PMC Investor Relations Website:
http://investor.pmcs.comQ4 2013 earnings announcement
call live on Website at 1:30 p.m. PTConference call replay
number 1 (800) 406-7325; passcode 4660981#.Replay available
shortly after end of conference call through February 6,
2014
PMC-Sierra, Inc. (PMC®) (Nasdaq:PMCS), the semiconductor and
software solutions innovator transforming networks that connect,
move and store big data, today reported results for the fourth
quarter and full year ended December 28, 2013.
Net revenues in the fourth quarter of 2013 totaled $126.1
million, a decrease of 2.2 percent compared to $128.9 million in
the third quarter of 2013, and a decrease of 2.6 percent compared
to $129.4 million in the fourth quarter of 2012.
GAAP net loss in the fourth quarter of 2013
totaled $16.7 million, or $0.08 per share, compared to a GAAP net
loss in the third quarter of 2013 of $2.7 million, or $0.01 per
share. The fourth quarter GAAP net loss included provision for
income taxes of $12.8 million, driven primarily by net deferred tax
expense associated with changes in assessment for certain income
tax credits. Non-GAAP net income totaled $18.5 million, or $0.09
per diluted share, down seven percent in the fourth quarter of 2013
compared to non-GAAP net income of $20.0 million, or $0.10 per
diluted share in the third quarter of 2013.
“Fourth quarter results were above the midpoint of our
expectations and reflected solid growth in our storage business,”
said Greg Lang, PMC president and chief executive officer. “It is
encouraging to see our storage and server businesses finish the
year strong.”
Net income on a non-GAAP basis in the fourth quarter of
2013 excludes the following items: (i) $6.8 million stock-based
compensation expense; (ii) $13.6 million amortization of purchased
intangible assets; (iii) $4.1 million severance costs; and (iv)
$10.7 million of other adjustments, including income tax related as
described in the accompanying GAAP to non-GAAP reconciliation
table.
For the full year ended December 28, 2013, net revenues
were $508.0 million compared to $531.0 million for the year ended
December 29, 2012, a decrease of 4.3 percent year over year. GAAP
operating loss for the full year 2013 was $6.7 million compared to
GAAP operating loss of $282 million reported in the year ended
December 29, 2012. GAAP operating loss for the full year 2012
included impairment write-downs of goodwill and intangible assets
of $274.6 million. Non-GAAP operating income for the full year 2013
was $68.1 million compared to non-GAAP operating income of $77.5
million in the prior year. GAAP net loss for the full year 2013 was
$32.5 million, or $0.16 per share, compared to GAAP net loss of
$319.3 million, or $1.47 per share, for the prior year. Non-GAAP
net income in the year ended December 28, 2013, was $68.2 million
or $0.33 per diluted share, compared to non-GAAP net income of
$81.8 million or $0.38 per diluted share, in the year ended
December 29, 2012.
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 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.
FOURTH QUARTER AND 2013 HIGHLIGHTS
The Company announced the following in the fourth quarter and
full year of 2013:
- On Nov. 18, TweakTown recognized the
Adaptec by PMC Series 8 12Gb/s RAID controller with an Editor’s
Choice Award, commenting that they “are built to address the
changing landscape of the data center.”
- On Nov. 14, Fierce Telecom recognized
PMC’s WinPath4 mobile backhaul processor with two Fierce Innovation
Awards: a “Best in Show” award for “Best Technological Problem
Solver” as well as the best backhaul solution for wireless
networks.
- On Oct. 28, Dell DCS announced a
demonstration of their ARM 64-bit server, which utilizes PMC’s
16-port 12Gb/s SAS storage solution, at ARM TechCon 2013.
- On Sept. 4, PMC became the only
supplier of an end-to-end 12G architecture from controller to SSD
with the introduction of Adaptec Series 8 12Gb/s SAS RAID Adapters.
PMC's 12Gb/s SAS architecture is optimized to deliver the
performance, flexibility and density needed for dynamic data in
cloud computing, content delivery networks, and mission-critical
database applications.
- On July 15, PMC announced the
completion of its previously announced intention to acquire IDT’s
Enterprise Flash Controller business, strengthening the Company’s
position as a leader in the rapidly growing enterprise SSD market
segment.
- On June 5, PMC introduced WinPath4, the
industry’s first backhaul processor that enables mobile operators
to scale capacity in their backhaul networks while transitioning to
Layer 3 Packet Transport Networks. WinPath4 eliminates network
bottlenecks caused by the growing deployment of 4G LTE.
- On June 3, PMC announced further
expansion of its Adaptec storage product line with the industry’s
first low-profile, 24-port, PCI Express® (PCIe®) Gen3 6Gb/s
SAS/SATA RAID adapter, enabling new dense architectures for
scale-out or space-limited data centers. With 24-port native
connectivity, the Adaptec 78165 triples storage connectivity by
replacing up to three eight-port RAID adapters, and more than
doubles the performance of competing solutions, significantly
reducing cost and power.
- On Mar. 18, PMC introduced DIGI 120G,
the industry’s only single-chip OTN processor supporting 10G, 40G
and 100G speeds for OTN transport, aggregation and switched
deployments. To meet the elastic traffic demands of big data, DIGI
120G allows for efficient sharing and the dynamic assignment of
network resources, enabling OTN networks to effectively virtualize
optical network bandwidth. This unprecedented level of silicon
integration facilitates the most cost effective designs,
engineering efficiency, and lowest power approach to OTN system
solutions.
- On Feb. 20, PMC expanded its Adaptec
storage product line with the industry’s first high-performance,
high-density, low-profile encrypted PCIe Gen3 host bus adapter
(HBA) family. This product line is capable of executing over one
million input/output operations per second (IOPS) with 6.6 GB/s
sustained throughput, provides 256 bit AES encryption, and offers
up to 16 ports. The Adaptec Series 7H and 6H families of SAS/SATA
HBAs provide customers with high-performance connectivity for hard
disk drives, solid-state drives, removable media and tape drives.
The product family is ideally suited for high-performance data
center applications and positions PMC as a leader in secure data
center storage solutions.
Fourth Quarter and Full Year 2013 Conference Call
Management will review the fourth quarter and full year 2013
results and share its outlook for the first quarter of 2014 during
a conference call at 1:30 pm Pacific Time/4:30 pm Eastern Time on
January 30, 2014. 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 (877) 941-9205 with passcode 4660981#,
approximately 10 minutes before the start time. A telephone
playback will be available after the completion of the call and can
be accessed at 1(800) 406-7325 using the access code
4660981#. A replay of the webcast will be available for 30
business days.
Safe Harbor Statement
This release contains forward-looking statements that involve
risks and uncertainties, including in respect of our ongoing review
of tax accounting errors. The Company’s SEC filings, including the
Company’s most recent reports on Form 10-K and Form 10-Q, 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 and software solutions
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 Facebook, Twitter, LinkedIn and RSS.
© Copyright PMC-Sierra, Inc. 2014. All rights reserved. PMC and
PMC-SIERRA are registered trademarks of PMC-Sierra, Inc. in the
United States and other countries, and PMCS is a trademark 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.
PMC-Sierra, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except for per share amounts) (unaudited)
Three Months Ended Twelve Months Ended
December 28, December 29, December 28,
December 29, 2013 2012 2013 2012
(As restated - (As restated - See Note
A) See Note A) Net revenues $ 126,105 $ 129,418 $
508,028 $ 530,997 Cost of revenues 37,176
36,663 149,457 157,918 Gross
profit $ 88,929 92,755 358,571 373,079 Gross profit % 71 %
72 % 71 % 70 % Research and development 54,009 49,553
211,047 220,927 Selling, general and administrative 27,768 26,432
112,770 112,479 Amortization of purchased intangible assets 13,547
10,784 48,245 45,321 Impairment of goodwill and purchased
intangible assets - - -
274,637 (Loss) income from operations (6,395 ) 5,986
(13,491 ) (280,285 ) Foreign exchange gain (loss) 2,363 439
4,043 (1,512 ) Amortization of debt issue costs - (17 ) - (167 )
Interest income (expense), net 33 (47 ) 827 (1,586 ) Gain on
investment securities and other investments 103
777 1,879 1,523 (Loss)
income before (provision for) recovery of income taxes (3,896 )
7,138 (6,742 ) (282,027 ) (Provision for) recovery of income taxes
(12,795 ) 6,967 (25,756 )
(37,301 ) Net (loss) income $ (16,691 ) $ 14,105 $ (32,498 )
$ (319,328 ) Net (loss) income per common share - basic $
(0.08 ) $ 0.07 $ (0.16 ) $ (1.47 ) Net (loss) income per common
share - diluted $ (0.08 ) $ 0.07 $ (0.16 ) $ (1.47 ) Shares
used in per share calculation - basic 201,615 202,400 203,882
216,593 Shares used in per share calculation - diluted 201,615
202,900 203,882 216,593
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, impairment of goodwill and 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.
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, Impairment of goodwill and 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 Twelve Months Ended December 28,
September 28, December 29, December 28,
December 29,
2013 (1)
2013 (2)
2012 (3)
2013 (4)
2012 (5)
GAAP cost of revenues $
37,176 $ 37,194 $ 36,663 $ 149,457 $ 157,918 Stock-based
compensation (256 ) (190 ) (218 ) (899 ) (875 ) Acquisition-related
costs (5 ) (777 ) - (800 ) (37 ) Asset impairment - - 10 - (98 )
Termination costs (171 ) - (92 ) (171 ) (92 ) Reversal of accruals
- 2,300 - 2,300
-
Non-GAAP cost of revenues $ 36,744
$ 38,527 $ 36,363 $ 149,887 $ 156,816
GAAP gross profit $ 88,929 $ 91,661 $ 92,755 $
358,571 $ 373,079 Stock-based compensation 256 190 218 899 875
Acquisition-related costs 5 777 - 800 37 Asset impairment - - (10 )
- 98 Termination costs 171 - 92 171 92 Reversal of accruals
- (2,300 ) - (2,300 ) -
Non-GAAP gross profit $ 89,361 $ 90,328
$ 93,055 $ 358,141 $ 374,181
Non-GAAP gross profit % 70.9 % 70.1 % 71.9 % 70.5 % 70.5 %
GAAP research and development expense $ 54,009 $
50,733 $ 49,553 $ 211,047 $ 220,927 Stock-based compensation (2,854
) (2,541 ) (2,909 ) (11,095 ) (11,583 ) Acquisition-related costs
(1,071 ) (1,200 ) (269 ) (2,812 ) (2,162 ) Termination costs (2,690
) (178 ) (347 ) (4,138 ) (2,748 ) Reversal of accruals - - - 2,890
- Asset impairment (508 ) - (533 )
(508 ) (1,012 )
Non-GAAP research and development
expense $ 46,886 $ 46,814 $ 45,495 $
195,384 $ 203,422
GAAP selling, general and
administrative expense $ 27,768 $ 26,383 $ 26,432 $ 112,770 $
112,479 Stock-based compensation (3,694 ) (3,143 ) (3,210 ) (14,271
) (13,857 ) Acquisition-related costs (39 ) (5 ) 40 (1,122 ) (1,591
) Lease exit (costs) recoveries (48 ) - 125 (48 ) (2,384 )
Termination costs (1,282 ) (41 ) (219 ) (1,784 ) (1,137 ) Reversal
of accruals 1,300 - - 1,300 - Asset impairment (639 )
- 39 (2,214 ) (273 )
Non-GAAP
selling, general and administrative expense $ 23,366 $
23,194 $ 23,207 $ 94,631 $ 93,237
GAAP amortization of purchased intangible assets $
13,547 $ 13,138 $ 10,784 $ 48,245 $ 45,321 Amortization of
purchased intangible assets (13,547 ) (13,138 )
(10,784 ) (48,245 ) (45,321 )
Non-GAAP
amortization of purchased intangible assets $ - $ -
$ - $ - $ -
GAAP impairment
of goodwill and purchased intangible assets $ - $ - $ - $ - $
274,637 Impairment of goodwill and purchased intangible assets
- - - -
(274,637 )
Non-GAAP impairment of goodwill and purchased
intangible assets $ - $ - $ - $ - $
-
GAAP other income (expense) $ 2,499 $ 64 $
1,152 $ 6,749 $ (1,742 ) Foreign exchange (gain) loss on foreign
tax liabilities (2,564 ) 1,390 (872 ) (4,697 ) 1,531 Accretion of
the debt discount related to the senior convertible notes - - 389 -
3,218 Gain on disposal of investments - (1,762 ) - (1,762 ) -
Interest expense related to short-term loan 114
48 - 162 -
Non-GAAP other income (expense) $ 49 $ (260 ) $ 669
$ 452 $ 3,007
GAAP provision for
(recovery of) income taxes $ 12,795 $ 4,195 $ (6,967 ) $ 25,756
$ 37,301 (Provision for) recovery of income tax matters
(12,179 ) (4,160 ) 6,843 (25,397 )
(38,598 )
Non-GAAP provision for (recovery of) income
taxes $ 616 $ 35 $ (124 ) $ 359 $ (1,297 )
GAAP operating expenses $ 95,324 $ 90,254 $ 86,769 $
372,062 $ 654,809 Stock-based compensation (6,548 ) (5,684 ) (6,119
) (25,366 ) (25,440 ) Acquisition-related costs (1,110 ) (1,205 )
(229 ) (3,934 ) (3,753 ) Asset impairment (1,147 ) - (494 ) (2,722
) (1,285 ) Lease exit (costs) recoveries (48 ) - 125 (48 ) (2,384 )
Termination costs (3,972 ) (219 ) (566 ) (5,922 ) (3,885 )
Amortization of purchased intangible assets (13,547 ) (13,138 )
(10,784 ) (48,245 ) (45,321 ) Reversal of accruals 1,300 - - 4,190
- Impairment of goodwill and purchased intangible assets -
- - -
(274,637 )
Non-GAAP operating expenses $ 70,252 $
70,008 $ 68,702 $ 290,015 $ 296,659
GAAP operating (loss) income $ (6,395 ) $ 1,407 $
5,986 $ (13,491 ) $ (280,285 ) Stock-based compensation 6,804 5,874
6,337 26,265 26,315 Acquisition-related costs 1,115 1,982 229 4,734
3,790 Asset impairment 1,147 - 484 2,722 1,383 Reversal of accruals
(1,300 ) (2,300 ) - (6,490 ) - Lease exit costs (recoveries) 48 -
(125 ) 48 2,384 Termination costs 4,143 219 658 6,093 3,977
Amortization of purchased intangible assets 13,547 13,138 10,784
48,245 45,321 Impairment of goodwill and purchased intangible
assets - - - -
274,637
Non-GAAP operating income $
19,109 $ 20,320 $ 24,353 $ 68,126 $
77,522
Non-GAAP operating margin 15.2 % 15.8 %
18.8 % 13.4 % 14.6 %
Three Months Ended
Twelve Months Ended December 28, September 28,
December 29, December 28, December 29,
2013 (1)
2013 (2)
2012 (3)
2013 (4)
2012 (5)
GAAP net (loss) income $ (16,691 ) $ (2,724 )
$ 14,105 $ (32,498 ) $ (319,328 ) Stock-based compensation 6,804
5,874 6,337 26,265 26,315 Acquisition-related costs 1,115 1,982 229
4,734 3,790 Termination costs 4,143 219 658 6,093 3,977 Asset
impairment 1,147 - 484 2,722 1,383 Reversal of accruals (1,300 )
(2,300 ) - (6,490 ) - Lease exit costs (recoveries) 48 - (125 ) 48
2,384 Amortization of purchased intangible assets 13,547 13,138
10,784 48,245 45,321 Impairment of goodwill and purchased
intangible assets - - - - 274,637 Foreign exchange (gain) loss on
foreign tax liabilities (2,564 ) 1,390 (872 ) (4,697 ) 1,531
Accretion of the debt discount related to the senior convertible
notes - - 389 - 3,218 Gain on disposal of investments - (1,762 ) -
(1,762 ) - Interest expense related to short-term loan 114 48 - 162
- Provision for (recovery of) income tax matters 12,179
4,160 (6,843 ) 25,397
38,598
Non-GAAP net income $ 18,542 $
20,025 $ 25,146 $ 68,219 $ 81,826
Non-GAAP net income per share - basic $ 0.09 $ 0.10 $
0.12 $ 0.33 $ 0.38
Non-GAAP net income per share - diluted $
0.09 $ 0.10 $ 0.12 $ 0.33 $ 0.38 Shares used to
calculate non-GAAP net income per share - basic 201,615 205,377
202,400 203,882 216,593 Shares used to calculate non-GAAP net
income per share - diluted 203,047 207,475 202,900 205,841 218,046
(1) $6.8 million stock-based compensation expense; $1.1 million
acquisition-related costs and deferred tax effects; $4.1 million
termination costs; $1.1 million asset impairment; $1.3 million
reversal of accrual; $0.1 million lease exit costs; $13.5 million
amortization of purchased intangible assets; $2.6 million foreign
exchange loss on foreign tax liabilities; $0.1 million interest
expense related to short-term loan; and $12.2 million provision for
income taxes which includes $1.9 million income tax recovery
relating to intercompany transactions, $2.5 million income tax
recovery for adjustments relating to prior periods and changes in
estimates, $0.9 million arrears interest relating to unrecognized
tax benefits, $3.3 million provision related to non-deductible
intangible asset amortization, $0.7 million income tax provision
relating to foreign exchange translation of a foreign subsidiary,
$10.4 million deferred tax effect related to changes in assessments
for certain income tax credits, and $1.3 million income tax
provision related to tax deductible goodwill and other items
above.
(2) $5.9 million stock-based compensation expense; $2 million
acquisition-related costs; $0.2 million termination costs; $13.1
million amortization of purchased intangible assets; $1.5 million
foreign exchange loss on foreign tax liabilities; $1.8 million gain
from disposal of investments; $2.3 million reversal of accruals;
and $4.2 million provision for income taxes which includes $2.9
million deferred tax provision related to non-deductible intangible
asset amortization, $0.7 million arrears interest relating to
unrecognized tax benefits, $0.4 million tax recovery relating to
foreign exchange translation of a foreign subsidiary, and $1
million income tax provision related to tax deductible items
above.
(3) $6.3 million stock-based compensation expense; $0.2 million
acquisition-related costs; $0.7 million termination costs; $0.5
million asset impairment; $0.1 million recovery of lease exit
costs; $10.8 million amortization of purchased intangible assets;
$0.9 million foreign exchange gain on foreign tax liabilities; $0.4
million non-cash interest expense for the accretion of the debt
discount related to the senior convertible notes; and $6.8 million
recovery of income taxes which includes $3.5 million income tax
recovery related to an intercompany dividend, $0.5 million income
tax provision relating to intercompany transactions, $1.8 million
income tax recovery for adjustments relating to prior periods, $0.6
million recovery of arrears interest relating to unrecognized tax
benefits, $0.8 million deferred tax recovery related to
non-deductible intangible asset amortization and impairment, $0.4
million income tax recovery relating to foreign exchange
translation of a foreign subsidiary, and $0.2 million income tax
recovery related to tax deductible items above.
(4) $26.3 million stock-based compensation expense; $4.8 million
acquisition-related costs and deferred tax effects; $6.1 million
termination costs; $2.8 million asset impairment; $6.5 million
reversal of accruals; $0.1 million lease exit costs; $48.2 million
amortization of purchased intangible assets; tangible assets; $4.7
million foreign exchange loss on foreign tax liabilities; $0.1
million interest related to short-term loan; and $25.4 million
provision for income taxes which includes $0.2 million income tax
provision relating to intercompany transactions, $2.6 million
arrears interest relating to unrecognized tax benefits, $11.7
million provision related to non-deductible intangible asset
amortization and impairment, $2 million income tax recovery for
adjustments relating to prior periods and changes in estimates,
$1.2 million income tax provision relating to foreign exchange
translation of a foreign subsidiary, $10.4 million deferred tax
effect related to change in assessment for certain income tax
credit, and $1.3 million income tax provision related to tax
deductible goodwill and other items above.
(5) $26.3 million stock-based compensation expense; $3.8 million
acquisition-related costs; $4 million termination costs; $1.4
million asset impairment; $2.4 million lease exit costs; $45.3
million amortization of purchased intangible assets; $274.6 million
impairment of goodwill and purchased intangible assets; $1.5
million foreign exchange loss on foreign tax liabilities; $3.2
million non-cash interest expense for the accretion of the debt
discount related to the senior convertible notes; and $38.6 million
provision for income taxes which includes $42 million income tax
provision related to an intercompany dividend net of $11.1 million
related to the U.S. Federal and State tax credits required to be
recognized in advance of their utilization, $10 million income tax
provision relating to intercompany transactions, $2.2 million
arrears interest relating to unrecognized tax benefits, $4 million
deferred tax recovery related to non-deductible intangible asset
amortization and impairment, $10.2 million income tax recovery for
adjustments relating to prior periods, $0.9 million net tax
recovery relating to foreign exchange translation of a foreign
subsidiary, and $0.5 million income tax recovery related to tax
deductible items above.
PMC-Sierra, Inc. CONDENSED CONSOLIDATED BALANCE
SHEETS (in thousands) (unaudited)
December
28, December 29, 2013 2012 (As restated
-
See Note A) ASSETS:
Current assets: Cash and cash equivalents $ 100,038 $ 169,970
Short-term investments 10,894 11,431
Cash, cash equivalents and short-term investments 110,932 181,401
Accounts receivable, net 56,112 62,143 Inventories, net 28,712
23,548 Prepaid expenses and other current assets 19,855 22,125
Income tax receivable 2,640 6,630 Prepaid tax expense 5,695 -
Deferred tax assets 42,561 43,630 Total
current assets 266,507 339,477 Investment securities 103,391
91,778 Investments and assets 10,750 20,133 Prepaid tax expense 93
19,152 Property and equipment, net 39,149 43,146 Goodwill and other
intangible assets, net 425,823 381,087 Deferred tax assets
7,492 1,137 $ 853,205 $ 895,910
LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts
payable 23,173 $ 27,410 Accrued liabilities 64,257 66,722
Short-term loan 30,000 - Liability for unrecognized tax benefit
54,127 51,810 Income taxes payable 632 1,450 Current deferred
income taxes 2,450 2,466 Deferred income 7,481
8,113 Total current liabilities 182,120 157,971
Long-term obligations 11,108 22,793 Deferred tax and other
long-term tax liabilities 46,380 39,186 Liability for unrecognized
tax benefit 27,947 28,204 PMC special shares 1,188 1,188
Stockholders' equity: Capital stock and additional paid in
capital 1,550,385 1,555,087 Accumulated other comprehensive (loss)
income (526 ) 616 Accumulated deficit (965,397 )
(909,135 ) Total stockholders' equity 584,462
646,568 $ 853,205 $ 895,910
PMC-Sierra, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands) (unaudited)
Twelve Months Ended
December 28, December 29, 2013
2012 Cash flows from operating
activities: Net loss $ (32,498 ) $ (319,328 ) Adjustments to
reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 71,432 64,535 Stock-based
compensation 26,264 26,315 Unrealized foreign exchange (gain) loss
, net (2,251 ) 1,747 Net amortization of premiums/discounts and
accrued interest of investments 1,580 5,101 Asset Impairment 167
1,759 Gain on investment securities and other investments (1,796 )
(1,508 ) Impairment of goodwill and purchased intangible assets -
274,637 Taxes related to intercompany dividend - 60,940 Loss on
disposal of property and equipment 6 - Excess tax benefits from
stock option transactions (842 ) (14,232 ) Changes in
operating assets and liabilities: Accounts receivable 6,007 (2,929
) Inventories (3,381 ) 16,363 Prepaid expenses and other current
assets 1,900 2,635 Accounts payable and accrued liabilities (5,551
) (28,267 ) Deferred taxes and income taxes payable 16,223 (21,085
) Deferred income (632 ) (7,911 ) Net cash provided
by operating activities 76,628 58,772
Cash flows from investing activities: Business
acquisition (96,098 ) (15,900 ) Investment in long term deposits
(1,127 ) - Purchases of property and equipment (14,637 ) (31,229 )
Purchase of intangible assets (3,979 ) (7,438 ) Redemption of
short-term investments 8,466 26,473 Disposals of investment
securities and other investments 162,773 315,310 Purchases of
investment securities and other investments (179,837 )
(120,917 ) Net cash (used in) provided by investing
activities (124,439 ) 166,299
Cash
flows from financing activities: Payment of debt issuance costs
(928 ) - Repurchase of convertible subordinated notes - (68,340 )
Proceeds from short-term loan 30,000 - Proceeds from issuance of
common stock 25,247 16,000 Excess tax benefits from stock option
transactions 842 14,232 Repurchases of common stock (76,335
) (199,999 ) Net cash used in financing activities
(21,174 ) (238,107 ) Effect of exchange rate changes
on cash and cash equivalents (947 ) 435 Net decrease in cash and
cash equivalents (69,932 ) (12,601 ) Cash and cash equivalents,
beginning of the period 169,970 182,571
Cash and cash equivalents, end of the period $ 100,038 $
169,970
Note A. Prior Period Error Corrections - Income
Taxes
The comparative condensed consolidated financial statements as
of and for the year ended December 29, 2012 have been revised to
correct the misapplication of accounting principles related to our
accounting for deferred income taxes and uncertain tax positions.
Most significantly, the Company did not appropriately re-measure
its reserves for uncertain tax positions associated with a decrease
in exposure that occurred in 2012 related to the historical
utilization of certain tax credits. The Company also corrected two
additional items : the Company did not adjust its deferred tax
liabilities to reflect the effect of a certain change in tax law
enacted 2012; and the Company did not record the deferred tax
effect related to a change in the value of a certain liability that
occurred in 2012. The net impact of revising our comparative
condensed consolidated financial statements for these items was an
$8.7 million reduction in our previously recorded 2012 provision
for income tax, a $1.1 million increase, $6.8 million decrease and
$2.8 million decrease in long-term deferred tax assets, liability
for unrecognized tax benefits and deferred tax liabilities,
respectively, and a $2.0 million increase in additional paid in
capital as of December 28, 2012. There was no change to the total
amount of income tax loss carry-forwards or any other income tax
assets available or utilized for tax purposes, nor to the actual
amount of income tax payable to taxing authorities as a result of
these matters in any period.
Management believes the effects of these corrections on its 2012
consolidated financial statements as presented in Form 10-K/A filed
November 12, 2013, including the effects on the 2012 quarterly
financial information summarized below, are not material. The
Company and its auditors continue to review the accounting
adjustments. As a result, the selected financial information
reported herein, including the adjusted 2012 financial information
reported herein, should be considered preliminary. Until the
examination has been completed, the Company cannot make
assurances that it will not adjust the selected financial
information reported herein or amend prior period filings. You are
encouraged to read the Company's 2013 Annual Report on Form 10-K
when it is available.
The tables below illustrate the effects on the comparative
condensed consolidated financial statements as of and for the year
ended December 29, 2012, and as supplemental information, the
effects on the condensed consolidated balance sheets for each of
the past six quarters and the interim condensed consolidated
statements of operations for the three and six month periods ended
July 1, 2012 and the three and twelve month period ended December
29, 2012:
As of As
of As of September 28, 2013 June 29,
2013 March 30, 2013 As Previously As
Previously As Previously
(in
thousands)
As Restated Reported As Restated
Reported As Restated Reported CONDENSED
CONSOLIDATED BALANCE SHEETS Non-current assets: Deferred tax assets
$ 1,282 $ 145 $ 1,389 $ 252 $ 1,181 $ 44 Non-current liabilities
Liability for unrecognized tax benefits -
non-current
$ 28,133 $ 34,886 $ 27,610 $ 34,363 $ 28,489 $ 35,242 Deferred tax
and other long-term tax liabilities $ 42,002 $ 44,752 $ 41,395 $
44,145 $ 40,134 $ 42,884 Equity: Common stock and additional paid
in capital $ 1,584,013 $ 1,582,063 $ 1,581,116 $ 1,579,166 $
1,577,403 $ 1,575,453 Accumulated deficit $ (932,575 ) $ (941,265 )
$ (923,966 ) $ (932,656 ) $ (917,535 ) $ (926,225 )
As of As of As of December
29, 2012 September 30, 2012 July 1, 2012 As
Previously As Previously As Previously
(in
thousands)
As Restated Reported As Restated
Reported As Restated Reported CONDENSED
CONSOLIDATED BALANCE SHEETS Non-current assets: Deferred tax assets
$ 1,137 $ - $ 777 $ 58 $ 1,108 $ 389 Non-current liabilities
Liability for unrecognized tax benefits - non-current $ 28,204 $
34,957 $ 29,330 $ 36,083 $ 28,529 $ 35,282 Deferred tax and other
long-term tax liabilities $ 39,186 $ 41,936 $ 40,279 $ 40,279 $
40,321 $ 40,321 Equity: Common stock and additional paid in capital
$ 1,555,087 $ 1,553,137 $ 1,553,971 $ 1,552,021 $ 1,560,720 $
1,558,770 Accumulated deficit $ (909,135 ) $ (917,825 ) $ (915,276
) $ (920,798 ) $ (633,590 ) $ (639,112 )
Twelve months
Three Months Ended Six Months Ended Three Months
Ended December 29, 2012 December 29, 2012 July
1, 2012 July 1, 2012 As Previously As
Previously As Previously As Previously
(in thousands,
except for per share amounts)
As Restated Reported As Restated
Reported As Restated Reported As
Restated Reported CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Provision for) recovery of income taxes $ (37,301 ) $
(45,991 ) $ 6,967 $ 3,799 $ (49,783 ) $ (55,305 ) $ 5,457 $ (65 )
Net loss $ (319,328 ) $ (328,018 ) $ 14,105 $ 10,937 $ (58,909 ) $
(64,431 ) $ 5,873 $ 351 Net loss per common share - basic $ (1.47 )
$ (1.51 ) $ 0.07 $ 0.05 $ (0.26 ) $ (0.28 ) $ 0.03 $ 0.00 Net loss
per common share - diluted $ (1.47 ) $ (1.51 ) $ 0.07 $ 0.05 $
(0.26 ) $ (0.28 ) $ 0.03 $ 0.00
Blueshirt GroupSuzanne Schmidt,
1-415-217-4962suzanne@blueshirtgroup.comorPMC-Sierra,
Inc.Hillary Choularton, 1-604-415-6671Communications
Specialisthillary.choularton@pmcs.com
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