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. | |||||||||||||||||||||||||
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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 (Expense) Income, (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 |
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| (in thousands, except for per share amounts) | |||||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
| September 27, | June 28, | September 28, | September 27, | September 28, | |||||||||||||||||||||
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2014 (1) |
2014 (2) |
2013 (3) |
2014 (4) |
2013 (5) |
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| GAAP cost of revenues | $ | 40,306 | $ | 36,824 | $ | 36,840 | $ | 114,694 | $ | 111,864 | |||||||||||||||
| Stock-based compensation | (226 | ) | (214 | ) | (190 | ) | (681 | ) | (643 | ) | |||||||||||||||
| Acquisition-related costs | - | - | (777 | ) | - | (795 | ) | ||||||||||||||||||
| Termination recoveries | - | - | - | 9 | - | ||||||||||||||||||||
| Reversal of accruals | - | - | 2,300 | - | 2,300 | ||||||||||||||||||||
| Non-GAAP cost of revenues | $ | 40,080 | $ | 36,610 | $ | 38,173 | $ | 114,022 | $ | 112,726 | |||||||||||||||
| GAAP gross profit | $ | 95,156 | $ | 89,998 | $ | 91,571 | $ | 274,058 | $ | 269,292 | |||||||||||||||
| Stock-based compensation | 226 | 214 | 190 | 681 | 643 | ||||||||||||||||||||
| Acquisition-related costs | - | - | 777 | - | 795 | ||||||||||||||||||||
| Termination recoveries | - | - | - | (9 | ) | - | |||||||||||||||||||
| Reversal of accruals | - | - | (2,300 | ) | - | (2,300 | ) | ||||||||||||||||||
| Non-GAAP gross profit | $ | 95,382 | $ | 90,212 | $ | 90,238 | $ | 274,730 | $ | 268,430 | |||||||||||||||
| Non-GAAP gross profit % | 70 | % | 71 | % | 70 | % | 71 | % | 70 | % | |||||||||||||||
| GAAP research and development expense | $ | 48,441 | $ | 49,388 | $ | 50,733 | $ | 147,977 | $ | 157,038 | |||||||||||||||
| Stock-based compensation | (1,990 | ) | (1,903 | ) | (2,541 | ) | (6,540 | ) | (8,241 | ) | |||||||||||||||
| Acquisition-related costs | (356 | ) | (794 | ) | (1,200 | ) | (1,950 | ) | (1,741 | ) | |||||||||||||||
| Termination recoveries (costs) | 28 | (342 | ) | (178 | ) | (256 | ) | (1,448 | ) | ||||||||||||||||
| Reversal of accruals | - | - | - | - | 2,890 | ||||||||||||||||||||
| Non-GAAP research and development expense | $ | 46,123 | $ | 46,349 | $ | 46,814 | $ | 139,231 | $ | 148,498 | |||||||||||||||
| GAAP selling, general and administrative expense | $ | 29,265 | $ | 28,991 | $ | 26,383 | $ | 87,596 | $ | 85,002 | |||||||||||||||
| Stock-based compensation | (3,012 | ) | (2,798 | ) | (3,143 | ) | (9,113 | ) | (10,577 | ) | |||||||||||||||
| Acquisition-related costs | (669 | ) | (3 | ) | (5 | ) | (733 | ) | (1,083 | ) | |||||||||||||||
| Lease exit costs | (31 | ) | (4 | ) | - | (177 | ) | - | |||||||||||||||||
| Termination recoveries (costs) | 254 | (1,295 | ) | (41 | ) | (1,044 | ) | (502 | ) | ||||||||||||||||
| Asset impairment | - | - | - | (477 | ) | (1,575 | ) | ||||||||||||||||||
| Other expenses | - | - | - | (58 | ) | - | |||||||||||||||||||
| Non-GAAP selling, general and administrative expense | $ | 25,807 | $ | 24,891 | $ | 23,194 | $ | 75,994 | $ | 71,265 | |||||||||||||||
| GAAP amortization of purchased intangible assets | $ | 9,948 | $ | 9,948 | $ | 13,138 | $ | 32,225 | $ | 34,698 | |||||||||||||||
| Amortization of purchased intangible assets | (9,948 | ) | (9,948 | ) | (13,138 | ) | (32,225 | ) | (34,698 | ) | |||||||||||||||
| Non-GAAP amortization of purchased intangible assets | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||
| GAAP other (expense) income | $ | 1,058 | $ | (680 | ) | $ | 64 | $ | 897 | $ | 4,250 | ||||||||||||||
| Foreign exchange (gain) loss on foreign tax liabilities | (1,081 | ) | 976 | 1,390 | (984 | ) | (2,133 | ) | |||||||||||||||||
| Gain on disposal of investment | - | - | - | - | (1,762 | ) | |||||||||||||||||||
| Non-GAAP other income (expense) | $ | (23 | ) | $ | 296 | $ | 1,454 | $ | (87 | ) | $ | 355 | |||||||||||||
| GAAP provision for income taxes | $ | 3,087 | $ | 4,471 | $ | 4,613 | $ | 9,405 | $ | 13,379 | |||||||||||||||
| Provision for income tax matters | (2,178 | ) | (3,550 | ) | (4,578 | ) | (6,839 | ) | (13,636 | ) | |||||||||||||||
| Non-GAAP provision for (recovery of) income taxes | $ | 909 | $ | 921 | $ | 35 | $ | 2,566 | $ | (257 | ) | ||||||||||||||
| GAAP operating expenses | $ | 87,654 | $ | 88,327 | $ | 90,254 | $ | 267,798 | $ | 276,738 | |||||||||||||||
| Stock-based compensation | (5,002 | ) | (4,701 | ) | (5,684 | ) | (15,653 | ) | (18,818 | ) | |||||||||||||||
| Acquisition-related costs | (1,025 | ) | (797 | ) | (1,205 | ) | (2,683 | ) | (2,824 | ) | |||||||||||||||
| Assets impairment | - | - | - | (477 | ) | (1,575 | ) | ||||||||||||||||||
| Lease exit costs | (31 | ) | (4 | ) | - | (177 | ) | - | |||||||||||||||||
| Termination recoveries (costs) | 282 | (1,637 | ) | (219 | ) | (1,300 | ) | (1,950 | ) | ||||||||||||||||
| Amortization of purchased intangible assets | (9,948 | ) | (9,948 | ) | (13,138 | ) | (32,225 | ) | (34,698 | ) | |||||||||||||||
| Reversal of accruals | - | - | - | - | 2,890 | ||||||||||||||||||||
| Other expenses | - | - | - | (58 | ) | - | |||||||||||||||||||
| Non-GAAP operating expenses | $ | 71,930 | $ | 71,240 | $ | 70,008 | $ | 215,225 | $ | 219,763 | |||||||||||||||
| September 27, | June 28, | September 28, | September 27, | September 28, | |||||||||||||||||||||
| 2014 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
| GAAP operating income (loss) | $ | 7,502 | $ | 1,671 | $ | 1,317 | $ | 6,260 | $ | (7,446 | ) | ||||||||||||||
| Stock-based compensation | 5,228 | 4,915 | 5,874 | 16,334 | 19,461 | ||||||||||||||||||||
| Acquisition-related costs | 1,025 | 797 | 1,982 | 2,683 | 3,619 | ||||||||||||||||||||
| Assets impairment | - | - | - | 477 | 1,575 | ||||||||||||||||||||
| Lease exit costs | 31 | 4 | - | 177 | - | ||||||||||||||||||||
| Termination (recoveries) costs | (282 | ) | 1,637 | 219 | 1,291 | 1,950 | |||||||||||||||||||
| Amortization of purchased intangible assets | 9,948 | 9,948 | 13,138 | 32,225 | 34,698 | ||||||||||||||||||||
| Reversal of accruals | - | - | (2,300 | ) | - | (5,190 | ) | ||||||||||||||||||
| Other expenses | - | - | - | 58 | - | ||||||||||||||||||||
| Non-GAAP operating income | $ | 23,452 | $ | 18,972 | $ | 20,230 | $ | 59,505 | $ | 48,667 | |||||||||||||||
| Non-GAAP operating margin | 17 | % | 15 | % | 16 | % | 15 | % | 13 | % | |||||||||||||||
| GAAP net income (loss) | $ | 5,473 | $ | (3,480 | ) | $ | (3,232 | ) | $ | (2,248 | ) | $ | (16,575 | ) | |||||||||||
| Stock-based compensation | 5,228 | 4,915 | 5,874 | 16,334 | 19,461 | ||||||||||||||||||||
| Acquisition-related costs | 1,025 | 797 | 1,982 | 2,683 | 3,619 | ||||||||||||||||||||
| Termination costs (recoveries) | (282 | ) | 1,637 | 219 | 1,291 | 1,950 | |||||||||||||||||||
| Reversal of accruals | - | - | (2,300 | ) | - | (5,190 | ) | ||||||||||||||||||
| Assets impairment | - | - | - | 477 | 1,575 | ||||||||||||||||||||
| Lease exit costs | 31 | 4 | - | 177 | - | ||||||||||||||||||||
| Amortization of purchased intangible assets | 9,948 | 9,948 | 13,138 | 32,225 | 34,698 | ||||||||||||||||||||
| Other expenses | - | - | - | 58 | - | ||||||||||||||||||||
| Foreign exchange (gain) loss on foreign tax liabilities | (1,081 | ) | 976 | 1,390 | (984 | ) | (2,133 | ) | |||||||||||||||||
| Gain on disposal of investments | - | - | (1,762 | ) | - | (1,762 | ) | ||||||||||||||||||
| Provision for income tax matters | 2,178 | 3,550 | 4,578 | 6,839 | 13,636 | ||||||||||||||||||||
| Non-GAAP net income | $ | 22,520 | $ | 18,347 | $ | 19,887 | $ | 56,852 | $ | 49,279 | |||||||||||||||
| Non-GAAP net income per share - basic | $ | 0.11 | $ | 0.09 | $ | 0.10 | $ | 0.29 | $ | 0.24 | |||||||||||||||
| Non-GAAP net income per share - diluted | $ | 0.11 | $ | 0.09 | $ | 0.10 | $ | 0.28 | $ | 0.24 | |||||||||||||||
| Shares used to calculate non-GAAP net income per share - basic | 197,613 | 196,114 | 205,377 | 196,305 | 204,638 | ||||||||||||||||||||
| Shares used to calculate non-GAAP net income per share - diluted | 200,744 | 199,594 | 207,475 | 199,548 | 206,772 | ||||||||||||||||||||
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(1) $5.2 million stock-based compensation expense; $1 million acquisition-related costs; $0.3 million recovery of termination costs; $9.9 million amortization of purchased intangible assets; $1.1 million foreign exchange gain on foreign tax liabilities; $0.1 million lease exit costs; $0.1 million other expenses; and $2.2 million provision for income taxes which includes $0.9 million income tax provision related to unrecognized tax benefits, $1.1 million income tax provision related to prepaid tax amortization, and $0.2 million income tax provision from adjustments related to prior periods. |
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(2) $4.9 million stock-based compensation expense; $0.8 million acquisition-related costs; $1.6 million of net termination costs; $9.9 million amortization of purchased intangible assets; $1 million foreign exchange loss on foreign tax liabilities; $0.1 million lease exit costs; and $3.6 million provision for income taxes which includes $0.8 million income tax provision related to unrecognized tax benefits, $1.5 million income tax provision related to prepaid tax amortization, $1.5 million income tax provision related to tax deductible goodwill and other items, $0.4 million deferred income tax benefit from adjustments related to prior periods, and $0.2 million income tax provision related to tax deductible items above. |
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(3) $5.9 million stock-based compensation expense; $2 million acquisition-related costs; $0.2 million termination costs; $13.1 million amortization of purchased intangible assets; $1.4 million foreign exchange loss on foreign tax liabilities; $1.8 million gain from disposal of investments; $2.3 million reversal of accruals; and $4.6 million provision for income taxes which includes $2.9 million deferred tax provision related to non-deductible intangible asset amortization, $1.1 million income tax provision related to unrecognized tax benefits, $0.4 million tax recovery related to foreign exchange translation of a foreign subsidiary, and $1 million income tax provision related to tax deductible items above. |
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(4) $16.3 million stock-based compensation expense; $2.7 million acquisition-related costs; $1.3 million net termination costs; $32.2 million amortization of purchased intangible assets; $1 million foreign exchange gain on foreign tax liabilities; $0.5 million asset impairment; $0.2 million lease exit costs; $0.1 million other expenses; and $6.8 million provision for income taxes which includes $2.4 million income tax provision related to unrecognized tax benefits, $3 million income tax provision related to prepaid tax amortization, and $1.4 million income tax provision related to tax deductible goodwill and other items. |
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(5) $19.5 million stock-based compensation expense; $3.6 million acquisition-related costs; $2 million termination costs; $1.6 million asset impairment; $5.2 million reversal of accruals; $34.7 million amortization of purchased intangible assets; $2.1 million foreign exchange gain on foreign tax liabilities; $1.8 million gain on disposal; and $13.6 million provision for income taxes which includes$1.7 million arrears interest relating to unrecognized tax benefits, $8.6 million deferred tax provision related to non-deductible intangible asset amortization, $0.5 million income tax provision relating to foreign exchange translation of a foreign subsidiary, $2.7 million tax provision for adjustments relating to prior period, and $0.1 million deferred tax provision related to tax deductible items above. |
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