10/20/2003 - PMC-Sierra(TM) Inc., a leading provider of high-speed broadband communications and storage semiconductors and MIPS-based(TM) microprocessors, reported its third quarter results for the period ended September 28, 2003.
Net revenues in the third quarter of 2003 were $63.1 million compared with $60.4 million for the second quarter of 2003 and $59.6 million for the same period a year ago. This represented an increase in revenues of 4.5 percent sequentially and 5.9 percent on a year-over-year basis.
Net income in the third quarter of 2003 on a non-GAAP basis was $0.8 million (non-GAAP diluted earnings per share of $0.00) compared with a non-GAAP net loss of $3.9 million (non-GAAP net loss per share of $0.02) in the prior quarter.
GAAP net income in the third quarter of 2003 was $3.2 million (GAAP diluted earnings per share of $0.02). This compares to GAAP net loss of $9.2 million in the second quarter of 2003 (GAAP net loss per share of $0.05).
Non-GAAP net income in the third quarter of 2003 excludes the following items: (i) a gain of $1.7 million on repurchase of convertible subordinated notes; (ii) a net reversal of $1.1 million of restructuring provision; (iii) $0.3 million in amortization of deferred stock compensation; and (iv) a loss on sale of other investments of $0.2 million. (For a full reconciliation of GAAP versus non-GAAP for the second and third quarters of 2003 as well as the third quarter of 2002, please see the schedule on page 6 of this release). The Company believes that the additional non-GAAP measures provided are useful to investors for the performance of financial analysis. Management uses the non-GAAP measures internally to evaluate its operating performance and planning for the Company's future periods. However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures.
"After two-and-a-half years of hard work, PMC-Sierra has reached its intermediate goal of achieving profitability while enhancing our competitive position in the service provider, MIPS-based microprocessor, and enterprise and storage semiconductor markets. The next milestone for the Company is to achieve model profitability," said Bob Bailey, president and chief executive officer of PMC-Sierra.
The Company repurchased $100 million in face value of convertible subordinated notes during the third quarter at a cost of $96.7 million. The face value of the remaining notes is $175 million and they mature on August 15, 2006. The notes are convertible into common shares of PMC-Sierra at a conversion price of $42.43 per share and have an annual interest rate of 3.75 percent.
As previously announced, during the quarter, PMC-Sierra eliminated its lease obligation at the Mission Towers Two building located at Freedom Circle in Santa Clara, CA. The Company purchased and resold the facility at a net cost of approximately $102 million. The transaction eliminated the Company's remaining rental commitment for the building of about $215 million that was due through December 2011.
"From a financial perspective, this past quarter was very productive," said Alan Krock, vice president of finance and chief financial officer of PMC-Sierra. "Significant future period obligations were settled in the third quarter. In addition, we exceeded our previous operating expense reduction targets established in January 2003. We remain focused on maintaining operating leverage as our markets begin to improve."
New products announced in the third quarter of 2003 include the following:
Third Quarter 2003 Conference Call
Management will review the third quarter 2003 results and provide guidance for the fourth quarter of 2003 during a conference call at 1:30 PM Pacific Time/4:30 PM Eastern Time today. To listen to the call, investors can access an audio webcast of the conference from the Investor Relations page of PMC-Sierra's corporate website at www.pmc-sierra.com. A replay of this webcast will be posted and available two hours after the conference call has been completed. To listen to the conference call live by telephone, please dial 719-457-2621 approximately ten minutes before the 1:30 PM Pacific start time. A phone replay will be available 15 minutes after the completion of the call and can be accessed by dialing 719-457-0820 (replay access code is 701006).
Fourth Quarter 2003 Conference Call
PMC-Sierra will be releasing its results for the fourth quarter on January 22, 2004. A conference call will be held that day to review the quarter and provide an outlook for the first quarter of 2004.
PMC-Sierra is a leading provider of high-speed broadband communications and storage semiconductors and MIPS-based(TM) processors for Enterprise, Access, Metro Optical Transport, Storage Area Networking and Wireless network equipment. The company offers worldwide technical and sales support, including a network of offices throughout North America, Europe and Asia. The company is publicly traded on the NASDAQ Stock Market under the PMCS symbol and is included in the S&P 500 Index. For more information, visit www.pmc-sierra.com.
PMC-Sierra, Inc. 2003. PMC, PMCS, PMC-Sierra and "Thinking you can build on" are trademarks of PMC-Sierra, Inc.
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