NetLogic Microsystems Announces Q4 and FY 2005 Financial Results.MOUNTAIN VIEW, Calif. -- Company Introduces NETL NETL - A semantic network language, for connectionist architectures. ["NETL: A System for Representing and Using Real-World Data", S.E. Fahlman, MIT Press 1979]. 7(TM) Layer 7 Content Processor, Announces Acquisition of Cypress Cypress, city, United States Cypress (sī`prəs), city (1990 pop. 42,655), Orange co., S Calif. near Long Beach; inc. 1956. Forest Lawn–Cypress, a branch of the famous cemetery in Glendale, Calif. Semiconductor's Network Search Engine Products Including Noted Ayama and Sahasra Families NetLogic Microsystems, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :NETL), the leader in the design and development of knowledge-based processors Knowledge-based processors are used for processing packets in computer networks. Knowledge-based processors are essential for the long term success of the IPv6 network. The buildout of the IPv6 network is inevitable as it provides the means to an improved and secure networking , today announced financial results for the fourth quarter ended Dec. 31, 2005. Revenue in the fourth quarter of 2005 was $21.2 million, up 6 percent from $20.0 million in the third quarter of 2005 and up 39 percent from $15.2 million in the fourth quarter of 2004. Gross margin in the fourth quarter of 2005 was 63 percent, compared with gross margin of 61 percent in the third quarter of 2005, and gross margin of approximately 48 percent in the fourth quarter of 2004. Fourth quarter net income, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), was $5.0 million or $0.26 per share, compared with a net income of $3.6 million or $0.19 per share in the third quarter of 2005, and a net loss of $75,000 or a loss of $0.00 per share in fourth quarter of 2004. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net income, which excludes amortization of stock-based compensation, was $5.3 million or $0.27 per share in the fourth quarter of 2005, compared with pro forma net income of $4.0 million or $0.21 per share in the third quarter of 2005, and pro forma net income of $820,000 or $0.05 per share in the fourth quarter of 2004. For the fiscal year ended Dec. 31, 2005, revenue was $81.8 million, up 71 percent from $47.8 million for the fiscal year ended Dec. 31, 2004. Net income, in accordance with GAAP for the year ended Dec. 31, 2005, was $16.4 million or $0.87 per share, compared with a net loss of $12.0 million or a loss of $1.17 per share for the year ended Dec. 31, 2004. Pro forma net income, excluding amortization of stock-based compensation for the year ended Dec. 31, 2005, was $18.3 million or $0.97 per share. Pro forma net loss for the year ended Dec. 31, 2004 was $2.8 million or a loss of $0.28 per share, and excluded amortization of stock-based compensation and note discounts. The company believes the additional non-GAAP measures provided are useful to investors for performing financial analysis because they highlight the company's operating activities. The company's management uses this pro forma measure internally to evaluate its operating performance and plan for its future periods. However, pro forma measures are not a substitute for GAAP measures. For a reconciliation of GAAP versus pro forma financial information on a quarterly basis, please see the attached schedule. Launch of NETL7(TM), Layer 7 Content Processor Family The company announced the first product in its new NETL7(TM) family of Layer 7 content processors. The NLS NLS - Native Language System 1000 content processor is the industry's first content processor capable of processing application networking and security functions at 10 Gigabits per second (10Gbps). This high-performance Adj. 1. high-performance - modified to give superior performance; "a high-performance car" superior - of high or superior quality or performance; "superior wisdom derived from experience"; "superior math students" content processor accelerates compute-intensive content signature recognition tasks for enterprise and carrier-class networks and is used to perform 10 Gbps wire-speed content inspection of packets traveling through the network. Typical applications for the NLS1000 content processor include Layer 7 application switching/routing, unified threat management See UTM. (UTM (Unified Threat Management) Refers to a stand-alone appliance or a software package that combines a firewall, antivirus, spam and content filtering as well as intrusion detection. See firewall, antivirus, antispam and IDS. ) appliances, intrusion detection See IDS and IPS. and prevention systems (IDS/IPS), and anti-virus See antivirus program. gateways. The market for application-layer networking and network security is expected to be one of the fastest growing segments within the technology sector over the next decade, as service providers, enterprises, consumers and government agencies continue their migration toward Layer 7 routing and security systems. Acquisition of Cypress Semiconductor's Network Search Engine Products Including Noted Ayama and Sahasra Families The company also announced today that it has signed a definitive agreement to acquire certain assets associated with Cypress Semiconductor's network search engine products. The agreement was signed today and the company hopes to close the transaction prior to the end of the first quarter of 2006. The company believes that the transaction will be neutral to slightly accretive to its fiscal 2006 earnings, and accretive to 2007 earnings. The purchase has been approved by the boards of directors of each company and is subject to customary closing conditions. The company is acquiring the Sahasra algorithmic al·go·rithm n. A step-by-step problem-solving procedure, especially an established, recursive computational procedure for solving a problem in a finite number of steps. technology, which it views as a significant component in driving towards low-cost Layer 7 applications acceleration and security processing solutions. Acquiring the Sahasra assets and intellectual property gives NetLogic a four-year head start in this effort, based on Cypress' leadership position in developing this advanced technology. The company plans to combine the Sahasra technology with the recently announced NETL7 content processor technology to develop second and third generation Layer 7 content processors, which will deliver even higher performance while greatly reducing power and lowering system cost. The acquisition also includes Cypress' NSE NSE - Network Software Environment: a proprietary CASE framework from Sun Microsystems. 70K family, Ayama(TM) 10K family and Ayama 20K family. Acquiring the NSE70K, Ayama 10K and Ayama 20K families will help the company expand its non-Cisco customer base and accelerate the diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. of its revenue. The acquisition of the Ayama products will also expand the company's product offering and customer engagements in the new high volume, entry-level en·try-lev·el adj. Appropriate for or accessible to one who is inexperienced in a field or new to a market: an entry-level job in advertising; an entry-level computer. Layer 2/3 switch market, where Cypress has a strong established presence. Under the terms of the agreement, the company will pay Cypress approximately $50 million in shares of common stock at the closing of the transaction, plus up to an additional $10 million in cash and approximately $10 million in additional shares of common stock upon achieving specific revenue objectives that are outlined in the agreement. Management Qualitative qualitative /qual·i·ta·tive/ (kwahl´i-ta?tiv) pertaining to quality. Cf. quantitative. qualitative pertaining to observations of a categorical nature, e.g. breed, sex. Comments "We continue to deliver strong revenue growth as companies respond to the need to upgrade their networking infrastructure to meet the increasing demands of voice, video and data traffic over their networks," said Ron Noun 1. Ron - a Chadic language spoken in northern Nigeria Bokkos, Daffo West Chadic - a group of Chadic languages spoken in northern Nigeria; Hausa in the most important member Jankov, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Our focus in the past year has been to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. our product line and customer base, and we have made great progress on both fronts. As we move into 2006, we expect this customer diversification trend to continue as new programs utilizing knowledge-based processors ramp with existing customers and our newer product families gain traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. with an expanded base of customers," Jankov said. During 2005, the company announced the NL6000 family, its second generation knowledge-based processor, which doubles the performance and halves the power relative to the NL5000 KBP kbp kilobase pair; for double-stranded nucleotides, a thousand nucleotide base pairs. family. Customers such as Alaxala Networks Alaxala Networks is a Japanese company that develops high performance routers and switches. Alaxala Networks was established in 2004 by Hitachi, Ltd. (Hitachi) and NEC Corporation (NEC). External Links
(networking) Internet Protocol - (IP) The network layer for the TCP/IP protocol suite widely used on Ethernet networks, defined in STD 5, RFC 791. IP is a connectionless, best-effort packet switching protocol. version 6. Significantly, the company closed two major design wins at Cisco Systems “Cisco” redirects here. For other uses, see Cisco (disambiguation). Cisco System,Inc. (NASDAQ: CSCO, HKSE: 4333 ) is an American multinational corporation with 54,000 employees and annual revenue of US $28.48 billion as of 2006. for the NL6000 family, its first design wins for this product at Cisco. In 2005, the company also launched its NetLite(TM) family of processors targeting entry-level Layer 2/3 switches. With the acquisition of the Cypress' Ayama product family, the company now has a more complete product offering for this market, and a significantly expanded customer base. The company expects this market to begin a phase of rapid growth in late 2006 or early 2007, as the triple-play requirements of voice and video will drive increased functionality and performance in these entry-level internet access See how to access the Internet. boxes. "The introduction of our first processor for Layer 7 processing, together with the acquisition of Cypress' Sahasra algorithmic technology gives us a strong start in this exploding market," said Jankov. "Layer 7 content processing represents the next phase of our growth and diversification strategy. In addition to expanding the company's product portfolio, the NETL7 content processor family allows us to expand our global market footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. and customer base by offering our high-performance processors to a broader set of customers in the communications, networking, security appliance Security appliances protect computer networks from unwanted data traffic, intruders, email spam, enforce policies, and may also be used to create and manage VPNs. There are a number of types of security appliances. , software provider and computing computing - computer markets." Conference Call The company will host its fourth quarter and fiscal 2005 financial results conference call on Jan. 25, 2006 at 2:00 p.m. Pacific time. To listen to the conference call, dial (800) 299-0433 ten minutes prior to the start of the call, using the passcode 80875495. A taped replay will be made available approximately two hours after the conclusion of the call and will remain available for one week. To access the replay, dial (888) 286-8010 and enter passcode 26899037. The conference call will be available via a live webcast on the investor relations Investor relations The process by which the corporation communicates with its investors. section of the NetLogic Microsystems web site at http://www.netlogicmicro.com. Access the web site 15 minutes prior to the start of the call to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. An archived webcast replay will be available on the web site for 3 months. About NetLogic Microsystems NetLogic Microsystems, Inc., a fabless semiconductor company A fabless semiconductor company specializes in the design and sale of hardware devices implemented on semiconductor chips. It achieves an advantage by outsourcing the fabrication of the devices to a specialized semiconductor manufacturer called a semiconductor foundry or "fab. located in Mountain View, Calif., designs, develops and markets high performance knowledge-based processors for a variety of advanced Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the , corporate and other networking systems, such as routers, switches, network security appliances, network access equipment and networked storage devices. NetLogic Microsystems' knowledge-based processors use an advanced processor architecture and a large knowledge database to make complex decisions about individual packets of information traveling through the network. Knowledge-based processors significantly enhance the ability of networking OEMs to supply network service providers with systems offering more advanced functionality for the Internet, such as application-based routing, voice transmission over the Internet, or VoIP, virtual private networks, or VPNs, and streaming video A one-way video transmission over a data network. It is widely used on the Web as well as company networks to play video clips and video broadcasts. Computers in home networks stream video to digital media hubs connected to a home theater. and audio. For more information about products offered by NetLogic Microsystems, call 650.961.6676 or visit the NetLogic Microsystems Website at http://www.netlogicmicro.com. NetLogic Microsystems, the NetLogic Microsystems logo, NetLite and NETL7 are trademarks of NetLogic Microsystems, Inc. All other trademarks are properties of their respective owners. "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: Statements in this press release regarding NetLogic Microsystems' business which are not historical facts may be "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " that involve risks and uncertainties. Forward-looking statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Actual results and trends may differ materially from historical results or those projected in any such forward-looking statements depending on a variety of factors. These factors include, but are not limited to, customer acceptance and demand for our products, the volume of sales to our principal product customers, manufacturing yields for our products, the timing of manufacture and delivery of product by our foundry A semiconductor manufacturer that makes chips for third parties. It may be a large chip maker that sells its excess manufacturing capacity or one that makes chips exclusively for other companies. suppliers, the length of our sales cycles, our average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. , the strength of the OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and networking equipment market and the cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. nature of that market and the semiconductor industry, and the effects of any acquisitions we make, including the pending acquisition of Cypress Semiconductor Cypress Semiconductor is a semiconductor design and manufacturing company. It began operations in 1982 and listed publicly in 1986. Two years later, the company shifted over to the New York Stock Exchange under the symbol, (NYSE: CY). network search engine products under the definitive agreement dated as of January January: see month. 25, 2006. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's reports on Forms 10-K and 10-Q, as well as other reports that NetLogic Microsystems files from time to time with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. by this cautionary statement, and NetLogic Microsystems undertakes no obligation to update publicly any forward-looking statement for any reason, except as required by law, even as new information becomes available or other events occur in the future.
NETLOGIC MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
(Unaudited)
Three months ended Year ended
December 31, December 31,
2005 2004 2005 2004
--------- -------- -------- ---------
Revenue:
Product revenue $21,221 $15,249 $81,759 $ 46,705
License and engineering
service revenue - - - 1,128
--------- -------- -------- ---------
Total revenue 21,221 15,249 81,759 47,833
--------- -------- -------- ---------
Gross profit 13,306 7,351 48,344 21,169
--------- -------- -------- ---------
Operating expenses:
Research and development 5,724 4,893 21,125 17,259
Selling, general and
administrative 2,856 1,692 9,929 6,587
Stock-based compensation 334 895 1,821 5,511
--------- -------- -------- ---------
Total operating expenses 8,914 7,480 32,875 29,357
--------- -------- -------- ---------
Income (loss) from operations 4,392 (129) 15,469 (8,188)
Interest and other income
(expense), net 564 54 1,349 (3,843)
--------- -------- -------- ---------
Income (loss) before income
taxes 4,956 (75) 16,818 (12,031)
Provision for income taxes (27) - 379 -
--------- -------- -------- ---------
Net income (loss) $ 4,983 $ (75) $16,439 $(12,031)
========= ======== ======== =========
Net income (loss) per share -
Basic $ 0.28 $ (0.00) $ 0.93 $ (1.17)
========= ======== ======== =========
Net income (loss) per share -
Diluted $ 0.26 $ (0.00) $ 0.87 $ (1.17)
========= ======== ======== =========
Shares used in calculation -
Basic 17,908 17,328 17,725 10,318
========= ======== ======== =========
Shares used in calculation -
Diluted 19,418 17,328 18,992 10,318
========= ======== ======== =========
NETLOGIC MICROSYSTEMS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
(Unaudited)
Three months ended Year ended
December 31, December 31,
2005 2004 2005 2004
--------- --------- --------- ---------
Revenue:
Product revenue $21,221 $15,249 $81,759 $46,705
License and engineering
service revenue - - - 1,128
--------- --------- --------- ---------
Total revenue 21,221 15,249 81,759 47,833
--------- --------- --------- ---------
Gross profit 13,326 7,351 48,420 21,338
--------- --------- --------- ---------
Operating expenses:
Research and development 5,724 4,893 21,125 17,259
Selling, general and
administrative 2,856 1,692 9,929 6,587
Stock-based compensation - - - -
--------- --------- --------- ---------
Total operating expenses 8,580 6,585 31,054 23,846
--------- --------- --------- ---------
Income (loss) from operations 4,746 766 17,366 (2,508)
Interest and other income
(expense), net 564 54 1,349 (330)
--------- --------- --------- ---------
Income (loss) before income
taxes 5,310 820 18,715 (2,838)
Provision for income taxes (27) - 379 -
--------- --------- --------- ---------
Net income (loss) $ 5,337 $ 820 $18,336 $(2,838)
========= ========= ========= =========
Net income (loss) per share -
Basic $ 0.30 $ 0.05 $ 1.03 $ (0.28)
========= ========= ========= =========
Net income (loss) per share -
Diluted $ 0.27 $ 0.05 $ 0.97 $ (0.28)
========= ========= ========= =========
Shares used in calculation -
Basic 17,908 17,328 17,725 10,318
========= ========= ========= =========
Shares used in calculation -
Diluted 19,418 18,210 18,992 10,318
========= ========= ========= =========
NETLOGIC MICROSYSTEMS, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS)
TO PRO FORMA NET INCOME (LOSS)
(IN THOUSANDS)
(Unaudited)
Three months ended Year ended
December 31, December 31,
2005 2004 2005 2004
--------- -------- --------- ----------
GAAP net income (loss) $ 4,983 $ (75) $16,439 $(12,031)
Pro forma adjustments:
Amortization of stock-based
compensation 354 895 1,897 5,680
Amortization of note
discounts - - - 3,513
--------- -------- --------- ----------
Pro forma net income (loss) $ 5,337 $ 820 $18,336 $ (2,838)
========= ======== ========= ==========
NETLOGIC MICROSYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(Unaudited)
December 31, December 31,
2005 2004
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 65,788 $ 41,411
Accounts receivable, net 5,972 5,873
Inventory 8,822 7,759
Prepaid expenses and other current assets 832 1,408
------------ ------------
Total current assets 81,414 56,451
Property and equipment, net 4,012 2,953
Other assets 103 50
------------ ------------
Total assets $ 85,529 $ 59,454
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,458 $ 5,690
Accrued liabilities 7,432 4,164
Capital lease obligations, current 360 1,314
------------ ------------
Total current liabilities 16,250 11,168
Capital lease obligations, long-term 327 3
Other liabilities 294 181
------------ ------------
Total liabilities 16,871 11,352
------------ ------------
Stockholders' equity:
Common stock 180 176
Additional paid-in capital 152,379 150,769
Notes receivable from stockholders (44) (434)
Deferred stock-based compensation (1,114) (3,227)
Accumulated deficit (82,743) (99,182)
------------ ------------
Total stockholders' equity 68,658 48,102
------------ ------------
Total liabilities and stockholders'
equity $ 85,529 $ 59,454
============ ============
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