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PLX Technology, Inc. Reports Fourth Quarter, Fiscal Year 2013 Financial Results(Marketwire Via Acquire Media NewsEdge) SUNNYVALE, CA -- (Marketwired) -- 01/27/14 -- PLX Technology, Inc. (NASDAQ: PLXT), the global leader in PCI Express® (PCIe®) silicon and software connectivity solutions enabling emerging data center architectures, today announced fourth quarter revenues of $25.7 million and GAAP income of $1.0 million, or $0.03 per share (diluted). For 2013, PLX® reported revenue of $104.5 million and GAAP income of $7.3 million, or $0.15 per share (diluted). "Our ongoing commitment to controlling costs and focusing on our market-leading PCI Express products resulted in our most profitable year in company history," said David Raun, PLX president and CEO. "PCI Express revenues were up 2 percent over Q3 and 13 percent annually. We are pleased to see a number of Gen3 designs ramping to volume production and expect many more of our customers to launch their Gen3-enabled products in 2014. Design activity remains strong for both our Gen2 and Gen3 products, underscoring our market leadership and ongoing growth opportunity." Non-GAAP Financial Comparison (in millions, except per share amounts) Quarterly Results Year to Date Q4 2013 Q3 2013 Q4 2012 2013 2012 -------- -------- -------- ------- ------- Net revenues $ 25.7 $ 25.7 $ 23.4 $ 104.5 $ 100.2 Gross Margin $ 14.3 $ 14.7 $ 13.7 $ 59.6 $ 58.9 Operating expense $ 12.4 $ 11.8 $ 11.5 $ 47.6 $ 53.7 Operating income from continuing operations $ 1.9 $ 2.9 $ 2.2 $ 12.0 $ 5.2 Income from continuing operations $ 1.9 $ 2.8 $ 2.4 $ 11.6 $ 4.8 Income per share (diluted) from continuing operations $ 0.04 $ 0.06 $ 0.06 $ 0.25 $ 0.10 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, restructuring and impairment charges, amortization of acquired intangibles 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 Q4 2013 Q3 2013 Q4 2012 2013 2012 -------- -------- -------- ------- ------- Net revenues $ 25.7 $ 25.7 $ 23.4 $ 104.5 $ 100.2 Gross Margin $ 14.1 $ 14.5 $ 13.7 $ 59.1 $ 58.8 Operating expense $ 13.2 $ 12.4 $ 14.1 $ 51.6 $ 63.6 Operating income (loss) from continuing operations $ 0.8 $ 2.0 $ (0.4) $ 7.5 $ (4.8) Income (loss) from continuing operations $ 0.8 $ 2.0 $ (0.2) $ 7.1 $ (5.2) Income (loss) per share (diluted) from continuing operations $ 0.02 $ 0.04 $ - $ 0.15 $ (0.12) "Our balance sheet in the quarter continued to improve as we paid down our bank debt and increased our cash and investments to $20.4 million, while increasing shareholder equity 24 percent over the course of the year," said Raun. "As we look to 2014, we anticipate growth in revenues and profits, driven by a robust design win pipeline and a strong focus on improving gross margins and controlling costs." Product Update: PLX today offers an industry-leading 18 PCI Express (PCIe) Gen3 switches now in production and expects to release next generation PCIe Gen3 feature-rich technology in the coming quarters to enable its ExpressFabric® initiative. ExpressFabric was demonstrated live at the Intel Developers Forum (IDF) and SuperComputing (SC13) conferences in 2013. PLX is working closely with market leaders who are planning to deploy ExpressFabric technology in data centers to replace box-to-box connectivity currently using Ethernet and InfiniBand within individual racks. ExpressFabric eliminates power hungry and costly protocol translation adapter cards and retains native PCIe within the rack while seamlessly connecting to Ethernet for rack-to-rack connectivity. Business Outlook: The following statements are based on current expectations. The company does not intend to update, confirm or change this guidance until its first quarter 2014 earnings release, although it may provide additional details regarding its guidance during today's scheduled conference call. Net revenues for the first quarter ending March 31, 2014, are expected to be between $24 million and $27 million Non-GAAP gross margins are expected to be approximately 56 percent with GAAP margins at approximately 55 percent. The GAAP number includes an accrual for royalties associated with the Internet Machines litigation and share-based compensation. Operating expenses are expected to be approximately $14.0 million. Included in operating expenses are share-based compensation charges of approximately $0.6 million. The first quarter also includes a 40nm tape-out and beginning of the year higher payroll taxes. For the year, operating expenses net of share-based compensation are expected to be about $52 million. Conference Call: PLX management plans to conduct a conference call and webcast today at 2:00 p.m. (PT) to discuss its fourth quarter and fiscal year 2013 financial results, as well as its first quarter 2014 outlook. 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 (877) 474-9506, using access code 18615127. International callers may dial +1 (857) 244-7559. A recorded replay of this webcast will be available on the PLX website beginning 6:00 p.m. (PT) on January 27, 2014, through 11:59 p.m. (PT) on February 3, 2014. To listen to the replay via telephone, call (888) 286-8010 and use access code 98425423. International callers may dial +1 (617) 801-6888. 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, 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 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, restructuring and impairment related charges, amortization of acquired intangibles 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 estimated net revenues, estimated operating expenses and estimated gross margins, which are set forth under the caption "Business Outlook," and statements regarding PLX's growth potential and GAAP profitability this year, our expectations for the release of feature-rich technology and expectations for Gen 3-enabled product customer launches. 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 that use 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, 2012, and PLX's quarterly reports on Forms 10-Q for the quarters ended March 31, 2013, June 30, 2013, and September 30, 2013, 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 ExpressFabric 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 organizations. PLX TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share amounts) Twelve Months Ended Three Months Ended December 31 December 31 September 30 December 31 ------------------ 2013 2013 2012 2013 2012 ----------- ------------ ----------- -------- -------- Net revenues $ 25,697 $ 25,725 $ 23,413 $104,490 $100,248 Cost of revenues 11,624 11,265 9,729 45,359 41,462 ----------- ------------ ----------- -------- -------- Gross margin 14,073 14,460 13,684 59,131 58,786 ----------- ------------ ----------- -------- -------- Operating expenses: Research and development 6,328 6,107 6,170 24,876 27,532 Selling, general and administrative 6,910 6,309 6,163 26,442 28,927 Acquisition and restructuring related costs - - 1,719 291 6,898 Amortization of purchased intangible assets - - 22 - 245 ----------- ------------ ----------- -------- -------- Total operating expenses 13,238 12,416 14,074 51,609 63,602 ----------- ------------ ----------- -------- -------- Income (loss) from operations 835 2,044 (390) 7,522 (4,816) Interest income (expense) and other, net (29) (2) (30) (157) (149) ----------- ------------ ----------- -------- -------- Income (loss) from continuing operations before provision for income taxes 806 2,042 (420) 7,365 (4,965) Provision (benefit) for income taxes 27 57 (230) 229 236 ----------- ------------ ----------- -------- -------- Income (loss) from continuing operations, net of tax 779 1,985 (190) 7,136 (5,201) Gain (loss) from discontinued operations, net of tax (1) 258 - (423) 201 (27,388) ----------- ------------ ----------- -------- -------- Net income (loss) $ 1,037 $ 1,985 $ (613) $ 7,337 $(32,589) =========== ============ =========== ======== ======== Basic net income (loss) per share: Income (loss) from continuing operations $ 0.02 $ 0.04 $ - $ 0.16 $ (0.12) =========== ============ =========== ======== ======== Gain (loss) from discontinued operations $ 0.01 $ - $ (0.01) $ - $ (0.61) =========== ============ =========== ======== ======== Net income (loss) $ 0.03 $ 0.04 $ (0.01) $ 0.16 $ (0.73) =========== ============ =========== ======== ======== Diluted net income (loss) per share: Income (loss) from continuing operations $ 0.02 $ 0.04 $ - $ 0.15 $ (0.12) =========== ============ =========== ======== ======== Gain (loss) from discontinued operations $ 0.01 $ - $ (0.01) $ - $ (0.61) =========== ============ =========== ======== ======== Net income (loss) $ 0.03 $ 0.04 $ (0.01) $ 0.15 $ (0.73) =========== ============ =========== ======== ======== Shares used to compute per share amounts: Basic 45,750 45,682 45,053 45,603 44,882 =========== ============ =========== ======== ======== Diluted 47,082 46,692 45,053 46,523 44,882 =========== ============ =========== ======== ======== (1) Gain (Loss) from discontinued operations includes gain on disposal of $297 for the three and twelve months ended December 31, 2013, and $1,353 and $3,450 for the three and twelve months ended December 31, 2012, respectively. PLX TECHNOLOGY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands) December 31 December 31 2013 2012 ------------- ------------- ASSETS Cash and investments $ 20,424 $ 16,711 Accounts receivable, net 12,835 10,635 Inventories 10,289 10,560 Property and equipment, net 10,333 11,267 Goodwill 20,461 20,461 Other assets 2,818 3,345 ------------- ------------- Total assets $ 77,160 $ 72,979 ============= ============= LIABILITIES Accounts payable $ 6,511 $ 10,738 Accrued compensation and benefits 4,050 4,493 Accrued commissions 480 817 Other accrued expenses 3,213 2,259 Short term borrowings against line of credit - 8,000 Long term borrowings against line of credit 5,000 - ------------- ------------- Total liabilities 19,254 26,307 STOCKHOLDERS' EQUITY Common stock, par value 46 45 Additional paid-in capital 193,391 189,444 Accumulated other comprehensive loss (277) (226) Accumulated deficit (135,254) (142,591) ------------- ------------- Total stockholders' equity 57,906 46,672 ------------- ------------- Total liabilities and stockholders' equity $ 77,160 $ 72,979 ============= ============= 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) Twelve Months Ended Three Months Ended December 31 December 31 September 30 December 31 ------------------ 2013 2013 2012 2013 2012 ----------- ------------ ----------- -------- -------- Income From Continuing Operations Reconciliation GAAP Income (Loss) $ 779 $ 1,985 $ (190) $ 7,136 $ (5,201) Acquisition and restructuring related costs - - 1,719 291 6,898 Share-based compensation 875 545 887 2,752 2,893 Lawsuit verdict contingency accrual 213 293 - 1,409 - Amortization of purchased intangible assets - - 22 - 245 ----------- ------------ ----------- -------- -------- Non-GAAP Income $ 1,867 $ 2,823 $ 2,438 $ 11,588 $ 4,835 =========== ============ =========== ======== ======== Income Per Share From Continuing Operations Reconciliation GAAP Diluted Income (Loss) Per Share $ 0.02 $ 0.04 $ - $ 0.15 $ (0.12) Effect of acquisition and restructuring related costs - - 0.04 0.01 0.15 Effect of share-based compensation 0.02 0.01 0.02 0.06 0.06 Effect of lawsuit verdict contingency accrual - 0.01 - 0.03 - Effect of amortization of purchased intangible assets - - - - 0.01 ----------- ------------ ----------- -------- -------- Non-GAAP Diluted Income Per Share $ 0.04 $ 0.06 $ 0.06 $ 0.25 $ 0.10 =========== ============ =========== ======== ======== Operating Income From Continuing Operations Reconciliation GAAP Operating Income (Loss) $ 835 $ 2,044 $ (390) $ 7,522 $ (4,816) Share-based compensation - COGS 12 9 49 12 147 Share-based compensation - R&D 179 193 288 788 1,007 Share-based compensation - SG&A 684 343 550 1,952 1,739 Lawsuit verdict contingency accrual 213 293 - 1,409 - Acquisition and restructuring related costs - - 1,719 291 6,898 Amortization of purchased intangible assets - - 22 - 245 ----------- ------------ ----------- -------- -------- Non-GAAP Operating Income $ 1,923 $ 2,882 $ 2,238 $ 11,974 $ 5,220 =========== ============ =========== ======== ======== Gross Margin From Continuing Operations Reconciliation GAAP Gross Margin $ 14,073 $ 14,460 $ 13,684 $ 59,131 $ 58,786 Share-based compensation - COGS 12 9 49 12 147 Lawsuit verdict contingency accrual 194 235 - 429 - ----------- ------------ ----------- -------- -------- Non-GAAP Gross Margin $ 14,279 $ 14,704 $ 13,733 $ 59,572 $ 58,933 =========== ============ =========== ======== ======== Operating Expense From Continuing Operations Reconciliation GAAP Operating Expenses $ 13,238 $ 12,416 $ 14,074 $ 51,609 $ 63,602 Share-based compensation - R&D (179) (193) (288) (788) (1,007) Share-based compensation - SG&A (684) (343) (550) (1,952) (1,739) Lawsuit verdict contingency accrual (19) (58) - (980) - Acquisition and restructuring related costs - - (1,719) (291) (6,898) Amortization of purchased intangible assets - - (22) - (245) ----------- ------------ ----------- -------- -------- Non-GAAP Operating Expenses $ 12,356 $ 11,822 $ 11,495 $ 47,598 $ 53,713 =========== ============ =========== ======== ======== (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) Twelve Months Three Months Ended Ended December 31 September 30 December 31 December 31 -------------- 2013 2013 2012 2013 2012 ------------ ------------- ------------ ------ ------ Net Revenues by Geography Americas 21% 20% 15% 21% 16% Asia Pacific 71% 71% 70% 70% 71% Europe 8% 9% 15% 9% 13% Twelve Months Three Months Ended Ended December 31 September 30 December 31 December 31 -------------- 2013 2013 2012 2013 2012 ------------ ------------- ------------ ------ ------ Net Revenues by Type PCI Express Revenue 72% 71% 69% 72% 67% Connectivity Revenue 28% 29% 31% 28% 33% Source: PLX Technology, Inc. |