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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ÈANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 28, 2008
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 of incorporation or organization) (I.R.S. Employer 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:
Title of each class Name of exchange on which registered
Common Stock, $0.001 Par Value
Preferred Stock Purchase Rights
The NASDAQ Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes ÈNo
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes No È
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 ÈNo
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. È
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a
non-accelerated filer or a smaller reporting company. See definition of “accelerated filer”, large accelerated
filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ÈAccelerated filer Non-accelerated filer Smaller reporting company
Indicate by check mark if the Registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes No È
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, 2008 as reported by the NASDAQ Global Market, was
approximately $1.2 billion. 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 February 20, 2009, the Registrant had 222,320,797 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for Registrant’s 2009 Annual Meeting of Stockholders are incorporated by
reference into Part III of this Form 10-K Report.

Table of contents

  • Page 1
    ... 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, 2008 as reported by the NASDAQ Global Market, was approximately $1.2 billion. Shares of Common Stock held by each executive officer and director...

  • Page 2
    ...Item 9A. Controls and Procedures ...Item 9B. Other Information ...Item 10. Item 11. Item 12. Item 13. Item 14. Item 15. PART III Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder...

  • Page 3
    PART I ITEM 1. Business. OVERVIEW PMC-Sierra, Inc. ("PMC" or the "Company") designs, develops, markets and supports semiconductor solutions for the Enterprise Networking, Wide Area Network Infrastructure, and Access Network markets. The Company offers worldwide technical and sales support through a ...

  • Page 4
    ...Growth in Internet usage and digital consumer devices continues to drive demand for bandwidth and efficient networks that can manage high levels of data and video traffic. At the same time, communication service providers are seeking ways to increase their revenues by bundling and delivering a range...

  • Page 5
    ...as aggregation and multi-service provisioning platforms, switches, and routers. One key industry protocol that helps in packaging information into formats for transportation across various networks is Internet Protocol ("IP"). As networks slowly converge over time, more data-centric and hybrid multi...

  • Page 6
    ...convert high-speed analog signals ("wired" or "wirelessly") to digital signals and split or combine various transmission signals. Controllers: rapid growth in data storage is driving a requirement for more cost-effective and larger capacity storage systems. Controller products based on Fibre Channel...

  • Page 7
    ... and business activity with our Asian customers. In 2008, we expanded our Fibre-To-The-Home presence in Japan, China and Korea. To support these customers, we have expanded our sales, service and design center in Shanghai, China and continue to expand our technology center in Bangalore, India. Our...

  • Page 8
    .... Our sales to customers in Asia, including Japan and China, increased to 73% of sales in 2008 from 65% of sales in 2007 in part because many of our OEM customers increased the use of Asia-based contract manufacturers for the assembly of their products. MANUFACTURING PMC-Sierra is a fabless company...

  • Page 9
    ...development of both hardware and software. 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 and we...

  • Page 10
    ...) and India (Bangalore). Our research and development spending was $157.6 million in 2008, $159.1 million in 2007, and $158.7 million in 2006. These figures exclude in-process research and development acquired in business combinations. BACKLOG Our sales originate from customer purchase orders...

  • Page 11
    ... companies to broaden the features in our products. We also rely on mask work protection, trademarks, copyrights, trade secret laws, employee and third-party nondisclosure agreements, and licensing arrangements to protect our intellectual property. PMC, PMC-Sierra and our logo are registered...

  • Page 12
    ... ability of customers and suppliers to obtain financing for significant purchases and operations and could result in a decrease in or cancellation of orders for our products and services. Our global business is also adversely affected by decreases in the general level of economic activity, such as...

  • Page 13
    ... our customers purchase a greater proportion of our lower margin parts in a particular period, it would adversely impact our results of operations. Further, our distributors provide us with periodic reports of their backlog to end customers, sales to end customers and quantities of our products that...

  • Page 14
    ... and manufacturing is conducted outside North America, in particular, India and China. The geographic diversity of our business operations could hinder our ability to coordinate design, manufacturing and sales activities. If we are unable to develop systems and communication processes to support our...

  • Page 15
    ... 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 16
    ...another three to 18 months to be designed into our customers' equipment and sold in production quantities. We sell products whose characteristics include evolving industry standards, short product life spans and new manufacturing and design technologies. Our products often must be redesigned because...

  • Page 17
    ...acquired businesses into our existing business. These challenges include integration of product lines, sales forces, customer lists and manufacturing facilities, development of expertise outside our existing business, diversion of management time and resources, possible divestitures, inventory write...

  • Page 18
    ... foundry suppliers also make products for other companies and some make products for themselves, thus we may not have access to adequate capacity or certain process technologies. We have less control over delivery schedules, manufacturing yields and costs than competitors with their own fabrication...

  • Page 19
    ... be sold. In addition, our competitors may be able to design around our patents. To protect our product technology, documentation and other proprietary information, we enter into confidentiality agreements with our employees, customers, consultants and strategic partners. We require our employees to...

  • Page 20
    ...past. In particular, fluctuations in our stock price and our price-to-earnings multiple may have made our stock attractive 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...

  • Page 21
    ... the two major sites in Santa Clara and Burnaby, during 2008 we also operated nine additional research and development centers: two in Canada, four in the US, one in Bangalore, India, one in Herzliya, Israel and one in Shanghai, China. We have twelve sales/operations offices located in Europe, Asia...

  • Page 22
    ... action. The Beiser/Barone plaintiffs generally allege that various current and former Company directors and/or officers breached their duty of loyalty and/or duty of care to the Company and its stockholders in connection with improperly dating certain employee stock option grants and that these...

  • Page 23
    ... for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Stock Price Information. Our Common Stock trades on the NASDAQ Global Select Market under the symbol PMCS. The following table sets forth, for the periods indicated, the high and low closing sale...

  • Page 24
    Stock Performance Graph The following graph shows a comparison of cumulative total stockholder returns for PMC, the line-of-business index for semiconductors and related devices (SIC code 3674) furnished by Research Data Group, Inc., and the S&P 500 Index. The graph assumes the investment of $100 on...

  • Page 25
    ... OF OPERATIONS DATA: Net revenues ...Cost of revenues ...Gross profit ...Research and development ...Selling, general and administrative ...Amortization of purchased intangible assets ...In-process research and development ...Restructuring costs and other charges ...Acquisition costs ...Income...

  • Page 26
    ... exchange loss on an income tax liability. (5) Results for the year ended December 26, 2004 include $1.3 million provision for employee-related taxes included in Selling, general and administrative expenses; $5.1 million recovery of prior year taxes; $9.4 million tax recovery based on agreements...

  • Page 27
    ... (in thousands except for per share data) Year Ended December 28, 2008 Year Ended December 30, 2007 Fourth(1) Third(2) Second(3) First(4) Fourth(5) Third(6) Second(7) First(8) STATEMENT OF OPERATIONS DATA: Net revenues ...$120,840 $139,356 $139,839 $125,040 $123,569 $117,455 $104,692 $103,665 Cost...

  • Page 28
    ... income tax liability; and $1.2 million employee-related taxes included in Selling, general and administrative expenses. (7) Results include $0.5 million stock-based compensation expense included in Cost of revenues; $4.4 million stock-based compensation expense included in Research and development...

  • Page 29
    ... product portfolio services a number of key end markets: the Enterprise Networking market which includes our products and solutions that enable the high-speed interconnection of servers, switches and storage devices that comprise these systems so that large quantities of data can be stored, managed...

  • Page 30
    ... particularly China. In 2008, there was an increase in shipments to our Chinese customers using Ethernet Passive Optical Network devices for field trials in the China market. In addition, shipments of our FTTH products to Japan and Korea increased as carriers continue to build out their networks. An...

  • Page 31
    ... products toward our storage, FTTH and SOC products, which decreased gross margin by approximately 2%; in 2006, we sold inventory acquired from the Storage Semiconductor Business of Avago that was valued at its selling price, less related selling costs, as opposed to the lower manufacturing...

  • Page 32
    ... no future alternative uses existed. Projects acquired from Passave included 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 further...

  • Page 33
    ... this project to the ROC controller for the server-attached storage market, and the 8 Gbps Fibre Channel controllers for high-performance storage systems in the SAN and NAS markets, which went into production in 2009. Restructuring Costs and Other Charges The activity related to excess facility and...

  • Page 34
    ..., we also initiated new R&D programs in 2008 which resulted in increases in payroll-related costs of approximately $4.9 million that partially offset the cost savings anticipated by the 2007 restructuring plan. 2006 In the third quarter of 2006, we closed our Ottawa development site in order to...

  • Page 35
    ...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 36
    ... 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 37
    ... 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. Provision for Income Taxes Our provision for income taxes for the year ended December 28, 2008 was a $70.0 million recovery...

  • Page 38
    ... written communication from a tax authority examining the historical 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 39
    ... 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 40
    ... quarter of 2003, we announced a further restructuring of our operations, which resulted in the closing of an additional four product development sites and the recording of $9.6 million charge related to these facilities. During 2006 we reversed $2.3 million of this provision because a portion of...

  • Page 41
    ... percentage to be in the range of 63% plus or minus 25 basis points including approximately $0.2 million stock-based compensation expense. As in past quarters this could vary depending on the volumes of products sold, since many of our costs are fixed. Margins will also vary depending on the mix...

  • Page 42
    ... investments. We employ these sources of liquidity to support ongoing business activities, acquire or invest in critical or complementary technologies, purchase capital equipment, repurchase and repay our senior convertible notes and finance working capital. The combination of cash, cash equivalents...

  • Page 43
    ... loss of the Reserve Funds of $11.8 million, and the addback or deduction of non-cash items such as stock based compensation expense, depreciation and amortization expense, the gain on repurchase of our senior convertible notes and our net tax recovery. Significant changes in working capital...

  • Page 44
    ... 15, 2012, 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...

  • Page 45
    ... Notes to December 28, 2008: December 28, 2008 (in thousands, except for per share amounts) Year Ended December 30, 2007 December 31, 2006 Under APB 14-1 As reported Under APB 14-1 As reported Under APB 14-1 As reported Deferred debt issue costs* ...2.25% senior convertible notes due October 15...

  • Page 46
    ... and hedging activities on its financial position, financial performance, and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We are currently assessing the potential impact...

  • Page 47
    ... 15, 2012, 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...

  • Page 48
    ... in U.S. dollars. We generate a significant portion of our revenues from sales to customers located outside the United States including Canada, Europe, the Middle East and Asia. We are subject to risks typical of an international business including, but not limited to, differing economic conditions...

  • Page 49
    ... ...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 Accounting Firm ...Schedules for each of the three years in the period ended December 28, 2008 included...

  • Page 50
    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 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 28, 2008 and December 30, 2007, and the related ...

  • Page 51
    ... ...Liability for unrecognized tax benefit ...PMC special shares convertible into 2,045 (2007-2,065) shares of common stock ...Commitments and contingencies (Note 11) Stockholders' equity: Common stock, par value $.001: 900,000 shares authorized; 221,335 shares issued and outstanding (2007-217,285...

  • Page 52
    PMC-Sierra, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except for per share amounts) December 28, 2008 Year Ended December 30, 2007 December 31, 2006 Net revenues ...Cost of revenues ...Gross profit ...Other costs and expenses: Research and development ...Selling, general and ...

  • Page 53
    ...paid for income taxes ...Supplemental disclosures of non-cash investing and financing activities: Issuance of common stock and assumption of vested stock options on acquisition ...Conversion of PMC-Sierra special shares into common stock ... $ 133,923 10,158 45,712 (2,043) (7,853) 595 - 24,838 4,300...

  • Page 54
    PMC-Sierra, Inc. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands) Shares of Common Common Stock Stock Additional Paid in Capital Accumulated Retained Other Earnings Total Comprehensive (Accumulated Stockholders' Income (Loss) Deficit) Equity Balances at December 31, 2005 ...183,306 ...

  • Page 55
    ... of business. PMC-Sierra, Inc (the "Company" or "PMC") designs, develops, markets and supports semiconductor solutions for the Enterprise Networking, Wide Area Network Infrastructure, and Access Network markets. The Company offers worldwide technical and sales support through a network of offices in...

  • Page 56
    ... 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 2008, PMC renewed...

  • Page 57
    ... 2,449 384 $18,725 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 58
    ... 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 foreign currency transactions related to certain operating expenses. All derivatives are recorded in the balance...

  • Page 59
    ... 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 60
    ... at the time of shipment. The Company estimates its warranty costs based on historical failure rates and related repair or replacement costs. The following table summarizes the activity related to the product warranty liability during fiscal 2008, 2007 and 2006: December 28, 2008 Year ended December...

  • Page 61
    ... 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 62
    ...are revenue-producing components of a company for which separate financial information is produced. In all periods presented, the Company operated in one reportable segment: networking products. Recent Accounting Pronouncements. In May 2008, the FASB issued Staff Position Accounting Principles Board...

  • Page 63
    ...on its financial position, financial performance, and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company is currently assessing the potential impact that SFAS 161 may...

  • Page 64
    ... 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 65
    ...of Passave. Of this amount, $257.5 million was allocated to the purchase price, and $46.5 million related to unvested stock and stock options of Passave which will be recorded as stock-based compensation over the requisite service period in accordance with FAS 123R. The fair value of options assumed...

  • Page 66
    ... solutions. This acquisition fits with PMC's strategic intent to address the high-growth Fibre Access market and is aligned with PMC's developments in Customer Premises Equipment. The final purchase price was: (in thousands) PMC shares (19.3 million) ...Vested Passave stock options assumed by PMC...

  • Page 67
    .... For these derivatives, the gain or loss from the effective portion of the hedge is initially reported as a component of other comprehensive income in stockholders' equity and subsequently reclassified to earnings in the same period in which the hedged transaction affects earnings. The gain or...

  • Page 68
    ... market data. Level 3-Pricing inputs include significant inputs that are generally not observable in the marketplace. These inputs may be used with internally developed methodologies that result in management's best estimate of fair value. At each balance sheet date, the Company performs an...

  • Page 69
    ... are expected to be outstanding. The risk-free rate for periods within the contractual life of the stock option is based on the U.S. Treasury yield curve in effect at the time of the grant. The fair values of the Company's stock option and Employee Stock Purchase Plan, ("ESPP") awards were estimated...

  • Page 70
    ... the Company assumed the stock option plans and all outstanding stock options of Passave as part of the merger consideration. (See Note. 2 Business Combinations) Activity under the option plans during the year ended December 28, 2008 was as follows: Weighted average exercise price per share Weighted...

  • Page 71
    ... 2008 and 2007, were $7.93, and $7.49, respectively. Employee Stock Purchase Plan In 1991, the Company adopted an ESPP under Section 423 of the Internal Revenue Code. The ESPP allows eligible participants to purchase shares of the Company's common stock through payroll deductions at a purchase price...

  • Page 72
    ...centers in Saskatoon, Saskatchewan and Winnipeg, Manitoba. The Company also vacated excess office space at its Santa Clara facility. PMC continued to rationalize costs in the fourth quarter of 2007 by reducing headcount by 18 employees primarily at the Burnaby facility. In 2008, the Company recorded...

  • Page 73
    ...first quarter of 2005, the Company recorded restructuring charges of $0.9 million in severance costs related to the termination of 24 employees across all business functions. In the second quarter of 2005, the Company expanded the workforce reduction activities initiated during the first quarter and...

  • Page 74
    ...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 75
    ..., the Company recorded an impairment of the Reserve Funds of $11.8 million during the third quarter 2008, incorporating the Reserve Funds' valuation at zero for debt securities of Lehman Brothers held, and a net asset value of $0.97 per share communicated by the Primary Fund. The Company has...

  • Page 76
    ...15, 2012, 2015 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...

  • Page 77
    ... action. The Beiser/Barone plaintiffs generally allege that various current and former Company directors and/or officers breached their duty of loyalty and/or duty of care to the Company and its stockholders in connection with improperly dating certain employee stock option grants and that these...

  • Page 78
    ... effect on the Company's financial position, results of operations or cash flows. NOTE 12. Special Shares At December 28, 2008 and December 30, 2007, the Company maintained a reserve of 2,045,000 and 2,065,000, respectively, of PMC common stock to be issued to holders of PMC-Sierra, Ltd. ("LTD...

  • Page 79
    ... benefit obligation assumed by the Company was $1.1 million at the time of the acquisition. At December 28, 2008, the accumulated postretirement benefit obligation was $1.1 million, with no unrecognized gain/loss or unrecognized prior service cost. The net period benefit cost was $0.3 million during...

  • Page 80
    ... addition, prior to the settlement, the Company accrued $35.2 million (including associated interest) relating to an ongoing liability arising from the examination of our existing transfer pricing practices, $28.1 million of income tax from normal operations (offset by investment tax credits of $19...

  • Page 81
    ... from a tax authority examining the historic transfer pricing policies and practices of certain companies within the PMC-Sierra group. As a result, in 2006, the Company increased its provision for periods prior to 2006 by $29.9 million. Significant components of the Company's deferred tax assets and...

  • Page 82
    ... 2006, respectively. The Company recorded $4.3 million tax expense related to earnings it repatriated in 2008. In addition, the Company recorded $7.1 million tax expense in 2006 related to earnings it repatriated to fund the purchase of the Storage Semiconductor Business. These distributions do not...

  • Page 83
    ... semiconductor devices and related technical service and support to equipment manufacturers for use in their communications and networking equipment. Enterprise-wide information is provided below in accordance with SFAS 131. Geographic revenue information is based on the location of the customer...

  • Page 84
    ...- 203,470 $ (0.49) (1) PMC-Sierra, Ltd. Special Shares are included in the calculation of basic weighted average common shares outstanding. In 2007 and 2006, the Company had approximately 5.5 million and $6.0 million options that were not included in diluted net loss per share because they would be...

  • Page 85
    ... officer, as appropriate 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. Management's Annual Report on Internal Control...

  • Page 86
    Changes in Internal Controls over Financial Reporting There were no changes in our internal controls during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 86

  • Page 87
    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of PMC-Sierra, Inc. We have audited the internal control over financial reporting of PMC-Sierra, Inc. and subsidiaries (the "Company") as of December 28, 2008, based on criteria established in Internal...

  • Page 88
    ITEM 9B. Other Information. None. 88

  • Page 89
    ...Item is incorporated by reference from the information set forth in the sections entitled "Election of Directors", "Code of Business Conduct and Ethics", "Executive Officers", and "Section 16(a) Beneficial Ownership Reporting Compliance" in our Proxy Statement for the 2009 Annual Stockholder Meeting...

  • Page 90
    ... and Related Transactions, and Director Independence. The information required by this Item is incorporated by reference from the information set forth in the section entitled "Executive Compensation Change of Control and Severance Agreements" in our Proxy Statement for the 2009 Annual Stockholder...

  • Page 91
    ...of Merger dated April 4, 2006, between PMC-Sierra, Inc. and Passave Inc. 1991 Employee Stock Purchase Plan, as amended 1994 Incentive Stock Plan, as amended 2001 Stock Option Plan, as amended 2008 Equity Plan Form of Indemnification Agreement between the Registrant and its directors and officers, as...

  • Page 92
    ... and Sale of Real Property between PMC-Sierra, Inc. and WB Mission Towers, L.L.C. 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 93
    ... 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PMC-SIERRA, INC. (Registrant) Date: February 25, 2009 /s/ Michael W. Zellner Michael W. Zellner Vice President, (duly authorized officer) Chief Financial Officer and Principal...

  • Page 94
    ... Farese Michael Farese President, Chief Executive Officer (Principal Executive Officer) and Director Vice President, Chief Financial Officer (and Principal Accounting Officer) Chairman of the Board of Directors Director Director Director Director Director Director February 25, 2009 February 25...

  • Page 95
    SCHEDULE II-Valuation and Qualifying Accounts Balance at beginning of year Charged to expenses or other accounts Write-offs Balance at end of year Allowance for doubtful accounts: December 28, 2008 ...December 30, 2007 ...December 31, 2006 ...Allowance for obsolete inventory and excess inventory:...

  • Page 96
    ... TO EXHIBITS Exhibit Number Description 12.1 21.1 23.1 31.1 31.2 32.1 32.2 Statement of Computation of Ratio of Earnings to Fixed Charges Subsidiaries of the Registrant Consent of Deloitte & Touche LLP, Independent Registered Public Accountants Certification of Chief Executive Officer pursuant to...

  • Page 97
    Exhibit 12.1 PMC-SIERRA, INC. STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Year Ended December 28, December 30, December 31, December 31, December 26, 2008 2007 2006 2005 2004 Earnings: Income (loss) before income taxes and before income from equity investees ...Fixed charges: ...

  • Page 98
    ...Subsidiaries of the Registrant State or Other Jurisdiction of Incorporation PMC-Sierra Ltd. PMC-Sierra US, Inc. Palau Acquisition Corporation Passave, Inc. PMC-Sierra International, Inc. PMC-Sierra Mauritius Ltd. British Columbia, Canada Delaware, USA Delaware, USA Delaware, USA Barbados Mauritius

  • Page 99
    ...paragraph relating to the Company's adoption of Statement of Financial Accounting Standard No. 157, Fair Value Measurements, effective January 1, 2008) and the effectiveness of internal control over financial reporting appearing in the Annual Report on Form 10-K of PMC-Sierra Inc. for the year ended...

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    ...31.1 CERTIFICATION I, Gregory S. Lang, certify that: 1. 2. I have reviewed this annual report on Form 10-K of PMC-Sierra, Inc.; Based on my knowledge, this 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...

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    ... CERTIFICATION I, Michael W. Zellner, certify that: 1. 2. I have reviewed this annual report on Form 10-K of PMC-Sierra, Inc.; Based on my knowledge, this 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...

  • Page 102
    Exhibit 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED ...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 28, 2008, fully complies with the ...

  • Page 103
    Exhibit 32.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED ...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 28, 2008, fully complies with the ...

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