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Morningstar® Document Research℠
FORM 10-K
PMC SIERRA INC - PMCS
Filed: March 01, 2007 (period: December 31, 2006)
Annual report which provides a comprehensive overview of the company for the past year

Table of contents

  • Page 1
    Morningstar Document Research ® ℠FORM 10-K PMC SIERRA INC - PMCS Filed: March 01, 2007 (period: December 31, 2006) Annual report which provides a comprehensive overview of the company for the past year

  • Page 2
    ...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 30, 2006 as reported by the NASDAQ Global Market, was approximately $807.8 million. Shares of Common Stock held by each executive officer and director...

  • Page 3
    ...239 shares of Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement for Registrant's 2007 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K Report. Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar...

  • Page 4
    ... Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III Directors, Executive Officers and Corporate Governance Item 10. Item 11. Executive Compensation Security Ownership of Certain Beneficial Owners and Management...

  • Page 5
    ... and reincorporated in the State of Delaware in 1997. Our Common Stock trades on the NASDAQ Global Market under the symbol "PMCS" and is included in the S&P 500 index. Our principal executive offices are located at 3975 Freedom Circle, Santa Clara, California 95054, and our phone number is (408) 239...

  • Page 6
    ...; competition and pricing; critical accounting policies and estimates; customer product inventory levels, needs and order levels; demand for networking, storage and consumer equipment; net revenues; gross profit; research and development expenses; selling, general and administrative expenditures...

  • Page 7
    ...requirements for service providers and enterprises to upgrade and improve their network infrastructure and storage management capabilities. Enterprises, corporations, small offices and home offices are expanding their networks to better capture, store, and access large quantities of data efficiently...

  • Page 8
    ...product synergies between the acquired business and PMC-Sierra's disk interconnect storage IC business. In 2006 we also purchased Passave, Inc., a company that develops system-on-chip semiconductor solutions for the Fiber To The Home (FTTH) access market. We purchased Passave due to its market share...

  • Page 9
    ... optical fiber. Enterprise Storage Institutions and businesses connect to their data storage either directly or indirectly, the latter using network-attached systems (NAS) or storage area networks (SAN). Fibre Channel 7 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document...

  • Page 10
    ..., switches and storage devices that comprise these systems so that large quantities of data can be stored, managed and moved securely. Our focus in this area is on fibre channel interconnect and fibre channel controllers, with switching solutions for both SAS and SATA. Enterprise Networking The...

  • Page 11
    ... storage systems. Controller products based on Fibre Channel, Serial Attached SCSI (SAS), and Serial ATA (SATA), are enabling technologies for building network-attached storage system architectures that meet the new cost and capacity needs. Traffic managers and switch fabrics: traffic managers...

  • Page 12
    .... To support our customers, we have increased our sales, service and design center in Shanghai, China and opened a technology center in Bangalore, India in early 2006. Over half of our total revenues were received from the Asia Pacific region in 2006, which includes China and Japan. Based on PMC...

  • Page 13
    ...sent by us directly to contract manufacturers selected by OEMs, and the balance were sent directly to our OEM customers. In 2006, our largest distributor was Avnet Inc., which represented our products worldwide (excluding Japan, Israel, and Taiwan). In North America, we recognize sales through Avnet...

  • Page 14
    ... of Asia-based contract manufacturers for the assembly of their products. Sales to Cisco Systems and EMC Corporation through distributors, contract manufacturers and direct sales each represented more than 10% of our total revenues in 2006. MANUFACTURING PMC-Sierra is a fabless company, meaning that...

  • Page 15
    .... These devices and reference designs are targeted for use in enterprise, storage and service provider markets. Increasingly, our OEM customers that serve these end markets are demanding complete solutions with software support and complex feature sets. From time to time we announce new products to...

  • Page 16
    ... semiconductor technology assets and established sales channels, and depend on the market in which we participate for the bulk of their revenues. Second, we also compete with major domestic and international semiconductor companies, 14 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by...

  • Page 17
    .... PMC, PMCS, PMC-Sierra and our 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 entities. 15 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered...

  • Page 18
    ..., 105 in Production and Quality Assurance, 252 in Sales and Marketing and 111 in Administration. Our employees are not represented by a collective bargaining agreement and we have never experienced any related work stoppage. 16 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar...

  • Page 19
    ...and typically engage contract manufacturers for additional manufacturing capacity. In addition, our customers often shift buying patterns as they manage inventory levels, market different products, or change production schedules. This makes forecasting their production requirements difficult and can...

  • Page 20
    ... direct, distributor and subcontractor purchases, Cisco Systems and EMC Corporation accounted for more than 10% of our revenues in 2006. The companies that constitute our largest customers may change due to the Storage Semiconductor Business and Passave acquisitions. We do not have long-term volume...

  • Page 21
    ...the acquisition. The Storage Semiconductor Business acquisition may make the Company reliant on a limited number of customers for a major portion of its revenues. PMC may also be unsuccessful at, either selling the existing products of the acquired business, or developing and selling new products of...

  • Page 22
    ...'s revenues in 2006 were derived from product sales in Japan. Our financial condition and results of operations are becoming increasingly dependent on our sales in China and the majority of our wafer supply comes from Taiwan. China has large organizations with major programs that can start and...

  • Page 23
    ... 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 24
    ... design and sales activities. If we are unable to develop systems and communication processes to support our geographic diversity, we may suffer product development delays or strained customer relationships. 22 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document...

  • Page 25
    ...end of 2006 due to an increase in our estimated tax liability following receipt in 2007 of a written communication from a tax authority examining the historic transfer pricing policies and practices of certain companies within the PMC-Sierra group. As a result, we increased our provision for periods...

  • Page 26
    ... could adversely affect our operating performance. Acquiring products, intellectual property, technologies, or businesses from third parties is a core part of our business strategy. That strategy depends on the availability of suitable acquisition candidates at reasonable prices and our ability to...

  • Page 27
    ... high-speed networking products. 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 grant and that...

  • Page 28
    ...their end-user networking equipment, our customers are focusing more on cash preservation and tighter inventory management, and because we supply a large number of products to a variety of customers and contract manufacturers who have many equipment programs for which they purchase our products. Our...

  • Page 29
    ... technologies. We have less control over delivery schedules, manufacturing yields and costs than competitors with their own fabrication facilities. If the wafer foundries we use are unable or unwilling to manufacture our products in required volumes, or at specified times, we may have to identify...

  • Page 30
    ... technology and products more likely. Steps we take to protect our proprietary information may not be adequate to prevent theft of our technology. We may not be able to prevent our competitors from independently developing technologies that are similar to or better than ours. 28 Source: PMC SIERRA...

  • Page 31
    ... to momentum, hedge or day-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 32
    ... opportunity to receive a higher bid by requiring potential acquirers to negotiate with our Board of Directors, these provisions apply even if the offer may be considered beneficial by some stockholders. 30 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Researchâ„

  • Page 33
    ... consolidation activities. We also operate nine additional research & development centers: three in Canada, three in the US, one in Bangalore, India, one in Herzliya, Israel and one in Shanghai, China. We have eleven sales/operations offices located in Europe, Asia, the Middle East and North America...

  • Page 34
    ... of Passave's PAS 5001 system-on-a-chip with a particular company's switch used by UTStarcom in its Fiber-to-the-home ("FTTH") products. In the suit, UTStarcom asserts various claims for breach of contract and breach of warranty and requests indemnity associated with the sale of Passave's PAS 5001...

  • Page 35
    Table of Contents ITEM 4. None. 33 Submission of Matters to a Vote of Security Holders. Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Researchâ„

  • Page 36
    ... Securities. Stock Price Information. Our Common Stock trades on the NASDAQ Global 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 the NASDAQ Global Market: Fiscal 2006 First Quarter...

  • Page 37
    Table of Contents Stock Performance Graph The following graph shows a comparison of cumulative total stockholder returns for PMC, the NASDAQ Global Market, the line-of-business index for semiconductors and related devices (SIC code 3674) furnished by Georgeson Shareholder Communications Inc., and ...

  • Page 38
    ..., $2.4 million for employee-related taxes, and $0.2 million acquisition-related relocation expenses included in Selling, general and administrative expenses; $16.2 million stock-based compensation expense included in Research 36 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar...

  • Page 39
    ... of a provision for employee-related taxes included in Selling, general and administrative expenses, $9.2 million gain on sale of investments, $5.1 million recovery of prior year taxes, $9.4 million tax recovery based on agreements and assessments with Canada Revenue Agency and $1.5 million...

  • Page 40
    ... grants, we recorded an aggregate of $89.6 million of increased stock-based compensation expense for fiscal years 1999 through 2002. Of this amount, stock-based compensation expense of $38.7 million was recorded in 2002. See Note 2 to the Consolidated Financial Statements. 38 Source: PMC SIERRA...

  • Page 41
    ...include $0.9 million restructuring costs relating to workforce reduction, $1.0 million reversal of state income tax and $0.7 million foreign exchange loss on Canadian taxes. 39 (2) (3) (4) (5) (6) (7) (8) Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research...

  • Page 42
    ... eight months since the acquisition date, Passave contributed $30.7 million in revenues. In the second half of 2006 we experienced lower activity levels of FTTH deployment in Japan, especially as it relates to Ethernet Passive Optical Networking (EPON) products, due partly to a slowdown in equipment...

  • Page 43
    ... an adverse impact on our reported results of operations in future periods. In order to align our fiscal year end with the calendar year end, fiscal 2005 consisted of 53 weeks compared to 52 weeks in 2006 and 2004. 41 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document...

  • Page 44
    ...lower sales volumes compared to 2004, gross profit improved due in part to the centralizing of our manufacturing logistics teams into a single location through our restructuring activities, as well as tightly managing our manufacturing costs. 42 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered...

  • Page 45
    ... gross profit as a percentage of net revenues by 1%. In addition, we recorded $1.8 million stock-based compensation expense in cost of revenues in 2006 compared to none in 2005 and 2004, which had an impact of less than one percentage point. Many of the acquired products sell at overall lower gross...

  • Page 46
    ... the acquired businesses, were higher by $16.1 million due to salary increases, and additional headcount from Passave and the Storage Semiconductor Business for 2006, which were partially offset by savings from our workforce reduction initiatives. In addition, we recorded $16.2 million stock-based...

  • Page 47
    ... uses exist. Projects acquired from Passave include Ethernet Passive Optical Network (EPON) and Analog Front End (AFE) products, which are based on technology that provides a low-cost method of deploying optical access lines between a carrier's central office and a customer site and which provide...

  • Page 48
    ...for the acquired products could result in lower market share for the products as well as lost revenues. Restructuring Costs and Other Charges The activity related to excess facility and severance accruals under the Company's restructuring plans during the three years ended December 31, 2006, by year...

  • Page 49
    ...fewer resources were required to support the reduced level of development and sales activities during these periods. The January 2003 restructuring included the termination of 175 employees and the closure of design centers in Maryland, Ireland and India, and vacating office space in the Santa Clara...

  • Page 50
    ... for abandoned office facilities of $1.3 million in the fourth quarter of 2004. In the first quarter of 2001, we recorded a charge of $19.9 million for a restructuring plan that included the termination of 223 employees across all business functions, the consolidation of a number of facilities...

  • Page 51
    ... company, and a $1.3 million loss on sales of other short-term investments that were redeemed prior to maturity to fund the acquisition of the Storage Semiconductor Business. In 2005, we received $2.2 million as final satisfaction of the mortgage owed to us for a property we sold in 2003. As part...

  • Page 52
    ... a written communication from a tax authority examining the historic transfer pricing policies and practices of certain companies within the PMC-Sierra group. As a result, we increased our provision for periods prior to 2006 by $29.9 million. We recorded $7.1 million tax expense in the first quarter...

  • Page 53
    .... Measurement of an impairment loss is based on the fair value of the asset compared to carrying value. During the year ended December 31, 2006, our goodwill and intangible asset balances increased significantly due to the acquisitions. We performed an annual test for impairment of goodwill...

  • Page 54
    ... a stock price is expected to fluctuate during a period. Our estimates of expected volatilities are based on a weighted historical and market-based implied volatility. In order to determine the expected life of the awards, we use historical data to estimate option exercises and employee terminations...

  • Page 55
    ...transfer pricing policies and practices of certain companies within the PMC-Sierra group. As a result, we increased our provision for periods prior to 2006 by $29.9 million. The timing of any such review and final assessment of our liabilities by local authorities is substantially out of our control...

  • Page 56
    ...at the end of 2006 was 33 days compared to 37 at the end of 2005, primarily due to higher revenues from the acquisitions of the Storage Semiconductor Business and Passave; a $2.6 million net decrease in accrued restructuring costs due to $6.1 million of additional charges recorded in 2006, offset by...

  • Page 57
    ..., 2015 and 2020 respectively. Holders may convert the notes into the right to receive the conversion value (i) when our stock price exceeds 120% of the approximately $8.80 per share initial conversion price for a specified period, (ii) in certain change in control transactions, and (iii) when the...

  • Page 58
    ... rate increased significantly at the end of 2006 due to an increase in our estimated tax liability following receipt in 2007 of a written communication from a tax authority concerning past transfer pricing policies and practices of certain companies within the PMC-Sierra group. We have various tax...

  • Page 59
    ... we may contemplate mergers and acquisitions of other companies or assets as part of our business strategy. Consequently in the future we may determine that our sources of liquidity are insufficient and we may proceed with financing or other activities, which may dilute your investment or impact our...

  • Page 60
    ... we pay fixed interest coupons on our notes, market interest rate fluctuations do not impact our debt interest payments. However, the fair value of our senior convertible notes will fluctuate as a result of changes in the price of our common stock, changes in market interest rates and changes in our...

  • Page 61
    ... Holders may convert the notes into the right to receive the conversion value (i) when our stock price exceeds 120% of the approximately $8.80 per share initial conversion price for a specified period, (ii) in certain change in control transactions, and (iii) when the trading price of the notes...

  • Page 62
    ...quarter of 2006 we recorded a charge of $3.2 million for impairment of an investment in a private company. We may record additional impairment charges should we determine that our investments have incurred a non-temporary decline in value. 60 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by...

  • Page 63
    ... Statements Reports on Internal Control Over Financial Reporting included in Item 9A: Management's Annual Report on Internal Control over Financial Reporting Report of Independent Registered Public Accountants Schedules for each of the three years in the period ended December 31, 2006 included...

  • Page 64
    ... Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS To the Board of Directors and Stockholders of PMC-Sierra, Inc. We have audited the accompanying consolidated balance sheets of PMC-Sierra, Inc. and subsidiaries (the Company) as of December 31, 2006 and 2005, and the related consolidated...

  • Page 65
    ... (Note 11) PMC special shares convertible into 2,099 (2005 - 2,459) shares of common stock Stockholders' equity Common stock, par value $.001; 900,000 shares authorized; 210,650 shares issued and outstanding (2005 - 183,306) Additional paid in capital Accumulated other comprehensive (loss) income...

  • Page 66
    ... of Contents PMC-Sierra, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except for per share amounts) December 31, 2006 December 31, 2005 December 26, 2004 Net revenues Cost of revenues Gross profit Other costs and expenses: Research and development Selling, general and administrative...

  • Page 67
    ... PMC-Sierra, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) December 31, 2006 December 31, 2005 December 26, 2004 Cash flows from operating activities: Net (loss) income Adjustments to reconcile net (loss) income to net cash provided by operating activities: Stock-based compensation...

  • Page 68
    ... Comprehensive loss Issuance of common stock and assumption of stock options on acquisition of Passave Inc. Conversion of special shares into common stock Issuance of common stock under stock benefit plans Stock-based compensation expense Balances at December 31, 2006 Common Stock Additional...

  • Page 69
    ... and microprocessors for metro, access, Fiber To The Home, wireless infrastructure, storage, laser printers and customer premise 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 70
    ... 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 suppliers compared to the target levels in the wafer supply agreements. In 2006...

  • Page 71
    ... 193 $ 10,981 Net Goodwill. Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired. The Company performs a two-step process on an annual basis, or more frequently if necessary, to determine...

  • Page 72
    ... are reported separately as foreign exchange gain (loss) under Other income (expense) on the Statement of Operations. Derivatives and Hedging Activities. Fluctuating foreign exchange rates may significantly impact PMC's net income and cash flows. The Company periodically hedges forecasted...

  • Page 73
    ... delivery has occurred, the sales price is fixed or determinable, and collectibility is reasonably assured. PMC generates revenues from direct sales, sales to distributors and sales of consignment inventory. 71 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research...

  • Page 74
    ... the sales from this distributor to end customers and the Company may utilize inventory at the major distributor to satisfy product demand by other customers. PMC recognizes revenues from minor distributors at the time of shipment. These distributors are also given business terms to return a portion...

  • Page 75
    ... measuring stock-based compensation expense. If the Company had accounted for stock-based compensation in accordance with the fair value method as prescribed by SFAS 123, net loss and net loss per share for, 2005, and 2004 would have been: 73 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by...

  • Page 76
    ..., 2005, the Board of Directors of the Company approved an acceleration of vesting of the Company's stock options granted on December 29, 2003 to employees and executive officers under the Company's 1994 Incentive Stock Plan and its 2001 Stock Option Plan that have an exercise price per share of $20...

  • Page 77
    ... income (loss) per share. Diluted net income (loss) per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Dilutive common equivalent shares consist of stock options, shares issuable on our Employee Share Purchase Plan...

  • Page 78
    .... Based on the results of the review, the Company concluded that, pursuant to the requirements of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25) that were in effect prior to 2006, the accounting measurement dates for certain stock option grants awarded...

  • Page 79
    ... statements of cash flows in 2003 or subsequent periods. The restatement had no impact on the Company's cash position or previously reported revenues. The adjustments would have increased stock-based compensation expense in each of the years impacted, by type, as follows: (in thousands) Receipt of...

  • Page 80
    ... of the acquired business from the acquisition date. PMC purchased the Storage Semiconductor Business due to its strategic and product fit with PMC, the market position the Storage Semiconductor Business has in the Fibre Channel controller market, the design capabilities of its engineering team, and...

  • Page 81
    ... expensed immediately following the consummation of the acquisition. PMC acquired three next-generation Tachyon storage protocol IPR&D projects related to the Storage Semiconductor Business. One of the projects is a multi-protocol storage controller 79 Source: PMC SIERRA INC, 10-K, March 01, 2007...

  • Page 82
    ... its market share leadership in Passive Optical Networking solutions. This acquisition fits with PMC's strategic intent to address the high-growth Fiber Access market and is aligned with PMC's developments in Customer Premises Equipment. The preliminary purchase price is: 80 Source: PMC SIERRA INC...

  • Page 83
    ... acquired was recorded as goodwill, which for this acquisition is not deductible for tax purposes. The preliminary allocation was determined by management based on a third-party valuation. Areas of the purchase price that are not yet finalized and may result in future amounts payable by PMC relate...

  • Page 84
    ... using the income approach by determining cash flow projections related to identified projects. The assumptions included information on revenues from existing products and future expected trends for each technology, with an estimated useful life of 6 years. The stage of completion of each project...

  • Page 85
    ... loss was excluded from the assessment of effectiveness and the ineffective portions of hedges had no impact on earnings. NOTE 5. Stock-Based Compensation At December 31, 2006, the Company has two stock-based compensation programs, which are described below. None of the Company's stock-based awards...

  • Page 86
    ... including the expected stock price volatility and expected life. The Company's estimates of expected volatilities are based on a weighted historical and market-based implied volatility. The Company uses historical data to estimate option exercises and employee terminations within the valuation...

  • Page 87
    ... outstanding stock options of Passave as part of the merger consideration. Activity under the option plans during the year ended December 31, 2006 was as follows: Weighted average remaining contractual term per share - Years Outstanding, December 31, 2005 Granted Assumed on acquisition of Passave...

  • Page 88
    ... per share, respectively. NOTE 6. Restructuring and Other Costs The activity related to excess facility and severance accruals under the Company's restructuring plans during the year ended December 31, 2006, by year of plan, were as follows: 86 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered...

  • Page 89
    ... restructuring activities aimed at streamlining production and reducing its operating expenses. In the first quarter of 2005, the Company recorded restructuring charges of $0.9 million in severance costs related to the termination of 87 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by...

  • Page 90
    ... were required to support the reduced level of development and sales activities during these periods. The January 2003 restructuring included the termination of 175 employees and the closure of design centers in Maryland, Ireland and India. To date, PMC has recorded a restructuring charge of...

  • Page 91
    ... for abandoned office facilities of $1.3 million in the fourth quarter of 2004. In the first quarter of 2001, the Company recorded a charge of $19.9 million for a restructuring plan that included the termination of 223 employees across all business functions, the consolidation of a number of...

  • Page 92
    ... stock of Ikanos. These shares are not tradeable until the end of the first quarter of 2006, and are subject to regulatory trading restrictions thereafter. The Company's investment in Ikanos was classified as available-for-sale and reported at fair value, with unrealized gains and losses recorded...

  • Page 93
    ...and 2020 respectively. Holders may convert the notes into the right to receive the conversion value (i) when the Company's stock price exceeds 120% of the approximately $8.80 per share initial conversion price for a specified period, (ii) in certain change in control transactions, and (iii) when the...

  • Page 94
    ... semi-annually and were convertible into an aggregate of approximately 6.5 million shares of PMC's common stock at any time prior to maturity at a conversion price of approximately $42.43 per share. NOTE 11. Commitments and Contingencies Legal Matters: SEC Informal Inquiry On August 18, 2006, PMC...

  • Page 95
    ... of Passave's PAS 5001 system-on-a-chip with a particular company's switch used by UTStarcom in its Fiber-to-the-home ("FTTH") products. In the suit, UTStarcom asserts various claims for breach of contract and breach of warranty and requests indemnity associated with the sale of Passave's PAS 5001...

  • Page 96
    ... 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. 94 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by...

  • Page 97
    ...benefit plan, which was assumed in connection with the acquisition of the Storage Semiconductor Business, provides retiree medical benefits to eligible United States employees who meet certain age and service requirements upon retirement from the Company. These benefits are provided from the date of...

  • Page 98
    ..., limited to maximum annual amounts set by local taxation authorities. The Company contributed $4.3 million, $3.8 million, and $3.7 million to the plans in fiscal years 2006, 2005, and 2004, respectively. 96 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research...

  • Page 99
    ... historic transfer pricing policies and practices of certain companies within the PMC-Sierra group. As a result, the Company increased its provision for periods prior to 2006 by $29.9 million. Significant components of the Company's deferred tax assets and liabilities are as follows: 97 Source: PMC...

  • Page 100
    ...and $75.8 million in 2006, 2005, and 2004, respectively. The Company recorded $7.1 million tax expense related to earnings it repatriated in 2006 to fund the purchase of the Storage Semiconductor Business 98 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Researchâ„

  • Page 101
    ... and 12% in 2004. During 2006, the Company had two end customers, Cisco Systems and EMC Corporation, whose purchases represented greater than 10% of our total net revenues (2005 and 2004 - Cisco Systems). 99 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Researchâ„

  • Page 102
    ... 0.15 $ $ 0.29 0.27 In 2006, the Company had approximately 6.0 million options that were not included in diluted net loss per share because they would be antidilutive. (1) PMC-Sierra, Ltd. Special Shares are included in the calculation of basic weighted average common shares outstanding. NOTE 18...

  • Page 103
    ...internal controls and procedures with respect to a number of stock option grants during the period 1998 to 2001. Some of these stock options were granted with an exercise price equal to the NASDAQ closing market price for our common stock on the date set forth on written consents signed by directors...

  • Page 104
    ... of 2006, after an internal review of past option grants, we identified certain stock option grants, primarily from the years 1998-2001, where evidence to support selected measurement dates was unclear. The Audit Committee of the Board of Directors completed a review of the Company's stock option...

  • Page 105
    ... to allow timely decisions regarding required disclosure, and that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. 103 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar...

  • Page 106
    ... registered public accounting firm that audited the financial statements included in this Annual Report, has issued an attestation report on management's assessment of the registrant's internal control over financial reporting. The attestation report is included herein. Changes in Internal Controls...

  • Page 107
    ... Registered Public Accounting Firm To the Board of Directors and Stockholders of PMC-Sierra, Inc. We have audited management's assessment, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting, that PMC-Sierra, Inc. and subsidiaries (the Company...

  • Page 108
    ... Company's adoption of Statement of Financial Accounting Standard No. 123(R) "Share-Based Payment". /s/ DELOITTE & TOUCHE LLP Independent Registered Public Accountants Vancouver, Canada February 28, 2007 ITEM 9B. None. Other Information. 106 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered...

  • Page 109
    ... which was created to replace a number of stock option plans assumed by us in connection with mergers and acquisitions we completed prior to 2001. The number of options that may be granted under the 2001 107 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Researchâ„

  • Page 110
    ...Financial Statement Schedules Financial Statement Schedules required by this item are listed on page 116 of this Annual Report on Form 10-K. Exhibits The exhibits listed under Item 15(c) are filed as part of this Form 10-K Annual Report. 108 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by...

  • Page 111
    ... Transfer and Trust Company Purchase and Sale Agreement dated October 28, 2005, between PMC-Sierra, Inc. and Avago Technologies Pte. Limited Indenture Agreement dated October 26, 2005, between the Company and U.S. Bank National Association, as trustee Agreement and Plan of Merger dated April 4, 2006...

  • Page 112
    ... the Registrant, PMC-Sierra, Ltd., and Taiwan Semiconductor Manufacturing Corporation. Deposit agreement dated January 31, 2000 by and between Chartered Semiconductor Manufacturing Ltd. and the Registrant. Technology License Agreement, by and between Weitek Corporation and MIPS Computer Systems, Inc...

  • Page 113
    ... and PMC-Sierra, Inc Employment Agreement between Steve Perna and PMC-Sierra, Inc Calculation of earnings per share (1) Statement of Computation of Ratio of Earnings to Fixed Charges Subsidiaries of the Registrant Consent of Deloitte & Touche LLP, Independent Registered Public Accountants. Power of...

  • Page 114
    ... in Item 8 of Part II of this Annual Report. Refer to Signature page of this Annual Report. Financial Statement Schedules required by this item are listed on page 115 of this Annual Report on Form 10-K. 112 X X * ^ (1) (2) (c) Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar...

  • Page 115
    ..., thereunto duly authorized. PMC-SIERRA, INC. (Registrant) Date: March 1, 2007 /s/ Alan F. Krock Alan F. Krock Vice President, (duly authorized officer) Chief Financial Officer and Principal Accounting Officer 113 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document...

  • Page 116
    ... 1, 2007 Director March 1, 2007 Director March 1, 2007 Director March 1, 2007 Director March 1, 2007 Frank Marshall /s/ Jonathan Judge Jonathan Judge /s/ Michael Farese Michael Farese 114 Director March 1, 2007 Director March 1, 2007 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by...

  • Page 117
    ...at end of year 1,768 2,665 2,849 8,454 12,190 16,199 3,997 3,492 2,897 - (897) (184) 2,276 (1,904) (24) 1,093 712 1,343 - - - (2,321) (1,832) (3,985) (759) (207) (748) 1,768 1,768 2,665 8,409 8,454 12,190 4,331 3,997 3,492 Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by...

  • Page 118
    ....2 1991 Employee Stock Purchase Plan, as amended 1994 Incentive Stock Plan, as amended 2001 Stock Option Plan, as amended Statement of Computation of Ratio of Earnings to Fixed Charges Subsidiaries of the Registrant Consent of Deloitte & Touche LLP Certification of Chief Executive Officer pursuant...

  • Page 119
    ... mean the Board of Directors of the Company. (b) "Code" shall mean the Internal Revenue Code of 1986, as amended. (c) "Common Stock" shall mean the Common Stock of the Company. (d) "Company" shall mean PMC-Sierra, Inc., a Delaware corporation. (e) "Compensation" shall mean all base straight time...

  • Page 120
    ... Dealers, Inc. Automated Quotation ("NASDAQ") System, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported), as quoted on such exchange (or the exchange with the greatest volume of trading in Common Stock) or system on the last market...

  • Page 121
    ... "Trading Day" shall mean a day on which national stock exchanges and the National Association of Securities Dealers Automated Quotation (NASDAQ) System are open for trading. 3. Eligibility. (a) Any Employee, as defined in paragraph 2, who has been continuously employed by the Company for at least...

  • Page 122
    ...'s subscription agreement at the beginning of the first Purchase Period which is scheduled to end in the following calendar year, unless terminated by the participant as provided in paragraph 10. -4- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Researchâ„

  • Page 123
    ... Date of each Offering Period, each eligible Employee participating in such Offering Period shall be granted an option to purchase on each Exercise Date during such Offering Period (at the applicable Purchase Price) up to a number of shares of the Company's Common Stock determined by dividing such...

  • Page 124
    ... 18. During any Purchase Period under the January Offering Period, the maximum number of shares of the Company's Common Stock which shall be made available for sale under the Plan during such Purchase Period shall equal 480,000 shares, subject to adjustment upon changes in capitalization as provided...

  • Page 125
    ... at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with paragraph 10. -7- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document...

  • Page 126
    ... Employees at least annually, which statements will set forth the amounts of payroll deductions (including any additional contributions), the Purchase Price, the number of shares purchased and the remaining cash balance, if any. 18. Adjustments Upon Changes in Capitalization, Dissolution, Merger...

  • Page 127
    ... of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Common Stock in the sale of assets or merger. 19. Amendment or Termination. (a) The Board of Directors of the Company may at any time and for any reason terminate or amend the...

  • Page 128
    ...day thereof; provided that the Fair Market Value of the Common Stock on such date is less than the Fair Market Value of the Common Stock at the Enrollment date of the employee's current Offering Period. -10- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Researchâ„

  • Page 129
    ...is lower, for the Purchase Period ending on , only. All capitalized terms have the meaning they have in the PMC-Sierra, Inc. 1991 Employee Stock Purchase Plan. Any tax consequences arising from this election, from the purchase of shares or from any other event or act hereunder (of the Company or the...

  • Page 130
    ... to me over the price which I paid for the shares. I hereby agree to notify the Company in writing within 30 days after the date of any disposition of my shares and I will make adequate provision for Federal, 2. 3. 4. 5. 6. Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar...

  • Page 131
    ... all payments and shares due me under the Employee Stock Purchase Plan: 8. NAME: (Please print) (First) (Middle) (Last) Relationship (Address) NAME: (Please print) (First) (Middle) (Last) Relationship (Address) -2- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document...

  • Page 132
    ...'s Social Security Number: Employee's Address: I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME. Dated: Signature of Employee Spouse's Signature (If beneficiary other than spouse) -3- Source: PMC SIERRA INC, 10...

  • Page 133
    ... be made for the purchase of shares in the current Offering Period and the undersigned shall be eligible to participate in succeeding Offering Periods only by delivering to the Company a new Subscription Agreement. Name and Address of Participant Signature Date: Source: PMC SIERRA INC, 10-K, March...

  • Page 134
    ... system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Options, Stock Purchase Rights or Restricted Stock Units are, or will be, granted under the Plan. (c) "Board" means the Board of Directors of the Company. (d) "Change of Control...

  • Page 135
    ... an interruption in the Continuous Status as an Employee, Consultant or Director. (k) "Director" means a member of the Board or a member of the board of directors of any Parent or Subsidiary of Company. -2- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Researchâ„

  • Page 136
    .... Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in Common Stock) [on the...

  • Page 137
    ...Director who is not an Employee of the Company. (aa) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code. (bb) "Plan" means this 1994 Incentive Stock Plan. (cc) "Restricted Stock" means shares of Common Stock acquired pursuant to a grant...

  • Page 138
    ... of Grant. (kk) "Subsidiary" means a "subsidiary corporation", whether now or hereafter existing, as defined in Section 424(f) of the Code. 3. Stock Subject to the Plan. Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares which may be optioned and sold under...

  • Page 139
    ... date the Option or Stock Purchase Right was granted (provided, however, that the exercise price of any Option or Stock Purchase Right granted to Directors or Officers of the Company may not be so reduced); -6- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research...

  • Page 140
    ... relationship with the Company, nor shall they interfere in any way with the Optionee's right or the Company's right to terminate such employment or consulting relationship at any time, with or without cause. -7- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document...

  • Page 141
    ... date of grant. (2) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. -8- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar...

  • Page 142
    .... In the case of a Nonstatutory Stock Option intended to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. (b) Waiting Period and Exercise...

  • Page 143
    ... as set forth in the Notice of Grant). In the absence of a specified time in the Notice of Grant, the Option shall remain exercisable for 90 days following the Optionee's termination of Continuous Status as an Employee, Consultant or Director. In the case of an Incentive Stock Option, such period of...

  • Page 144
    ...the Plan, it shall advise the offeree in writing, by means of a Notice of Grant, of the terms, conditions and restrictions related to the offer, including the number of Shares that the offeree shall be entitled to purchase, the price to be paid, and the time within which the offeree must accept such...

  • Page 145
    ...Merger, Asset Sale or Change of Control. (a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each outstanding Option, Stock Purchase Right and Restricted Stock Unit, and the number of shares of Common Stock...

  • Page 146
    ..., Stock Purchase Right or Restricted Stock Unit, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change of Control. -13- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by...

  • Page 147
    ... which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan will not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to Options, Stock Purchase Rights and Restricted Stock Units granted under the Plan prior to...

  • Page 148
    .... 20. Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. -15- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research...

  • Page 149
    .... "102 Ordinary Income Track" means the tax alternative set forth in Section 102(b)(1) of the ITO pursuant to which income resulting from the sale of Stock derived from Options is taxed as ordinary income. -16- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research...

  • Page 150
    ... as a director or an office holder, who is not a Controlling Shareholder. "Fair Market Value" shall mean with respect to 102 Capital Gains Track Grants only, for the sole purpose of determining tax liability pursuant to Section 102(b)(3) of the ITO, if at the date of grant the Company's shares are...

  • Page 151
    ... Grant granted to an Eligible 102 Optionee and each certificate for Shares acquired pursuant to the exercise of a Option or issued directly as Shares shall be issued to and registered in the name of a Trustee and shall be held in trust for the benefit of the Optionee for -18- Source: PMC SIERRA...

  • Page 152
    ... Grant is exercised during the Required Holding Period, the Shares issued upon such exercise shall be issued in the name of the Trustee for the benefit of the Eligible 102 Optionee. If such an Option is exercised after the Required Holding -19- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered...

  • Page 153
    ... issued thereunder or in connection therewith shall be governed by, and interpreted in accordance with, the laws of the State of Israel applicable to contracts made and to be performed therein. -20- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Researchâ„

  • Page 154
    ...of law in India. (b) "Employee" means any person permanently employed by the Company or any Parent or Indian Subsidiary of the Company or a director, whether whole-time or not, of the Company or any Parent or Indian Subsidiary of the Company, within the meaning of the Employees' Stock Option Plan or...

  • Page 155
    ... in its sole discretion makes an Option or Stock Purchase Right transferable, such Option or Stock Purchase Right may only be transferred pursuant to the provisions of Section 13 of the Plan. -22- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Researchâ„

  • Page 156
    ... other amounts due to the Employee on account of salary, remuneration or otherwise and, if necessary, remit the same to the Company. 11. Effective Date. This Appendix shall be effective from April 1, 2006. -23- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research...

  • Page 157
    ... system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Options, Stock Purchase Rights or Restricted Stock Units are, or will be, granted under the Plan. (c) "Board" means the Board of Directors of the Company. (d) "Change of Control...

  • Page 158
    ... the Common Stock of the Company. (h) "Company" means PMC-Sierra, Inc., a Delaware corporation. (i) "Consultant" means any person, including an advisor, Outside Director, Sales Representative or Distributor engaged by the Company or a Parent or Subsidiary of the Company to render services and who...

  • Page 159
    .... Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in Common Stock) [on the...

  • Page 160
    ... a Director of the Company who is not an Employee. (aa) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code. (bb) "Plan" means this 2001 Stock Option Plan. (cc) "Restricted Stock" means shares of Common Stock acquired pursuant to a grant...

  • Page 161
    ... of Share ownership. 4. Administration of the Plan. (a) Procedure. (i) Multiple Administrative Bodies. The Plan may be administered by different Committees with respect to different groups of Directors, Officers and Employees. -5- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar...

  • Page 162
    ... the exercise price of any Option or Stock Purchase Right granted to Directors or Officers of the Company may not be so reduced); (viii) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan; -6- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar...

  • Page 163
    ... shall apply to grants of Options and Stock Purchase Rights to Employees: Shares. (i) No Employee shall be granted, in any fiscal year of the Company, Options and Stock Purchase Rights to purchase more than 800,000 -7- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document...

  • Page 164
    ...the Administrator. In the case of an Option intended to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. (b) Waiting Period and Exercise Dates...

  • Page 165
    ... requested by the Optionee, in the name of the Optionee and his or her spouse. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends...

  • Page 166
    ...the Plan, it shall advise the offeree in writing, by means of a Notice of Grant, of the terms, conditions and restrictions related to the offer, including the number of Shares that the offeree shall be entitled to purchase, the price to be paid, and the time within which the offeree must accept such...

  • Page 167
    ... transfer agent of the Company. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 14 of the Plan. 12. Restricted Stock Units. (a) Grant. Restricted Stock Units may be granted...

  • Page 168
    ...shall terminate as of a date fixed by the Board and give each Optionee the right to exercise his or her Option or Stock Purchase Right as to all or any part of the Optioned Stock, including Shares as to which the Option or Stock Purchase Right would not otherwise be exercisable. (c) Merger or Change...

  • Page 169
    ... Option, Stock Purchase Right or Restricted Stock Unit, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Optionee within a reasonable time after the date of such grant. -13- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by...

  • Page 170
    .... 20. Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. -14- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research...

  • Page 171
    ... from the sale of Shares derived from Options is taxed as a capital gain. "102 Capital Gains Track Grant" means a 102 Trustee Grant qualifying for the special tax treatment under the 102 Capital Gains Track. -15- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document...

  • Page 172
    ... as a director or an office holder, who is not a Controlling Shareholder. "Fair Market Value" shall mean with respect to 102 Capital Gains Track Grants only, for the sole purpose of determining tax liability pursuant to Section 102(b)(3) of the ITO, if at the date of grant the Company's shares are...

  • Page 173
    ... or Shares granted by the Company must be held by the Trustee for the benefit of the person to whom it was granted. Currently, the Required Holding Period for 102 Capital Gains Track Grants is 24 months from the date of grant of the Options. "Rules" means the Income Tax Rules (Tax benefits in Stock...

  • Page 174
    ... Grant granted to an Eligible 102 Optionee and each certificate for Shares acquired pursuant to the exercise of a Option or issued directly as Shares shall be issued to and registered in the name of a Trustee and shall be held in trust for the benefit of the Optionee for the Required Holding Period...

  • Page 175
    ... is exercised after the Required Holding Period ends, the Shares issued upon such exercise shall, at the election of the Eligible 102 Optionee, either (i) be issued in the name of the Trustee, or (ii) be transferred to the Eligible 102 Optionee directly, provided that the Optionee first complies...

  • Page 176
    ... issued thereunder or in connection therewith shall be governed by, and interpreted in accordance with, the laws of the State of Israel applicable to contracts made and to be performed therein. -20- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Researchâ„

  • Page 177
    ...of law in India. (b) "Employee" means any person permanently employed by the Company or any Parent or Indian Subsidiary of the Company or a director, whether whole-time or not, of the Company or any Parent or Indian Subsidiary of the Company, within the meaning of the Employees' Stock Option Plan or...

  • Page 178
    ... in its sole discretion makes an Option or Stock Purchase Right transferable, such Option or Stock Purchase Right may only be transferred pursuant to the provisions of Section 13 of the Plan. -22- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Researchâ„

  • Page 179
    ... other amounts due to the Employee on account of salary, remuneration or otherwise and, if necessary, remit the same to the Company. 11. Effective Date. This Appendix shall be effective from April 1, 2006. -23- Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research...

  • Page 180
    Exhibit 12.1 PMC-SIERRA, INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Year Ended December 31, 2006 December 31, 2005 December 26, 2004 December 28, 2003 Earnings: (Loss) income before income taxes and before income from equity investees Fixed charges: Interest expense and amortization (2)...

  • Page 181
    ...Palau Acquisition Corporation, organized under the laws of Delaware, doing business only under its official name, PMC-Sierra, or under PMC-Sierra, Inc. Passave, Inc., organized under the laws of Delaware, doing business only under its official name, PMC-Sierra, or under PMC-Sierra, Inc. Source: PMC...

  • Page 182
    ...paragraph relating to the Company's adoption of Statement of Financial Accounting Standard No. 123(R) "Share-Based Payment"), and management's report on the effectiveness of internal control over financial reporting, appearing in this Annual Report on Form 10-K of PMC-Sierra, Inc. for the year ended...

  • Page 183
    ... end of the period covered by this report based on such evaluation; and Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual...

  • Page 184
    ..., that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. b) Date: March 1, 2007 /s/ Robert L. Bailey Robert L. Bailey President and Chief Executive Officer Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by...

  • Page 185
    ... end of the period covered by this report based on such evaluation; and Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual...

  • Page 186
    ... material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 1, 2007 /s/ Alan F. Krock Alan F. Krock Vice President Chief Financial Officer and Principal Accounting Officer Source: PMC SIERRA INC, 10...

  • Page 187
    ... to Section 906 of the Sarbanes-Oxley Act of 2002, in my capacity as an officer of PMC-Sierra, Inc. ("PMC"), that, to my knowledge, the Annual Report of PMC on Form 10-K for the annual period ended December 31, 2006, fully complies with the requirements of Section 13 (a) or 15(d) of the Securities...

  • Page 188
    ... to Section 906 of the Sarbanes-Oxley Act of 2002, in my capacity as an officer of PMC-Sierra, Inc. ("PMC"), that, to my knowledge, the Annual Report of PMC on Form 10-K for the annual period ended December 31, 2006, fully complies with the requirements of Section 13 (a) or 15(d) of the Securities...