SOURCE: Pericom Semiconductor Corporation

Pericom Semiconductor Corporation

August 07, 2012 16:05 ET

Pericom Semiconductor Reports Fiscal Fourth Quarter and Annual 2012 Financial Results

SAN JOSE, CA--(Marketwire - Aug 7, 2012) - Pericom Semiconductor Corporation (NASDAQ: PSEM)

  • Q4 revenues increased 14% sequentially.
  • Q4 non-GAAP gross margin increased by 90 bps sequentially.

Pericom Semiconductor Corporation (NASDAQ: PSEM), a worldwide supplier of high performance connectivity and timing solutions, today announced results for its fiscal 2012 fourth quarter and year ended June 30, 2012.

Net revenues for the fourth quarter were $37.9 million, an increase of 14% from the $33.4 million reported in the third quarter of fiscal 2012, and down 12% from the $43.3 million reported in the comparable period last year. The revenue increase from the prior quarter reflects strength from the networking and telecom, server, storage, and embedded end-market segments. Net revenues for the fiscal year 2012 were $137.1 million, a decrease of 18% from the $166.3 million reported last year. The book-to-bill ratio for the fiscal fourth quarter was greater than 1.0.

GAAP gross margin was 35.7% in the fourth quarter, an increase from 34.7% last quarter and an increase from 35.0% in the comparable period last year. On a non-GAAP basis, gross margin was 37.1% in the fourth quarter, which reflects exclusion of share-based compensation, amortization of intangible assets and amortization of fair value adjustments from the PTI acquisition. The comparable non-GAAP gross margins were 36.2% last quarter and also in the comparable period last year. The GAAP gross margin was 35.5% for the full fiscal year of 2012, an increase of 200 basis points from the 33.5% reported for fiscal year 2011. On a non-GAAP basis, the fiscal year 2012 gross margin was 36.9%, and increased by 180 basis points from fiscal year 2011's gross margin of 35.1%.

GAAP net loss for the fourth quarter was $1.9 million, or $0.08 per diluted share, compared with net loss of $267,000, or $0.01 per diluted share in the third quarter, and net income of $1.6 million, or $0.06 per diluted share in the comparable period last year. GAAP net income for all periods included share-based compensation, amortization of intangible assets, restructuring charges, amortization of fair value adjustments, and other PTI acquisition related expenses. The fiscal 2012 fourth quarter also included establishment of a $2.8 million deferred tax asset valuation allowance relating to California tax credits that may not be utilized in the future and a $0.6 million note receivable write off. Excluding these items, non-GAAP net income for the fourth quarter was $2.5 million, or $0.10 per diluted share, compared with non-GAAP net income of $1.7 million or $0.07 per diluted share in the third quarter, and non-GAAP net income of $3.6 million, or $0.14 per diluted share in the comparable period last year. For the full fiscal year 2012, GAAP net loss was $2.1 million, or $0.09 per diluted share, compared with the GAAP net income of $13.5 million, or $0.53 per diluted share in fiscal year 2011. For the full fiscal year 2012, non-GAAP net income was $7.0 million, or $0.28 per diluted share, compared with $14.4 million, or $0.56 per diluted share in fiscal year 2011.

The balance sheet remained very strong with cash and investments in marketable securities of $128 million or $5.41 per diluted share at the end of the fourth quarter. Inventory decreased $0.6 million on a sequential basis to $16.6 million, which represents 63 days of supply based on non-GAAP cost of goods sold. This is the seventh consecutive quarter of inventory declines, and during this period inventory has decreased $14.4 million or 46.5% from $31.0 million. Trade accounts receivable increased by $2.6 million sequentially as a result of higher revenues, while DSO was flat at 58 days. At quarter-end, working capital was $128 million and the current ratio was 6.1.

"We were pleased with our fourth quarter results, especially since the end market increases were aligned with our strategic focus," said Alex Hui, President and CEO of Pericom. "Sequentially, our server and storage revenue increased 23%, networking and telecom increased 19% and embedded increased 18%. We initiated volume shipment of our USB 3.0 signal integrity solution in next generation Ivy Bridge computing platforms and we saw a nice ramp-up of our PCIe product revenue with our comprehensive switching, bridging, timing and signal integrity solution."

New Products 

In the fourth quarter of fiscal 2012, Pericom introduced a total of nine new products in our Signal Integrity, Connectivity, and Timing product areas.

We introduced 4 new products across our Connectivity product families targeting networking, server, storage, embedded, notebook and consumer segments, including PCIe GEN3 and USB switches, Hi-Flex consumer ASIC and microprocessor voltage supervisor.

We also expanded our Timing solutions for next generation platforms with 2 new products, including a specialized XO and a multi-output clock buffer optimized for networking applications.

For Signal Integrity, we introduced 3 new ReDriver products targeting PCIe GEN3 and 10Gb/40Gb Ethernet applications in server, storage, and networking applications.

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 authorization, the Company repurchased 298,343 shares in the three months ended June 30, 2012 for an aggregate cost of $2.4 million and an average per share purchase price of $8.06. The remaining balance of potential share repurchases under the 2008 authorization is approximately $701,000. As Pericom has nearly completed the repurchase of shares pursuant to the 2008 authorization, the Board of Directors has authorized another repurchase program for up to an additional $25 million of shares of our common stock. Shares may be repurchased from time to time in the open market or through private transactions, at the discretion of Pericom management. As of August 3, 2012, Pericom had approximately 23.6 million shares of common stock outstanding.

Fiscal Q1 2013 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 Q1 2013.

  • Revenues in the first fiscal quarter are expected to be in the range of $36.0 million to $40.0 million.

  • GAAP gross margins are expected to be between 34.9% and 36.9%, and adjusting for share-based compensation, amortization of intangibles and fair value adjustments that are expected to total approximately 1.3%, non-GAAP gross margins are expected to be in the 36.2% to 38.2% range.

  • GAAP operating expenses are expected to be between $12.6 million and $13.1 million, and adjusting for share-based compensation, amortization of intangibles and fair value adjustments that are expected to total approximately $1.2 million, non-GAAP operating expenses are expected to be in the range of $11.4 million to $11.9 million.

  • Other income is expected to be between $0.6 million and $0.8 million on a GAAP basis and on a non-GAAP basis.

  • The effective tax rate is expected to be approximately 32-36% on a GAAP basis and 24-30% 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 August 7, 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.

A taped replay of the conference call will be made available for the period from this evening through midnight on Tuesday, August 14th. To listen to the replay, dial toll-free (855) 859-2056 and reference conference ID 15566967.

About Pericom

Pericom Semiconductor Corporation (NASDAQ: PSEM) enables serial connectivity with the industry's most complete solutions for the computing, communications, consumer and embedded 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, restructuring charges, establishment of a deferred tax asset valuation allowance, note receivable write off, 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, restructuring charges, establishment of a deferred tax valuation allowance, note receivable write off, 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 also use non-GAAP data in calculating certain metrics such as non-GAAP cost of goods sold in computing inventory days of supply.

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 Q1 2013 Outlook," which regard the anticipated revenues, gross margin, operating expenses, other income, and effective tax rate in the first fiscal quarter of 2013, and statements from our CEO regarding improving results and future deployment of our USB 3.0 and PCIe product solutions in next generation platforms, 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, subsequent quarterly reports on Form 10-Q, and in particular, the risk factors sections contained in those reports.

                           
                           
Pericom Semiconductor Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
                           
    Three Months Ended   Twelve Months Ended
    June 30,     March 31,     July 2,   June 30,     July 2,
    2012     2012     2011   2012     2011
                                     
Net revenues   $ 37,944     $ 33,378     $ 43,342   $ 137,135     $ 166,343
                                     
Cost of revenues     24,396       21,789       28,173     88,484       110,661
                                     
  Gross profit     13,548       11,589       15,169     48,651       55,682
                                     
Operating expenses:                                    
                                     
  Research and development     5,460       5,669       5,535     21,722       20,230
                                     
  Selling, general and administrative     8,135       7,114       7,487     29,648       29,447
                                     
    Total operating expenses     13,595       12,783       13,022     51,370       49,677
                                     
Income (loss) from operations     (47 )     (1,194 )     2,147     (2,719 )     6,005
                                     
Interest and other income, net     1,059       847       695     3,614       14,377
                                     
Income (loss) before income taxes     1,012       (347 )     2,842     895       20,382
                                     
Income tax expense (benefit)     2,974       (76 )     1,281     3,097       7,619
                                     
Net income (loss) from consolidated companies     (1,962 )     (271 )     1,561     (2,202 )     12,763
                                     
Equity in net income of unconsolidated affiliates     51       4       48     134       700
                                     
Net income (loss)   $ (1,911 )   $ (267 )   $ 1,609   $ (2,068 )   $ 13,463
                                     
Basic income (loss) per share   $ (0.08 )   $ (0.01 )   $ 0.06   $ (0.09 )   $ 0.54
                                     
Diluted income (loss) per share   $ (0.08 )   $ (0.01 )   $ 0.06   $ (0.09 )   $ 0.53
                                     
Shares used in computing basic income (loss) per share     23,611       24,030       24,917     24,094       24,923
                                     
Shares used in computing diluted income (loss) per share     23,611       24,030       25,140     24,094       25,254
                                     
                                     
                                     
Pericom Semiconductor Corporation
Condensed Consolidated Statements of Operations
(In thousands)
(unaudited)
                     
    Three Months Ended   Twelve Months Ended
    June 30,   March 31,   July 2,   June 30,   July 2,
    2012   2012   2011   2012   2011
                               
Share-based compensation                              
  Cost of revenues   $ 50   $ 60   $ 58   $ 211   $ 250
  Research and development     335     371     372     1,434     1,536
  Selling, general and administrative     518     496     601     2,091     2,500
    Share-based compensation expense   $ 903   $ 927   $ 1,031   $ 3,736   $ 4,286
                               
Amortization of intangible assets                              
  Cost of revenues   $ 477   $ 334   $ 342   $ 1,596   $ 1,513
  Research and development     57     201     246     585     246
  Selling, general and administrative     243     243     294     966     998
    Amortization of intangible assets   $ 777   $ 778   $ 882   $ 3,147   $ 2,757
                               
                               
 
Pericom Semiconductor Corporation  
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income  
(In thousands)  
(unaudited)  
                               
    Three Months Ended     Twelve Months Ended  
    June 30,     March 31,     July 2,     June 30,     July 2,  
    2012     2012     2011     2012     2011  
GAAP net income (loss)   $ (1,911 )   $ (267 )   $ 1,609     $ (2,068 )   $ 13,463  
Reconciling items:                                        
  Share-based compensation expense     903       927       1,031       3,736       4,286  
  Amortization of intangible assets     777       778       882       3,147       2,757  
  Fair value adjustment amortization on acquired inventory     -       -       -       -       614  
  Gain on previously held interest at PTI     -       -       -       -       (11,004 )
  Acquisition-related costs     -       -       -       -       598  
  Interest expense accrual relating to PTI acquisition earnout     -       -       206       -       688  
  Fair value adjustment to depreciation expense on acquired fixed assets     50       50       49       200       159  
  Compensation expense accrual relating to PTI acquisition     -       -       364       -       1,211  
  Restructuring charge     -       460       -       460       118  
  Establishment of deferred tax asset valuation allowance     2,751       -       -       2,751       -  
  Write off of note receivable     556       -       -       556       -  
  Tax effect of adjustments     (625 )     (285 )     (569 )     (1,816 )     1,549  
    Total reconciling items     4,412       1,930       1,963       9,034       976  
Non-GAAP net income   $ 2,501     $ 1,663     $ 3,572     $ 6,966     $ 14,439  
                                         
Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS  
(unaudited)  
                                         
Diluted net income (loss) per share:                                        
  GAAP diluted income (loss) per share   $ (0.08 )   $ (0.01 )   $ 0.06     $ (0.09 )   $ 0.53  
  Adjustments:                                        
  Share-based compensation expense     0.04       0.04       0.04     $ 0.15       0.17  
  Amortization of intangible assets     0.04       0.03       0.03       0.13       0.09  
  Fair value adjustment amortization on acquired inventory     -       -       -       -       0.03  
  Gain on previously held interest at PTI     -       -       -       -       (0.43 )
  Acquisition-related costs     -       -       -       -       0.02  
  Interest expense accrual relating to earnout     -       -       0.01       -       0.03  
  Fair value adjustment to depreciation expense on acquired fixed assets     -       -       -       0.01       0.01  
  Compensation expense accrual relating to PTI acquisition     -       -       0.01       -       0.04  
  Restructuring charge     -       0.02       -       0.02       -  
  Establishment of deferred tax asset valuation allowance     0.11       -       -       0.11       -  
  Write off of note receivable     0.02       -       -       0.02       -  
  Tax effect of adjustments     (0.03 )     (0.01 )     (0.02 )     (0.07 )     0.06  
  Difference in share count     -       -       -       -       0.01  
    Total adjustments     0.18       0.08       0.08       0.37       0.03  
  Non-GAAP diluted income per share   $ 0.10     $ 0.07     $ 0.14     $ 0.28     $ 0.56  
                                         
Shares used in diluted net income (loss) per share calculation:                                        
  GAAP     23,611       24,030       25,140       24,094       25,248  
    Change in diluted shares from GAAP net loss to non-GAAP net income     182       105       -       123       -  
    Exclude the benefit of share-based compensation expense (1)     379       370       369       376       332  
  Non-GAAP     24,172       24,505       25,509       24,593       25,580  
                                         
(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     Twelve Months Ended  
    June 30,     March 31,     July 2,     June 30,     July 2,  
    2012     2012     2011     2012     2011  
GAAP gross margin   $ 13,548     $ 11,589     $ 15,169     $ 48,651     $ 55,682  
- % of revenues     35.7 %     34.7 %     35.0 %     35.5 %     33.5 %
Reconciling items:                                        
  Share-based compensation     50       60       58       211       250  
  Amortization of intangible assets     477       334       342       1,596       1,513  
  Fair value adjustment amortization on acquired inventory     -       -       -       -       614  
  Fair value adjustment to depreciation expense on acquired fixed assets     10       10       10       40       30  
  Compensation expense accrual relating to PTI acquisition     -       -       106       -       352  
  Restructuring charge     -       78       -       78       -  
    Total reconciling items     537       482       516       1,925       2,759  
Non-GAAP gross margin   $ 14,085     $ 12,071     $ 15,685     $ 50,576     $ 58,441  
- % of revenues     37.1 %     36.2 %     36.2 %     36.9 %     35.1 %
                                         
Reconciliation of GAAP R&D Expenses to Non-GAAP R&D Expenses  
(unaudited)  
                                         
GAAP research and development expenses   $ 5,460     $ 5,669     $ 5,535     $ 21,722     $ 20,230  
- % of revenues     14.4 %     17.0 %     12.8 %     15.8 %     12.2 %
Reconciling items:                                        
  Share-based compensation     (335 )     (371 )     (372 )     (1,434 )     (1,536 )
  Amortization of intangible assets     (57 )     (201 )     (246 )     (585 )     (246 )
  Fair value adjustment to depreciation expense on acquired fixed assets     (10 )     (10 )     (10 )     (40 )     (37 )
  Compensation expense accrual relating to PTI acquisition     -       -       (119 )     -       (395 )
  Restructuring charge     -       (164 )     -       (164 )     -  
    Total reconciling items     (402 )     (746 )     (747 )     (2,223 )     (2,214 )
Non-GAAP research and development expenses   $ 5,058     $ 4,923     $ 4,788     $ 19,499     $ 18,016  
- % of revenues     13.3 %     14.7 %     11.0 %     14.2 %     10.8 %
                                         
Reconciliation of GAAP SG&A Expenses to Non-GAAP SG&A Expenses  
(unaudited)  
                                         
GAAP selling, general and administrative expenses   $ 8,135     $ 7,114     $ 7,487     $ 29,648     $ 29,447  
- % of revenues     21.4 %     21.3 %     17.3 %     21.6 %     17.7 %
Reconciling items:                                        
  Share-based compensation     (518 )     (496 )     (601 )     (2,091 )     (2,500 )
  Amortization of intangible assets     (243 )     (243 )     (294 )     (966 )     (998 )
  Acquisition-related costs     -       -       -       -       (598 )
  Fair value adjustment to depreciation expense on acquired fixed assets     (30 )     (30 )     (29 )     (120 )     (92 )
  Compensation expense accrual relating to PTI acquisition     -       -       (139 )     -       (464 )
  Restructuring charge     -       (218 )     -       (218 )     (118 )
  Write off of note receivable     (556 )     -       -       (556 )     -  
    Total reconciling items     (1,347 )     (987 )     (1,063 )     (3,951 )     (4,770 )
Non-GAAP selling, general and administrative expenses   $ 6,788     $ 6,127     $ 6,424     $ 25,697     $ 24,677  
- % of revenues     17.9 %     18.4 %     14.8 %     18.7 %     14.8 %
                                         
                                         
   
Pericom Semiconductor Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
 
    As of   As of
    June 30, 2012   July 2, 2011
Assets            
             
Current assets:            
             
  Cash and cash equivalents   $ 24,283   $ 30,023
  Restricted cash     -     2,947
  Short-term investments     79,924     76,266
  Accounts receivable - trade     24,010     28,185
  Inventories     16,604     21,942
  Prepaid expenses and other current assets     6,099     7,788
  Deferred income taxes     1,549     2,564
    Total current assets     152,469     169,715
             
Property, plant and equipment-net     56,102     60,859
Investments in unconsolidated affiliates     2,474     2,596
Deferred income taxes non-current     2,447     4,324
Long-term investments in marketable securities     23,628     21,282
Goodwill     16,797     16,669
Intangible assets - net     12,831     15,690
Other assets     9,058     9,881
    Total assets   $ 275,806   $ 301,016
             
             
Liabilities and Shareholders' Equity            
             
Current liabilities:            
             
  Short-term debt   $ 1,364   $ 8,671
  Accounts payable     14,860     12,221
  Accrued liabilities     8,608     19,645
    Total current liabilities     24,832     40,537
             
Industrial development subsidy     8,577     9,075
Deferred tax liabilities     6,191     6,605
Other long-term liabilities     2,571     2,074
    Total liabilities     42,171     58,291
             
Shareholders' equity:            
Common stock and paid in capital     123,362     130,960
Retained earnings and other comprehensive income     110,273     111,765
    Total shareholders' equity     233,635     242,725
             
    Total liabilities and shareholders' equity   $ 275,806   $ 301,016
             

Contact Information

  • Contact:
    Aaron Tachibana
    Pericom Semiconductor
    Tel: 408 435-0800
    Email Contact