
                                           
                                           
                                           
PLX TECHNOLOGY, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Unaudited)  
(in thousands)  
             
             
             
             
             
    June 30     December 31  
    2014     2013  
ASSETS            
             
  Cash and investments   $ 25,670     $ 20,424  
  Accounts receivable, net     13,042       12,835  
  Inventories     11,998       10,289  
  Property and equipment, net     11,229       10,333  
  Goodwill     20,461       20,461  
  Other assets     3,098       2,818  
Total assets   $ 85,498     $ 77,160  
                 
LIABILITIES                
                 
  Accounts payable   $ 10,443     $ 6,511  
  Accrued compensation and benefits     3,270       4,050  
  Accrued commissions     492       480  
  Other accrued expenses     4,965       3,213  
  Long term borrowings against line of credit     5,000       5,000  
Total liabilities     24,170       19,254  
                 
STOCKHOLDERS' EQUITY                
                 
  Common stock, par value     46       46  
  Additional paid-in capital     194,940       193,391  
  Accumulated other comprehensive loss     (277 )     (277 )
  Accumulated deficit     (133,381 )     (135,254 )
Total stockholders' equity     61,328       57,906  
Total liabilities and stockholders' equity   $ 85,498     $ 77,160  
                 
                 
                 
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           Six Months Ended
    June 30       March 31     June 30     June 30
    2014       2014     2013     2014   2013
Income (Loss) From Continuing Operations Reconciliation                            
  GAAP Income (Loss), Net of Tax $ (314 )     $ 2,187     $ 1,673     $ 1,873   $ 4,372
  Acquisition and restructuring related costs   1,711         -       -     1,711   291
  Share-based compensation   535         586       567     1,121   1,332
  Lawsuit verdict contingency accrual   272         275       903     547   903
  Non-GAAP Income, Net of Tax $ 2,204       $ 3,048     $ 3,143     $ 5,252   $ 6,898
                                 
Income (Loss) Per Share From Continuing Operations Reconciliation                                
  GAAP Diluted Income (Loss) Per Share, Net of Tax $ (0.01 )     $ 0.05     $ 0.04     $ 0.04   $ 0.09
  Effect of acquisition and restructuring related costs   0.04         -       -     0.04   0.01
  Effect of share-based compensation   0.01         0.01       0.01     0.02   0.03
  Effect of lawsuit verdict contingency accrual   0.01         0.01       0.02     0.01   0.02
  Non-GAAP Diluted Income Per Share, Net of Tax $ 0.05       $ 0.07     $ 0.07     $ 0.11   $ 0.15
                                 
Operating Income (Loss) From Continuing Operations Reconciliation                                
  GAAP Operating Income (Loss) $ (296 )     $ 2,268     $ 1,789     $ 1,972   $ 4,643
  Share-based compensation - Cost of revenues   14         13       14     27   (9)
  Share-based compensation - R&D   219         221       191     440   416
  Share-based compensation - SG&A   302         352       362     654   925
  Lawsuit verdict contingency accrual   272         275       903     547   903
  Acquisition and restructuring related costs   1,711         -       -     1,711   291
  Non-GAAP Operating Income $ 2,222       $ 3,129     $ 3,259     $ 5,351   $ 7,169
                                 
Gross Margin From Continuing Operations Reconciliation                                
  GAAP Gross Margin $ 16,703       $ 14,755     $ 15,073     $ 31,458   $ 30,598
  Share-based compensation - Cost of revenues   14         13       14     27   (9)
  Lawsuit verdict contingency accrual   250         254       -     504   -
  Non-GAAP Gross Margin $ 16,967       $ 15,022     $ 15,087     $ 31,989   $ 30,589
                                 
Operating Expense From Continuing Operations Reconciliation                                
  GAAP Operating Expenses $ 16,999       $ 12,487     $ 13,284     $ 29,486   $ 25,955
  Share-based compensation - R&D   (219 )       (221 )     (191 )   (440)   (416)
  Share-based compensation - SG&A   (302 )       (352 )     (362 )   (654)   (925)
  Lawsuit verdict contingency accrual   (22 )       (21 )     (903 )   (43)   (903)
  Acquisition and restructuring related costs   (1,711 )       -       -     (1,711)   (291)
  Non-GAAP Operating Expenses $ 14,745       $ 11,893     $ 11,828     $ 26,638   $ 23,420
                                 
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     Six Months Ended  
    June 30     March 31     June 30     June 30  
    2014     2014     2013     2014     2013  
Net Revenues by Geography                              
Americas   18 %   20 %   19 %   19 %   21 %
Asia Pacific   72 %   67 %   71 %   70 %   69 %
Europe   10 %   13 %   10 %   11 %   10 %
                               
                               
                               
    Three Months Ended     Six Months Ended  
    June 30     March 31     June 30     June 30  
    2014     2014     2013     2014     2013  
Net Revenues by Type                              
PCI Express Revenue   69 %   70 %   75 %   70 %   73 %
Connectivity Revenue   31 %   30 %   25 %   30 %   27 %

Contact Information:  David Hurd  PLX Technology, Inc.  Sr. Director, Corporate Communication  (408) 328-3594  dhurd@plxtech.com

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