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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10−K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 29, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from:________ to
Commission File Number 0−19084
PMC−Sierra, Inc.
(Exact name of registrant as specified in its charter)
Delaware 94−2925073
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
3975 Freedom Circle
Santa Clara, CA 95054
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (408) 239−8000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.001
Preferred Stock Purchase Rights
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
−−−−−−−−−−− −−−−−−−−−−−
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S−K is not
contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10−K or any amendment to this Form
10−K. [ X ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b−2 of the Exchange Act).
Yes X No
−−−−−−−−−−− −−−−−−−−−−−−
The aggregate market value of the voting stock held by nonaffiliates of the Registrant, based upon the
closing sale price of the Common Stock on June 28th, 2002, as reported by the Nasdaq National Market, was
approximately $822 million. Shares of Common Stock held by each executive officer and director and by each
person known to the Registrant who owns 5% or more of the outstanding voting stock have been excluded in
that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily
a conclusive determination for other purposes.
As of March 11, 2003, the Registrant had 168,520,260 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for Registrant's 2003 Annual Meeting of
Stockholders are incorporated by reference into Part III, Items 10, 11, 12
and 13 of this Form 10−K Report.

Table of contents

  • Page 1
    ... aggregate market value of the voting stock held by nonaffiliates of the Registrant, based upon the closing sale price of the Common Stock on June 28th, 2002, as reported by the Nasdaq National Market, was approximately $822 million. Shares of Common Stock held by each executive officer and director...

  • Page 2
    ... executive offices are located at 3975 Freedom Circle, Santa Clara, California 95054, and our phone number is (408) 239âˆ'8000. Our internet homepage is located at www.pmcâˆ'sierra.com; however, the information in, or that can be accessed through, our home page is not part of this report. Our annual...

  • Page 3
    ... bankruptcy. The contraction in capital spending on networking equipment in 2001 and 2002 resulted in fewer orders for our customers' equipment, and therefore a reduction in demand for our products. We sell more than 120 different semiconductor devices to the leading original equipment manufacturers...

  • Page 4
    ... standard that packages information into a fixedâˆ'size cell format for transportation across networks is ATM or Asynchronous Transfer Mode. Many service providers deploy equipment that handles this protocol because it can support voice, video, data, and multimedia applications simultaneously...

  • Page 5
    ... a new silicon chip or chip set can be designed, manufactured, tested, and released to full production for a customer. It is essential, therefore, that companies like PMCâˆ'Sierra that develop the chips to be incorporated into the OEM equipment work very closely with their OEM customers so that...

  • Page 6
    ...equipment such as setâˆ'top boxes, highâˆ'definition TVs and personal video recorders. o o Our chips and chipsets can also be divided into the broadly defined functional categories identified below. As with descriptions of the network, particular categories may overlap and a device may be present...

  • Page 7
    ...such as personal video recorders, setâˆ'top boxes and highâˆ'definition TVs. We are working closely with some of the largest players in the enterprise and storage markets to help these customers design and develop standard semiconductor solutions that will lower their costs and improve their time to...

  • Page 8
    ... application engineers, technical marketing and factory systems engineers. We also provide more detailed information and support for our product line through our corporate website and special customerâˆ'accessible extranet sites. We believe that providing comprehensive product service and support is...

  • Page 9
    ... than 10% of our 2002 revenues based on total sales to end customers through distributors, contract manufacturers or direct sales. Our sales outside of the United States accounted for 45% of total revenue in 2002, 42% in 2001, and 38% in 2000. MANUFACTURING We are a fabless company, meaning we do...

  • Page 10
    ... which our chips operate. At the end of fiscal 2002, we had design centers in the United States (California, Oregon, Maryland, and Pennsylvania), Canada (British Columbia, Saskatchewan, Manitoba, Ontario and Quebec), Ireland, and India. On January 16, 2003, we announced a corporate restructuring to...

  • Page 11
    ... revenues. Other competitors include major domestic and international semiconductor companies, such as Agilent, Cypress Semiconductor, Intel, IBM, Infineon, Integrated Device Technology, Maxim Integrated Products, Motorola, Nortel Networks and Texas Instruments. These companies are concentrating an...

  • Page 12
    ... to retain the MIPS license in order to produce our followâˆ'on microprocessor products. PMC and its logo are our registered trademarks and service marks. We own other trademarks and service marks not appearing in this Annual Report. Any other trademarks used in this Annual Report are owned by other...

  • Page 13
    ... of our product development, manufacturing, marketing, sales and test activities. We also operate ten additional research & development centers: four in Canada, three in the US, two in Ireland and one in India. We have fourteen sales offices North America. worldwide, with locations in Europe, Asia...

  • Page 14
    ... for Registrant's Common Equity and Related Stockholder Matters. Stock Price Information. Our common stock trades on the Nasdaq National Market under the symbol PMCS. The following table sets forth, for the periods indicated, the high and low closing sale prices for our Common Stock as reported by...

  • Page 15
    ... of goodwill Costs of merger Acquisition of in process research and development Income (loss) from operations Gain (loss) on investments Provision for (recovery of) income taxes Net income (loss) Net income (loss) per share âˆ' basic: (4) Net income (loss) per share âˆ' diluted: (4) $ 218,093 89...

  • Page 16
    ...225,303 16,807 119,225 Working capital Cash, cash equivalents, short...(1) (2) The Company's fiscal year ...recorded in cost of revenues and a $17.5 million charge for impairment of other investments recorded in gain (loss) on investments. Reflects two 2âˆ'forâˆ'1 stock splits, in the form of 100% stock...

  • Page 17
    ...tables set forth the consolidated statements of operations for each of the Company's last eight quarters. This quarterly information is derived from unaudited interim financial statements and has been prepared on the same basis as the annual Consolidated Financial Statements. In management's opinion...

  • Page 18
    ..., however price reductions for high volume products also reduced revenues by 4% and 5% in 2002 and 2001 respectively. Nonâˆ'networking Nonâˆ'networking revenues declined $17.1 million, or 76%, in 2002 and $6.5 million, or 22%, in 2001 due to decreased unit sales to our principal customer in this...

  • Page 19
    ... points, and products, the effect of applying fixed manufacturing costs over reduced shipment volumes which lowered margins by 5 percentage points. Nonâˆ'networking Nonâˆ'networking gross profit for both 2002 and 2001 decreased as a result of declining sales volume. This product reached the end...

  • Page 20
    ...63.4 million, or 32%, in 2002 compared to 2001 due to the Company's restructuring and cost reduction programs implemented in the first and fourth ...tools and equipment costs for 2001 exceeded 2000 by $11.8 million. Acquisitions that we completed during 2000 and accounted for under the purchase method...

  • Page 21
    ... and Equipment In 2002, we recorded an impairment charge of $1.8 million reflecting a reduction in the estimated fair value of a product tester. This equipment was removed from service because lower manufacturing and product development volumes resulted in excess product tester capacity. There...

  • Page 22
    ... to the decline in demand for our networking products and consequently recorded a restructuring charge of $19.9 million. The restructuring plan included the involuntary termination of 223 employees across all business functions, the consolidation of a number of facilities and the curtailment of...

  • Page 23
    ... market conditions and a delay in the introduction of certain products to the market, we completed an assessment of the future revenue potential and estimated costs associated with all acquired technologies. As a result of this review, we recorded an impairment charge of $79.3 million related to the...

  • Page 24
    ...at an appropriate riskâˆ'adjusted rate of return. Revenues were estimated based on relevant market size and growth factors, expected industry trends, individual product sales cycles and the estimated life of each product's underlying technology. Estimated operating expenses, income taxes and charges...

  • Page 25
    The technology acquired from Datum is a digitally controlled amplifier architecture, which was designed to increase base station system capacities, while reducing cost, size and power consumption of radio networks. At the date of acquisition, we estimated that Datum's technology was 59% complete and...

  • Page 26
    ...125%) $ 58.5 8% We reported a net loss on investments of $11.6 million in 2002, $14.6 million in 2001 and a gain on investments of $58.5 million in 2000. In 2002, we recorded a $3.7 million gain on the sale of a portion of our investment in Sierra Wireless, Inc., a public company, as well as other...

  • Page 27
    ..." of both annual and interim financial statements about the method of accounting for stockâˆ'based employee compensation and the effect of the method used on reported results. We adopted SFAS 148 for our 2002 fiscal year end. Adoption of this statement has affected the location of this disclosure...

  • Page 28
    ... liabilities. Management bases its estimates on historical experience and on various other assumptions that are reasonable in the circumstances. Senior management has discussed the development, selection and disclosure of these estimates with the Audit Committee of PMC's Board of Directors. Actual...

  • Page 29
    ... or purchased intangibles during our annual assessment in 2002. Business Outlook Our annual networking revenues are impacted by short and longerâˆ'term trends in the demand for the networking equipment that incorporate our products. Future demand for our customers' products is in turn affected by...

  • Page 30
    ... could vary significantly depending on the volumes and mix of products sold. Excluding the impact of any restructuring activities that are reflected in R&D and... base rate as long as the Company maintains eligible investments with the bank in an amount equal to its drawings. At December 31, 2002 we...

  • Page 31
    ...regarding restructuring and other costs. We participate in four professionally managed venture funds that invest in earlyâˆ'stage private technology companies in markets of strategic interest to us. From time to time these funds request additional capital for private placements. We have committed to...

  • Page 32
    ... return in a shorter time horizon. This equipment to which they shift may not incorporate, or may incorporate fewer, of our products. In response to the actual and anticipated declines in networking equipment demand, many of our customers and their contract manufacturers have undertaken initiatives...

  • Page 33
    ... rely on a few customers for a major portion of our sales, any one of which could materially impact our revenues should they change their ordering pattern. We depend on a limited number of customers for a major portion of our revenues. Through direct, distributor and subcontractor purchases, Cisco...

  • Page 34
    ... if early sales of new system level products by our customers do not increase over time. We may experience this more with design wins from early stage companies, who tend to focus on leadingâˆ'edge technologies that may be adopted less rapidly in the current environment by telecommunications service...

  • Page 35
    ... wafer manufacturing techniques, process tools and alternate networking technologies. We may not be able to develop new products at competitive pricing and performance levels. Even if we are able to do so, we may not complete a new product and introduce it to market in a timely manner. Our customers...

  • Page 36
    ..., and new manufacturing and design technologies. Many of the standards and protocols for our products are based on highâˆ'speed networking technologies that have not been widely adopted or ratified by one or more of the standardâˆ'setting bodies in our customers' industry. Our customers often delay...

  • Page 37
    ... receivables from customers based in foreign countries. Many of our customers employ contract manufacturers to produce their products and manage their inventories. Many of these contract manufacturers represent greater credit risk than our networking equipment customers, who generally do not...

  • Page 38
    ...âˆ'speed networking products and related software. The competition for such employees is intense. We do not have employment agreements in place with many of our key personnel. As employee incentives, we issue common stock options that generally have exercise prices at the market value at the time of...

  • Page 39
    ... loss of revenues. We have less control over delivery schedules, assembly processes, quality assurances and costs than competitors that do not outsource these tasks. We depend on a limited number of design software suppliers, the loss of which could impede our product development. A limited number...

  • Page 40
    ...and it does not address longâˆ'term fluctuations. In addition, while all of our sales are denominated in US dollars, our customers' products are sold worldwide. Any further decline in the world networking markets could seriously depress our customers' order levels for our products. This effect could...

  • Page 41
    ...to third party claims than some of our larger competitors and customers. In the past, our customers have been required to obtain licenses from and pay royalties to third parties for the sale of systems incorporating our semiconductor devices. Customers may also make claims against us with respect to...

  • Page 42
    ... to momentum, hedge or dayâˆ'trading investors who often shift funds into and out of stocks rapidly, exacerbating price fluctuations in either direction particularly when viewed on a quarterly basis. Securities class action litigation has often been instituted against a company following periods of...

  • Page 43
    ... by some stockholders. Our board of directors adopted a stockholder rights plan, pursuant to which we declared and paid a dividend of one right for each share of common stock held by stockholders of record as of May 25, 2001. Unless redeemed by us prior to the time the rights are exercised, upon...

  • Page 44
    ... Other investments at December 31, 2002 include a minority investment of approximately 2 million shares of Sierra Wireless Inc., a publicly traded company. The securities are recorded on the balance sheet at fair value with unrealized gains or losses reported as a separate component of accumulated...

  • Page 45
    ...the figures recorded are not independently verified. The average bid and ask price of our convertible subordinated notes on the Portal Market on December 27, 2002 was $75.50 per $100 in face value, resulting in an aggregate fair value of approximately $207.6 million. There were no reported trades on...

  • Page 46
    ... the three years in the period ended December 31, 2002 included in Item 15 (a): II Valuation and Qualifying Accounts 88 46 47 48 49 50 51 Schedules not listed above have been omitted because they are not applicable or are not required, or the information required to be set forth therein is included...

  • Page 47
    Independent Auditors' Report The Board of Directors of PMCâˆ'Sierra, Inc. We have audited the accompanying consolidated balance sheets of PMCâˆ'Sierra, Inc. and subsidiaries ("the Company") as of December 31, 2002 and 2001 and the related consolidated statements of operations, stockholders' equity ...

  • Page 48
    ... and longâˆ'term debt Total current liabilities Convertible subordinated notes Deferred tax liabilities Commitments and contingencies (Note 8) PMC special shares convertible into 3,196 (2001 âˆ' 3,373) shares of common stock Stockholders' equity Common stock and additional paid in capital, par value...

  • Page 49
    ... development Marketing, general and administrative Impairment of property and equipment Restructuring costs and other special charges Impairment of goodwill and purchased intangible assets Amortization of goodwill Costs of merger Acquisition of in process research and development Income (loss) from...

  • Page 50
    ...Capital lease obligations incurred for purchase of property and equipment Conversion of PMCâˆ'Sierra special shares into common stock Issuance of common stock and stock options for acquisitions under the purchase method of accounting See notes to the consolidated financial statements. $ 10,762 411...

  • Page 51
    PMCâˆ'Sierra, Inc. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands) Common Stock Accumulated Retained Shares of and Deferred Other Earnings Total Common Additional Stock Comprehensive (Accumulated Stockholders' Stock (1) Paid in Capital (1) Compensation Income Deficit) Equity Balances...

  • Page 52
    ... communications and storage semiconductors and MIPSâˆ'based processors for service provider, enterprise, storage, and wireless networking equipment. The Company offers worldwide technical and sales support through a network of offices in North America, Europe and Asia. Basis of presentation. The...

  • Page 53
    ... of any future period since wafers are purchased based on current market pricing and the Company's volume requirements change in relation to sales of its products. In each year, the Company is entitled to receive a refund of a portion of the deposits based on the annual purchases from these...

  • Page 54
    ... combinations be accounted for under the purchase method of accounting and addresses the initial recognition and measurement of assets acquired, including goodwill and intangibles, and liabilities assumed in a business combination. The Company adopted SFAS 141 on a prospective basis effective...

  • Page 55
    ... recoverability, the Company compares the carrying value of the assets to the estimated future undiscounted cash flows. Measurement of an impairment loss for longâˆ'lived assets held for use is based on the fair value of the asset. Longâˆ'lived assets classified as held for sale are reported at the...

  • Page 56
    $ 53,530 $ 49,348 ================================= 54

  • Page 57
    ... from trade receivables owing from highâˆ'technology industry customers is substantially mitigated by the Company's credit evaluation process, relatively short collection terms and the geographical dispersion of the Company's sales. The Company generally does not require collateral security for...

  • Page 58
    ... limited number of suppliers for wafer fabrication Revenue recognition. Revenues from product sales direct to customers and minor distributors are recognized at the time of shipment. The Company accrues for warranty costs, sales returns and other allowances at the time of shipment based on its...

  • Page 59
    ...Ended December 31 in thousands, except per share amounts) 2002 2001 2000 Net income (loss), as reported Adjustments: Additional stockâˆ'based employee compensation expense under fair value based method for all awards, net of related tax effects Net income (loss), adjusted (65,007) (639,054) 75,298...

  • Page 60
    ... annual and interim financial statements about the method of accounting for stockâˆ'based employee compensation and the effect of the method used on reported results. The Company has adopted SFAS 148 for the 2002 fiscal year end. Adoption of this statement has affected the location of the Company...

  • Page 61
    ..., the Company acquired SwitchOn Networks Inc., a privately held packet content processor company, with offices in the United States and India. Under the terms of the agreement, approximately 2,112,000 shares of common stock were exchanged and options assumed to acquire SwitchOn. PMC recorded merger...

  • Page 62
    ... design company located in Ireland. Toucan offered expertise in telecommunications semiconductor design. At December 31, 1999, the Company owned seven per cent of Toucan and purchased the remainder for approximately 300,000 shares of common stock and stock options. PMC recorded mergerâˆ'related...

  • Page 63
    ... located in Vancouver, Canada, made digital signal processors that allow traffic for all major digital wireless standards to be transmitted using a single digitally controlled power amplifier architecture. Malleable Technologies, Inc. On June 27, 2000, the Company exercised an option to acquire...

  • Page 64
    ... include the operating results of each acquisition from the respective acquisition dates. The fair value of the common shares of the Company issued to acquire Malleable, Datum, and Octera was based on the closing market price of the Company's stock a short period before and after the date the...

  • Page 65
    ... wireless communications network equipment. The technology acquired from Datum was a digitally controlled amplifier architecture, which was designed to increase base station system capacities, while reducing cost, size and power consumption of radio networks. At the date of acquisition, the Company...

  • Page 66
    ... 2003, the Company announced that it was undertaking a corporate restructuring to further reduce operating expenses. The restructuring plan includes the termination of approximately 175 employees and the closure of design centers in Maryland, Ireland and India. PMC will record a restructuring charge...

  • Page 67
    ... conditions and a delay in introduction of certain products to the market, the Company completed an assessment of the future revenue potential and estimated costs associated with all acquired technologies. As a result of this review, the Company recorded a further impairment charge of $80.8 million...

  • Page 68
    ... following tables summarize the Company's investments in debt securities: December 31 in thousands) 2002 2001 Held to maturity: US Government Treasury and Agency notes Corporate bonds and notes 92,039 $ 50,163 303,169 307,352 395,208 357,515 $ Availableâˆ'forâˆ'sale: US Government Treasury and...

  • Page 69
    ... held 2.0 million shares (2001 âˆ' 2.3 million shares) of Sierra Wireless, Inc., of which 1.2 million were previously subject to resale restrictions and could not be sold until May 2002. The Company has classified these shares as availableâˆ'forâˆ'sale and has recorded a related unrealized holding...

  • Page 70
    ...convertible into an aggregate of approximately 6,480,650 shares of PMC's common stock at any time prior to maturity, at a conversion price of approximately $42.43 per share. The Company... charges recorded in 2001, the Company recorded a charge of $128.3 million for exiting and terminating certain ...

  • Page 71
    ...preference the number of shares of PMC common stock issuable on conversion plus a nominal amount per share plus unpaid dividends, or at the holder's option convert into LTD ordinary shares, which are the functional equivalent of voting common stock. If the Company files for bankruptcy, is liquidated...

  • Page 72
    ... the Company's Board of Directors approved a twoâˆ'forâˆ'one split of the Company's common stock in the form of a stock dividend that was applicable to shareholders of record on January 31, 2000, and effective on February 14, 2000. All references to share and per share data for all periods presented...

  • Page 73
    ...the QED ESPP. As of December 31, 2002, 5,834,285 shares were available for future issuance under the PMC ESPP. Stock Option Plans. The Company has various stock option plans that cover grants of options to purchase the Company's common stock. The options generally expire within five to ten years and...

  • Page 74
    ...at December 31, 2002: outstanding and Options Outstanding Options Exercisable Weighted Weighted Weighted Average Average Average Remaining Exercise Exercise Range of Options Contractual Price per Options Price per Exercise Prices Outstanding Life (years) Share Exercisable Share 0.17 âˆ'âˆ' $ 3.66...

  • Page 75
    ... will receive a new option to purchase a number of PMC shares equal to one share for each four unexercised shares subject to the tendered option. On September 26, 2002, the Company accepted and cancelled 19.3 million options with a weighted average exercise price of $35.98 and expects to grant...

  • Page 76
    ...: Capitalized technology (498) (369) Unrealized gain on investments (2,737) (17,715 Total deferred tax liabilities (3,235) (18,084 Total net deferred taxes $ (1,681) $ (8,230 At December 31, 2002, the Company has approximately $583.4 million of federal net operating losses, which will...

  • Page 77
    ...semiconductor devices and related technical service and support to equipment manufacturers for use in their communications and networking equipment. The nonâˆ'networking segment consists of custom user interface products. The Company is supporting the nonâˆ'networking products for existing customers...

  • Page 78
    ... a third customer were approximately 12.8% of the Company's net revenues in 2001, but were less than 10% of the Company's net revenues in 2002 and 2000. NOTE 14. Net Income (Loss) Per Share computation of basic and diluted net income The following table sets forth the (loss) per share: Year ended...

  • Page 79
    ... Company had approximately 4.4 million and 11.0 million options outstanding at December 31, 2002 and 2001, respectively, that were not included in diluted net loss per share because they would be antidilutive. (1) PMCâˆ'Sierra, Ltd. Special Shares are included in the weighted average common shares...

  • Page 80
    ...concerning the Company's directors and executive officers required by this Item is incorporated by reference from the information set forth in the sections entitled "Election of Directors", "Executive Officers", and "Section 16(a) Beneficial Ownership Reporting Compliance" in our Proxy Statement for...

  • Page 81
    ... required by this Item is incorporated by reference from the information set forth in the section entitled "Executive Compensation and Other Matters âˆ' Employment Agreements" in our Proxy Statement for the 2003 Annual Stockholder Meeting. ITEM 14. Controls and Procedures Evaluation of disclosure...

  • Page 82
    ... Agreement between the Registrant and its directors and officers, as amended and restated ...Form of Executive Employment Agreement by and between the Registrant and the executive officers ...Net Building Lease dated May 15, 1996 by and between PMCâˆ'Sierra, Ltd. and Pilot Pacific Developments Inc...

  • Page 83
    ... Lease Agreements between WHTS Freedom Circle Partners, LLC and the Registrant (15)...Building Lease Agreement between Kanata Research Park Corporation and PMCâˆ'Sierra, Ltd. (16)...Building Lease Agreement between Transwestern âˆ' Robinson I, LLC and PMCâˆ'Sierra US, Inc. (17)...Forecast and Option...

  • Page 84
    ... 10.2 filed with the Registrant's Annual Report on Form 10K filed with the Commission on March 26, 1999. Incorporated by reference from Exhibit 10.2 filed with the Registrant's Quarterly Report on Form 10âˆ'Q filed with the Commission on November 8, 2002. Incorporated by reference from Exhibit 10...

  • Page 85
    ... Act of 1934, this Annual Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Name Title Date /s/ Robert L. Bailey Robert L. Bailey President, Chief Executive Officer (Principal Executive Officer) March 27, 2003...

  • Page 86
    ... Marshall /s/ Lewis O. Wilks Lewis O. Wilks Director March 27, 2003 Director March 27, 2003 85 CERTIFICATIONS I, Robert L. Bailey, certify that: 1. I have reviewed this annual report on Form 10âˆ'K of PMCâˆ'Sierra, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue...

  • Page 87
    Chief Executive Officer 86

  • Page 88
    ...certify that: 1. I have reviewed this annual report on Form 10âˆ'K of PMCâˆ'Sierra, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under...

  • Page 89
    SCHEDULE II âˆ' Valuation and Qualifying Accounts Years ended December 31, 2002, 2001, and 2000 (in thousands) Balance at beginning of year Charged to expenses or other accounts Writeâˆ'offs Balance at end of year Allowance for doubtful accounts: 2002 2001 2000 $ $ $ 2,625 1,934 1,553 179 ...

  • Page 90
    ... Agreement between the Registrant and its directors and officers, as amended and restated Form of Executive Employment Agreement by and between the Registrant and the executive officers Statement of Computation of Ratio of Earnings to Fixed Charges Subsidiaries of the Registrant Consent of Deloitte...

  • Page 91

  • Page 92
    ... in the coverage of such insurance; WHEREAS, the Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting directors, officers, employees, agents and fiduciaries to expensive litigation risks at the same time as the availability and coverage...

  • Page 93
    ... a constituent) absorbed in a consolidation or merger to which PMCâˆ'Sierra, Inc. (or any of its wholly owned subsidiaries) is a party which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees, agents or fiduciaries, so that if...

  • Page 94
    ... shall mean, subject the Board of Directors in accordance with under applicable law, which may include a Legal Counsel or any other person or body seeking indemnification. (j) "Section" indicated. (k) "Voting Securities" shall mean any securities of the Company that vote generally in the election of...

  • Page 95
    ... Board of Directors, and if there has been such a Change in Control, any Reviewing Party with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnification of Expenses under this Agreement or any other agreement or under the Company's Certificate of Incorporation...

  • Page 96
    .... Notice to the Company shall be directed to the Chief Executive Officer of the Company at the address shown on the signature page of this Agreement (or such other address as the Company shall designate in writing to Indemnitee). In addition, Indemnitee shall give the Company such information and...

  • Page 97
    ... the time of the receipt by the Company of a notice of a Claim pursuant to Section 4(b) hereof, the Company has liability insurance in effect which may cover such Claim, the Company shall give prompt notice of the commencement of such Claim to the insurers in accordance with the procedures set forth...

  • Page 98
    ... of Incorporation, the Company's Bylaws or by statute. In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a Delaware corporation to indemnify a member of its board of directors or an officer, employee, agent or fiduciary...

  • Page 99
    ... this Agreement or any other agreement or insurance policy or under the Company's Certificate of Incorporation or Bylaws now or hereafter in effect relating to Claims for Covered Events, (ii) in specific cases if the Board of Directors has approved the initiation or bringing of such Claim, or (iii...

  • Page 100
    ...personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two year period... Addresses...

  • Page 101
    ..., powers and...Company effectively to bring suit to enforce such rights. 20. Amendment and Waiver. No amendment, modification, termination...sets...Employment Agreement. Nothing contained in this Agreement shall be construed as giving Indemnitee any right to be retained in the employment of the Company...

  • Page 102
    IN WITNESS WHEREOF, the parties hereto have Indemnification Agreement as of the date first above written. executed this PMCâˆ'SIERRA, INC. By Title: Address 3975 Freedom Circle Santa Clara, CA 95054 AGREED TO AND ACCEPTED: INDEMNITEE: _____ [NAME address) 11

  • Page 103

  • Page 104
    ... PMCâˆ'SIERRA, INC. EXECUTIVE EMPLOYMENT AGREEMENT This Agreement is between PMCâˆ'Sierra, Inc. (the "Company"), _____ ("Executive") and effective as of _____. and 1. Termination Without Cause, or Constructive Termination, With Change in Control. If Company terminates Executive's employment without...

  • Page 105
    ...employment by the Company terminates or (2) the date on which all options to purchase Company stock held by Executive are fully vested, Executive will not directly or indirectly attempt to influence any employee of the Company or its subsidiaries to terminate the individual's services to the Company...

  • Page 106
    ... all purposes. "Successor" shall include any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. Executive has no other right to assign this...

  • Page 107
    ...such arbitration. Each party shall separately pay its counsel fees and expenses. (iv) Executive understands that nothing in this Agreement modifies Executive's atâˆ'will status. Either the Company or Executive can terminate the employment relationship at any time, with or without cause. 10. No Oral...

  • Page 108
    ...discuss this matter with and obtain advice from his private attorney, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement. PMCâˆ'SIERRA, INC NAME] [TITLE] EXECUTIVE signature 5

  • Page 109

  • Page 110
    ...charges for the periods indicated. Earnings consist of income (loss) before provision for income taxes less income from equity investees plus fixed charges. Fixed charges consist of interest charges, amortization of debt issuance costs, and that portion of rental expense that the Company believes to...

  • Page 111
    ... of the United Kingdom, doing business only under its official name or under PMCâˆ'Sierra, Inc. PMCâˆ'Sierra Ireland Limited, organized under the laws of the Ireland, doing business only under its official name or under PMCâˆ'Sierra, Inc. PMCâˆ'Sierra US, Inc., organized under the laws of Delaware...

  • Page 112
    ... to the incorporation by reference in the Registration Statements of PMCâˆ'Sierra, Inc. ...Annual Report of PMCâˆ'Sierra, Inc. on Form 10âˆ'K for the year ended December 31, 2002 (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the change in method...

  • Page 113
    ..., as adopted pursuant to Section 906 of the Sarbanesâˆ'Oxley Act of 2002, in my capacity as an officer of PMCâˆ'Sierra, Inc. ("PMC"), that, to my knowledge, the Annual Report of PMC on Form 10âˆ'K for the period ended December 29, 2002, fully complies with the requirements of Section 13 (a) of the...

  • Page 114
    ..., as adopted pursuant to Section 906 of the Sarbanesâˆ'Oxley Act of 2002, in my capacity as an officer of PMCâˆ'Sierra, Inc. ("PMC"), that, to my knowledge, the Annual Report of PMC on Form 10âˆ'K for the period ended December 29, 2002, fully complies with the requirements of Section 13 (a) of the...