PMC Reports Second Quarter 2012 Results

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,
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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