PMC Reports First Quarter 2015 Results

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, net, selling, general and administrative expense, amortization of purchased intangible assets, other income (expense), provision for income taxes, operating expenses, operating income (loss), operating margin, net income (loss), and net income per share - basic and diluted.

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, net, Selling, General and Administrative Expense, Amortization of Purchased Intangible Assets, Other Income (Expense), Provision for Income Taxes, Operating Expenses, Operating Income (Loss), Net Income (Loss), and Basic and Diluted Net Income (Loss) Per Share

(in thousands, except for per share amounts)
(unaudited)
 
    Three Months Ended
March 28,     December 27,     March 29,
2015 2014 2014
 
GAAP cost of revenues $ 39,980 $ 40,702 $ 37,564
Stock-based compensation (271 ) (285 ) $ (241 )
Termination expense recoveries   -     -   $ 9  
Non-GAAP cost of revenues $ 39,709   $ 40,417   $ 37,332  
 
GAAP gross profit $ 93,091 $ 96,149 $ 88,904
Stock-based compensation 271 285 241
Termination expense recoveries   -     -     (9 )
Non-GAAP gross profit $ 93,362   $ 96,434   $ 89,136  
 
Non-GAAP gross profit % 70.2 % 70.5 % 70.5 %
 
GAAP research and development expense, net $ 48,866 $ 50,942 $ 50,148
Stock-based compensation (2,844 ) (2,880 ) (2,647 )
Acquisition-related costs (106 ) (423 ) (800 )
Termination expense recoveries 38 8 58
Reversal of accruals - 342 -
Lease exit recoveries   -     29     -  
Non-GAAP research and development expense, net $ 45,954   $ 48,018   $ 46,759  
 
GAAP selling, general and administrative expense $ 30,051 $ 29,411 $ 29,340
Stock-based compensation (3,578 ) (3,682 ) (3,303 )
Acquisition-related costs (171 ) (261 ) (61 )
Lease exit recoveries (costs) 11 (5 ) (142 )
Termination and separation costs (507 ) (645 ) (3 )
Asset impairments - - (477 )
Other expenses   -     -     (58 )
Non-GAAP selling, general and administrative expense $ 25,806   $ 24,818   $ 25,296  
 
GAAP amortization of purchased intangible assets $ 9,317 $ 10,994 $ 12,329
Amortization of purchased intangible assets   (9,317 )   (10,994 )   (12,329 )
Non-GAAP amortization of purchased intangible assets $ -   $ -   $ -  
 
GAAP other income $ 2,529 $ 2,535 $ 519
Foreign exchange gain on foreign tax liabilities (2,179 ) (2,665 ) (879 )
Gain on disposal of investment - (26 ) -
Amortization of discount on short-term and long-term obligations   210     350     -  
Non-GAAP other income (expense) $ 560   $ 194   $ (360 )
 
GAAP provision for income taxes $ 2,731 $ 5,007 $ 1,847
Provision for income tax matters   (1,516 )   (3,900 )   (1,111 )
Non-GAAP provision for income taxes $ 1,215   $ 1,107   $ 736  
 
GAAP operating expenses $ 88,234 $ 91,347 $ 91,817
Stock-based compensation (6,422 ) (6,562 ) (5,950 )
Acquisition-related costs (277 ) (684 ) (861 )
Asset impairments - - (477 )
Lease exit recoveries (costs) 11 24 (142 )
Termination and separation (costs) recoveries (469 ) (637 ) 55
Amortization of purchased intangible assets (9,317 ) (10,994 ) (12,329 )
Reversal of accruals - 342 -
Other expenses   -     -     (58 )
Non-GAAP operating expenses $ 71,760   $ 72,836   $ 72,055  
 
 
March 28, December 27, March 29,
  2015 2014 2014
 
GAAP operating income (loss) $ 4,857 $ 4,802 $ (2,913 )
Stock-based compensation 6,693 6,847 6,191
Acquisition-related costs 277 684 861
Asset impairments - - 477
Lease exit (recoveries) costs (11 ) (24 ) 142
Termination and separation costs (recoveries) 469 637 (64 )
Amortization of purchased intangible assets 9,317 10,994 12,329
Reversal of accruals - (342 ) -
Other expenses   -     -     58  
Non-GAAP operating income $ 21,602   $ 23,598   $ 17,081  
 
Non-GAAP operating margin 16.2 % 17.2 % 13.5 %
 
GAAP net income (loss) $ 4,655 $ 2,330 $ (4,241 )
Stock-based compensation 6,693 6,847 6,191
Acquisition-related costs 277 684 861
Termination and separation costs (recoveries) 469 637 (64 )
Reversal of accruals - (342 ) -
Asset impairments - - 477
Lease exit (recoveries) costs (11 ) (24 ) 142
Amortization of purchased intangible assets 9,317 10,994 12,329
Other expenses - - 58
Foreign exchange gain on foreign tax liabilities (2,179 ) (2,665 ) (879 )
Amortization of discount on short-term and long-term obligations 210 350 -
Gain on disposal of investments - (26 ) -
Provision for income taxes   1,516     3,900     1,111  
Non-GAAP net income $ 20,947   $ 22,685   $ 15,985  
 
Non-GAAP net income per share - basic and diluted $ 0.10 $ 0.11 $ 0.08
 
 
Shares used to calculate non-GAAP net income per share - basic 200,249 198,625 195,188
Shares used to calculate non-GAAP net income per share - diluted 205,688 201,935 198,306
 
 

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