Exhibit 99.1
PMC Reports Second Quarter 2012 Results
PMC’s investor relations website: http://investor.pmcs.com
Q2 2012 earnings announcement call live on website at 1:30 p.m. PT
Conference call replay number 1 (888) 843-7419; passcode 32708187#
Replay available shortly after end of conference call through August 12, 2012
SUNNYVALE, Calif.--(BUSINESS WIRE)--July 30, 2012--PMC® (Nasdaq:PMCS), the semiconductor innovator transforming networks that connect, move and store big data, today reported results for the second quarter ended July 1, 2012.
Net revenues in the second quarter of 2012 were $137.8 million, an increase of 4% as compared to net revenues of $132.1 million in the first quarter of 2012 and a decrease of 19% compared to $171 million in the second quarter of 2011.
GAAP net income in the second quarter of 2012 was $26.5 million, or $0.12 per diluted share, including a $28.5 million benefit from the recognition of certain U.S. tax credits, mainly arising from foreign withholding taxes paid in the second quarter related to the intercompany dividend noted below. This compares to a GAAP net loss in the first quarter of 2012 of $96.3 million, or $0.41 per share, including $85.4 million income tax provision related to an intercompany dividend made in preparation for funding the Company’s share repurchase program. Non-GAAP net income in the second quarter of 2012 was $21.3 million, or $0.09 per diluted share, compared to non-GAAP net income of $14 million, or $0.06 per diluted share, in the first quarter of 2012.
Non-GAAP net income in the second quarter of 2012 excludes the following items: (i) $7.3 million in stock-based compensation expense; (ii) $1.1 million in acquisition-related costs; (iii) $0.3 million in termination costs; (iv) $0.3 million in lease exit costs; (v) $11.6 million in amortization of purchased intangible assets; (vi) a $1.1 million foreign exchange gain on foreign tax liabilities; (vii) $0.9 million of non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; and (viii) a $25.7 million recovery of income taxes.
“Our second quarter revenues were in line with expectations.” said Greg Lang, president and chief executive officer of PMC. “The macro environment is challenging the pace of recovery but we are focused on project execution, operational efficiency and tightly managing expenses. PMC is well positioned as the fundamentals behind our key growth drivers remain intact.”
For a full reconciliation of each non-GAAP item used herein to the most directly comparable GAAP financial measure, 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 these 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.
SECOND QUARTER AND RECENT HIGHLIGHTS
The Company announced the following in the second quarter of 2012:
- PMC announced that it entered into an Accelerated Stock Buyback agreement (“ASB agreement”) with Goldman, Sachs & Co. (“Goldman”) to repurchase an aggregate of $160 million of PMC common stock. The Company will acquire these common shares as part of its $275 million stock repurchase program announced on March 13, 2012.
- Building on PMC’s industry leadership in providing innovative technologies that accelerate its customers’ efforts to connect, move and store big data, PMC announced the industry’s first 12Gb/s SAS flash manager for the next wave of enterprise solid state drives (SSDs). With this introduction, PMC has delivered the industry's first end-to-end 12Gb/s SAS solution, from the protocol controller to the SSD controller. PMC's SFM-12G enables more than 300,000 IOPS in a 2.5" SAS SSD, more than double the performance of today's 6Gb/s SAS SSDs. When paired with the industry's highest-performing protocol controller, PMC's SPCv 12G, cloud server and big data storage manufacturers can deliver a stunning 2.4 million IOPS in an eight-drive, enterprise-class flash subsystem.
- Extending its portfolio of low power solutions for the wireless communications market, PMC announced the industry's lowest power and most integrated radio transceiver chipset for macro base station designs. PMC's new UniTRX™ chipset replaces up to 14 discrete devices, and reduces both board space and power by more than 50 percent for equivalent multi-standard base station radio designs. The UniTRX chipset includes three integrated monolithic CMOS devices: the UniTX™ dual-transmitter RFIC for multi-standard, wideband radio designs; the UniRX™ dual-receiver RFIC for multi-standard, wideband radio designs, with an embedded processor included for control and calibration; and, the SyntheCLK™ low-phase-noise clock synthesizer with an integrated jitter attenuator.
- PMC announced that it was expanding its leadership in optical transport with a second-generation HyPHY OTN processor family that enables Metro OTN. With PMC's HyPHY 20Gflex and HyPHY 10Gflex, Metro OTN doubles packet efficiency and delivers multiservice capabilities and scalability required for metro transport networks worldwide to cope with explosive growth in packet traffic. The HyPHY Flex devices provide OEMs with the lowest cost of development by enabling them to leverage a single device for both OTN-switched and DWDM lambda-switched optical transport equipment.
- In conjunction with IP Infusion, PMC announced the availability of ZebOS® Advanced Hardware Integration Software (AHIS) on PMC’s WinPath3™ network processor. IP Infusion AHIS is the first solution to provide a scalable, hardware-independent architecture that enables network equipment providers to efficiently develop networking solutions based on leading silicon platforms.
- As a testament to the Company’s focus on quality, PMC announced that it has received the prestigious 2011 Quality Award from Huawei Technologies, China’s leading telecommunications equipment company. The award, which focuses on quality assurance, acknowledges the high standard of PMC’s products and the quality of technical support delivered in 2011.
Second Quarter 2012 Conference Call
Management will review the second quarter 2012 results and share its outlook for the third quarter of 2012 during a conference call at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time on July 30, 2012. The conference call webcast will be accessible under the Financial News and Events section at: http://investor.pmcs.com. To listen to the conference call live by telephone, dial 1 (888) 771-4371 (US Toll Free) or 1 (847) 585-4405 (International) with passcode 32708187, approximately ten minutes before the start time. A telephone playback will be available after the completion of the call and can be accessed at 1 (888) 843-7419 using the access code 32708187#. A replay of the webcast will be available for 10 business days.
Safe Harbor Statement
This release contains forward-looking statements that involve risks and uncertainties. The Company’s SEC filings describe the risks associated with the Company’s business, including PMC’s limited revenue visibility due to variable customer demands, market segment growth or decline, orders with short delivery lead times, customer concentration, changes in inventory, and other items such as foreign exchange rates and volatility in global financial markets.
About PMC
PMC (Nasdaq:PMCS) is the semiconductor innovator transforming networks that connect, move and store big data. Building on a track record of technology leadership, the Company is driving innovation across storage, optical and mobile networks. PMC’s highly integrated solutions increase performance and enable next-generation services to accelerate the network transformation. For more information, visit www.pmcs.com. Follow PMC on Twitter, LinkedIn and RSS.
© Copyright PMC-Sierra, Inc. 2012. All rights reserved. PMC and PMC-SIERRA are registered trademarks of PMC-Sierra, Inc. in the United States and other countries. PMCS and Adaptec by PMC are trademarks of PMC-Sierra, Inc. Other product and company names mentioned herein may be trademarks of their respective owners. PMC is the corporate brand of PMC-Sierra, Inc.
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PMC-Sierra, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share amounts)
(unaudited) |
| |
| | Three Months Ended | | Six Months Ended |
| | July 1,
2012 | | April 1,
2012 | | June 26,
2011 | | July 1,
2012 | | June 26,
2011 |
| | | | | | | | | | |
| Net revenues | | $ | 137,762 | | | $ | 132,094 | | | $ | 171,018 | | | $ | 269,856 | | | $ | 328,452 | |
| Cost of revenues | | | 41,253 | | | | 41,012 | | | | 52,663 | | | | 82,265 | | | | 111,824 | |
| Gross profit | | | 96,509 | | | | 91,082 | | | | 118,355 | | | | 187,591 | | | | 216,628 | |
| | | | | | | | | | |
| Research and development | | | 56,699 | | | | 59,071 | | | | 56,421 | | | | 115,770 | | | | 110,920 | |
| Selling, general and administrative | | | 29,290 | | | | 28,971 | | | | 29,366 | | | | 58,261 | | | | 61,575 | |
| Amortization of purchased intangible assets | | | 11,626 | | | | 11,287 | | | | 11,031 | | | | 22,913 | | | | 22,052 | |
| (Loss) income from operations | | | (1,106 | ) | | | (8,247 | ) | | | 21,537 | | | | (9,353 | ) | | | 22,081 | |
| | | | | | | | | | |
| Other income (expense): | | | | | | | | | | |
| Gain on investment securities and other | | | 527 | | | | 39 | | | | 167 | | | | 566 | | | | 337 | |
| Amortization of debt issue costs | | | (50 | ) | | | (50 | ) | | | (50 | ) | | | (100 | ) | | | (100 | ) |
| Foreign exchange gain (loss) | | | 1,608 | | | | (1,105 | ) | | | (623 | ) | | | 503 | | | | (2,097 | ) |
| Interest expense, net | | | (563 | ) | | | (179 | ) | | | (571 | ) | | | (742 | ) | | | (1,495 | ) |
| Income (loss) before recovery of (provision for) income taxes | | | 416 | | | | (9,542 | ) | | | 20,460 | | | | (9,126 | ) | | | 18,726 | |
| Recovery of (provision for) income taxes | | | 26,064 | | | | (86,729 | ) | | | (3,725 | ) | | | (60,665 | ) | | | (9,648 | ) |
| Net income (loss) | | $ | 26,480 | | | $ | (96,271 | ) | | $ | 16,735 | | | $ | (69,791 | ) | | $ | 9,078 | |
| | | | | | | | | | |
| Net income (loss) per common share - basic | | $ | 0.12 | | | $ | (0.41 | ) | | $ | 0.07 | | | $ | (0.31 | ) | | $ | 0.04 | |
| Net income (loss) per common share - diluted | | $ | 0.12 | | | $ | (0.41 | ) | | $ | 0.07 | | | $ | (0.31 | ) | | $ | 0.04 | |
| | | | | | | | | | |
| Shares used in per share calculation - basic | | | 222,316 | | | | 232,142 | | | | 234,993 | | | | 227,229 | | | | 234,526 | |
| Shares used in per share calculation - diluted | | | 224,560 | | | | 232,142 | | | | 237,506 | | | | 227,229 | | | | 237,531 | |
| |
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, other income (expense), (provision for) recovery of income taxes, operating expenses, operating income (loss), operating margin percentage, net income (loss), and basic and diluted net income (loss) per share.
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, |
| Other Income (Expense), (Provision for) Recovery of Income Taxes, Operating Expenses, Operating Income (Loss), |
| Operating Margin Percentage, 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 |
| | July 1,
2012 (1) | | April 1,
2012 (2) | | June 26,
2011 (3) | | July 1,
2012 (4) | | June 26,
2011 (5) |
| | | | | | | | | | |
| GAAP cost of revenues | | $ | 41,253 | | | $ | 41,012 | | | $ | 52,663 | | | $ | 82,265 | | | $ | 111,824 | |
| Stock-based compensation | | | (252 | ) | | | (224 | ) | | | (260 | ) | | | (476 | ) | | | (483 | ) |
| Acquisition-related costs | | | (35 | ) | | | (2 | ) | | | (41 | ) | | | (37 | ) | | | (9,105 | ) |
| Non-GAAP cost of revenues | | $ | 40,966 | | | $ | 40,786 | | | $ | 52,362 | | | $ | 81,752 | | | $ | 102,236 | |
| | | | | | | | | | |
| GAAP gross profit | | $ | 96,509 | | | $ | 91,082 | | | $ | 118,355 | | | $ | 187,591 | | | $ | 216,628 | |
| Stock-based compensation | | | 252 | | | | 224 | | | | 260 | | | | 476 | | | | 483 | |
| Acquisition-related costs | | | 35 | | | | 2 | | | | 41 | | | | 37 | | | | 9,105 | |
| Non-GAAP gross profit | | $ | 96,796 | | | $ | 91,308 | | | $ | 118,656 | | | $ | 188,104 | | | $ | 226,216 | |
| | | | | | | | | | |
| Non-GAAP gross profit % | | | 70 | % | | | 69 | % | | | 69 | % | | | 70 | % | | | 69 | % |
| | | | | | | | | | |
| GAAP research and development expense | | $ | 56,699 | | | $ | 59,071 | | | $ | 56,421 | | | $ | 115,770 | | | $ | 110,920 | |
| Stock-based compensation | | | (2,900 | ) | | | (2,841 | ) | | | (2,927 | ) | | | (5,741 | ) | | | (5,624 | ) |
| Acquisition-related costs | | | (544 | ) | | | (598 | ) | | | (97 | ) | | | (1,142 | ) | | | (288 | ) |
| Termination costs | | | (227 | ) | | | (1,484 | ) | | | - | | | | (1,711 | ) | | | - | |
| Non-GAAP research and development expense | | $ | 53,028 | | | $ | 54,148 | | | $ | 53,397 | | | $ | 107,176 | | | $ | 105,008 | |
| | | | | | | | | | |
| GAAP selling, general and administrative expense | | $ | 29,290 | | | $ | 28,971 | | | $ | 29,366 | | | $ | 58,261 | | | $ | 61,575 | |
| Stock-based compensation | | | (4,157 | ) | | | (3,516 | ) | | | (3,859 | ) | | | (7,673 | ) | | | (7,254 | ) |
| Acquisition-related costs | | | (535 | ) | | | (761 | ) | | | (1,051 | ) | | | (1,296 | ) | | | (2,210 | ) |
| Termination costs | | | (68 | ) | | | (133 | ) | | | - | | | | (201 | ) | | | - | |
| Lease exit costs | | | (312 | ) | | | (442 | ) | | | - | | | | (754 | ) | | | (3,392 | ) |
| Non-GAAP selling, general and administrative expense | | $ | 24,218 | | | $ | 24,119 | | | $ | 24,456 | | | $ | 48,337 | | | $ | 48,719 | |
| | | | | | | | | | |
| GAAP amortization of purchased intangible assets | | $ | 11,626 | | | $ | 11,287 | | | $ | 11,031 | | | $ | 22,913 | | | $ | 22,052 | |
| Amortization of purchased intangible assets | | | (11,626 | ) | | | (11,287 | ) | | | (11,031 | ) | | | (22,913 | ) | | | (22,052 | ) |
| Non-GAAP amortization of purchased intangible assets | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | |
| GAAP other income (expense) | | $ | 1,522 | | | $ | (1,295 | ) | | $ | (1,077 | ) | | $ | 227 | | | $ | (3,355 | ) |
| Foreign exchange (gain) loss on foreign tax liabilities | | | (1,084 | ) | | | 1,342 | | | | 260 | | | | 258 | | | | 1,213 | |
| Accretion of debt discount related to senior convertible notes | | | 942 | | | | 925 | | | | 871 | | | | 1,867 | | | | 1,724 | |
| Accretion of liability for contingent consideration | | | - | | | | - | | | | 334 | | | | - | | | | 810 | |
| Interest expense related to short-term loan | | | - | | | | - | | | | - | | | | - | | | | 258 | |
| Non-GAAP other income | | $ | 1,380 | | | $ | 972 | | | $ | 388 | | | $ | 2,352 | | | $ | 650 | |
| | | | | | | | | | |
| GAAP (recovery of) provision for income taxes | | $ | (26,064 | ) | | $ | 86,729 | | | $ | 3,725 | | | $ | 60,665 | | | $ | 9,648 | |
| Recovery of (provision for) income taxes | | | 25,673 | | | | (86,718 | ) | | | (2,706 | ) | | | (61,045 | ) | | | (7,247 | ) |
| Non-GAAP (recovery of) provision for income taxes | | $ | (391 | ) | | $ | 11 | | | $ | 1,019 | | | $ | (380 | ) | | $ | 2,401 | |
| |
| |
| | Three Months Ended | | Six Months Ended |
| | July 1,
2012 (1) | | April 1,
2012 (2) | | June 26,
2011 (3) | | July 1,
2012 (4) | | June 26,
2011 (5) |
| | | | | | | | | | |
| GAAP operating expenses | | $ | 97,615 | | | $ | 99,329 | | | $ | 96,818 | | | $ | 196,944 | | | $ | 194,547 | |
| Stock-based compensation | | | (7,057 | ) | | | (6,357 | ) | | | (6,786 | ) | | | (13,414 | ) | | | (12,878 | ) |
| Acquisition-related costs | | | (1,079 | ) | | | (1,359 | ) | | | (1,148 | ) | | | (2,438 | ) | | | (2,498 | ) |
| Termination costs | | | (295 | ) | | | (1,617 | ) | | | - | | | | (1,912 | ) | | | - | |
| Lease exit costs | | | (312 | ) | | | (442 | ) | | | - | | | | (754 | ) | | | (3,392 | ) |
| Amortization of purchased intangible assets | | | (11,626 | ) | | | (11,287 | ) | | | (11,031 | ) | | | (22,913 | ) | | | (22,052 | ) |
| Non-GAAP operating expenses | | $ | 77,246 | | | $ | 78,267 | | | $ | 77,853 | | | $ | 155,513 | | | $ | 153,727 | |
| | | | | | | | | | |
| GAAP operating (loss) income | | $ | (1,106 | ) | | $ | (8,247 | ) | | $ | 21,537 | | | $ | (9,353 | ) | | $ | 22,081 | |
| Stock-based compensation | | | 7,309 | | | | 6,581 | | | | 7,046 | | | | 13,890 | | | | 13,361 | |
| Acquisition-related costs | | | 1,114 | | | | 1,361 | | | | 1,189 | | | | 2,475 | | | | 11,603 | |
| Termination costs | | | 295 | | | | 1,617 | | | | - | | | | 1,912 | | | | - | |
| Lease exit costs | | | 312 | | | | 442 | | | | - | | | | 754 | | | | 3,392 | |
| Amortization of purchased intangible assets | | | 11,626 | | | | 11,287 | | | | 11,031 | | | | 22,913 | | | | 22,052 | |
| Non-GAAP operating income | | $ | 19,550 | | | $ | 13,041 | | | $ | 40,803 | | | $ | 32,591 | | | $ | 72,489 | |
| | | | | | | | | | |
| Non-GAAP operating margin % | | | 14 | % | | | 10 | % | | | 24 | % | | | 12 | % | | | 22 | % |
| | | | | | | | | | |
| GAAP net income (loss) | | $ | 26,480 | | | $ | (96,271 | ) | | $ | 16,735 | | | $ | (69,791 | ) | | $ | 9,078 | |
| Stock-based compensation | | | 7,309 | | | | 6,581 | | | | 7,046 | | | | 13,890 | | | | 13,361 | |
| Acquisition-related costs | | | 1,114 | | | | 1,361 | | | | 1,189 | | | | 2,475 | | | | 11,603 | |
| Termination costs | | | 295 | | | | 1,617 | | | | - | | | | 1,912 | | | | - | |
| Lease exit costs | | | 312 | | | | 442 | | | | - | | | | 754 | | | | 3,392 | |
| Amortization of purchased intangible assets | | | 11,626 | | | | 11,287 | | | | 11,031 | | | | 22,913 | | | | 22,052 | |
| Foreign exchange (gain) loss on foreign tax liabilities | | | (1,084 | ) | | | 1,342 | | | | 260 | | | | 258 | | | | 1,213 | |
| Accretion of debt discount related to senior convertible notes | | | 942 | | | | 925 | | | | 871 | | | | 1,867 | | | | 1,724 | |
| Accretion of liability for contingent consideration | | | - | | | | - | | | | 334 | | | | - | | | | 810 | |
| Interest expense related to short-term loan | | | - | | | | - | | | | - | | | | - | | | | 258 | |
| (Recovery of) provision for income taxes | | | (25,673 | ) | | | 86,718 | | | | 2,706 | | | | 61,045 | | | | 7,247 | |
| Non-GAAP net income | | $ | 21,321 | | | $ | 14,002 | | | $ | 40,172 | | | $ | 35,323 | | | $ | 70,738 | |
| | | | | | | | | | |
| Non-GAAP net income per share - basic | | $ | 0.10 | | | $ | 0.06 | | | $ | 0.17 | | | $ | 0.16 | | | $ | 0.30 | |
| Non-GAAP net income per share - diluted | | $ | 0.09 | | | $ | 0.06 | | | $ | 0.17 | | | $ | 0.15 | | | $ | 0.30 | |
| | | | | | | | | | |
| Shares used to calculate non-GAAP net income per share - basic | | | 222,316 | | | | 232,142 | | | | 234,993 | | | | 227,229 | | | | 234,526 | |
| | | | | | | | | | | | | | | | | | | | |
| Shares used to calculate non-GAAP net income per share - diluted | | | 224,560 | | | | 234,198 | | | | 237,506 | | | | 229,379 | | | | 237,531 | |
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(1) $7.3 million stock-based compensation expense; $1.1 million acquisition-related costs; $0.3 million termination costs; $0.3 million lease exit costs; $11.6 million amortization of purchased intangible assets; $1.1 million foreign exchange gain on foreign tax liabilities; $0.9 million non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; and $25.7 million recovery of income taxes which includes $28.5 million benefit of certain U.S. Federal and State tax credits required to be recognized in advance of their utilization, $2.6 million arrears interest relating to unrecognized tax benefits, $1.7 million income tax provision relating to intercompany transactions, $0.9 million income tax recovery for adjustments relating to prior periods, $0.5 million deferred tax recovery related to non-deductible intangible asset amortization, $0.4 million reduction of stock option related loss carry-forwards recognized in equity, and $0.3 million income tax provision relating to foreign exchange translation of a foreign subsidiary.
(2) $6.6 million stock-based compensation expense; $1.4 million acquisition-related costs; $1.6 million termination costs; $0.4 million lease exit costs; $11.3 million amortization of purchased intangible assets; $1.3 million foreign exchange loss on foreign tax liabilities; $0.9 million non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; and $86.7 million provision for income taxes which includes $85.4 million income tax provision related to an intercompany dividend, $1.6 million income tax provision relating to intercompany transactions, $0.6 million arrears interest relating to unrecognized tax benefits, $0.5 million deferred tax recovery related to non-deductible intangible asset amortization, $0.2 million net tax recovery relating to foreign exchange translation of a foreign subsidiary, and $0.2 million income tax recovery for adjustments relating to prior periods.
(3) $7 million stock-based compensation expense; $1.2 million acquisition-related costs; $11 million amortization of purchased intangible assets; $0.3 million foreign exchange loss on foreign tax liabilities; $0.9 million of non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; $0.3 million accretion of liability for contingent consideration; and $2.7 million income tax provision which includes $1.6 million income tax provision relating to intercompany transactions, $1.2 million net tax expense relating to foreign exchange translation of a foreign subsidiary, $0.9 million reduction of stock option related loss carry-forwards recognized in equity, $0.6 million arrears interest relating to unrecognized tax benefits, $0.5 million income tax provision for adjustments relating to prior periods, and $0.3 million income tax recovery related to stock-based compensation.
(4) $13.9 million stock-based compensation expense; $2.5 million acquisition-related costs; $1.9 million termination costs; $0.8 million lease exit costs; $22.9 million amortization of purchased intangible assets; $0.3 million foreign exchange loss on foreign tax liabilities; $1.9 million non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; and $61 million provision for income taxes which includes $60.5 million income tax provision related to an intercompany dividend net of $24.6 million related to the U.S. Federal and State tax credits required to be recognized in advance of their utilization, $3.3 million income tax provision relating to intercompany transactions, $3.9 million benefit of certain U.S. Federal and State tax credits required to be recognized in advance of their utilization, $3.2 million arrears interest relating to unrecognized tax benefits, $1.1 million deferred tax recovery related to non-deductible intangible asset amortization, and $1 million income tax recovery for adjustments relating to prior periods.
(5) $13.4 million stock-based compensation expense; $11.6 million acquisition-related costs; $3.4 million lease exit costs; $22.1 million amortization of purchased intangible assets; $1.2 million foreign exchange loss on foreign tax liabilities; $1.7 million of non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; $0.8 million accretion of liability for contingent consideration; $0.3 million interest related to short-term loan; and $7.2 million income tax provision which includes $1.3 million of stock option related loss carry-forwards recognized in equity, $5.3 million income tax provision relating to intercompany transactions, $0.7 million net tax recovery relating to foreign exchange translation of a foreign subsidiary, $1.2 million arrears interest relating to unrecognized tax benefits, $0.4 million income tax provision for adjustments relating to prior periods, and $0.3 million income tax recovery related to stock-based compensation.
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PMC-Sierra, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited) |
| |
| | July 1,
2012 | | December 31,
2011 |
| ASSETS: | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 101,025 | | | $ | 182,571 | |
| Short-term investments | | | 68,437 | | | | 104,391 | |
| Accounts receivable, net | | | 65,578 | | | | 59,213 | |
| Inventories, net | | | 29,162 | | | | 39,911 | |
| Prepaid expenses and other current assets | | | 21,392 | | | | 23,411 | |
| Income tax receivable | | | 4,768 | | | | 8,027 | |
| Deferred tax assets | | | 37,004 | | | | 30,725 | |
| Total current assets | | | 327,366 | | | | 448,249 | |
| | | | |
| Investment securities | | | 170,944 | | | | 226,619 | |
| Investments and other assets | | | 5,074 | | | | 2,431 | |
| Prepaid expenses | | | 14,127 | | | | 16,901 | |
| Property and equipment, net | | | 34,358 | | | | 25,364 | |
| Goodwill | | | 521,492 | | | | 520,899 | |
| Intangible assets, net | | | 154,896 | | | | 158,482 | |
| Deferred tax assets | | | 389 | | | | 494 | |
| | $ | 1,228,646 | | | $ | 1,399,439 | |
| | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY: | | | | |
| Current liabilities: | | | | |
| 2.25% senior convertible notes due October 15, 2025, net | | $ | 66,989 | | | $ | 65,122 | |
| Accounts payable | | | 26,881 | | | | 38,340 | |
| Accrued liabilities | | | 73,053 | | | | 66,139 | |
| Liability for unrecognized tax benefit | | | 48,861 | | | | 46,394 | |
| Deferred income taxes | | | 2,450 | | | | 2,450 | |
| Deferred income | | | 14,777 | | | | 16,024 | |
| Total current liabilities | | | 233,011 | | | | 234,469 | |
| | | | |
| Long-term obligations | | | 3,415 | | | | 1,284 | |
| Deferred income taxes | | | 42,638 | | | | 40,663 | |
| Liability for unrecognized tax benefit | | | 19,654 | | | | 17,323 | |
PMC special shares convertible into 1,019 (2011 - 1,029) shares of common stock | | | 1,188 | | | | 1,228 | |
| Stockholders' equity: | | | | |
| Common stock and additional paid in capital | | | 1,546,757 | | | | 1,594,667 | |
| Accumulated other comprehensive loss | | | (119 | ) | | | (1,146 | ) |
| Accumulated deficit | | | (617,898 | ) | | | (489,049 | ) |
| Total stockholders' equity | | | 928,740 | | | | 1,104,472 | |
| | $ | 1,228,646 | | | $ | 1,399,439 | |
| |
| |
PMC-Sierra, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited) |
| |
| | Six Months Ended |
| | July 1,
2012 | | June 26,
2011 |
| Cash flows from operating activities: | | | | |
| Net (loss) income | | $ | (69,791 | ) | | $ | 9,078 | |
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | | | | |
| Depreciation and amortization | | | 32,041 | | | | 40,723 | |
| Stock-based compensation | | | 13,890 | | | | 13,361 | |
| Unrealized foreign exchange (gain) loss, net | | | (174 | ) | | | 1,828 | |
| Net amortization of premiums/discounts and accrued interest of investments | | | 2,984 | | | | 2,186 | |
| Accrued interest on short-term loan | | | - | | | | 589 | |
| Gain on investment securities and other | | | (551 | ) | | | (336 | ) |
| Asset impairment | | | 260 | | | | - | |
| Taxes related to intercompany dividend | | | 60,940 | | | | - | |
| | | | |
| Changes in operating assets and liabilities: | | | | |
| Accounts receivable | | | (6,367 | ) | | | (1,759 | ) |
| Inventories | | | 10,749 | | | | 8,017 | |
| Prepaid expenses and other current assets | | | (1,506 | ) | | | 1,698 | |
| Accounts payable and accrued liabilities | | | (22,838 | ) | | | (9,045 | ) |
| Deferred income taxes and income taxes payable | | | 1,658 | | | | 4,208 | |
| Accrued restructuring costs | | | - | | | | (970 | ) |
| Deferred income | | | (1,247 | ) | | | (2,154 | ) |
| Net cash provided by operating activities | | | 20,048 | | | | 67,424 | |
| | | | |
| Cash flows from investing activities: | | | | |
| Business acquisition | | | (15,900 | ) | | | - | |
| Purchases of property and equipment | | | (15,818 | ) | | | (5,861 | ) |
| Purchases of intangible assets | | | (2,291 | ) | | | (3,930 | ) |
| Disposals of investment securities | | | 73,579 | | | | 72,276 | |
| Purchases of investment securities | | | (59,210 | ) | | | (72,957 | ) |
| Reclassification of short-term investments and long-term investment securities | | | 74,852 | | | | - | |
| Net cash provided by (used in) investing activities | | | 55,212 | | | | (10,472 | ) |
| | | | |
| Cash flows from financing activities: | | | | |
| Repurchases of common stock | | | (155,783 | ) | | | (9,704 | ) |
| Equity forward contract related to accelerated share repurchase program | | | (9,827 | ) | | | - | |
| Repayment of short-term loan | | | - | | | | (180,991 | ) |
| Proceeds from issuance of common stock | | | 8,949 | | | | 10,454 | |
| Net cash used in financing activities | | | (156,661 | ) | | | (180,241 | ) |
| | | | |
| Effect of exchange rate changes on cash and cash equivalents | | | (145 | ) | | | 455 | |
| Net decrease in cash and cash equivalents | | | (81,546 | ) | | | (122,834 | ) |
| Cash and cash equivalents, beginning of period | | | 182,571 | | | | 293,355 | |
| Cash and cash equivalents, end of period | | $ | 101,025 | | | $ | 170,521 | |
| |
CONTACT:
PMC-Sierra, Inc.
Vice President & CFO
Mike Zellner, 1-408-988-1204
mike.zellner@pmcs.com
or
Director, Investor Relations
Jennifer Gianola, 1-408-239-8630
jennifer.gianola@pmcs.com
or
Communications Specialist
Hillary Choularton, 1-604-415-6671
hillary.choularton@pmcs.com
