SOURCE: Pericom Semiconductor Corporation

Pericom Semiconductor Corporation

August 06, 2014 16:05 ET

Pericom Semiconductor Reports Fiscal Fourth Quarter and Annual 2014 Financial Results

MILPITAS, CA--(Marketwired - Aug 6, 2014) - Pericom Semiconductor Corporation (NASDAQ: PSEM)

FOURTH QUARTER HIGHLIGHTS

  • Revenues increased 6.7% sequentially to $32.7 million
  • Achieved 41.4% gross margin (43.0% non-GAAP) and year-over-year increase of 381 bps
  • Net income was $0.04 per diluted share
  • Non-GAAP net income was $0.12 or a 50% increase from $0.08 in the previous quarter

Pericom Semiconductor Corporation (NASDAQ: PSEM), a worldwide supplier of high performance connectivity and timing solutions, today announced results for its fiscal 2014 fourth quarter and year ended June 28, 2014.

Net revenues for the fourth quarter were $32.7 million, an increase of 6.7% from the $30.7 million reported in the third quarter of fiscal 2014, and up 3.3% from the $31.7 million reported in the comparable period last year. The revenue increase from the prior quarter reflects strength from primarily the embedded and server end-market segments. Net revenues for the fiscal year 2014 were $128.1 million, a decrease of 0.9% from the $129.3 million reported last year.

GAAP gross margin was 41.4% in the fourth quarter, an increase from 40.8% last quarter and from 37.6% for the comparable period last year. The GAAP gross margin was 39.9% for the full fiscal year of 2014, an increase of 286 basis points from the 37.0% reported for fiscal year 2013. 

GAAP net income for the fourth quarter was $0.9 million, or $0.04 per diluted share, compared with net income of $1.6 million, or $0.07 per diluted share in the third quarter, and net loss of $16.8 million, or $0.74 per diluted share in the comparable period last year. For the full fiscal year 2014, GAAP net income was $4.1 million, or $0.18 per diluted share, compared with GAAP net loss of $21.6 million, or $0.93 per diluted share in fiscal year 2013. 

To facilitate the complete understanding of comparable financial performance between periods, Pericom also presents performance results net of certain non-cash and one-time items as non-GAAP measures.

On a non-GAAP basis, gross margin was 43.0% in the fourth quarter, an increase from 42.5% last quarter and 39.3% in the comparable period last year. On a non-GAAP basis, the fiscal year 2014 gross margin was 41.6%, and increased by 286 basis points from fiscal year 2013's gross margin of 38.7%.

On a non-GAAP basis, net income for the fourth quarter was $2.8 million, or $0.12 per diluted share, compared with non-GAAP net income of $1.8 million or $0.08 per diluted share in the third quarter, and non-GAAP net income of $1.6 million, or $0.07 per diluted share in the comparable period last year. For the full fiscal year 2014, non-GAAP net income was $8.5 million, or $0.36 per diluted share, compared with $6.0 million, or $0.25 per diluted share in fiscal year 2013.

"We are pleased to deliver good sequential growth in revenue along with margin expansion, and this together with careful control of operating expenses resulted in a strong sequential increase in earnings," said Alex Hui, President and CEO of Pericom. "We believe these results validate our strategy of transforming our business with growth from market segments offering higher gross margin and growth potential. We will continue to focus on growing our customer base in networking, cloud computing and embedded applications with our serial connectivity and timing solutions."

New Products 

In the fourth quarter of fiscal 2014, Pericom introduced a total of 17 new products in our Signal Integrity, Connectivity, Switching and Timing product areas. All of these products are targeted to our focus market segments, and were sampled to key customers during the quarter.

We introduced 7 new products across our Connectivity products which included new I2C and PCIe to UART bridge families targeting industrial control and instrumentation applications. A new addition to our PCIe GEN2 multi-lane packet switch family targets networking control plane and embedded applications.

We expanded our Timing solutions for next generation mobile and networking platforms with 5 new products, including a new high performance clock generator, Real Time Clock (RTC), and XO IC.

We introduced 2 new products across our Switching product families, a DDR and a USB high performance switch to further broaden our PC and Mobile market segment product offerings.

For Signal Integrity, we introduced 3 new products, including HDMI ReDrivers aimed at consumer and mobile video applications, and SAS3 ReDrivers aimed at next generation storage platforms.

Share Repurchase Update

On April 26, 2012, the Board authorized a repurchase program for up to $25 million of shares of our common stock, and on April 24, 2014, the Board authorized an additional $20 million of share repurchases. Pursuant to these authorizations, the Company repurchased 535,447 shares in the three months ended June 28, 2014 for an aggregate cost of $4,445,000 and an average per share purchase price of $8.30. The remaining balance of potential share repurchases under the authorization is approximately $26.6 million. 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 4, 2014, Pericom had approximately 22.0 million shares of common stock outstanding.

Fiscal Q1 2015 Outlook

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

  • Revenues are expected to be in the range of $32.0 million to $35.0 million.

  • GAAP gross margins are expected to be between 40.0% and 42.0%, 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 41.5% to 43.5% range.

  • GAAP operating expenses are expected to be between $12.1 million and $12.4 million, and adjusting for share-based compensation, amortization of intangibles and fair value adjustments that are expected to total approximately $0.9 million, non-GAAP operating expenses are expected to be in the range of $11.2 million to $11.5 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 30-34% on a GAAP basis and 26-28% 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 6, 2014. 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.

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 Milpitas, California, with design centers and technical sales and support offices globally. Pericom and the Pericom logo are trademarks or registered trademarks of Pericom Semiconductor Corp in the U.S. and/or other countries. Our website is 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 on acquired fixed assets, write-off of property and equipment, restructuring charge, lease restructuring and moving costs, goodwill impairment, write-off of government subsidy, release of tax reserves, tax provision on intercompany transactions 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 fair value adjustments on acquired fixed assets, write-off of property and equipment, restructuring charge, lease restructuring and moving costs, goodwill impairment, write-off of government subsidy, release of tax reserves, tax provision on intercompany transactions and the corresponding tax effects 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 statements by our CEO concerning future business and revenue growth and margin improvement and the statements under the captions "Fiscal Q1 2015 Outlook", which regard the anticipated revenues, gross margin, operating expenses, other income, and effective tax rate in the first fiscal quarter of 2015. 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 June 29, 2013, our quarterly report on Form 10-Q for the quarter ended March 29, 2014, 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 28,   March 29,     June 29,     June 28,     June 29,  
    2014   2014     2013     2014     2013  
                                       
Net revenues   $ 32,739   $ 30,681     $ 31,707     $ 128,068     $ 129,255  
                                       
Cost of revenues     19,188     18,175       19,791       76,983       81,388  
                                       
  Gross profit     13,551     12,506       11,916       51,085       47,867  
                                       
Operating expenses:                                      
                                       
  Research and development     4,782     4,694       5,320       19,795       21,017  
                                         
  Selling, general and administrative     8,100     7,407       7,217       30,320       29,581  
                                         
  Goodwill impairment     -     -       16,899       -       16,899  
                                       
    Total operating expenses     12,882     12,101       29,436       50,115       67,497  
                                       
Income (loss) from operations     669     405       (17,520 )     970       (19,630 )
                                       
Interest and other income, net     456     802       1,277       2,792       4,024  
                                       
Income (loss) before income taxes     1,125     1,207       (16,243 )     3,762       (15,606 )
                                       
Income tax expense (benefit)     291     (421 )     573       (230 )     6,223  
                                       
Net income (loss) from consolidated companies     834     1,628       (16,816 )     3,992       (21,829 )
                                       
Equity in net income of unconsolidated affiliates     50     13       30       132       215  
                                       
Net income (loss)   $ 884   $ 1,641     $ (16,786 )   $ 4,124     $ (21,614 )
                                       
Basic income (loss) per share   $ 0.04   $ 0.07     $ (0.74 )   $ 0.18     $ (0.93 )
                                       
Diluted income (loss) per share   $ 0.04   $ 0.07     $ (0.74 )   $ 0.18     $ (0.93 )
                                       
Shares used in computing basic income (loss) per share     22,123     22,659       22,783       22,594       23,251  
                                       
Shares used in computing diluted income (loss) per share     22,338     22,880       22,783       22,797       23,251  
                                       
                                       
 
Pericom Semiconductor Corporation
Supplemental Information
(In thousands)
(unaudited)
                     
      Three Months Ended     Twelve Months Ended
    June 28,   March 29,   June 29,   June 28,   June 29,
     2014    2014    2013    2014   2013
                               
Share-based compensation                              
  Cost of revenues   $ 37   $ 40   $ 41   $ 163   $ 187
  Research and development     229     257     309     1,096     1,282
  Selling, general and administrative     329     420     447     1,533     1,871
    Share-based compensation expense   $ 595   $ 717   $ 797   $ 2,792   $ 3,340
                               
Amortization of intangible assets                              
  Cost of revenues   $ 478   $ 483   $ 486   $ 1,930   $ 1,926
  Research and development     -     -     50     67     206
  Selling, general and administrative     247     249     245     992     972
    Amortization of intangible assets   $ 725   $ 732   $ 781   $ 2,989   $ 3,104
                               
                               
Pericom Semiconductor Corporation  
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income  
(In thousands)  
(unaudited)  
   
    Three Months Ended     Twelve Months Ended  
    June 28,     March 29,     June 29,     June 28,     June 29,  
    2014     2014     2013     2014     2013  
GAAP net income (loss)   $ 884     $ 1,641     $ (16,786 )   $ 4,124     $ (21,614 )
Reconciling items:                                        
  Share-based compensation expense     595       717       797       2,792       3,340  
  Amortization of intangible assets     725       732       781       2,989       3,104  
  Write off of equipment     -       -       184       210       184  
  Fair value adjustment to depreciation expense on acquired fixed assets     51       51       51       204       201  
  Goodwill impairment     -       -       16,899       -       16,899  
  Restructuring charge     44       95       -       234       -  
  Release of tax reserves     -       (1,035 )     -       (1,776 )     -  
  Write off of government subsidy     843       -       -       843       -  
  Tax on intercompany transaction     -       -       118       15       5,487  
  Lease restructuring and moving costs     -       -       -       522       -  
  Tax effect of adjustments     (321 )     (383 )     (420 )     (1,699 )     (1,633 )
    Total reconciling items     1,937       177       18,410       4,334       27,582  
Non-GAAP net income   $ 2,821     $ 1,818     $ 1,624     $ 8,458     $ 5,968  
                                         
Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS  
(unaudited)  
                                         
Diluted net income (loss) per share:                                        
  GAAP diluted income (loss) per share   $ 0.04     $ 0.07     $ (0.74 )   $ 0.18     $ (0.93 )
  Adjustments:                                        
  Share-based compensation expense     0.03       0.03       0.03     $ 0.12       0.15  
  Amortization of intangible assets     0.03       0.03       0.04       0.12       0.13  
  Write off of equipment     -       -       0.01       0.01       0.01  
  Fair value adjustment to depreciation expense on acquired fixed assets     -       -       0.01       0.01       0.01  
  Goodwill impairment     -       -       0.72       -       0.72  
  Restructuring charge     -       0.01       -       0.01       -  
  Release of tax reserves     -       (0.04 )     -       (0.08 )     -  
  Write off of government subsidy     0.04       -       -       0.04       -  
  Tax on intercompany transaction     -       -       0.01       -       0.23  
  Lease restructuring and moving costs     -       -       -       0.02       -  
  Tax effect of adjustments     (0.02 )     (0.02 )     (0.02 )     (0.07 )     (0.07 )
  Difference in share count     -       -       0.01       -       -  
    Total adjustments     0.08       0.01       0.81       0.18       1.18  
Non-GAAP diluted income per share   $ 0.12     $ 0.08     $ 0.07     $ 0.36     $ 0.25  
                                         
Shares used in diluted net income (loss) per share calculation:                                        
  GAAP     22,338       22,880       22,783       22,797       23,251  
    Change in diluted shares from GAAP net loss to non-GAAP net income     -       -       117       -       139  
    Exclude the benefit of share-based compensation expense (1)     486       526       467       457       451  
  Non-GAAP     22,824       23,406       23,367       23,254       23,841  
                                         
(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 28,     March 29,     June 29,     June 28,     June 29,  
    2014     2014     2013     2014     2013  
GAAP gross margin   $ 13,551     $ 12,506     $ 11,916     $ 51,085     $ 47,867  
- % of revenues     41.4 %     40.8 %     37.6 %     39.9 %     37.0 %
Reconciling items:                                        
  Share-based compensation     37       40       41       163       187  
  Amortization of intangible assets     478       483       486       1,930       1,926  
  Fair value adjustment to depreciation expense on acquired fixed assets     10       10       10       40       40  
                                         
    Total reconciling items     525       533       537       2,133       2,153  
Non-GAAP gross margin   $ 14,076     $ 13,039     $ 12,453     $ 53,218     $ 50,020  
- % of revenues     43.0 %     42.5 %     39.3 %     41.6 %     38.7 %
                                         
Reconciliation of GAAP R&D Expenses to Non-GAAP R&D Expenses  
(unaudited)  
                                         
GAAP research and development expenses   $ 4,782     $ 4,694     $ 5,320     $ 19,795     $ 21,017  
- % of revenues     14.6 %     15.3 %     16.8 %     15.5 %     16.3 %
Reconciling items:                                        
  Share-based compensation     (229 )     (257 )     (309 )     (1,096 )     (1,282 )
  Amortization of intangible assets     -       -       (50 )     (67 )     (206 )
  Write off of equipment     -       -       (184 )     (210 )     (184 )
  Fair value adjustment to depreciation expense on acquired fixed assets     (10 )     (10 )     (10 )     (40 )     (40 )
  Restructuring charge     (28 )     (59 )     -       (165 )     -  
    Total reconciling items     (267 )     (326 )     (553 )     (1,578 )     (1,712 )
Non-GAAP research and development expenses   $ 4,515     $ 4,368     $ 4,767     $ 18,217     $ 19,305  
- % of revenues     13.8 %     14.2 %     15.0 %     14.2 %     14.9 %
                                         
Reconciliation of GAAP SG&A Expenses to Non-GAAP SG&A Expenses  
(unaudited)  
                                         
GAAP selling, general and administrative expenses   $ 8,100     $ 7,407     $ 7,217     $ 30,320     $ 29,581  
- % of revenues     24.7 %     24.1 %     22.8 %     23.7 %     22.9 %
Reconciling items:                                        
  Share-based compensation     (329 )     (420 )     (447 )     (1,533 )     (1,871 )
  Amortization of intangible assets     (247 )     (249 )     (245 )     (992 )     (972 )
  Fair value adjustment to depreciation expense on acquired fixed assets     (31 )     (31 )     (31 )     (124 )     (121 )
  Restructuring charge     (16 )     (36 )     -       (69 )     -  
  Lease restructuring and moving costs     -       -       -       (522 )     -  
  Write off of government subsidy     (843 )     -       -       (843 )     -  
    Total reconciling items     (1,466 )     (736 )     (723 )     (4,083 )     (2,964 )
Non-GAAP selling, general and administrative expenses   $ 6,634     $ 6,671     $ 6,494     $ 26,237     $ 26,617  
- % of revenues     20.3 %     21.7 %     20.5 %     20.5 %     20.6 %
                                         
 
Pericom Semiconductor Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
         
    As of   As of
    June 28, 2014   June 29, 2013
    Assets            
             
Current assets:            
             
  Cash and cash equivalents   $ 33,020   $ 30,844
  Short-term investments     86,104     86,839
  Accounts receivable - trade     24,036     22,105
  Inventories     12,288     14,844
  Prepaid expenses and other current assets     5,336     5,886
  Deferred income taxes     726     585
    Total current assets     161,510     161,103
             
Property, plant and equipment-net     58,537     60,959
Investments in unconsolidated affiliates     2,445     2,525
Deferred income taxes non-current     2,460     3,411
Intangible assets - net     7,009     9,944
Other assets     8,118     8,625
    Total assets   $ 240,079   $ 246,567
             
             
    Liabilities and Shareholders' Equity            
             
Current liabilities:            
             
  Accounts payable   $ 8,927   $ 12,184
  Accrued liabilities     9,934     8,731
    Total current liabilities     18,861     20,915
             
Industrial development subsidy     6,354     7,263
Deferred tax liabilities     5,460     5,798
Other long-term liabilities     1,912     3,700
    Total liabilities     32,587     37,676
             
Shareholders' equity:            
  Common stock and paid in capital     113,118     119,591
  Retained earnings and other comprehensive income     94,374     89,300
    Total shareholders' equity     207,492     208,891
             
    Total liabilities and shareholders' equity   $ 240,079   $ 246,567
             
             

Contact Information

  • Contact:
    Kevin Bauer
    Pericom Semiconductor
    Tel: 408 232-9100
    Email Contact