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PMC-Sierra Posts Q4

SUNNYVALE, Calif. — PMC-Sierra, Inc. (Nasdaq:PMCS), the premier Internet infrastructure semiconductor solution provider, today reported results for the fourth quarter and year ended December 26, 2010.

Net revenues in the fourth quarter of 2010 were $159.3 million, compared with $139.5 million in the fourth quarter of 2009 and $162.3 million reported in the third quarter of 2010. Net revenues in the fourth quarter of 2010 increased 14% year over year and decreased 2% compared to the third quarter of 2010.

Net income in the fourth quarter of 2010 on a GAAP basis was $10.9 million (GAAP diluted net income per share of $0.05). This compares with GAAP net income of $15.1 million (GAAP diluted net income per share of $0.06) in the fourth quarter of 2009 and GAAP net income of $15.2 million (GAAP diluted net income per share of $0.06) in the third quarter of 2010.

Non-GAAP net income in the fourth quarter of 2010 was $34.6 million (non-GAAP diluted net income per share of $0.15). This compares with non-GAAP net income in the fourth quarter of 2009 of $39.2 million (non-GAAP diluted net income per share of $0.17) and non-GAAP net income in the third quarter of 2010 of $42.9 million (non-GAAP diluted net income per share of $0.18).

Non-GAAP net income for the fourth quarter of 2010 excludes the following items: (i) $5.6 million in stock-based compensation expense; (ii) $5.6 million acquisition related costs; (iii) $7.4 million amortization of purchased intangible assets; (iv) $0.6 million of other items; (v) $0.8 million of non-cash interest expense for the accretion of the debt discount related to the senior convertible notes; (vi) $1.1 million interest expense related to short-term loan; (vii) $3.8 million recovery of impairment on investment securities; (viii) $4.5 million gain on disposition of investment in Wintegra, Inc.; and (ix) $10.8 million income tax provision.

For the year ended December 26, 2010, net revenues were $635.1 million compared with $496.1 million for the year ended December 27, 2009, an increase of 28% year over year. GAAP operating income in 2010 was $108.6 million compared with GAAP operating income of $56.6 million reported in the year ended December 27, 2009. Non-GAAP operating income in 2010 was $173.7 million compared with non-GAAP operating income of $119.8 million in the prior year. GAAP net income in 2010 was $83.2 million (GAAP diluted net income per share of $0.35) compared with GAAP net income of $46.9 million (GAAP diluted net income per share of $0.20) for the prior year. Non-GAAP net income in 2010 was $168.6 million (non-GAAP diluted net income per share of $0.72) compared with the non-GAAP net income of $115.8 million (non-GAAP diluted net income per share of $0.50) in the year ended December 27, 2009.

“In 2010, we experienced a broad recovery following a difficult recession the prior year. Revenue growth resumed across all of our major businesses including enterprise storage and WAN infrastructure,” said Greg Lang, president and chief executive officer of PMC-Sierra. “With the improved economic environment in 2010, we experienced 28% year-over-year growth in net revenues and 45% growth in non-GAAP operating income.”

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