[April 25, 2013]

PMC Reports First Quarter 2013 Results

PMC® (Nasdaq: PMCS), the semiconductor innovator transforming networks that connect, move and store big data, today reported results for the first quarter ended March 30, 2013.

Net revenues in the first quarter of 2013 totaled $125.2 million, a decrease of three percent compared to $129.4 million in the fourth quarter of 2012, and a decrease of five percent compared to $132.1 million in the first quarter of 2012.

GAAP net loss in the first quarter of 2013 totaled $6.8 million, or $0.03 per share, compared to GAAP net income in the fourth quarter of 2012 of $10.8 million, or $0.05 per diluted share. Note this GAAP comparative is restated for an immaterial correction described in the financial statements later in this release. Non-GAAP net income totaled $13.4 million, or $0.07 per diluted share, down 47 percent in the first quarter of 2013 compared to non-GAAP net income of $25.1 million, or $0.12 per diluted share in the fourth quarter of 2012.

"Our first quarter results were in line with our outlook and within the expected range," said Greg Lang, PMC President and Chief Executive Officer. "We are encouraged by stronger bookings in the quarter and expect to grow revenues in the second quarter of 2013. Our book-to-bill ratio within the period was greater than one for the second consecutive quarter."

Net income on a non-GAAP basis in the first quarter of 2013 excludes the following items: (i) $7.4 million stock-based compensation expense; (ii) $10.8 million amortization of purchased intangible assets; and (iii) $2 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 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.

FIRST QUARTER 2013 HIGHLIGHTS

The Company announced the following in the first quarter of 2013:

• To meet the elastic traffic demands of big data, PMC announced the introduction of DIGI 120G, the industry's only single-chip OTN processor supporting 10G, 40G and 100G speeds for OTN transport, aggregation and switched deployments. DIGI 120G allows for the efficient sharing and dynamic assignment of network resources, enabling OTN networks to effectively virtualize optical network bandwidth. This unprecedented level of silicon integration facilitates the most cost effective designs, engineering efficiency, and lowest power approach to OTN system solutions.
• As a leader in secure data center storage solutions, PMC announced further expansion of its Adaptec storage product line with the industry's first high performance, high density, low profile encrypted PCIe Gen3 host bus adapter (HBA) family. This product line is capable of executing over one million input/output operations per second (IOPS) with 6.6 GB/sec sustained throughput, provides 256 bit AES encryption, and offers up to 16 ports. The Adaptec Series 7H and 6H families of SAS/SATA HBAs provide customers with high-performance connectivity for hard disk drives (HDDs), solid-state drives (SSDs), removable media and tape drives. The product family is ideally suited for high performance data center applications.

First Quarter 2013 Conference Call

Management will review the first quarter of 2013 results and share its outlook for the second quarter of 2013 during a conference call at 1:30 pm Pacific Time/4:30 pm Eastern Time on April 25, 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 34533385#, approximately ten 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 34533385#. 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 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 (Nasdaq: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 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.

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.

(1) $7.4 million stock-based compensation expense; $0.3 million acquisition-related costs; $0.6 million termination costs; $10.8 million amortization of purchased intangible assets; $1.3 million foreign exchange gain on foreign tax liabilities; and $2.5 million provision for income taxes which includes $1.8 million tax provision relating to intercompany transactions, $1 million arrears interest relating to unrecognized tax benefits, $0.5 million deferred tax recovery related to non-deductible intangible asset amortization, $0.1 million tax provision for adjustments relating to prior periods, and $0.1 million income tax provision related to tax deductible items above.

(2) $6.3 million stock-based compensation expense; $0.2 million acquisition-related costs; $0.7 million termination costs; $0.5 million asset impairment; $0.1 million recovery of lease exit costs; $10.8 million amortization of purchased intangible assets; $0.9 million foreign exchange gain on foreign tax liabilities; $0.4 million non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; and $3.6 million recovery of income taxes which includes $3.2 million tax recovery relating to intercompany transactions, $1.3 million income tax provision for adjustments relating to prior periods, $0.6 million recovery of arrears interest relating to unrecognized tax benefits, $0.5 million deferred tax recovery related to non-deductible intangible asset amortization and impairment, $0.4 million income tax recovery relating to foreign exchange translation of a foreign subsidiary, and $0.2 million income tax recovery related to tax deductible items above.

(3) $6.6 million stock-based compensation expense; $1.4 million acquisition-related costs; $1.6 million termination costs; $0.4 million lease exit costs; $11.3 million amortization of purchased intangible assets; $1.3 million foreign exchange loss on foreign tax liabilities; $0.9 million non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; and $57.8 million provision for income taxes which includes $58.1 million tax provision relating to intercompany transactions, $0.6 million arrears interest relating to unrecognized tax benefits, $0.5 million deferred tax recovery related to non-deductible intangible asset amortization, $0.2 million net tax recovery relating to foreign exchange translation of a foreign subsidiary, and $0.2 million income tax recovery for adjustments relating to prior periods.

Note A. Error Corrections - Income Taxes

The condensed consolidated financial statements as of December 29, 2012 and for the quarters ended December 29, 2012 and April 1, 2012 have been revised to reflect a restatement related to income tax errors. Subsequent to the issuance of the Company's December 29, 2012 consolidated financial statements, errors were identified that related to the determination of tax expense associated with the Company's 2009 intercompany sale of intellectual property. Under the accounting principles that apply to the intercompany sale of intellectual property, the tax expense attributable to the gain is recognized over the economic life of the asset sold. The Company had previously identified any tax expense that would not have been recognized absent the transaction as tax expense subject to deferral, including tax expense in years subsequent to the year of sale. This correction limits the tax expense subject to deferral to the incremental tax expense incurred in the year of sale.

Additionally, the Company corrected tax benefits recognized that related to excess stock option deductions to appropriately consider foreign tax credit carry-forwards previously not recognized, that should have reduced tax expense in 2012. Furthermore, the Company has corrected the accounting for foreign tax credits that arose in the first quarter of 2012. Management believes the effects of the current period corrections to its financial statements restated in its 2012 annual report filed on Form 10-K on February 28, 2013, including the quarterly information restated in Part II, Item 6 therein, are not material.

The tables below illustrate the effects on the condensed consolidated balance sheet and statements of operations:

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