SAN JOSE, CA--(Marketwire - Nov 1, 2011) - Pericom Semiconductor Corporation (
- Q1 revenues decreased 18% sequentially and 17% year-over-year primarily as a result of economic softness and distribution inventory reductions.
- Q1 GAAP gross margin increased by 50 bps sequentially and 150 bps year-over-year.
- Q1 GAAP net income decreased 72% sequentially and 95% year-over-year.
Pericom Semiconductor Corporation (
Net revenues for the first quarter were $35.3 million, a decrease of 18% from the $43.3 million reported in the fourth quarter of fiscal 2011, and down 17% from the $42.8 million reported in the comparable period last year. The revenue decrease primarily resulted from reduced end user demand due to economic softness and inventory reduction activities by our distributors and customers.
GAAP gross margin was 35.5% in the first quarter, up from 35.0% last quarter and from 34.0% in the comparable period last year. On a non-GAAP basis, gross margin was 36.9% in the first 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 36.2% last quarter and 35.3% in the comparable period last year. The improvement in sequential gross margin primarily reflects favorable product mix from lower PC and consumer end-market shipments.
GAAP net income for the first quarter was $445,000, or $0.02 per diluted share, compared with net income of $1.6 million, or $0.06 per diluted share in the fourth quarter, and net income of $9.5 million, or $0.38 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. The comparable period last year included an $11.0 million gain on previously held shares of PTI. Excluding these items, non-GAAP net income for the first quarter was $1.8 million or $0.07 per diluted share, compared with $3.6 million or $0.14 per diluted share in the fourth quarter, and non-GAAP net income of $4.3 million, or $0.17 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 $5.06 per diluted share at the end of the first quarter. Inventory decreased by $3.5 million or 16% in the first quarter, and it was the fourth consecutive quarter of a reduction in Pericom owned inventory. Trade accounts receivable decreased by $5.5 million as a result of lower volume, and DSO remained steady at 58. At quarter-end, working capital was $106 million and the current ratio was 4.0.
"We were pleased about our gross margin improvement despite the lower revenue volume associated with the weak macro environment," said Alex Hui, President and CEO of Pericom. "The margin expansion reflects our strategic initiative to transition from low-margin commodity applications to higher value add platforms in enterprise computing and embedded segments. Also, our continued reduction of inventory and overall strength of our balance sheet will allow us to deliver solid results once again when the rebound occurs."
New Products
In the first quarter of fiscal 2012, Pericom introduced a total of 31 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 ReDriver™ products for SATA3, SAS2, and the new USB3 (SuperSpeed) protocols. These products address volume notebook, server, storage, and embedded market segments, with all four redrivers offering low power consumption. The new USB3 products are specifically designed to meet the latest industry compliance requirements for next generation platforms with integrated USB3 controllers, and the new SATA/SAS product is our first to offer I2C programmability which expands our applications reach.
- Connectivity: Adding to our high-speed connectivity solutions, we introduced 6 products supporting DisplayPort, USB charging, DDR switching, and PCIe GEN2 packet switching. These products target notebook, embedded, and networking market segments.
- Timing: Expanding our timing solutions for next generation platforms, we introduced 21 new products including 5 HiFlex™ multi-output clock generators, 13 ASSP VCXO oscillators, and 3 IP phone clock generators. These new products target networking, telecom, and server/storage market segments.
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 456,346 shares in the three months ended October 1, 2011 for an aggregate cost of $3,498,759 and an average per share purchase price of $7.67. The remaining balance of potential share repurchases under the 2008 authority is approximately $8.8 million.
Fiscal Q2 2012 Outlook
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.
The overall macro environment has been weak the past few months and we have experienced a slowdown in demand. Below are the estimates for fiscal Q2 2012.
- Revenues in the second 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 $12.2 and $12.8 million, and adjusting for share-based compensation, amortization of intangibles and fair value adjustments that are expected to total approximately $1.4 million, non-GAAP operating expenses are expected to be in the range of $10.8 to $11.4 million.
- Other income is expected to be between $0.6 and $0.7 million on a GAAP basis and on a non-GAAP basis.
- The effective tax rate is expected to be approximately 55-60% on a GAAP basis and 34-36% 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 November 1, 2011. 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.
A taped replay of the conference call will be made available for the period from this evening through midnight on Tuesday, November 8th. To listen to the replay, dial toll-free (855) 859-2056 and reference conference ID 21198191.
About Pericom
Pericom Semiconductor Corporation (
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 Q2 2012 Outlook", which regard the anticipated revenues, gross margin, operating expenses, other income, and effective tax rate in the second fiscal quarter of 2012, and statements from our CEO regarding margin expansion, reductions in Pericom owned inventories, channel inventories reducing, potential industry slowdown due to macro-economic conditions, 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.
| Pericom Semiconductor Corporation | ||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||
| (In thousands, except per share data) | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| October 1, | July 2, | October 2, | ||||||||||
| 2011 | 2011 | 2010 | ||||||||||
| Net revenues | $ | 35,332 | $ | 43,342 | $ | 42,775 | ||||||
| Cost of revenues | 22,795 | 28,173 | 28,240 | |||||||||
| Gross profit | 12,537 | 15,169 | 14,535 | |||||||||
| Operating expenses: | ||||||||||||
| Research and development | 5,316 | 5,535 | 4,397 | |||||||||
| Selling, general and administrative | 7,339 | 7,487 | 7,742 | |||||||||
| Total operating expenses | 12,655 | 13,022 | 12,139 | |||||||||
| Income (loss) from operations | (118 | ) | 2,147 | 2,396 | ||||||||
| Interest and other income, net | 1,070 | 695 | 11,936 | |||||||||
| Income before income taxes | 952 | 2,842 | 14,332 | |||||||||
| Income tax expense | 534 | 1,281 | 5,378 | |||||||||
| Net income from consolidated companies | 418 | 1,561 | 8,954 | |||||||||
| Equity in net income of unconsolidated affiliates | 27 | 48 | 556 | |||||||||
| Net income | $ | 445 | $ | 1,609 | $ | 9,510 | ||||||
| Basic income per share | $ | 0.02 | $ | 0.06 | $ | 0.38 | ||||||
| Diluted income per share | $ | 0.02 | $ | 0.06 | $ | 0.38 | ||||||
| Shares used in computing basic income per share | 24,491 | 24,917 | 24,890 | |||||||||
| Shares used in computing diluted income per share | 24,583 | 25,140 | 25,263 | |||||||||
| Pericom Semiconductor Corporation | |||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||
| (In thousands) | |||||||||||
| (unaudited) | |||||||||||
| Three Months Ended | |||||||||||
| October 1 | July 2, | October 2, | |||||||||
| 2011 | 2011 | 2010 | |||||||||
| Share-based compensation | |||||||||||
| Cost of revenues | $ | 54 | $ | 58 | $ | 73 | |||||
| Research and development | 371 | 372 | 390 | ||||||||
| Selling, general and administrative | 549 | 601 | 600 | ||||||||
| Share-based compensation expense | $ | 974 | $ | 1,031 | $ | 1,063 | |||||
| Amortization of intangible assets | |||||||||||
| Cost of revenues | $ | 454 | $ | 342 | $ | 269 | |||||
| Research and development | 160 | 304 | 53 | ||||||||
| Selling, general and administrative | 239 | 236 | 76 | ||||||||
| Amortization of intangible assets | $ | 853 | $ | 882 | $ | 398 | |||||
| Pericom Semiconductor Corporation | ||||||||||||
| Reconciliation of GAAP Net Income to Non-GAAP Net Income | ||||||||||||
| (In thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| October 1 | July 2, | October 2, | ||||||||||
| 2011 | 2011 | 2010 | ||||||||||
| GAAP net income attributable to Pericom shareholders | $ | 445 | $ | 1,609 | $ | 9,510 | ||||||
| Reconciling items: | ||||||||||||
| Share-based compensation expense | 974 | 1,031 | 1,063 | |||||||||
| Amortization of intangible assets | 853 | 882 | 398 | |||||||||
| Fair value adjustment amortization on acquired inventory | - | - | 202 | |||||||||
| Gain on previously held interest at PTI | - | - | (11,004 | ) | ||||||||
| Acquisition-related costs | - | - | 594 | |||||||||
| Interest expense accrual relating to PTI acquisition earnout | - | 206 | 74 | |||||||||
| Fair value adjustment to depreciation expense on acquired fixed assets | 50 | 49 | 15 | |||||||||
| Compensation expense accrual relating to PTI acquisition | - | 364 | 128 | |||||||||
| Tax effect of adjustments | (478 | ) | (569 | ) | 3,341 | |||||||
| Total reconciling items | 1,399 | 1,963 | (5,189 | ) | ||||||||
| Non-GAAP net income attributable to Pericom shareholders | $ | 1,844 | $ | 3,572 | $ | 4,321 | ||||||
| Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS | ||||||||||||
| (unaudited) | ||||||||||||
| Diluted net income per share: | ||||||||||||
| GAAP diluted income per share | $ | 0.02 | $ | 0.06 | $ | 0.38 | ||||||
| Adjustments: | ||||||||||||
| Share-based compensation expense | 0.04 | 0.04 | 0.04 | |||||||||
| Amortization of intangible assets | 0.03 | 0.04 | 0.02 | |||||||||
| Fair value adjustment amortization on acquired inventory | - | - | 0.01 | |||||||||
| Gain on previously held interest at PTI | - | - | (0.44 | ) | ||||||||
| Acquisition-related costs | - | - | 0.02 | |||||||||
| Interest expense accrual relating to earnout | - | 0.01 | - | |||||||||
| Fair value adjustment to depreciation expense on acquired fixed assets | - | - | - | |||||||||
| Compensation expense accrual relating to PTI acquisition | - | 0.01 | 0.01 | |||||||||
| Tax effect of adjustments | (0.02 | ) | (0.02 | ) | 0.13 | |||||||
| Difference in share count | - | - | - | |||||||||
| Total adjustments | 0.05 | 0.08 | (0.21 | ) | ||||||||
| Non-GAAP diluted income per share | $ | 0.07 | $ | 0.14 | $ | 0.17 | ||||||
| Shares used in diluted net income per share calculation: | ||||||||||||
| GAAP | 24,583 | 25,140 | 25,263 | |||||||||
| Exclude the benefit of share-based compensation expense (1) | 423 | 369 | 265 | |||||||||
| Non-GAAP | 25,006 | 25,509 | 25,528 | |||||||||
| (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. |
| Pericom Semiconductor Corporation | ||||||||||||
| Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin | ||||||||||||
| (In thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| October 1 | July 2, | October 2, | ||||||||||
| 2011 | 2011 | 2010 | ||||||||||
| GAAP gross margin | $ | 12,537 | $ | 15,169 | $ | 14,535 | ||||||
| - % of revenues | 35.5 | % | 35.0 | % | 34.0 | % | ||||||
| Reconciling items: | ||||||||||||
| Share-based compensation | 54 | 58 | 73 | |||||||||
| Amortization of intangible assets | 454 | 342 | 269 | |||||||||
| Fair value adjustment amortization on acquired inventory | - | - | 202 | |||||||||
| Fair value adjustment to depreciation expense on acquired fixed assets | 10 | 10 | 1 | |||||||||
| Compensation expense accrual relating to PTI acquisition | - | 106 | 37 | |||||||||
| Total reconciling items | 518 | 516 | 582 | |||||||||
| Non-GAAP gross margin | $ | 13,055 | $ | 15,685 | $ | 15,117 | ||||||
| - % of revenues | 36.9 | % | 36.2 | % | 35.3 | % | ||||||
| Reconciliation of GAAP R&D Expenses to Non-GAAP R&D Expenses | ||||||||||||
| (unaudited) | ||||||||||||
| GAAP research and development expenses | $ | 5,316 | $ | 5,535 | $ | 4,397 | ||||||
| - % of revenues | 15.0 | % | 12.8 | % | 10.3 | % | ||||||
| Reconciling items: | ||||||||||||
| Share-based compensation | (371 | ) | (372 | ) | (390 | ) | ||||||
| Amortization of intangible assets | (160 | ) | (304 | ) | (53 | ) | ||||||
| Fair value adjustment to depreciation expense on acquired fixed assets | (10 | ) | (10 | ) | (8 | ) | ||||||
| Compensation expense accrual relating to PTI acquisition | - | (119 | ) | (42 | ) | |||||||
| Total reconciling items | (541 | ) | (805 | ) | (493 | ) | ||||||
| Non-GAAP research and development expenses | $ | 4,775 | $ | 4,730 | $ | 3,904 | ||||||
| - % of revenues | 13.5 | % | 10.9 | % | 9.1 | % | ||||||
| Reconciliation of GAAP SG&A Expenses to Non-GAAP SG&A Expenses | ||||||||||||
| (unaudited) | ||||||||||||
| GAAP selling, general and administrative expenses | $ | 7,339 | $ | 7,487 | $ | 7,742 | ||||||
| - % of revenues | 20.8 | % | 17.3 | % | 18.1 | % | ||||||
| Reconciling items: | ||||||||||||
| Share-based compensation | (549 | ) | (601 | ) | (600 | ) | ||||||
| Amortization of intangible assets | (239 | ) | (236 | ) | (76 | ) | ||||||
| Acquisition-related costs | - | - | (594 | ) | ||||||||
| Fair value adjustment to depreciation expense on acquired fixed assets | (30 | ) | (29 | ) | (6 | ) | ||||||
| Compensation expense accrual relating to PTI acquisition | - | (139 | ) | (49 | ) | |||||||
| Total reconciling items | (818 | ) | (1,005 | ) | (1,325 | ) | ||||||
| Non-GAAP selling, general and administrative expenses | $ | 6,521 | $ | 6,482 | $ | 6,417 | ||||||
| - % of revenues | 18.5 | % | 15.0 | % | 15.0 | % | ||||||
| Pericom Semiconductor Corporation | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (In thousands) | ||||||||
| (unaudited) | ||||||||
| As of | As of | |||||||
| October 1, 2011 | July 2, 2011 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 26,497 | $ | 30,023 | ||||
| Restricted cash | 7,721 | 2,947 | ||||||
| Short-term investments | 55,662 | 76,266 | ||||||
| Accounts receivable - trade | 22,667 | 28,185 | ||||||
| Inventories | 18,439 | 21,942 | ||||||
| Prepaid expenses and other current assets | 7,555 | 7,788 | ||||||
| Deferred income taxes | 2,501 | 2,564 | ||||||
| Total current assets | 141,042 | 169,715 | ||||||
| Property, plant and equipment-net | 58,961 | 60,859 | ||||||
| Investments in unconsolidated affiliates | 2,654 | 2,596 | ||||||
| Deferred income taxes non-current | 4,686 | 4,324 | ||||||
| Long-term investments in marketable securities | 42,316 | 21,282 | ||||||
| Goodwill | 16,551 | 16,669 | ||||||
| Intangible assets | 14,906 | 15,690 | ||||||
| Other assets | 9,945 | 9,881 | ||||||
| Total assets | $ | 291,061 | $ | 301,016 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Short-term debt | $ | 7,079 | $ | 8,671 | ||||
| Accounts payable | 8,983 | 12,221 | ||||||
| Accrued liabilities | 18,885 | 19,645 | ||||||
| Total current liabilities | 34,947 | 40,537 | ||||||
| Industrial development subsidy | 8,742 | 9,075 | ||||||
| Deferred tax liabilities | 6,574 | 6,605 | ||||||
| Other long-term liabilities | 2,031 | 2,074 | ||||||
| Total liabilities | 52,294 | 58,291 | ||||||
| Shareholders' equity: | ||||||||
| Common stock and paid in capital | 128,435 | 130,960 | ||||||
| Retained earnings and other comprehensive income | 110,332 | 111,765 | ||||||
| Total shareholders' equity | 238,767 | 242,725 | ||||||
| Total liabilities and shareholders' equity | $ | 291,061 | $ | 301,016 | ||||
Contact Information:
Contact:
Aaron Tachibana
Pericom Semiconductor
Tel: 408 435-0800