Exhibit 99.1
PMC-Sierra Reports Second Quarter 2009 Results
Revenues Increase 20% Sequentially to $123.2 Million and Non-GAAP Net Income of $0.13/sh in Q2’09
SANTA CLARA, Calif.--(BUSINESS WIRE)--July 23, 2009--PMC-Sierra, Inc. (Nasdaq:PMCS), the premier Internet infrastructure semiconductor solution provider, today reported results for the second quarter ended June 28, 2009.
Net revenues in the second quarter of 2009 were $123.2 million, an increase of 20% compared to $102.6 million in the first quarter of 2009 and 12% lower than net revenues of $139.8 million reported in the second quarter of 2008.
Net income in the second quarter of 2009 on a GAAP basis was $7.8 million (GAAP diluted earnings per share of $0.03) compared with a net loss of $3.9 million (GAAP loss per share of $0.02) in the first quarter of 2009 and net income of $135.9 million (GAAP diluted earnings per share of $0.60) in the second quarter of 2008.
Non-GAAP net income in the second quarter of 2009 was $29.7 million (non-GAAP diluted earnings per share of $0.13), an increase of 140% compared to $12.4 million (non-GAAP diluted earnings per share of $0.06) in the first quarter of 2009 and matching the non-GAAP diluted earnings per share of $0.13 in the second quarter of 2008, which was our peak revenue quarter last year.
“In the second quarter of 2009, we benefited from a solid ramp in our new 6Gb/s SAS RAID-on-Chip device at H-P and improved demand in our Fiber-To-The-Home business,” said Greg Lang, president and chief executive officer of PMC-Sierra. “Continued cost control allowed us to achieve the same level of non-GAAP net income as in the second quarter of 2008 but on revenue that was 12% below the peak level last year.”
Net income on a non-GAAP basis in the second quarter of 2009 excludes the following items: (i) $5.6 million stock-based compensation expense; (ii) $9.8 million amortization of purchased intangible assets; (iii) $0.3 million restructuring costs; (iv) $0.7 million of non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; (v) $2.9 million foreign exchange loss on foreign tax liabilities; and (vi) $2.5 million income tax provision, which includes $1.5 million net deferred tax expense relating to foreign exchange translation of a foreign subsidiary, and other items.
For a full reconciliation of GAAP net income to non-GAAP net income, please refer to the schedule included with this release. The Company believes the additional non-GAAP measures are useful to investors for the purpose of financial analysis. Management uses the non-GAAP measures internally to evaluate its in-period operating performance before gains, losses and other charges that are considered by management to be outside of the Company’s core operating results. In addition, the measures are used to plan for the Company’s future periods. However, non-GAAP measures are neither stated in accordance with, nor are they a substitute for, GAAP measures.
The Company made the following announcements in Q2 2009:
- We introduced our HyPHY 20G and HyPHY 10G devices that enable the convergence of high-bandwidth data, video and voice services over Optical Transport Network (OTN-based) Metro infrastructures. PMC-Sierra’s HyPHY products can reduce line card variants by 75 percent, achieve 50 percent power savings, and deliver multi-service aggregation flexibility to accelerate the transition to IP-optimized OTN networks. Our devices are low-power, cost-effective service gateways with simultaneous protocol support for Carrier Ethernet, Video, SAN, OTN and SONET/SDH, enabling OEMs to deliver Reconfigurable Optical Add-Drop Multiplexer (ROADM), Optical Transport Platform (OTP) and Micro OTP (µ-OTP) equipment that allow carriers to reduce their operational and capital expenditures.
- We announced our storage partner Promise Technology Inc.—a leading supplier of RAID storage solutions for enterprise and SMB customers—was selected by NEC for its new 6Gb/s SAS server platforms. Promise’s SuperTrak 6G RAID controller card line is powered by PMC-Sierra’s PM8011 SRC 8x6G 6Gb/s SAS RAID-on-Chip controller, which enables NEC’s next-generation servers to offer the latest in server storage technology. The new servers provide NEC’s customers with a proven, industry-hardened RAID stack and 6Gb/s SAS RAID controller platform featuring superior levels of performance and scalability.
Second Quarter 2009 Conference Call
Management will review the results for the second quarter of 2009 and provide an outlook for the third quarter of 2009 during a conference call at 2:30 p.m. Pacific Time/5:30 p.m. Eastern Time on July 23, 2009. The conference call webcast will be accessible under the Financial Events and Calendar section at http://investor.pmc-sierra.com/. To listen to the conference call live by telephone, dial 416-640-3404 approximately ten minutes before the start time. A telephone playback will be available after the completion of the call and can be accessed at 647-436-0148 using the access code 4670336. A replay of the webcast will be available for five business days.
Third Quarter 2009 Conference Call
PMC-Sierra is planning to release its results for the third quarter of 2009 on October 22, 2009. A conference call will be held on the day of the release to review the quarter and provide an outlook for the fourth quarter of 2009.
Safe Harbor Statement
PMC-Sierra’s forward-looking statements are subject to risks and uncertainties. Actual results may differ from these projections, and reported results should not be considered as an indication of future performance. The Company’s SEC filings describe more fully the risks associated with the Company’s business including PMC-Sierra’s limited revenue visibility due to variable customer demands, uncertainty in the financial and credit markets, market segment growth or decline, orders with short delivery lead times, customer concentration, and other items such as foreign exchange rates. The Company does not undertake any obligation to update the forward-looking statements.
About PMC-Sierra
PMC-Sierra®, the premier Internet infrastructure semiconductor solution provider, offers its customers technical and sales support worldwide through a network of offices in North America, Europe, Israel and Asia. PMC-Sierra provides semiconductor solutions for Enterprise Storage, Wide Area Network Infrastructure, Fiber To The Home, and Laser Printer/SMB NAS markets. The Company is publicly traded on the NASDAQ Stock Market under the PMCS symbol. For more information, visit www.pmc-sierra.com.
© Copyright PMC-Sierra, Inc. 2009. All rights reserved. PMC and PMC-SIERRA are registered trademarks of PMC-Sierra, Inc. in the United States and other countries. Other product and company names mentioned herein may be trademarks of their respective owners.
| PMC-Sierra, Inc. |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| (in thousands, except for per share amounts) |
| (unaudited) |
| | | | | | | | | | | |
| | Three Months Ended | | | Six Months Ended |
| | June 28, | | March 29, | | June 29, | | | June 28, | | June 29, |
| | 2009 | | 2009 | | 2008 | | | 2009 | | 2008 |
| | | | | | Restated * | | | | | Restated * |
| | | | | | | | | | | |
| Net revenues | | $ | 123,194 | | | $ | 102,572 | | | $ | 139,839 | | | | $ | 225,766 | | | $ | 264,879 | |
| Cost of revenues | | | 39,413 | | | | 36,803 | | | | 49,073 | | | | | 76,216 | | | | 92,379 | |
| Gross profit | | | 83,781 | | | | 65,769 | | | | 90,766 | | | | | 149,550 | | | | 172,500 | |
| | | | | | | | | | | |
| Other costs and expenses: | | | | | | | | | | | |
| Research and development | | | 36,383 | | | | 38,628 | | | | 39,995 | | | | | 75,011 | | | | 77,305 | |
| Selling, general and administrative | | | 22,222 | | | | 21,889 | | | | 24,180 | | | | | 44,111 | | | | 48,389 | |
| Amortization of purchased intangible assets | | | 9,836 | | | | 9,836 | | | | 9,836 | | | | | 19,672 | | | | 19,672 | |
| Restructuring costs and other charges | | | 303 | | | | 335 | | | | 157 | | | | | 638 | | | | 1,044 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income (loss) from operations | | | 15,037 | | | | (4,919 | ) | | | 16,598 | | | | | 10,118 | | | | 26,090 | |
| | | | | | | | | | | |
| Other income (expense): | | | | | | | | | | | |
| Foreign exchange gain (loss) | | | (2,867 | ) | | | 4,070 | | | | (1,066 | ) | | | | 1,203 | | | | 2,092 | |
| Gain on repurchase of senior convertible notes, net | | | - | | | | - | | | | - | | | | | - | | | | 4,931 | |
| Amortization of debt issue costs | | | (50 | ) | | | (50 | ) | | | (93 | ) | | | | (100 | ) | | | (238 | ) |
| Loss on subleased facilities | | | - | | | | (538 | ) | | | - | | | | | (538 | ) | | | - | |
| Interest income (expense), net | | | (841 | ) | | | (811 | ) | | | 113 | | | | | (1,652 | ) | | | 440 | |
| Income (loss) before provision for income taxes | | | 11,279 | | | | (2,248 | ) | | | 15,552 | | | | | 9,031 | | | | 33,315 | |
| | | | | | | | | | | | | | | | | | | | | |
| Recovery of (provision) for income taxes | | | (3,430 | ) | | | (1,669 | ) | | | 120,397 | | | | | (5,099 | ) | | | 81,711 | |
| Net income (loss) | | $ | 7,849 | | | $ | (3,917 | ) | | $ | 135,949 | | | | $ | 3,932 | | | $ | 115,026 | |
| | | | | | | | | | | |
| Net income (loss) per common share - basic | | $ | 0.03 | | | $ | (0.02 | ) | | $ | 0.62 | | | | $ | 0.02 | | | $ | 0.52 | |
| Net income (loss) per common share - diluted | | $ | 0.03 | | | $ | (0.02 | ) | | $ | 0.60 | | | | $ | 0.02 | | | $ | 0.52 | |
| | | | | | | | | | | |
| Shares used in per share calculation - basic | | | 224,861 | | | | 223,844 | | | | 221,008 | | | | | 224,353 | | | | 220,470 | |
| Shares used in per share calculation - diluted | | | 227,883 | | | | 223,844 | | | | 224,984 | | | | | 226,327 | | | | 222,966 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| * Effective December 29, 2008, the Company retrospectively adopted Financial Accounting Standards Board issued Staff Position Accounting Principles |
| Board Opinion 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlements). |
| Accordingly, the comparative condensed consolidated financial statements have been restated. |
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| |
| |
As a supplement to the Company's condensed consolidated financial statements presented in accordance with generally accepted accounting principles ("GAAP"), the Company provides additional non-GAAP measures for cost of revenues, gross profit, gross profit percentage, research and development expense, selling, general and administrative expense, amortization of purchased intangible assets, restructuring costs and other charges, other income (expense), provision for (recovery of) income taxes, operating expenses, operating income (loss), net income (loss), and basic and diluted net income (loss) per share. |
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A non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The Company believes that the additional non-GAAP measures are useful to investors for the purpose of financial analysis. Management uses these measures internally to evaluate the Company's in-period operating performance before gains, losses and other charges that are considered by management to be outside of the Company's core operating results. In addition, the measures are used for planning and forecasting of the Company's future periods. However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. Other companies may use different non-GAAP measures and presentation of results. |
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| PMC-Sierra, Inc. |
Adjustments to GAAP Cost of Revenues, Gross Profit, Gross Profit Percentage, Research and Development Expense, Selling, General and Administrative Expense, Amortization of Purchased Intangible Assets, Restructuring Costs and Other Charges, Other Income (Expense), Provision for (Recovery of) Income Taxes, Operating Expenses, Operating Income (Loss), Net Income (Loss), and Basic and Diluted Net Income (Loss) Per Share |
| (in thousands, except for per share amounts) |
| (unaudited) |
| | | | | | | | | | | |
| | Three Months Ended | | | Six Months Ended |
| | June 28, | | March 29, | | June 29, | | | June 28, | | June 29, |
| | 2009 (1) | | 2009 (2) | | 2008 (3) | | | 2009 (4) | | 2008 (5) |
| | | | | | Restated * | | | | | Restated * |
| | | | | | | | | | | |
| GAAP cost of revenues | | $ | 39,413 | | | $ | 36,803 | | | $ | 49,073 | | | | $ | 76,216 | | | $ | 92,379 | |
| Stock-based compensation | | | (226 | ) | | | (205 | ) | | | (410 | ) | | | | (431 | ) | | | (726 | ) |
| Non-GAAP cost of revenues | | $ | 39,187 | | | $ | 36,598 | | | $ | 48,663 | | | | $ | 75,785 | | | $ | 91,653 | |
| | | | | | | | | | | |
| GAAP gross profit | | $ | 83,781 | | | $ | 65,769 | | | $ | 90,766 | | | | $ | 149,550 | | | $ | 172,500 | |
| Stock-based compensation | | | 226 | | | | 205 | | | | 410 | | | | | 431 | | | | 726 | |
| Non-GAAP gross profit | | $ | 84,007 | | | $ | 65,974 | | | $ | 91,176 | | | | $ | 149,981 | | | $ | 173,226 | |
| | | | | | | | | | | |
| Non-GAAP gross profit % | | | 68 | % | | | 64 | % | | | 65 | % | | | | 66 | % | | | 65 | % |
| | | | | | | | | | | |
| GAAP research and development expense | | $ | 36,383 | | | $ | 38,628 | | | $ | 39,995 | | | | $ | 75,011 | | | $ | 77,305 | |
| Stock-based compensation | | | (2,062 | ) | | | (2,331 | ) | | | (3,220 | ) | | | | (4,393 | ) | | | (6,383 | ) |
| Exclusion of termination costs | | | - | | | | (1,168 | ) | | | - | | | | | (1,168 | ) | | | - | |
| Non-GAAP research and development expense | | $ | 34,321 | | | $ | 35,129 | | | $ | 36,775 | | | | $ | 69,450 | | | $ | 70,922 | |
| | | | | | | | | | | |
| GAAP selling, general and administrative expense | | $ | 22,222 | | | $ | 21,889 | | | $ | 24,180 | | | | $ | 44,111 | | | $ | 48,389 | |
| Stock-based compensation | | | (3,343 | ) | | | (2,925 | ) | | | (3,725 | ) | | | | (6,268 | ) | | | (7,253 | ) |
| Exclusion of termination costs | | | - | | | | (771 | ) | | | - | | | | | (771 | ) | | | - | |
| Non-GAAP selling, general and administrative expense | | $ | 18,879 | | | $ | 18,193 | | | $ | 20,455 | | | | $ | 37,072 | | | $ | 41,136 | |
| | | | | | | | | | | |
| GAAP amortization of purchased intangible assets | | $ | 9,836 | | | $ | 9,836 | | | $ | 9,836 | | | | $ | 19,672 | | | $ | 19,672 | |
| Exclusion of amortization of purchased intangible assets | | | (9,836 | ) | | | (9,836 | ) | | | (9,836 | ) | | | | (19,672 | ) | | | (19,672 | ) |
| Non-GAAP amortization of purchased intangible assets | | $ | - | | | $ | - | | | $ | - | | | | $ | - | | | $ | - | |
| | | | | | | | | | | |
| GAAP restructuring costs and other charges | | $ | 303 | | | $ | 335 | | | $ | 157 | | | | $ | 638 | | | $ | 1,044 | |
| Exclusion of restructuring costs and other charges | | | (303 | ) | | | (335 | ) | | | (157 | ) | | | | (638 | ) | | | (1,044 | ) |
| Non-GAAP restructuring costs and other charges | | $ | - | | | $ | - | | | $ | - | | | | $ | - | | | $ | - | |
| | | | | | | | | | | |
| GAAP other income (expense) | | $ | (3,758 | ) | | $ | 2,671 | | | $ | (1,046 | ) | | | $ | (1,087 | ) | | $ | 7,225 | |
| Loss on subleased facilities | | | - | | | | 538 | | | | - | | | | | 538 | | | | - | |
| Accretion of the debt discount related to the senior convertible notes | | | 742 | | | | 728 | | | | 1,274 | | | | | 1,470 | | | | 3,180 | |
| Gain on repurchase of senior convertible notes, net | | | - | | | | - | | | | - | | | | | - | | | | (4,931 | ) |
| Foreign exchange loss (gain) on foreign tax liabilities | | | 2,889 | | | | (3,576 | ) | | | 765 | | | | | (687 | ) | | | (2,839 | ) |
| Non-GAAP other income (expense) | | $ | (127 | ) | | $ | 361 | | | $ | 993 | | | | $ | 234 | | | $ | 2,635 | |
| | | | | | | | | | | |
| GAAP provision for (recovery of) income taxes | | $ | 3,430 | | | $ | 1,669 | | | $ | (120,397 | ) | | | $ | 5,099 | | | $ | (81,711 | ) |
| Recovery of (provision for) income tax matters | | | (2,450 | ) | | | (1,030 | ) | | | 125,584 | | | | | (3,480 | ) | | | 92,176 | |
| Non-GAAP provision for (recovery of) income taxes | | $ | 980 | | | $ | 639 | | | $ | 5,187 | | | | $ | 1,619 | | | $ | 10,465 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | Three Months Ended | | | Six Months Ended |
| | June 28, | | March 29, | | June 29, | | | June 28, | | June 29, |
| | 2009 (1) | | 2009 (2) | | 2008 (3) | | | 2009 (4) | | 2008 (5) |
| | | | | | Restated * | | | | | Restated * |
| | | | | | | | | | | |
| GAAP operating expenses | | $ | 68,744 | | | $ | 70,688 | | | $ | 74,168 | | | | $ | 139,432 | | | $ | 146,410 | |
| Stock-based compensation | | | (5,405 | ) | | | (5,256 | ) | | | (6,945 | ) | | | | (10,661 | ) | | | (13,636 | ) |
| Exclusion of termination costs | | | - | | | | (1,939 | ) | | | - | | | | | (1,939 | ) | | | - | |
| Exclusion of amortization of purchased intangible assets | | | (9,836 | ) | | | (9,836 | ) | | | (9,836 | ) | | | | (19,672 | ) | | | (19,672 | ) |
| Exclusion of restructuring costs and other charges | | | (303 | ) | | | (335 | ) | | | (157 | ) | | | | (638 | ) | | | (1,044 | ) |
| Non-GAAP operating expenses | | $ | 53,200 | | | $ | 53,322 | | | $ | 57,230 | | | | $ | 106,522 | | | $ | 112,058 | |
| | | | | | | | | | | |
| GAAP operating income (loss) | | $ | 15,037 | | | $ | (4,919 | ) | | $ | 16,598 | | | | $ | 10,118 | | | $ | 26,090 | |
| Stock-based compensation | | | 5,631 | | | | 5,461 | | | | 7,355 | | | | | 11,092 | | | | 14,362 | |
| Exclusion of termination costs | | | - | | | | 1,939 | | | | - | | | | | 1,939 | | | | - | |
| Exclusion of amortization of purchased intangible assets | | | 9,836 | | | | 9,836 | | | | 9,836 | | | | | 19,672 | | | | 19,672 | |
| Exclusion of restructuring costs and other charges | | | 303 | | | | 335 | | | | 157 | | | | | 638 | | | | 1,044 | |
| Non-GAAP operating income (loss) | | $ | 30,807 | | | $ | 12,652 | | | $ | 33,946 | | | | $ | 43,459 | | | $ | 61,168 | |
| | | | | | | | | | | |
| GAAP net income (loss) | | $ | 7,849 | | | $ | (3,917 | ) | | $ | 135,949 | | | | $ | 3,932 | | | $ | 115,026 | |
| Stock-based compensation | | | 5,631 | | | | 5,461 | | | | 7,355 | | | | | 11,092 | | | | 14,362 | |
| Exclusion of termination costs | | | - | | | | 1,939 | | | | - | | | | | 1,939 | | | | - | |
| Exclusion of amortization of purchased intangible assets | | | 9,836 | | | | 9,836 | | | | 9,836 | | | | | 19,672 | | | | 19,672 | |
| Exclusion of restructuring costs and other charges | | | 303 | | | | 335 | | | | 157 | | | | | 638 | | | | 1,044 | |
| Loss on subleased facilities | | | - | | | | 538 | | | | - | | | | | 538 | | | | - | |
| Accretion of the debt discount related to the senior convertible notes | | | 742 | | | | 728 | | | | 1,274 | | | | | 1,470 | | | | 3,180 | |
| Gain on repurchase of senior convertible notes, net | | | - | | | | - | | | | - | | | | | - | | | | (4,931 | ) |
| Foreign exchange loss (gain) on foreign tax liabilities | | | 2,889 | | | | (3,576 | ) | | | 765 | | | | | (687 | ) | | | (2,839 | ) |
| Provision for (recovery of) income tax matters | | | 2,450 | | | | 1,030 | | | | (125,584 | ) | | | | 3,480 | | | | (92,176 | ) |
| Non-GAAP net income | | $ | 29,700 | | | $ | 12,374 | | | $ | 29,752 | | | | $ | 42,074 | | | $ | 53,338 | |
| | | | | | | | | | | |
| Non-GAAP net income per share - basic | | $ | 0.13 | | | $ | 0.06 | | | $ | 0.13 | | | | $ | 0.19 | | | $ | 0.24 | |
| Non-GAAP net income per share - diluted | | $ | 0.13 | | | $ | 0.06 | | | $ | 0.13 | | | | $ | 0.19 | | | $ | 0.24 | |
| | | | | | | | | | | |
| Shares used to calculate non-GAAP net income per share - basic | | | 224,861 | | | | 223,844 | | | | 221,008 | | | | | 224,353 | | | | 220,470 | |
| Shares used to calculate non-GAAP net income per share - diluted | | | 227,883 | | | | 224,771 | | | | 224,984 | | | | | 226,327 | | | | 222,966 | |
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| Non-GAAP adjustments |
| | | | | | | | | | | |
(1) $5.6 million stock-based compensation expense; $9.8 million amortization of purchased intangible assets; $0.3 million restructuring costs; $0.7 million of non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; $2.9 million foreign exchange loss on foreign tax liabilities; and $2.5 million income tax provision which includes $1.5 million net deferred tax expense relating to foreign exchange translation of a foreign subsidiary, $0.3 million arrears interest relating to unrecognized tax benefits, $1.2 million tax effect on inter-company transactions, and $0.5 million income tax recovery related to the adjustments above. |
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(2) $5.5 million stock-based compensation expense; $1.9 million termination costs; $9.8 million amortization of purchased intangible assets; $0.3 million restructuring costs; $0.5 million loss on subleased facilities; $0.7 million of non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; $3.6 million foreign exchange gain on foreign tax liabilities; and $1.0 million income tax provision which includes $0.9 million net deferred tax recovery relating to foreign exchange translation of a foreign subsidiary, $0.4 million arrears interest relating to unrecognized tax benefits, $0.7 million tax adjustments relating to prior periods, $0.3 million income tax related to foreign exchange gain on a foreign tax liability, $1.0 million tax effect on inter-company transactions, and $0.5 million income tax recovery related to adjustments above. |
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(3) $7.4 million stock-based compensation expense; $9.8 million amortization of purchased intangible assets; $0.2 million restructuring costs related to severance; $1.3 million of non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; $0.8 million foreign exchange loss on foreign tax liabilities; and $125.6 million income tax recovery which includes $124.3 million related to an adjustment to the accrual for unrecognized tax benefits, and $1.3 million income tax effect related to the non-GAAP adjustments above. |
During the second quarter of 2008, the Company reached a settlement on several ongoing foreign tax matters related to prior years for amounts less than had been accrued as unrecognized tax benefits. As part of the settlement, the Company agreed to a cash payment of $18.0 million and utilized $38.1 million in investment tax credits. |
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(4) $11.1 million stock-based compensation expense; $1.9 million termination costs; $19.7 million amortization of purchased intangible assets; $0.6 million restructuring costs; $0.5 million loss on subleased facilities; $1.5 million of non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; $0.7 million foreign exchange gain on foreign tax liabilities; and $3.5 million income tax provision which includes $0.6 million net deferred tax expense relating to foreign exchange translation of a foreign subsidiary, $0.7 million arrears interest relating to unrecognized tax benefits, $0.7 million tax adjustments relating to prior periods, $0.3 million income tax related to foreign exchange gain on a foreign tax liability, $2.2 million tax effect on inter-company transactions, and $1.0 million income tax recovery related to adjustments above. |
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(5) $14.4 million stock-based compensation expense; $19.7 million amortization of purchased intangible assets; $1.0 million restructuring costs including $0.4 million for severance and $0.6 million for excess facilities; $3.2 million of non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; $4.9 million gain on repurchase of senior convertible notes, net; $2.8 million foreign exchange gain on foreign tax liabilities; and $92.2 million income tax recovery which includes $91.7 million related to the net adjustment to the accrual for unrecognized tax benefits; and $0.5 million income tax effect related to the non-GAAP adjustments above. |
During the second quarter of 2008, the Company reached a settlement on several ongoing foreign tax matters related to prior years for amounts less than had been accrued as unrecognized tax benefits. As part of the settlement, the Company agreed to a cash payment of $18.0 million and utilized $38.1 million in investment tax credits. |
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| PMC-Sierra, Inc. |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (in thousands) |
| (unaudited) |
| | | | |
| | June 28, | | December 28, |
| | 2009 | | 2008 |
| | | | Restated * |
| ASSETS: | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 169,880 | | | $ | 97,839 | |
| Short-term investments | | | 67,453 | | | | 209,685 | |
| Accounts receivable, net | | | 45,441 | | | | 40,191 | |
| Inventories, net | | | 25,522 | | | | 34,003 | |
| Prepaid expenses and other current assets | | | 17,869 | | | | 9,683 | |
| Deferred tax assets | | | 1,107 | | | | 3,949 | |
| Total current assets | | | 327,272 | | | | 395,350 | |
| | | | |
| Goodwill | | | 396,144 | | | | 396,144 | |
| Intangible assets, net | | | 132,986 | | | | 153,956 | |
| Investment securities | | | 117,239 | | | | - | |
| Prepaid expenses | | | 23,700 | | | | - | |
| Property and equipment, net | | | 14,575 | | | | 15,858 | |
| Investments and other assets | | | 10,046 | | | | 3,512 | |
| Deposits for wafer fabrication capacity | | | 5,145 | | | | 5,145 | |
| | $ | 1,027,107 | | | $ | 969,965 | |
| | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY: | | | | |
| Current liabilities: | | | | |
| Accounts payable | | $ | 16,392 | | | $ | 17,066 | |
| Accrued liabilities | | | 52,907 | | | | 51,390 | |
| Liability for unrecognized tax benefit | | | 25,371 | | | | 23,398 | |
| Income taxes payable | | | 15,012 | | | | - | |
| Deferred income taxes | | | 2,106 | | | | 2,042 | |
| Accrued restructuring costs | | | 5,019 | | | | 5,938 | |
| Deferred income | | | 10,585 | | | | 11,200 | |
| Total current liabilities | | | 127,392 | | | | 111,034 | |
| | | | |
| 2.25% senior convertible notes due October 15, 2025, net | | | 56,827 | | | | 55,357 | |
| Long-term obligations | | | 5,481 | | | | 503 | |
| Deferred taxes and other tax liabilities | | | 20,085 | | | | 17,806 | |
| Liability for unrecognized tax benefit | | | 7,563 | | | | 3,352 | |
| | | | |
PMC special shares convertible into 2,023 (2008 - 2,045) shares of common stock | | | 2,637 | | | | 2,655 | |
| | | | |
| Stockholders' equity | | | | |
| Common stock and additional paid in capital | | | 1,491,529 | | | | 1,471,717 | |
| Accumulated other comprehensive loss | | | 902 | | | | (3,218 | ) |
| Accumulated deficit | | | (685,309 | ) | | | (689,241 | ) |
| Total stockholders' equity | | | 807,122 | | | | 779,258 | |
| | $ | 1,027,107 | | | $ | 969,965 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| PMC-Sierra, Inc. |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (in thousands) |
| (unaudited) |
| | | | |
| | Six Months Ended |
| | | | |
| | June 28, | | June 29, |
| | 2009 | | 2008 |
| | | | Restated * |
| | | | |
| Cash flows from operating activities: | | | | |
| Net income | | $ | 3,932 | | | $ | 115,026 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
| Stock-based compensation | | | 11,092 | | | | 14,362 | |
| Depreciation and amortization | | | 28,289 | | | | 26,439 | |
| Non-cash accretion of investment securities | | | (1,054 | ) | | | - | |
| Foreign exchange gain on tax liability, net | | | (687 | ) | | | (2,527 | ) |
| Gain on repurchase of senior convertible notes, net | | | - | | | | (4,931 | ) |
| Loss on subleased facilities | | | 538 | | | | - | |
| | | | |
| Changes in operating assets and liabilities: | | | | |
| Accounts receivable | | | (5,250 | ) | | | (5,680 | ) |
| Inventories | | | 8,732 | | | | (3,472 | ) |
| Prepaid expenses and other current assets | | | (916 | ) | | | 4,076 | |
| Accounts payable and accrued liabilities | | | (2,843 | ) | | | (6,101 | ) |
| Deferred income taxes and income taxes payable | | | 3,086 | | | | (82,381 | ) |
| Accrued restructuring costs | | | (919 | ) | | | (2,461 | ) |
| Deferred income | | | (615 | ) | | | 791 | |
| Net cash provided by operating activities | | | 43,385 | | | | 53,141 | |
| Cash flows from investing activities: | | | | |
| Purchases of property and equipment | | | (2,983 | ) | | | (3,369 | ) |
| Purchases of intangible assets | | | (1,384 | ) | | | (4,330 | ) |
| Redemption of short-term investments | | | 170,802 | | | | - | |
| Disposals of investment securities | | | 1,000 | | | | - | |
| Purchases of investment securities | | | (145,797 | ) | | | - | |
| Net cash provided by (used in) investing activities | | | 21,638 | | | | (7,699 | ) |
| | | | |
| Cash flows from financing activities: | | | | |
| Repurchase of senior convertible notes | | | - | | | | (95,491 | ) |
| Proceeds from issuance of common stock | | | 7,018 | | | | 8,059 | |
| Net cash provided by (used in) financing activities | | | 7,018 | | | | (87,432 | ) |
| | | | |
| Effect of exchange rate changes on cash and cash equivalents | | | - | | | | (658 | ) |
| Net increase (decrease) in cash and cash equivalents | | | 72,041 | | | | (42,648 | ) |
| Cash and cash equivalents, beginning of the period | | | 97,839 | | | | 364,922 | |
| Cash and cash equivalents, end of the period | | $ | 169,880 | | | $ | 322,274 | |
CONTACT:
PMC-Sierra, Inc.
Vice President & CFO
Mike Zellner, 1-408-988-1204
VP Marketing Communications
David Climie, 1-408-988-8276
Sr Manager, Communications
Susan Shaw, 1-408-988-8515
