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): February 15, 2012

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 reference in such filing.

On February 15, 2012, we issued a press release announcing our financial results for the three months and twelve months ended December 31, 2011, 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 as reported by the Company 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, a gain recognized on an investment in Optichron, Inc., an impairment charge on another investment, 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 recorded in periods unrelated to the periods in which they were paid or  incurred. 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 our 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 from 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 related taxes; (iv) acquisition-related costs; and (v) gain or loss recognized on a previous investment in the acquired entity. 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, 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 expected earnout milestone achievements and 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.  For example, under the terms of definitive acquisition agreements with RMI and Optichron, contingent earn-out consideration was a significant portion of the total consideration payable. We evaluated contingent earn-out consideration as part of the total purchase consideration of the business and did not consider changes in the total purchase consideration recorded in our operating results to meaningfully reflect the performance of our business in the current period.

(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 an expenditure of cash in our operations. 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.  Similarly, we exclude the income tax effect of this item when evaluating our operating results.

(iv) Acquisition-related costs.  Acquisition-related costs include severance and professional fees incurred as a result of acquisitions, including our pending merger with Broadcom Corporation.  We consider these charges unrelated to our core operating performance. In addition, acquisitions result in non-continuing operating expenses, which we would not have incurred otherwise in the normal course of our business operations. For example, we have incurred charges related to employment severance and acquisition-related settlement costs associated with the acquired entity.

(v) Gain recognized on investment in Optichron, Inc.  Prior to April 2011 when we completed the acquisition of Optichron, Inc., we owned warrants to purchase 5,250,000 shares of common stock in Optichron, Inc. as a cost investment of $2.1 million.  The fair value immediately prior to the acquisition date was $6.4 million.  Upon acquiring the remaining equity interests of Optichron, we recorded a gain on the step-acquisition accounting of this pre-existing investment of $4.3 million, which has been included in Other Income in the results of our operations during the second fiscal quarter of 2011.  We consider such credits unrelated to our core operating performance. Furthermore, we would not have recognized such non-continuing credits otherwise in the normal course of our business operations.

• Other Items. We exclude certain other items that are the result of either unique or unplanned events such as (i) lease termination expenses incurred in our second fiscal quarter of 2010, (ii) impairment charge on other investment recorded in our second fiscal quarter of 2011 and (iii) release on a portion of our California research and development credit carryforward in our fourth quarter of 2010 and establishment of deferred tax asset valuation allowance in our fourth fiscal quarter of 2011.  In connection with the early termination of our headquarter facility lease, we recorded charges related to lease termination fees.  We also recognized an impairment charge on our investment in a convertible bridge note based on valuation immediately prior to its conversion to an equity investment. Due to cumulative US pretax book losses in recent years on a GAAP basis, we established a full valuation allowance in 2011 on deferred tax assets not considered to be more likely than not to be realized. 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. Because our non-GAAP net income does not reflect the effects of stock-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 implication 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 February 15, 2012

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: February 15, 2012	By:	/s/ Michael T. Tate
		Michael T. Tate Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibits	Description
99.1	Press Release dated February 15, 2012

EX-99.1

Exhibit 99.1

Investor Relations Contact:

Leslie Green

Green Communications Consulting, LLC

(650) 312-9060

leslie@greencommunicationsllc.com

NetLogic Microsystems Announces Fourth Quarter 2011 and Fiscal Year 2011 Financial Results

• FY 2011 Net Revenues: $405.4 million

• Q4 FY 2011 Net Revenues: $96.2 million

• FY 2011 GAAP Net Loss: $56.7 million; $0.82 per share (diluted)

• Q4 FY 2011 GAAP Net Loss: $30.1 million; $0.43 per share (diluted)

• FY 2011 Non-GAAP Net Income: $123.0 million; $1.62 per share (diluted)

• Q4 FY 2011 Non-GAAP Net Income: $24.6 million; $0.32 per share (diluted)

SANTA CLARA, Calif. – February 15, 2012 – 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 fourth quarter and fiscal year ended December 31, 2011.

Revenue for the fourth quarter of 2011 was $96.2 million, a 9.9% sequential decrease from $106.8 million for the third quarter of 2011 and a 4.2% decrease from $100.4 million for the fourth quarter of 2010.

Fourth quarter 2011 net loss, determined in accordance with generally accepted accounting principles (GAAP), was $30.1 million or $0.43 per diluted share. By comparison, GAAP net loss was $9.4 million or $0.14 per diluted share for the fourth quarter of 2010.  GAAP net income for fourth quarter 2011 included stock-based compensation and related payroll taxes, changes in contingent earn-out liability, amortization of intangible assets, acquisition-related costs, and establishment of deferred tax asset valuation allowance.  Excluding these items, non-GAAP net income for the fourth quarter of 2011 was $24.6 million or $0.32 per diluted share, compared with $0.45 per diluted share for the fourth quarter of 2010.

For the fiscal year 2011, revenue was $405.4 million, a 6.2% increase from $381.7 million for fiscal year 2010.

Fiscal year 2011 GAAP net loss was $56.7 million or $0.82 per diluted share. By comparison, GAAP net loss for fiscal year 2010 was $66.4 million or $1.10 per diluted share.  GAAP net income for fiscal year 2011 included stock-based compensation and related payroll taxes, changes in contingent earn-out liability, amortization of intangible assets, inventory fair value adjustments and related taxes, acquisition-related costs, and establishment of deferred tax asset valuation allowance.  Excluding these items, non-GAAP net income for fiscal year 2011 was $123.0 million or $1.62 per diluted share, compared with $1.58 per diluted share for fiscal year 2010.

Merger Update

As previously announced on September 12, 2011, NetLogic Microsystems, Inc entered into an Agreement and Plan of Merger with Broadcom Corporation and I&N Acquisition Corp., a wholly owned subsidiary of Broadcom, pursuant to which NetLogic Microsystems would be acquired by Broadcom for $50.00 per share in cash.

Consummation of the merger remains subject to the satisfaction of customary closing conditions, other than conditions requiring stockholder approval and required regulatory approvals and clearances, all of which have been satisfied including the approval of the transaction without conditions from the Ministry of Commerce of the People’s Republic of China.  Both companies anticipate closing the transaction shortly subject to satisfaction or waiver of all conditions to close.

Recent Operating Highlights

• NetLogic Microsystems announced the industry’s first open–source Xen® hypervisor for high-performance multi-core MIPS64® processors.  The new Xen hypervisor enables highly efficient virtualization for next-generation communications, networking and server platforms using the industry’s best-in-class XLP® and XLP II multi-core, multi-threaded processors. 

• The company expanded its intellectual property portfolio to now include over 800 worldwide patents, filings and international registrations covering a broad range of innovations for its industry-leading products for networking infrastructure. The extraordinary strength of its intellectual property portfolio has enabled NetLogic Microsystems to be at the forefront of innovation and technology leadership in high-performance multi-core processing, knowledge-based processing, digital front-end processing and 10/40/100 Gigabit Ethernet PHY solutions.

• NetLogic Microsystems received the distinguished 2011 Most Respected Emerging Public Semiconductor Company Award for the third consecutive year from the Global Semiconductor Alliance (GSA).  It was recognized by its industry peers, customers, partners and the GSA as the most respected public semiconductor company with revenue up to $500 million.

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, digital front-end 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 and the NetLogic Microsystems logo are trademarks of NetLogic Microsystems, Inc.  XLP is a registered trademarks of NetLogic Microsystems, Inc. All other trademarks are the properties of their respective owners.

NETLOGIC MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

(UNAUDITED)

	Three months ended						Twelve months ended
	December 31, 2011			December 31, 2010			December 31, 2011			December 31, 2010
Revenue	$	96,247		$	100,428		$	405,413		$	381,745
Cost of revenue*		35,335			38,561			156,488			173,427
Gross profit		60,912			61,867			248,925			208,318
Operating expenses:
Research and development*		39,997			35,235			153,459			127,697
Selling, general and administrative*		22,677			19,260			90,799			78,879
Change in contingent earn-out liability		(16,957	)		20,573			14,459			71,725
Acquisition-related costs		2,496			-			10,743			735
Total operating expenses		48,213			75,068			269,460			279,036
Income (loss) from operations		12,699			(13,201	)		(20,535	)		(70,718	)
Other income (expense):
Gain recognized on investment in Optichron, Inc.		-			-			4,259			-
Impairment charge on other investment		-			-			(1,276	)		-
Interest and other income (expense), net		42			111			540			(125	)
Income (loss) before income taxes		12,741			(13,090	)		(17,012	)		(70,843	)
Provision for (benefit from) income taxes		42,793			(3,682	)		39,690			(4,472	)
Net loss	$	(30,052	)	$	(9,408	)	$	(56,702	)	$	(66,371	)
Net loss per share - Basic and Diluted	$	(0.43	)	$	(0.14	)	$	(0.82	)	$	(1.10	)
Shares used in calculation - Basic and Diluted		70,547			65,155			69,190			60,426

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

	Three months ended				Twelve months ended
	December 31, 2011		December 31, 2010		December 31, 2011		December 31, 2010
Stock-based compensation and related payroll taxes:
Cost of revenue	$	283	$	379	$	1,056	$	915
Research and development		8,845		6,485		34,242		25,948
Selling, general and administrative		5,553		5,078		24,320		21,983
Total	$	14,681	$	11,942	$	59,618	$	48,846
Amortization of intangible assets:
Cost of revenue	$	9,790	$	10,430	$	48,260	$	39,458
Selling, general and administrative		1,278		913		4,727		3,652
Total	$	11,068	$	11,343	$	52,987	$	43,110

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, change in contingent earn-out liability, amortization of intangible assets, fair value adjustments of acquired inventory and related taxes, acquisition-related costs, lease termination costs, a gain recognized on a pre-acquisition investment in Optichron, Inc., an impairment charge on another investment, release and 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 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 and Optichron acquisitions during a defined period 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, gain recognized on investment in Optichron, Inc., impairment charge on other investment and changes in 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 February 15, 2012 that the Company has submitted to the Securities and Exchange Commission.

NETLOGIC MICROSYSTEMS, INC.

RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME

(IN THOUSANDS)

(UNAUDITED)

	Three months ended						Twelve months ended
	December 31, 2011			December 31, 2010			December 31, 2011			December 31, 2010
GAAP net loss	$	(30,052	)	$	(9,408	)	$	(56,702	)	$	(66,371	)
Reconciling items:
Stock-based compensation and related taxes		14,681			11,942			59,618			48,846
Changes in contingent earn-out liability		(16,957	)		20,573			14,459			71,725
Amortization of intangible assets		11,068			11,343			52,987			43,110
Fair value adjustments of acquired inventory		-			-			2,381			16,018
Acquisition-related costs		2,496			-			10,743			735
Lease termination costs		-			-			-			503
Gain recognized on investment in Optichron		-			-			(4,259	)		-
Impairment charge on other investment		-			-			1,276			-
Tax effect of inventory fair value adjustment		-			-			(847	)		(5,618	)
Establishment (release) of deferred tax asset valuation allowance		43,376			(1,585	)		43,376			(1,585	)
Non-GAAP net income	$	24,612		$	32,865		$	123,032		$	107,363

NETLOGIC MICROSYSTEMS, INC.

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

NON-GAAP DILUTED NET INCOME PER SHARE

(UNAUDITED)

	Three months ended						Twelve months ended
	December 31, 2011			December 31, 2010			December 31, 2011			December 31, 2010
GAAP net loss per share - Diluted	$	(0.43	)	$	(0.14	)	$	(0.82	)	$	(1.10	)
Reconciling items:
Stock-based compensation and related taxes		0.19			0.16			0.78			0.72
Changes in contingent earn-out liability		(0.22	)		0.28			0.19			1.05
Amortization of intangible assets		0.14			0.15			0.70			0.63
Fair value adjustments of acquired inventory		-			-			0.03			0.24
Acquisition-related costs		0.03			-			0.14			0.01
Lease termination costs		-			-			-			0.01
Gain recognized on investment in Optichron		-			-			(0.06	)		-
Impairment charge on other investment		-			-			0.02			-
Tax effect of inventory fair value adjustment		-			-			(0.01	)		(0.08	)
Establishment (release) of deferred tax asset valuation allowance		0.56			(0.02	)		0.57			(0.02	)
Difference in shares count between diluted GAAP and diluted non-GAAP calculation		0.05			0.02			0.08			0.12
Non-GAAP net income per share - Diluted	$	0.32		$	0.45		$	1.62		$	1.58

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		Twelve months ended
	December 31, 2011	December 31, 2010	December 31, 2011	December 31, 2010
Shares used in calculation - Diluted (GAAP)	70,547	65,155	69,190	60,426
The effect of removing stock-based compensation expense for non-GAAP presentation purpose	2,117	2,269	2,147	2,526
The effect of dilutive potential common shares due to reporting non-GAAP net income	4,592	5,979	4,631	5,065
Shares used in calculation - Diluted (Non-GAAP)	77,256	73,403	75,968	68,017

NETLOGIC MICROSYSTEMS, INC.

RECONCILIATION OF GAAP GROSS MARGIN TO NON-GAAP GROSS MARGIN

(IN THOUSANDS, EXCEPT PERCENTAGES)

(UNAUDITED)

	Three months ended								Twelve months ended
	December 31, 2011				December 31, 2010				December 31, 2011				December 31, 2010
GAAP gross margin	$	60,912	63.3	%	$	61,867	61.6	%	$	248,925	61.4	%	$	208,318	54.6	%
Reconciling items:
Stock-based compensation		283	0.3	%		379	0.4	%		1,056	0.3	%		915	0.2	%
Amortization of intangible assets		9,790	10.2	%		10,430	10.4	%		48,260	11.9	%		39,458	10.3	%
Fair value adjustment related to acquired inventory		-	0.0	%		-	0.0	%		2,381	0.6	%		16,018	4.2	%
Non-GAAP gross margin	$	70,985	73.8	%	$	72,676	72.4	%	$	300,622	74.2	%	$	264,709	69.3	%

NETLOGIC MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

(UNAUDITED)

	December 31, 2011			December 31, 2010
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	258,868		$	256,167
Accounts receivables, net		38,189			19,829
Inventories		35,051			36,290
Deferred income taxes		2,143			8,428
Prepaid expenses and other current assets		8,530			11,458
Total current assets		342,781			332,172
Property and equipment, net		30,115			20,507
Goodwill		166,760			112,700
Intangible asset, net		192,961			180,838
Other assets		42,473			66,372
Total assets	$	775,090		$	712,589
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	6,133		$	17,257
Accrued liabilities		23,972			27,848
Contingent earn-out liability, current		51,741			-
Deferred margin		815			4,242
Software licenses and other obligations, current		5,281			4,514
Total current liabilities		87,942			53,861
Contingent earn-out liability, long-term		6,193			-
Software licenses and other obligations, long-term		2,978			2,033
Other liabilities		38,275			37,782
Total liabilities		135,388			93,676
Stockholders' equity
Common stock		713			675
Additional paid-in capital		887,328			807,780
Accumulated other comprehensive loss		(2,123	)		(28	)
Accumulated deficit		(246,216	)		(189,514	)
Total stockholders' equity		639,702			618,913
Total liabilities and stockholders' equity	$	775,090		$	712,589

CONTACT: Green Communications Consulting, LLC

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

leslie@greencommunicationsllc.com

SOURCE: NetLogic Microsystems, Inc.