-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KCPThsuEWpeGcVjjTsO3EUgWFDbrdFqxbNB3dcUm+j7NR4nX6YqkWRwcXmECYO1h j7Zjjc4kx2VMZBc4cLf33w== 0000767920-98-000014.txt : 19980623 0000767920-98-000014.hdr.sgml : 19980623 ACCESSION NUMBER: 0000767920-98-000014 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980520 ITEM INFORMATION: FILED AS OF DATE: 19980622 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PMC SIERRA INC CENTRAL INDEX KEY: 0000767920 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 942925073 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-19084 FILM NUMBER: 98651477 BUSINESS ADDRESS: STREET 1: 8555 BAXTER PLACE SUITE 105 STREET 2: BURABURY BRITISH COLUMBIA CITY: CANADA V5A 4V7 STATE: A1 ZIP: 00000 BUSINESS PHONE: 6044156000 MAIL ADDRESS: STREET 1: 8555 BAXTER PLACE STE 105 STREET 2: BURABURY BRITISH COLUMBIA CITY: CANADA V5A 4V7 STATE: A1 ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: SIERRA SEMICONDUCTOR CORP DATE OF NAME CHANGE: 19950419 8-K/A 1 PMC-SIERRA, INC AMENDED FORM 8-K ----------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Form 8 - K/A1 CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) May 20, 1998 PMC-Sierra, Inc. (Exact name of registrant as specified in its charter) - ---------------------- ---------------------- ------------------------------- Delaware 0-19084 94-2925073 - ---------------------- ---------------------- ------------------------------- State of incorporation Commission File Number IRS Employer Identification No. - ---------------------- ---------------------- ------------------------------- 105-8555 BAXTER PLACE BURNABY, BRITISH COLUMBIA, V5A 4V7, CANADA (address of principal executive offices) Company's telephone number, including area code: (604) 415-6000 ----------------------------------------------- This current report on Form 8-K/A1 amends the current report on Form 8-K filed by PMC-Sierra, Inc. ("PMC") on June 3, 1998 solely to add the financial statements of the business acquired required by Item 7(a) for the period ended March 31, 1998 and the pro forma financial information required by Item 7(b). Item 7. Financial Statements and Exhibits. (a) Financial Statements of Businesses Acquired Pursuant to paragraph (a)(4) of Item 7 of Form 8-K, the following financial statements were omitted from disclosure in the Registrant's Current Report on Form 8-K filed on June 3, 1998 but are filed herewith: Unaudited balance sheet of Integrated Telecom Technology, Inc. ("IGT") as of March 31, 1998 and the unaudited statements of operations, and cash flows for the three months ended March 31, 1998 and 1997. (b) Pro Forma Financial Information Pursuant to paragraph (b)(2) of Item 7, the unaudited pro forma combined balance sheet of the Registrant and IGT as of March 31, 1998 and the unaudited pro forma combined statements of operations for the three months ended March 31, 1998 and for the year ended December 31, 1997 are attached. The unaudited pro forma combined financial statements give effect to the merger of the Registrant's subsidiary and IGT on a purchase accounting basis. The pro forma combined balance sheet assumes the merger took place on March 31, 1998 and combines the March 31, 1998 balance sheet of the Registrant with the March 31, 1998 balance sheet of IGT. The pro forma combined statement of operations for the fiscal year ended December 31, 1997 assumes the merger took place as of the beginning of the fiscal year and combines the historical operating results of the Registrant and IGT for the fiscal year ended December 31, 1997 with pro forma adjustments. The pro forma combined statement of operations for the three months ended March 31, 1998 assumes the merger took place as of the beginning of the most recently completed fiscal year and combines the Registrant's historical operating results for the three months ended March 31, 1998 and IGT for the three months ended March 31, 1998 with pro forma adjustments. The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred had the acquisition of IGT by the Registrant been consummated at the beginning of the periods presented, nor is it necessarily indicative of future operating results or financial position. These pro forma financial statements are based on and should be read with the historical combined financial statements and the related notes thereto of the Registrant and IGT. INTEGRATED TELECOM TECHNOLOGY, INC. BALANCE SHEET - UNAUDITED (in thousands) Mar 31, 1998 ASSETS: Current assets: Cash and cash equivalents $ 1,095 Accounts receivable, net 1,814 Inventories, finished goods 579 Prepaid expenses and other current assets 175 ------------- Total current assets 3,663 Property and equipment, net 2,003 Other assets 610 ------------- $ 6,276 ============= LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Short-term debt $ 7,650 Accounts payable 850 Accrued liabilities 1,042 Current portion of obligations under capital leases 726 ------------- Total current liabilities 10,268 Noncurrent obligations under capital leases 722 ------------- 10,990 ------------- Stockholders' equity: Common stock 4 Preferred stock 9,974 Additional paid in capital 1,363 Accumulated deficit (16,055) ------------- Total stockholders' equity (4,714) ------------- $ 6,276 ============= See note to condensed financial statements. INTEGRATED TELECOM TECHNOLOGY, INC. STATEMENTS OF OPERATIONS - UNAUDITED (in thousands) Three Months Ended ----------------------------- Mar 31, Mar 31, 1998 1997 Net revenues $ 3,104 $ 3,136 Cost of revenues 1,006 978 ------------- ------------- Gross profit 2,098 2,158 Other costs and expenses: Research and development 1,593 1,770 Marketing, general and administrative 963 710 ------------- ------------- Loss from operations (458) (322) Interest expense (190) (59) ------------- ------------- Net loss $ (648) $ (381) ============= ============= See note to condensed financial statements. INTEGRATED TELECOM TECHNOLOGY, INC. STATEMENTS OF CASH FLOWS - UNAUDITED (in thousands)
Three Months Ended ---------------------------- Mar 31, Mar 31, 1998 1997 Cash flows from operating activities: Net loss $ (648) $ (381) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 364 284 Gain on sale of equipment (11) - Changes in assets and liabilities Accounts receivable 921 397 Inventories (275) 179 Prepaid expenses and other 56 (71) Accounts payable and accrued expenses (38) 430 Contracts in progress - (595) ------------- ------------- Net cash provided by operating activities 369 243 ------------- ------------- Cash flows from investing activities: Purchases of plant and equipment (31) (207) ------------- ------------- Net cash used in investing activities (31) (207) ------------- ------------- Cash flows from financing activities: Proceeds from issuance of note payable 2,000 - Repayment of short-term debt (2,000) - Financing Fees - (24) Principal payments under capital lease obligations (188) (92) Proceeds from issuance of options 28 - ------------- ------------- Net cash used in investing activities (160) (116) ------------- ------------- Net increase (decrease) in cash and cash equivalents 178 (80) Cash and cash equivalents, beginning of the period 917 804 ------------- ------------- Cash and cash equivalents, end of the period $ 1,095 $ 724 ============= ============= See note to condensed financial statements.
INTEGRATED TELECOM TECHNOLOGY, INC. NOTE TO CONDENSED FINANCIAL STATEMENTS 1. The accompanying financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules or regulations. The interim financial statements are unaudited, but reflect all adjustments which are, in the opinion of management, necessary to present a fair statement of results for the interim periods presented. These financial statements should be read in conjunction with the financial statements and the notes thereto in IGT's financial statements for the year ended December 31, 1997. PMC-Sierra, Inc. PRO FORMA COMBINED BALANCE SHEET - UNAUDITED March 31, 1998 (in thousands)
Pro Forma PMC IGT Pro Forma Adjustments Combined ---------------------------------- ASSETS: Current assets: Cash and cash equivalents $ 77,149 $ 1,095 $ (26,777) (a) $ 51,467 Short-term investments 2,982 - - 2,982 Accounts receivable, net 17,602 1,814 - 19,416 Inventories 4,258 579 - 4,837 Prepaid expenses and other current assets 1,717 175 - 1,892 ------------- ------------- -------------- ------------- Total current assets 103,708 3,663 (26,777) 80,594 Property and equipment, net 20,377 2,003 (220) (d) 22,160 Goodwill and other intangible assets, net 8,174 - 5,341 (b), (c), (d) 13,515 Investments and other assets 4,424 610 - 5,034 Deposits for wafer fabrication capacity 23,120 - - 23,120 ------------- ------------- -------------- ------------- $ 159,803 $ 6,276 $ (21,656) $ 144,423 ============= ============= ============== ============= LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Short-term debt $ - $ 7,650 (7,650) (a) $ - Accounts payable 6,251 850 - 7,101 Accrued liabilities 16,702 1,042 2,295 (b), (d) 20,039 Accrued income taxes 6,935 - - 6,935 Current portion of obligations under capital leases and long-term debt 4,515 726 (32) (d) 5,209 Net liabilities of discontinued operations 249 - - 249 ------------- ------------- -------------- ------------- Total current liabilities 34,652 10,268 (5,387) 39,533 Deferred income taxes 3,992 - - 3,992 Noncurrent obligations under capital leases and long-term debt 8,104 722 221 (d) 9,047 Special shares convertible into PMC common stock 9,503 - - 9,503 Shareholders' equity: Common stock, par value $0.001 30 4 (4) (e) 30 Preferred stock - 9,974 (9,974) (e) - Additional paid in capital 146,491 1,363 26,860 (a), (e) 174,714 Accumulated deficit (42,969) (16,055) (33,372) (e), (f) (92,396) ------------- ------------- -------------- ------------- Total shareholders' equity 103,552 (4,714) (16,490) 82,348 ------------- ------------- -------------- ------------- $ 159,803 $ 6,276 $ (21,656) $ 144,423 ============= ============= ============== ============= See notes to unaudited pro forma combined financial statements.
PMC-Sierra, Inc. PRO FORMA COMBINED STATEMENTS OF OPERATIONS - UNAUDITED Year Ended December 31, 1997 (in thousands, except for per share amounts)
Pro Forma PMC IGT Pro Forma Adjustments Combined --------------------------- Net revenues $ 127,166 $ 12,603 $ - $ 139,769 Cost of revenues 33,065 4,634 688 (a) 38,387 ------------ ------------ -------------- -------------- Gross profit 94,101 7,969 (688) 101,382 Other costs and expenses: Research and development 22,880 7,378 351 (a) 30,609 Marketing, general and administrative 23,663 3,567 121 (a) 27,351 Restructure and other costs (1,383) - - (1,383) ------------ ------------ -------------- -------------- Income (loss) from operations 48,941 (2,976) (1,160) 44,805 Interest income (expense), net 1,044 (408) (1,162) (b) (526) ------------ ------------ -------------- -------------- Income (loss) before provision for income taxes 49,985 (3,384) (2,322) 44,279 Provision for income taxes 15,727 - (366) (c) 15,361 ------------ ------------ -------------- -------------- Net income (loss) $ 34,258 $ (3,384) $ (1,956) $ 28,918 ============ ============ ============== ============== Basic net income per share: $ 1.10 $ 0.92 Diluted net income per share: $ 1.05 $ 0.87 Shares used to calculate: Basic net income per share 31,043 31,458 Diluted net income per share 32,642 33,244 See notes to unaudited pro forma combined financial statements.
PMC-Sierra, Inc. PRO FORMA COMBINED STATEMENTS OF OPERATIONS - UNAUDITED Three Months Ended March 31, 1998 (in thousands, except for per share amounts)
Pro Forma PMC IGT Pro Forma Adjustments Combined ------------------------ Net revenues $ 34,295 $ 3,104 $ - $ 37,399 Cost of revenues 8,135 1,006 172 (a) 9,313 ------------ ------------ ------------ ------------- Gross profit 26,160 2,098 (172) 28,086 Other costs and expenses: Research and development 6,016 1,593 88 (a) 7,697 Marketing, general and administrative 6,122 963 30 (a) 7,115 ------------ ------------ ------------ ------------- Income (loss) from operations 14,022 (458) (290) 13,274 Interest income (expense), net 824 (190) (227) (b) 407 ------------ ------------ ------------ ------------- Income (loss) before provision for income taxes 14,846 (648) (517) 13,681 Provision for income taxes 5,197 - (79) (c) 5,118 ------------ ------------ ------------ ------------- Net income (loss) $ 9,649 $ (648) $ (438) $ 8,563 ============ ============ ============ ============= Basic net income per share: $ 0.31 $ 0.27 Diluted net income per share: $ 0.29 $ 0.25 Shares used to calculate: Basic net income per share 31,524 31,939 Diluted net income per share 33,701 34,312 See notes to unaudited pro forma combined financial statements.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS 1. Basis of Presentation On May 20, 1998, the Registrant acquired IGT in exchange for total consideration of $55.0 million consisting of cash paid to IGT stockholders of $17.8 million, cash paid to IGT creditors of $9.0 million and the issuance of 415,000 shares of common stock and options to purchase 214,000 shares of common stock. IGT is a fabless semiconductor company headquartered in Gaithersburg, MD with a development site in San Jose, CA. IGT makes Asynchronous Transfer Mode (ATM) switching chipsets for wide area network applications as well as ATM Segmentation-and-Reassembly and other telecommunication chips. In connection with the acquisition, intangible assets of $54.8 million were acquired by the Registrant of which $49.4 million was allocated to in-process research and development. The related technology has not reached technological feasibility and the technology has no alternative future use. In accordance with generally accepted accounting principles, the acquired in-process research and development will be charged to expense by the Registrant in its second quarter ended June 30, 1998. The remaining $5.3 million of intangible assets will be amortized over their estimated useful lives, ranging from three to seven years. The pro forma combined statements of operations for the fiscal year ended December 31, 1997 and for the three months ended March 31, 1998 exclude the impact of the nonrecurring charge associated with expensing in-process research and development. The unaudited pro forma combined financial statements give effect to the merger of the Registrant and IGT on a purchase accounting basis. The pro forma combined balance sheet assumes the merger took place on March 31, 1998 and combines the March 31, 1998 balance sheets of the Registrant and IGT. The pro forma combined statement of operations for the fiscal year ended December 31, 1997 assumes the merger took place as of the beginning of the fiscal year and combines the historical results of the Registrant and IGT for the fiscal year ended December 31, 1997 with pro forma adjustments. The pro forma combined statement of operations for the three months ended March 31, 1998 assumes the merger took place as of the beginning of the most recently completed fiscal year and combines the historical results of the Registrant and IGT for the three months ended March 31, 1998 with pro forma adjustments. The pro forma combined financial statements included herein have been prepared by the Registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, the Registrant believes that the disclosures are adequate to make the information not misleading. These pro forma combined financial statements should be read in conjunction with the financial statements and the notes thereto included in the Registrant's annual report on Form 10-K for the fiscal year ended December 31, 1997 and the financial statements of IGT included in the Registrant's Current Report on Form 8-K filed on June 3, 1998. 2. Pro Forma Adjustments The pro forma combined balance sheet reflects the following adjustments: a) Entry to record the acquisition of IGT by the payment of cash to IGT stockholders and cash to IGT creditors and the issuance of 415,000 shares of common stock and options to purchase 214,000 shares of common stock; b) Entry to record acquisition related expenses of $850,000; c) Entry to record intangibles including goodwill, existing product technologies and assembled work force; d) Entry to record other purchase price adjustments to reflect certain IGT balances at fair values; e) Entry to eliminate the preferred stock, common stock, additional paid-in capital and accumulated deficit of IGT and f) Entry to expense in-process research and development of IGT. The pro forma combined statements of operations reflect the following adjustment with respect to the acquisition: a) Entry to record amortization of purchased intangibles other than in-process research and development over estimated useful lives, ranging from three to seven years; b) Entry to record elimination of interest expense paid on IGT's lines of credit as if they were repaid at the beginning of the year and reduction of interest income of the Registrant as a result of utilizing cash and cash equivalents for the IGT acquisition and c) Entry to record related tax effect of adjustment b). 3. Earnings Per Share Basic net income per share for each period is calculated by dividing pro forma net income by the shares used to calculate basic net income per share in the historical period plus the effect of the 415,000 shares of the Registrant's Common Stock which, together with cash payments, were exchanged for all issued and outstanding shares of IGT common and preferred stock. Diluted net income per share also includes the effect of the options to purchase 214,000 shares of the Registrant's Common Stock which were exchanged for options to purchase IGT common stock. 4. Merger Related Expenses The Registrant estimates that it will incur merger-related expenses, consisting primarily of transaction costs for lawyers, accountants, financial advisory services, and other related charges, of approximately $850,000 before income taxes. This estimate is preliminary and subject to change. These non-recurring expenses are reflected in the purchase price in the pro forma financial statements. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 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: June 19, 1998 /S/ JOHN W. SULLIVAN ------------- ------------------- John W. Sullivan Vice President, Finance Chief Financial Officer (Principal Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----