PMC Reports Fourth Quarter and Full Year 2012 Results

  PMC Reports Fourth Quarter and Full Year 2012 Results

           PMC Investor Relations Website: http://investor.pmcs.com

Q4 and Full Year 2012 earnings announcement call live on Website at 1:30 p.m.
                                      PT

      Conference call replay number 1 (888) 843-7419; passcode 34052547#

  Replay available shortly after end of conference call through February 14,
                                     2013

Business Wire

SUNNYVALE, Calif. -- January 31, 2013

PMC® (Nasdaq: PMCS), the semiconductor innovator transforming networks that
connect, move and store big data, today reported results for the fourth
quarter and full year ended December 29, 2012.

Net revenues in the fourth quarter of 2012 were $129.4 million, a sequential
decrease of 2 percent compared to $131.7 million in the third quarter of 2012,
and a decrease of 15 percent compared to $152.6 million in the fourth quarter
of 2011.

GAAP net income in the fourth quarter of 2012 was $11.1 million, or $0.05 per
diluted share, compared to GAAP net loss in the third quarter of 2012  was
$274.4 million, or $1.31 per share. Third quarter of 2012 GAAP results
included impairment write-downs of goodwill and intangible assets of $276.1
million. Non-GAAP net income in the fourth quarter of 2012 was $25.1 million,
or $0.12 per diluted share, up 18 percent sequentially, compared to non-GAAP
net income of $21.4 million, or $0.10 per diluted share, in the third quarter
of 2012.

“We are pleased to report that our fourth quarter results were at the high end
of our outlook, despite continued headwinds in the macro environment," said
Greg Lang, PMC President and Chief Executive Officer.

Net income on a non-GAAP basis in the fourth quarter of 2012 excludes the
following items: (i) $6.3 million stock-based compensation expense; (ii) $10.8
million amortization of purchased intangible assets; and (iii) $3.1 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 29, 2012, net revenues were $531 million
compared to $654.3 million for the year ended December 31, 2011, a decrease of
19 percent year over year. GAAP operating loss for the full year 2012 was
$281.7 million compared to GAAP operating income of $52.8 million reported in
the year ended December 31, 2011. GAAP operating loss for the full year 2012
included impairment write-downs of goodwill and intangible assets of $276.1
million. Non-GAAP operating income for the full year 2012 was $77.5 million
compared to non-GAAP operating income of $142.7 million in the prior year.
GAAP net loss for the full year 2012 was $333.1 million, or $1.54 per share,
compared to GAAP net income of $84.7 million, or $0.36 per diluted share, for
the prior year. Non-GAAP net income in the year ended December 29, 2012 was
$81.8 million or $0.38 per diluted share, compared to non-GAAP net income of
$142 million or $0.60 per diluted share, in the year ended December 31, 2011.

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 FULL YEAR 2012 HIGHLIGHTS

The Company announced the following in the fourth quarter and full year of
2012:

  *Nov 19 - PMC Appoints Steve Geiser Vice President and Chief Financial
    Officer
  *Sept 18 - PMC Delivers Industry’s First Tri-Speed Converged Carrier
    Ethernet/OTN Framer
  *Sept 5 - Adaptec by PMC Transforms Data Center Storage Architectures with
    Industry’s Highest Port Count, PCIe Gen3 RAID Adapters
  *Jun 25 - PMC Wins Huawei 2011 Technology Quality Award
  *Jun 5 - PMC Introduces Industry’s Most Integrated, Lowest Power Radio
    Transceiver Chipset for Next-Generation Macro Base Stations
  *Jun 5 - PMC Delivers Industry’s First End-to-End 12Gb/s Enterprise SAS
    Solution with SSD Controller
  *May 24 - PMC Showcases the Industry’s First End-to-End Symmetric 10G EPON
    Demonstration at OptiNet China
  *Mar 6 - Adaptec Doubles Server Storage Performance and Bandwidth in CeBIT
    Demo Featuring PCIe 3.0 on the Intel® Xeon® Processor E5-2600 Product
    Family and Seagate Pulsar® Solid State Drives
  *Feb 29 - PMC Acquires the Server Storage 12Gb/s Expander Product Line from
    Maxim

Fourth Quarter and Full Year 2012 Conference Call

Management will review the fourth quarter and full year 2012 results and share
its outlook for the first quarter of 2013 during a conference call at 1:30 pm
Pacific Time/4:30 pm Eastern Time on January 31, 2013. 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 (888) 771-4371 (US Toll Free) or 1 (847) 585-4405 (International) with
passcode 34052547#, approximately ten minutes before the start time. A
telephone playback will be available after the completion of the call and can
be accessed at 1 (888) 843-7419 using the access code 34052547#. A replay of
the webcast will be available for 10 business days.

Safe Harbor Statement

This release contains forward-looking statements that involve risks and
uncertainties. The Company’s SEC filings 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 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 Twitter, LinkedIn and RSS.

© Copyright PMC-Sierra, Inc. 2013. 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.

PMC-Sierra, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share amounts)
(unaudited)
                                                                     
                 Three Months Ended                         Twelve Months Ended
                                                                           
                 December      September      December      December 29,   December
                 29,           30,            31,                          31,
                  2012        2012         2011        2012         2011    
                                                                           
Net revenues     $ 129,418     $ 131,723      $ 152,553     $ 530,997      $ 654,304
Cost of           36,663      38,990       47,166      157,918      211,630 
revenues
Gross profit       92,755        92,733         105,387       373,079        442,674
                                                                           
Research and       49,553        55,604         56,517        220,927        227,106
development
Selling,
general and        26,432        27,786         27,045        112,479        118,601
administrative
Amortization
of purchased       10,784        11,624         11,099        45,321         44,182
intangible
assets
Impairment of
goodwill and
purchased         -           276,082      -           276,082      -       
intangible
assets
Income (loss)
from               5,986         (278,363 )     10,726        (281,730 )     52,785
operations
                                                                           
Other income
(expense):
Revaluation of
liability for      -             -              -             -              29,376
contingent
consideration
Gain on
investment         777           180            286           1,523          845
securities and
other
Amortization
of debt issue      (17     )     (50      )     (50     )     (167     )     (200    )
costs
Foreign
exchange gain      439           (2,454   )     (1,194  )     (1,512   )     344
(loss)
Interest          (47     )    (797     )    (295    )    (1,586   )    (2,267  )
expense, net
Income (loss)
before
recovery of        7,138         (281,484 )     9,473         (283,472 )     80,883
(provision
for) income
taxes
Recovery of
(provision        3,949       7,098        18,892      (49,618  )    3,816   
for) income
taxes
Net income       $ 11,087     $ (274,386 )   $ 28,365     $ (333,090 )   $ 84,699  
(loss)
                                                                           
Net income
(loss) per       $ 0.05        $ (1.31    )   $ 0.12        $ (1.54    )   $ 0.36
common share -
basic
Net income
(loss) per       $ 0.05        $ (1.31    )   $ 0.12        $ (1.54    )   $ 0.36
common share -
diluted
                                                                           
Shares used in
per share          202,400       209,512        231,199       216,593        233,210
calculation -
basic
Shares used in
per share          202,900       209,512        232,028       216,593        235,184
calculation -
diluted
                                                                                     

 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      September      December      December 29,   December
                      29,           30,            31,                          31,
                       2012        2012         2011        2012         2011    
                        ^(1)          ^(2)           ^(3)          ^(4)           ^(5)
                                                                                
GAAP cost of          $ 36,663      $ 38,990       $ 47,166      $ 157,918      $ 211,630
revenues
Stock-based             (218    )     (181     )     (242    )     (875     )     (945    )
compensation
Acquisition-related     -             -              -             (37      )     (9,128  )
costs
Asset impairment        10            (108     )     -             (98      )     -
Termination costs      (92     )    -            -           (92      )    -       
Non-GAAP cost of      $ 36,363     $ 38,701      $ 46,924     $ 156,816     $ 201,557 
revenues
                                                                                
GAAP gross profit     $ 92,755      $ 92,733       $ 105,387     $ 373,079      $ 442,674
Stock-based             218           181            242           875            945
compensation
Acquisition-related     -             -              -             37             9,128
costs
Asset impairment        (10     )     108            -             98             -
Termination costs      92          -            -           92           -       
Non-GAAP gross        $ 93,055     $ 93,022      $ 105,629    $ 374,181     $ 452,747 
profit
                                                                                
Non-GAAP gross          72      %     71       %     69      %     70       %     69      %
profit %
                                                                                
GAAP research and     $ 49,553      $ 55,604       $ 56,517      $ 220,927      $ 227,106
development expense
Stock-based             (2,909  )     (2,933   )     (2,983  )     (11,583  )     (11,648 )
compensation
Acquisition-related     (269    )     (751     )     175           (2,162   )     (203    )
(costs) recoveries
Termination costs       (347    )     (690     )     -             (2,748   )     -
Asset impairment       (533    )    (479     )    -           (1,012   )    (3,029  )
Non-GAAP research
and development       $ 45,495     $ 50,751      $ 53,709     $ 203,422     $ 212,226 
expense
                                                                                
GAAP selling,
general and           $ 26,432      $ 27,786       $ 27,045      $ 112,479      $ 118,601
administrative
expense
Stock-based             (3,210  )     (2,974   )     (3,500  )     (13,857  )     (14,462 )
compensation
Acquisition-related     40            (335     )     (810    )     (1,591   )     (3,545  )
recoveries (costs)
Termination costs       (219    )     (717     )     -             (1,137   )     -
Asset impairment        39            (312     )     -             (273     )     -
Lease exit             125         (1,755   )    626         (2,384   )    (2,766  )
recoveries (costs)
Non-GAAP selling,
general and           $ 23,207     $ 21,693      $ 23,361     $ 93,237      $ 97,828  
administrative
expense
                                                                                
GAAP amortization
of purchased          $ 10,784      $ 11,624       $ 11,099      $ 45,321       $ 44,182
intangible assets
Amortization of
purchased              (10,784 )    (11,624  )    (11,099 )    (45,321  )    (44,182 )
intangible assets
Non-GAAP
amortization of       $ -          $ -           $ -          $ -           $ -       
purchased
intangible assets
                                                                                
GAAP impairment of
goodwill and          $ -           $ 276,082      $ -           $ 276,082      $ -
purchased
intangible assets
Impairment of
goodwill and           -           (276,082 )    -           (276,082 )    -       
purchased
intangible assets
Non-GAAP impairment
of goodwill and       $ -          $ -           $ -          $ -           $ -       
purchased
intangible assets
                                                                                
GAAP other income     $ 1,152       $ (3,121   )   $ (1,253  )   $ (1,742   )   $ 28,098
(expense)
Revaluation of
liability for           -             -              -             -              (29,376 )
contingent
consideration
Foreign exchange
(gain) loss on          (872    )     2,145          1,430         1,531          (583    )
foreign tax
liabilities
Accretion of debt
discount related to     389           962            906           3,218          3,518
senior convertible
notes
Accretion of
liability for           -             -              -             -              1,182
contingent
consideration
Interest expense
related to              -             -              -             -              258
short-term loan
Recovery of
impairment on
investment             -           -            (533    )    -            (533    )
securities and
other
Non-GAAP other        $ 669        $ (14      )   $ 550        $ 3,007       $ 2,564   
income (expense)
                                                                                
GAAP (recovery of)
provision for         $ (3,949  )   $ (7,098   )   $ (18,892 )   $ 49,618       $ (3,816  )
income taxes
Recovery of
(provision for)        3,825       6,305        18,889      (50,915  )    7,092   
income taxes
Non-GAAP (recovery
of) provision for     $ (124    )   $ (793     )   $ (3      )   $ (1,297   )   $ 3,276   
income taxes
                                                                                
                                                                                
                      Three Months Ended                         Twelve Months Ended
                      December      September      December      December 29,   December
                      29,           30,            31,                          31,
                       2012        2012         2011        2012         2011    
                        ^(1)          ^(2)           ^(3)          ^(4)           ^(5)
                                                                                
GAAP operating        $ 86,769      $ 371,096      $ 94,661      $ 654,809      $ 389,889
expenses
Stock-based             (6,119  )     (5,907   )     (6,483  )     (25,440  )     (26,110 )
compensation
Acquisition-related     (229    )     (1,086   )     (635    )     (3,753   )     (3,748  )
costs
Termination costs       (566    )     (1,407   )     -             (3,885   )     -
Asset impairment        (494    )     (791     )     -             (1,285   )     (3,029  )
Lease exit              125           (1,755   )     626           (2,384   )     (2,766  )
recoveries (costs)
Amortization of
purchased               (10,784 )     (11,624  )     (11,099 )     (45,321  )     (44,182 )
intangible assets
Impairment of
goodwill and           -           (276,082 )    -           (276,082 )    -       
purchased
intangible assets
Non-GAAP operating    $ 68,702     $ 72,444      $ 77,070     $ 296,659     $ 310,054 
expenses
                                                                                
GAAP operating        $ 5,986       $ (278,363 )   $ 10,726      $ (281,730 )   $ 52,785
income (loss)
Stock-based             6,337         6,088          6,725         26,315         27,055
compensation
Acquisition-related     229           1,086          635           3,790          12,876
costs
Termination costs       658           1,407          -             3,977          -
Asset impairment        484           899            -             1,383          3,029
Lease exit              (125    )     1,755          (626    )     2,384          2,766
(recoveries) costs
Amortization of
purchased               10,784        11,624         11,099        45,321         44,182
intangible assets
Impairment of
goodwill and           -           276,082      -           276,082      -       
purchased
intangible assets
Non-GAAP operating    $ 24,353     $ 20,578      $ 28,559     $ 77,522      $ 142,693 
income
                                                                                
Non-GAAP operating      19      %     16       %     19      %     15       %     22      %
margin %
                                                                                
GAAP net income       $ 11,087      $ (274,386 )   $ 28,365      $ (333,090 )   $ 84,699
(loss)
Stock-based             6,337         6,088          6,725         26,315         27,055
compensation
Acquisition-related     229           1,086          635           3,790          12,876
costs
Termination costs       658           1,407          -             3,977          -
Asset impairment        484           899            -             1,383          3,029
Lease exit              (125    )     1,755          (626    )     2,384          2,766
(recoveries) costs
Amortization of
purchased               10,784        11,624         11,099        45,321         44,182
intangible assets
Impairment of
goodwill and            -             276,082        -             276,082        -
purchased
intangible assets
Revaluation of
liability for           -             -              -             -              (29,376 )
contingent
consideration
Foreign exchange
(gain) loss on          (872    )     2,145          1,430         1,531          (583    )
foreign tax
liabilities
Accretion of debt
discount related to     389           962            906           3,218          3,518
senior convertible
notes
Accretion of
liability for           -             -              -             -              1,182
contingent
consideration
Interest expense
related to              -             -              -             -              258
short-term loan
Recovery of
impairment on
investment              -             -              (533    )     -              (533    )
securities and
other
(Recovery of)
provision for          (3,825  )    (6,305   )    (18,889 )    50,915       (7,092  )
income taxes
Non-GAAP net income   $ 25,146     $ 21,357      $ 29,112     $ 81,826      $ 141,981 
                                                                                
Non-GAAP net income   $ 0.12        $ 0.10         $ 0.13        $ 0.38         $ 0.61
per share - basic
Non-GAAP net income   $ 0.12        $ 0.10         $ 0.13        $ 0.38         $ 0.60
per share - diluted
                                                                                
Shares used to
calculate non-GAAP      202,400       209,512        231,199       216,593        233,210
net income per
share - basic
Shares used to
calculate non-GAAP      202,900       210,525        232,028       218,046        235,184
net income per
share - diluted
                                                                                          
(1) $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 $3.8
million recovery of income taxes which includes $5.1 million income tax recovery related to
an intercompany dividend, $1.7 million income tax provision relating to intercompany
transactions, $1.3 million income tax provision for adjustments relating to prior periods,
$0.6 million recovery of arrears interest relating to unrecognized tax benefits, $0.5
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.

(2) $6.1 million stock-based compensation expense; $1.1 million acquisition-related costs;
$1.4 million termination costs; $0.9 million asset impairment; $1.8 million lease exit
costs; $11.6 million amortization of purchased intangible assets; $276.1 million impairment
of goodwill and purchased intangible assets; $2.1 million foreign exchange loss on foreign
tax liabilities; $1 million non-cash interest expense for the accretion of the debt
discount related to the senior convertible notes; and $6.3 million recovery of income taxes
which includes $4.3 million income tax recovery related to an intercompany dividend, $2.8
million income tax recovery for adjustments relating to prior periods, $1.7 million income
tax provision relating to intercompany transactions, $1.2 million deferred tax recovery
related to non-deductible intangible asset amortization and impairment, $0.8 million
arrears interest relating to unrecognized tax benefits, and $0.5 million income tax
recovery relating to foreign exchange translation of a foreign subsidiary.

(3) $6.7 million stock-based compensation expense; $0.6 million acquisition-related costs;
$0.6 million recovery of lease exit costs; $11.1 million amortization of purchased
intangible assets; $1.4 million foreign exchange loss on foreign tax liabilities; $0.9
million of non-cash interest expense for the accretion of the debt discount related to the
senior convertible notes; $0.5 million recovery of impairment on investment securities and
other; and $18.9 million recovery of income taxes which includes $10.2 million income tax
recovery for adjustments relating to prior periods, $2.5 million reduction of stock option
related loss carry-forwards recognized in equity, $1.8 million recovery of arrears interest
relating to unrecognized tax benefits, $1 million income tax recovery related to foreign
tax credits, $0.6 million net tax recovery relating to foreign exchange translation of a
foreign subsidiary, $0.4 million income tax recovery relating to intercompany transactions,
and $2.4 million deferred tax recovery related to non-deductible intangible asset
amortization.

(4) $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; $276.1 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 $50.9 million provision for income taxes which
includes $47.2 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, $6.7 million income tax provision relating to intercompany
transactions, $3.4 million arrears interest relating to unrecognized tax benefits, $2.8
million deferred tax recovery related to non-deductible intangible asset amortization and
impairment, $2.2 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.

(5) $27.1 million stock-based compensation expense; $12.9 million acquisition-related
costs; $3 million asset impairment; $2.8 million lease exit costs; $44.2 million
amortization of purchased intangible assets; $29.4 million revaluation of liability for
contingent consideration; $0.6 million foreign exchange gain on foreign tax liabilities;
$3.5 million of non-cash interest expense for the accretion of the debt discount related to
the senior convertible notes; $1.2 million accretion of liability for contingent
consideration; $0.3 million interest related to short-term loan; $0.5 million recovery of
impairment on investment securities and other; and $7.1 million recovery of income taxes
which includes $9.9 million income tax recovery for adjustments relating to prior periods,
$6.5 million income tax provision relating to inter-company transactions, $1 million income
tax recovery related to foreign tax credits, $0.6 million of stock option related loss
carry-forwards recognized in equity, $0.5 million net tax recovery related to foreign
exchange translation of a foreign subsidiary, $0.2 million recovery of arrears interest
relating to unrecognized tax

benefits, $0.2 million income tax recovery related to stock-based compensation, and $2.4
million deferred tax recovery related to non-deductible intangible asset amortization.


PMC-Sierra, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
                                                              
                                                 December 29,    December 31,
                                                  2012          2011      
ASSETS:
Current assets:
Cash and cash equivalents                        $ 169,970       $ 182,571
Short-term investments                             11,431          104,391
Accounts receivable, net                           62,143          59,213
Inventories, net                                   23,548          39,911
Prepaid expenses and other current assets          22,125          23,411
Income tax receivable                              5,824           8,027
Deferred tax assets                               45,063        30,725    
Total current assets                               340,104         448,249
                                                                 
Investment securities                              91,778          226,619
Investments and other assets                       20,133          2,431
Prepaid expenses                                   10,920          16,901
Property and equipment, net                        43,146          25,364
Goodwill                                           252,419         520,899
Intangible assets, net                             128,668         158,482
Deferred tax assets                               484           494       
                                                 $ 887,652      $ 1,399,439 
                                                                 
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
2.25% senior convertible notes due October 15,   $ -             $ 65,122
2025, net
Accounts payable                                   27,410          38,340
Accrued liabilities                                72,282          66,139
Liability for unrecognized tax benefit             52,948          46,394
Income taxes payable                               644             -
Deferred income taxes                              2,466           2,450
Deferred income                                   8,113         16,024    
Total current liabilities                          163,863         234,469
                                                                 
Long-term obligations                              17,233          1,284
Deferred income taxes                              43,888          40,663
Liability for unrecognized tax benefit             19,257          17,323
                                                                 
PMC special shares convertible into 1,019
(2011 - 1,029)
shares of common stock                             1,188           1,228
                                                                 
Stockholders' equity:
Common stock and additional paid in capital        1,537,930       1,594,667
Accumulated other comprehensive income (loss)      616             (1,146    )
Accumulated deficit                               (896,323  )    (489,049  )
Total stockholders' equity                        642,223       1,104,472 
                                                 $ 887,652      $ 1,399,439 
                                                                             

PMC-Sierra, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                                                                
                                                   Twelve Months Ended
                                                   December 29,   December 31,
                                                    2012         2011     
Cash flows from operating activities:
Net (loss) income                                  $ (333,090 )   $ 84,699
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation and amortization                        64,535         72,544
Stock-based compensation                             26,315         27,055
Unrealized foreign exchange loss (gain), net         1,747          (43      )
Net amortization of premiums/discounts and accrued   5,101          4,520
interest of investments
Asset impairment                                     1,759          3,589
Accrued interest on short-term loan                  -              589
Gain on investment securities and other              (1,508   )     (671     )
Impairment of goodwill and purchased intangible      276,082        -
assets
Revaluation of liability for contingent              -              (29,376  )
consideration
Taxes related to intercompany dividend               60,940         -
                                                                  
Changes in operating assets and liabilities:
Accounts receivable                                  (2,929   )     10,177
Inventories                                          16,363         2,210
Prepaid expenses and other current assets            2,635          2,824
Accounts payable and accrued liabilities             (28,267  )     (9,447   )
Deferred income taxes and income taxes payable       (8,768   )     (4,044   )
Accrued restructuring costs                          -              (1,609   )
Deferred income                                     (7,911   )    (2,202   )
Net cash provided by operating activities           73,004       160,815  
                                                                  
Cash flows from investing activities:
Business acquisition                                 (15,900  )     (1,669   )
Purchases of property and equipment                  (31,229  )     (12,702  )
Purchases of intangible assets                       (7,438   )     (6,116   )
Redemption of short-term investments                 26,473         -
Disposals of investment securities                   315,310        159,523
Purchases of investment securities and other        (120,917 )    (205,903 )
investments
Net cash provided by (used in) investing            166,299      (66,867  )
activities
                                                                  
Cash flows from financing activities:
Repurchase of senior convertible notes               (68,340  )     -
Repurchases of common stock                          (199,999 )     (39,999  )
Repayment of short-term loan                         -              (180,991 )
Proceeds from issuance of common stock              16,000       16,764   
Net cash used in financing activities               (252,339 )    (204,226 )
                                                                  
Effect of exchange rate changes on cash and cash     435            (506     )
equivalents
Net decrease in cash and cash equivalents            (12,601  )     (110,784 )
Cash and cash equivalents, beginning of year        182,571      293,355  
Cash and cash equivalents, end of year             $ 169,970     $ 182,571  

Contact:

PMC-Sierra, Inc.
Director, Investor Relations
Jennifer Gianola, 1-408-239-8630
jennifer.gianola@pmcs.com
or
Communications Specialist
Hillary Choularton, 1-604-415-6671
hillary.choularton@pmcs.com
 
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