PERICOM SEMICONDUCTOR REPORTS

FISCAL SECOND QUARTER 2012 FINANCIAL RESULTS

 

	§	Q2 revenues decreased 14% sequentially and 25% year-over-year primarily the result of economic softness and distribution inventory reductions.
	§	Q2 GAAP gross margin increased by 53 bps sequentially and  254 bps year-over-year.
	§	Q2 GAAP $335,000 net loss compared with $445,000 and $1.8 million net income the prior quarter and the same quarter the prior year, respectively.

 

San Jose, Calif. – January 31, 2012 - Pericom Semiconductor Corporation (NASDAQ: PSEM), a worldwide supplier of high performance connectivity and timing solutions, today announced results for its fiscal 2012 second quarter ended December 31, 2011.

 

Net revenues for the second quarter were $30.5 million, a decrease of 14% from the $35.3 million reported in the first quarter of fiscal 2012, and down 25% from the $40.7 million reported in the comparable period last year. The revenue decrease primarily resulted from reduced end user demand due to economic softness of the PC, notebook, and consumer end market segments, as well as lower storage volume attributed to the Thailand flood.

 

GAAP gross margin was 36.0% in the second quarter, up from 35.5% last quarter and from 33.5% in the comparable period last year. On a non-GAAP basis, gross margin was 37.3% in the second quarter, which reflects exclusion of share-based compensation, amortization of intangible assets, and amortization of fair value adjustments and compensation expense accruals from the PTI acquisition. The comparable non-GAAP gross margins were 36.9% last quarter and 36.3% in the comparable period last year. The improvement in sequential gross margin primarily reflects favorable product mix from lower PC, storage, and consumer end-market shipments.

 

GAAP net loss for the second quarter was $335,000, or $0.01 per diluted share, compared with net income of $445,000, or $0.02 per diluted share in the first quarter, and net income of $1.8 million, or $0.07 per diluted share in the comparable period last year. GAAP net income for all periods included share-based compensation, amortization of intangible assets, amortization of fair value adjustments, and other PTI acquisition related expenses. Excluding these items, non-GAAP net income for the second quarter was $958,000, or $0.04 per diluted share, compared with non-GAAP net income of $1.8 million or $0.07 per diluted share in the first quarter, and non-GAAP net income of $4.1 million, or $0.16 per diluted share in the comparable period last year.

 

The balance sheet remained very strong with cash and investments in marketable securities of $124 million or $5.13 per diluted share at the end of the second quarter. Inventory was relatively flat on a sequential basis and trade accounts receivable decreased by $2.9 million as a result of lower volume, and DSO remained steady at 59. At quarter-end, working capital was $104 million and the current ratio was 5.5.

 

”We were pleased about our second consecutive quarter of sequential gross margin improvement as it reaffirms our strategic initiative to improve our margins by increasing the revenue mixture from server, networking and telecom, and embedded segments,” said Alex Hui, President and CEO of Pericom. “We are excited to see many design wins with our industry-leading USB 3.0 signal integrity solution in next generation computing platforms. We also expect to see deployment of our PCIe Gen 3 product solution in next generation servers in the latter part of this calendar year.”

 

 

NEWS RELEASE January 31, 2012

 

New Products

 

In the second quarter of fiscal 2012, Pericom introduced a total of 12 new products across the Signal Integrity, Timing, and Connectivity product areas.

 

	·	Signal Integrity: We expanded our solutions for serial protocol signal integrity by introducing 4 new ReDriverTM products for SATA3, SAS2, and the new PCIe 3.0 (8Gb) and USB3 (5Gb SuperSpeed) protocols. These products address server, storage, computing and embedded market segments.
	·	Connectivity:  Adding to our high-speed connectivity solutions, we introduced 3 products supporting PCIe GEN2 packet switching, DDR3 mux switch, and PCIe to USB2 serial bridge.  These products target notebook, tablet, embedded, and networking market segments.
	·	Timing:  Expanding our timing solutions for next generation platforms, we introduced 5 new products. These comprised a new XO, a specialized crystal, 2 high performance clock buffers and an ASSP clock generator.

 

Share Repurchase Update

 

On April 29, 2008, our Board of Directors authorized the repurchase of $30 million of our common stock. Pursuant to the 2008 authority, the Company repurchased 302,117 shares in the three months ended December 31, 2011 for an aggregate cost of $2,305,564 and an average per share purchase price of $7.63. The remaining balance of potential share repurchases under the 2008 authority is approximately $6.5 million.

 

Fiscal Q3 2012 Outlook

 

The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially.

 

Below are the estimates for fiscal Q3 2012.

 

	·	Revenues in the third fiscal quarter are expected to be in the range of $30.0 million to $34.0 million.
	·	GAAP gross margins are expected to be between 33.5% and 35.5%, and adjusting for share-based compensation, amortization of intangibles and fair value adjustments that are expected to total approximately 1.5%, non-GAAP gross margins are expected to be in the 35.0% to 37.0% range.
	·	GAAP operating expenses are expected to be between $12.4 and $12.8 million, and adjusting for share-based compensation, amortization of intangibles, fair value adjustments and restructuring charges that are expected to total approximately $1.9 million, non-GAAP operating expenses are expected to be in the range of $10.5 to $10.9 million.
	·	Other income is expected to be between $0.5 and $0.7 million on a GAAP basis and on a non-GAAP basis.
	·	The effective tax rate is expected to be approximately 7-10% on a GAAP basis and 32-34% on a non-GAAP basis.

 

Conference Call

 

The press release will be followed by a conference call beginning at 1:30 p.m. Pacific time on January 31, 2012. To listen to the call, dial (877) 377-7103 and reference “Pericom”. A slide presentation will accompany the conference call. To view the slides, please visit the investor relations section of www.pericom.com.

 

The Pericom financial results conference call will be available via a live webcast on the investor relations section of the web site at http://www.pericom.com. Access the web site 15 minutes prior to the start of the call to download and install any necessary audio software. An archived webcast replay will be available on the web site for approximately 90 days.

 

3545 North Second Street San Jose, CA 95134 (408) 435-0800

 

 

NEWS RELEASE January 31, 2012

 

A taped replay of the conference call will be made available for the period from this evening through midnight on Tuesday, February 7th. To listen to the replay, dial toll-free (855) 859-2056 and reference conference ID 45480663.

 

About Pericom

 

Pericom Semiconductor Corporation (NASDAQ: PSEM) enables serial connectivity with the industry's most complete solutions for the computing, communications and consumer market segments. Pericom's analog, digital and mixed-signal integrated circuits, along with its frequency control products are essential in the timing, switching, bridging and conditioning of high-speed signals required by today's ever-increasing speed and bandwidth demanding applications. Company headquarters is in San Jose, California, with design centers and technical sales and support offices globally. http://www.pericom.com.

 

Non-GAAP Financial Information

 

In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (GAAP), this announcement of operating results contains non-GAAP financial measures that exclude the income statement effects of share-based compensation, amortization of intangible assets, fair value adjustments of acquired inventory, acquisition-related expenses, a one-time gain on the previously held interest in PTI, and the effects of excluding share-based compensation upon the number of diluted shares used in calculating non-GAAP earnings per share.

 

We have excluded share-based compensation expense in calculating these non-GAAP financial measures.  These expenses are non-cash in nature and rely on valuations of the future market price of our common stock that is difficult to predict and is affected by market factors that are largely not within the control of management. We have excluded amortization of intangible assets, amortization of the fair value adjustments related to acquired inventory, acquisition related expenses, the gain on the previously held interest in PTI, and the corresponding tax effect because we do not consider them to be related to our core operating performance.

 

We use the non-GAAP financial measures that exclude these items to make strategic decisions, forecast future results and evaluate the Company’s current operating performance. We believe that the presentation of non-GAAP financial measures that exclude these items is useful to investors because we do not consider these charges either part of the day-to-day business or reflective of the core operational activities of the Company that are within the control of management or that are used to evaluate the Company’s operating performance.

 

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

 

Safe Harbor Statement

 

This press release contains forward-looking statements as defined under The Securities Litigation Reform Act of 1995. Forward-looking statements in this release include the statements under the captions ”Fiscal Q3 2012 Outlook”, which regard the anticipated revenues, gross margin, operating expenses, other income, and effective tax rate in the third fiscal quarter of 2012, and statements from our CEO regarding margin improvement, better revenue mix, positive traction with design wins and product solutions, and other future expectations. The Company’s actual results could differ materially from what is set forth in such forward-looking statements due to a variety of risk factors, including softness in demand for our products, price erosion for certain of our products, unexpected difficulties in developing new products, customer decisions to reduce inventory, economic or financial difficulties experienced by our customers, or technological and market changes. All forward-looking statements included in this document are made as of the date hereof, based on information available to the Company as of the date hereof, and Pericom assumes no obligation to update any forward-looking statements. Parties receiving this release are encouraged to review our annual report on Form 10-K for the year ended July 2, 2011, and in particular, the risk factors sections contained in that report.

 

3545 North Second Street San Jose, CA 95134 (408) 435-0800

 

 

NEWS RELEASE January 31, 2012

 

Contact: Aaron Tachibana

Pericom Semiconductor

Tel: 408 435-0800

atachibana@pericom.com

 

- See Attached Tables -

 

 

NEWS RELEASE January 31, 2012  

 

Pericom Semiconductor Corporation

Condensed Consolidated Statements of Operations

(In thousands)

(unaudited)

  

	Three Months Ended										Six Months Ended
	December 31,			October 1,			January 1,				December 31,			January 1,
	2011			2011			2011				2011			2011
Net revenues	$	30,481		$	35,332		$	40,671			$	65,813		$	83,446
Cost of revenues		19,504			22,795			27,058				42,299			55,298
Gross profit		10,977			12,537			13,613				23,514			28,148
Operating expenses:
Research and development		5,277			5,316			5,060				10,593			9,457
Selling, general and administrative		7,060			7,339			6,986				14,399			14,728
Total operating expenses		12,337			12,655			12,046				24,992			24,185
Income (loss) from operations		(1,360	)		(118	)		1,567				(1,478	)		3,963
Interest and other income, net		638			1,070			614				1,708			12,550
Income (loss) before income taxes		(722	)		952			2,181				230			16,513
Income tax expense (benefit)		(335	)		534			446				199			5,824
Net income (loss) from consolidated companies		(387	)		418			1,735				31			10,689
Equity in net income of unconsolidated affiliates		52			27			77				79			633
Net income (loss)	$	(335	)	$	445		$	1,812			$	110		$	11,322
Basic income (loss) per share	$	(0.01	)	$	0.02		$	0.07			$	0.00		$	0.45
Diluted income (loss) per share	$	(0.01	)	$	0.02		$	0.07			$	0.00		$	0.45
Shares used in computing basic income (loss) per share		24,244			24,491			24,894				24,368			24,892
Shares used in computing diluted income (loss) per share		24,244			24,583			25,270				24,469			25,267

  

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NEWS RELEASE January 31, 2012 

 

Pericom Semiconductor Corporation

Condensed Consolidated Statements of Operations

(In thousands)

(unaudited)

 

	Three Months Ended										Six Months Ended
	December 31,			October 1,			Januar1y 1,				December 31,			January 1,
	2011			2011			2011				2011			2011
Share-based compensation
Cost of revenues	$	47		$	54		$	57			$	101		$	130
Research and development		357			371			353				728			743
Selling, general and administrative		528			549			591				1,077			1,191
Share-based compensation expense	$	932		$	974		$	1,001			$	1,906		$	2,064
Amortization of intangible assets
Cost of revenues	$	331		$	454		$	564			$	785		$	833
Research and development		167			160			55				327			108
Selling, general and administrative		241			239			230				480			306
Amortization of intangible assets	$	739		$	853		$	849			$	1,592		$	1,247

 

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NEWS RELEASE January 31, 2012 

 

Pericom Semiconductor Corporation

Reconciliation of GAAP Net Income to Non-GAAP Net Income

(In thousands)

(unaudited)

 

		Three Months Ended												Six Months Ended
		December 31,				October 1,				January 1,				December 31,				January 1,
		2011				2011				2011				2011				2011
GAAP net income (loss)		$	(335	)		$	445			$	1,812			$	110			$	11,322
Reconciling items:
Share-based compensation expense			932				974				1,001				1,906				2,064
Amortization of intangible assets			739				853				849				1,592				1,247
Fair value adjustment amortization on acquired inventory			-				-				412				-				614
Gain on previously held interest at PTI			-				-				-				-				(11,004	)
Acquisition-related costs			-				-				4				-				598
Interest expense accrual relating to PTI acquisition earnout			-				-				204				-				278
Fair value adjustment to depreciation expense on acquired fixed assets			50				50				46				100				61
Compensation expense accrual relating to PTI acquisition			-				-				359				-				487
Tax effect of adjustments			(428	)			(478	)			(618	)			(906	)			2,723
Total reconciling items			1,293				1,399				2,257				2,692				(2,932	)
Non-GAAP net income (loss)		$	958			$	1,844			$	4,069			$	2,802			$	8,390

 

Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS

(unaudited)

 

Diluted net income (loss) per share:
GAAP diluted income (loss) per share		$	(0.01	)		$	0.02			$	0.07			$	0.00			$	0.45
Adjustments:
Share-based compensation expense			0.04				0.04				0.04				0.08				0.08
Amortization of intangible assets			0.03				0.03				0.03				0.07				0.05
Fair value adjustment amortization on acquired inventory			-				-				0.02				-				0.03
Gain on previously held interest at PTI			-				-				-				-				(0.44	)
Acquisition-related costs			-				-				-				-				0.02
Interest expense accrual relating to earnout			-				-				0.01				-				0.01
Fair value adjustment to depreciation expense on acquired fixed assets			-				-				-				-				-
Compensation expense accrual relating to PTI acquisition			-				-				0.01				-				0.02
Tax effect of adjustments			(0.02	)			(0.02	)			(0.02	)			(0.04	)			0.11
Total adjustments			0.05				0.05				0.09				0.11				(0.12	)
Non-GAAP diluted income per share		$	0.04			$	0.07			$	0.16			$	0.11			$	0.33
Shares used in diluted net income (loss) per share calculation:
GAAP			24,244				24,583				25,270				24,469				25,267
Exclude the benefit of share-based compensation expense (1)			334				423				346				379				305
Change in diluted shares from GAAP net loss to non-GAAP net income			111				-				-				-				-
Non-GAAP			24,689				25,006				25,616				24,848				25,572

 

(1) For purposes of calculating non-GAAP diluted net income per share, the GAAP diluted weighted average shares outstanding is adjusted to exclude the benefits of unamortized stock compensation costs that are treated as proceeds assumed to be used to repurchase shares under the GAAP treasury stock method.

 

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NEWS RELEASE January 31, 2012

 

Pericom Semiconductor Corporation

Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin

(In thousands)

(unaudited)

  

		Three Months Ended												Six Months Ended
		December 31,				October 1,				January 1,				December 31,				January 1,
		2011				2011				2011				2011				2011
GAAP gross margin		$	10,977			$	12,537			$	13,613			$	23,514			$	28,148
- % of revenues			36.0	%			35.5	%			33.5	%			35.7	%			33.7	%
Reconciling items:
Share-based compensation			47				54				57				101				130
Amortization of intangible assets			331				454				564				785				833
Fair value adjustment amortization on acquired inventory			-				-				412				-				614
Fair value adjustment to depreciation expense on acquired fixed assets			10				10				9				20				10
Compensation expense accrual relating to PTI acquisition			-				-				104				-				141
Total reconciling items			388				518				1,146				906				1,728
Non-GAAP gross margin		$	11,365			$	13,055			$	14,759			$	24,420			$	29,876
- % of revenues			37.3	%			36.9	%			36.3	%			37.1	%			35.8	%

 

Reconciliation of GAAP R&D Expenses to Non-GAAP R&D Expenses

(unaudited)

 

GAAP research and development expenses		$	5,277			$	5,316			$	5,060			$	10,593			$	9,457
- % of revenues			17.3	%			15.0	%			12.4	%			16.1	%			11.3	%
Reconciling items:
Share-based compensation			(357	)			(371	)			(353	)			(728	)			(743	)
Amortization of intangible assets			(167	)			(160	)			(55	)			(327	)			(108	)
Fair value adjustment to depreciation expense on acquired fixed assets			(10	)			(10	)			(9	)			(20	)			(17	)
Compensation expense accrual relating to PTI acquisition			-				-				(117	)			-				(159	)
Total reconciling items			(534	)			(541	)			(534	)			(1,075	)			(1,027	)
Non-GAAP research and development expenses		$	4,743			$	4,775			$	4,526			$	9,518			$	8,430
- % of revenues			15.6	%			13.5	%			11.1	%			14.5	%			10.1	%

 

Reconciliation of GAAP SG&A Expenses to Non-GAAP SG&A Expenses

(unaudited)

 

GAAP selling, general and administrative expenses		$	7,060			$	7,339			$	6,986			$	14,399			$	14,728
- % of revenues			23.2	%			20.8	%			17.2	%			21.9	%			17.6	%
Reconciling items:
Share-based compensation			(528	)			(549	)			(591	)			(1,077	)			(1,191	)
Amortization of intangible assets			(241	)			(239	)			(230	)			(480	)			(306	)
Acquisition-related costs			-				-				(4	)			-				(598	)
Fair value adjustment to depreciation expense on acquired fixed assets			(30	)			(30	)			(28	)			(60	)			(34	)
Compensation expense accrual relating to PTI acquisition			-				-				(138	)			-				(187	)
Total reconciling items			(799	)			(818	)			(991	)			(1,617	)			(2,316	)
Non-GAAP selling, general and administrative expenses		$	6,261			$	6,521			$	5,995			$	12,782			$	12,412
- % of revenues			20.5	%			18.5	%			14.7	%			19.4	%			14.9	%

 

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NEWS RELEASE January 31, 2012

 

Pericom Semiconductor Corporation

Condensed Consolidated Balance Sheets

(In thousands)

(unaudited)

 

		As of				As of
		December 31, 2011				July 2, 2011
Assets
Current assets:
Cash and cash equivalents		$	24,838			$	30,023
Restricted cash			-				2,947
Short-term investments			54,595				76,266
Accounts receivable - trade			19,777				28,185
Inventories			18,259				21,942
Prepaid expenses and other current assets			7,806				7,788
Deferred income taxes			2,323				2,564
Total current assets			127,598				169,715
Property, plant and equipment-net			58,244				60,859
Investments in unconsolidated affiliates			2,723				2,596
Deferred income taxes non-current			4,422				4,324
Long-term investments in marketable securities			44,901				21,282
Goodwill			16,675				16,669
Intangible assets-net			14,277				15,690
Other assets			9,580				9,881
Total assets		$	278,420			$	301,016
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt		$	3,352			$	8,671
Accounts payable			10,520				12,221
Accrued liabilities			9,391				19,645
Total current liabilities			23,263				40,537
Industrial development subsidy			8,441				9,075
Deferred income tax liabilities			6,425				6,605
Other long-term liabilities			1,987				2,074
Total liabilities			40,116				58,291
Shareholders' equity:
Common stock and paid in capital			127,504				130,960
Retained earnings and other comprehensive income			110,800				111,765
Total shareholders' equity			238,304				242,725
Total liabilities and shareholders' equity		$	278,420			$	301,016

   

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3545 North Second Street San Jose, CA 95134 (408) 435-0800