PMC Reports Fourth Quarter and Full Year 2014 Results

(1) $6.8 million stock-based compensation expense; $0.7 million acquisition-related costs; $0.6 million termination and separation costs; $0.3 million reversal of accrual; $0.1 million lease exit recoveries; $11 million amortization of purchased intangible assets; $2.7 million foreign exchange gain on foreign tax liabilities; $0.1 million gain on disposal of investment; $0.3 million amortization of discount on long-term obligations; and $3.9 million provision for income taxes which includes $4 million arrears interest relating to unrecognized tax benefits, $2.7 million income tax provision related to prepaid tax amortization, and $5.2 million income tax provision related to tax deductible goodwill, and $8 million income tax recovery related to change in valuation allowance and other deductible items above.

(2) $5.2 million stock-based compensation expense; $1 million acquisition-related costs; $0.3 million recovery of termination and separation costs; $9.9 million amortization of purchased intangible assets; $1.1 million foreign exchange gain on foreign tax liabilities; $0.1 million lease exit costs; and $2.2 million provision for income taxes which includes $0.9 million income tax provision related to unrecognized tax benefits, $1.1 million income tax provision related to prepaid tax amortization, and $0.2 million income tax provision from adjustments related to prior periods.

(3) $6.8 million stock-based compensation expense; $1.1 million acquisition-related costs; $4.1 million termination and separation costs; $1.2 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 gain on foreign tax liabilities; and $11.8 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 $0.9 million income tax provision related to tax deductible goodwill and other items above.

(4) $23.2 million stock-based compensation expense; $3.4 million acquisition-related costs; $1.9 million termination and separation costs; $0.5 million asset impairment; $0.3 million reversal of accruals; $0.2 million lease exit costs; $43.2 million amortization of purchased intangible assets; $3.6 million foreign exchange gain on foreign tax liabilities; $0.1 million gain on disposal of investment; $0.3 million amortization of discount on long-term obligations; $0.1 million other nonrecurring expenses; and $10.7 million provision for income taxes which includes $6.5 million arrears interest relating to unrecognized tax benefits, $5.7 million income tax provision related to prepaid tax amortization, $6.5 million income tax provision related to tax deductible goodwill, and $8 million income tax recovery related to change in valuation allowance and other deductible items above.

(5) $26.3 million stock-based compensation expense; $4.8 million acquisition-related costs and deferred tax effects; $6.1 million termination and separation 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; $4.7 million foreign exchange gain on foreign tax liabilities; $1.8 million gain on disposal of investment 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.

PMC-Sierra, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
   
December 27, December 28,
  2014     2013  
 
ASSETS:
Current assets:
Cash and cash equivalents $ 112,570 $ 100,038
Short-term investments   45,885     10,894  
Cash, cash equivalents and short-term investments 158,455 110,932
Accounts receivable, net 55,414 56,112
Inventories, net 37,949 31,074
Prepaid expenses and other current assets 16,473 19,855
Income tax receivable 1,968 2,640
Prepaid tax expense 51 5,695

Deferred tax assets (1)

  4,079     43,131  
Total current assets 274,389 269,439
 
Investment securities 107,509 103,391
Investments and other assets 7,683 10,750
Prepaid tax expense 42 93
Property and equipment, net 37,311 39,149
Goodwill and other intangible assets, net 426,919 425,823
Deferred tax assets (1) 13,412 1,306
Long-term income tax receivable   457     -  
$ 867,722   $ 849,951  
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 23,360 $ 23,173
Accrued liabilities 74,135 64,257
Credit facility - 30,000
Income taxes payable 1,062 632
Liability for unrecognized tax benefit (1) 16,076 54,127
Current deferred income taxes 7,644 71
Deferred income   4,530     7,481  
Total current liabilities 126,807 179,741
 
Long-term obligations 36,305 11,108
Deferred income taxes 52,130 43,143

Liability for unrecognized tax benefit (1)

25,244 27,947
 
PMC special shares convertible into 278 (2013 - 1,019) 745 1,188
shares of common stock
 
Stockholders' equity:
Common stock and additional paid in capital 1,595,809 1,550,385
Accumulated other comprehensive loss (2,355 ) (526 )
Accumulated deficit   (966,963 )   (963,035 )
Total stockholders' equity   626,491     586,824  
$ 867,722   $ 849,951  
 
 
(1) Effective from the beginning of the first quarter of 2014, the Company adopted Financial Accounting Standards Board's Accounting Standards Update (“ASU”) No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or Tax Credit Carryforward Exists.” Approximately $44 million of deferred tax assets of a foreign subsidiary were derecognized along with the related liability for unrecognized tax benefits as a result of this presentation adoption, with no impact to the Condensed Consolidated Statements of Operations.
 
PMC-Sierra, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
   

 

Twelve Months Ended

December 27, December 28,
  2014     2013  
Cash flows from operating activities:
Net loss $ 82 $ (32,254 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 65,477 71,432
Stock-based compensation 23,181 26,264
Unrealized foreign exchange gain, net (5,846 ) (2,251 )
Net amortization of premiums and accrued interest of investments 718 1,580
Asset impairments 770 2,966
Gain on investment securities and other investments (131 ) (1,796 )
Loss on disposal of property and equipment 4 6
Amortization of discount on long-term obligations 350 -
Excess tax benefits from stock option transactions - (842 )
 
Changes in operating assets and liabilities:
Accounts receivable, net 598 6,330
Inventories, net (6,875 ) (3,625 )
Prepaid expenses and other current assets 1,349 1,315
Accounts payable and accrued liabilities 878 (5,551 )
Deferred income taxes and income taxes receivables/payables 12,970 15,900
Deferred income   (2,951 )   (632 )
Net cash provided by operating activities   90,574     78,842  
 
Cash flows from investing activities:
Business acquisition (10,000 ) (96,098 )
Investment in long term deposits - (1,127 )
Purchases of property and equipment (13,945 ) (16,851 )
Purchases of intangible assets (1,437 ) (3,979 )
Redemption of short-term investments 5,670 8,466
Disposals of investment securities and other investments 61,695 162,773
Purchases of investment securities and other investments   (106,076 )   (179,837 )
Net cash used in investing activities   (64,093 )   (126,653 )
 
Cash flows from financing activities:
Payment of debt issuance costs - (928 )
Proceeds from credit facility 30,000 30,000
Repayment of credit facility (60,000 ) -
Proceeds from issuance of common stock 29,175 25,247
Repurchases of common stock (11,496 ) (76,335 )
Excess tax benefits from stock option transactions   -     842  
Net cash used in financing activities   (12,321 )   (21,174 )
 
Effect of exchange rate changes on cash and cash equivalents (1,628 ) (947 )
Net increase (decrease) in cash and cash equivalents 12,532 (69,932 )
Cash and cash equivalents, beginning of the period   100,038     169,970  
Cash and cash equivalents, end of the period $ 112,570   $ 100,038  

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