PMC-Sierra Announces Corporate Restructuring and Financial Charges

Business Wire, Jan 16, 2003

Business Editors

SANTA CLARA, Calif.--(BUSINESS WIRE)--Jan. 16, 2003

PMC-Sierra, Inc. (Nasdaq:PMCS) today announced that it is undertaking a corporate restructuring that the Company expects will reduce ongoing annualized operating expenses by an estimated $25 to $28 million per year.

The Company's decision to undertake a further restructuring reflects continued lower levels of capital spending in customers' end markets and slow economic recovery evident in major global economies. The restructuring will largely be completed by the end of the second quarter of 2003. The Company expects that costs and charges related to the corporate restructuring, which include severance costs related to workforce reduction of approximately 16%, closure of excess facilities and other related assets, will be recorded in the financial statements for the quarters ended March and June 2003. At December 29, 2002, PMC-Sierra had 1,099 employees in its worldwide operations. The Company has not yet determined the amount of the aggregate costs and charges associated with the restructuring, as it is currently finalizing its plans.

Additionally, because of business and market conditions, the Company will record financial charges for provisions against the net carrying value of certain investments in venture stage companies and related venture capital funds, inventories, and, to a limited extent, fixed assets removed from service. These specific charges will be taken in the fourth quarter of 2002 and are expected to approximate $20 to $25 million.

The Company expects that when it reports its financial results for the December 2002 quarter, before including restructuring activities and other financial items, that revenues and operating expenses will be generally consistent with the financial outlook for the quarter provided by management during the most recent investor teleconference held October 17, 2003.

"PMC-Sierra is preserving and in some cases enhancing our product and technology capabilities as a result of this restructuring. Our goal is to strengthen development efforts in MIPS processors, high-speed mixed signal, and sub-90 nanometer design capabilities," emphasized Bob Bailey, Chairman and CEO of PMC-Sierra. "However, near term market conditions for communications semiconductors necessitate that we adjust our business size prudently to focus on returning to a profitable growth track."

Management will provide more details on the corporate restructuring and changes in asset carrying values and related accounting charges during the Company's fourth quarter 2002 conference call scheduled for January 23, 2003 at 2:30 pm Pacific Time. To listen to the call, please access the audio webcast of the call from our corporate website at www.pmc-sierra.com. To listen to the live version of the conference call by telephone, please dial 719/457-2645. A phone replay will be available 15 minutes after the completion of the call and can be accessed by dialing 719/457-0820 (enter access code: 532113).

About PMC-Sierra

PMC-Sierra is a leading provider of high-speed broadband communications and storage semiconductors and MIPS-based processors for Service Provider, Enterprise, Storage, and Wireless networking equipment. The company offers worldwide technical and sales support, including a network of offices throughout North America, Europe and Asia. PMC-Sierra is included in the S&P 500 Index and is publicly traded on the NASDAQ Stock Market under the PMCS symbol. For more information, please visit our website at http://www.pmc-sierra.com.

This release contains forward-looking statements including, but not limited to, projections or expectations of when the restructuring will be completed, the extent to which the restructuring will reduce ongoing operating costs, changes in competencies and product development goals. Actual results may vary from PMC-Sierra's projections or expectations for varied reasons, including but not limited to delays in implementing the restructuring or in determining charges against any restructuring reserve which PMC-Sierra may establish, management's ability to project accurately cost savings from the restructuring, and the impact of personnel reductions on product development efforts. Other risks of restructurings and of PMC-Sierra's business generally, which may also cause actual results to vary from projected or expected results, are described in PMC-Sierra's reports filed with the Securities and Exchange Commission.