PMC-Sierra: Fiscal 3Q11 Financial Results

PMC-Sierra, Inc. reported results for the third quarter ended October 2, 2011.

Net revenues in the third quarter of 2011 were $173.3 million, a sequential increase of 1% compared with $171.0 million in the second quarter of 2011, and 7% higher than net revenues of $162.3 million in the third quarter of 2010.

In the third quarter of 2011, the Company reported GAAP net income of $47.3 million, or $0.20 per diluted share, compared with GAAP net income in the second quarter of 2011 of $16.7 million, or $0.07 per diluted share. Non-GAAP net income in the third quarter of 2011 was $42.1 million, or $0.18 per diluted share, compared with non-GAAP net income of $40.2 million, or $0.17 per diluted share, in the second quarter of 2011.

"Our third quarter results were solid given the difficult economic environment," said Greg Lang, president and chief executive officer of PMC. "While macro concerns impact our near-term outlook, PMC is well-positioned to deliver the infrastructure required to support explosive traffic growth on storage, mobile and optical networks."

Net income on a non-GAAP basis in the third quarter of 2011 excludes the following items: (i) $7.0 million stock-based compensation expense; (ii) $0.6 million acquisition-related costs; (iii) $3.0 million asset impairment; (iv) $11.0 million amortization of purchased intangible assets; (v) $29.4 million gain on liability for contingent consideration; (vi) $3.2 million foreign exchange gain on foreign tax liabilities; (vii) $0.9 million of non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; (viii) $0.4 million accretion of liability for contingent consideration; and (ix) $4.6 million income tax related amounts.

For a full reconciliation of GAAP net income to non-GAAP net income, please refer to the schedules 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.

In the third quarter of 2011, PMC announced:

• A new family of Tachyon 6Gb/s SAS/SATA controller-based encryption solutions for securing cloud storage. The SPCve controllers integrate line-rate data encryption into the existing data flow, providing a central, scalable and cost-effective means to secure and manage stored data. PMC’s controller-based encryption architecture is agnostic to drive type or vendor, allowing OEMs and cloud providers to mix and match HDDs and SSDs, and to encrypt their deployed storage infrastructure.
• The Adaptec Series 6Q RAID controller with maxCache 2.0 SSD caching designed to accelerate data center and cloud computing application performance. PMC’s second-generation SSD caching solution, maxCache 2.0, adds support for write caching to expand the application workloads that can benefit from this technology. The Series 6Q with maxCache 2.0 improves quality of service, offers up to 13 times improvement in I/O operations per second (IOPS) and a 13 times reduction in application latency. PMC also released the Series 6T with recessed top-mounted connectors that enable maximum installation flexibility in dense form-factor servers.