PMC Reports Second Quarter 2013 Results
PMC Reports Second Quarter 2013 Results
PMC Investor Relations Website: http://investor.pmcs.com
Q2 2013 earnings announcement call live on Website at 1:30 p.m. PT
Conference call replay number 1 (888) 843-7419; passcode 35145266#.
Replay available shortly after end of conference call through August 12, 2013
SUNNYVALE, Calif.--(BUSINESS WIRE)-- PMC-Sierra, Inc. (PMC®) (NAS: PMCS) , the semiconductor innovator transforming networks that connect, move and store big data,today reported results for the second quarter ended June 29, 2013.
Net revenues in the second quarter of 2013 totaled $127.9 million, an increase of two percent compared to $125.2 million in the first quarter of 2013, and a decrease of seven percent compared to $137.8 million in the second quarter of 2012.
GAAP net loss in the second quarterof 2013 totaled $4.2 million, or $0.02 per share, compared to a GAAP net loss in the first quarter of 2013of $6.8 million, or $0.03 per share. Non-GAAP net income totaled $16.3 million, or $0.08 per diluted share, up 22 percent in the second quarter of 2013 compared to non-GAAP net income of $13.4 million, or $0.07 per diluted share in the first quarter of 2013.
"Our second quarter results were in line with our outlook despite the muted environment," said Greg Lang, PMC president and chief executive officer. "The recent acquisition of IDT's PCI Express (PCIe) flash controller business further expands our growth opportunities and positions us as a leader in the rapidly growing enterprise solid-state drive (SSD) market segment."
Net income on a non-GAAP basis in the second quarter of 2013 excludes the following items: (i) $6.2 million stock-based compensation expense; (ii) $10.8 million amortization of purchased intangible assets; and (iii) $3.5 million of other adjustments including income tax related as described in the accompanying GAAP to non-GAAP reconciliation table.
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 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.
SECOND QUARTER AND RECENT 2013 HIGHLIGHTS
The Company announced the following second quarter and recent announcements:
Strengthening the Company's position as a leader in the rapidly growing enterprise SSD market segment, PMC announced a definitive agreement to acquire IDT's Enterprise Flash Controller Business and certain PCI Express (PCIe) Switch assets on May 29, 2013, which was completed on July 15, 2013.
To meet the demands of Big Data, 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 (PTN). As the newest member of PMC's leading WinPath backhaul processor family, WinPath4 eliminates network bottlenecks caused by the growing deployment of 4G LTE.
As a leader in secure data center storage solutions, PMC announced further expansion of its Adaptec storage product line with the industry's first low-profile, 24-port, PCI Express 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 June 6, 2013, PMC received the Excellence in Product Innovation award for its DIGI 120G multiservice OTN processor from the British Columbia Technology Industry Association (BCTIA). The award recognizes PMC's leadership, technology and product excellence within the technology community.
Second Quarter 2013 Conference Call
Management will review the second quarter of 2013 results and share its outlook for the third quarter of 2013 during a conference call at 1:30 pm Pacific Time/4:30 pm Eastern Time on July 29, 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 35145266#, 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 (888) 843-7419 using the access code 35145266#. 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, 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 (NAS: 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 Facebook, 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, Inc.
PMC-Sierra, Inc. | ||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
(in thousands, except for per share amounts) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 29, | March 30, | July 1, | June 29, | July 1, | ||||||||||||||||
2013 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||
(As Restated - See Note A) | (As Restated - See Note A) | |||||||||||||||||||
Net revenues | $ | 127,907 | $ | 125,161 | $ | 137,762 | $ | 253,068 | $ | 269,856 | ||||||||||
Cost of revenues | 37,827 | 37,260 | 41,253 | 75,087 | 82,265 | |||||||||||||||
Gross profit | 90,080 | 87,901 | 96,509 | 177,981 | 187,591 | |||||||||||||||
Research and development | 54,571 | 54,624 | 56,699 | 109,195 | 115,770 | |||||||||||||||
Selling, general and administrative | 30,277 | 28,342 | 29,290 | 58,619 | 58,261 | |||||||||||||||
Amortization of purchased intangible assets | 10,776 | 10,784 | 11,626 | 21,560 | 22,913 | |||||||||||||||
Loss from operations | (5,544 | ) | (5,849 | ) | (1,106 | ) | (11,393 | ) | (9,353 | ) | ||||||||||
Other income (expense): | ||||||||||||||||||||
Gain on investment securities and other | 30 | (16 | ) | 527 | 14 | 566 | ||||||||||||||
Amortization of debt issue costs | - | - | (50 | ) | - | (100 | ) | |||||||||||||
Foreign exchange gain | 2,213 | 1,365 | 1,608 | 3,578 | 503 | |||||||||||||||
Interest income (expense), net | 330 | 264 | (563 | ) | 594 | (742 | ) | |||||||||||||
(Loss) income before provision for income taxes | (2,971 | ) | (4,236 | ) | 416 | (7,207 | ) | (9,126 | ) | |||||||||||
Provision for income taxes | (1,181 | ) | (2,589 | ) | (519 | ) | (3,770 | ) | (58,330 | ) | ||||||||||
Net loss | $ | (4,152 | ) | $ | (6,825 | ) | $ | (103 | ) | $ | (10,977 | ) | $ | (67,456 | ) | |||||
Net loss per common share - basic | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.00 | ) | $ | (0.05 | ) | $ | (0.30 | ) | |||||
Net loss per common share - diluted | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.00 | ) | $ | (0.05 | ) | $ | (0.30 | ) | |||||
Shares used in per share calculation - basic | 205,230 | 203,307 | 222,316 | 204,269 | 227,229 | |||||||||||||||
Shares used in per share calculation - diluted | 205,230 | 203,307 | 222,316 | 204,269 | 227,229 | |||||||||||||||
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, 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 | ||||||||||||||||||||
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 | |||||||||||||||||||
June 29, | March 30, | July 1, | June 29, | July 1, | ||||||||||||||||
2013 (1) | 2013 (2) | 2012 (3) | 2013 (4) | 2012 (5) | ||||||||||||||||
GAAP cost of revenues | $ | 37,827 | $ | 37,260 | $ | 41,253 | $ | 75,087 | $ | 82,265 | ||||||||||
Stock-based compensation | (208 | ) | (245 | ) | (252 | ) | (453 | ) | (476 | ) | ||||||||||
Acquisition-related costs | (18 | ) | - | (35 | ) | (18 | ) | (37 | ) | |||||||||||
Non-GAAP cost of revenues | $ | 37,601 | $ | 37,015 | $ | 40,966 | $ | 74,616 | $ | 81,752 | ||||||||||
GAAP gross profit | $ | 90,080 | $ | 87,901 | $ | 96,509 | $ | 177,981 | $ | 187,591 | ||||||||||
Stock-based compensation | 208 | 245 | 252 | 453 | 476 | |||||||||||||||
Acquisition-related costs | 18 | - | 35 | 18 | 37 | |||||||||||||||
Non-GAAP gross profit | $ | 90,306 | $ | 88,146 | $ | 96,796 | $ | 178,452 | $ | 188,104 | ||||||||||
Non-GAAP gross profit % | 71 | % | 70 | % | 70 | % | 71 | % | 70 | % | ||||||||||
GAAP research and development expense | $ | 54,571 | $ | 54,624 | $ | 56,699 | $ | 109,195 | $ | 115,770 | ||||||||||
Stock-based compensation | (2,396 | ) | (3,304 | ) | (2,900 | ) | (5,700 | ) | (5,741 | ) | ||||||||||
Acquisition-related costs | (268 | ) | (273 | ) | (544 | ) | (541 | ) | (1,142 | ) | ||||||||||
Termination costs | (878 | ) | (392 | ) | (227 | ) | (1,270 | ) | (1,711 | ) | ||||||||||
Non-GAAP research and development expense | $ | 51,029 | $ | 50,655 | $ | 53,028 | $ | 101,684 | $ | 107,176 | ||||||||||
GAAP selling, general and administrative expense | $ | 30,277 | $ | 28,342 | $ | 29,290 | $ | 58,619 | $ | 58,261 | ||||||||||
Stock-based compensation | (3,601 | ) | (3,833 | ) | (4,157 | ) | (7,434 | ) | (7,673 | ) | ||||||||||
Acquisition-related costs | (1,072 | ) | (6 | ) | (535 | ) | (1,078 | ) | (1,296 | ) | ||||||||||
Termination costs | (254 | ) | (207 | ) | (68 | ) | (461 | ) | (201 | ) | ||||||||||
Asset impairment | (1,575 | ) | - | |||||||||||||||||
