Exhibit 99.1
PMC-Sierra Reports First Quarter 2005 Results;
Revenue in Q1/05 Increases 7% Sequentially; Earnings Per Share of $0.02
SANTA CLARA, Calif.--(BUSINESS WIRE)--April 20, 2005--
-Q1 Net Revenues: US$66.1 million
-Q1 GAAP Net Income: US$3.3 million or $0.02 per share (diluted)
-Q1 Non-GAAP Net Income: US$3.9 million or $0.02 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 first quarter ending
April 3, 2005.
Net revenues in the first quarter of 2005 were $66.1 million, an
increase of seven percent compared with $61.8 million for the fourth
quarter of 2004, and a decrease of 16 percent on a year-over-year
basis.
Net income in the first quarter of 2005 on a non-GAAP basis was
$3.9 million (non-GAAP diluted earnings per share of $0.02) compared
with non-GAAP net income of $1.9 million (non-GAAP diluted earnings
per share of $0.01) in the fourth quarter of 2004. GAAP net income in
the first quarter of 2005 was $3.3 million (GAAP diluted earnings per
share of $0.02) compared with GAAP net income of $13.1 million in the
fourth quarter of 2004 (GAAP diluted earnings per share of $0.07).
PMC-Sierra's first quarter included an additional week of business
because 2005 is a 53-week fiscal year for the Company.
For a full reconciliation of GAAP net income to non-GAAP net
income, please refer to the supplemental schedule on page 6 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.
"In the first quarter of 2005, we experienced improving trends in
Asian geographies and a recovery in enterprise networking, wireless
infrastructure, routing and laser printing as well as growth in new
storage-related products," said Bob Bailey, president and chief
executive officer of PMC-Sierra. "We continue to invest in growth
opportunities including next-generation infrastructure that enables
voice, video and data services as well as enhanced enterprise storage
solutions."
New products and company announcements in Q1 2005 include the
following:
- S/UNI(R) DUPLEX GE - we announced an ATM-to-Ethernet
interworking device for IP DSLAMs that enables service
providers to offer Triple Play services while lowering their
development and field deployment costs. As ATM networks are
migrating to Ethernet-based IP networks, service providers are
deploying DSLAMs that can interface to the ATM-based CPE on one
side and the Ethernet access network on the other. The S/UNI
DUPLEX GE implements ATM to Ethernet conversion in dedicated
hardware, a function deployed to date in expensive network
processors or FPGAs. The device provides DSLAM vendors with
increased bandwidth while significantly reducing their line
card costs. The S/UNI DUPLEX GE provides the AAL5 SARing,
queuing/buffering, traffic management, address translation, and
multicast functions.
- 4G Fibre Channel Interoperability - we successfully
demonstrated system interoperability between our 4Gbit/s Fibre
Channel (FC) Loop Switch product family with multiple FC
initiator, fabric switch, and FC hard disk drive vendors at the
Intel Developers Forum in March. The multi-vendor
interoperability included: 4Gbit/s Fibre Channel Loop Switch
products from PMC-Sierra; 4Gbit/s HDDs from Hitachi and
Seagate; Initiators from Emulex and Agilent Technologies; and
Fabric Switches from Brocade. PMC's architecture for 4G Fibre
Channel SAN and NAS storage systems includes the CTS 20x4G,
CTS 18x4G, CTS 4x4G and Storage Management Controller (SMC).
This low cost, scalable architecture enables storage systems
OEMs to differentiate their product offerings through
innovative enclosure services, system performance and
diagnostics.
- maxSAS(TM) Reference System - we announced the availability of
our maxSAS Reference System for fabric attached and server
attached SATA/SAS disk array enclosures. The Reference System,
combined with the SCSI Enclosure Services Software Development
Kit, significantly reduces development costs while accelerating
time-to-market for storage equipment vendors. The system
utilizes PMC-Sierra's SXP 36x3G or SXP 24x3G high port count
expander switches for SATA and SAS Hard Disk Drive
interconnect. Both SXP devices integrate a MIPS-Powered
programmable storage enclosure processor for managing the
enclosure environment through the standards-compliant SES
protocol.
First Quarter 2005 Conference Call
Management will review the first quarter 2005 results and provide
guidance for the second quarter of 2005 during a conference call at
1:30 pm Pacific Time/4:30 pm Eastern Time on April 20, 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) 457-2641 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 4798418). A replay of the webcast will be available for five
business days.
Second Quarter 2005 Conference Call
PMC-Sierra is planning on releasing its results for the second
quarter of 2005 on July 21st. A conference call will be held on the
day of the release to review the quarter and provide an outlook for
the third quarter of 2005.
Safe Harbor Statement
PMC-Sierra's forward-looking statements are subject to risks and
uncertainties. Actual results may differ from these projections. 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 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. S/UNI is
a registered trademark of PMC-Sierra, Inc. maxSAS, 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)
Apr 3, Dec 26, Mar 28,
2005 2004 2004
Net revenues $ 66,111 $ 61,847 $ 78,660
Cost of revenues 19,621 18,918 23,757
---------- ---------- ----------
Gross profit 46,490 42,929 54,903
Other costs and expenses:
Research and development 31,416 30,833 28,802
Marketing, general and
administrative 13,004 9,859 11,925
Amortization of deferred
stock compensation:
Marketing, general and
administrative - - 697
Restructuring costs 868 3,520 -
---------- ---------- ----------
Income (loss) from operations 1,202 (1,283) 13,479
Other income:
Interest income, net 2,685 1,529 956
Foreign exchange loss (590) (1,380) (33)
Loss on extinguishment of debt and
amortization of debt issue costs (1,634) (97) (1,942)
Gain on sale of property
and investments 1,439 - 8,587
---------- ---------- ----------
Income (loss) before provision
for income taxes 3,102 (1,231) 21,047
Recovery of (provision for)
income taxes 175 14,348 (4,200)
---------- ---------- ----------
Net income $ 3,277 $ 13,117 $ 16,847
---------- ---------- ----------
---------- ---------- ----------
Net income per common share - basic $ 0.02 $ 0.07 $ 0.09
Net income per common share - diluted $ 0.02 $ 0.07 $ 0.09
Shares used in per share
calculation - basic 182,192 181,209 178,409
Shares used in per share
calculation - diluted 188,678 188,607 192,300
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 and
net income 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 to Non-GAAP net income
(in thousands)
(unaudited)
Three Months Ended
-------------------------------
Apr 3, Dec 26, Mar 28,
2005 (1) 2004 (2) 2004 (3)
GAAP net income $ 3,277 $ 13,117 $ 16,847
Amortization of deferred stock
compensation - - 697
Restructuring costs 868 3,520 -
Elimination of provision - (1,300) -
Loss on extinguishment of debt 1,618 - 1,845
Gain on sale of property
and investments (1,439) - (8,587)
Recovery of prior year income taxes (998) (5,095) -
Canada Revenue Agency assessments
of prior years' taxes - (9,355) -
Foreign exchange loss on
Canadian taxes 710 1,545 -
Income tax effect of above items (150) (531) -
--------- ---------- ----------
Non-GAAP net income $ 3,886 $ 1,901 $ 10,802
---------- ---------- ----------
---------- ---------- ----------
Non-GAAP net income per
share - diluted $ 0.02 $ 0.01 $ 0.06
Shares used to calculate non-GAAP
net income per share - diluted 188,678 188,607 192,300
Non-GAAP adjustments
The above amounts have been adjusted to eliminate the following:
(1) $0.9 million restructuring costs relating to workforce
reduction, $1.6 million loss on extinguishment of debt, $1.4 million
gain on sales of property and investments, $1.0 million reversal of
state income tax, $0.7 million foreign exchange loss on Canadian
taxes and $0.2 million income tax effect related to these non-GAAP
adjustments.
(2) $3.5 million net charge for additional excess facilities costs
related to our 2001 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.
(3) $0.7 million amortization of deferred stock compensation, $1.8
million loss on extinguishment of debt, and $8.6 million gain on
sale of an investment.
PMC-Sierra, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Apr 3, Dec 26,
2005 2004
ASSETS:
Current assets:
Cash and short-term investments (1) $ 224,229 $ 274,686
Accounts receivable, net 23,946 19,931
Inventories, net 15,803 15,823
Prepaid expenses and other current assets 17,977 17,042
----------- -----------
Total current assets 281,955 327,482
Investment in bonds and notes (1) 130,881 139,111
Other investments and assets 5,169 4,565
Property and equipment, net 14,382 16,177
Goodwill and other intangible assets, net 12,725 12,910
Deposits for wafer fabrication capacity 5,145 6,779
----------- -----------
$ 450,257 $ 507,024
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 18,628 $ 16,598
Accrued liabilities 39,110 40,195
Income taxes payable 29,321 28,931
Accrued restructuring costs 12,739 13,735
Deferred income 8,413 7,646
Current portion of long-term debt - 68,071
----------- -----------
Total current liabilities 108,211 175,176
Deferred taxes and other tax liabilities 28,077 28,077
PMC special shares convertible into 2,815
(2004 - 2,897) shares of common stock 4,139 4,434
Stockholders' equity
Capital stock and additional paid in capital 902,198 893,704
Accumulated other comprehensive income (928) 350
Accumulated deficit (591,440) (594,717)
----------- -----------
Total stockholders' equity 309,830 299,337
----------- -----------
$ 450,257 $ 507,024
----------- -----------
----------- -----------
(1) Total cash and marketable investments, current and non-current,
comprised of Cash and short-term investments plus Investments in
bonds and notes, totaled $355.1 million and $413.8 million at April
3, 2005 and December 26, 2004, respectively.
PMC-Sierra, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
--------------------
Apr 3, Mar 28,
2005 2004
Cash flows from operating activities:
Net income $ 3,277 $ 16,847
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,224 4,898
Gain on disposal of property and equipment (184) -
Loss on extinguishment of debt 1,618 1,845
Gain on sale of investments
and other assets (1,255) (8,587)
Changes in operating assets and liabilities:
Accounts receivable (4,015) (7,283)
Inventories 20 1,394
Prepaid expenses and other current assets (2,607) (5,721)
Accounts payable and accrued liabilities 2,028 (4,335)
Income taxes payable 769 4,127
Accrued restructuring costs (996) (1,661)
Deferred income 766 2,138
---------- ----------
Net cash provided by operating activities 2,645 3,662
---------- ----------
Cash flows from investing activities:
Purchases of short-term available-for-sale
investments (66,950) -
Proceeds from sales and maturities of
short-term available-for-sale investments 141,084 20,323
Purchases of long-term available-for-sale
investments in bonds and notes - (37,788)
Proceeds from sales and maturities
of long-term available-for-sale
investments in bonds and notes 16,396 51,935
Purchases of investments and other assets (2,000) (800)
Proceeds from sale of investments
and other assets 680 9,916
Proceeds from refund of wafer
fabrication deposits 1,634 -
Purchases of property and equipment (1,085) (3,713)
Proceeds from sale of property 2,604 -
Purchase of intangible assets (335) (663)
---------- ----------
Net cash provided by investing activities 92,028 39,210
---------- ----------
Cash flows from financing activities:
Repurchase of convertible subordinated notes (70,177) (106,929)
Proceeds from issuance of common stock 8,198 11,180
---------- ----------
Net cash used in financing activities (61,979) (95,749)
---------- ----------
Net increase (decrease) in cash
and cash equivalents 32,694 (52,877)
Cash and cash equivalents,
beginning of the period 121,276 225,959
---------- ----------
Cash and cash equivalents,
end of the period $ 153,970 $ 173,082
---------- ----------
---------- ----------
CONTACT: PMC-Sierra
Alan Krock, 408-988-1204
VP Finance & CFO
or
David Climie, 408-988-8276
Director, Investor Relations
or
Susan Kirk, 408-988-8515
Manager, Corp. Communications
email: susan_kirk@pmc-sierra.com