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, 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 | Twelve Months Ended | ||||||||||||||||||||
| December 27, | September 27, | December 28, | December 27, | December 28, | |||||||||||||||||
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2014 (1) |
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2014 (2) |
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2013 (3) |
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2014 (4) |
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2013 (5) |
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| GAAP cost of revenues | $ | 40,702 | $ | 40,306 | $ | 37,349 | $ | 155,396 | $ | 149,213 | |||||||||||
| Stock-based compensation | (285 | ) | (226 | ) | (256 | ) | (966 | ) | (899 | ) | |||||||||||
| Acquisition-related costs | - | - | (5 | ) | - | (800 | ) | ||||||||||||||
| Termination and separation (costs) recoveries | - | - | (171 | ) | 9 | (171 | ) | ||||||||||||||
| Reversal of accruals | - | - | - | - | 2,300 | ||||||||||||||||
| Non-GAAP cost of revenues | $ | 40,417 | $ | 40,080 | $ | 36,917 | $ | 154,439 | $ | 149,643 | |||||||||||
| GAAP gross profit | $ | 96,149 | $ | 95,156 | $ | 89,523 | $ | 370,207 | $ | 358,815 | |||||||||||
| Stock-based compensation | 285 | 226 | 256 | 966 | 899 | ||||||||||||||||
| Acquisition-related costs | - | - | 5 | - | 800 | ||||||||||||||||
| Termination and separation costs (recoveries) | - | - | 171 | (9 | ) | 171 | |||||||||||||||
| Reversal of accruals | - | - | - | - | (2,300 | ) | |||||||||||||||
| Non-GAAP gross profit | $ | 96,434 | $ | 95,382 | $ | 89,955 | $ | 371,164 | $ | 358,385 | |||||||||||
| Non-GAAP gross profit % | 70 | % | 70 | % | 71 | % | 71 | % | 71 | % | |||||||||||
| GAAP research and development expense | $ | 50,942 | $ | 48,441 | $ | 54,009 | $ | 198,919 | $ | 211,047 | |||||||||||
| Stock-based compensation | (2,880 | ) | (1,990 | ) | (2,854 | ) | (9,420 | ) | (11,095 | ) | |||||||||||
| Acquisition-related costs | (423 | ) | (356 | ) | (1,071 | ) | (2,373 | ) | (2,812 | ) | |||||||||||
| Termination and separation recoveries (costs) | 8 | 28 | (2,690 | ) | (248 | ) | (4,138 | ) | |||||||||||||
| Reversal of accruals | 342 | - | - | 342 | 2,890 | ||||||||||||||||
| Lease exit recoveries | 29 | - | - | 29 | - | ||||||||||||||||
| Asset impairment | - | - | (508 | ) | - | (508 | ) | ||||||||||||||
| Non-GAAP research and development expense | $ | 48,018 | $ | 46,123 | $ | 46,886 | $ | 187,249 | $ | 195,384 | |||||||||||
| GAAP selling, general and administrative expense | $ | 29,411 | $ | 29,265 | $ | 27,768 | $ | 117,007 | $ | 112,770 | |||||||||||
| Stock-based compensation | (3,682 | ) | (3,012 | ) | (3,694 | ) | (12,795 | ) | (14,271 | ) | |||||||||||
| Acquisition-related costs | (261 | ) | (669 | ) | (39 | ) | (994 | ) | (1,122 | ) | |||||||||||
| Lease exit costs | (5 | ) | (31 | ) | (48 | ) | (182 | ) | (48 | ) | |||||||||||
| Termination and separation (costs) recoveries | (645 | ) | 254 | (1,282 | ) | (1,689 | ) | (1,784 | ) | ||||||||||||
| Reversal of accruals | - | - | 1,300 | - | 1,300 | ||||||||||||||||
| Asset impairment | - | - | (639 | ) | (477 | ) | (2,214 | ) | |||||||||||||
| Other nonrecurring expenses | - | - | - | (58 | ) | - | |||||||||||||||
| Non-GAAP selling, general and administrative expense | $ | 24,818 | $ | 25,807 | $ | 23,366 | $ | 100,812 | $ | 94,631 | |||||||||||
| GAAP amortization of purchased intangible assets | $ | 10,994 | $ | 9,948 | $ | 13,547 | $ | 43,219 | $ | 48,245 | |||||||||||
| Amortization of purchased intangible assets | (10,994 | ) | (9,948 | ) | (13,547 | ) | (43,219 | ) | (48,245 | ) | |||||||||||
| Non-GAAP amortization of purchased intangible assets | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
| GAAP other income | $ | 2,535 | $ | 1,058 | $ | 2,499 | $ | 3,432 | $ | 6,749 | |||||||||||
| Foreign exchange gain on foreign tax liabilities | (2,665 | ) | (1,081 | ) | (2,564 | ) | (3,649 | ) | (4,697 | ) | |||||||||||
| Gain on disposal of investments | (26 | ) | - | - | (26 | ) | (1,762 | ) | |||||||||||||
| Amortization of discount on long-term obligations | 350 | - | - | 350 | - | ||||||||||||||||
| Non-GAAP other income (expense) | $ | 194 | $ | (23 | ) | $ | (65 | ) | $ | 107 | $ | 290 | |||||||||
| GAAP provision for income taxes | $ | 5,007 | $ | 3,087 | $ | 12,377 | $ | 14,412 | $ | 25,756 | |||||||||||
| Provision for income tax matters | (3,900 | ) | (2,178 | ) | (11,760 | ) | (10,739 | ) | (25,396 | ) | |||||||||||
| Non-GAAP provision for income taxes | $ | 1,107 | $ | 909 | $ | 617 | $ | 3,673 | $ | 360 | |||||||||||
| GAAP operating expenses | $ | 91,347 | $ | 87,654 | $ | 95,324 | $ | 359,145 | $ | 372,062 | |||||||||||
| Stock-based compensation | (6,562 | ) | (5,002 | ) | (6,548 | ) | (22,215 | ) | (25,366 | ) | |||||||||||
| Acquisition-related costs | (684 | ) | (1,025 | ) | (1,110 | ) | (3,367 | ) | (3,934 | ) | |||||||||||
| Asset impairment | - | - | (1,147 | ) | (477 | ) | (2,722 | ) | |||||||||||||
| Lease exit recoveries (costs) | 24 | (31 | ) | (48 | ) | (153 | ) | (48 | ) | ||||||||||||
| Termination and separation (costs) recoveries | (637 | ) | 282 | (3,972 | ) | (1,937 | ) | (5,922 | ) | ||||||||||||
| Reversal of accruals | 342 | - | 1,300 | 342 | 4,190 | ||||||||||||||||
| Amortization of purchased intangible assets | (10,994 | ) | (9,948 | ) | (13,547 | ) | (43,219 | ) | (48,245 | ) | |||||||||||
| Other nonrecurring expenses | - | - | - | (58 | ) | - | |||||||||||||||
| Non-GAAP operating expenses | $ | 72,836 | $ | 71,930 | $ | 70,252 | $ | 288,061 | $ | 290,015 | |||||||||||
| GAAP operating income (loss) | $ | 4,802 | $ | 7,502 | $ | (5,801 | ) | $ | 11,062 | $ | (13,247 | ) | |||||||||
| Stock-based compensation | 6,847 | 5,228 | 6,804 | 23,181 | 26,265 | ||||||||||||||||
| Acquisition-related costs | 684 | 1,025 | 1,115 | 3,367 | 4,734 | ||||||||||||||||
| Asset impairment | - | - | 1,147 | 477 | 2,722 | ||||||||||||||||
| Reversal of accruals | (342 | ) | - | (1,300 | ) | (342 | ) | (6,490 | ) | ||||||||||||
| Lease exit (recoveries) costs | (24 | ) | 31 | 48 | 153 | 48 | |||||||||||||||
| Termination and separation costs (recoveries) | 637 | (282 | ) | 4,143 | 1,928 | 6,093 | |||||||||||||||
| Amortization of purchased intangible assets | 10,994 | 9,948 | 13,547 | 43,219 | 48,245 | ||||||||||||||||
| Other nonrecurring expenses | - | - | - | 58 | - | ||||||||||||||||
| Non-GAAP operating income | $ | 23,598 | $ | 23,452 | $ | 19,703 | $ | 83,103 | $ | 68,370 | |||||||||||
| Non-GAAP operating margin | 17 | % | 17 | % | 16 | % | 16 | % | 13 | % | |||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
| December 27, | September 27, | December 28, | December 27, | December 28, | |||||||||||||||||
|
2014 (1) |
|
2014 (2) |
|
2013 (3) |
|
2014 (4) |
|
2013 (5) |
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| GAAP net income (loss) | $ | 2,330 | $ | 5,473 | $ | (15,679 | ) | $ | 82 | $ | (32,254 | ) | |||||||||
| Stock-based compensation | 6,847 | 5,228 | 6,804 | 23,181 | 26,265 | ||||||||||||||||
| Acquisition-related costs | 684 | 1,025 | 1,115 | 3,367 | 4,734 | ||||||||||||||||
| Termination and separation costs (recoveries) | 637 | (282 | ) | 4,143 | 1,928 | 6,093 | |||||||||||||||
| Asset impairment | - | - | 1,147 | 477 | 2,722 | ||||||||||||||||
| Reversal of accruals | (342 | ) | - | (1,300 | ) | (342 | ) | (6,490 | ) | ||||||||||||
| Lease exit (recoveries) costs | (24 | ) | 31 | 48 | 153 | 48 | |||||||||||||||
| Amortization of purchased intangible assets | 10,994 | 9,948 | 13,547 | 43,219 | 48,245 | ||||||||||||||||
| Foreign exchange gain on foreign tax liabilities | (2,665 | ) | (1,081 | ) | (2,564 | ) | (3,649 | ) | (4,697 | ) | |||||||||||
| Gain on disposal of investments | (26 | ) | - | - | (26 | ) | (1,762 | ) | |||||||||||||
| Amortization of discount on long-term obligation | 350 | - | - | 350 | - | ||||||||||||||||
| Other nonrecurring expenses | - | - | - | 58 | - | ||||||||||||||||
| Provision for income tax matters | 3,900 | 2,178 | 11,760 | 10,739 | 25,396 | ||||||||||||||||
| Non-GAAP net income | $ | 22,685 | $ | 22,520 | $ | 19,021 | $ | 79,537 | $ | 68,300 | |||||||||||
| Non-GAAP net income per share - basic | $ | 0.11 | $ | 0.11 | $ | 0.09 | $ | 0.40 | $ | 0.33 | |||||||||||
| Non-GAAP net income per share - diluted | $ | 0.11 | $ | 0.11 | $ | 0.09 | $ | 0.40 | $ | 0.33 | |||||||||||
| Shares used to calculate non-GAAP net income per share - basic | 198,625 | 197,613 | 201,615 | 196,885 | 203,882 | ||||||||||||||||
| Shares used to calculate non-GAAP net income per share - diluted | 201,935 | 200,744 | 203,047 | 200,145 | 205,841 | ||||||||||||||||
