Exhibit 99.1
PMC-Sierra Reports Fourth Quarter and Fiscal 2004 Results;
2004 net revenues increase 19%;
non-GAAP net income increases $39m
SANTA CLARA, Calif.--(BUSINESS WIRE)--Jan. 27, 2005--PMC-Sierra, Inc.
(Nasdaq:PMCS):
-- Q4 Net Revenues: $61.8 million
-- Q4 Non-GAAP Net Income: $1.9 million or $0.01 per share (diluted)
-- Q4 GAAP Net Income: $13.1 million or $0.07 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 results for the fourth quarter and year ended December 26, 2004.
Net revenues in the fourth quarter of 2004 were $61.8 million compared with
$71.2 million for the third quarter of 2004 and $70.6 million for the same
period a year ago. This represented a decrease in revenues of 13 percent
sequentially and 12 percent on a year-over-year basis.
Net income in the fourth quarter of 2004 on a non-GAAP basis was $1.9
million (non-GAAP diluted earnings per share of $0.01) compared with non-GAAP
net income of $6.9 million (non-GAAP diluted earnings per share of $0.04) in the
third quarter of 2004. GAAP net income in the fourth quarter of 2004 was $13.1
million (GAAP diluted earnings per share of $0.07). This compares to GAAP net
income of $6.3 million in the third quarter of 2004 (GAAP diluted earnings per
share of $0.03).
For the year ended December 26, 2004, net revenues increased 19 percent to
$297.4 million compared with $249.5 million for the year ended December 28,
2003. Non-GAAP net income in 2004 was $34.5 million (non-GAAP diluted net income
per share of $0.18) compared with non-GAAP net loss of $4.0 million (non-GAAP
diluted net loss per share of $0.02) the prior year. GAAP net income in 2004 was
$51.7 million (GAAP diluted net income per share of $0.27) compared with the
prior year's GAAP net loss of $8.0 million (GAAP diluted net loss per share of
$0.05).
For a full reconciliation of GAAP net income (loss) to non-GAAP net income
(loss), please refer to 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
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.
"We believe that our revenues stabilized in the fourth quarter and industry
conditions are improving," said Bob Bailey, president and chief executive
officer of PMC-Sierra. "Meanwhile, our new products in Metro Transport, Storage
Systems and Voice-over-IP are generating pre-production revenues, giving us
confidence that our customers' next-generation systems are moving towards
production."
On January 18, 2005, PMC-Sierra announced it had completed the redemption
of the remaining balance of its outstanding 3.75% Convertible Subordinated Notes
due August 15, 2006. Approximately $68.1 million aggregate principal amount of
the Notes was redeemed for a total of approximately $70.2 million in cash, which
included approximately $1.1 million in accrued interest.
New products and company announcements in Q4 2004 include the following:
-- Storage Management Controller -- we introduced a Storage Management
Controller to provide customers with a complete storage enclosure
architecture for 4G Fibre Channel Storage Area Networks and
Network-Attached Storage systems. The Storage Management Controller
joins our CTS 20x4G, CTS 18x4G and CTS 4x4G Fibre Channel loop switch
product family to provide a complete hardware and firmware reference
design.
-- Multi-Service Processors for VoIP -- we introduced a group of highly
integrated MIPS-Powered System-on-a-Chip processors for VoIP-enabled
broadband customer premises equipment. The Multi Service Processor
family -- including the MSP2015, MSP2020, MSP4000, and MSP5000 --
provides PSTN-quality VoIP capabilities to residential and SOHO
broadband gateways, analog telephone adapters and small
enterprise-class IP-based PBXs.
-- Wideband Cross-Connect -- we introduced the WSE 20 Wideband
Cross-Connect that provides scalable, cost-effective grooming
solutions for Add-Drop Multiplexers, Digital Cross-connect Systems and
Multi-Service Provisioning Platforms. Operating in conjunction with
our WSE 40 device, the WSE 20 can be used to efficiently implement the
first and third stages of a high capacity multi-stage switch.
-- Interoperability of maxSAS Storage products -- we announced the
successful interoperability of our maxSAS expander product family with
multiple SAS server, storage enclosure and controller vendors at a
recent SAS Plugfest in November 2004 at the University of New
Hampshire InterOperability Laboratory.
Fourth Quarter 2004 Conference Call
Management will review the fourth quarter 2004 results and provide outlook
for the first quarter of 2005 during a conference call at 1:30 pm Pacific
Time/4:30 pm Eastern Time on January 27, 2005. 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
719-457-2657 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 408265). A replay of the
webcast will be available for five business days.
First Quarter 2005 Conference Call
PMC-Sierra is planning on releasing its results for the first quarter of
2005 on April 21, 2005. A conference call will be held on the day of the release
to review the quarter and provide an outlook for the second quarter of 2005.
Safe Harbor Statement
PMC-Sierra's forward-looking statements about revenues, improving industry
conditions and production of next-generation systems using PMC's new devices are
subject to risks and uncertainties. PMC's future revenues depend on factors that
vary unpredictably, including demand for customers' systems, inventories of
PMC's products held by customers and their contract manufacturers, and customer
production schedules. Industry conditions depend on several factors, including
global economic conditions and expenditures on telecommunications and enterprise
equipment, particularly in North America and China. Pre-production product
purchases may not result in commercial shipments of PMC's new devices.
Furthermore, the timing of the commercial production of our customers' equipment
is uncertain. The Company's SEC filings describe more fully the risks associated
with market trends and sales of new products. The Company does not undertake any
obligation to update its 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 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. 2005. All rights reserved. maxSAS,
Multi-Service Processor, PMC, PMCS, PMC-Sierra 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)
Three Months Ended
--------------------------------
(unaudited)
Dec 26, Sep 26, Dec 28,
2004 2004 2003
Net revenues
Networking $ 61,847 $ 71,173 $ 69,851
Non-networking - - 768
---------- ---------- ----------
Total 61,847 71,173 70,619
Cost of revenues 18,918 21,024 22,821
---------- ---------- ----------
Gross profit 42,929 50,149 47,798
Other costs and expenses:
Research and development 30,833 30,168 28,593
Marketing, general and
administrative 9,859 12,148 9,176
Amortization of deferred
stock compensation:
Research and development - - -
Marketing, general and
administrative - - 270
Acquisition costs - 1,212 -
Restructuring costs 3,520 - 2,503
---------- ---------- ----------
Income (loss) from operations (1,283) 6,621 7,256
Other income:
Interest income, net 1,529 1,319 451
Foreign exchange gain (loss) (1,380) 98 (1,035)
Gain (loss) on extinguishment
of debt and amortization of
debt issue costs (97) (97) (249)
Gain on sale of investments - 655 85
---------- ---------- ----------
Income (loss) before provision
for income taxes (1,231) 8,596 6,508
Provision for (recovery of)
income taxes (14,348) 2,288 (3,017)
---------- ---------- ----------
Net income (loss) $ 13,117 $ 6,308 $ 9,525
========== ========== ==========
Net income (loss) per
common share - basic $ 0.07 $ 0.03 $ 0.05
Net income (loss) per
common share - diluted $ 0.07 $ 0.03 $ 0.05
Shares used in per share
calculation - basic 181,209 180,280 176,464
Shares used in per share
calculation - diluted 188,607 187,968 190,694
Certain prior year amounts have been reclassified in order to
conform to the 2004 presentation.
PMC-Sierra, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share amounts)
Twelve Months Ended
----------------------
Dec 26, Dec 28,
2004 2003
Net revenues
Networking $ 297,383 $ 247,947
Non-networking - 1,536
----------- -----------
Total 297,383 249,483
Cost of revenues 87,542 87,875
----------- -----------
Gross profit 209,841 161,608
Other costs and expenses:
Research and development 120,492 119,473
Marketing, general and administrative 46,135 45,974
Amortization of deferred stock compensation:
Research and development - 317
Marketing, general and administrative 697 691
Acquisition costs 1,212 -
Restructuring costs 3,520 15,314
----------- -----------
Income (loss) from operations 37,785 (20,161)
Other income:
Interest income, net 4,859 1,709
Foreign exchange gain (loss) (1,295) (954)
Gain (loss) on extinguishment of debt and
amortization of debt issue costs (2,233) 287
Gain on sale of investments 9,242 2,416
----------- -----------
Income (loss) before provision
for income taxes 48,358 (16,703)
Provision for (recovery of) income taxes (3,323) (8,712)
----------- -----------
Net income (loss) $ 51,681 $ (7,991)
=========== ===========
Net income (loss) per common share - basic $ 0.29 $ (0.05)
Net income (loss) per common share - diluted $ 0.27 $ (0.05)
Shares used in per share
calculation - basic 180,353 173,568
Shares used in per share
calculation - diluted 188,903 173,568
Certain prior year amounts have been reclassified in order to
conform to the 2004 presentation.
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
------------------------------
Dec 26, Sep 26, Dec 28,
2004 (1) 2004 (2) 2003 (3)
GAAP net income (loss) $ 13,117 $ 6,308 $ 9,525
Amortization of deferred
stock compensation - - 270
Reversal of provision for excess
inventory resulting from the sale
of inventory that was previously
provided for - - -
Acquisition costs - 1,212 -
Restructuring costs 3,520 - 2,503
Elimination of provision (1,300) - (1,750)
(Gain) loss on extinguishment of debt - - -
Gain on sale of property and
investments (net) - (655) (192)
Recovery of prior year income taxes (5,095) - (4,377)
Canada Revenue Agency assessments
of prior years' taxes (9,355) - -
Foreign exchange loss on
Canadian taxes 1,545 - 860
Income tax effect of above items (531) - (936)
---------- --------- ---------
Non-GAAP net income (loss) $ 1,901 $ 6,865 $ 5,903
========== ========= =========
Non-GAAP net income (loss)
per share - diluted $ 0.01 $ 0.04 $ 0.03
Shares used to calculate non-GAAP net
income (loss) per share - diluted 188,607 187,968 190,694
Non-GAAP adjustments
The above amounts have been adjusted to eliminate the following:
(1) $3.5 million net charge for additional excess facilities costs
related to our 2001 and 2003 restructurings, $1.3 million
elimination of a provision for potential employee-related taxes,
$5.1 million recovery of prior year taxes, $9.4 million tax recovery
based on agreements and assessments with Canada Revenue Agency, $1.5
million foreign exchange loss on Canadian taxes and $0.5 million
income tax effect related to these non-GAAP adjustments.
(2) $1.2 million acquisition costs related to a purchase of assets
and $0.7 million gain on sales of investments.
(3) $0.3 million amortization of deferred stock compensation, $2.5
million net charge for restructuring costs, $1.8 million elimination
of a provision for potential litigation costs, $0.2 million gain on
sale of property and investments, $4.4 million additional recovery
of prior year income taxes, $0.9 million foreign exchange loss on
Canadian taxes and $0.9 million income tax effect related to these
non-GAAP adjustments. The restructuring charge is comprised of $3.2
million additional excess facilities costs and the reversal of $0.7
million excess accrual for workforce reduction costs related to our
January 2003 restructuring plan.
PMC-Sierra, Inc.
Reconciliation of GAAP net income (loss)
to Non-GAAP net income (loss)
(in thousands)
(unaudited)
Twelve Months Ended
----------------------
Dec 26, Dec 28,
2004 (4) 2003 (5)
GAAP net income (loss) $ 51,681 $ (7,991)
Amortization of deferred
stock compensation 697 1,008
Reversal of provision for excess inventory
resulting from the sale of inventory that
was previously provided for (651) -
Acquisition costs 1,212 -
Restructuring costs 3,520 15,314
Elimination of provision (1,300) (1,750)
(Gain) loss on extinguishment of debt 1,845 (1,700)
Gain on sale of property and
investments (net) (9,242) (2,523)
Recovery of prior year income taxes (5,095) (4,377)
Canada Revenue Agency assessments
of prior years' taxes (9,355) -
Foreign exchange loss on Canadian taxes 1,545 860
Income tax effect of above items (368) (2,796)
----------- ----------
Non-GAAP net income (loss) $34,489 $ (3,955)
=========== ==========
Non-GAAP net income (loss)
per share - diluted $ 0.18 $ (0.02)
Shares used to calculate non-GAAP net
income (loss) per share - diluted 188,903 173,568
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 a purchase of assets, $3.5 million net
charge for additional excess facilities costs related to our 2001
and 2003 restructurings, $1.3 million elimination of a provision for
employee-related taxes, $1.8 million loss on extinguishment of
debt, $9.2 million gain on sale of investments, $5.1 million
recovery of prior year taxes, $9.4 million tax recovery based on
agreements and assessments with Canada Revenue Agency, $1.5 million
foreign exchange loss on Canadian taxes and $0.4 million income tax
effect related to these non-GAAP adjustments.
(5) $1.0 million amortization of deferred stock compensation, $15.3
million net charge for restructuring costs, $1.8 million elimination
of a provision for potential litigation costs, $2.5 million gain on
sale of property and investments, $1.7 million gain on
extinguishment of debt, $4.4 million additional receipt of prior
year income taxes, $0.9 million foreign exchange loss on Canadian
taxes and $2.8 million income tax effect related to these non-GAAP
adjustments. The $15.3 million net charge for restructuring is
comprised of $7.2 million for workforce reduction, $11.9 million for
excess facilities, $1.4 million for asset impairments, $4.5 million
reversal of excess facilities costs related to our October 2001
restructuring and $0.7 million reversal of excess workforce
reduction costs related to our January 2003 restructuring plan. The
$2.5 million net gain on sale of property and investments is
comprised of a $5.9 million net gain on sale of investment, a $3.5
million charge for impairment of other investments and $0.1 million
gain on sale of property.
PMC-Sierra, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Dec 26, Dec 28,
2004 2003
ASSETS:
Current assets:
Cash and short-term investments (1) $ 274,686 $ 411,928
Accounts receivable, net 19,931 21,645
Inventories, net 15,823 18,275
Prepaid expenses and other current assets 17,042 12,547
----------- -----------
Total current assets 327,482 464,395
Investment in bonds and notes (1) 139,111 41,569
Other investments and assets 4,565 11,336
Property and equipment, net 16,177 20,750
Goodwill and other intangible assets, net 12,910 8,127
Deposits for wafer fabrication capacity 6,779 6,779
----------- -----------
$ 507,024 $ 552,956
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 16,598 $ 27,356
Accrued liabilities 40,195 50,240
Income taxes payable 28,931 37,222
Accrued restructuring costs 13,735 16,413
Deferred income 7,646 15,720
Current portion of long-term debt 68,071 -
----------- -----------
Total current liabilities 175,176 146,951
3.75% Convertible subordinated notes
due August 15, 2006 - 175,000
Deferred taxes and other tax liabilities 28,077 189
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 893,704 870,857
Accumulated other comprehensive income 350 1,838
Accumulated deficit (594,717) (646,398)
----------- -----------
Total stockholders' equity 299,337 226,297
----------- -----------
$ 507,024 $ 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 $413.8 million and $453.5 million at
December 26, 2004 and December 28, 2003, respectively.
Certain prior year amounts have been reclassified in order to
conform to the 2004 presentation.
PMC-Sierra, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Twelve Months Ended
---------------------
Dec 26, Dec 28,
2004 2003
Cash flows from operating activities:
Net income (loss) $ 51,681 $ (7,991)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 16,518 29,361
Deferred income taxes - 1,131
Loss on disposal of property and equipment - 232
Impairment of goodwill and
purchased intangible assets 175 -
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) (5,903)
Reversal of write-down of excess inventory (651) -
Changes in operating assets and liabilities:
Accounts receivable 1,714 (5,024)
Inventories 3,103 8,145
Prepaid expenses and other current assets (3,831) 4,511
Accounts payable and accrued liabilities (13,651) 1,629
Income taxes payable 20,147 14,618
Accrued restructuring costs (2,531) (113,061)
Deferred income (8,074) (2,262)
---------- ----------
Net cash provided by (used in)
operating activities 57,203 (71,324)
---------- ----------
Cash flows from investing activities:
Purchases of short-term
held-to-maturity investments - (16,538)
Purchases of short-term
available-for-sale investments (8,525) (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 14,067 170,258
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 126,087 16,268
Purchases of investments and other assets (6,074) (4,912)
Proceeds from sale of investments
and other assets 20,067 8,539
Proceeds from refund of wafer
fabrication deposits - 15,213
Purchases of property and equipment (9,922) (11,651)
Proceeds from sale of property - 14,225
Purchase of intangible assets (5,921) (225)
---------- ----------
Net cash provided by (used in)
investing activities (62,201) 351,034
---------- ----------
Cash flows from financing activities:
Repurchase of convertible subordinated notes (106,929) (96,680)
Proceeds from issuance of common stock 14,640 33,948
---------- ----------
Net cash used in financing activities (92,289) (62,732)
---------- ----------
Net increase (decrease) in cash
and cash equivalents (97,287) 216,978
Cash and cash equivalents,
beginning of the period 292,811 75,833
---------- ----------
Cash and cash equivalents,
end of the period $ 195,524 $ 292,811
========== ==========
CONTACT: PMC-Sierra Contacts:
Alan Krock, 408-988-1204
or
David Climie, 408-988-8276 (Investor Relations)
or
Susan Kirk, 408-988-8515 (Corp. Communications)