-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H02VxNTL+3CBNHTfdAKp3yYKgcRzxeh+Spl/f4q/eOtKxy+Kk/gYma22wHySbKBz E1UwRcXjrQacL/GIuv0HMw== 0000850579-04-000017.txt : 20040804 0000850579-04-000017.hdr.sgml : 20040804 20040803175053 ACCESSION NUMBER: 0000850579-04-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040804 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLX TECHNOLOGY INC CENTRAL INDEX KEY: 0000850579 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 943008334 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25699 FILM NUMBER: 04949568 BUSINESS ADDRESS: STREET 1: 870 MAUDE AVENUE CITY: SUNNYVALE STATE: CA ZIP: 94085 BUSINESS PHONE: 4087749060 10-Q 1 form10q.htm FORM 10-Q Q2 2004 DOC


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549




FORM 10-Q



[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

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

PLX Technology, Inc.
(Exact name of Registrant as Specified in its Charter)

 
Delaware
94-3008334
  (State or Other Jurisdiction of Incorporation or Organization) 
(I.R.S. Employer Identification Number)

870 Maude Avenue
Sunnyvale, California    94085

(Address of Principal Executive Offices including Zip Code)

(408) 774-9060
(Registrant's Telephone Number, Including Area Code)



      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 reports), and (2) has been subject to such filing requirements for the past 90 days. YES [ X ]    NO [   ]

      Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 121(b)2 of the Securities Exchange Act of 1934). YES [ X ]     NO [     ]

      As of July 30, 2004, there were 26,105,803 shares of common stock, par value $0.001 per share, outstanding.





PLX Technology, Inc.
Index To
Report on Form 10-Q
For Quarter Ended June 30, 2004

PART I. FINANCIAL INFORMATION Page No.
     
Item 1. Financial Statements (Unaudited):
 
     
           Condensed Consolidated Balance Sheets at June 30, 2004 and December 31, 2003
3
     
           Condensed Consolidated Statements of Operations for the three
           and six months ended June 30, 2004 and 2003
4
     
           Condensed Consolidated Statements of Cash Flows for the six
           months ended June 30, 2004 and 2003
5
     
           Notes to Condensed Consolidated Financial Statements
6
     
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
11
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk
26
     
Item 4. Controls and Procedures
26
     
PART II. OTHER INFORMATION
 
     
Item 2. Changes In Securities and Use of Proceeds
26
     
Item 4. Submission of Matters to a Vote of Security Holders
27
     
Item 6. Exhibits and Reports on Form 8-K
28
     
Signature
29







PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

PLX TECHNOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)




                                                       June 30,    December 31,
                                                         2004          2003 (1)
                                                     ------------  ------------
                                                      (unaudited)
ASSETS
Current assets:
  Cash and cash equivalents........................ $      6,710  $     10,955
  Short-term marketable securities.................       11,085        10,052
  Accounts receivable, net.........................        6,192         4,998
  Inventories......................................        3,487         1,893
  Income tax receivable............................           --            --
  Other current assets.............................        1,672         1,730
                                                     ------------  ------------
Total current assets...............................       29,146        29,628
Property and equipment, net........................       30,477        31,068
Long-term marketable securities....................       13,540         2,049
Goodwill...........................................       27,840        15,998
Other intangible assets............................        7,970         2,730
Other assets.......................................          277           330
                                                     ------------  ------------
Total assets.......................................      109,250  $     81,803
                                                     ============  ============
LIABILITIES
Current liabilities:
  Accounts payable................................. $      4,005  $      1,768
  Accrued compensation and benefits................        2,003         1,427
  Deferred revenues................................        1,290           991
  Accrued commissions..............................          354           368
  Other accrued expenses...........................        2,853         1,228
                                                     ------------  ------------
Total current liabilities..........................       10,505         5,782
                                                     ------------  ------------
STOCKHOLDERS' EQUITY
  Common stock, par value..........................           26            24
  Additional paid-in capital.......................      108,410        84,508
  Deferred compensation............................         (868)          (44)
  Notes receivable for employee stock purchases....           --           (70)
  Accumulated other comprehensive loss.............         (215)          (49)
  Accumulated deficit..............................       (8,608)       (8,348)
                                                     ------------  ------------
Total stockholders' equity.........................       98,745        76,021
                                                     ------------  ------------
Total liabilities and stockholders' equity......... $    109,250  $     81,803
                                                     ============  ============

(1) Derived from audited financial statements

See accompanying notes to condensed consolidated financial statements.






 

PLX TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share amounts)


                                                                      Three Months Ended      Six Months Ended
                                                                            June 30,              June 30,
                                                                    --------------------  --------------------
                                                                    2004           2003   2004           2003
                                                                    ---------  ---------  ---------  ---------
Net revenues...................................................... $  14,016  $   8,660  $  25,658  $  17,163
Cost of revenues..................................................     4,925      2,518      8,154      5,033
                                                                    ---------  ---------  ---------  ---------
Gross margin......................................................     9,091      6,142     17,504     12,130
                                                                    ---------  ---------  ---------  ---------
Operating expenses:
  Research and development........................................     4,394      3,893      8,451      7,606
  Selling, general and administrative.............................     3,768      3,193      7,446      6,251
  In-process research and development.............................     1,123        875      1,123        875
  Amortization of purchased intangible assets.....................       442        204        739        337
                                                                    ---------  ---------  ---------  ---------
Total operating expenses..........................................     9,727      8,165     17,759     15,069
                                                                    ---------  ---------  ---------  ---------
Loss from operations..............................................      (636)    (2,023)      (255)    (2,939)
Interest income and other, net....................................        99        102        167        210
                                                                    ---------  ---------  ---------  ---------
Loss before provision (benefit) for income taxes..................      (537)    (1,921)       (88)    (2,729)
Provision (benefit) for income taxes..............................        --        (24)       172        (16)
                                                                    ---------  ---------  ---------  ---------
Net loss.......................................................... $    (537) $  (1,897) $    (260) $  (2,713)
                                                                    =========  =========  =========  =========

Basic and diluted net loss per share.............................. $   (0.02) $   (0.09) $   (0.01) $   (0.13)
                                                                    =========  =========  =========  =========
Shares used to compute basic and diluted per share amounts........    24,850     22,214     24,363     21,678
                                                                    =========  =========  =========  =========





See accompanying notes to condensed consolidated financial statements.






 

PLX TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


                                                                        Six Months Ended
                                                                             June 30,
                                                                     --------------------
                                                                         2004       2003
                                                                     ---------  ---------
Cash flows from operating activities
Net loss........................................................... $    (260) $  (2,713)
  Adjustments to reconcile net loss to net cash
    provided by operating activities:
  Depreciation.....................................................     1,116      1,142
  Amortization of deferred compensation............................        46        825
  Amortization of other intangible assets..........................       739        337
  In process research and development..............................     1,123        875
  Other non-cash items.............................................        57         66
  Changes in operating assets and liabilities:
    Accounts receivable............................................       373     (1,359)
    Inventories....................................................    (1,100)      (997)
    Income tax receivable..........................................        --      3,635
    Other current assets...........................................        69        442
    Other assets...................................................        57        (73)
    Accounts payable...............................................     1,144        540
    Accrued compensation and benefits..............................       376        180
    Deferred revenues..............................................       298        314
    Other accrued expenses.........................................       719       (339)
                                                                     ---------  ---------
Net cash provided by operating activities..........................     4,757      2,875
                                                                     ---------  ---------
Investing Activities
Payment for the acquisition of HiNT, net of cash acquired..........        --       (704)
Cash acquired from the acquisition of NetChip......................     2,821         --
Purchases of marketable securities.................................   (15,751)    (5,000)
Sales and maturities of marketable securities......................     3,000      3,000
Purchases of property and equipment................................      (455)      (871)
                                                                     ---------  ---------
Net cash used in investing activities..............................   (10,385)    (3,575)
                                                                     ---------  ---------
Financing Activities
Proceeds from sales of common stock................................     1,314         24
Repurchases of common stock........................................        --       (922)
Repayment of stockholders notes receivable.........................        70         --
                                                                     ---------  ---------
Net cash provided by (used) in financing activities................     1,384       (898)
                                                                     ---------  ---------
Effect of exchange rate fluctuations on cash and cash equivalents..        (1)        (7)
                                                                     ---------  ---------
Decrease in cash and cash equivalents..............................    (4,245)    (1,605)
Cash and cash equivalents at beginning of year.....................    10,955      5,482
                                                                     ---------  ---------
Cash and cash equivalents at end of period......................... $   6,710  $   3,877
                                                                     =========  =========

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.








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 subsidiaries (collectively, "PLX" or the "Company") as of June 30, 2004 and for the three and six-month periods ended June 30, 2004 and 2003 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 unaudited condensed consolidated financial statements include all adjustments (consisting only of normal recurring accruals) that management considers necessary for a fair presentation of the Company's 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.

The unaudited condensed consolidated financial statements include all of the accounts of the Company and those of its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated.

This financial data should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2003.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.

Comprehensive Net Loss

The Company's comprehensive net loss for the three and six months ended June 30, 2004 and June 30, 2003 was as follows (in thousands):



                                                     Three Months Ended     Six Months Ended
                                                           June 30,             June 30,
                                                   -------------------- --------------------
                                                       2004       2003      2004       2003
                                                   ---------  --------- ---------  ---------
Net loss.........................................      (537)    (1,897)     (260)    (2,713)
Unrealized loss on marketable securities, net....      (201)       (31)     (172)       (49)
Cumulative translation adjustments...............         4          3         6          8
                                                   ---------  --------- ---------  ---------
Comprehensive net loss...........................      (734)    (1,925)     (426)    (2,754)
                                                   =========  ========= =========  =========


Recent Accounting Pronouncements

In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46), "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51", which requires companies to consolidate certain types of variable interest entities. A variable interest entity is an entity that has inadequate invested equity at risk to meet expected future losses, or whose holders of the equity investments lack any of the following three characteristics: (i) the ability to make the Company's decisions about the entity's activities; (ii) the obligation to absorb the entity's losses if they occur; (iii) the right to receive the entity's future returns if they occur. Adoption of this statement did not have a material impact on the Company's financial position, results of operations or cash flows.

2. Stock Based Compensation

The Company has elected to follow the intrinsic value method under APB Opinion No. 25 and related interpretations in accounting for its stock options and grants since the alternative fair market value accounting provided for under Statement of Financial Accounting Standards (SFAS) No. 123 requires use of grant valuation models that were not developed for use in valuing employee stock options and grants. Using the intrinsic value method under APB Opinion No. 25, if the exercise price of the Company's stock grants and options equals the deemed fair value of the underlying stock on the date of grant, no compensation expense is recognized.

If compensation expense for the Company's stock-based compensation plans had been determined based on the fair value at the grant dates for awards under those plans consistent with the method of SFAS No. 123, then the Company's net loss per share would have been adjusted to the pro forma amounts indicated below:



                                                             Three Months Ended      Six Months Ended
                                                                   June 30,              June 30,
                                                           --------------------  --------------------
                                                               2004       2003       2004       2003
                                                           ---------  ---------  ---------  ---------
Net loss as reported..................................... $    (537) $  (1,897) $    (260) $  (2,713)
Add: Stock-based compensation included in reported
  net loss...............................................        28        368         46        825
Deduct: Stock-based compensation cost under SFAS 123.....    (1,681)    (1,163)    (2,879)    (3,049)
                                                           ---------  ---------  ---------  ---------
Pro forma net loss....................................... $  (2,190) $  (2,692) $  (3,093) $  (4,937)
                                                           =========  =========  =========  =========
Pro forma basic and diluted net loss per common share:
Pro forma shares used in the calculation of pro
  forma net loss per common share - basic and diluted....    24,850     22,214     24,363     21,678

Pro forma net loss per common share - basic and diluted.. $   (0.09) $   (0.12) $   (0.13) $   (0.23)
                                                           =========  =========  =========  =========
Reported net loss per common share - basic and diluted... $   (0.02) $   (0.09) $   (0.01) $   (0.13)
                                                           =========  =========  =========  =========




3. Inventories

Inventories are valued at the lower of cost (first-in, first-out method) or market (net realizable value). Inventories were as follows (in thousands):



                               June 30,    December 31,
                                 2004          2003
                             ------------  ------------
Work in process............ $        796  $        356
Finished goods.............        2,691         1,537
                             ------------  ------------
Total...................... $      3,487  $      1,893
                             ============  ============

4. Business Combination

On May 24, 2004, the Company purchased NetChip Technology, Inc., a supplier of high-performance semiconductors based on Universal Serial Bus (USB) and Peripheral Component Interconnect (PCI) standards. The aggregate purchase price, including acquisition costs, was $22.2 million, and was substantially all paid in the form of the Company's common stock and options to purchase common stock. The Company acquired NetChip Technology, Inc. in order to expand its position of strength in the market for PCI, PCI-X and PCI Express interconnect chips to include the USB product line, where NetChip offers an industry-leading product line offering high-performance and low-power products for the USB 2.0 market. NetChip also has PCI Express products in development that complement the Company's PCI Express chips.

The financial results for the three months ended June 30, 2004 reflect the acquisition from the date the transaction was closed.

The purchase price of the NetChip Technology, Inc. acquisition is summarized below (in thousands):




Fair value of common stock issued............. $     21,405
Fair value of options assumed.................          315
Acquisition costs.............................          524
                                                ------------
Total consideration........................... $     22,244
                                                ============

The Company issued an aggregate of 2,035,077 shares of its common stock valued at $21.4 million. The Company also assumed 126,419 stock options with a total value of approximately $0.3 million. The stock options were valued using the Black-Scholes valuation model. Additionally, the Company incurred approximately $0.5 million in professional fees, including legal, valuation and accounting fees related to the acquisition, which were included as part of the purchase price consideration for this transaction.

PLX also recorded $0.9 million in deferred compensation on the unvested options, assumed in connection with the acquisition of NetChip Technology, Inc. Deferred compensation is being amortized over the remaining vesting periods of these assumed options, generally three years.

Additional consideration of the Company's common stock with a maximum aggregate value of approximately $10 million may be paid out to the former shareholders of NetChip Technology, Inc. in the event USB gross profits meet certain milestones in the period ending approximately one year following the close of the transaction. Any additional consideration will become additional goodwill in the period such additional consideration becomes payable.

The allocation of the Company's purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed is summarized below (in thousands). The allocation was based on management's assessment of the fair value of the identified assets and liabilities assumed.


Net tangible assets........................... $      3,144
In-process technology.........................        1,123
Goodwill and other intangible assets:
    Goodwill..................................       11,998
    Developed/Core Technology.................        3,594
    Customer Base.............................        2,385
                                                ------------
                                                     17,977
                                                ------------
Net assets acquired........................... $     22,244
                                                ============

Net tangible assets acquired were comprised primarily of cash, inventory, accounts receivables, accounts payables, and other accrued liabilities. The acquired in-process technology was written-off in the second quarter of 2004. The estimated weighted average useful life of the intangible assets for the developed/core technology and customer base created as a result of the acquisition of NetChip Technology, Inc. is approximately 6 and 3 years, respectively. Amortization of developed/core technology and customer base was $62,000 and $83,000, respectively, for the three months ended June 30, 2004.

The $1.1 million allocation of the purchase price to the acquired in-process technology was determined by identifying research projects in areas for which technological feasibility had not been established and no alternative future uses existed. The Company acquired technology consisting of PCI Express solutions. The value was determined by estimating the expected cash flows from the project once commercially viable, discounting the net cash flows to their present value, and then applying a percentage of completion to the calculated value as defined below.

Net Cash Flows. The net cash flows from the identified project utilized were based on estimates of revenues, cost of sales, research and development costs, selling, general, and administrative costs, and income taxes from the project. These estimates were based on assumptions mentioned below. The research and development costs excluded costs to bring the acquired in-process project to technological feasibility. The estimated revenues were based on management projections of the acquired in-process project.

Discount Rate. The discount rate used in the present value calculation was derived from a weighted average cost of capital, adjusted upward to reflect the additional risk inherent in the development life cycle, including the useful life of the technology, profitability level of the technology, and the uncertainty of technology advances that are known at the date of the acquisition. The cost of capital used in discounting the net cash flows from acquired in-process technology was 30%.

Percentage of Completion. Percentage of completion was determined by using costs incurred by NetChip Technology, Inc. prior to the acquisition date compared to the remaining research and development to be completed to bring the project to technological feasibility. As of the acquisition date, the Company estimated the project was approximately 60% complete.

The Company expects to complete the project within approximately 6-9 months from the acquisition date. However, development of this project remains a significant risk to the Company due to the remaining effort to achieve technical feasibility, integration of NetChip Technology, Inc. into the Company, employee retention, rapidly changing customer markets and significant competitive threats from numerous companies. Failure to bring these products to market in a timely manner could adversely impact sales and profitability of the Company in the future. Additionally, the value of the intangible assets acquired may become impaired.

Unaudited Pro Forma Financial Results

On May 22, 2003, the Company purchased HiNT Corp., a fabless semiconductor supplier of Peripheral Component Interconnect (PCI) and PCI-X bridge chips, for an aggregate purchase price, of $15.6 million. In addition, consideration comprised of shares of the Company's common stock and cash is payable if certain HiNT product sales milestones are met approximately one year from the close of the transaction (see Note 8 to the condensed consolidated financial statements). On May 24, 2004, the Company purchased NetChip Technology, Inc., a supplier of high-performance semiconductors based on Universal Serial Bus (USB) and Peripheral Component Interconnect (PCI) standards, for an aggregate purchase price of $22.2 million, as described above.

The unaudited pro forma financial information combines the historical statements of operations of the Company, NetChip Technology, Inc., and HiNT Corp. for the three and six months ended June 30, 2004 and 2003 and gives effect to the transactions, including the amortization of other intangible assets and the amortization of deferred compensation, as if they occurred at the beginning of each period presented. The amount of the aggregate purchase price allocated to purchased in-process research and development for each of the transactions have been excluded from the pro forma information, as they are a non-recurring item.

The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred if the transaction had been consummated at the dates indicated, nor is it necessarily indicative of future operating results of the combined companies and should not be construed as representative of these amounts for any future periods (in thousands, except per share data).



                                                   Three Months Ended      Six Months Ended
                                                         June 30,              June 30,
                                                 --------------------  --------------------
                                                     2004       2003       2004       2003
                                                 ---------  ---------  ---------  ---------
Net revenues................................... $  17,079  $  11,002  $  35,212  $  21,749
Net income (loss).............................. $      70  $  (1,293) $   1,082  $  (2,621)
Net income (loss) per share - basic ........... $    0.00  $   (0.05) $    0.04  $   (0.10)
Shared used to compute basic per share amounts.    26,035     25,928     25,973     26,047
Net income (loss) per share - diluted ......... $    0.00  $   (0.05) $    0.04  $   (0.10)
Shared used to compute diluted per share amount    27,864     25,928     27,585     26,047

5. Net Loss Per Share

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share data):



                                                   Three Months Ended      Six Months Ended
                                                         June 30,              June 30,
                                                 --------------------  --------------------
                                                     2004       2003       2004       2003
                                                 ---------  ---------  ---------  ---------

Net loss....................................... $    (537) $  (1,897) $    (260) $  (2,713)
                                                 ========== ========== ========== ==========

Weighted average shares of common stock
   outstanding.................................    24,850     22,214     24,363     21,678
                                                 ========== ========== ========== ==========

Net loss per share - basic and diluted......... $   (0.02) $   (0.09) $   (0.01) $   (0.13)
                                                 ========== ========== ========== ==========


As the Company incurred a loss for the three and six month periods ended June 30, 2004 and 2003, the effect of dilutive securities, totaling 4.7 million and 4.3 million equivalent shares, respectively, have been excluded from the computation of diluted loss per share because the effect would be anti-dilutive.

6. Segments of an Enterprise and Related Information

 

The Company has one operating segment, the sale of semiconductor devices. The Chief Executive Officer has been identified as the Chief Operating Decision Maker (CODM) because he has final authority over resource allocation decisions and performance assessment. The CODM does not receive discrete financial information about individual components of the Company's business.

Revenues by geographic region based on customer location were as follows (in thousands):



                                                   Three Months Ended      Six Months Ended
                                                         June 30,              June 30,
                                                 --------------------  --------------------
                                                     2004       2003       2004       2003
                                                 ---------  ---------  ---------  ---------
                                                 (unaudited)           (unaudited)
Revenues:
  United States................................ $   4,244  $   2,950  $   8,417  $   6,090
  Asia - excluding Taiwan and Singapore........     3,800      1,666      6,115      2,966
  Europe - excluding France....................     1,918      1,185      3,639      2,332
  Taiwan.......................................     1,699        850      2,942      1,573
  Singapore....................................     1,331        912      2,522      1,708
  France.......................................       586        649      1,000      1,579
  Americas - excluding United States...........       438        448      1,023        915
                                                 ---------  ---------  ---------  ---------
Total.......................................... $  14,016  $   8,660  $  25,658  $  17,163
                                                 =========  =========  =========  =========


For the three months ended June 30, 2004 and 2003, 10% and 11%, respectively, of net revenues were derived from sales to the same distributor. For the six months ended June 30, 2004 and 2003, 11% and 10%, respectively, of net revenues were derived from sales to the same distributor. No other distributor or direct customer represented greater than 10% of net revenues.

7. Income Taxes

Income tax expense of $172,000 was recorded for the six months ended June 30, 2004 compared to an income tax benefit of $16,000 for the six months ended June 30, 2003. Income tax expense for the six months ended June 30, 2004 is primarily due to federal alternative minimum tax, miscellaneous state income tax payable and foreign income taxes currently payable. The current expense differs from the expected provision derived by applying the applicable U.S. federal statutory rate to the loss from operations primarily due to nondeductible acquisition-related items.

Deferred tax assets are recognized when there is sufficient evidence that it is more likely than not that such deferred tax assets will be realized. The Company has determined that such evidence does not currently exist. Therefore, a full valuation allowance has been established to reserve the Company's net deferred tax assets.

    8. Subsequent Event

    Under the terms of the Company's May 2003 acquisition agreement to purchase HiNT, additional consideration comprising of shares of the Company's common stock and cash is payable if certain HiNT product sales milestones were met by June 30, 2004. Based on the product sales through June 30, 2004, the Company will issue approximately 337,000 additional shares to the former shareholders of HiNT, and pay cash of approximately $137,000 to former employees and warrant holders of HiNT. These final share and cash payments became issuable on July 30, 2004. The fair value of the additional shares of common stock of approximately $3.0 million and cash of approximately $137,000 will be recorded as goodwill on the Company's balance sheet.

    ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    This Report on Form 10-Q contains forward-looking statements within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our expectations, hopes, intentions, beliefs or strategies regarding the future. Such forward- looking statements also include statements regarding our future gross margin, our future research and development expenses, our future selling, general and administrative expenses, our future deferred compensation expenses, our ability to meet our capital requirements for the next twelve months and our future capital requirements. Actual results could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ include unexpected changes in the mix of our product sales, unexpected pricing pressures, or unexpected capital requirements that may arise due to the NetChip acquisition or other possible acquisitions. Actual results could also differ for the reasons noted 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.

    The following discussion should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2003.

    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 were derived 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 less than 1% of our revenues from sales of our software and development tools.

    In May 2004, we acquired NetChip Technology, Inc. a supplier of high-performance semiconductors based on Universal Serial Bus (USB) and Peripheral Component Interconnect (PCI) standards. NetChip also has PCI Express products in devemopment that complement our PCI Express chips. Beginning May 24, 2004, our operating results include results of NetChip Technology, Inc. and its products.

    We utilize a "fabless" semiconductor business model whereby we purchase wafers and packaged and tested 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.

    We rely on a combination of direct sales personnel, distributors, and manufacturers' representatives throughout the world to sell a significant portion of our products. We pay manufacturers' representatives a commission on sales while we sell products to distributors at a discount from the selling price. We generally recognize revenue at the time of title passage. Recognition of sales to distributors, including international distributors, is deferred until the product is resold by the distributors to end users. See "Certain Factors That May Affect Future Operating Results -- A Large Portion of Our Revenues Is Derived From Sales to Third-Party Distributors Who May Terminate Their Relationships with Us at Any Time."

    Our gross margins have fluctuated in the past and are expected to fluctuate in the future due to changes in product and customer mix, write-downs and recoveries of excess or obsolete inventory, the position of our products in their respective life cycles, and specific product manufacturing costs.

    The time period between initial customer evaluation and design completion can range from six to twelve months or more. Furthermore, there is typically an additional six to twelve month or greater period after design completion before a customer requests volume production of our products. Due to the variability and length of these design cycles and variable demand from customers, we may experience significant fluctuations in new orders from month to month. In addition, we typically make inventory purchases prior to receiving customer orders. Consequently, if anticipated sales and shipments in any quarter do not occur when expected, expenses and inventory levels could be disproportionately high, and our results for that quarter and potentially future quarters would be materially and adversely affected.

    Our long-term success will depend on our ability to introduce new products. While new products typically generate little or no revenues during the first twelve months following their introduction, our revenues in subsequent periods depend upon these new products. Due to the lengthy sales cycle and additional time before our customers request volume production, significant revenues from our new products typically occur twelve to twenty-four months after product introduction. As a result, revenues from newly introduced products have, in the past, produced a small percentage of our total revenues in the year the product was introduced. See "Certain Factors That May Affect Future Operating Results -- Our Lengthy Sales Cycle Can Result in Uncertainty and Delays with Regard to Our Expected Revenues."

    RESULTS OF OPERATIONS

    The following table summarizes historical results of operations as a percentage of net revenues for the periods shown.

    
    
                                                                          Three Months Ended      Six Months Ended
                                                                                June 30,              June 30,
                                                                        --------------------  --------------------
                                                                            2004       2003       2004       2003
                                                                        ---------  ---------  ---------  --------- 
    Net revenues......................................................     100.0 %    100.0 %    100.0 %    100.0 %
    Cost of revenues..................................................      35.1       29.1       31.8       29.3
                                                                        ---------  ---------  ---------  ---------
    Gross margin......................................................      64.9       70.9       68.2       70.7
                                                                        ---------  ---------  ---------  ---------
    Operating expenses:
      Research and development........................................      31.3       45.0       32.9       44.3
      Selling, general and administrative.............................      26.9       36.9       29.0       36.4
      In-process research and development.............................       8.0       10.1        4.4        5.1
      Amortization of purchased intangible assets.....................       3.2        2.4        2.9        2.0
                                                                        ---------  ---------  ---------  ---------
    Total operating expenses..........................................      69.4       94.4       69.2       87.8
                                                                        ---------  ---------  ---------  ---------
    Loss from operations..............................................      (4.5)     (23.5)      (1.0)     (17.1)
    Interest income and other, net....................................       0.7        1.2        0.7        1.2
                                                                        ---------  ---------  ---------  ---------
    Loss before provision (benefit) for income taxes..................      (3.8)     (22.3)      (0.3)     (15.9)
    Provision (benefit) for income taxes..............................        --       (0.3)       0.7       (0.1)
                                                                        ---------  ---------  ---------  ---------
    Net loss..........................................................      (3.8)%    (22.0)%     (1.0)%    (15.8)%
                                                                        =========  =========  =========  =========
    
    

    Net Revenues

    Net revenues consist of product revenues generated principally by sales of our semiconductor devices. Net revenues for the three months ended June 30, 2004 were $14.0 million, an increase of 61.8% from $8.7 million for the three months ended June 30, 2003. The increase was primarily due to higher unit shipments as well as revenues generated from the USB products acquired as part of the NetChip Technology, Inc. acquisition. Our USB products are characterized by relatively fast customer design cycles, relatively fast product ramps and relatively short customer product life cycles. These factors may result in a greater degree of revenue fluctuation from USB products as compared to our PCI business.

    For the three months ended June 30, 2004 and 2003, 10% and 11%, respectively, of net revenues were derived from sales to the same distributor. No other distributor or direct customer represented greater than 10% of net revenues.

    Net revenues for the six months ended June 30, 2004 were $25.7 million, an increase of 49.5% from $17.2 million for the six months ended June 30, 2003. The increase was primarily due to higher unit shipments as well as revenues generated from the USB products acquired as part of the NetChip Technology, Inc. acquisition. For the six months ended June 30, 2004 and 2003, 11% and 10%, respectively, of net revenues were derived from sales to the same distributor. No other distributor or direct customer represented greater than 10% of net revenues.

    Gross Margin

    Gross margin represents net revenues less the cost of revenues. Cost of revenues includes the cost of (1) purchasing semiconductor devices from our independent foundries, (2) package, assembly and test services from our independent foundries and assembly and test contractors and (3) our operating costs associated with the procurement, storage, and shipment of products.

    Gross margin for the three months ended June 30, 2004 was 64.9%, a decrease of 6.0% from 70.9% for the same period in 2003. The decrease in gross margin was due primarily to an expected change in the company's product and customer mix associated with the acquisition of NetChip.

    Gross margin for the six months ended June 30, 2004 was 68.2%, a decrease of 2.5% from 70.7% for the same period in 2003. Excluding benefits from selling previously written-down inventory of approximately $0.2 million and $0.3 million for the six months ended June 30, 2004 and 2003, respectively, gross margin decreased to 67.5% for the six months ended June 30, 2004, from 68.8% for the same period in 2003. The decrease in gross margin was due primarily to an expected change in the company's product and customer mix associated with the acquisition of NetChip.

    We expect gross margin as a percentage of revenues will likely decrease in future periods as a result of the expected change in our product and customer mix associated with the acquisition of NetChip.

    Research and Development Expenses

    Research and development (R&D) 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 and deferred compensation are included in research and development expenses.

    R&D as a percentage of net revenues decreased to 31.3% for the three months ended June 30, 2004, as compared to 45.0% for the same period in 2003. The percentage decrease is due primarily to revenues increasing at a higher rate than costs. In absolute dollars, R&D expenses increased by $0.5 million or 13% to $4.4 million for the three months ended June 30, 2004 from $3.9 million for the same period in 2003. Excluding deferred compensation amortization of $13,000 and $0.4 million for the three months ended June 30, 2004 and 2003, respectively, R&D increased by $0.8 million to $4.4 million for the three months ended June 30, 2004 from $3.5 million for the same period in 2003. The increase in R&D was due to higher compensation and benefit expenses of $0.3 million resulting mainly from the NetChip acquisition, and increases in consulting expenses and engineering tools expense of $0.1 million and $0.4 million associated with the development of new products and enhancement of existing products, respectively.

    R&D as a percentage of net revenues decreased to 32.9% for the six months ended June 30, 2004, as compared to 44.3% for the same period in 2003. The percentage decrease is due primarily to revenues increasing at a higher rate than costs. In absolute dollars, R&D expenses increased by $0.9 million or 12% to $8.5 million for the six months ended June 30, 2004 from $7.6 million for the same period in 2003. Excluding deferred compensation of $24,000 and $0.8 million for the six months ended June 30, 2004 and 2003, R&D increased by $1.6 million to $8.4 million for the six months ended June 30, 2004 from $6.8 million for the same period in 2003. The increase in R&D was due to higher compensation and benefit expenses of $0.8 million resulting mainly from the NetChip acquisition, and increases in consulting expenses and engineering tools expense of $0.2 million and $0.5 million associated with the development of new products and enhancement of existing products, respectively.

    We expect research and development expenses in absolute dollars to likely increase in future periods.

    Selling, General and Administrative Expenses

    Selling, general and administrative (SG&A) expenses consist primarily of employee-related expenses, professional fees, trade show and other promotional expenses, and sales commissions to manufacturers' representatives.

    SG&A as a percentage of net revenues decreased to 26.9% for the three months ended June 30, 2004, as compared to 36.9% for the same period in 2003. The percentage decrease is due primarily to revenues increasing at a higher rate than costs. In absolute dollars, SG&A expenses increased by $0.6 million or 18% to $3.8 million for the three months ended June 30, 2004 from $3.2 million for the same period in 2003. The increase in SG&A was due to higher compensation and benefit expenses of $0.3 million and an increase of approximately $0.2 million in sales commissions to manufacturer's representatives as a result of higher revenues.

    SG&A as a percentage of net revenues decreased to 29.0% for the six months ended June 30, 2004, as compared to 36.4% for the same period in 2003. The percentage decrease is due primarily to revenues increasing at a higher rate than costs. In absolute dollars, SG&A expenses increased by $1.2 million or 19.1% to $7.4 million for the six months ended June 30, 2004 from $6.3 million for the same period in 2003. The increase in SG&A was due to higher compensation and benefit expenses of $0.6 million and an increase of approximately $0.3 million in sales commissions to manufacturer's representatives as a result of higher revenues.

    We expect selling, general and administrative expense in absolute dollars to likely increase in future periods.

    In-Process Research and Development

    Purchased in-process research and development (IPRD) of $1.1 million and $0.9 million in the second quarter of 2004 and 2003, respectively, represents the write-off of in-process research and development associated with our acquisitions of NetChip Technologies, Inc. on May 24, 2004 and HiNT Corp. on May 22, 2003 (collectively, the "Acquired Companies"). At the date of each acquisition noted above, the projects associated with the IPRD efforts had not yet reached technological feasibility and the IPRD had no alternative future uses. Accordingly, these amounts were expensed on the respective acquisition dates of each of the Acquired Companies.

    The NetChip IPRD was determined by estimating the expected cash flows from the project once commercially viable, discounting the net cash flows to their present value, and then applying a percentage of completion to the calculated value as defined below.

    Net Cash Flows. The net cash flows from the identified project utilized were based on estimates of revenues, cost of sales, research and development costs, selling, general, and administrative costs, and income taxes from the project. These estimates were based on assumptions mentioned below. The research and development costs excluded costs to bring the acquired in-process project to technological feasibility. The estimated revenues were based on management projections of the acquired in-process project.

    Discount Rate. The discount rate used in the present value calculation was derived from a weighted average cost of capital, adjusted upward to reflect the additional risk inherent in the development life cycle, including the useful life of the technology, profitability level of the technology, and the uncertainty of technology advances that are known at the date of the acquisition. The cost of capital used in discounting the net cash flows from acquired in-process technology was 30%.

    Percentage of Completion. Percentage of completion was determined by using costs incurred by NetChip Technology, Inc. prior to the acquisition date compared to the remaining research and development to be completed to bring the project to technological feasibility. As of the acquisition date, the Company estimated the project was approximately 60% complete.

    The Company expects to complete the project within approximately 6-9 months from the acquisition date. However, development of this project remains a significant risk to the Company due to the remaining effort to achieve technical feasibility, integration of NetChip Technology, Inc. into the Company, employee retention, rapidly changing customer markets and significant competitive threats from numerous companies. Failure to bring these products to market in a timely manner could adversely impact sales and profitability of the Company in the future. Additionally, the value of the intangible assets acquired may become impaired.

    Amortization of Purchased Intangible Assets

    Amortization of purchased intangible assets for the three months ended June 30, 2004 was $0.4 million, an increase of $0.2 million from $0.2 million for the three months ended June 30, 2003. Amortization of purchased intangibles for the six months ended June 30, 2004 was $0.7 million, an increase of $0.4 million from $0.3 million for the six months ended June 30, 2003. The increase for both the three and six months ended June 30, 2004 compared to June 30, 2003 is due to additional amortization expense from developed/core technology and customer base acquired as a result of the NetChip Technology, Inc. acquisition in May 2004 (see Note 4 to the condensed consolidated financial statements).

    Deferred Compensation

    We recorded deferred compensation of $0.9 million related to unvested stock options assumed in connection with the acquisition of NetChip Technology, Inc. in May 2004. The amount of deferred compensation is presented as a reduction of stockholders' equity and is amortized ratably over the vesting period of the applicable stock grants.

    Amortization of deferred compensation decreased by $0.3 million to $28,000 for the three months ended June 30, 2004 from $0.4 million from the same period in 2003. Amortization of deferred compensation decreased by $0.8 million to $46,000 for the six months ended June 30, 2004 from $0.8 million for the same period in 2003. The decrease in deferred compensation for the three and six months ended June 30, 2004 is primarily the result of certain stock options becoming fully vested. This decrease was partially offset by additional deferred compensation recorded from the NetChip Technology, Inc. acquisition. Substantially all of these amounts are recorded in research and development expenses.

    We expect deferred compensation expense in absolute dollars to likely increase in future periods as a result of the NetChip Technology, Inc. acquisition.

    Interest Income and Other, Net

    Interest income reflects interest earned on cash, cash equivalents and short-term and long-term marketable securities balances. Interest income and other remained relatively flat at $0.1 million for each of the three months ended June 30, 2004 and 2003 and at $0.2 million for each of the six months ended June 30, 2004 and 2003.

    Provision for Income Taxes

    Income tax expense of $172,000 was recorded for the six months ended June 30, 2004 compared to an income tax benefit of $16,000 for the six months ended June 30, 2003. Income tax expense for the six months ended June 30, 2004 is primarily due to federal alternative minimum tax, miscellaneous state income tax payable, and foreign income taxes currently payable. The current expense differs from the expected provision derived by applying the applicable U.S. federal statutory rate to the loss from operations primarily due to nondeductible acquisition-related items.

    Deferred tax assets are recognized when there is sufficient evidence that it is more likely than not that such deferred tax assets will be realized. The Company has determined that such evidence does not currently exist. Therefore, a full valuation allowance has been established to reserve the Company's net deferred tax asset.

    Liquidity and Capital Resources

    Cash and cash equivalents and short and long-term marketable securities were $31.3 million at June 30, 2004, an increase of $8.2 million from $23.1 million at December 31, 2003. The increase was primarily due to (1) net loss of $0.3 million adjusted for non-cash expenses of $3.1 million, (2) increases in accounts payable and accrued expenses of $1.1 million and $0.7 million, respectively, (3) a decrease in accounts receivable of $0.4 million, (4) an increase in cash received as a result of the acquisition of NetChip Technology, Inc. of $2.8 million, and (5) cash received of $1.3 million from the exercise of stock options. This was partially offset by an increase in inventory of $1.1 million.

    In May 2003 we completed the acquisition of HiNT Corp., a fabless semiconductor supplier of Peripheral Component Interconnect (PCI) and PCI-X bridge chips. Under the terms of the acquisition agreement, additional consideration comprising of shares of our common stock and cash is payable if certain HiNT product sales milestones were met by June 30, 2004. Based on the product sales through June 30, 2004, we will issue 337,162 additional shares to the former shareholders of HiNT and pay cash of approximately $137,000 to former employees and warrant holders of HiNT. These final share and cash payments became issuable on July 30, 2004.

    On May 24, 2004, we purchased NetChip Technology, Inc., a supplier of high-performance semiconductors based on Universal Serial Bus (USB) and Peripheral Component Interconnect (PCI) standards. NetChip also has PCI Express products in devemopment that complement our PCI Express chips. As consideration for this acquisition, we issued 2,035,077 shares of our common stock to former NetChip shareholders and assumed 126,419 options to purchase common stock. Additional consideration of our common stock with a maximum aggregate value of $10 million may be paid out to the former shareholders of NetChip Technology, Inc. in the event USB products acquired as part of the NetChip Technology, Inc. acquisition meet certain gross profit milestones approximately one year following the close of this acquisition.

    In September 2002, our Board of Directors authorized the repurchase of up to 2,000,000 shares of common stock.  At the discretion of the management, we can repurchase the shares from time to time in the open market or in privately negotiated transactions.  As of June 30, 2004, approximately 774,000 shares had been repurchased for approximately $1,867,000 in cash. We did not repurchase any shares during the six month period ended June 30, 2004.

    As of June 30, 2004, inventory purchase commitments were $6.1 million. There were no other significant changes in contractual obligations or commercial commitments outstanding.

    We believe that our existing resources, together with 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. From time to time, we may also evaluate potential acquisitions and equity investments complementary to our technologies and market strategies. To the extent that existing resources and future earnings are insufficient to fund our future activities, we may need to raise additional funds through public or private financings. Additional funds may not be available or, if available, we may not be able to obtain them on terms favorable to us and our stockholders.

    Critical Accounting Policies

    The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying notes. The SEC has defined a company's critical accounting policies as the ones that are most important to the portrayal of the company's financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We also have other key accounting policies which involve the use of estimates, judgments and assumptions that are significant to understanding our results. Although we believe that our estimates, assumptions and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments or conditions.

    Inventory Write-downs. We evaluate the write-downs for inventory based on a combination of factors. Based on the life of the product, sales history, obsolescence, and sales forecast, we record write-downs ranging from 0% to 100%. Any adverse changes to our future product demand may result in increased write-downs, resulting in decreased gross margin. In addition, future sales on any of our previously written down inventory may result in increased gross margin in the period of sale.

    Allowance for Doubtful Accounts. We evaluate the collectibility of our accounts receivable based on length of time the receivables are past due and our historical bad debt experience. We record reserves for bad debts against amounts due to reduce the net recognized receivable to the amount we reasonably believe will be collected. We have certain customers with individually large amounts due at any given balance sheet date. Any unanticipated change in one of those customer's credit worthiness or other matters affecting the collectibility of amounts due from such customers could have a material affect on our results of operations in the period in which such changes or events occur.

    Goodwill.  We perform goodwill impairment tests annually on November 1 and between annual tests if indicators of potential impairment exist. Although at June 30, 2004, no impairment of goodwill has been recognized, it is reasonably possible that assumptions upon which the recoverability of goodwill were based could differ in the future. In that event, impairment charges could be required.

    Taxes. We account for income taxes using the liability method. Deferred taxes are determined based on the differences between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. As of June 30, 2004, we carried a valuation allowance for the entire deferred tax asset as a result of uncertainties regarding the realization of the asset balance. Future taxable income and/or tax planning strategies may eliminate all or a portion of the need for the valuation allowance. In the event we determine we are able to realize our deferred tax asset, an adjustment to the valuation allowance may increase income in the period such determination is made.

    CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

    This quarterly report on Form 10-Q contains forward- looking statements which involve risks and uncertainties. Our actual results could differ materially from those anticipated by such forward-looking statements as a result of certain factors, including those set forth below.

    Our Operating 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 under 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:

    • the timing of significant orders, order cancellations and reschedulings,
    • the loss of a significant customer(s),
    • our significant customers could lose market share that may affect our business,
    • the availability of production capacity at the fabrication facilities that manufacture our products,
    • our ability to develop, introduce and market new products and technologies on a timely basis,
    • introduction of products and technologies by our competitors,
    • shifts in our product mix toward lower margin products,
    • changes in our pricing policies or those of our competitors or suppliers, including decreases in unit average selling prices of our products,
    • the availability and cost of materials to our suppliers,
    • general economic conditions, and
    • political climate.

    In addition, our USB products, which we acquired as part of our May 2004 acquisition of NetChip Technology, Inc., are characterized by relatively fast consumer design cycles, relatively fast product ramps and relatively short customer product life cycles. These factors may result in a greater degree of revenue fluctuation from USB products, as compared to our PCI business.

    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.

    We May Fail To Adequately Integrate Acquired Businesses

    In May 2004, we acquired NetChip Technology, Inc. a supplier of high-performance semiconductors based on Universal Serial Bus (USB) and Peripheral Component Interconnect (PCI) standards. NetChip also has PCI Express products in development that complement our PCI Express chips. The integration of NetChip will place a burden on our management and infrastructure. Such integrations are subject to risks commonly encountered in making such acquisitions, including, among others, loss of key personnel of the acquired company, loss of key customers and business relationships of the acquired company, the difficulty associated with assimilating and integrating the personnel, operations and technologies of the acquired company, the potential disruption of our ongoing business, and the maintenance of uniform standards, controls, procedures, employees and clients. There can be no assurance that we will be successful in overcoming these risks or any other problems encountered in connections with our acquisition of NetChip.

    Our Potential Future Acquisitions May Not Be Successful Because Of Our Limited Experience With 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. Future acquisitions could result in any of all of the following:

    • potentially dilutive issuances of equity securities,
    • large acquisition-related write-offs,
    • the incurrence of debt and contingent liabilities or amortization expenses related to other intangible assets,
    • difficulties in the assimilation of operations, personnel, technologies, products and the information systems of the acquired companies,
    • diversion of management's attention from other business concerns,
    • 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.

    We have had limited experience with acquisitions in the past and may not 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.

    Because A Substantial Portion Of Our Net Sales Is Generated By A Small Number Of Large Customers, If Any Of These Customers Delays Or Reduces Its Orders, Our Net Revenues And Earnings Will Be Harmed

    Historically, a relatively small number of customers have accounted for a significant portion of our net revenues in any particular period. For the three months ended June 30, 2004 and 2003, 10% and 11%, respectively, of net revenue were derived from sales to the same distributor. For the six months ended June 30, 2004 and 2003, 11% and 10%, respectively, of net revenues were derived from sales to the same distributor. No other distributor or direct customer represented greater than 10% of net revenues.

    We have no long-term volume purchase commitments from any of our significant customers. We cannot be certain that our current customers will continue to place orders with us, that orders by existing customers will continue at the levels of previous periods or that we will be able to obtain orders from new customers. In addition, some of our customers supply products to end-market purchasers and any of these end-market purchasers could choose to reduce or eliminate orders for our customers' products. This would in turn lower our customers' orders for our products.

    We anticipate that sales of our products to a relatively small number of customers will continue to account for a significant portion of our net sales. Due to these factors, the following have in the past and may in the future reduce our net sales or earnings:

    • the reduction, delay or cancellation of orders from one or more of our significant customers;
    • the selection of competing products or in-house design by one or more of our current customers;
    • the loss of one or more of our current customers; or
    • a failure of one or more of our current customers to pay our invoices.

    Our Lengthy 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 a 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.

    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

    We operate in an industry that is subject to evolving industry standards, rapid technological changes, rapid changes in customer demands and the rapid introduction of new, higher performance products with shorter product life cycles. As a result, we expect to continue to make significant investments in research and development. However, we may not have adequate funds from operations or otherwise to devote to research and development, forcing us to reduce our research and development efforts. Also, we must manage product transitions successfully, since announcements or introductions of new products by us or our competitors could adversely affect sales of our existing products because these existing products can become obsolete or unmarketable for specific purposes. There can be no assurance that we will be able to develop and introduce new products or enhancements to our existing products on a timely basis or in a manner which satisfies customer needs or achieves widespread market acceptance. Any significant delay in releasing new products could adversely affect our reputation, give a competitor a first-to-market advantage or allow a competitor to achieve greater market share. The failure to adjust to rapid technological change could harm our business, financial condition, results of operations and cash flows.

    Failure Of Our Products To Gain Market Acceptance Would Adversely Affect Our Financial Condition

    We believe that our growth prospects depend upon our ability to gain customer acceptance of our products and technology. Market acceptance of products depends upon numerous factors, including compatibility with other products, adoption of relevant interconnect standards, perceived advantages over competing products and the level of customer service available to support such products. There can be no assurance that growth in sales of new products will continue or that we will be successful in obtaining broad market acceptance of our products and technology.

    We expect to spend a significant amount of time and resources to develop new products and refine existing products. In light of the long product development cycles inherent in our industry, these expenditures will be made well in advance of the prospect of deriving revenues from the sale of any new products. Our ability to commercially introduce and successfully market any new products is subject to a wide variety of challenges during this development cycle, including start-up bugs, design defects and other matters that could delay introduction of these products to the marketplace. In addition, since our customers are not obligated by long-term contracts to purchase our products, our anticipated product orders may not materialize, or orders that do materialize may be cancelled. As a result, if we do not achieve market acceptance of new products, we may not be able to realize sufficient sales of our products in order to recoup research and development expenditures. The failure of any of our new products to achieve market acceptance would harm our business, financial condition, results of operation and cash flows.

    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. Investors should understand 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 towards 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, delay our shipments or may increase our costs.

    The cyclical nature of the semiconductor industry drives wide fluctuations in available capacity at third party manufacturers.  We believe that the industry is now in a period of high demand which is creating an environment of capacity shortages.   We may be unable to obtain adequate manufacturing or assembly capacity from our third-party manufacturers and assembly subcontractors to meet our customers' delivery requirements even if we adequately forecast customer demand.

    None of our semiconductor devices are 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.

    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 PLX. 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. See "Business -- Competition," and " -- Products" in Part I of Item I of our Form 10-K for the year ended December 31, 2003.

    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 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 could make it more difficult to retain our existing customers and to attract new customers. Moreover, product errors, defects or bugs could 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.

    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. For the six months ended June 30, 2004 and 2003, net revenues through distributors accounted for approximately 50% and 54%, 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, as we may not be successful in servicing our customers directly or through manufacturers' representatives.

    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 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 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 third parties. While there is currently no intellectual property litigation pending against us, litigation could result in significant expenses to us and 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 few 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. 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 63.2% of our revenues for the six months ended June 30, 2004. In 2003, 2002, and 2001, sales outside of North America accounted for 62.9%, 58.4%, and 43.7% of our revenues, respectively. Sales outside of North America may fluctuate in future periods and may continue to account for a large 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:

    • difficulties in managing distributors,
    • difficulties in staffing and managing foreign subsidiary and branch operations,
    • political and economic instability,
    • foreign currency exchange fluctuations,
    • difficulties in accounts receivable collections,
    • potentially adverse tax consequences,
    • timing and availability of export licenses,
    • changes in regulatory requirements, tariffs and other barriers,
    • difficulties in obtaining governmental approvals for telecommunications and other products, and
    • the burden of complying with complex foreign laws and treaties.

    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, which could lead to a reduction in sales and profitability in that country.

    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 a substantial amount 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.

    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.

    As part of our anti-takeover devices, our Board of Directors has the ability 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. Consistent with Delaware law, our Board of Directors may adopt additional anti-takeover measures in the future.

    ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    We have an investment portfolio comprised of fixed income securities, including amounts classified as cash equivalents, short-term and long-term investments. Our investment portfolio totaled $28.1 million at June 30, 2004. These securities are subject to interest rate fluctuations and will decrease in market value if interest rates increase.

    The primary objective of our investment activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. We invest primarily in high quality, short-term and long-term debt instruments. A hypothetical 100 basis point increase in interest rates would result in approximately a $0.2 million decrease (less than 1%) in the fair value of our available-for-sale securities.

    ITEM 4. CONTROLS AND PROCEDURES

    (a) Evaluation of disclosure controls and procedures.

    As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in this report on Form 10-Q.

    (b) Changes in internal controls.

    There has been no significant change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

    PART II. OTHER INFORMATION

    ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

    In connection with the acquisition of NetChip Technology, Inc. on May 24, 2004, the Company issued 2,035,077 shares of its common stock and assumed 126,419 options to purchase common stock, valued aggregately at $21.4 million, to the former shareholders of NetChip Technology, Inc. The shares were issued, and options were assumed, in reliance on Rule 506 of Regulation D under the Securities Act of 1933, as amended, the shares were registered for resale on a Form S-3 (File No. 333-116702) registration statement declared effective on June 28, 2004. The options were registered on a Form S-8 (File No. 333-116704), filed on June 21, 2004.

    ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    At the Company's Annual Meeting of Stockholders held on May 24, 2004, the following individuals were elected to the Board of Directors:

    
    Name                 Votes For    Votes Withheld 
    Michael J. Salameh   21,320,365          798,730
    D. James Guzy        19,114,863        3,004,232
    Timothy Draper       21,199,733          919,362
    John H. Hart         21,392,600          726,495
    Robert H. Smith      21,458,633          660,462
    

    The following proposals were approved at the Company's Annual Meeting:

    
                                                                                            Broker
                                                       For        Against      Abstain     Non-Votes 
    
    1.  Amendment of amended and restated             15,373,094    1,248,090      340,756    5,157,155
         certificate of incorporation.
    
    2.  Approval of issuance of common stock in       15,724,148      895,590      342,202    5,157,155
         the NetChip Technology, Inc. acquisition.
    
    3.  Approval of an amendment to the PLX           12,576,690    2,730,489    1,654,761    5,157,155
         Technology, Inc. 1999 Stock Incentive
         Plan.
    
    4.  Ratification of the appointment of Ernst      21,241,759      299,985      577,351           --
         & Young LLP as independent auditors for
         the fiscal year ending December 31, 2004.
    

    PART II. OTHER INFORMATION

    ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

      a. Exhibits

      Exhibit

      Number

      Description

      2.1

      Agreement and Plan of Reorganization by and among PLX Technology, Inc., NC Acquisition Sub, Inc., NetChip Technology, Inc. and Wei-Ti Liu as Shareholders' Agent (1)

      3.1

      Certificate of Amendment to Amended and Restated Certificate of Incorporation.

      4.1

      Registration Rights Agreement (2)

      10.1*

      NetChip Technology, Inc. 1996 Flexible Stock Incentive Plan.

      10.2*

      PLX Technology, Inc. 2004 Bonus and Deferred Compensation Plan.

      31.1

      Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.

      31.2

      Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

      32.1

      Certification of Chief Executive Officer Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

      32.2

      Certification of Chief Financial Officer Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

         
       

      (1) Incorporated by reference to Exhibit 2.1 to Form 8-K filed on March 9, 2004.

       

      (2) Incorporated by reference to Exhibit 4.2 to Form S-3 filed on June 21, 2004

       

      * Management contract or compensatory plan or arrangement.

       

      1. Reports on Form 8-K

        1. A report on Form 8-K was filed by the Company on May 25, 2004 relating to the acquisition of Net Chip Technology, Inc.
        2. A report on Form 8-K was furnished by the Company on April 15, 2004 relating to a press release announcing the Company's preliminary earnings release for the quarter ended March 31, 2004.







       

      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.

       

      Date: August 3, 2004

      By /s/ Rafael Torres

      Rafael Torres

      Vice President, Finance and Chief Financial Officer

      (Authorized Officer and

      Principal Financial Officer)








       

      EXHIBIT INDEX

       

      Exhibit

      Number

      Description

      2.1

      Agreement and Plan of Reorganization by and among PLX Technology, Inc., NC Acquisition Sub, Inc., NetChip Technology, Inc. and Wei-Ti Liu as Shareholders' Agent (1)

      3.1

      Certificate of Amendment to Amended and Restated Certificate of Incorporation.

      4.1

      Registration Rights Agreement (2)

      10.1*

      NetChip Technology, Inc. 1996 Flexible Stock Incentive Plan.

      10.2*

      PLX Technology, Inc. 2004 Bonus and Deferred Compensation Plan.

      31.1

      Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.

      31.2

      Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

      32.1

      Certification of Chief Executive Officer Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

      32.2

      Certification of Chief Financial Officer Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

         
       

      (1) Incorporated by reference to Exhibit 2.1 to Form 8-K filed on March 9, 2004.

       

      (2) Incorporated by reference to Exhibit 4.2 to Form S-3 filed on June 21, 2004.

       

      * Management contract or compensatory plan or arrangement.








      EX-3.1 3 exh3-1.htm CERTIFICATE

      EXHIBIT 3.3


      CERTIFICATE OF AMENDMENT

      TO

      AMENDED AND RESTATED

      CERTIFICATE OF INCORPORATION

              PLX Technology, Inc., a corporation organized and existing under the laws of the State of Delaware, (the "Corporation") hereby certifies as follows:

              FIRST: That, on March 16, 2004, the Board of Directors adopted a resolution proposing and declaring advisable the following amendment to the Amended and Restated Certificate of Incorporation of the Corporation:

                RESOLVED, that the first paragraph of Article IV of the Corporation's Amended and Restated Certificate of Incorporation shall be amended, subject to stockholder approval, to read in its entirety as follows:

                  "The Corporation is authorized to issue two classes of shares designated, respectively, "Common Stock' and "Preferred Stock.' The total number of shares of all classes of stock which the Corporation has authority to issue is 55,000,000 consisting of 50,000,000 shares of Common Stock, with a par value of $0.001 and 5,000,000 shares of Preferred Stock, with a par value of $0.001."

              SECOND: That the stockholders of the Corporation have approved at the Annual Meeting of Stockholders held on May 24, 2004 said amendment in accordance with the provisions of Section 222 of the General Corporation Law of the State of Delaware.

              THIRD: That the aforesaid amendment was duly adopted in accordance with applicable provisions of Sections 242 and 222 of the General Corporation Law of the State of Delaware.

              IN WITNESS WHEREOF, PLX Technology, Inc. has caused this Certificate of Amendment to Amended and Restated Certificate of Incorporation to be signed by its Chief Executive Officer and attested to by its Secretary this 24th day of May, 2004.

          PLX TECHNOLOGY, INC.

       

       

      By

      /s/  
      MICHAEL J. SALAMEH      
      Michael J. Salameh
      Chief Executive Officer

      ATTEST:

       

       

       

      /s/  
      RAFAEL TORRES      
      Rafael Torres
      Secretary

       

       

       

      EX-10.1 4 exh10-1.htm NETCHIP FLEXIBLE STOCK INCENTIVE PLAN Q2 2004 Exhibit 10.1

       

      Exhibit 10.1

      NETCHIP TECHNOLOGY, Inc.

      1996 FLEXIBLE STOCK INCENTIVE PLAN

       

       

      1. Establishment, Purpose, and Definitions.

    (a) There is hereby adopted the 1996 Flexible Stock Incentive Plan (the "Plan") of NetChip Technology, Inc., a California corporation (the "Company").

    (b) The purpose of the Plan is to provide a means whereby eligible individuals (as defined in Section 4, below) can acquire Common Stock of the Company (the "Stock"). The Plan provides employees (including officers and directors who are employees)

    of the Company and of its Affiliates (as defined below) an opportunity to purchase shares of Stock pursuant to options which may qualify as incentive stock options (referred to as "incentive stock options") under Section 422 of the Internal Revenue Cod of 1986, as amended (the "Code"), and employees, officers, directors, independent contractors, and consultants of the Company and of its Affiliates (as defined below) an opportunity to purchase shares of Stock pursuant to options which are not described in Sections 422 or 423 of the Code (referred to as "nonqualified stock options"). The Plan also provides for the sale of Stock to eligible individuals in connection with the performance of services for the Company or it's Affiliates (as defined below).

    (c) The term "Affiliates" as used in the Plan means parent or subsidiary corporations, as defined in Sections 424(e) and (f) of the Code (but substituting the "Company" for "employer corporation"), including parents or subsidiaries which become such after adoption of the plan.

    2. Administration of the Plan.

    (a) The Plan shall be administered by the Board of Directors of the Company (the "Board"). The Board may delegate the responsibility for administering the Plan to a committee, under such terms and conditions as the Board shall determine (the "Committee"). References in this Plan to the "Committee" shall mean the Board if the Board has not delegated responsibility to a separate committee. Members of the Committee shall serve at the pleasure of the board. The Committee shall select one of its members as chairman, and shall hold meetings at such times and places as it may determine. A majority of the Committee shall constitute a quorum and acts of the Committee at which a quorum is present, or acts reduced to or approved in writing by all the members of the Committee, shall be the valid acts of the Committee.

    (b) The Committee shall determine which eligible individuals (as defined in Section 4, below) shall be granted options under the Plan, the timing of such grants, the terms thereof (including any restrictions on the Stock), and the number of shares subject to such options.

    (c) The Committee may amend the terms of any outstanding option granted under this Plan, but any amendment which would adversely affect the participant's rights under tan outstanding option shall not be made without the participant's written consent. The Committee may, with the participant's written consent, cancel any outstanding stock option or accept any outstanding stock option in exchange for a new option.

    (d) The Committee shall also determine which eligible individuals (as defined in Section 4, below) shall be issued Stock under the Plan, the timing of such grants, the terms thereof (including an restrictions), and the number of shares to be granted. The Stock shall be issued for such consideration (if any) as the Committee deems appropriate. Stock issued subject to the restrictions shall be evidenced by a written agreement (the "Restricted Stock Purchase Agreement"). The Committee may amend any Restricted Stock Purchase Agreement, but any amendment which would adversely affect the shareholder's rights to the Stock shall not be made without his or her written consent.

    (e) The Committee shall have the sole authority, in its absolute discretion to adopt, amend, and rescind such rules and regulations as, in its opinion, may be advisable for the administration of the Plan, to construe and interpret the Plan, the rules and the regulations, and the instruments evidencing options or Stock granted under the Plan and to make all other determinations deemed necessary or advisable for the administration of the Plan. All decisions, determinations, and interpretations of the Committee shall be binding on all participants.

    3. Stock Subject to the Plan.

    (a) An aggregate of not more than 3,000,000 shares of Stock shall be available for the grant of stock options or the issuance of Stock under the Plan. If any option is surrendered (except surrender for the shares of Stock) or for any other reason ceases to be exercisable in whole or in part, the shares which were subject to such option but as to which the option had not been exercised shall continue to be available under the Plan. Any Stock which is retained by the Company upon exercise of an option in order to satisfy the exercise price for such option or any withholding taxes due with respect to such option exercise shall be treated as issued to the participant and will thereafter not be available under the Plan.

    (b) If there is any change in the Stock subject to the Plan, a Stock Option Agreement, or a Restricted Stock Purchase Agreement through merger, consolidation, reorganization, recapitalization, ,reincorporation, stock split, stock dividend, or other change in the capital structure of the Company, appropriate adjustments shall be made by the Committee in order to preserve but not to increase the benefits to the individual, including adjustments to the aggregate number, kind and price per share of shares subject to the Plan, a Stock Option Agreement, or a Restricted Stock Purchase Agreement.

    4. Eligible Individuals. Individuals who shall be eligible to have granted to them the options, or Stock provided for by the Plan shall be such employees, officers, directors, independent contractors and consultants of the Company or an affiliate as the Committee, in its discretion, shall designate from time to time. Notwithstanding the foregoing, only employees of the Company or an Affiliate (including officers and directors who are bona fide employees ) shall be eligible to recieve incentive stock options.

    5. The Option Price. The exercise price of the Stock covered by each incentive stock option shall be not less than the per share fair market value of such Stock on the date the option is granted. The exercise price of the Stock covered by each nonqualified stock option shall be as determined by the Committee and shall be not less than 85% of the per share fair market value of such Stock on the date the option is granted. Notwithstanding the foregoing, in the case of a stock option granted to a person possessing more than 10% of the combined voting power of the Company or an Affiliate, the exercise price shall be not less than 110% of the fair market value of the Stock on the dated the option is granted. The exercise price of an option shall be subject to the adjustment to the extent provided in Section 3(b), above.

    6. Terms and Conditions of Options.

    (a) Each option granted pursuant to the Plan will be evidenced by a written stock option agreement (the "Stock Option Agreement") executed by the Company and the person to whom such option is granted.

    (b) The Committee shall determine the term of each option granted under the Plan; provided, however, that the term of an incentive stock option shall not be more than 10 years and that, in the case of an incentive stock option granted to a person possessing more than 10% of the combined voting power of the Company or an Affiliate, the term shall be for no more than five years.

    (c) In the case of incentive stock options, the aggregate fair market value (determined as of the time such option is granted) of the Stock with respect to which incentive stock options are exercisable for the first time by an eligible employee in any calendar year (under this Plan and any other plans of the Company or its Affiliates) shall not exceed $100,000.

    (d) The Stock Option Agreement may contain such other terms, provisions and conditions consistent with this Plan as may be determined by the Committee. If an option, or any part thereof is intended to qualify as an incentive stock option, the Stock Option Agreement shall contain those terms and conditions which are necessary to so qualify it. Notwithstanding the foregoing, no option granted under the Plan may vest as less than the rate required by the California Department of Corporations rules as in effect on the date of grant.

    7. Terms and Conditions of Stock Purchases

    (a) Each sale or grant of stock pursuant to the Plan will be evidenced by a written Restricted Stock Purchase Agreement executed by the Company and the person to whom such stock is sold or granted.

    (b) The Restricted Stock Purchase Agreement may contain such other terms, provisions and conditions consistent with the Plan as may be determined by the Committee, including not by way of limitation, restrictions on transfer, forfeiture provisions, repurchase provisions and vesting provisions. Notwithstanding the foregoing, no restricted stock purchase granted under the Plan my vest at less than the rate required by the California Department of Corporations rules as in effect on the date of grant.

    (c) The purchase price of Stock sold hereunder pursuant to a Restricted Stock Purchase Agreement shall be the price determined by the Committee on the date the right to purchase Stock is granted; provided, however that (i) such price shall not be less than 85% of the per share fair market value of such Stock on the date the right to purchase Stock is granted and (ii) in the case of any person possessing more than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, such price shall be not less than 100% of the per share fair market value of such Stock at the time the right to purchase Stock is granted, or at the time the purchase is consummated.

    8. Use of Proceeds. Cash proceeds realized from the sale of Stock under the Plan shall constitute general funds of the Company.

    9. Amendment, Suspension, or Termination of the Plan.

    (a) The Board may at any time amend, suspend or terminate the Plan as it deems advisable; provided that such amendment, suspension or termination complies with all applicable requirements of state and federal law, including any applicable requirement that the Plan or an amendment to the Plan be approved the Company's shareholders, and provided further that, except as provided in Section 3(b), above, the Board shall in no event amend the Plan in the following respects without the consent of shareholders than sufficient to approve the Plan in the first instance:

    (i) To increase the maximum number of shares subject to incentive stock options issued under the Plan; or

    (ii) To change the designation or class of persons eligible to receive incentive stock options under the Plan.

    10. Assignability. Each option granted pursuant to this Plan shall, during participant's lifetime, be exercisable only by participant, and neither the option nor any right hereunder shall be transferable by the participant by operation of law or otherwise other than by will or the laws of descent and distribution. Stock subject to a Restricted Stock Purchase Agreement shall be transferable only as provided in such Agreement.

    11. Payment Upon Exercise of Options.

    (a) Payment of the purchase price upon exercise of any option granted under this Plan shall be made in cash, certified check or wire transfer; provided, however, that the Committee, in its sole discretion, may permit a participant to pay the option price in whole or in part (i) with shares of Stock owned by the participant; (ii) by delivery on a form prescribed by the Committee of an irrevocable direction to a securities broker approved by the Committee to sell share and deliver all or a portion of the proceeds to the Company in payment for the Stock; (iii) by delivery of the participant's promissory note with such recourse, interest, security, and redemption provisions as the Committee in its discretion determines appropriate; or (iv) in any combination of the foregoing. Any stock used to exercise options shall be valued at is fair market value on the date of the exercise of the option. In addition, the Committee, in its sole discretion, may authorize the surrender by a participant of all or part of an unexercised option and authorize a payment in consideration thereof of an amount equal to the difference between the aggregate fair market value of the Stock subject to such option and the aggregate option price of such Stock. In the Committee's discretion, such payment may be made in cash, shares of Stock with a fair market value on the date of surrender equal to the payment amount, or some combination thereof.

    (b) In the event that the exercise price is satisfied by the Committee retaining from the shares of Stock otherwise to be issued to participant shares of Stock having a value equal to the exercise price, the Committee may, in its sole discretion, issue participant and additional option, entitling participant to purchase additional Stock in an amount equal to the number of share so retained.

    12. Withholding Taxes.

    (a) No Stock shall be granted or sold under the Plan to any participant, until the participant has made arrangements acceptable to the Committee for the satisfaction of federal, state, and local income and social security tax withholding obligations, including without limitation obligations incident to the receipt of Stock under the Plan, the lapsing of restrictions applicable to such Stock, the failure to satisfy the conditions for treatment as incentive stock option sunder the applicable tax law, or the receipt of cash payment. Upon exercise of a stock option or lapsing or restriction on Stock issued under the Plan, the Company may satisfy its withholding obligations by withholding from the participant or requiring the participant to surrender shares of the Company's Stock sufficient to satisfy federal, state, and local income and social security tax withholding obligations.

    (b) In the event the such withholding is satisfied by the Company or the participant's employer retaining from the shares of Stock otherwise to be issued to participant shares of Stock having a value equal to such withholding tax, the committee may, in its sole discretion, issue participant and additional option, entitling participant to purchase additional Stock in a amount equal to the number of shares so retained.

    13. Restrictions on Transfer of Shares. The Stock acquired pursuant to the Plan shall be subject to such restrictions and agreements regarding sale, assignment, encumbrances or other transfer as are in effect among the shareholders of the Company at the time such Stock is acquired, as well as to such other restrictions as the Committee shall deem advisable.

    14. Shareholder Approval. This Plan shall only become effective with regard to incentive stock options upon its approval by a majority of the shareholders within 12 months of the Board's adoption of the Plan. The Committee may grant incentive stock options under the Plan prior to such approval by the shareholders, but until shareholder approval of the Plan is obtained, no incentive stock option shall be exercisable. Any nonqualified stock option that is exercised before shareholder approval is obtained must be rescinded if shareholder approval is not obtained within 12 months before or after the Plan is adopted.

    15. Information to Plan Participants The Company shall provide, at least annually, to each Plan participant, during any period for which said participant has one or more options or shares acquired pursuant to the Plan outstanding, copies of financial statements of the Company issued during said period.








    NETCHIP TECHNOLOGY, INC.

    INCENTIVE STOCK OPTION AGREEMENT

    This Agreement is made as of November 19, 2003 between NetChip Technology, Inc., a California corporation (the "Company") and John Chasko ("Optionee).

    RECITALS:

    WHEREAS, the Company has adopted the 1996 Flexible Stock Incentive Plan (the "Plan"), which Plan is incorporated in this Agreement by reference and made a part of it; and

    WHEREAS, the Company regards Optionee as a valuable employee of the Company, and has determined that it would be to the advantage and in the interests of the Company and its shareholders to grant the options provided for in this Agreement to Optionee as an inducement to remain in the service of the Company (as defined in the Plan) and as an incentive for increased efforts during such service;

    NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties to the Agreement hereby agree as follows:

    1. Option Grant. The Company hereby grants to Optionee the right and option to purchase from the Company on the terms and conditions hereinafter set forth, all or any part of an aggregate of 6,000 shares of Common Stock of the Company (the "Stock"). This option is intended to satisfy the requirements of Section 422 of the Internal Revenue Code of 1986 , as amended (the "Code") and qualify as an incentive stock option.

    2. Option Price. The purchase price of the Stock subject to this option shall be $0.21 per share, which price is not less than the per share fair market value of such Stock as of November 19, 2003 (the "Grant Date") as determined by the Board of Directors of the Company or a committee designated by it (the "Committee"), or, if Optionee possesses more than ten percent of the combined voting power of the Company or any of its Affiliates, not less than 110 percent of the per share fair market value of the Stock as of the Grant Date as determined by the Committee. The term "Option Price" as used in this Agreement refers to the purchase price of the Stock subject to this option.

    3. Option Period. This option shall e exercisable only during the Option Period, and during such Option Period, the exercisability of the option shall be subject to the limitations of Section 4 and the vesting provisions of Section 5. the Option Period shall commence on the Grant Date and except as provided in Section 4, shall terminate (the "Termination Date") ten years from the Grant Date; provided, however, that the Option Period for a person possessing more than ten percent of the combined voting power of the Company or an Affiliate shall terminate five years from the Grant Date.

    4. Limits on Option Period. The Option Period may end before the Termination Date, as follows:

    (a) Termination of Employment. If Optionee ceases to be a bona fide employee of the Company or an Affiliate for any reason other than disability (within the meaning of subsections (c) and (d) or death during the Option Period, the Option Period shall terminate three months after the date of such cessation of employment or on the Termination Date, whichever shall first occur, and the option shall be exercisable only to the extent exercisable under Section 5 on the date of Optionee's cessation of employment.

    (b) Death. If Optionee dies while in the employ of the Company or any of its Affiliates, the Option Period shall end one year after the date of death or on the Termination Date, whichever shall first occur, and Optionee's executor or administrator or the person or persons to whom Optionee's rights under this option shall pass by will or by the applicable laws of descent and distribution may exercise this option only to the extent exercisable under Section 5 on the date of the Optionee's death.

    (c) Disability. If Optionee's employment is terminated by reason of disability, the Option Period shall end one year after the date of Optionee's cessation of employment or on the Termination Date, whichever shall first occur, and the option shall be exercisable only to the extent exercisable under Section 5 on the date of Optionee's cessation of employment. Optionee understands that exercise of the option, if Optionee's employment is terminated by reason of disability that is not deemed total and permanent disability within the meaning the meaning of Section 22(e)(3) of the Code, more than 90 days after termination will result in the disqualification of this option as an incentive stock option for tax purposes.

    (d) Leave of Absence. If Optionee is on a leave of absence from the Company or an Affiliate because of his disability, or for the purpose of serving the government of the country in which the principal place of employment of Optionee is location, either in a military or civilian capacity, or for such other purpose or reason as the Committee may approve, Optionee shall not be deemed during the period of such absence, by virtue of such absence alone, to have terminated employment with the Company or an Affiliate except as the Committee may otherwise expressly provide.

    5. Vesting of Right to Exercise Option. Subject to other limitations contained in this Agreement, the Optionee shall have the right to exercise the option such that the options are fully exercisable four (4) years from January 1, 2004 as follows:

    (i) As to 25% of the number of shares covered by this Agreement on, (one year from January 1, 2004);

    (ii) As to the 1/36th of the remaining number of shares covered by this Agreement, on the last day of each month thereafter until the option is fully exercisable.

    Any portion of the option that is not exercised shall accumulate and may be exercised at any time during the Option Period prior to the Termination Date. No partial exercise of this option may be for less than 5 percent of the total number of shares than available under this option. In no event shall the Company be required to issue fractional shares. Notwithstanding the foregoing, the aggregate fair market value (determined as of the time such option is granted) of the Stock with respect to which incentive stock options are exercisable for the first time in any calendar year (under the Plan and any other incentive stock option plans of the Company or its Affiliates) shall not exceed $100,000.

    6. Method of Exercise. Optionee may exercise the option with respect to all or any part of the shares of Stock then subject to such exercise as follows:

    (a) Delivery of Written Notice and Option Price. By giving the Company written notice of such exercise, specifying the number of such shares as to which this option is exercised. Such notice shall be accompanied by an amount equal to the Option Price of such shares, in the form of any one or a combination of the following: (i) cash, a certified check, or wire transfer payable to the order of the Company in lawful money of the United States: (ii) by delivery on a form prescribed by the Committee of an irrevocable direction to a securities broker approved the Committee to sell shares and deliver all or a portion of the proceeds to the Company in Payment for the Stock; (iii) shares of Stock valued on the date of exercise at fair market value; or (iv) if authorized for Optionee by the Committee, notes. The shares of Stock shall be valued in accordance with procedures established by the Committee. Any note used to exercise this option shall be a full recourse, interest-bearing obligation containing such terms as the Committee shall determine. If a note is used, the Optionee agrees to execute such further documents as the Committee may deem necessary or appropriate in connection with issuing the note, perfecting a security interest in the Stock purchased with the note, and any related terms or conditions that the Committee may propose. Such further documents may include, not by way of limitation, a security agreement, an escrow agreement, a voting trust agreement and an assignment separate from certificate.

    (b) Execution of Agreement. Optionee (and Optionee's spouse, if any) shall be required, as a condition precedent to acquiring Stock through the exercise of the option, to execute one or more agreements relation to obligations in connection with ownership of the Stock or restrictions to which the other shareholders of the Company are subject at the time of such exercise.

    (c) Investment Representation. If required by the Committee, Optionee shall give the Company satisfactory assurance in writing, signed by Optionee or his legal representative, as the case may be, that such shares are being purchased for investment and not with a view to the distribution thereof, provided that such assurance shall be deemed inapplicable to (1) any sale of such shares by such Optionee made in accordance with the terms of a registration statement covering such sale, which may hereafter be filed and become effective under the Securities Act of 1933, as amended (the "Securities Act"), and with respect to which no stop order suspending the effectiveness thereof has been issued, and (2) any other sale of such shares with respect to which in the opinion of counsel for the Company, such assurance is not required to be given in order to comply with the provisions of the Securities Act.

    (d) Delivery of Certificates. As soon as practicable after receipt of the notice required in Section 6(a) and satisfaction of the conditions set forth in Sections 6(b) and 6(c), the Company shall, without transfer or issue tax and without other incidental expense to Optioinee, deliver to Optionee at the office of the Company, at

    _________________________________________, or such other place as m ay be mutually acceptable to the Company and Optionee, a certificate or certificates of such shares of Stock; provided, however, that the time of such delivery may be postponed by the Company for such period as may be required for it with reasonable diligence to comply with applicable registration requirements under the Securities Act, the Securities Exchange Act of 1934, as amended, any applicable listing requirements of any national securities exchange, and requirements under an other law or regulation applicable to the issuance or transfer of such shares.

    7. Corporate Transactions.

    (a) Definition. For the purposes of this Section 7, a "Corporate Transaction" shall include any of the following shareholder-approved transactions to which the Company is a party:

    (i) a merger or consolidation in which the Company is not the surviving entity, except for (1) a transaction the principal purpose of which is to change the state of the Company's incorporation, or (2) a transaction in which the Company's shareholders immediately prior to such merger or consolidation hold (by virtue of securities received in exchange for their shares in the Company) securities of the surviving entity representing more than fifty percent (50%) of the total voting power of such surviving entity immediately after such transaction;

    (ii) the sale, a transfer or other disposition of all or substantially all of the assets of the Copany unless the Company's shareholders immediately prior to such sale, transfer or other disposition hold (by virtue of securities received in exchange for their shares in the Company) securities of the purchaser or other transferee representing more than fifty percent (50%) of the total voting power of such entity immediately after such transaction; or

    (iii) any merger in which the Company is the surviving entity but in which the Company's shareholders immediately prior to such merger do not hold (by virtue of their shares in the Company held immediately prior to such transaction) securities of the surviving entity (by virtue of their shares in the Company held immediately prior to such transaction) representing more than fifty percent (50%) of the total voting power of the surviving entity immediately after such transaction.

    (b) Effect. In the event of any Corporate Transaction, this option shall terminate immediately prior to the specified effective date of the Corporate Transaction unless assumed by the successor corporation or its parent company, pursuant to options providing substantially equal value and having substantially equivalent provisions as the options granted pursuant to this Agreement.

    8. Adjustments for Changes in Stock. If there should be any change in a class of Stock subject to this option, through merger, consolidation, reorganization, recapitalization, reincorporation, stock split, stock dividend or other change in the capital structure of the Company (except for a Corporate Transaction described in Section 7), the Company shall make appropriate adjustments in order to preserve, but not to increase, the benefits to Optionee, including adjustments in the number of shares of such Stock subject to this option and in the price per share. Any adjustments made pursuant to this Section 8 as a consequence of a change in the capital structure of the Company shall not entitle Optionee to acquire a number of shares of such Stock of the Company or shares of stock of any successor company greater than the number of shares Optionee would receive if, prior to such a change, Optionee had actually held a number of shares of such Stock equal to the number of shares then subject to this option.

    9. Limitations on Transfer of Option. This option shall, during Optionee's lifetime, be exercisable only by Optionee, and neither this option nor any right hereunder shall be transferable by Optionee by operation of law or otherwise other than by will or the laws of descent and distribution. In the event of any attempt by Optionee to alienate, assign, pledge, hypothecate, or otherwise dispose of this option or of any right hereunder, except as provided for in this Agreement, or in the event of the levy of any attachment, execution, or similar process upon the rights or interest hereby conferred, the Company at its election may terminate this option by notice to Optionee and this option shall thereupon become null and void.

    10. No Shareholder Rights. Neither Optionee nor any person entitled to exercise Optionee's rights in the event of this death shall have any of the rights of a shareholder with respect to the shares of Stock subject to this option except to the extent the certificates for such shares shall have been issued upon the exercise of this option.

    11. NO EFFECT ON TERMS OF EMPLOYMENT. SUBJECT TO THE TERMS OF ANY WRITTEN EMPLOYMENT CONTRACT TO THE CONTRARY, THE COMPANY (OR ITS AFFILIATE WHICH EMPLOYS OPTIONEE) SHALL HAVE THE RIGHT TO TERMINATE OR CHANGE THE TERMS OF EMPLOYMENT OF OPTIONEE AT ANY TIME AND FOR ANY REASON WHATSOEVER, WITH OR WITHOUT CAUSE.

    12. Notice. Any notice required to be given under the terms of this Agreement shall be addressed to the Copany in care of its Secretary at the Office of the Company at NetChip Technology, inc., 625C Clyde Avenue, Mountain View, California 94043, and any notice to be given to Optionee shall be addressed to him at the address given by him beneath his signature to the Agreement, or such other address as either party to this Agreement may hereafter designate in writing to the other. Any such notice shall be deemed to have been duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, express or certified and deposited (postage or certification fee prepaid) in a post office or branch office regularly maintained by the United States.

    13. Lock-Up Agreement.

    (a) Agreement. Optionee if requested by the Company and the lead underwriter of any public offering of the Common Stock or other securities of the Company (the "Lead Underwriter"), hereby irrevocably agrees not to sell, contract to sell, grant any option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of an interest in any Common Stock or an securities convertible into or exchangeable or exercisable for or any other rights to purchase or acquire common Stock (except Common Stock included in such public offering or acquired on the public market after such offering) during the 180-day period following the effective date of a registration statement of the Company filed under the Securities Act, or such shorter period of time as the Lead Underwriter shall specify. Optionee further agrees to sign such documents as may be requested by the Lead Underwriter to effect the foregoing and agrees that the Company may impose stop-transfer instructions with respect to such common Stock until the end of such period. The Company and Optionee acknowledge that each Lead Underwriter of a public offering of the Company's stock, during the period of such offering and for the 180-day period thereafter, is an intended beneficiary of this Section 13.

    (b) Permitted Transfers. Notwithstanding the foregoing, Section 13(a) shall not prohibit Optionee from transferring any shares of Common Stock or securities convertible into or exchangeable or exercisable for the Company's Common Stock either during Optionee's lifetime or on death by will or intestacy to Optionee's immediate family or to a trust the beneficiaries of which are exclusively Optionee and/or a member or members of Optionee's immediate family; provided, however, that prior to any such transfer, each transferee shall execute an agreement pursuant to which each transferee shall agree to receive and hold such securities subject to the provisions of Section 13 hereof. For the purposes of this Section, the term "immediate family" shall mean spouse, lineal descendant, father, brother, sister of the transferor.

    (c) No Amendment Without Consent of Underwriter. During the period from identification as a Lead Underwriter in connection with any public offering of the Company's Common Stock until the earlier of (i) the expiration of the lock-up period specified in Section 13(a) in connection with such offering or (ii) the abandonment of such offering by the Company and the Lead Underwriter, the provisions of Section 13 may not be mended or waived except with the consent of the Lead Underwriter.

    14. Committee Decisions Conclusive. All decisions of the Committee upon any question arising under the Plan or under this Agreement shall be conclusive.

    15. Successors. This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company. Where the context permits, "Optionee" as used in this Agreement shall include Optionee's executor, administrator or other legal representative or the person or persons to whom Optionee's rights pass by will or the applicable laws of descent and distribution.

    16. Early Dispositions.

    (a) Loss of ISO Treatment. Optionee understands that any disposition of any shares acquired by exercise of this option occurring within two (2) years from the Grant Date or within one (1) year from the date Optionee purchased such shares by exercise of this option may have adverse tax consequences. Optionee is advised to consult a tax advisor.

    (b) Notification Requirement. Optionee agrees, as partial consideration for the designation of this option as an incentive stock option under Section 422 of the Code, to notify the Company in writing within thirty (30) days of any disposition of any shares acquired by exercise of this option if such disposition occurs within two (2) years from the Grant Date or within one (1) year from the date the Optionee purchased such shares by exercise of this option. If the Company is required to withhold an amount for the purpose of income and employment taxes as a result of an early disposition, Optionee acknowledges that it will be required to satisfy the amount of such withholding in a manner that the Company prescribes.

    17. Restrictive Legends. All certificates for shares of the Stock shall bear the following legends, in addition to any other legends required by applicable state securities law and securities commissioners:

    "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO , OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACTO OR AN OPINION OF SUCH COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."

    "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF, AND ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE COMPANY, AS PROVIDED IN THE BYLAWS OF THE COMPANY, A CPY OF WHICH IS AVAILABLE FROM THE COMPANY."

    "THE SHARES EFIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE REGISTERED HOLDER UPON EXERCISE OF AN INCENTIVE STOCK OPTION AS DEFINED IN SECTION 422 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY SHALL NOTIFY THE CORPORATION IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE REGISTERED HOLDER HEREOF MADE ON OR BEFORE___________________[TWO YEARS FROM THE DATE OF GRANT AND ONE YEAR FROM THE DATE OF EXERCISE.] THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE OPTION IN THE REGISTERED HOLDER'S NAME (AND NOT IN THE NAME OF AN NOMINEE) PRIOR TO THIS DATE"

    18. California Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California.

    19. Copy of Plan. Optionee hereby acknowledges receipt of a copy of the Plan.

    EX-10.2 5 exh10-2.htm BONUS AND DEFERRED COMPENSATION PLAN Q2 2004 Exhibit 10.2

     

    Exhibit 10.2

    PLX TECHNOLOGY, INC.

    2004 BONUS AND DEFERRED COMPENSATION PLAN

    (Established as of January 1, 2004)

      1. Introduction. The Company hereby adopts the Plan, effective as of January 1, 2004. The purpose of the Plan is to encourage performance and achieve retention of a select group of executive employees of PLX Technology, Inc. This document constitutes the written instrument under which the Plan is maintained.
      2. Definitions.
        1. "Cause" means (i) conviction of a felony or a crime of moral turpitude; (ii) misconduct that results in harm to the Company; (iii) material failure to perform assigned duties; or (iv) willful disregard of lawful instructions from the chief executive officer of the Company or the Board of Directors relating to the business of the Company or any of its affiliates.
        2. "Code" means the Internal Revenue Code of 1986, as amended.
        3. "Committee" means the Compensation Committee of the Company's Board of Directors.
        4. "Company" means PLX Technology, Inc., a Delaware corporation.
        5. "Disability" means the Participant's inability to properly perform his or her employment duties by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.
        6. "Eligible Employee" means each employee who is eligible for the plan as designated by the Committee as set forth in approved minutes.
        7. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
        8. "Net Pro Forma Operating Income" means the Company's pro forma operating income for 2004, as reported in its earnings release for its fiscal year ending December 31, 2004, calculated after the payment of all bonuses.
        9. "Normal Retirement Age" means age sixty (60).
        10. "Participant" means each Eligible Employee who is designated from time to time by the Committee in writing.
        11. "Plan" means the PLX Technology, Inc. 2004 Bonus and Deferred Compensation Plan, as set forth in this document and as hereafter amended.
        12. "Plan Year" means the calendar year.
        13. "Retirement" means the termination of employment after Normal Retirement Age.
      3. Bonus Amount.
        1. Calculation of Bonus Amount. Each Participant will receive a bonus which will comprise a percentage of Net Pro Forma Operating Income and/or percentage of sales revenues, and/or a fixed amount bonus independent of Company performance, or some combination thereof. The percentage of the Company's Net Pro Forma Operating Income, percentage of sales revenues, or fixed amount bonus independent of Company performance that is awarded to each Participant as a bonus shall be as designated by the Committee to the Participant in writing. Notwithstanding the foregoing, the total Net Pro Forma Operating Profit and sales revenue bonus amount awarded to any Participant shall not exceed the Participant's base pay from the Company for 2004, unless the Committee, in its sole discretion, decides to permit a higher bonus amount with respect to such Participant based on the performance and condition of the Company's business. Also, at any time prior to January 1, 2005, the Committee or the CEO, in his, her, or its sole discretion, may reduce any Participant's bonus.
        2. Interest on Bonus Amount. No interest shall be paid on any Participant's bonus.
      4. Payment of Bonus.
        1. Timing and Form of Payment. Subject to Sections 4(b), 4(c), 4(d) and 7, each Participant's bonus shall be paid as follows:
        2. (i) Sixty percent (60%) of the Participant's bonus shall be paid to the Participant on January 31, 2005; and

          (ii) Twenty percent (20%) of the Participant's bonus (i.e. fifty percent (50%) of the bonus then remaining) shall be paid to the Participant on January 31, 2006; and

          (iii) Twenty percent (20%) of the Participant's bonus (i.e. one-hundred percent (100%) of the bonus then remaining) shall be paid to the Participant on January 31, 2007.

        3. Distribution in the Event of Retirement, Disability or Termination without Cause. If a Participant terminates employment because of Retirement or Disability, or the Company terminates a Participant's employment without Cause, the Participant shall be entitled to payment of all of his or her bonus according to the schedule in Section 4(a), provided that if termination under these conditions occurs prior to January 1, 2005, the bonus amount payable will be the bonus amount pursuant to Section 3(a) multiplied by the number of days employee was employed in 2004 by the Company and then divided by 365 days, and all remaining bonus amounts for 2004 shall be forfeited.
        4. Forfeiture. If a Participant terminates his or her employment for any reason other than Retirement, Disability, or termination by the Company without Cause, or if the Participant's employment is terminated for Cause, he or she shall forfeit all or any portion of his or her entire bonus for 2004 (as set forth in Section 3(a)) which is not yet due and payable under the schedule set forth in Section 4(a) as of the date of termination.
        5. Timing of Distribution to a Beneficiary. If a Participant dies before receiving a distribution of all of his or her bonus, one-hundred percent (100%) of such bonus will be distributed to his or her beneficiary as a lump sum distribution on the January 31 following the Participant's death, provided that this accelerated distribution applies only if Participant dies while still employed by the Company or after termination due to Retirement, Disability, or termination by the Company without Cause; otherwise, the forfeiture provisions of Section 4(c) shall apply.
        6. Beneficiary Designation. Each Participant must designate a beneficiary to receive a distribution of his or her bonus if the Participant dies before such amount is fully distributed to him or her. To be effective, a beneficiary designation must be signed, dated and delivered to the Committee. In the absence of a valid or effective beneficiary designation, the Participant's surviving spouse will be his or her beneficiary or, if there is no surviving spouse, the Participant's estate will be his or her beneficiary. If a married Participant designates anyone other than his or her spouse as his or her beneficiary, such designation will be void unless it is signed and dated by the Participant's spouse.
      5. Withholding. The Company will withhold from any Plan distribution all required federal, state, local and other taxes and any other payroll deductions that may be required.
      6. Administration. The Plan is administered and interpreted by the Company. The Company has delegated to the Committee certain responsibilities under the Plan. The Committee has the full and exclusive discretion to interpret and administer the Plan. All actions, interpretations and decisions of the Committee are conclusive and binding on all persons, and will be given the maximum possible deference allowed by law.
      7. Amendment or Termination. Through December 31, 2004, the Committee, in its sole and unlimited discretion, may amend or terminate the Plan at any time, without prior notice to any Participant. After January 1, 2005, the Committee may amend or terminate the Plan provided that any such amendment does not reduce any benefit to which a Participant has accrued and is otherwise entitled to under the terms of the Plan.
      8. Benefits Upon Plan Termination. Upon the termination of the Plan, each Participant's unpaid bonus to the date of such Plan termination will be distributed as a lump sum cash payment as soon as practicable.
      9. Claims Procedure. Any person who believes he or she is entitled to any payment under the Plan may submit a claim in writing to the Committee. If the claim is denied (either in full or in part), the claimant will be provided a written notice explaining the specific reasons for the denial and referring to the provisions of the Plan on which the denial is based. The notice will describe any additional information needed to support the claim. The denial notice will be provided within ninety (90) days after the claim is received. If special circumstances require an extension of time (up to 90 days), written notice of the extension will be given within the initial ninety-day period.
      10. Appeal Procedure. If a claimant's claim is denied, the claimant (or his or her authorized representative) may apply in writing to the Committee for a review of the decision denying the Claim. The claimant (or representative) then has the right to review pertinent documents and to submit issues and comments in writing. The Committee will provide written notice of its decision on review within sixty (60) days after it receives a review request. If additional time (up to sixty (60) days) is needed to review the request, the claimant will be given written notice of the reason for the delay.
      11. Source of Payments. All payments under the Plan will be paid in cash from the general funds of the Company. No separate fund will be established under the Plan, and the Plan will have no assets. Any right of any person to receive any payment under the Plan is no greater than the right of any other general unsecured creditor of the Company. This Plan shall be binding upon the Company's successors and assigns.
      12. Inalienability. A Participant's rights to benefits under the Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Participant or the Participant's beneficiary; provided, however, that upon the voluntary or involuntary termination of Company employment of a Participant who has received a loan from the Company, the Participant's bonus may be reduced by the outstanding principal amount of the loan (plus all accrued and unpaid interest).
      13. Applicable Law. The provisions of the Plan will be construed, administered and enforced in accordance with ERISA and, to the extent applicable, the laws of the State of California.
      14. Severability. If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of the Plan, and the Plan will be construed and enforced as if such provision had not been included.
      15. Status of Plan as ERISA "Top Hat" Plan. The Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of highly compensated employees and individuals responsible for managing the Participating Companies. The Plan will be administered and construed to effectuate this intent. Accordingly, the Plan is subject to Title I of ERISA, but is exempt from Parts 2, 3 and 4 of such Title.
      16. No Right of Continued Employment. THIS PLAN DOES NOT GIVE ANY PARTICIPANT THE RIGHT TO BE RETAINED AS AN EMPLOYEE. SUBJECT TO THE TERMS OF ANY WRITTEN EMPLOYMENT AGREEMENT TO THE CONTRARY, THE COMPANY SHALL HAVE THE RIGHT TO TERMINATE OR CHANGE THE TERMS OF EMPLOYMENT OF A PARTICIPANT AT ANY TIME AND FOR ANY REASON WHATSOEVER, WITH OR WITHOUT CAUSE.

    IN WITNESS WHEREOF, PLX Technology, Inc., by its duly authorized officer, has executed the Plan on the day and year first above written.

    PLX TECHNOLOGY, INC.



    /s/ Michael J. Salameh
    Michael J. Salameh
    Chief Executive Officer

    EX-31.1 6 exh31-1.htm CERTIFICATE Q2 2004 Exhibit 31.1

    Exhibit 31.1

    CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

    I, Michael J. Salameh, Chief Executive Officer of PLX Technology, Inc., certify that:

    1. I have reviewed this quarterly report on Form 10-Q of PLX Technology, Inc.;

    2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

    3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

    4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

    a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

    b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

    c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

    5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

    a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

    b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

    Date: August 3, 2004

     

    /s/ Michael J. Salameh
    Michael J. Salameh
    Chief Executive Officer
    (Principal Executive Officer)








    EX-31.2 7 exh31-2.htm CERTIFICATE Q2 2004 Exhibit 31.2

    Exhibit 31.2

    CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

    I, Rafael Torres, Chief Financial Officer of PLX Technology, Inc., certify that:

    1. I have reviewed this quarterly report on Form 10-Q of PLX Technology, Inc.;

    2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

    3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

    4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

    a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

    b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

    c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

    5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

    a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

    b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

    Date: August 3, 2004

     

    /s/ Rafael Torres
    Rafael Torres
    Chief Financial Officer
    (Principal Financial Officer)








    EX-32.1 8 exh32-1.htm CERTIFICATE Q2 2004 Exhibit 32.1

    Exhibit 32.1

    CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

    In connection with the periodic report of PLX Technology, Inc. (the "Company") on Form 10-Q for the period ended June 30, 2004 as filed with the Securities and Exchange Commission (the "Report"), I, Michael J. Salameh, Chief Executive Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

      1. the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
      2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.
      3. This Certification has not been, and shall not be deemed, "filed" with the Securities and Exchange Commission.

    Date: August 3, 2004

    /s/ Michael J. Salameh  

    Michael J. Salameh, Chief Executive Officer






    EX-32.2 9 exh32-2.htm CERTIFICATE Q2 2004 Exhibit 32.2

     

    Exhibit 32.2

    CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

    In connection with the periodic report of PLX Technology, Inc. (the "Company") on Form 10-Q for the period ended June 30, 2004 as filed with the Securities and Exchange Commission (the "Report"), I, Rafael Torres, Chief Financial Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

      1. the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
      2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.
      3. This Certification has not been, and shall not be deemed, "filed" with the Securities and Exchange Commission.

    Date: August 3, 2004

    /s/ Rafael Torres  

    Rafael Torres, Chief Financial Officer






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