Good morning ladies and gentleman. I am John Judge, Chairman of the Board and Chair of the Compensation Committee. On behalf of the board and the PMC management team, welcome and thank you for joining us here in Sunnyvale or listening to the webcast of PMC-Sierra’s 2012 Annual Shareholders Meeting. I’d like to start with introductions of our board of directors all of which are in attendance today.
First, Greg Lang, Director and President and Chief Executive Officer of PMC; Jim Diller, Vice-Chairman of the Board, Ric Belluzzo, Member of the Audit Committee and Nominating in Corporate Governance Committee; Mike Farese, Member of the Compensation Committee and Nominating and Corporate Governance Committee; Mike Klayko, Member of the Compensation Committee; Bill Kurtz, Chair of the Audit Committee; Frank Marshall, Chair of the Nominating and Corporate Governance Committee and Richard Nottenburg, Member of the Audit Committee.
Before our Corporate Secretary conducts the formal part of the meeting, Greg Lang will spend a few minutes giving a brief update on our business, Greg?
Good morning, before we get started with the formal part of the meeting, I wanted to spend a few minutes to give you a brief update on our business. I will begin with our financial performance in 2011. Past year, revenues increased about 3% to $654 million which is growth faster than the industry of about 0.5% or less than 0.5%. We generated $143 million in non-GAAP operating income last year representing 22% of our total revenues, and EPS of $0.60 lower year-on-year. And the year started very strong, but it actually finished at a decelerating pace. It appears that many of our customers over bought after the tsunami in Japan, due to supply related concerns and wanting to secure their supply. We also saw an industry wide slow down interior spending, a situation that has not much improved even now.
I am pleased to report that over the past 5 years the PMC’s revenues have increased 46% outpacing the industry by over two and a half times in our non-GAAP diluted EPS has more than doubled. Last week, we announced our first quarter of 2012 earnings reporting $13 million of non-GAAP operating income on revenues of $132 million, and providing an outlook of improved revenues in the range of $136 million to $144 million which is a growth of about 3 to 9% in the second quarter of this year. The start of 2012 has been quite slow given the inventory burn-off in the slow carrier spending that I just mentioned, but we are encouraged by our conversations with customers and a few carriers who are upbeat about second half spending, although we don’t yet see it in our books.
In March 2012, we announced board had authorized an additional $275 million share re-purchase program in addition to our previously announced $40 million, an increase in the total authorization of $350 million. The $350 million represents approximately only 18% of total shares outstanding at the current stock price. Last week we announced entering into now accelerated share buy back agreement with Goldman Sachs to re-purchase at an aggregate of $160 million of PMC’s common stock. The share re-purchases emphasize our ongoing commitment to enhance the shareholder value as well as our confidence in PMC’s long term financial outlook and growth prospects. Going forward I believe there are three fundamental drivers of growth for PMC. First the digitization of everything, whether it is TV, movies, medical images, scientific data, prints media of all sorts. We’ll continue to drive an explosion of sports and network bandwidth requirements across networks. Secondly, the rapid growth of proliferation of internet capable mobile devices like smartphones and tablets will put increasing pressure on mobile networks and aggregation networks globally.
And finally, growing demand for cloud computing services such as backup, video streaming, applications of the service etc., we expect demand for high speed access to and from those data centers around the world to continue to grow. PMC is investing heavily in the technology that will enable our customers to deliver significant increases in storage and network capability required by these traffic growth drivers. Put simply, PMC is enabling the next generation in storage, optical and mobile networks that provide new levels of performance for smartphone services, video streaming and cloud computing. No other company is better positioned to deliver the infrastructure behind exciting new applications.
In 2011, I’m pleased to report that we further enhanced our corporate governance. In August 2011, we appointed John Judge, Chairman of the Board, our first non-executive chairman and appointed our two newest members, who are board of directors, was Mike Klayko and Dr. Richard Nottenburg . With the addition of these two new independent members, the board is gaining access to view perspectives and extensive experience in communication and subordinate networks, which are extremely valuable to the company.
In summary, 2011 was a solid year for PMC in terms of financial performance in strengthening the company’s corporate governance. Outlook for 2012 beyond PMC is well positioned to capitalize on major industry growth trends and to build share, while creating small term shareholder value.
Now, I’d like to turn the meeting over to Alinka Flaminia, the Vice President of General Counsel and Corporate Secretary, make introductions of our executive officers in attendance and to conduct the formal part of the meeting.
Thank you Greg, and again just thank you for being here or listening into our meeting today.
I’d like to first point out that Mr. Lang’s remarks on the state of the business contains forward looking statements, which are subjected to known and unknown risks and uncertainties, that could cause actual results to differ materially from those expressed or implied by such statements including but not limited to risks described in PMC-Sierra’s SEC filing. PMC undertakes no obligation to update any forward looking statements. Mr Lang’s remark also included certain non-GAAP financial measures, which are reconciled for the most direct comparable GAAP financial measures and financial news releases posted at our website at investor.pmc-sierra.com.
Other executives present today include Mike Hellner, our Vice President, Finance and Chief Financial Officer; Collin Harris, our Chief Operating Officer and Founder; Rob Liszt, Vice President of World Wide Sales, Ra'ed O. Elmurib, Vice President, Corporate Development and General Manager, Microprocessor Products Division; Daryn Lau, Vice President and General Manager of the Communication Products Division and Travis Karr, Vice President and General Manager of the Enterprise Storage Division. And also with us today is Fraser (inaudible), a representative of (inaudible).
And now we will begin the formal part of today’s meeting. The proxy (inaudible) has informed me that the time (inaudible) has ended. We will cover the meeting agenda items first and then both, any thoughts would (inaudible). The former matters of the agenda are, proposal number,
1. The electrical records of 2013 annual meeting stock holders, and until any successor has been elected and qualified.
2. Ratification of Deloitte & Touche LLP (inaudible) as independent auditors for fiscal 2012.
3. To approve in a non-binding vote, our executive compensation as described in the proxy statement.
4. To approve a proposal to amend the company’s 2008 equity plan, to increase the number of shares in common stock reserve for issuing there under by 9.5 million shares, satisfy the shareholder approval requirements of Section 162(m) of the Internal Revenue Code of 1986 as amended, the perspective performance state compensation under Section 162(m) and make other technical or otherwise non-material division (inaudible). The board expressed this as on March 16, 2012 as the record date with the determination of stock holders entitled to vote at this meeting. On the record date, company had approximately 231,839,036 shares of common stock outstanding. I have proof (inaudible) noticed that, the annual meeting stock holders was probably given and that notice of annual meeting along with the proxy statement and proxy were furnished on or about March 23,2012 to all stockholders directly.
The affidavit is kept with copies of the notice of proxy statements proxy, will be filed with the minutes of this meeting. PMC-Sierra has appointed Peter Stacey of Lions Advisors, as the Director of Election. Inspector of elections has signed its oath of office, which will be filed with the minutes of this meeting. Inspector of elections has informed me that majority of the vote entitled to cast constituting a forum are represented at this meeting by proxy or in person, therefore the meeting is duly constituted and we may proceed.
Let me review voting procedures. Vote should be cast by ballot, ballots have already been provided to the proxy voters, whose name is proximate with this meeting. If you already delivered a proxy and do not wish to change your vote, it is not necessary to complete another ballot because that will be counted. Is there anyone here today, who has not given proxies or has not provoked a proxy or (inaudible) pointed by a stockholder of records that is not yet voted, and need ballot?
Okay, thank you no one requires ballot. We will now move to the election of Director who will disclose the No. 1. The company has nominated 9 directors to be elected at this meeting, Richard Belluzzo, James Diller, Michael Fareze, Jonathan Judge, Michael Klayko, William Kurtz, Gregory Lang, Frank Marshall and Richard Nottenburg? Is there a motion to elect the company’s nominees for Directors? Is there a second?
Thank you, we’ll go to No. 2, the next matter is stocks for ratification of the appointment of Deloitte & Touche LLP as PMC-Sierra’s independent auditors for the 2012 fiscal year. Are there any questions? Is there a motion to ratify the appointment of Deloitte & Touche LLP as the company’s independent auditor? Is there a second? Thank you.
Proposal No. 3, the next matter is stockholder approval of a non-binding vote of our executive compensation of described in the proxy statement, the first vote is commonly referred to as the Say-On-Pay vote. Are there any questions about this? Is there a motion to approve, it’s a non-binding vote or executive compensation as described in the proxy statement? Is there a second? Thank you.
The last proposal for today is the to amend our 2008 equity plan to increase the number of shares to common stock reserve for issuance by 9.5 million shares, that satisfy the shareholder approval requirement of 162(m) of the Internal Revenue Code for perspective performance based compensation and to make (inaudible) or otherwise nonmaterial to the plan. Are there any questions? Is there a motion to approve the amendment for 2008 equity funding? Thank you. Is there a second? Thank you.
The proxies in ballots (inaudible) for the four matters presented today will be calculated by the Director of elections. The company will also report these results in the filings with the Securities of Exchange Commission on Form 8-K. Mr. Inspector of elections, you have to goals to report?
Peter Stacey - Lions Advisors
Yes I do.
Please give the report
Peter Stacey - Lions Advisors
Each director nominee has been elected by the required vote, the appointment of Deloitte & Touche LLP has been ratified. The executive compensation as described in the proxy statement is approved. The proposal to amend the company’s 2008 equity plan is approved.
Thank you, the final report of the Inspector of Election shall be filed with the minutes of the meeting. If there is no further (inaudible) business to come up before the meeting, do I have a motion to adjourn? Is there a second? Thank you all, the 2012 Annual Meeting of Stock Holders for PMC-Sierra is now concluded.
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