Sierra Semiconductor Corporation Completes Acquisition of PMC-Sierra with Purchase Price Adjustment

Business Wire, August 10, 1995

SAN JOSE, Calif.--(BUSINESS WIRE)--Aug. 10, 1995--Sierra Semiconductor Corporation today announced that it has agreed to issue 647,361 shares of Sierra common stock to the former shareholders of PMC-Sierra, Inc. The new shares are being issued as an adjustment to the purchase price paid in connection with Sierra's September 1994 acquisition of PMC-Sierra. At an agreed upon price of $45 per share, the purchase price adjustment has a nominal value of approximately $29 million. If Sierra stock averages $45 or greater for any ten day period prior to June 1, 1996, then the purchase price adjustment process is completed. In the event this doesn't occur, then Sierra would issue additional shares to equate the value back to the $45 per share price.

Under the 1994 agreement, Sierra was obligated to make a purchase price adjustment if the financial performance of and outlook for PMC-Sierra significantly exceeded PMC-Sierra's 1994 expectations. "PMC-Sierra's financial performance during the last year has been extraordinary," according to Glenn C. Jones, Senior Vice President and Chief Financial Officer. "PMC-Sierra not only exceeded the financial expectations that formed the basis for the 1994 acquisition, the Company's actual performance was significantly above what was projected. As a result, we are issuing additional shares to PMC-Sierra employee shareholders and other former shareholders of PMC-Sierra. This issuance completes the original terms of the agreement between the minority shareholders of PMC-Sierra and Sierra Semiconductor."

"PMC-Sierra continues to be the dominant market leader in enabling physical layer silicon solutions in the rapidly growing ATM market," stated James Diller, Sierra Semiconductor Chairman and CEO, "and we are very pleased with their progress since the acquisition. They have made significant advances in developing new products, expanding their customer base and increasing their design wins. PMC-Sierra continues to be an integral part of Sierra's communication strategy and has expanded the corporate product offerings and market focus from the desktop to the corporate networks to the complete broadband communications network and infrastructure."

Sierra Semiconductor develops and markets products that provide its customers with advanced communications semiconductor system solutions for the global information network. The company's hardware and software products are fundamental elements in the communication of analog, digital, audio and visual data. Sierra, with offices throughout the U.S., Canada, and Europe, is headquartered in San Jose, California, and is traded on the Nasdaq National Market System under the symbol SERA.

CONTACT: Sierra Semiconductor, San Jose

Gary W. Breeding, 408/263-9300