EX-99.1 2 nex991.htm PRESS RELEASE nex991.htm
Exhibit 99.1
GRAPHIC
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 share 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 multiple 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 processors 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 Commission which 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 adjustments 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 measures. 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.