Exhibit 99.1
PMC-Sierra Reports Third Quarter 2004 Results
SANTA CLARA, Calif.--(BUSINESS WIRE)--Oct. 20, 2004--PMC-Sierra,
Inc. (Nasdaq:PMCS):
-- Q3 Net Revenues: $71.2 million
-- Q3 Non-GAAP Net Income: $6.9 million or $0.04 per share
(diluted)
-- Q3 GAAP Net Income: $6.3 million or $0.03 per share (diluted)
PMC-Sierra, Inc. (Nasdaq:PMCS), a leading provider of high-speed
broadband communications and storage semiconductors and MIPS-Powered
microprocessors, today reported its third quarter results for the
period ended September 26, 2004.
Net revenues in the third quarter of 2004 were $71.2 million
compared with $85.7 million for the second quarter of 2004 and $63.1
million for the same period a year ago. This represented a decrease in
revenues of 17 percent sequentially and an increase of 13 percent on a
year-over-year basis.
Net income in the third quarter of 2004 on a non-GAAP basis was
$6.9 million (non-GAAP diluted earnings per share of $0.04) compared
with non-GAAP net income of $14.9 million (non-GAAP diluted earnings
per share of $0.08) in the second quarter of 2004. GAAP net income in
the third quarter of 2004 was $6.3 million (GAAP diluted earnings per
share of $0.03). This compares to GAAP net income of $15.4 million in
the second quarter of 2004 (GAAP diluted earnings per share of $0.08).
Non-GAAP net income in the third quarter of 2004 excludes $1.2
million in acquisition costs relating to a purchase of assets and $0.7
million in gain resulting from sales of investments. For a
reconciliation of GAAP net income (loss) per share versus non-GAAP net
income (loss) per share, see the supplemental schedule on page 7 of
this release. The Company believes the additional non-GAAP measures
provided are useful to investors for the performance of financial
analysis. Management uses the non-GAAP measures internally to evaluate
its in-period operating performance and planning for the Company's
future periods. However, non-GAAP measures are neither in accordance
with, nor are they a substitute for, GAAP measures.
"Despite the recent softness in bookings due to inventory
adjustments, PMC-Sierra is well positioned to participate in the
current capital upgrade cycle in broadband infrastructure including
fiber-to-the-curb, 3G wireless, Ethernet-over-SONET, and enterprise
storage solutions," said Bob Bailey, president and chief executive
officer of PMC-Sierra.
New products and company announcements in Q3 2004 include the
following:
-- RM11200 1.8 GHz Dual CPU 64-Bit MIPS-Powered Multiprocessor --
we introduced the RM11200(TM), the company's third-generation
highly integrated multiprocessor, which integrates two newly
designed 1.8 GHz E11K(TM) CPU cores with multiple high-speed
memory and I/O interfaces, including dual DDR2, dual PCI
Express(TM), quad Gigabit Ethernet ports, and
HyperTransport(TM). The RM11200 provides customers with high
processing performance, low power and leading edge integration
for networking, storage and communications applications such
as routers, storage systems and DSLAMs.
-- SAS Expander Products -- we introduced the maxSAS(TM) product
line for end-to-end Serial Attached SCSI (SAS) solutions to be
used in both the network and server attached storage
applications. The product line includes 24 and 36 port SAS
expanders, namely the SXP 24x3G and SXP 36x3G, as well as an
innovative storage enclosure management processor, called the
SMC-L. The PMC-Sierra maxSAS product family, combined with
either the Adaptec AIC-9410 SAS controller or ASC-48300 SAS
host bus adapter, provides storage equipment manufacturers
with a complete end-to-end storage systems solution using
either SAS or SATA hard disk drives.
-- Open Source Network Computing (NC) initiative -- we announced
the Open Source NC initiative at the Fall Processor Forum in
San Jose to enable the rapid commercialization of low power
thin client solutions for education, enterprise, self-service
kiosks, and retail displays. PMC-Sierra's open source NC
solution, the PMC Xiao Hu(TM) (pronounced `Sha hu', meaning
"Little Tiger") is a commercially available single board
solution co-developed with China's Tsinghua University, MIPS
Technologies, Inc., and ATI Technologies, Inc. The combination
of the PMC Xiao Hu board with Linux software and a
MIPS-Powered microprocessor from PMC-Sierra achieves
significant reduction in power and costs compared to the
traditional desktop PC approach.
-- Executive announcements: we announced the appointment of
Thomas Brigiotta as Vice President of Worldwide Sales. Mr.
Brigiotta comes to the position with more than 20 years of
international sales experience and was formerly with Cadence
Design Systems. The Company also announced the appointment of
Steve Cadigan as Vice President of Human Resources. Mr.
Cadigan has more than 15 years of international human
resources experience and was formerly with Cisco Systems and
Advanced Micro Devices.
Third Quarter 2004 Conference Call
Management will review the third quarter 2004 results and provide
guidance for the fourth quarter of 2004 during a conference call at
1:30 pm Pacific Time/4:30 pm Eastern Time on October 20, 2004. To
listen to the call, investors can access an audio webcast of the
conference call on the Financial Events and Calendar section at
http://investor.pmc-sierra.com/. A replay of this webcast will be
posted and available two hours after the conference call has been
completed. To listen to the conference call live by telephone, please
dial 719-457-2625 approximately ten minutes before the start time. A
telephone replay will be available 15 minutes after the completion of
the call and can be accessed by dialing 719-457-0820 (replay access
code is 945252). A replay of the webcast will be available for five
business days.
Fourth Quarter 2004 Conference Call
PMC-Sierra is planning to release its results for the fourth
quarter of 2004 in late January 2005. A conference call will be held
on the day of the release to review the quarter and provide an outlook
for the first quarter of 2005.
Safe Harbor Statement
PMC-Sierra's forward-looking statements regarding the broadband
infrastructure capital upgrade cycle are subject to risks and
uncertainties. Actual results may differ from these projections.
Investments in broadband infrastructure vary over time and by type of
end-user. Even if they invest in broadband infrastructure, service
providers and enterprises may not maintain or increase their purchases
of equipment containing PMC-Sierra's products, particularly equipment
incorporating PMC-Sierra's newer products. The Company's SEC filings
describe more fully the risks associated with market trends and sales
of newer products, including rapid changes in demand due to customer
inventory levels and production schedules, fluctuations in demand for
networking equipment, and customer concentration. The Company does not
undertake any obligation to update the forward-looking statements.
About PMC-Sierra
PMC-Sierra(TM) is a leading provider of high speed broadband
communications semiconductors and MIPS-Powered(TM) processors for
enterprise, access, metro, storage, wireless infrastructure and
advanced consumer electronics equipment. The company offers worldwide
technical and sales support, including a network of offices throughout
North America, Europe and Asia. The company is publicly traded on the
NASDAQ Stock Market under the PMCS symbol and is included in the S&P
500 Index. For more information, visit www.pmc-sierra.com.
(C) Copyright PMC-Sierra, Inc. 2004. All rights reserved. E11K,
maxSAS, PMC, PMC Xiao Hu, PMCS, PMC-Sierra, RM11200 and "Thinking You
can Build On" are trademarks of PMC-Sierra, Inc. All other trademarks
are the property of the respective owners.
PMC-Sierra, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share amounts)
(unaudited)
Three Months Ended
--------------------------------
Sep 26, Jun 27, Sep 28,
2004 2004 2003
Net revenues
Networking $ 71,173 $ 85,703 $ 63,100
Non-networking - - -
---------- ---------- ----------
Total 71,173 85,703 63,100
Cost of revenues 21,024 23,843 21,868
---------- ---------- ----------
Gross profit 50,149 61,860 41,232
Other costs and expenses:
Research and development 30,168 30,689 27,759
Marketing, general and
administrative 12,148 12,203 12,031
Amortization of deferred
stock compensation:
Research and development - - -
Marketing, general and
administrative - - 313
Acquisition costs 1,212 - -
Restructuring costs - - (1,093)
---------- ---------- ----------
Income (loss) from operations 6,621 18,968 2,222
Interest and other income
(expense), net 1,320 978 (267)
Gain (loss) on extinguishment
of debt - - 1,700
Gain (loss) on investments 655 - (162)
---------- ---------- ----------
Income (loss) before provision
for income taxes 8,596 19,946 3,493
Provision for (recovery of)
income taxes 2,288 4,537 329
---------- ---------- ----------
Net income (loss) $ 6,308 $ 15,409 $ 3,164
========== ========== ==========
Net income (loss) per
common share - basic $ 0.03 $ 0.09 $ 0.02
Net income (loss) per
common share - diluted $ 0.03 $ 0.08 $ 0.02
Shares used in per share
calculation - basic 180,280 179,570 174,118
Shares used in per share
calculation - diluted 187,968 190,136 186,137
PMC-Sierra, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share amounts)
(unaudited)
Nine Months Ended
-----------------------
Sep 26, Sep 28,
2004 2003
Net revenues
Networking $ 235,536 $ 178,096
Non-networking - 768
----------- -----------
Total 235,536 178,864
Cost of revenues 68,624 65,054
----------- -----------
Gross profit 166,912 113,810
Other costs and expenses:
Research and development 89,659 90,880
Marketing, general and administrative 36,276 36,798
Amortization of deferred
stock compensation:
Research and development - 317
Marketing, general and administrative 697 421
Acquisition costs 1,212 -
Restructuring costs - 12,811
----------- -----------
Income (loss) from operations 39,068 (27,417)
Interest and other income (expense), net 3,124 175
Gain (loss) on extinguishment of debt (1,845) 1,700
Gain (loss) on investments 9,242 2,331
----------- -----------
Income (loss) before provision
for income taxes 49,589 (23,211)
Provision for (recovery of) income taxes 11,025 (5,695)
----------- -----------
Net income (loss) $ 38,564 $ (17,516)
=========== ===========
Net income (loss) per common share - basic $ 0.21 $ (0.10)
Net income (loss) per common share - diluted $ 0.20 $ (0.10)
Shares used in per share
calculation - basic 179,420 172,603
Shares used in per share
calculation - diluted 190,135 172,603
As a supplement to the Company's consolidated financial statements
presented on a generally accepted accounting principles (GAAP)
basis, the Company provides additional non-GAAP measures for net
income (loss) and net income (loss) per share in its press release.
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 performance of
financial analysis. Management uses these measures internally to
evaluate its in-period operating performance and 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.
PMC-Sierra, Inc.
Reconciliation of GAAP net income (loss)
to Non-GAAP net income (loss)
(in thousands)
(unaudited)
Three Months Ended
------------------------------
Sep 26, Jun 27, Sep 28,
2004 (1) 2004 (2) 2003 (3)
GAAP net income (loss) $ 6,308 $ 15,409 $ 3,164
Amortization of deferred
stock compensation - - 313
Reversal of provision for excess
inventory resulting from the sale
of inventory that was previously
provided for - (651) -
Acquisition costs 1,212 - -
Restructuring costs - - (1,093)
Impairment of other investments - - -
(Gain) loss on extinguishment of debt - - (1,700)
(Gain) loss on sale of investments (655) - 162
Income tax effect of above items - 163 -
--------- ---------- ---------
Non-GAAP net income (loss) $ 6,865 $ 14,921 $ 846
========= ========== =========
Non-GAAP net income (loss)
per share - diluted $ 0.04 $ 0.08 $ 0.00
Shares used to calculate non-GAAP net
income (loss) per share - diluted 187,968 190,136 186,137
Non-GAAP adjustments
The above amounts have been adjusted to eliminate the following:
(1) $0.7 million gain on sales of investments and $1.2 million
acquisition costs relating to a purchase of assets.
(2) $0.7 million reversal of a provision for excess inventory
resulting from the sale of inventory that was previously provided
for and $0.2 million income tax effect related to this non-GAAP
adjustment.
(3) $0.3 million amortization of deferred stock compensation, a $1.1
million net reversal of restructuring costs, $1.7 million gain on
extinguishment of debt and $0.2 million loss on sale of
investments. The $1.1 million net reversal of restructuring costs
is comprised of a $4.5 million reversal of excess facilities costs
related to our October 2001 restructuring, $3.1 million additional
excess facilities costs related to sites abandoned in our March
2001 restructuring and $0.3 million of restructuring costs related
to our January 2003 restructuring.
PMC-Sierra, Inc.
Reconciliation of GAAP net income (loss)
to Non-GAAP net income (loss)
(in thousands)
(unaudited)
Nine Months Ended
----------------------
Sep 26, Sep 28,
2004 (4) 2003 (5)
GAAP net income (loss) $ 38,564 $ (17,516)
Amortization of deferred
stock compensation 697 738
Reversal of provision for excess
inventory resulting from the sale
of inventory that was previously
provided for (651) -
Acquisition costs 1,212 -
Restructuring costs - 12,811
Impairment of other investments - 3,500
(Gain) loss on extinguishment of debt 1,845 (1,700)
(Gain) loss on sale of investments (9,242) (5,831)
Income tax effect of above items 163 (1,860)
---------- -----------
Non-GAAP net income (loss) $ 32,588 $ (9,858)
========== ===========
Non-GAAP net income (loss)
per share - diluted $ 0.17 $ (0.06)
Shares used to calculate non-GAAP
net income (loss) per share - diluted 190,135 172,603
Non-GAAP adjustments
The above amounts have been adjusted to eliminate the following:
(4) $0.7 million amortization of deferred stock compensation, $0.7
million reversal of a provision for excess inventory resulting
from the sale of inventory that was previously provided for, $1.2
million acquisition costs relating to purchase of assets, $1.8
million loss on extinguishment of debt, $9.2 million gain on sale
of investments, and $0.2 million income tax effect related to
these non-GAAP adjustments.
(5) $0.7 million amortization of deferred stock compensation, a $12.8
million net charge for restructuring costs, a $3.5 million charge
for impairment of other investments, a $1.7 million gain on
extinguishment of debt, a $5.8 million gain on sale of investments
and $1.9 million recovery of taxes related to these transactions.
The $12.8 million restructuring charge is comprised of $7.2
million for workforce reduction, $7.5 million for excess
facilities, $1.5 million for asset impairments, $1.1 million for
obligations incurred in connection with the closure of development
sites and $4.5 million reversal of excess facilities costs related
to our October 2001 restructuring.
PMC-Sierra, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Sep 26, Dec 28,
2004 2003
ASSETS:
Current assets:
Cash and short-term investments (1) $ 251,966 $ 411,928
Accounts receivable, net 20,516 21,645
Inventories, net 17,747 18,275
Prepaid expenses and other current assets 14,547 12,547
----------- -----------
Total current assets 304,776 464,395
Investment in bonds and notes (1) 140,083 41,569
Other investments and assets 4,640 11,336
Property and equipment, net 16,661 20,750
Goodwill and other intangible assets, net 13,244 8,127
Deposits for wafer fabrication capacity 6,779 6,779
Deferred tax assets 274 -
----------- -----------
$ 486,457 $ 552,956
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 16,941 $ 27,356
Accrued liabilities 43,281 50,240
Income taxes payable 48,427 36,171
Accrued restructuring costs 11,097 16,413
Deferred income 9,577 15,720
Current deferred income taxes 609 1,051
----------- -----------
Total current liabilities 129,932 146,951
3.75% Convertible subordinated notes
due August 15, 2006 68,071 175,000
Deferred tax liabilities 74 189
PMC special shares convertible into 2,897
(2003 - 2,921) shares of common stock 4,434 4,519
Stockholders' equity
Capital stock and additional
paid in capital 891,065 870,857
Accumulated other comprehensive income 715 1,838
Accumulated deficit (607,834) (646,398)
----------- -----------
Total stockholders' equity 283,946 226,297
----------- -----------
$ 486,457 $ 552,956
=========== ===========
(1) Total cash and marketable investments, current and non-current,
comprised of Cash and short-term investments plus Investments in
bonds and notes, totaled $392.0 million and $453.5 million at
September 26, 2004 and December 28, 2003, respectively.
PMC-Sierra, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
---------------------
Sep 26, Sep 28,
2004 2003
Cash flows from operating activities:
Net income (loss) $ 38,564 $ (17,516)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 12,442 23,628
Impairment of other investments - 3,500
Noncash restructuring costs - 1,490
Loss (gain) on extinguishment of debt 1,845 (1,700)
Gain on sale of investments and other assets (9,242) (5,818)
Reversal of write-down of excess inventory (651) -
Changes in operating assets and liabilities:
Accounts receivable 1,129 (1,828)
Inventories 1,179 6,730
Prepaid expenses and other current assets (2,139) 3,216
Accounts payable and accrued liabilities (10,223) (9,524)
Income taxes payable 12,256 17,025
Accrued restructuring costs (5,169) (114,200)
Deferred income (6,143) (2,278)
---------- ----------
Net cash provided by (used in)
operating activities 33,848 (97,275)
---------- ----------
Cash flows from investing activities:
Purchases of short-term
held-to-maturity investments (8,237) (16,538)
Purchases of short-term
available-for-sale investments (288) (54,701)
Proceeds from sales and maturities of
short-term held-to-maturity investments - 120,459
Proceeds from sales and maturities of
short-term available-for-sale investments 13,521 149,098
Purchases of long-term held-to-maturity
investments in bonds and notes - (95,874)
Purchases of long-term available-for-sale
investments in bonds and notes (191,980) -
Proceeds from sales and maturities
of long-term held-to-maturity
investments in bonds and notes - 189,973
Proceeds from sales and maturities
of long-term available-for-sale
investments in bonds and notes 113,378 -
Purchases of investments and other assets (5,991) (1,304)
Proceeds from sale of investments
and other assets 20,067 8,421
Proceeds from refund of wafer
fabrication deposits - 15,213
Purchases of property and equipment (6,907) (10,562)
Purchase of intangible assets (5,675) -
---------- ----------
Net cash provided by (used in)
investing activities (72,112) 304,185
---------- ----------
Cash flows from financing activities:
Repurchase of convertible subordinated notes (106,929) (96,680)
Proceeds from issuance of common stock 12,001 20,529
---------- ----------
Net cash used in financing activities (94,928) (76,151)
---------- ----------
Net increase (decrease) in cash
and cash equivalents (133,192) 130,759
Cash and cash equivalents,
beginning of the period 292,811 75,833
---------- ----------
Cash and cash equivalents,
end of the period $ 159,619 $ 206,592
========== ==========
CONTACT: PMC-Sierra
Alan Krock, 408-988-1204
Or
David Climie, 408-988-8276 (Investor Relations)
Or
Susan Kirk, 408-988-8515 (Corp. Communications)