Attached files
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EX-31.2 - EX-31.2 - PERICOM SEMICONDUCTOR CORP | d31768_ex31-2.htm |
EX-32.2 - EX-32.2 - PERICOM SEMICONDUCTOR CORP | d31768_ex32-2.htm |
EX-31.1 - EX-31.1 - PERICOM SEMICONDUCTOR CORP | d31768_ex31-1.htm |
EX-32.1 - EX-32.1 - PERICOM SEMICONDUCTOR CORP | d31768_ex32-1.htm |
EXCEL - IDEA: XBRL DOCUMENT - PERICOM SEMICONDUCTOR CORP | Financial_Report.xls |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) | |
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| For the quarterly period ended September 27, 2014 |
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| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) | |
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| For the Transition Period from _______ to _______ |
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| Commission File Number 0-27026 |
Pericom Semiconductor Corporation
(Exact Name of Registrant as Specified in Its Charter)
California |
| 77-0254621 |
(State or Other Jurisdiction of |
| (I.R.S. Employer |
Incorporation or Organization) |
| Identification No.) |
1545 Barber Lane
Milpitas, California 95035
(408) 232-9100
(Address of Principal Executive Offices and
Issuers Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes | x | No | ¨ |
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes | x | No | ¨ |
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non- accelerated filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer | ¨ | Accelerated Filer | x |
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Non-accelerated Filer | ¨ | Smaller Reporting Company | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 126-2 of the Exchange Act)
Yes | ¨ | No | x |
As of October 27, 2014 the Registrant had outstanding 21,843,000 shares of Common Stock.
Pericom Semiconductor Corporation
Form 10-Q for the Quarter Ended September 27, 2014
INDEX
PART I. FINANCIAL INFORMATION | Page | ||
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| Item 1: | Condensed Consolidated Financial Statements (Unaudited) |
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| Condensed Consolidated Balance Sheets as of |
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| September 27, 2014 and June 28, 2014 | 3 |
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| Condensed Consolidated Statements of Operations |
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| for the three months ended September 27, 2014 and |
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| September 28, 2013 | 4 |
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| Condensed Consolidated Statements of Comprehensive Income |
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| for the three months ended September 27, 2014 and |
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| September 28, 2013 | 5 |
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| Condensed Consolidated Statements of Cash Flows |
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| for the three months ended September 27, 2014 and |
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| September 28, 2013 | 6 |
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| Notes to Condensed Consolidated Financial Statements | 7 |
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| Item 2: | Managements Discussion and Analysis of |
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| Financial Condition and Results of Operations | 20 |
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| Item 3: | Quantitative and Qualitative Disclosures about |
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| Market Risk | 29 |
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| Item 4: | Controls and Procedures | 29 |
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PART II. OTHER INFORMATION |
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| Item 1A: | Risk Factors | 30 |
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| Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds | 41 |
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| Item 6: | Exhibits | 42 |
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| Signatures |
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2
PART I. FINANCIAL INFORMATION
Item 1: Condensed Consolidated Financial Statements
Pericom Semiconductor Corporation
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
September 27, | June 28, | |||||||
2014 | 2014 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 27,587 | $ | 33,020 | ||||
Short-term investments in marketable securities | 96,248 | 86,104 | ||||||
Accounts receivable | ||||||||
Trade (net of reserves and allowances of $2,303 and $2,461) | 24,863 | 24,036 | ||||||
Other receivables | 2,882 | 2,878 | ||||||
Inventories | 11,918 | 12,288 | ||||||
Prepaid expenses and other current assets | 1,053 | 2,458 | ||||||
Deferred income taxes | 795 | 726 | ||||||
Total current assets | 165,346 | 161,510 | ||||||
Property, plant and equipment – net | 58,083 | 58,537 | ||||||
Investments in unconsolidated affiliates | 2,495 | 2,445 | ||||||
Deferred income taxes – non-current | 2,576 | 2,460 | ||||||
Intangible assets (net of accumulated amortization of $13,579 and $12,849) | 6,285 | 7,009 | ||||||
Other assets | 8,062 | 8,118 | ||||||
Total assets | $ | 242,847 | $ | 240,079 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 9,697 | $ | 8,927 | ||||
Accrued liabilities | 10,120 | 9,934 | ||||||
Total current liabilities | 19,817 | 18,861 | ||||||
Industrial development subsidy | 6,133 | 6,354 | ||||||
Deferred income taxes | 5,577 | 5,460 | ||||||
Noncurrent tax liabilities | 1,041 | 1,041 | ||||||
Other long-term liabilities | 888 | 871 | ||||||
Total liabilities | 33,456 | 32,587 | ||||||
Commitments and contingencies (Note 6) | ||||||||
Shareholders’ equity: | ||||||||
Common stock and paid in capital - no par value, 60,000,000 shares authorized; shares issued and outstanding: September 27, 2014, 21,968,000; June 28, 2014, 21,974,000 | 113,039 | 113,118 | ||||||
Retained earnings | 85,699 | 83,204 | ||||||
Accumulated other comprehensive income, net of tax | 10,653 | 11,170 | ||||||
Total shareholders' equity | 209,391 | 207,492 | ||||||
Total liabilities and shareholders' equity | $ | 242,847 | $ | 240,079 |
See notes to condensed consolidated financial statements.
3
Pericom Semiconductor Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended | ||||||||
September 27, | September 28, | |||||||
2014 | 2013 | |||||||
Net revenues | $ | 33,259 | $ | 32,608 | ||||
Cost of revenues | 19,179 | 19,800 | ||||||
Gross profit | 14,080 | 12,808 | ||||||
Operating expenses: | ||||||||
Research and development | 4,588 | 5,045 | ||||||
Selling, general and administrative | 7,300 | 7,687 | ||||||
Total operating expenses | 11,888 | 12,732 | ||||||
Income from operations | 2,192 | 76 | ||||||
Interest and other income, net | 1,274 | 486 | ||||||
Income before income taxes | 3,466 | 562 | ||||||
Income tax expense | 1,010 | 231 | ||||||
Net income from consolidated companies | 2,456 | 331 | ||||||
Equity in net income of unconsolidated affiliate | 39 | 43 | ||||||
Net income | $ | 2,495 | $ | 374 | ||||
Basic income per share | $ | 0.11 | $ | 0.02 | ||||
Diluted income per share | $ | 0.11 | $ | 0.02 | ||||
Shares used in computing basic income per share | 21,936 | 22,794 | ||||||
Shares used in computing diluted income per share | 22,262 | 22,951 |
See notes to condensed consolidated financial statements.
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Pericom Semiconductor Corporation
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
Three Months Ended | ||||||||
September 27, | September 28, | |||||||
2014 | 2013 | |||||||
Net income | $ | 2,495 | $ | 374 | ||||
Other comprehensive income: | ||||||||
Change in unrealized gain or loss on securities available for sale, net | (174 | ) | 307 | |||||
Foreign currency translation adjustment | (458 | ) | 945 | |||||
Tax benefit (provision) related to other comprehensive income | 115 | (128 | ) | |||||
Other comprehensive income, net of tax | (517 | ) | 1,124 | |||||
Comprehensive income | $ | 1,978 | $ | 1,498 |
See notes to condensed consolidated financial statements.
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Pericom Semiconductor Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended | ||||||||
September 27, | September 28, | |||||||
2014 | 2013 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 2,495 | $ | 374 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 2,260 | 2,695 | ||||||
Share-based compensation | 709 | 729 | ||||||
Tax benefit resulting from share-based transactions | 293 | 109 | ||||||
Excess tax benefit resulting from share-based transactions | (29 | ) | — | |||||
Loss on disposal of equipment | 301 | 42 | ||||||
(Gain) loss on sale of investments | 6 | (44 | ) | |||||
Equity in net income of unconsolidated affiliate | (39 | ) | (43 | ) | ||||
Deferred taxes | 50 | (103 | ) | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (1,033 | ) | (2,276 | ) | ||||
Inventories | 370 | 341 | ||||||
Prepaid expenses and other current assets | 1,400 | (212 | ) | |||||
Other assets | 11 | 144 | ||||||
Accounts payable | 371 | (2,227 | ) | |||||
Accrued liabilities | (41 | ) | 501 | |||||
Other long-term liabilities | — | 17 | ||||||
Net cash provided by operating activities | 7,124 | 47 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property, plant and equipment | (1,136 | ) | (1,243 | ) | ||||
Purchase of available-for-sale investments | (25,719 | ) | (20,624 | ) | ||||
Maturities and sales of available-for-sale investments | 15,292 | 16,538 | ||||||
Net cash used in investing activities | (11,563 | ) | (5,329 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from common stock issuance under stock plans | 1,498 | — | ||||||
Proceeds from short-term debt | — | 514 | ||||||
Payments on short-term debt | — | (514 | ) | |||||
Excess tax benefit resulting from stock option transactions | 29 | — | ||||||
Repurchase of common stock | (2,302 | ) | (765 | ) | ||||
Net cash used in financing activities | (775 | ) | (765 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (219 | ) | 166 | |||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (5,433 | ) | (5,881 | ) | ||||
CASH AND CASH EQUIVALENTS: | ||||||||
Beginning of period | 33,020 | 30,844 | ||||||
End of period | $ | 27,587 | $ | 24,963 |
See notes to condensed consolidated financial statements.
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Pericom Semiconductor Corporation
Notes To Condensed Consolidated Financial Statements
(Unaudited)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements have been prepared by Pericom Semiconductor Corporation (Pericom or the Company) pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments and accruals, necessary for a fair presentation of the Companys financial position as of September 27, 2014, the results of operations for the three months ended September 27, 2014 and September 28, 2013 and cash flows for the three months ended September 27, 2014 and September 28, 2013. This unaudited quarterly information should be read in conjunction with the audited consolidated financial statements of Pericom and the notes thereto included in the Companys Annual Report on Form 10-K as filed with the Securities and Exchange Commission on August 29, 2014.
The preparation of the interim condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the interim condensed consolidated financial statements and the reported amounts of revenue and expenses during the period. Actual amounts could differ from these estimates. The results of operations for the three months ended September 27, 2014 are not necessarily indicative of the results to be expected for the entire year. The three month periods ended September 27, 2014 and September 28, 2013 each had 13 week periods.
The Company participates in a dynamic high technology industry and believes that changes in any of the following areas could have a material adverse effect on the Companys future financial position or results of operations: advances and trends in new technologies; competitive pressures in the form of new products or price reductions on current products; changes in the overall demand for products offered by the Company; changes in customer relationships; acquisitions and the subsequent integration of the acquired entity with the Company; litigation or claims against the Company based on intellectual property, patent, product, regulatory or other factors; risks associated with changes in domestic and international economic and/or political conditions or regulations and environmental laws; availability of necessary components; interruptions at wafer suppliers and subcontractors; fluctuations in currencies given the Companys sales and operations being heavily weighted and paid in foreign currencies; and the Companys ability to attract and retain employees necessary to support its growth.
These interim condensed consolidated financial statements include the accounts of Pericom Semiconductor Corporation and its wholly owned subsidiaries, Pericom Global Limited (PGL), PSE Technology Corporation (PSE-TW), and Pericom Asia Limited (PAL). PGL has two wholly-owned subsidiaries, Pericom International Limited (PIL) and Pericom Semiconductor (HK) Limited (PHK). In addition, PAL has three subsidiaries, PSE Technology (Shandong) Corporation ("PSE-SD") and Pericom Technology Yangzhou Corporation (PSC-YZ) for the Jinan, China and Yangzhou, China operations, respectively, and Pericom Technology Inc. (PTI). The Company eliminates all intercompany balances and transactions in consolidation.
FISCAL PERIOD For purposes of reporting the financial results, the Companys fiscal years end on the Saturday closest to the end of June. The year ended June 28, 2014 is referred to as fiscal year 2014 or fiscal 2014, whereas the current fiscal year 2015 or fiscal 2015 will end on June 27, 2015. Both fiscal 2014 and fiscal 2015 contain 52 weeks or 364 days. Periodically, the Company adds a 53rd week to a year in order to end that year on the Saturday closest to the end of June.
WARRANTY The Company offers a standard one-year product replacement warranty. In the past, the Company has not had to accrue for a general warranty reserve, but assesses the level and materiality of return material authorizations (RMAs) and determines whether it is appropriate to accrue for estimated returns of defective products at the time revenue is recognized. On occasion, management may determine to accept product returns beyond the standard one-year warranty period. In those instances, the Company
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accrues for the estimated cost at the time management decides to accept the return. Because of the Companys standardized manufacturing processes and product testing procedures, returns of defective product are infrequent and the quantities have not been significant. Accordingly, historical warranty costs have not been material.
RECENTLY ISSUED ACCOUNTING STANDARDS
In July 2013, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2013-11, Income Taxes (Topic 740)-Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU 2013-11 provides guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, similar tax loss, or tax credit carryforward exists. This new standard requires the netting of unrecognized tax benefits (UTBs) against a deferred tax asset for a loss or other carryforward that would apply in settlement of the uncertain tax positions. UTBs will be netted against all available same-jurisdiction loss or other tax carryforwards that would be utilized, rather than only against carryforwards that are created by the UTBs. The Company adopted the provisions of ASU 2013-11 this quarter. Since ASU 2013-11 only impacts financial statement disclosure requirements for unrecognized tax benefits, its adoption has had no impact on the Companys financial position or results of operations.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 outlines a single comprehensive model for accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. ASU 2014-09 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will be effective for annual and interim reporting periods beginning after December 15, 2016. The impact on the Companys financial condition, results of operations and cash flows as a result of the adoption of ASU 2014-09 has not yet been determined.
2. INTANGIBLE ASSETS
The following table summarizes the components of intangible assets and related accumulated amortization balances for each of the period-ending dates shown, which were recorded as a result of business combinations:
September 27, 2014 | June 28, 2014 | |||||||||||||||||||||||
(in thousands) | Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||
Customer relationships | $ | 6,068 | $ | (4,167 | ) | $ | 1,901 | $ | 6,056 | $ | (3,913 | ) | $ | 2,143 | ||||||||||
Core developed technology | 13,401 | (9,412 | ) | 3,989 | 13,402 | (8,936 | ) | 4,466 | ||||||||||||||||
Total amortizable purchased intangible assets | 19,469 | (13,579 | ) | 5,890 | 19,458 | (12,849 | ) | 6,609 | ||||||||||||||||
SaRonix trade name | 395 | — | 395 | 400 | — | 400 | ||||||||||||||||||
Total purchased intangible assets | $ | 19,864 | $ | (13,579 | ) | $ | 6,285 | $ | 19,858 | $ | (12,849 | ) | $ | 7,009 |
Amortization expense related to finite-lived purchased intangible assets was approximately $725,000 and $785,000 for the three month periods ended September 27, 2014 and September 28, 2013, respectively.
The Company performs an impairment review of its intangible assets at least annually. Based on the results of its most recent impairment review, the Company determined that no impairment of its intangible assets existed as of September 27, 2014. However, future impairment reviews could result in a charge to earnings.