8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 28, 2010

NetLogic Microsystems, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	000-50838	77-0455244
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

3975 Freedom Circle, Santa Clara, CA 95054

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (408) 454-3000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see  General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

The information contained in this report and the exhibit attached hereto is furnished solely pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information contained herein and the exhibit attached hereto shall not be incorporated by reference into any filing with the Securities and Exchange Commission made by NetLogic Microsystems, Inc., whether made before or after the date hereof, except as shall be expressly set forth by specific refe rence in such filing.

On October 28, 2010, we issued a press release announcing our financial results for the three months ended September 30, 2010, which is included in this report as Exhibit 99.1. The press release should be read in conjunction with the statements regarding forward-looking statements that are included in the text of the press release.

Discussion of Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (GAAP), the Company also reports certain non-GAAP financial measures.  Non-GAAP financial measures exclude the effects of stock-based compensation and related payroll taxes, changes in contingent earn-out liability, amortization of intangible assets, fair value adjustments of acquired inventory and related taxes, acquisition-related costs, lease termination costs, interest income on RMI bridge note, establishment of deferred tax asset valuation allowance, and the effects of excluding stock-based compensation on the number of diluted shares used in calculating non-GAAP earnings per share.

We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, forecasting and planning for future periods, and determining payments under compensation programs. We consider the use of the non-GAAP measures presented in our press release to be helpful in assessing the performance of the operation of our core business which comprises the ongoing revenue and expenses of our business excluding certain items that render comparisons with prior periods or analysis of on-going operating trends more difficult , such as non-cash expenses not directly related to the actual cash costs of development, sale, delivery or support of our products, or expenses that are reflected in periods unrelated to when the actual amounts were incurred or paid. Consistent with this approach, we believe that disclosing non-GAAP financial measures provides useful supplemental data that, while not a substitute for financial measures prepared in accordance with GAAP, allow for greater transparency in the review of our financial and operational performance. In addition, we have historically reported non-GAAP results to the investment community and believe that continuing to do so provides investors with a useful measure for comparing results over time. In assessing the overall health of our business for the periods covered in our press release and, in particular, in evaluating the non-GAAP financial line items presented in our press release, we have excluded items in the following three general categories, each of which are described below : Stock-Based Compensation and Related Payroll Taxes, Acquisition Related Expenses and Other Items. We also provide additional detail below regarding the shares used to calculate our non-GAAP net income per share.

Non-GAAP net income reflects net income adjusted for the following items:

• Stock-based Compensation and Related Payroll Taxes.  We provide non-GAAP information relative to our expense for stock-based compensation and related payroll tax. We began to include stock-based compensation expense in our GAAP financial measures in January 2006. Because of varying available valuation methodologies, subjective assumptions and the variety of award types, which affect the calculations of stock-based compensation, we believe that the exclusion of stock-based compensation allows for more accurate comparisons of our operating results to ou r peer companies. Stock-based compensation is very different from other forms of compensation that have a fixed and unvarying cash cost. In contrast, the expense associated with awards of options for shares of our stock and restricted stock units for our stock are not directly correlated to the amount of compensation ultimately received by the employee.  Furthermore, the amount of expense that we record is based on a stock-based compensation valuation methodology and underlying assumptions that may vary over time and that do not reflect any cash expenditure. The expense associated with an award for shares of company stock in one quarter may have a very different expense than an award of an identical number of shares in a different quarter. Finally, the expense we recognize for equity grants may be very different than the expense that other companies recognize for awarding a comparable equity grant, which can make it difficult to assess our operating performance relative to our competitors. Similar to stock-based compensation, payroll tax on stock option exercises is dependent on our stock price and the timing of employee exercises over which our management has little control, and as such does not correlate to the operation of our business. Because of these unique characteristics of stock-based compensation expense and the related payroll tax, management excludes these expenses when analyzing our business performance.

• Acquisition-Related Expenses. We exclude certain expense items resulting from acquisitions including the following, when applicable: (i) changes in contingent earn-out liability; (ii) amortization of purchased intangible assets associated with our acquisitions; (iii) fair value adjustments of acquired inventory; and (iv) acquisition-related costs. We believe that providing non-GAAP information for acquisition-related expense items in addition to the corresponding GAAP information allows the users of our financial statements to better review and understand the historic and current results of our continuing operations, and also facilitates comparisons with less acquisitive peer companies.

(i) Changes in contingent earn-out liability.  In accordance with changes in GAAP requirements for business combination accounting of contingent earn-out consideration effective in 2009, an estimated fair value of contingent earn-out consideration is recorded at the close of an acquisition.  As changes to the estimated fair value occur, which may be for a variety of reasons, including but not limited to, changes in our stock price, we are required to record the changes in the estimated liability through our operating results until the liability is fixed.  Under the terms of the merger agreement with RMI, a substantial portion of the contingent earn-out consideration is payable in stock.  We evaluate this contingent earn-out consideration as part of total purchase consideration of the business and do not consider changes in the total purchase consideration recorded in our operating results during the fourth fiscal quarter of 2009, and in each our our first, second, and third fiscal quarters of 2010 to meaningfully reflect the near-term performance of our business.

(ii) Amortization of intangible assets.   The amortization of intangible assets associated with our acquisitions results in recording expenses in our GAAP financial statements but does not represent cash expenditure. Moreover, had we developed the products acquired, the amortization of intangible assets, and the expenses of uncompleted research and development would have been expensed in prior periods. Accordingly, we analyze the performance of our operations in each period without regard to such expenses.

(iii) Fair value adjustments of acquired inventory and related taxes.  As part of business combination accounting for acquired inventory, we increase the value of acquired inventory to effectively eliminate any accounting gross profit except for a portion attributed to any manufacturing effort to be completed post-acquisition and any incremental selling effort.  Such adjustments do not reflect costs we would otherwise have expended to manufacture such inventory on our own.  Therefore, we analyze the performance of our operations in each period (i.e., in each of our third and fourth fiscal quarters of 2 009, and in each of our first and second fiscal quarters of 2010) without regard to such expenses.  Similarly, we exclude the income tax effect of this item when evaluating our operating results.

(iv) Acquisition-related costs.  Acquisition-related costs include transaction costs and integration-related costs, including severance payments that were made by RMI prior to its acquisition by us, which severance payments might be construed to be undertaken for our benefit and therefore required to be recorded as our expense under GAAP during each of our second, third, and fourth fiscal quarters of 2009, and in our first fiscal quarter of 2010.  We consider these charges unrelated to our core operating performance. In addition, acquisitions result in non-continuing operating expenses, which would not otherwis e have been incurred by us in the normal course of our business operations. For example, we have incurred deferred compensation charges related to assumed options and transition and integration costs such as retention bonuses and acquisition-related milestone payments to employees of the acquired entity.

(v) Interest income on RMI bridge loan.  We entered into an interest-bearing bridge loan with RMI in connection with our agreement to purchase the company.  We completed the acquisition of RMI during the quarter ended December 31, 2009, and eliminated the bridge loan in our consolidated financial position.  As the arrangement represented a temporary financing arrangement between the two parties in connection with the acquisition, we considered the interest income earned during each of our second, third, and fourth fiscal quarters of of 2009 to be unrelated to the performance of our business.

• Other Items. We exclude certain other items that are the result of either unique or unplanned events including the following, when applicable: (i) deferred tax asset valuation allowance on a portion of the Company’s California research and development credit carryforward during our first fiscal quarter of 2009, and (ii) lease termination expenses during our second fiscal quarter of 2010.  The establishment of deferred tax asset valuation allowance on a portion of the Company’s California research and development credit carryforward arose as a result in a change in the law.  In connection with t he early termination of our headquarter facility lease, we recorded charges related to lease termination fees, as well as asset write-off.  We believe that providing financial information without these items, in addition to our GAAP operating results, provides our management and users of our financial statements with better clarity regarding the on-going performance and future liquidity of our business.

The calculation of non-GAAP net income per share is adjusted for the following item:

• Non-GAAP net income per share is calculated by dividing non-GAAP net income by non-GAAP diluted weighted average shares. For purposes of calculating non-GAAP net income per share, the GAAP anti-dilutive weighted average shares outstanding is included after adjustments to exclude the benefits of stock-based compensation costs attributable to future services and not yet recognized in the financial statements. Under the GAAP treasury stock method, these stock-based compensation costs are treated as proceeds assumed to be used to repurchase shares. Since our non-GAAP net income does not reflect the effects of s tock-based compensation costs, management believes these amounts should not be applied to the repurchase of shares in calculating non-GAAP net income per share.

We expect to continue to incur expenses similar to some of the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP financial measures should not be construed as an inference that these costs do not represent additional costs of doing business and are unusual, infrequent or non-recurring.  For example:

• Non-GAAP financial measures do not account for stock-based compensation expense related to equity awards granted to our employees. Our stock incentive plans are an important component of our employee incentive compensation arrangements and are reflected as expense in our GAAP results.

• While amortization of purchased intangible assets does not directly affect our current cash position, such expenses represent the estimated decline in value of technology and other intangible assets we have acquired over their respective expected economic lives.  We have excluded the expense associated with this decline in value from non-GAAP financial measures, and therefore the non-GAAP financial measures do not reflect the costs of acquired intangible assets that supplement our research and development efforts.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

The following exhibit is furnished with this document:

Exhibits	Description
99.1	Press Release dated October 28, 2010

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 hereunto duly authorized.

	NetLogic Microsystems, Inc.
Date: October 28, 2010	By:	/s/ Michael T. Tate
		Michael T. Tate Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibits	Description
99.1	Press Release dated October 28, 2010

EX-99.1

Exhibit 99.1

Investor Relations Contact:

Leslie Green

Green Communications Consulting, LLC

(650) 312-9060

leslie@greencommunicationsllc.com

NetLogic Microsystems Announces Third Quarter 2010 Financial Results
 

• Q3 FY 2010 Net Revenues: $100.1 million

• Q3 FY 2010 GAAP Net Income: $5.2 million; $0.08 per share (diluted)

• Q3 FY 2010 Non-GAAP Net Income: $27.9 million; $0.40 per share (diluted)

SANTA CLARA, Calif. – October 28, 2010 – NetLogic Microsystems, Inc. (NASDAQ: NETL), a worldwide leader in high performance intelligent semiconductor solutions for next-generation Internet networks, today announced financial results for its third quarter ended September 30, 2010.

Revenue for the third quarter of 2010 was $100.1 million, a 5.3% sequential increase from $95.0 million for the second quarter of 2010 and a 136% increase from $42.3 million for the third quarter of 2009.

Third quarter 2010 net income, determined in accordance with generally accepted accounting principles (GAAP), was $5.2 million or $0.08 per diluted share. By comparison, GAAP net loss was $3.9 million or $0.09 per diluted share for the third quarter of 2009.  GAAP net income for third quarter 2010 included stock-based compensation and related payroll taxes, changes in contingent earn-out liability, and amortization of intangible assets.  Excluding these items, non-GAAP net income for the third quarter of 2010 was $27.9 million or $0.40 per diluted share, compared with $0.22 per diluted sha re for the third quarter of 2009.

NetLogic Microsystems, Inc. Announces Third Quarter 2010 Results

October 28, 2010

Page 2 of 8

Management Qualitative Comments

“We recently marked another significant milestone in our technology roadmap with the transition of our product portfolio of multi-core processing, knowledge-based processing and physical layer solutions to TSMC’s advanced 40 nanometer process node,” said Ron Jankov, president and CEO.  “This is a considerable achievement given the size and complexity of our solutions and further highlights the tremendous execution and expertise of our team.  This accomplishment comes at a great time when the performance capability of our advanced portfolio is ideally suited for mult iple market windows that are opening up this year and that will provide tremendous growth opportunity for many years to come. It also underscores our commitment to technology leadership and demonstrates our ability to consistently deliver an ambitious roadmap that keeps pace with the rigorous demands of next-generation networking and communications.”

Recent Highlights

• NetLogic Microsystems announced the availability of the  XLP™ Multi-Core Processor Development Kit that includes comprehensive hardware and software tools, libraries, drivers and reference solutions to help accelerate time-to-market and reduce development effort for Tier One OEMs who are developing next-generation systems using the industry-leading XLP multi-core, multi-threaded processor.

• The company also announced the availability of its innovative NL10k knowledge-based processors, which are designed in the advanced 40nm process node, to further expand the IPv6 processing portfolio for next-generation switches and routers.  The NL10k knowledge-based processors deliver 1.6 billion decisions per second of IPv6 processing while maintaining compatibility to previous generations of knowledge-based processors.

• H3C Technologies, a subsidiary of Hewlett-Packard Company and a leading global provider of IP-based products and solutions, selected NetLogic Microsystems’ AEL2020 dual-channel 10 Gigabit Ethernet (10GE) PHY device for both its S12500 and S9500E series core switches. The H3C S12500 is a series of core switches designed for use in next-generation data centers.  The H3C S9500E is a series of new-generation core routing switches developed for use in the core layer of campus networks and data centers.

• Advantech, a global manufacturer of telecom computing blades and multi-core network platforms, and NetLogic Microsystems announced their collaboration to deliver the industry's most advanced 40-Gbps AdvancedTCA (ATCA) platform using NetLogic Microsystems' XLP multi-core, multi-threaded processors with 64 NXCPUs™, knowledge-based processors, and 10GE PHY solutions.

• Continuous Computing®, the global provider of integrated platform solutions that address the mobile broadband capacity challenge, and NetLogic Microsystems announced their collaboration to deliver the industry's highest performance 40G AdvancedTCA (ATCA) packet processing platforms using NetLogic Microsystems' XLP multi-core, multi-threaded processors with 64 NXCPUs, the NL11k knowledge-based processors and 10GE PHY solutions.

• NetLogic Microsystems’ market-leading multi-core, multi-threaded processors and knowledge-based processors powered best-in-class TD-LTE equipment from Motorola and Continuous Computing to provide TD-LTE coverage at the Shanghai World Expo 2010.

NetLogic Microsystems, Inc. Announces Third Quarter 2010 Results

October 28, 2010

Page 3 of 8

Conference Call

NetLogic Microsystems will hold its third quarter 2010 financial results conference call today at 1:30 p.m. Pacific time.  To listen to the conference call, dial (866) 783-2137 ten minutes prior to the start of the call, using the passcode 14139643. International callers, dial (857) 350-1596. A taped replay will be made available approximately two hours after the conclusion of the call and will remain available for one week. To access the replay, dial (888) 286-8010 and enter passcode 65493307. International callers dial (617) 801-6888.

The conference call will be available via a live webcast on the investor relations section of NetLogic Microsystems’ web site at http://www.netlogicmicro.com.  Access the web site 15 minutes prior to the start of the call to download and install any necessary audio software.  An archived webcast replay will be available on the web site for three months.

About NetLogic Microsystems

NetLogic Microsystems, Inc. (NASDAQ: NETL) is a worldwide leader in high-performance intelligent semiconductor solutions that are powering next-generation Internet networks. NetLogic Microsystems' best-in-class products perform highly differentiated tasks of accelerating complex network traffic to significantly enhance the performance and functionality of advanced 3G/4G mobile wireless infrastructure, data center, enterprise, metro Ethernet, edge and core infrastructure networks. NetLogic Microsystems' market-leading product portfolio includes high-performance multi-core processors, knowledge-based processors, content processors, network search engines, ultra low-power embedded proces sors and high-speed 10/40/100 Gigabit Ethernet PHY solutions. These products are designed into high-performance systems such as switches, routers, wireless base stations, security appliances, networked storage appliances, service gateways and connected media devices offered by leading original equipment manufacturers (OEMs). NetLogic Microsystems is headquartered in Santa Clara, California, and has offices and design centers throughout North America, Asia and Europe. For more information about products offered by NetLogic Microsystems, call +1-408-454-3000 or visit the NetLogic Microsystems Web site at http://www.netlogicmicro.com.

NetLogic Microsystems, the NetLogic Microsystems logo, NXCPU and XLP are trademarks of NetLogic Microsystems, Inc.  Alchemy is a registered trademark of NetLogic Microsystems, Inc. All other trademarks are the properties of their respective owners.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding NetLogic Microsystems’ business which are not historical facts may be “forward-looking statements” that involve risks and uncertainties. Forward-looking statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Actual results and trends may differ materially from historical results or those projected in any such forward-looking statements depending on a variety of factors. These factors include, but are not limited to, customer acceptance and demand for our products, the volume of sales to our principal product customers, the timing of our receipt of customer orders during the quarter, manufacturing yields for our products, the timing of manufacture and delivery of product by our foundry suppliers, potential warranty claims and product defects, the length of our sales cycles, our average selling prices, our ability to successfully develop and sell new products, the effects of any business acquisitions that we might make, the strength of the OEM networking equipment market and the cyclical nature of that market and the semiconductor industry. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in the Company’s reports on Forms 10-K, 10-K/A, and 10-Q, as well as other reports that NetLogic Microsystems files from time to time with the Securities and Exchange Commissionwhich are available at http://www.sec.gov. All forward-looking statements are qualified in their entirety by this cautionary statement, and NetLogic Microsystems undertakes no obligation to update publicly any forward-looking statement for any reason, except as required by law, even as new information becomes available or other events occur in the future.

NetLogic Microsystems, Inc. Announces Third Quarter 2010 Results

October 28, 2010

Page 4 of 8

NETLOGIC MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

(UNAUDITED)

	Three months ended						Nine months ended
	September 30, 2010			September 30, 2009			September 30, 2010			September 30, 2009
Revenue	$	100,052		$	42,314		$	281,317		$	105,165
Cost of revenue*		40,523			21,498			134,866			49,029
Gross profit		59,529			20,816			146,451			56,136
Operating expenses:
Research and development*		32,372			16,087			92,462			42,421
Selling, general and administrative*		19,763			7,740			59,619			21,912
Change in contingent earn-out liability		741			-			51,152			-
Acquisition-related costs		-			1,425			735			2,760
Total operating expenses		52,876			25,252			203,968			67,093
Income (loss) from operations		6,653			(4,436	)		(57,517	)		(10,957	)
Interest and other income (expense), net		(126	)		(196	)		(236	)		223
Income (loss) before income taxes		6,527			(4,632	)		(57,753	)		(10,734	)
Provision for (benefit from) income taxes		1,318			(779	)		(790	)		(808	)
Net income (loss)	$	5,209		$	(3,853	)	$	(56,963	)	$	(9,926	)
Net income (loss) per share - Basic	$	0.08		$	(0.09	)	$	(0.95	)	$	(0.23	)
Net income (loss) per share - Diluted	$	0.08		$	(0.09	)	$	(0.95	)	$	(0.23	)
Shares used in calculation - Basic		63,632			44,494			60,041			43,976
Shares used in calculation - Diluted		67,933			44,494			60,041			43,976

* Includes stock-based compensation and related payroll taxes, and amortization of intangible assets as follows (in thousands):

	Three months ended				Nine months ended
	September 30, 2010		September 30, 2009		September 30, 2010		September 30, 2009
Stock-based compensation and related payroll taxes:
Cost of revenue	$	167	$	164	$	536	$	519
Research and development		6,207		3,733		19,463		9,345
Selling, general and administrative		5,041		2,555		16,905		6,906
Total	$	11,415	$	6,452	$	36,904	$	16,770
Amortization of intangible assets:
Cost of revenue	$	9,632	$	4,778	$	29,028	$	10,738
Selling, general and administrative		913		345		2,739		1,035
Total	$	10,545	$	5,123	$	31,767	$	11,773

NetLogic Microsystems, Inc. Announces Third Quarter 2010 Results

October 28, 2010

Page 5 of 8

Non-GAAP Financial Information

In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (GAAP), this announcement of operating results contains non-GAAP financial measures that exclude the income statement effects of stock-based compensation and related payroll taxes, amortization of intangible assets, fair value adjustments of acquired inventory and related taxes, changes in contingent earn-out liability, acquisition-related costs, lease termination costs, interest income on RMI bridge note, establishment of deferred tax asset valuation allowance, and the effects of excluding stock-based compensation upon the number of diluted shares used in calculating non-GAAP earnings per share.

We have excluded stock-based compensation expense and changes in contingent earn-out liability in calculating these non-GAAP financial measures.  These expenses are non-cash in nature and rely on valuations based on future events such as the market price of our common stock and revenue generated from products acquired in the RMI acquisition during the first 12 months following the close that are difficult to predict and are affected by market factors that are largely not within the control of management. We have excluded stock related payroll taxes, amortization of intangible assets, fair value adju stments related to acquired inventory and the related tax effect, acquisition-related costs, lease termination costs, interest income on RMI bridge note, and establishment of deferred tax asset valuation allowance because we do not consider them to be related to our core operating performance.

We use the non-GAAP financial measures that exclude these items to make strategic decisions, forecast future results and evaluate the Company’s current performance. We believe that the presentation of non-GAAP financial measures that exclude these items is useful to investors because we do not consider these charges either part of the day-to-day business or reflective of the core operational activities of the Company that are within the control of management or that are used to evaluate management’s operating performance.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial m easures. For additional information regarding these non-GAAP financial measures, and management’s explanation of why it considers such measures to be useful, refer to the Form 8-K dated October 28, 2010 that the Company has submitted to the Securities and Exchange Commission.

NetLogic Microsystems, Inc. Announces Third Quarter 2010 Results

October 28, 2010

Page 6 of 8

NETLOGIC MICROSYSTEMS, INC.

RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME

(IN THOUSANDS)

(UNAUDITED)

	Three months ended					Nine months ended
	September 30, 2010		September 30, 2009			September 30, 2010			September 30, 2009
GAAP net income (loss)	$	5,209	$	(3,853	)	$	(56,963	)	$	(9,926	)
Reconciling items:
Stock-based compensation and related payroll taxes		11,415		6,452			36,904			16,770
Amortization of intangible assets		10,545		5,123			31,767			11,773
Fair value adjustment related to the acquired inventory		-		2,262			16,018			2,262
Changes in contingent earn-out liability		741		-			51,152			-
Acquisition-related costs		-		1,425			735			2,760
Lease termination costs		-		-			503			-
Interest income on RMI bridge note		-		(375	)		-			(500	)
Tax effect of inventory fair value adjustment		-		-			(5,618	)		-
Net impact of deferred tax asset valuation allowance establishment		-		-			-			2,988
Non-GAAP net income	$	27,910	$	11,034		$	74,498		$	26,127

NETLOGIC MICROSYSTEMS, INC.

RECONCILIATION OF GAAP DILUTED NET INCOME (LOSS) PER SHARE TO

NON-GAAP DILUTED NET INCOME PER SHARE

(UNAUDITED)

	Three months ended					Nine months ended
	September 30, 2010		September 30, 2009			September 30, 2010			September 30, 2009
GAAP net loss per share - Diluted	$	0.08	$	(0.09	)	$	(0.95	)	$	(0.23	)
Reconciling items:
Stock-based compensation and related payroll taxes		0.16		0.13			0.55			0.35
Amortization of intangible assets		0.15		0.10			0.47			0.24
Fair value adjustment related to the acquired inventory		-		0.05			0.24			0.05
Changes in contingent earn-out liability		0.01		-			0.76			-
Acquisition-related costs		-		0.03			0.01			0.06
Lease termination costs		-		-			0.01			-
Interest income on RMI bridge note		-		(0.01	)		-			(0.01	)
Tax effect of inventory fair value adjustment		-		-			(0.08	)		-
Net impact of deferred tax asset valuation allowance establishment		-		-			-			0.06
Difference in shares count between diluted GAAP and diluted non-GAAP calculation		-		0.01			0.10			0.02
Non-GAAP net income per share - Diluted	$	0.40	$	0.22		$	1.11		$	0.54

NetLogic Microsystems, Inc. Announces Third Quarter 2010 Results

October 28, 2010

Page 7 of 8

NETLOGIC MICROSYSTEMS, INC.

RECONCILIATION OF THE SHARES USED FOR GAAP DILUTED

NET INCOME (LOSS) PER SHARE CALCULATION TO THE SHARES USED FOR

NON-GAAP DILUTED NET INCOME PER SHARE CALCULATION

(IN THOUSANDS)

(UNAUDITED)

	Three months ended				Nine months ended
	September 30, 2010		September 30, 2009		September 30, 2010		September 30, 2009
Shares used in calculation - Diluted (GAAP)		67,933		44,494		60,041		43,976
The effect of removing stock-based compensation expense for Non-GAAP presentation purpose		2,613		1,580		2,684		1,888
The effect of dilutive potential common shares due to reporting non-GAAP net income		-		3,256		4,481		2,228
Shares used in calculation - Diluted (Non-GAAP)		70,546		49,330		67,206		48,092

NETLOGIC MICROSYSTEMS, INC.

RECONCILIATION OF GAAP GROSS MARGIN TO NON-GAAP GROSS MARGIN

(IN THOUSANDS, EXCEPT PERCENTAGES)

(UNAUDITED)

	Three months ended								Nine months ended
	September 30, 2010				September 30, 2009				September 30, 2010				September 30, 2009
GAAP gross margin	$	59,529	59.5	%	$	20,816	49.2	%	$	146,451	52.1	%	$	56,136	53.4	%
Reconciling items:
Stock-based compensation		167	0.2	%		164	0.4	%		536	0.2	%		519	0.5	%
Amortization of intangible assets		9,632	9.6	%		4,778	11.3	%		29,028	10.3	%		10,738	10.2	%
Fair value adjustment related to acquired inventory		-	0.0	%		2,262	5.3	%		16,018	5.7	%		2,262	2.2	%
Non-GAAP gross margin	$	69,328	69.3	%	$	28,020	66.2	%	$	192,033	68.3	%	$	69,655	66.2	%

NetLogic Microsystems, Inc. Announces Third Quarter 2010 Results

October 28, 2010

Page 8 of 8

NETLOGIC MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

(UNAUDITED)

	September 30, 2010			December 31, 2009
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	225,128		$	44,278
Accounts receivables, net		31,073			25,137
Inventories		43,341			45,113
Deferred income taxes		14,218			13,157
Prepaid expenses and other current assets		8,107			8,638
Total current assets		321,867			136,323
Property and equipment, net		19,269			13,278
Goodwill		112,918			112,918
Intangible asset, net		192,190			223,345
Other assets		47,603			46,247
Total assets	$	693,847		$	532,111
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	20,410		$	17,937
Accrued liabilities		30,119			34,205
Contingent earn-out liability		62,839			11,687
Deferred margin		4,017			2,667
Software licenses and other obligations, current		3,859			3,037
Total current liabilities		121,244			69,533
Software licenses and other obligations, long-term		2,376			2,409
Other liabilities		34,665			34,214
Total liabilities		158,285			106,156
Stockholders' equity
Common stock		637			575
Additional paid-in capital		714,999			548,523
Accumulated other comprehensive income		32			-
Accumulated deficit		(180,106	)		(123,143	)
Total stockholders' equity		535,562			425,955
Total liabilities and stockholders' equity	$	693,847		$	532,111

CONTACT: Green Communications Consulting, LLC

Leslie Green, 650-312-9060 (Investor Relations)

leslie@greencommunicationsllc.com

SOURCE: NetLogic Microsystems, Inc.