<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1999.
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________ .
Commission File Number 0-25699
P L X T E C H N O L O G Y, I N C.
(Exact name of Registrant as specified in its charter)
Delaware 94-3008334
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
390 Potrero Avenue, Sunnyvale, CA 94086
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (408) 774-9060
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
As of October 31, 1999, there were 22,013,577 shares of common stock, par value
$0.001 per share, outstanding.
This Report on Form 10-Q includes 20 pages with the
Index to Exhibits located on page 21
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PLX TECHNOLOGY, INC.
INDEX TO
REPORT ON FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets at September 30, 1999 and
December 31, 1998...................................................... 3
Condensed Consolidated Statements of Income for the three and nine
months ended September 30, 1999 and 1998 .............................. 4
Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 1999 and 1998............................... 5
Notes to Condensed Consolidated Financial Statements...................... 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................. 9
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.................. 19
PART II. OTHER INFORMATION
ITEM 2. Changes in Securities and Use of Proceeds................................... 20
ITEM 6. Exhibits and Reports on Form 8-K............................................ 20
Signature ............................................................................ 21
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PLX TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998(1)
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 17,387 $ 5,638
Short term investments 14,883 --
Accounts receivable, net 5,198 2,073
Inventories 1,667 1,344
Deferred tax assets 735 735
Other current assets 383 332
-------- --------
Total current assets 40,253 10,122
Property and equipment, net 1,581 1,515
Other assets 184 129
Long term investments 7,238 --
-------- --------
Total assets $ 49,256 $ 11,766
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,271 $ 1,601
Accrued compensation and benefits 1,064 724
Accrued commissions 221 100
Deferred revenues 1,060 592
Other accrued expenses 504 547
Income tax payable 286 442
-------- --------
Total current liabilities 5,406 4,006
STOCKHOLDERS' EQUITY:
Redeemable convertible preferred stock, par value -- 5
Common stock, par value 22 5
Additional paid in capital 36,757 5,616
Deferred compensation (215) (283)
Notes receivable for employee stock purchases (68) (163)
Accumulated other comprehensive loss (21) --
Retained earnings 7,375 2,580
-------- --------
Total stockholders' equity 43,850 7,760
-------- --------
Total liabilities and stockholders' equity $ 49,256 $ 11,766
======== ========
</TABLE>
- --------------
(1) The balance sheet at December 31, 1998 has been derived from the audited
financial statements as of that date.
See notes to condensed consolidated financial statements.
3
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PLX TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- ---------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net revenues $10,597 $ 7,385 $28,918 $18,424
Cost of revenues 3,006 2,622 9,480 6,738
------- ------- ------- -------
Gross margin 7,591 4,763 19,438 11,686
Operating expenses:
Research and development 2,044 1,531 5,556 4,929
Selling, general and administrative 2,782 1,686 7,470 4,702
------- ------- ------- -------
Total operating expenses 4,826 3,217 13,026 9,631
------- ------- ------- -------
Income from operations 2,765 1,546 6,412 2,055
Interest income and other, net 508 19 970 47
------- ------- ------- -------
Income before income taxes 3,273 1,565 7,382 2,102
Provision for income taxes 1,145 313 2,587 421
------- ------- ------- -------
Net income $ 2,128 $ 1,252 $ 4,795 $ 1,681
======= ======= ======= =======
Basic net income per share $ 0.10 $ 0.34 $ 0.24 $ 0.48
======= ======= ======= =======
Shares used to compute basic share amounts 21,606 3,638 19,942 3,529
======= ======= ======= =======
Diluted net income per share $ 0.09 $ 0.07 $ 0.22 $ 0.09
======= ======= ======= =======
Shares used to compute diluted per share amounts 23,111 18,405 21,489 18,415
======= ======= ======= =======
</TABLE>
See notes to condensed consolidated financial statements.
4
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PLX TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1999 1998
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 4,795 $ 1,681
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 669 525
Compensation expense recognized 144 --
Amortization of unearned compensation 70 6
Changes in operating assets and liabilities:
Accounts receivable (3,125) (307)
Inventories (323) 3
Other current assets (51) (123)
Other assets (55) (250)
Accounts payable 670 (342)
Accrued compensation and benefits 340 303
Accrued commissions 121 1
Deferred revenues 468 276
Other accrued expenses (43) 567
Income tax payable (156) (111)
-------- -------
Net cash provided by operating activities 3,524 2,229
-------- -------
INVESTING ACTIVITIES
Purchase of short term investments (14,883) --
Purchase of long term investments (7,238) --
Purchase of property and equipment (735) (820)
-------- -------
Net cash used in investing activities (22,856) (820)
FINANCING ACTIVITIES
Proceeds from sale of common stock 31,007 33
Repayment of stockholder notes receivable 95 34
Unrealized loss on investments (21) --
-------- -------
Net cash provided by financing activities 31,081 67
-------- -------
Increase in cash and cash equivalents 11,749 1,476
Cash and cash equivalents at beginning of year 5,638 2,701
-------- -------
Cash and cash equivalents at end of period $ 17,387 $ 4,177
======== =======
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
PLX TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
PLX Technology, Inc. and its wholly-owned subsidiary (collectively, "PLX"
or the "Company") as of September 30, 1999 and for the three-month and
nine-month periods ended September 30, 1999 and 1998 have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. In the opinion of management, the condensed
consolidated financial statements include all adjustments (consisting only
of normal recurring accruals) that management considers necessary for a
fair presentation of our financial position, operating results and cash
flows for the interim periods presented. Operating results and cash flows
for interim periods are not necessarily indicative of results for the
entire year.
This financial data should be read in conjunction with the audited
consolidated financial statements and notes thereto included in our
Registration Statement on Form S-1, as amended, filed with the Securities
and Exchange Commission, SEC File No. 333-71795.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates
and such differences may be material to the financial statements.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company has adopted Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" (FAS 130). FAS 130 requires that all
items required to be recognized under accounting standards as components
of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. The
Company's comprehensive net income for the three and nine months ended
September 30, 1999 and 1998 were as follows:
The following are the components of comprehensive income:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
1999 1998 1999 1998
------------------- -------------------
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Net income $2,128 $1,252 $4,795 $1,681
Accumulated other comprehensive loss (21) -- (21) --
------ ------ ------ ------
Comprehensive income $2,107 $1,252 $4,774 $1,681
====== ====== ====== ======
</TABLE>
Accumulated comprehensive income on the accompanying Consolidated Balance
Sheets is comprised entirely of unrealized losses on investments.
6
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In June 1998, the Financial Accounting Standards Board issued Statement of
Accounting Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities" (FAS 133). FAS 133 provides a comprehensive and
consistent standard for the recognition and measurement of derivatives and
hedging activities. FAS 133 is effective for fiscal years beginning after
June 15, 2000 and the Company believes that the adoption of FAS 133 will
not have a significant impact on the Company's operating results or cash
flows.
2. INVESTMENTS IN DEBT AND EQUITY SECURITIES
The Company invests its excess cash in high quality, short-term and
long-term debt and equity instruments. The following is a summary of the
Company's investments by major security type at amortized cost which
approximates fair value:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
(UNAUDITED)
<S> <C> <C>
Operating cash $ 538 $1,658
Money market 4,209 --
Certificates of deposit 1,498 --
Commercial paper 13,288 3,980
Municipal bonds 15,543 --
Municipal auction rate preferred stock 925 --
Corporate debt securities 1,503 --
U.S government and agency securities 2,004 --
------- ------
$39,508 $5,638
======= ======
Amounts included in cash and cash equivalents $17,387 $5,638
Amounts included in short-term investments 14,883 --
Amounts included in long-term investments 7,238 --
------- ------
$39,508 $5,638
======= ======
</TABLE>
The Company classifies all securities as either cash and cash equivalents
or available for sale.
3. INVENTORIES
Inventories consisted solely of finished goods as of September 30, 1999
and December 31, 1998.
7
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4. NET INCOME PER SHARE
The following table sets forth the computation of basic and diluted net income
per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
1999 1998 1999 1998
---------------------- ----------------------
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Net income (numerator) $ 2,128 $ 1,252 $ 4,795 $ 1,681
Shares used in computing basic
Net income per share -
Weighted average number of common shares 21,606 3,638 19,942 3,529
======= ======= ======= =======
Basic net income per share $ 0.10 $ 0.34 $ 0.24 $ 0.48
======= ======= ======= =======
Outstanding weighted average number of common shares 21,606 3,638 19,942 3,529
Effect of dilutive securities:
Employee stock options 963 9 964 9
Unvested restricted stock 542 1,019 583 1,138
Redeemable convertible preferred stock 13,739 13,739
------- ------- ------- -------
Dilutive potential common shares 1,505 14,767 1,547 14,886
------- ------- ------- -------
Denominator for diluted net income per share - adjusted
Weighted-average shares and assumed conversions 23,111 18,405 21,489 18,415
======= ======= ======= =======
Diluted net income per share $ 0.09 $ 0.07 $ 0.22 $ 0.09
======= ======= ======= =======
</TABLE>
5. REINCORPORATION IN DELAWARE
On March 22, 1999, the Company reincorporated in the State of Delaware.
The par value of the preferred and common stock is $0.001 per share. The
Company's Certificate of Incorporation has been amended to authorize
5,000,000 shares of preferred stock. The Board of Directors has the
authority to fix or alter the designations, powers, preferences and rights
of the shares of each such series. The Company's reincorporation has been
reflected in the condensed consolidated financial statements for all
periods presented.
6. INITIAL PUBLIC OFFERING
In April 1999, the Company completed the initial public offering of its
common stock. At that time, all issued and outstanding shares of the
Company's preferred stock were automatically converted into 13,738,908
shares of common stock. The Company generated approximately $31 million
from the initial public offering.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Report on Form 10-Q contains forward-looking statements, including
statements regarding our expectations, hopes, intentions, beliefs or strategies
regarding the future. Such forward-looking statements include, but are not
limited to, our anticipated expense levels for research and development,
selling, general and administrative operations, and deferred compensation; the
amount of and specific uses of anticipated capital expenditures; expectations
regarding inventory balances, liquidity, adequacy of cash resources; and
adequacy of current facilities under the sub-headings "Results of Operations"
and "Liquidity and Capital Resources." Actual results could differ materially
from those projected in any forward-looking statements for the reasons detailed
below under the sub-heading "Factors That May Affect Future Operating Results"
and in other sections of this Report on Form 10-Q. All forward-looking
statements included in this Form 10-Q are based on information available to us
on the date of this Report on Form 10-Q, and we assume no obligation to update
the forward-looking statements, or to update the reasons why actual results
could differ from those projected in the forward-looking statements. See
"Factors That May Affect Future Operating Results" below, as well as such other
risks and uncertainties as are detailed in our Securities and Exchange
Commission reports and filings for a discussion of the factors that could cause
actual results to differ materially from the forward-looking statements.
The following discussion should be read in conjunction with the audited
consolidated financial statements and the notes thereto included in the
Company's Registration Statement on Form S-1, as amended, filed with the
Securities and Exchange Commission, SEC File No. 333-71795.
OVERVIEW
PLX was founded in 1986, and since 1994 we have focused on development of I/O
interface semiconductors and related software and development tools that are
used in systems incorporating the PCI standard. In 1994 and 1995, a significant
portion of our revenues was from the sale of semiconductor devices that perform
similar functions as our current products, except they were based on a variety
of industry standards. Our revenues since 1996 have been derived predominantly
from the sale of semiconductor devices based on the PCI standard to a large
number of customers in a variety of applications including networking and
telecommunications, enterprise storage, imaging, industrial and other embedded
applications as well as in related adapter cards. We generate a small portion of
our revenues from sales of our software and development tools.
We utilize a "fabless" semiconductor business model whereby we purchase
semiconductor devices from independent manufacturing foundries. This approach
allows us to focus on defining, developing, and marketing our products and
eliminates the need for us to invest large amounts of capital in manufacturing
facilities and work-in-process inventory.
Our gross margins have fluctuated in the past and are expected to fluctuate in
the future due to changes in product mix, the position of our products in their
respective life cycles, and specific product manufacturing costs.
9
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RESULTS OF OPERATIONS
The following table summarizes historical results of operations as a percentage
of net revenues for the periods shown.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
1999 1998 1999 1998
------------------- -------------------
<S> <C> <C> <C> <C>
Net revenues 100.0% 100.0% 100.0% 100.0%
Cost of revenues 28.4 35.5 32.8 36.6
----- ----- ----- -----
Gross margin 71.6 64.5 67.2 63.4
Operating expenses:
Research and development 19.3 20.8 19.2 26.8
Selling, general and administrative 26.2 22.8 25.8 25.5
----- ----- ----- -----
Total operating expenses 45.5 43.6 45.0 52.3
----- ----- ----- -----
Income from operations 26.1 20.9 22.2 11.1
Interest income and other, net 4.8 0.3 3.3 0.3
----- ----- ----- -----
Income before income taxes 30.9 21.2 25.5 11.4
Provision for income taxes 10.8 4.2 8.9 2.3
----- ----- ----- -----
Net income 20.1% 17.0% 16.6% 9.1%
</TABLE>
NET REVENUES
Net revenues for the three months ended September 30, 1999 were $10.6 million,
an increase of 43% from $7.4 million for the three months ended September 30,
1998. For the nine months ended September 30, 1999, net revenues were $28.9
million, a 57% increase over the $18.4 million recorded in the nine months ended
September 30, 1998. The increase was primarily due to higher unit shipments
resulting from increased market acceptance of our products. For the nine months
ended September 30, 1999, net revenues derived from customers in the United
States were 67%, with 25% of net revenues from sales to Unique Technologies, our
U.S. distributor. For the nine months ended September 30, 1999, Cisco Systems
and IBM, accounted for 11% and 10% of net revenues, respectively. No other
individual customer represented greater than 10% of net revenues.
GROSS PROFIT
Gross profit represents net revenues less the cost of revenues. Cost of revenues
includes the cost of purchasing packaged semiconductor devices from our
independent foundries, our operating costs associated with the procurement,
storage, and shipment of products, as well as royalty expenses paid on some of
our products. Gross profit for the three months ended September 30, 1999 was
$7.6 million, an increase of 59% from $4.8 million for the three months ended
September 30, 1998. For the nine months ended September 30, 1999, gross profit
was $19.4 million, an increase of 66% from $11.7 million for the nine months
ended September 30, 1998. The improvement in the Company's gross profit is
primarily due to lower product costs.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses consist primarily of salaries and related
costs of employees engaged in research, design, and development activities. In
addition, expenses for outside engineering consultants and non-recurring
engineering at our independent foundries are included in research and
development expenses. Research and development expenses for the three months
ended September 30, 1999 were $2.0 million, an increase of 34% from $1.5 million
for the three months ended September 30, 1998. For the nine months ended
September 30, 1999, research and development expenses were $5.6 million, an
increase of 13% from $4.9 million in the nine months ended September 30, 1998.
The increases were primarily due to increased headcount and higher costs to
support the Company's continuing efforts to develop new products. Research and
development expenses as a percentage of net revenues were 19.3% for the three
months ended September 30, 1999, as compared to 20.7% for the three months ended
September 30, 1998. For the nine months ended September 30, 1999, research and
development expenses were 19.2% as a percentage of net revenues compared to
26.8% for the nine months ended September 30, 1998. This percentage
10
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decrease was primarily due to higher net revenues as well as lower expenses for
outside engineering consultants and non-recurring engineering at our independent
foundries. We expect that research and development expenses in absolute dollars
will continue to increase in future periods.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses consist primarily of employee
related expenses, professional fees, trade show and other promotional expenses,
and sales commissions to manufacturers' representatives. Selling, general and
administrative expenses for the three months ended September 30, 1999 were $2.8
million, an increase of 65% from $1.7 million for the three months ended
September 30, 1998. For the nine months ended September 30, 1999, selling,
general and administrative expenses were $7.5 million, an increase of 59% from
$4.7 million for the same period in 1998. Selling, general and administrative
expenses as a percentage of net revenues were 26.3% for the three months ended
September 30, 1999, as compared to 22.8% for the three months ended September
30, 1998. For the nine months ended September 30, 1999, selling, general and
administrative expenses as a percentage of net revenues increased slightly to
25.8% compared to 25.5% in the comparable period a year ago. We expect that
selling, general and administrative expenses in absolute dollars will continue
to increase in future periods.
DEFERRED COMPENSATION
We recorded deferred compensation in connection with the grant of stock options
and restricted stock to our employees during 1997 and 1998. Amortization of
deferred compensation was recognized amounting to approximately $24,000 for the
three months ended September 30, 1999 and $15,000 for the three months ended
September 30, 1998. For the nine months ended September 30, 1999 and 1998, we
recorded amortization of deferred compensation of $70,000 and $45,000,
respectively. The amount of deferred compensation is amortized ratably over the
vesting period of the applicable stock grants. We expect the deferred
compensation amortization to continue at approximately $20,000 per quarter
through December 31, 2001.
INTEREST INCOME AND OTHER, NET
Interest income and other income, net reflects interest earned on average cash,
cash equivalents, short-term and long-term investment balances. Interest income
and other, net increased to $508,000 for the three months ended September 30,
1999 from $19,000 for the three months ended September 30, 1998. For the nine
months ended September 30, 1999, interest income increased to $970,000 from
$47,000 in the nine months ended September 30, 1998. The increase was primarily
due to interest earned on higher levels of short-term investments, long-term
investments, and cash balances generated by the initial public offering in April
1999.
PROVISION FOR INCOME TAXES
Income tax expenses as a percentage of pretax income were 35% and 20% for the
nine month periods ended September 30, 1999 and 1998, respectively. Our
effective tax rate in 1999 differs from the applicable statutory rate primarily
due to state income taxes offset by the benefit of the research and development
tax credit. Our effective tax rate in 1998 differed from the applicable
statutory rate primarily due to the benefit of research and development tax
credits and the realization of deferred tax assets.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999, we had $34.8 million in working capital and $32.3 million
in cash, cash equivalents and short term investments. Our operating activities
generated cash of $3.5 million for the nine months ended September 30, 1999, and
provided cash of $2.2 for the nine months ended September 30, 1998. The $1.3
million increase in cash provided by operations was primarily attributable to an
increase in net income partially offset by an increase in accounts receivable.
The increases in net income and accounts receivable were due to higher product
shipments during the nine months ended September 30, 1999 as compared to the
nine months ended September 30, 1998.
Our investing activities used cash of $22.9 million and $0.8 million for the
nine months ended September 30, 1999 and the nine months ended September 30,
1998, respectively. These investing activities were primarily for the purchase
of short term and long term investment securities. Cash provided by financing
activities was $31.1 million and $67,000 for the nine months ended September 30,
1999 and the nine months ended September 30, 1998, respectively. Cash provided
by financing activities for the nine months ended September 30, 1999 is
primarily related to the Company's initial public offering which generated
approximately $31 million in net proceeds from the sale of common stock in April
1999.
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<PAGE> 12
On April 9, 1999 we completed our initial public offering of common stock. We
intend to use the net proceeds primarily for general corporate purposes,
including working capital. Pending use of the net proceeds for such purposes, we
have invested the funds in interest-bearing, investment-grade securities. We
believe that the proceeds from the public offering together with the cash
generated from our operations will be sufficient to meet our capital
requirements for at least the next twelve months. Our future capital
requirements will depend on many factors, including the inventory levels we
maintain, the level of investment we make in new technologies and improvements
to existing technologies and the levels of monthly expenses required to launch
new products.
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
This quarterly report on Form 10-Q contains forward-looking statements which
involve risks and uncertainties. This Company's actual results could differ
materially from those anticipated by such forward-looking statements as a result
of certain factors including those set forth below.
RESULTS MAY FLUCTUATE SIGNIFICANTLY DUE TO FACTORS WHICH ARE NOT WITHIN OUR
CONTROL
Our quarterly operating results have fluctuated significantly in the past and
are expected to fluctuate significantly in the future based on a number of
factors, many of which are not in our control. Our operating expenses, which
include product development costs and selling, general and administrative
expenses, are relatively fixed in the short-term. If our revenues are lower than
we expect because we sell fewer semiconductor devices, delay the release of new
products or the announcement of new features, or for other reasons, we may not
be able to quickly reduce our spending in response.
Other circumstances that can affect our operating results include:
o our ability to develop, introduce and market new products and technologies on
a timely basis,
o the timing of significant orders, order cancellations and reschedulings,
o changes in our pricing policies or those of our competitors or suppliers,
including decreases in unit average selling prices of our products,
o introduction of products and technologies by our competitors,
o shifts in our product mix toward lower margin products,
o the availability of production capacity at the fabrication facilities that
manufacture our products,
o purchasing patterns related to the Year 2000, and
o the availability and cost of materials to our suppliers.
These factors are difficult to forecast, and these or other factors could
adversely affect our business. Any shortfall in our revenues would have a direct
impact on our business. In addition, fluctuations in our quarterly results could
adversely affect the market price of our common stock in a manner unrelated to
our long-term operating performance.
SALES CYCLE CAN RESULT IN UNCERTAINTY AND DELAYS WITH REGARD TO OUR EXPECTED
REVENUES
Our customers typically perform numerous tests and extensively evaluate our
products before incorporating them into their systems. The time required for
test, evaluation and design of our products into the customer's equipment can
range from six to twelve months or more. It can take an additional six to twelve
months or more before a customer commences volume shipments of equipment that
incorporates our products. Because of this lengthy sales cycle, we may
experience a delay between the time when we increase expenses for research and
development and sales and marketing efforts and the time when we generate higher
revenues, if any, from these expenditures.
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<PAGE> 13
In addition, the delays inherent in our lengthy sales cycle raise additional
risks of customer decisions to cancel or change product plans. When we achieve a
design win, there can be no assurance that the customer will ultimately ship
products incorporating our products. Our business could be materially adversely
affected if a significant customer curtails, reduces or delays orders during our
sales cycle or chooses not to release products incorporating our products.
RAPID TECHNOLOGICAL CHANGE COULD MAKE OUR PRODUCTS OBSOLETE
The semiconductor industry is characterized by rapidly changing technology and
industry standards, along with frequent new product introductions. Consequently,
our future success depends on our ability to identify trends in our target
markets and to offer new semiconductor devices, as well as other products and
services, that address the changing needs of our target customers.
WE MUST MAKE SIGNIFICANT RESEARCH AND DEVELOPMENT EXPENDITURES PRIOR TO
GENERATING REVENUES FROM PRODUCTS
To establish market acceptance of a new semiconductor device, we must dedicate
significant resources to research and development, production and sales and
marketing. We incur substantial costs in developing, manufacturing and selling a
new product, which often significantly precede meaningful revenues from the sale
of this product. Consequently, new products can require significant time and
investment to achieve profitability. Prospective investors should note that our
efforts to introduce new semiconductor devices or other products or services may
not be successful or profitable. In addition, products or technologies developed
by others may render our products or technologies obsolete or noncompetitive.
We record as expenses the costs related to the development of new semiconductor
devices and other products as these expenses are incurred. As a result, our
profitability from quarter to quarter and from year to year may be adversely
affected by the number and timing of our new product launches in any period and
the level of acceptance gained by these products.
OUR INDEPENDENT MANUFACTURERS MAY NOT BE ABLE TO MEET OUR MANUFACTURING
REQUIREMENTS
We do not manufacture any of our semiconductor devices. Therefore, we are
referred to in the semiconductor industry as a "fabless" producer of
semiconductors. Consequently, we depend upon third party manufacturers to
produce semiconductors that meet our specifications. We currently have third
party manufacturers that can produce semiconductors which meet our needs.
However, as the semiconductor industry continues to progress to smaller
manufacturing and design geometries, the complexities of producing
semiconductors will increase. Decreasing geometries may introduce new problems
and delays that may affect product development and deliveries. Due to the nature
of the semiconductor industry and our status as a "fabless" semiconductor
company, we could encounter fabrication related problems that may affect the
availability of our semiconductor devices, may delay our shipments or may
increase our costs.
OUR RELIANCE ON SINGLE SOURCE MANUFACTURERS OF OUR SEMICONDUCTOR DEVICES COULD
DELAY SHIPMENTS AND INCREASE OUR COSTS
None of our semiconductor devices is currently manufactured by more than one
supplier. We place our orders on a purchase order basis and do not have a long
term purchase agreement with any of our existing suppliers. In the event that
the supplier of a semiconductor device was unable or unwilling to continue to
manufacture this product in the required volume, we would have to identify and
qualify a substitute supplier. Introducing new products or transferring existing
products to a new third party manufacturer or process may result in unforeseen
device specification and operating problems. These problems may affect product
shipments and may be costly to correct. Silicon fabrication capacity may also
change, or the costs per silicon wafer may increase. Manufacturing-related
problems may have a material adverse effect on our business.
In September 1999, an earthquake in Taiwan disrupted operations for one of our
key suppliers, Taiwan Semiconductor Manufacturing Corporation (TSMC). Based on
our current finished product inventory and current TSMC product delivery
schedules, we do not anticipate a negative impact on future financial results as
a result of the
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<PAGE> 14
earthquake. However, the failure of TSMC to timely deliver product in the fourth
quarter 1999 may adversely impact our financial results for the fourth quarter
1999 and future quarters.
INTENSE COMPETITION IN THE MARKETS IN WHICH WE OPERATE MAY REDUCE THE DEMAND FOR
OR PRICES OF OUR PRODUCTS
Competition in the semiconductor industry is intense. If our main target market,
the embedded systems market, continues to grow, the number of competitors may
increase significantly. In addition, new semiconductor technology may lead to
new products that can perform similar functions as our products. Some of our
competitors and other semiconductor companies may develop and introduce products
that integrate into a single semiconductor device the functions performed by our
semiconductor devices. This would eliminate the need for our products in some
applications.
In addition, competition in our markets comes from companies of various sizes,
many of which are significantly larger and have greater financial and other
resources than we do and thus can better withstand adverse economic or market
conditions. Also, as we start to sell our processor products, we will compete
with established embedded microprocessor companies and others. Many of these
indirect competitors and microprocessor companies have significantly greater
financial, technical, marketing and other resources than we. Therefore, we
cannot assure you that we will be able to compete successfully in the future
against existing or new competitors, and increased competition may adversely
affect our business.
FAILURE TO HAVE OUR PRODUCTS DESIGNED INTO THE PRODUCTS OF ELECTRONIC EQUIPMENT
MANUFACTURERS WILL RESULT IN REDUCED SALES
Our future success depends on electronic equipment manufacturers that design our
semiconductor devices into their systems. We must anticipate market trends and
the price, performance and functionality requirements of current and potential
future electronic equipment manufacturers and must successfully develop and
manufacture products that meet these requirements. In addition, we must meet the
timing requirements of these electronic equipment manufacturers and must make
products available to them in sufficient quantities. These electronic equipment
manufacturers could develop products that provide the same or similar
functionality as one or more of our products and render these products obsolete
in their applications.
We do not have purchase agreements with our customers that contain minimum
purchase requirements. Instead, electronic equipment manufacturers purchase our
products pursuant to short-term purchase orders that may be canceled without
charge. We believe that in order to obtain broad penetration in the markets for
our products, we must maintain and cultivate relationships, directly or through
our distributors, with electronic equipment manufacturers that are leaders in
the embedded systems markets. Accordingly, we will often incur significant
expenditures in order to build relationships with electronic equipment
manufacturers prior to volume sales of new products. If we fail to develop
relationships with additional electronic equipment manufacturers, to have our
products designed into new embedded systems or to develop sufficient new
products to replace products that have become obsolete, our business would be
materially adversely affected.
LOWER DEMAND FOR OUR CUSTOMERS' PRODUCTS WILL RESULT IN LOWER DEMAND FOR OUR
PRODUCTS
Demand for our products depends in large part on the development and expansion
of the high-performance embedded systems markets including networking and
telecommunications, enterprise storage, imaging and industrial applications. The
size and rate of growth of these embedded systems markets may in the future
fluctuate significantly based on numerous factors. These factors include the
adoption of alternative technologies, capital spending levels and general
economic conditions. Demand for products that incorporate high-performance
embedded systems may not grow.
DEFECTS IN OUR PRODUCTS COULD INCREASE OUR COSTS AND DELAY OUR PRODUCT SHIPMENTS
Our products are complex. While we test our products, these products may still
have errors, defects or bugs that we find only after commercial production has
begun. We have experienced errors, defects and bugs in the past in connection
with new products.
Our customers may not purchase our products if the products have reliability,
quality or compatibility problems. This delay in acceptance can make it more
difficult to retain our existing customers and to attract new customers.
14
<PAGE> 15
Moreover, product errors, defects or bugs can result in additional development
costs, diversion of technical and other resources from our other development
efforts, claims by our customers or others against us, or the loss of
credibility with our current and prospective customers. In the past, the
additional time required to correct defects has caused delays in product
shipments and resulted in lower revenues. We may have to spend significant
amounts of capital and resources to address and fix problems in new products.
We must continuously develop our products using new process technology with
smaller geometries to remain competitive on a cost and performance basis.
Migrating to new technologies is a challenging task requiring new design skills,
methods and tools and is difficult to achieve.
FAILURE TO HIRE ADDITIONAL PERSONNEL AND TO IMPROVE OUR OPERATIONS WILL LIMIT
OUR GROWTH
We have experienced rapid growth which places a significant strain on our
limited personnel and other resources. To manage our expanded operations
effectively, we will need to further improve our operational, financial and
management systems. We will also need to successfully hire, train, motivate and
manage our employees. We may not be able to manage our growth effectively, which
could have a material adverse effect on our business. Also, we are seeking to
hire additional skilled development engineers, who are currently in short
supply. Our business could be adversely affected if we encounter delays in
hiring additional engineers.
WE COULD LOSE KEY PERSONNEL DUE TO COMPETITIVE MARKET CONDITIONS AND ATTRITION
Our success depends to a significant extent upon our senior management and key
technical and sales personnel. The loss of one or more of these employees could
have a material adverse effect on our business. We do not have employment
contracts with any of our executive officers.
Our success also depends on our ability to attract and retain qualified
technical, sales and marketing, customer support, financial and accounting, and
managerial personnel. Competition for such personnel in the semiconductor
industry is intense, and we may not be able to retain our key personnel or to
attract, assimilate or retain other highly qualified personnel in the future. In
addition, we may lose key personnel due to attrition, including health, family
and other reasons. We have experienced, and may continue to experience,
difficulty in hiring and retaining candidates with appropriate qualifications.
If we do not succeed in hiring and retaining candidates with appropriate
qualifications, our business could be materially adversely affected.
A LARGE PORTION OF OUR REVENUES IS DERIVED FROM SALES TO THIRD-PARTY
DISTRIBUTORS WHO MAY TERMINATE THEIR RELATIONSHIPS WITH US AT ANY TIME
We depend on distributors to sell a significant portion of our products. In the
nine months ended September 30, 1999 and in fiscal 1998, net revenues through
distributors accounted for approximately 57% and 49%, respectively, of our net
revenues. Some of our distributors also market and sell competing products.
Distributors may terminate their relationships with us at any time. Our future
performance will depend in part on our ability to attract additional
distributors that will be able to market and support our products effectively,
especially in markets in which we have not previously distributed our products.
We may lose one or more of our current distributors or may not be able to
recruit additional or replacement distributors. The loss of one or more of our
major distributors could have a material adverse effect on our business.
THE DEMAND FOR OUR PRODUCTS DEPENDS UPON OUR ABILITY TO SUPPORT EVOLVING
INDUSTRY STANDARDS
Substantially all of our revenues are derived from sales of products which rely
on the PCI standard. If the embedded systems markets move away from this
standard and begin using new standards, we may not be able to successfully
design and manufacture new products that use these new standards. There is also
the risk that new products we develop in response to new standards may not be
accepted in the market. In addition, the PCI standard is continuously evolving,
and we may not be able to modify our products to address new PCI specifications.
Any of these events would have a material adverse effect on our business.
THE SUCCESSFUL MARKETING AND SALES OF OUR PRODUCTS DEPEND UPON OUR THIRD PARTY
RELATIONSHIPS, WHICH ARE NOT SUPPORTED BY WRITTEN AGREEMENTS
When marketing and selling our semiconductor devices, we believe we enjoy a
competitive advantage based on the availability of development tools offered by
third parties. These development tools are used principally for the
15
<PAGE> 16
design of other parts of the embedded system but also work with our products. We
will lose this advantage if these third party tool vendors cease to provide
these tools for existing products or do not offer them for our future products.
This event could have a material adverse effect on our business. We generally
have no written agreements with these third parties, and these parties could
choose to stop providing these tools at any time.
OUR LIMITED ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
COULD ADVERSELY AFFECT OUR COMPETITIVE POSITION
Our future success and competitive position depend upon our ability to obtain
and maintain proprietary technology used in our principal products. Currently,
we have limited protection of our intellectual property in the form of patents
and rely instead on trade secret protection. Our existing or future patents may
be invalidated, circumvented, challenged or licensed to others. The rights
granted thereunder may not provide competitive advantages to us. In addition,
our future patent applications may not be issued with the scope of the claims
sought by us, if at all. Furthermore, others may develop technologies that are
similar or superior to our technology, duplicate our technology or design around
the patents owned or licensed by us. In addition, effective patent, trademark,
copyright and trade secret protection may be unavailable or limited in foreign
countries where we may need protection. We cannot be sure that steps taken by us
to protect our technology will prevent misappropriation of the technology.
We may from time to time receive notifications of claims that we may be
infringing patents or other intellectual property rights owned by other third
parties. While there is currently no intellectual property litigation pending
against us, litigation could result in significant expenses to us, adversely
affect sales of the challenged product or technology. This litigation could also
divert the efforts of our technical and management personnel, whether or not the
litigation is determined in our favor. In addition, we may not be able to
develop or acquire non-infringing technology or procure licenses to the
infringing technology under reasonable terms. This could require expenditures by
us of substantial time and other resources. Any of these developments would have
a material adverse effect on our business.
THE CYCLICAL NATURE OF THE SEMICONDUCTOR INDUSTRY MAY LEAD TO SIGNIFICANT
VARIANCES IN THE DEMAND FOR OUR PRODUCTS
In the last two years, the semiconductor industry has been characterized by
significant downturns and wide fluctuations in supply and demand. Also, during
this time, the industry has experienced significant fluctuations in anticipation
of changes in general economic conditions, including economic conditions in
Asia. This cyclicality has led to significant variances in product demand and
production capacity. It has also accelerated erosion of average selling prices
per unit. We may experience periodic fluctuations in our future financial
results because of industry-wide conditions.
BECAUSE WE SELL OUR PRODUCTS TO CUSTOMERS OUTSIDE OF NORTH AMERICA AND BECAUSE
OUR PRODUCTS ARE INCORPORATED WITH PRODUCTS OF OTHERS THAT ARE SOLD OUTSIDE OF
NORTH AMERICA WE FACE FOREIGN BUSINESS, POLITICAL AND ECONOMIC RISKS
Sales outside of North America accounted for 33% of our revenues for the nine
months ended September 30, 1999. In 1998, 1997, and 1996 sales outside of North
America accounted for 34%, 22%, and 21% of our revenues, respectively. We
anticipate that these sales may increase in future periods and may account for
an increasing portion of our revenues. In addition, equipment manufacturers who
incorporate our products into their products, sell their products outside of
North America, thereby exposing us indirectly to foreign risks. Further, most of
our semiconductor products are manufactured outside of North America.
Accordingly, we are subject to international risks, including:
o difficulties in managing distributors,
o difficulties in staffing and managing foreign subsidiary and branch
operations,
o political and economic instability,
o foreign currency exchange fluctuations,
16
<PAGE> 17
o difficulties in accounts receivable collections,
o potentially adverse tax consequences,
o timing and availability of export licenses,
o changes in regulatory requirements, tariffs and other barriers,
o difficulties in obtaining governmental approvals for telecommunications and
other products, and
o the burden of complying with complex foreign laws and treaties.
Although approximately 10% of our revenues were attributable to sales in Asia
during 1998 and the first nine months of 1999, the recent Asian economic
instability could adversely affect our business, particularly to the extent that
this instability impacts the sales of products manufactured by our customers.
Because sales of our products have been denominated to date exclusively in
United States dollars, increases in the value of the United States dollar will
increase the price of our products so that they become relatively more expensive
to customers in the local currency of a particular country, leading to a
reduction in sales and profitability in that country.
WE COULD EXPERIENCE DISRUPTIONS FROM IMPORTANT SUPPLIERS AND CUSTOMERS BECAUSE
THEY ARE NOT YEAR 2000 COMPLIANT
We are highly dependent on our computer software programs and operating systems
in operating our business. We also depend on proper functioning of computer
systems of third parties, such as suppliers and customers. Any computer programs
that have date-sensitive software may recognize a date using "00" as the year
1900 instead of the year 2000. We have completed audits of our internal systems,
including our accounting, sales and technical support automation system, and
obtained assurances from our major suppliers and customers that they have done
the same. However, we do not have the resources to verify these assurances.
Thus, there is a risk that some of our customers' and suppliers' systems will
not function adequately. If they do not, the result could be a system failure or
miscalculation causing disruptions of operations, including, among other things,
a temporary inability to process transactions, send invoices, or engage in
similar normal business activities.
OUR POTENTIAL FUTURE ACQUISITIONS MAY NOT BE SUCCESSFUL BECAUSE WE HAVE NOT MADE
ACQUISITIONS IN THE PAST
There have been a significant number of mergers and acquisitions in the
semiconductor industry in the past. As part of our business strategy, we expect
to review acquisition prospects that would complement our existing product
offerings, improve market coverage or enhance our technological capabilities. We
have no current agreements or negotiations underway with respect to any
acquisitions, and we may not be able to locate suitable acquisition
opportunities. Future acquisitions could result in the following:
o potentially dilutive issuances of equity securities,
o large one-time write-offs,
o the incurrence of debt and contingent liabilities or amortization expenses
related to goodwill and other intangible assets,
o difficulties in the assimilation of operations, personnel, technologies,
products and the information systems of the acquired companies,
o diversion of management's attention from other business concerns, and
17
<PAGE> 18
o risks of entering geographic and business markets in which we have no or
limited prior experience and potential loss of key employees of acquired
organizations.
Since we have not made any acquisitions in the past, we are not certain that we
will be able to successfully integrate any businesses, products, technologies or
personnel that may be acquired in the future. Our failure to do so could have a
material adverse effect on our business.
OUR PRINCIPAL STOCKHOLDERS HAVE SIGNIFICANT VOTING POWER AND MAY TAKE ACTIONS
THAT MAY NOT BE IN THE BEST INTERESTS OF OUR OTHER STOCKHOLDERS
Our executive officers, directors and other principal stockholders, in the
aggregate, beneficially own approximately 45% of our outstanding common stock.
Although these stockholders do not have majority control, they currently have,
and likely will continue to have, significant influence with respect to the
election of our directors and approval or disapproval of our significant
corporate actions. This influence over our affairs might be adverse to the
interests of other stockholders. In addition, the voting power of these
stockholders could have the effect of delaying or preventing a change in control
of PLX. Commencing at the first annual meeting of stockholders following the
annual meeting of stockholders when we shall have had at least 800 stockholders,
our stockholders will not be entitled to cumulate their votes in the election of
directors, and the holders of a majority of the common stock present at a
meeting of stockholders will be able to elect all of our directors.
THE ANTI-TAKEOVER PROVISIONS IN OUR CERTIFICATE OF INCORPORATION COULD ADVERSELY
AFFECT THE RIGHTS OF THE HOLDERS OF OUR COMMON STOCK
Anti-takeover provisions of Delaware law and our Certificate of Incorporation
may make a change in control of PLX more difficult, even if a change in control
would be beneficial to the stockholders. These provisions may allow the Board of
Directors to prevent changes in the management and control of PLX. Under
Delaware law, our Board of Directors may adopt additional anti-takeover measures
in the future.
One anti-takeover provision that we have is the ability of our Board of
Directors to determine the terms of preferred stock and issue preferred stock
without the approval of the holders of the common stock. Our Certificate of
Incorporation allows the issuance of up to 5,000,000 shares of preferred stock.
There are no shares of preferred stock outstanding. However, because the rights
and preferences of any series of preferred stock may be set by the Board of
Directors in its sole discretion without approval of the holders of the common
stock, the rights and preferences of this preferred stock may be superior to
those of the common stock. Accordingly, the rights of the holders of common
stock may be adversely affected.
READINESS DISCLOSURE FOR YEAR 2000
We utilize a number of computer software programs and operating systems across
our entire organization, including applications used in financial business
systems and various administrative functions. To the extent that our software
applications contain source code that is unable to appropriately interpret the
upcoming Year 2000 and beyond, some level of modifications and replacements of
such applications would be necessary. We believe that our internal Year 2000
issues were limited to information technology, or IT, systems such as software
programs and computer operating systems. Employing a team made up of internal
personnel, we have completed our evaluation and modification of our IT systems
to make them Year 2000 compliant. We have also completed our assessment of the
Year 2000 compliance issues presented by our semiconductor hardware and software
products and believe that none of these products has Year 2000 issues that
require product modification or replacement.
We are highly dependent on a few semiconductor foundry companies to produce the
majority of our products. We have reviewed these suppliers' plans for Year 2000
compliance and believe that these foundry companies have made the necessary
modifications to or replacements of their affected systems. We rely primarily on
the suppliers' execution of their plans but have no contractual commitment from
the suppliers regarding Year 2000 issues.
We do not expect Year 2000 compliance costs to have any material adverse impact
on our business. We estimate that total costs for the Year 2000 compliance
assessment and remediation will not exceed $100,000. The costs of this
assessment and remediation will be paid out of general and administrative
expenses.
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<PAGE> 19
In light of our assessment and remediation efforts to date, and the planned,
normal course-of-business upgrades, we believe that any residual Year 2000 risk
is limited to non-critical business applications and support hardware. No
assurance can be given, however, that all of our systems will be Year 2000
compliant or that compliance will not have a material adverse effect on our
business. We also do not have any assurance that the manufacturers who supply
semiconductors for us will be Year 2000 compliant with their internal systems; a
reduction in the supply of product from these suppliers could have a material
adverse effect on our business.
We believe that, if our suppliers are not Year 2000 compliant, the reasonably
likely worst case would be that we would be unable to receive products from them
on a timely basis which would disrupt our shipments to customers and could
materially adversely affect our business. In addition, if our IT systems are not
Year 2000 compliant, we may be unable to process customer orders, which could
also lead to shipment delays. We have developed a contingency plan for all
operations to address the most reasonably likely worst case scenarios regarding
Year 2000 compliance.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We have an investment portfolio of fixed income securities, including those
classified as cash equivalents of approximately $27.3 million at September 30,
1999. These securities are subject to interest rate fluctuations and will
decrease in market value if interest rates increase.
19
<PAGE> 20
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The Company has invested the proceeds generated from the Initial public
offering of its common stock in the amount of $31 million in high quality,
short-term and long-term debt and equity securities. The Company intends to use
such proceeds for general corporate purposes, including working capital.
20
<PAGE> 21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------- -----------
<S> <C>
3.1* Amended and Restated Certificate of Incorporation of the Registrant.
3.2* Registrant's Amended and Restated Bylaws.
4.1 Reference is made to Exhibit 3.1.
10.1* Form of Indemnification Agreement between PLX and
each of its Officers and Directors.
10.2* 1998 Stock Incentive Plan.
10.3* 1999 Stock Incentive Plan.
10.4* Lease Agreement dated December 20, 1995 by and
between Aetna Life Insurance Company as Landlord and
PLX as Tenant.
10.5* Lease Agreement dated October 17, 1997 between The
Arrillaga Foundation and The Perry Foundation as
Landlords and PLX as Tenant, as amended.
10.6* Form of Restricted Stock Purchase Agreement used in connection with the 1986
Restricted Stock Purchase Program.
10.7* Form of Pledge Agreement used in connection with the 1986 Restricted Stock
Purchase Program.
10.8* Form of Promissory Note used in connection with the 1986 Restricted Stock
Purchase Program.
10.9* PLX Technology, Inc. Stock Restriction, Information Rights and Registration
Rights Agreement dated April 19, 1989.
10.10* PLX Technology, Inc. Stock Restriction, Information Rights and Registration
Rights Agreement dated July 3, 1991.
27.1 Financial Data Schedule.
</TABLE>
- -------------------
* Incorporated by reference to the same numbered exhibit previously filed with
the Company's Registration Statement on Form S-1 (Registration No.
333-71795).
(b) Reports on Form 8-K. The Company did not file any Reports on Form
8-K during the quarter ended September 30, 1999.
21
<PAGE> 22
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLX TECHNOLOGY, INC.
(Registrant)
Date: November 11, 1999 By /s/ Scott M. Gibson
-------------------------------------
Scott M. Gibson
Vice President, Finance and
Chief Financial Officer
(Authorized Officer and
Principal Financial Officer)
22
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 17,387
<SECURITIES> 0
<RECEIVABLES> 5,410
<ALLOWANCES> (212)
<INVENTORY> 1,667
<CURRENT-ASSETS> 40,253
<PP&E> 3,772
<DEPRECIATION> (2,191)
<TOTAL-ASSETS> 49,256
<CURRENT-LIABILITIES> 5,406
<BONDS> 0
0
0
<COMMON> 22
<OTHER-SE> 43,828
<TOTAL-LIABILITY-AND-EQUITY> 49,256
<SALES> 28,918
<TOTAL-REVENUES> 28,918
<CGS> 9,480
<TOTAL-COSTS> 9,480
<OTHER-EXPENSES> 13,026
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7,382
<INCOME-TAX> 2,587
<INCOME-CONTINUING> 4,795
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,795
<EPS-BASIC> 0.24
<EPS-DILUTED> 0.22
</TABLE>
